Does anyone here know who Milton Friedman or Thomas Sowell is?

Hey everybody!

I don't post much, but I've been apart of the GB family since day one (we're talking ArrowPointingDown podcast days). I love me some video games. This past year I've asked myself the big questions in life. I mean the REALLY big questions. I'm relatively at peace now, but I discovered two giants along the way and I wanted to share them with you and see what you guys think.

First up is Thomas Sowell. He is an 81 year old African American Economist. He never knew either of his parents. He grew up in Depression-Era Harlem. He graduated magna cum-laude from Harvard with a BA in Economics, then graduated from Columbia with his MA in Economics, and finally got his Ph.D. in Economics from the University of Chicago -- still a Marxist during this period. Even at Chicago he studied under Milton Friedman, Mr. Capitalism himself, and was STILL a Marxist! It was not until one summer when he got a job at the Labor Department in the government did he do a complete 180. As he described it, "I looked around and thought to myself 'these people are not going to save us.'" Who are "these people" he talked about? The politicians/bureaucrats in Washington DC. Since that fateful summer, Thomas Sowell has written over 30 books promoting the idea that society does better when the government is less involved in our lives.

I HIGHLY recommend reading his Basic Economics 4th edition. No charts. No graphs. Just plain language about what an Economy is and how it works. Here's a sample of from Google Books.

Next up is Milton Friedman. After reading Dr. Sowell's books, I decided to seek out the man who taught him. If Thomas Sowell is Mace Windu, then Milton Friendman is definitely Yoda. I became an INSTANT fan of Milton Friedman's when I saw this 2:24 clip of him talking to Phil Donahue about greed and capitalism.

Hot Damn! That's such a great question: what is "greed"? We should live in a society where individuals are allowed to pursue their own self interests.

It's true that capitalism is not perfect, but that's because human beings are not perfect. This is not a perfect world. Think for a moment about honesty. Imagine how much richer we would be as a society if we were all honest. I got in an argument with a girl about why a grocery store does not locate in a poor neighborhood. She said it's because the store did not want to ruin its image. My answer to her was that stores don't get built in poor neighborhoods because it's inherently riskier to build them there. To lower that risk the store needs to get insurance, and politicians mandate that insurance policies cover all sorts of things. In addition to insurance, the store will need security in the form of guards, cameras, and alarm systems -- all of which costs money (the guard needs a salary and benefits, the cameras need operators and maintenance, and the alarm system needs testing). In order to pay for that security, the store must raise the prices of its goods. The higher prices hurt the already poor neighborhood. So the store then locates in a safer neighborhood because there is less risk involved. Less risk means less security required, which means lower prices. If the store did not have to worry about vandalism and theft, then they would gladly locate in the poor neighborhood. The location of a store can make the difference between going bankrupt and making millions.

What eliminates poverty? Thomas Sowell says wealth is ultimately the only thing that can reduce poverty. What creates wealth? Thomas Sowell says wealth is created when those who already have it are free enough to be able to create more of it (e.g. think about how much wealth Steve Jobs created at Apple -- how many people are richer because of Apple?)

I'm so curious to know what you guys think. Do you guys agree with Thomas Sowell and Milton Friedman? What is greed to you? What do you think eliminates poverty? Am I right or wrong in my story about the grocery store in the poor neighborhood?

I like Capitalism.

But wealth sure as hell doesn't trickle down without some assistance from the government.

@coakroach said:

I like Capitalism.

But wealth sure as hell doesn't trickle down without some assistance from the government.

Interesting! Assistance from the government? What do you mean?

@AZ123 said:

@coakroach said:

I like Capitalism.

But wealth sure as hell doesn't trickle down without some assistance from the government.

Interesting! Assistance from the government? What do you mean?

Effective taxation on the highest earners and using that money to encourage social mobility (ensuring that all people are relatively safe, healthy, educated and drive on roads that aren't riddled with potholes).

Pretty much what any reasonable democracy tries to pull off, only instead of a balance they often veer to deep into one side or the other and everything goes to shit.

I like Friedman for the most part, he gave Hong Kong in the 90's as a good example of capitalism in action and while it certainly does well for itself there are some people in that city that live in simply deplorable conditions.

But really overall who the fuck knows. In an ideal world the smart and calculating would run government and the people who want to see human society progress would run businesses, but for the most part the roles are reversed or both fields are just full of moronic douchebags.

@coakroach said:

@AZ123 said:

@coakroach said:

I like Capitalism.

But wealth sure as hell doesn't trickle down without some assistance from the government.

Interesting! Assistance from the government? What do you mean?

Effective taxation on the highest earners and using that money to encourage social mobility (ensuring that all people are relatively safe, healthy, educated and drive on roads that aren't riddled with potholes).

Pretty much what any reasonable democracy tries to pull off, only instead of a balance they often veer to deep into one side or the other and everything goes to shit.

I like Friedman for the most part, he gave Hong Kong in the 90's as a good example of capitalism in action and while it certainly does well for itself there are some people in that city that live in simply deplorable conditions.

But really overall who the fuck knows. In an ideal world the smart and calculating would run government and the people who want to see human society progress would run businesses, but for the most part the roles are reversed or both fields are just full of moronic douchebags.

That's wonderful that you know Dr. Friedman's example about Hong Kong in the 90s as an example of capitalism raising the standard of living for the Chinese. And you are absolutely correct -- Dr. Friedman acknowledges that Hong Kong is far from utopia; it has its share slums, crime, and desperately poor people.... but the people are FREE. That's why so many people have gone there. They will take the risk of living in a leaky house boat at a small harbor to have freedom and the opportunity to better their lives, and many succeed.

There are appalling conditions in Hong Kong, yes; you're right. But the people there are far better off than they were when they first came over from China. The kind of poverty in Hong Kong is appalling to us in the West, but that's because we enjoy such high standards of living. Most truly impoverished people in the world would consider aspiring to poverty levels in Hong Kong, or especially the USA.

This is why I love Milton Friedman and Thomas Sowell -- they have made me aware of my standard of living, which is unprecedented in human history.

In a system like this, money is worth more than human life.

@Tru3_Blu3 said:

In a system like this, money is worth more than human life.

Hmm? That's quite a lofty claim. What do you mean? Is human life worth more in Communist or Feudal system?

I've always been more of a John Maynard Keynes fan myself; Friedman is still a little bit too self-assured of the nature of humanity for an economist.

@Jerr said:

I've always been more of a John Maynard Keynes fan myself; Friedman is still a little bit too self-assured of the nature of humanity for an economist.

I'm so glad you brought up JMK! Friedman said he considers it a tragedy that JMK died in 1946 and did not live for at least another decade. According to Friedman, JMK was the only person who had the standing, personality, and force of character to persuade his disciples not to carry too far some ideas that we good in the 1930s, but did NOT apply in the post-WWII situation.

In fact, Friedman even says JMK expressed in the final article before he died reservations about his disciples carrying his ideas too far. Here is a 1:18 video clip of Friedman explaining JMK (I may have plagiarized his words).

But I'm very curious: why are you more of a John Maynard Keynes fan? Has your opinion changed in light of what Dr. Friedman has about JMK's final article? Why or why not?

@AZ123 said:

@Tru3_Blu3 said:

In a system like this, money is worth more than human life.

Hmm? That's quite a lofty claim. What do you mean? Is human life worth more in Communist or Feudal system?

Equality isn't equality when there are political leaders who destroy the lives of millions. Equality is only possible when mankind carries and teaches rightful ideals to the men and women of the future, for it is then that government will be obsolete. With advertisements, unintelligent adults, and sordid societies surrounding empty minded children, we get more unintelligent people with false, ignorant ideals that create war, conflict, and even more unintelligent people.

There's more to it than that, and my expression of my ideals seem rather stubborn and strict in comparison to the source of the idea. I recommend you look up the Technocratic Movement and Jacque Fresco. In fact, here's a list of videos from Jacque's youtube channel, if you're too busy to read of course. If you do want to read, I recommend The Best That Money Can't Buy. This is not communistic, democratic, or fascist society--this is something entirely brand new.

Here's the thing, friend: what I'm speaking of is beyond the knowledge of our contemporary cultural. Many would find the stuff I say as impossible, unrealistic, or erroneous because it goes against their notions which have been formed by dated foundations and dated mindsets. No offense to them, for it wasn't their fault that they think this way. Eventually, if we get the idea of the Venus Project out there for proper discussion, we can get some real change in our society, one that focuses on science, technological revolution, art and most imporantly, humanity.

EDIT: I'm going rather off topic in this thread, so you can just ignore what I've said.

i like him i believe in what he says. id like to ask those who say we have horrible condtions with poverty and there are so many people who would benefit from social programs like those in europe to view it from this angle.

1 we are way bigger than europe we have 300,000,000 million people 3rd most populated nation on earth. programs like that simply cannot work for us were are to big and the bueracry that would come with something like that wouldbe deplorable.

2nd free health care sounds great on paper but it would be so convuleted and complicated to pull off. I have a disabled brother he is blind and in a wheel chair the state helps us with some of our medical bills. most of the time they are late with the payment or make it even more complicated for us to get the money we need to pay for medical bills. he accounts for only 2% of the population can you imagine what it would be like for the rest of us??

3rd you as a human being are owed nothing in this world except for the basic rights in the constitution you are allowed to pursue happiness but that does not mean you are owed it. if you want wealth get an education and pursue it for every failure there is a success. i do however think that goverment should pay for college i think we can all agreee on that we need better education if you have that the rest will follow.

4th dont be angry at rich people being angry at some one or judging them based of what they have is not right many such as bill gates give to charity all the time and have companys that employee thousands of workers

2 dumbshits who have dedicated their lives to ruining the world

@AZ123 said:

@Jerr said:

I've always been more of a John Maynard Keynes fan myself; Friedman is still a little bit too self-assured of the nature of humanity for an economist.

I'm so glad you brought up JMK! Friedman said he considers it a tragedy that JMK died in 1946 and did not live for at least another decade. According to Friedman, JMK was the only person who had the standing, personality, and force of character to persuade his disciples not to carry too far some ideas that we good in the 1930s, but did NOT apply in the post-WWII situation.

In fact, Friedman even says JMK expressed in the final article before he died reservations about his disciples carrying his ideas too far. Here is a 1:18 video clip of Friedman explaining JMK (I may have plagiarized his words).

But I'm very curious: why are you more of a John Maynard Keynes fan? Has your opinion changed in light of what Dr. Friedman has about JMK's final article? Why or why not?

I like JMK because I believe his ideas actually do have relevance in a post WWII society. If Western nations followed his theories about spending on the people when times are tough, and making them save when times are good, we could have avoided the messes we face now. Bill Clinton was a good example of a Keynesian thinker when he raised taxes during his presidency to curb the deficit, yet still inspired growth and created a budget surplus by adapting some JMK theories to the modern world. Don't get me wrong, I like Friedman quite a bit as well, but I feel he carries too much capitalist ideological baggage with him, when his real genius was his theories on using interest rates to inspire growth. I always knew he was reverent of JMK , but contrary to his point I think they might have actually clashed on many social issues.

@AZ123 said:

Friedman's son is cooler

and more of a free market type in my opinion. Anyway this idea about the lack of efficacy of democracy is not Friedmans' it's actually an public policy researcher that goes back half a century.

Though i love Thomas Sowell on Welfare as i think it's one of the most corrosive institutions the left have given short of centralized unaccountable regulatory instruments.

Also with respect to Clinton and growth, Clinton de-regulated more then Reagan according to "Regulation and the Macro-Economy" published in Kyklos that the Clinton administration was the only period in decades that significant DE-Regulation occurred. Any Student of basic management theory knows that regulation's impose compliance costs. it's a bizarre fact that Clinton de-regulated and was more free market oriented with regards to regulation then even Ronald Reagan.

Also to respond to teh resource based economy dude.

"In a system like this, money is worth more than human life." Money has no value independent of human. In an "I Am Legend" scenario, only one man remains in existence, money becomes worthless. It's not money that makes human life worthless, its' the ability to obtain benefits from humans that make it appear as if human lives are worthless. In reality your witnessing the cognitive limits a human's ability to feel a connection with other people outside their intimate group and it's known as the Dunbar unit. Human's cannot be expected to value life beyond their immediate social spheres, we did not evolve under such conditions to faciliate the arbitrary assignment of these feelings.

@AZ123 said: I personally find no merit in teh venus project, it's simply a command economy, like Stalin's USSR but where everything is resourced based. The only good thing i'll say about it is it's a voluntary project which Soviet Marxism was not. That says nothing about how The VP elders will respond when such a system tends toward disequilibrium and people begin to flee.

It's nice to see more free market oriented people here, well atleast one more.

@RJMacReady: Excellent points, brother. Free markets are the only way to prosperity.

@Jerr said:

@AZ123 said:

@Jerr said:

I've always been more of a John Maynard Keynes fan myself; Friedman is still a little bit too self-assured of the nature of humanity for an economist.

I'm so glad you brought up JMK! Friedman said he considers it a tragedy that JMK died in 1946 and did not live for at least another decade. According to Friedman, JMK was the only person who had the standing, personality, and force of character to persuade his disciples not to carry too far some ideas that we good in the 1930s, but did NOT apply in the post-WWII situation.

In fact, Friedman even says JMK expressed in the final article before he died reservations about his disciples carrying his ideas too far. Here is a 1:18 video clip of Friedman explaining JMK (I may have plagiarized his words).

But I'm very curious: why are you more of a John Maynard Keynes fan? Has your opinion changed in light of what Dr. Friedman has about JMK's final article? Why or why not?

I like JMK because I believe his ideas actually do have relevance in a post WWII society. If Western nations followed his theories about spending on the people when times are tough, and making them save when times are good, we could have avoided the messes we face now. Bill Clinton was a good example of a Keynesian thinker when he raised taxes during his presidency to curb the deficit, yet still inspired growth and created a budget surplus by adapting some JMK theories to the modern world. Don't get me wrong, I like Friedman quite a bit as well, but I feel he carries too much capitalist ideological baggage with him, when his real genius was his theories on using interest rates to inspire growth. I always knew he was reverent of JMK , but contrary to his point I think they might have actually clashed on many social issues.

Those are some interesting ideas, but could you be a little more specific? What exact policies did Clinton enact that lead to the good economy of the late 1990s? When talking about Bill Clinton I think it's important to know that the economy didn't boom until he CUT the Capital Gains Tax from 28% to 20% in 1997. The budget surplus is also sort of a myth. The national debt (now at $15 trillion) increased every single year Clinton was in office. How can you have a budget surplus AND an increasing national debt? You can't have both.

This is why Washington DC is full of corrupt liars (on both sides) because of the spin they create. Social crusaders are not forced to confront the consequences of their choices, even in their own minds or consciences, much less pay a tangible price for the havoc they leave in their wake while feeling noble.

Giving money directly to people in order to stop a recession is like breaking off a piece of a dam to plug its leaks. Keynesian policies have exacerbated the financial crisis in the US and ruined Greece and Italy, possibly irreparably.

FYI, you write like a mixture between an essay question, a video game tutorial, and a guidance counselor

Regarding capitalism - I agree that greed is good at a microeconomic level, but principles of free commerce do not hold up in the larger context:

1) There is no intrinsic mechanism by which a high standard of living is preserved. A free market acts without compassion, undercutting the working class when it is necessary to compete. On paper, this leads to growth and prosperity in the aggregate, in actuality, it leads to very unhappy voters who punish those advocating such a point of view. This is why developed nations turn into welfare states once their comparative manufacturing advantage begins to decline. Only a draconian government could successfully institute the changes necessary to remain free at this point.

2) One country cannot institute free trade alone. If such a country does so, it says, "Okay, no tariffs, no subsidies, no nothin," then it leaves itself open to be victimized by other nations less committed to these principles. If Country A welcomes Country B's imports, while Country B places taxes on Country A's imports, guess who ends up richer? So ironically, by playing by 'free markets' on principle, you undermine the objective of prosperity you were ostensibly aiming for when you began. There is a huge free rider problem in international free trade organizations.

3) The long term good and the short term good are not always the same. This is most transparent when looking at environmental issues. In many cases, environmentally harmful practices either do not affect the business performing them or have effects that will not lead to a drop in profits for several decades. Given the finite time period in which people work, acting by greed alone overlooks these issues as the next generation's problem. An immortal computer calculating its own self-interest would not have this issue, but a guy who wants to retire at 35? Forget it.

A completely free market is as much a utopia as communism, and likely will never come to pass.

The best we can hope to do is improve conditions for as many people as possible. By this metric the most successful societies are European social democracies like Sweden, Norway, Denmark.

@Veektarius said:

FYI, you write like a mixture between an essay question, a video game tutorial, and a guidance counselor

Regarding capitalism - I agree that greed is good at a microeconomic level, but principles of free commerce do not hold up in the larger context:

1) There is no intrinsic mechanism by which a high standard of living is preserved. A free market acts without compassion, undercutting the working class when it is necessary to compete. On paper, this leads to growth and prosperity in the aggregate, in actuality, it leads to very unhappy voters who punish those advocating such a point of view. This is why developed nations turn into welfare states once their comparative manufacturing advantage begins to decline. Only a draconian government could successfully institute the changes necessary to remain free at this point.

2) One country cannot institute free trade alone. If such a country does so, it says, "Okay, no tariffs, no subsidies, no nothin," then it leaves itself open to be victimized by other nations less committed to these principles. If Country A welcomes Country B's imports, while Country B places taxes on Country A's imports, guess who ends up richer? So ironically, by playing by 'free markets' on principle, you undermine the objective of prosperity you were ostensibly aiming for when you began. There is a huge free rider problem in international free trade organizations.

3) The long term good and the short term good are not always the same. This is most transparent when looking at environmental issues. In many cases, environmentally harmful practices either do not affect the business performing them or have effects that will not lead to a drop in profits for several decades. Given the finite time period in which people work, acting by greed alone overlooks these issues as the next generation's problem. An immortal computer calculating its own self-interest would not have this issue, but a guy who wants to retire at 35? Forget it.

We turned into welfare states a century ago. We're now watching the results of the experiment.

It's not gone well.

@Veektarius said:

FYI, you write like a mixture between an essay question, a video game tutorial, and a guidance counselor

Regarding capitalism - I agree that greed is good at a microeconomic level, but principles of free commerce do not hold up in the larger context:

1) There is no intrinsic mechanism by which a high standard of living is preserved. A free market acts without compassion, undercutting the working class when it is necessary to compete. On paper, this leads to growth and prosperity in the aggregate, in actuality, it leads to very unhappy voters who punish those advocating such a point of view. This is why developed nations turn into welfare states once their comparative manufacturing advantage begins to decline. Only a draconian government could successfully institute the changes necessary to remain free at this point.

2) One country cannot institute free trade alone. If such a country does so, it says, "Okay, no tariffs, no subsidies, no nothin," then it leaves itself open to be victimized by other nations less committed to these principles. If Country A welcomes Country B's imports, while Country B places taxes on Country A's imports, guess who ends up richer? So ironically, by playing by 'free markets' on principle, you undermine the objective of prosperity you were ostensibly aiming for when you began. There is a huge free rider problem in international free trade organizations.

3) The long term good and the short term good are not always the same. This is most transparent when looking at environmental issues. In many cases, environmentally harmful practices either do not affect the business performing them or have effects that will not lead to a drop in profits for several decades. Given the finite time period in which people work, acting by greed alone overlooks these issues as the next generation's problem. An immortal computer calculating its own self-interest would not have this issue, but a guy who wants to retire at 35? Forget it.

Thank you for kind words about my writing style. I take it as a compliment that you notice an eclecticism in my prose ;-)

Let me respond to your points:

1) You said "A free market acts without compassion, undercutting the working class when it is necessary to compete." I respectfully challenge you to the idea that there's nothing MORE compassionate than a free market economy, precisely because it is FREE. Thomas Sowell and Milton Friedman have spent their lives promoting this idea. Think about Friedman's example of the pencil for a second. There's not a single person who can make a pencil on his own. For all we know, the wood used to make it could have come from a tree cut down in Washington state. To cut down that tree, it took a saw. To make the saw, it took steel. To make the steel, it took iron ore. The graphite in the center could have come from mines in South America. The eraser could have come from rubber trees in Malaysia. Who knows where the material for brass barrel or the yellow paint comes from. The point is literally THOUSANDS of people have co-operated to make the pencil. People who don't speak the same language, who practice different religions, who might HATE one another if they ever met.

What brought these people together and induced them to co-operate to make the pencil? It was no commissar sending out orders from some central office. It was the magic of the PRICE SYSTEM. The impersonal operation of the price system has brought these people together to make the pencil so that you and I could have it for a trifling sum. This is why the operation of the free market is compassionate; it not only promotes productive efficiency, but it more importantly fosters harmony and peace among the peoples of the world. I would be extremely interested in your thoughts on this position.

2) A free market does not mean no taxes on international trade. CLEARLY Country B is ripping off Country A in your example. You could not be more correct about there being a free rider problem in international trade. The point Thomas Sowell makes, though, is that the sad fact remains that virtually all countries impose "unfair" restrictions on imports, usually in response to internal special interests. However, here as elsewhere, choices can be made among alternatives actually available. Other countries' restrictions deprive both them and us of some of the benefits of international trade. If we do the same in response, it will deprive both of us of still more benefits. If we let them "get away with it," this will minimize the losses on both sides.

3) I think you're making an excellent point about how "intentions" and "outcomes" are two very different things. Thomas Sowell has a section in his Basic Economics 4th edition about Property Rights. The most important point is that PROPERTY RIGHTS CREATE SELF-MONITORING, which tends to be both more effective and less costly than third-party (i.e. government) monitoring. The only animals threatened with extinction are animals not owned by anybody. Colonel Sanders was not about to let chickens become extinct.Nor will McDonald's stand idly by and let cows become extinct. All of these things, in different ways, illustrate the value of private property rights to the society as a whole, including people who own viturally no private property, but who benefit from the greater economic efficiency that property rights create, which translates into a higher standard of living for the population at large.

Also, the guy who wants to retire at 35? What are we, France? They riot in the streets when their retirement age is raised from 60 to 62, and they have 35 hour work weeks. Our retirement age is 65 and we have 40 hour work weeks. Is it any wonder we have a higher standard of living than France?

Heck, if people REALLY want to save the rain forest, SELL them.

The Tragedy of the Commons is a real thing. If nobody has a vested interest in something surviving, it won't survive.

@AZ123: @MikeinSC: The point isn't that the welfare state is the best solution, it's that it's the only solution to an inevitable consequence of a higher standard of living leading to the loss of comparative advantage.

And if you're saying that A) The welfare state began 100 years ago and B), the welfare state has not succeeded.. are you saying the US has not done well for itself in the past 100 years? Or were you rounding to the start of the New Deal, and actually saying the US has not done well in the past 70 years?

@Veektarius said:

@AZ123: @MikeinSC: The point isn't that the welfare state is the best solution, it's that it's the only solution to an inevitable consequence of a higher standard of living leading to the loss of comparative advantage.

And if you're saying that A) The welfare state began 100 years ago and B), the welfare state has not succeeded.. are you saying the US has not done well for itself in the past 100 years? Or were you rounding to the start of the New Deal, and actually saying the US has not done well in the past 70 years?

Except it isn't. We've tried it for a century and it simply does not work. As Thatcher said, you eventually run out of other people's money.

Are you not noticing the meltdown in the EU over government spending, largely social spending? The US has a debt of $15T and it grows by over $1T a year. China is in a bubble. Japan has major problems. Globally, governments are noticing that they cannot remotely afford what they promised. The states here in the US are in truly horrific condition (don't look at the public pension crisis in the US and in the individual states, which makes everything else look gorgeous).

@AZ123:

Milton Friedman was terrible... I mean especially in Giant bomb where most of you are atheists... nobody should believe in Free Markets. Well as Hayek says in the Road to Serfdom, its never actually been tested. So why believe in something as retarded as that? Believing in free markets isn't for diagnostics.

Step by step logic, what's the point of a system? Maximize happiness of its people. What's one of the most important factors of happiness? RELATIVE wealth(I can look for some studies shown if you didn't know that). Free markets in capitalism create inequality, not only is this the general consensus but its the first rule of capitalism, a company won't hire someone unless they get more value out of them than they compensate them for. Not to mention that happiness creates productivity(also read it on the behavioural finance journal). Free Markets is short termism, liquidity is favoured only because of people's insecurities brought about the free markets ability to let someone starved and homeless. We are past such idealism and you would do well to let Friedman where he belongs, in the past.

Private enterprise can achieve great things, but if you don't put a leash on it, it will ruin everything. I hate it when people talk about it as working on its own, I mean how do you even define government intervention? Property rights is government intervention and you never hear about any free market idealist telling government to stop providing this... same thing with Police and the Judicial system. Its all intervention...

Decades of deregulation have caused the financial sector to steadily rise as a % of GDP, yet only today do we begin to ask, was it worth it? has it actually added the value the free market has obviously said it would?

Free markets work perfectly on their own terms but they don't lead towards a fairer society. I think the point that most people disagree on is what is a "fair society." People like me (generally left-wing I suppose) think fair society means everyone being granted a similar chance to succeed in life which requires a reasonably equal standard of living, whereas I suppose the more right wing (or free marketeers) would say that money itself is representative of how successful one has been and therefore a fair reward.

A free market would be fine for a generation if we all started from scratch (but even then one might get in an accident) but it seems to implictly punish those who start with less advantages than others and this, for me at least, is where responsible government needs to step in.

@gamefreak9 said:

@AZ123:

Milton Friedman was terrible... I mean especially in Giant bomb where most of you are atheists... nobody should believe in Free Markets. Well as Hayek says in the Road to Serfdom, its never actually been tested. So why believe in something as retarded as that? Believing in free markets isn't for diagnostics.

Step by step logic, what's the point of a system? Maximize happiness of its people. What's one of the most important factors of happiness? RELATIVE wealth(I can look for some studies shown if you didn't know that). Free markets in capitalism create inequality, not only is this the general consensus but its the first rule of capitalism, a company won't hire someone unless they get more value out of them than they compensate them for. Not to mention that happiness creates productivity(also read it on the behavioural finance journal). Free Markets is short termism, liquidity is favoured only because of people's insecurities brought about the free markets ability to let someone starved and homeless. We are past such idealism and you would do well to let Friedman where he belongs, in the past.

Private enterprise can achieve great things, but if you don't put a leash on it, it will ruin everything. I hate it when people talk about it as working on its own, I mean how do you even define government intervention? Property rights is government intervention and you never hear about any free market idealist telling government to stop providing this... same thing with Police and the Judicial system. Its all intervention...

Decades of deregulation have caused the financial sector to steadily rise as a % of GDP, yet only today do we begin to ask, was it worth it? has it actually added the value the free market has obviously said it would?

I'm sorry, gamefreak9, you write eloquently but I cannot agree with anything you've just said. The whole purpose of FA Hayek's "Road to Serfdom" is the idea of abandoning freedom and individualism leads to socialist or fascist oppression, i.e. tyranny. The record of history is absolutely crystal clear: Capitalism has done more to bring people out of abject poverty than any other system in the world. India's poverty rate was cut in half when they embraced free-market principles in the 1990s -- same thing with China after Mao's death. Capitalism creates inequality? Yes it does; you're right, but more people have the opportunity to succeed in a capitalism system. Who guarantees equality of outcome? Who are these angels that are going to arrange society for us?

I define government intervention as a third-party making decisions for individuals. How does some bureaucrat know what's better for my life? How would you feel if I made a law mandating that you are no longer allowed to drink Soda Pop? If you do, then you would have to pay a $50.00 tax. You would be outraged! But what if I was an elected official who had a study saying that drinking Soda Pop was bad? The more government grows, the less freedom we have. Plain and simple.

Look at government price controls on apartment rent. New York is the city with the oldest and strongest rent control laws in the nation. San Francisco is second. But if you look at cities with the highest average rents, New York is first and San Francisco is second. Obviously, "rent control" laws do not control rent. Yet it sounds politically attractive, does it not?

Milton Friedman may have passed away, but the free market is an eternal idea he spent his life promoting.

But I'm very interested in your ideas. If Capitalism and the free market is not responsible for bringing millions out of poverty, what system is? Communist/Socialist regimes are responsible for the death of hundreds of millions of people in the 20th century alone (Hitler, Stalin, Mao, Pol Pot).

@AZ123:

The road to serfdom is promoting free market I just wanted to point to the controversy these people live. How they promote free market, yet they say its never been let happen... how can you promote something unproven? its a ridiculous premise. Its easy to just say... how was it before? and how was it after... but reality isn't that simple, capitalism helped, but technology was the leader in organizing. More people have the opportunity to succeed? that's the kind of idealist, broad statements republicans make. Succeed relative to who? Opportunity is what? Fact is the more free market's there are the less people actually have social mobility. You see people like Bill gates and think OH but he did it, however statistically someone from such a background succeeding is become more and more rare everyday.

There are risks in the world people have no way of foreseeing, the fact of the matter is insurance must be taken before the event happens, and if you don't foresee such an event happening why would you have insurance? This is the role of the government plain and simple. This notion of "Freedom" is merely american propaganda, what matters is well-being and obviously that constitutes a certain level of freedom but choosing something because of freedom is misguided.

That price control point your making is absurd... the point of price controls is not rankings...

Lets take drugs, its been proven that drugs increase individuals marginal propensity to consume, and among poor people it even takes it beyond 100%. Now classically I think on average this propensity to consume is about .3. If drugs were allowed to circulate, (which would be a pure free market society). Now people doing drugs live on average something like 10-15 years less than a regular person. Have you done the math yet? The market just said its okay for a mass amount of people to lose wellbeing and die earlier.

Technology brought about prosperity, people used to spend hours every day washing their clothes, the washing machine added 4-5 hours of free time per day per family of alternative work. Capitalism merely distributed the washing machine, it acted as a catalyst, and its nice to say that its the best catalyst... but we don't know and following Milton's dogma is the most erroneous course of action possible.

@gamefreak9 said:

@AZ123:

The road to serfdom is promoting free market I just wanted to point to the controversy these people live. How they promote free market, yet they say its never been let happen... how can you promote something unproven? its a ridiculous premise. Its easy to just say... how was it before? and how was it after... but reality isn't that simple, capitalism helped, but technology was the leader in organizing. More people have the opportunity to succeed? that's the kind of idealist, broad statements republicans make. Succeed relative to who? Opportunity is what? Fact is the more free market's there are the less people actually have social mobility. You see people like Bill gates and think OH but he did it, however statistically someone from such a background succeeding is become more and more rare everyday.

There are risks in the world people have no way of foreseeing, the fact of the matter is insurance must be taken before the event happens, and if you don't foresee such an event happening why would you have insurance? This is the role of the government plain and simple. This notion of "Freedom" is merely american propaganda, what matters is well-being and obviously that constitutes a certain level of freedom but choosing something because of freedom is misguided.

That price control point your making is absurd... the point of price controls is not rankings...

Lets take drugs, its been proven that drugs increase individuals marginal propensity to consume, and among poor people it even takes it beyond 100%. Now classically I think on average this propensity to consume is about .3. If drugs were allowed to circulate, (which would be a pure free market society). Now people doing drugs live on average something like 10-15 years less than a regular person. Have you done the math yet? The market just said its okay for a mass amount of people to lose wellbeing and die earlier.

Technology brought about prosperity, people used to spend hours every day washing their clothes, the washing machine added 4-5 hours of free time per day per family of alternative work. Capitalism merely distributed the washing machine, it acted as a catalyst, and its nice to say that its the best catalyst... but we don't know and following Milton's dogma is the most erroneous course of action possible.

Brother,

Again, I respectfully challenge your ideas. You say "capitalism helped, but technology was the leader in organizing". Organizing what? Society? How are these advances in technology made? Government mandates? Were Bill Gates and Steve Jobs ordered by a commissar to build their respective companies? My opinion is that these men had the FREEDOM to come up with an idea and CAPITALIZE on it. Look how much our standard of living has gone up because of Gates and Jobs. I'm fairly alarmed by your referring to freedom as "American propaganda". In my opinion, freedom is not an American value; it is a universal value. Freedom cannot be imposed; it must be chosen. And when people are given a choice, they choose freedom. At the end of World War II, there were about two dozen democracies in the world. As early as 2001, there were 120.

In my opinion, the American dream in not owning a house; it is owning your own destiny. You choose how you want to live your life. What is crucial to understand, however, is that life (just like capitalism) is full of risk and there are no guarantees. You take a risk and undergo the consequences of that risk, good or bad. I'm trying very hard to understand your statement: "Fact is the more free market's there are the less people actually have social mobility." Could you please explain this to me?

How is my price control point absurd? What I said is factually correct; New York and San Fransisco have the highest and strictest rent control laws in the country, and the two cities with the highest rent in America are New York and San Fransisco! Don't you remember Jimmy McMillan running for New York governor in 2010 from "The Rent Is Too Damn High Party" platform? Google him! He's very interesting.

Allow me to give you another example of why government intervention in the economy always leads to disaster. The granddaddy of all examples, the Great Depression. Thomas Sowell says the stock market crashed in October 1929 and unemployment shot up to 9 percent -- for one month. Then unemployment started drifting back down until it was 6.3 percent in June 1930, when the first major federal intervention took place under Republican President Hoover. This intervention was the Smoot-Hawley tariff bill, which more than a thousand economists across the country pleaded with Congress and President Hoover not to enact. But then, as now, politicians decided that they had to "do something."

What happened?

Within 6 months, unemployment hit double digits. Then, as now, when "doing something" made things worse, many felt that the answer was to do something more. Both President Hoover and FDR did more - and more, and more. Unemployment remained in the double digits for the entire remainder of the decade. Indeed, unemployment topped 20 percent and remained there for 35 months, stretching from the Hoover administration into the Roosevelt administration.

You are partially correct when you say that technology brought about prosperity, in that it has helped raise peoples' standard of living. But the great advancements in technology did not come from a government mandate. They came from individuals who were apart of a FREE society and who pursued their own separate interests.

But I'm still very much interested in your ideas. Where am I going wrong? Why would following Milton Friedman's "dogma" of freedom and capitalism be the "most erroneous course of action possible"? I look forward to your reply :)

@AZ123

I think you touched on an important point in the previous post about paternalism or the idea that WE don't understand what is best for us therefore we need beneficent central planners to help us optimize our decisions. Gamefreak touches on this.

@gamefreak9 said:

There are risks in the world people have no way of foreseeing, the fact of the matter is insurance must be taken before the event happens, and if you don't foresee such an event happening why would you have insurance? This is the role of the government plain and simple.

If government is organized by people then i see a self-detonating statement or a contradiction here. If people cannot forecast future events with certainty then what separates the non-bureaucrat from the bureaucrat? What makes one person effectively better then all the rest to the point that THEIR POSITIVE FREEDOMS should override OUR NEGATIVE FREEDOM? How can you resolve this paradox unless its' to say government personal , past or present, possess some intimate knowledge that a person who does not win elections or does not have political connections that get them a public appointment has access to ?

Then there is the question of democracy itself which tends to serve as the fulcrum of this argument but in my opinion destroys the entire project of paternalism. Democratic output is intransitive, that means that no majority can exist when you have more then 2 selection options. Any will expressed via democratic election cannot be defined as the will of the people because it cannot mathematically be proven it's teh majority. The lack of majority preference ranking is the subject of arrows impossibility theorem.

If Democracy cannot give you the will of the people then as an egalitarian principle it fails and it must descend into elitism. To be more specific democracy is not TWO wolves and ONE sheep voting what's for dinner. Democracy is ONE Wolf and TWO SHEEP voting to have sheep for dinner.

Then there is the rational ignorance problem which is, as far as i'm concerned the final nail in the coffin of democracy. Democratic decisions making is subject to tremendous ignorance and error because of the lack of incentive to make informed selections due to teh value of the vote. If our votes have no value then it is rational to not make informed selections. Because of this any output via democracy will not outperform the market because the consumer is more likely to obtain greater utility from making informed selections in a market then making them in a democratic contest. To put that another way, when you make a bad decision under a democratic contest the probability that your ignorance will hurt you is very low because the impact of your decision is unlikely to alter the final outcome so being uninformed is safe. In a market structure that is inverted, when you make a bad decision because of lack of knowledge your more likely to receive the negative consequences of your ignorance because your decision and it's ensuring outcomes are more isolated.

All this leads to a paradox of egalitarianism. Many egalitarians do not support the market or want it constrained via some form of government intervention. Presumably the government will then be regulated , at least partially, by some constitution and some form of voting structure. This just cannot work and so efforts to make a more equal society by relegating more decisions to a centralized regulatory authority end up exacerbating elitism which is what the egalitarians are struggling to reverse. They end up destroying any chances they have of making their society more equal by concentrating power in a single institution. They end up expanding freedom, but only for a few in political office or those corporations who are able to seize power from political officials which of coarse doesn't allow markets to function correctly.

@RJMacReady said:

If government is organized by people then i see a self-detonating statement or a contradiction here. If people cannot forecast future events with certainty then what separates the non-bureaucrat from the bureaucrat? What makes one person effectively better then all the rest to the point that THEIR POSITIVE FREEDOMS should override OUR NEGATIVE FREEDOM? How can you resolve this paradox unless its' to say government personal , past or present, possess some intimate knowledge that a person who does not win elections or does not have political connections that get them a public appointment has access to ?

Could you explain the difference between Positive and Negative freedom? I'm afraid I don't understand. But I will answer your question about what separates the non-bureaucrat from the bureaucrat. Simply put, the bureaucrat can make laws that dictate how the non-bureaucrat can live. The kinds of laws created by the bureaucrat can have extremely devastating results. I'll give you an example:

Say you are a small business owner and you want to hire a low-skilled worker for $5 an hour. Well, if I was a politician who mandated a minimum wage of $10.24 (I'm looking at you San Fransisco), then you would not be able to hire that low-skill worker. Even though YOU, the non-bureaucrat, know that you have work that needs to be done that requires a worker with low-skills, you would be penalized for breaking the minimum wage law that I, the bureaucrat, had created. After all, as a government official, I know what's best for your business than you and know how much your employees are worth. The minimum wage law is a CLASSIC example of intentions versus effects. The truth is that minimum wage laws discriminate against low-skill workers.

Consider this example by economist Walter E. Williams. Let's say you have a filet mignon and chuck steak. Assume - realistically - that consumers want the former. Then the question becomes: why is it, despite consumer preferences, that chuck steak sells at all? The fact is that chuck steak outsells filet mignon. How does something less preferred compete with something more preferred? It does so by offering what economists call "compensating differences." In other words, as you wheel your shopping cart down the aisle, chuck steak "says" to you, "I don't look as nice as filt mignon; I'm not as tender and tasty; but I'm not as expensive either. I sell for $4.00 a pound while filet mignon sells for $9.00." Chuck steak therefore in effect offers to "pay" you $5.00 per pound for its "inferiority," a compensating difference.

Now suppose sellers of filet mignon wanted to raise their sales by colluding against the less-preferred competitor. What would be their most effective strategy? Short of getting a law passed prohibiting sales of chuck steak, it would be to push for a law establishing minimum prices for steak. What would be the effect of a minimum steak of, say, $9.00 per pound for all steaks? Let's see what happens after the law is passed. As the shopper, the chuck steak now says to you "I don't look as nice as filet mignon, I'm not as tender and tasty, and I sell for the same price as my preferred competitor, filet mignon. Buy me." That plea would fall on deaf ears.

The point of this story is to illustrate the fact that government bureaucrats who impose set wages on businesses they know absolutely nothing about have devastating effects on low-skill workers. While we are not fortune tellers, we do have the record of history on our side. As I said before, the record of history is absolutely crystal clear: societies that have free market systems enjoy a higher standard of living than those that don't. Government intervention in the economy does more harm than good.

@AZ123:

I'm not disputing your points, i never was. I was saying that you identified the the superficial flaws of progressive paternalism. I don't support price controls.

Negative freedom is the freedom to be free of something, or "freedom from actions of another person or institution". So rape would be a violation of negative freedom or a regulatory decree that i must not smoke is a violation of negative freedom.

Positive freedom tends to be the opposite. It's the freedom from some need, like hunger or health care. Advancing positive freedom allows you to interfere in another person's actions. In the context of what i wrote liberal paternalism advances the positive freedom of everybody but disproportionally the political class in that they can now interfere with other people via regulatory instruments of the state. This takes the form of political power in that a politician may take your money(interference with your freedom) to finance their campaign which then generates political capital for them which allows them to extend their ability to interfere allowing them to take more of your wealth generating a positive feed back system.

Friedman was a very important individual whose contributions to monetary policy contributed immensely. That being said I disagree with him on pure free market capitalism with a government regulator on the money supply being the best way for a society to run. Social safety nets such as universal health care and unemployment benefits as well as antitrust laws and other regulations are also necessary.

@AZ123: There are definitely examples of Keynesian economists having some bad ideas (the idea that high inflation means low unemployment being of those that lead to to stagflation of the 70's). But for the most part fiscal spending in America during the recent crisis has no where near enough.

@hidys: As far as unemployment benefits are concerned there is a large volume of academic research that indicates that the duration of benefits effects the departure from benefits. To say that another way, the more generous the state is with other peoples money the more that recipients will abuse this generosity.

http://www.irs.princ...lle%2092611.pdf

http://www.jstor.org...3Don&Search=yes

http://congres.afse....tlb20110201.pdf

http://ftp.iza.org/dp4523.pdf

People abuse social safety nets because of basic risk offsetting behavior. When we socialize the cost of failure, or lack of will to obtain employment or some other socially destructive behavior we are discounting it and as such we will get more of this behavior. This is the fundamental insight of Sam Peltzman's research on seat belt safety which we can generalize to other behaviors that are even not economic or not human. The welfare state is a corrosive social institution because it allows some segment of society to obtain benefits of other people's labor without any proportional compensation.

We really shouldn't even need to look at the research here, it should be obvious that when you allow somebody to engage in predation on another person with no expectation of restoring that person they will do it. While humans evolved to be altruistic to non-kin that altruism is stabilized via specific environmental variables like the memory capacity of the average individual in the social unit or population viscosity. As we scale society up it is impossible for a potential donor to watch and put pressure on a recipient when the recipient makes decisions that will result in a delayed departure from benefits. The recipient doesn't answer to the provider of funds but to the government institution which didn't have to labor to provide the benefits, in fact the welfare of the agents in the distribution apparatus benefit from this perverse social arrangement so they are under very limited incentive to police free riders.

Need itself has a positive supply elasticity, the more aid that is available the more need becomes available. Now maybe this might satisfy a particular sadomasochistic streak in some members in that they want to feel good about helping by regardless of how much dependence emerges as a result of their efforts to accumulate spiritual reward or just feel good about themselves but it should be totally voluntary arrangement like any other fetish that can potentially hurt the participants.

Also it should be noted that corporations and the welfare state are very similar in that they allow their beneficiaries to free-ride or obtain the benefits of the social system at the cost of external parties. The welfare state allows recipients to obtain aid and yet delay or defect on repayment because the consequences are discounted. Corporations have a legal shield called limited liability, effectively shareholders(owners) of a corporation can create negative externalities (pollution) or bad crappy products and yet the shareholder is protected from any form of sanction beyond their investment capital. If an owner of a pit bull fails to leash it and it gets out of the yard and kills a child that owner is liable. Not so in teh case of welfare recipients and corporate stakeholders.

@AZ123 said:

@gamefreak9 said:

@AZ123:

The road to serfdom is promoting free market I just wanted to point to the controversy these people live. How they promote free market, yet they say its never been let happen... how can you promote something unproven? its a ridiculous premise. Its easy to just say... how was it before? and how was it after... but reality isn't that simple, capitalism helped, but technology was the leader in organizing. More people have the opportunity to succeed? that's the kind of idealist, broad statements republicans make. Succeed relative to who? Opportunity is what? Fact is the more free market's there are the less people actually have social mobility. You see people like Bill gates and think OH but he did it, however statistically someone from such a background succeeding is become more and more rare everyday.

There are risks in the world people have no way of foreseeing, the fact of the matter is insurance must be taken before the event happens, and if you don't foresee such an event happening why would you have insurance? This is the role of the government plain and simple. This notion of "Freedom" is merely american propaganda, what matters is well-being and obviously that constitutes a certain level of freedom but choosing something because of freedom is misguided.

That price control point your making is absurd... the point of price controls is not rankings...

Lets take drugs, its been proven that drugs increase individuals marginal propensity to consume, and among poor people it even takes it beyond 100%. Now classically I think on average this propensity to consume is about .3. If drugs were allowed to circulate, (which would be a pure free market society). Now people doing drugs live on average something like 10-15 years less than a regular person. Have you done the math yet? The market just said its okay for a mass amount of people to lose wellbeing and die earlier.

Technology brought about prosperity, people used to spend hours every day washing their clothes, the washing machine added 4-5 hours of free time per day per family of alternative work. Capitalism merely distributed the washing machine, it acted as a catalyst, and its nice to say that its the best catalyst... but we don't know and following Milton's dogma is the most erroneous course of action possible.

Brother,

Again, I respectfully challenge your ideas. You say "capitalism helped, but technology was the leader in organizing". Organizing what? Society? How are these advances in technology made? Government mandates? Were Bill Gates and Steve Jobs ordered by a commissar to build their respective companies? My opinion is that these men had the FREEDOM to come up with an idea and CAPITALIZE on it. Look how much our standard of living has gone up because of Gates and Jobs. I'm fairly alarmed by your referring to freedom as "American propaganda". In my opinion, freedom is not an American value; it is a universal value. Freedom cannot be imposed; it must be chosen. And when people are given a choice, they choose freedom. At the end of World War II, there were about two dozen democracies in the world. As early as 2001, there were 120.

In my opinion, the American dream in not owning a house; it is owning your own destiny. You choose how you want to live your life. What is crucial to understand, however, is that life (just like capitalism) is full of risk and there are no guarantees. You take a risk and undergo the consequences of that risk, good or bad. I'm trying very hard to understand your statement: "Fact is the more free market's there are the less people actually have social mobility." Could you please explain this to me?

How is my price control point absurd? What I said is factually correct; New York and San Fransisco have the highest and strictest rent control laws in the country, and the two cities with the highest rent in America are New York and San Fransisco! Don't you remember Jimmy McMillan running for New York governor in 2010 from "The Rent Is Too Damn High Party" platform? Google him! He's very interesting.

Allow me to give you another example of why government intervention in the economy always leads to disaster. The granddaddy of all examples, the Great Depression. Thomas Sowell says the stock market crashed in October 1929 and unemployment shot up to 9 percent -- for one month. Then unemployment started drifting back down until it was 6.3 percent in June 1930, when the first major federal intervention took place under Republican President Hoover. This intervention was the Smoot-Hawley tariff bill, which more than a thousand economists across the country pleaded with Congress and President Hoover not to enact. But then, as now, politicians decided that they had to "do something."

What happened?

Within 6 months, unemployment hit double digits. Then, as now, when "doing something" made things worse, many felt that the answer was to do something more. Both President Hoover and FDR did more - and more, and more. Unemployment remained in the double digits for the entire remainder of the decade. Indeed, unemployment topped 20 percent and remained there for 35 months, stretching from the Hoover administration into the Roosevelt administration.

You are partially correct when you say that technology brought about prosperity, in that it has helped raise peoples' standard of living. But the great advancements in technology did not come from a government mandate. They came from individuals who were apart of a FREE society and who pursued their own separate interests.

But I'm still very much interested in your ideas. Where am I going wrong? Why would following Milton Friedman's "dogma" of freedom and capitalism be the "most erroneous course of action possible"? I look forward to your reply :)

okay so where were we... I think i wrote abouy some of this stuff on my blog. Like I said, Bill Gates and Steve Jobs are the exception, and the more mature with deregulation our society becomes, the more this social mobility is disappearing. Its funny how you emphasize freedom when the free market has a specific set of values it creates and punishes those who do not follow them with poverty. This crisis as we see here is partly government failure, partly bank failure, but the government's policy was in good faith, the community reinvestment act was undertaken to give more people wealth because of how upwardly the wealth was over these free market decades. You don't own your destiny, rich people own your destiny, if there was no government, monopolies would occur(which the government is stopping atm), and power would be concentrated in FAR fewer sources. Sure the official might not know what's best for you, but the business man in the top not only doesn't know what's best for you, but doesn't even care because its not part of his interest and if he did care, it would be because he would be able to use you to make himself even richer, making the inequality gap grow even further. And inequality as I have said before is a cause for great unhappiness.

I was merely pointing about how you value the success of price control... merely rankings... you can't leave it to that, learn why, is it that they have the highest GDP per square foot? Is the median income higher in these areas? A ranking as a source of evidence is a joke. But lets say I do buy this control has failed... the only thing this proves is an isolated incident in failure policy making, nothing else.

You can't just look at what societies are right now and pick and choose what you think caused it. Causality is a completely different matter. Look at the big picture, think logically and critically... is this faith in the free market god also known as the "invisible hand" really warranted? I mean I certainly don't want people to not be able to have heart surgery just because they are born with a lower IQ score than I am(FYI i don't believe the market allocates IQ very efficiently at all, and I also don't think IQ is a very precise measure. . And I certainly don't want impaired people to be left on the street because they can't contribute. I mean the market WILL cut off people who don't give off more value than they receive and a good majority do that.

Free Markets are a cost benefit analysis, and we live in a much more civilized society than that, there are elements of the free market we can use but as a whole, its a terrible idea that only increases our problems. I am not claiming that government is more efficient however government is the daddy of capitalism and helps out whenever it doesn't do things properly. Like the minimum wage... which believe it or not DOES have unanimous positive econometric studies associated with equality. All this stuff you hear is idealism and theory, its best to actually LOOK at the world and see what works. Its an era of diagnosis not presumption.

@gamefreak9 said:

@AZ123 said:

Look at the big picture, think logically and critically... is this faith in the free market god also known as the "invisible hand" really warranted?

I've seen this rhetorical ploy used often and i find it curious how the individual using it reconciles the inverse: that a centralized regulatory agency would be all knowing or omnipotent. Not only are regulators able to forecast future events but they even have the incentive and beneficence to do so because these political agents "love" us dearly and are creating an Eden for us.

Now that we can show that both means of diminishing the others arguments are nothing more the Strawmen and discard them( i sure hope we can i hope the left do not believe such absurdities about the political class) we can then engage in comparative institutional analysis. We can talk about the incentives of politicians, we can talk about how regulation serves to incentivize entrepreneurs to exit the market and become political entrepreneurs and attempt to capture rents because gaining market-power via legislation is much more profitable then operating in teh market. We can compare the incentives of a voter to a consumer in deploying their political capital vs their actual capital etc. We can talk about epistemological issues like where is knowledge in society? Is it centralized in a few geniuses that can then be easily identified and extracted from the gross population via democracy or is knowledge fragmented , decentralized or even contradictory and do we need more dynamic solutions to tap into this knowledge or cap it when it fails to yield benefits or intrudes on social domains it does not belong because it was too specialized to begin with?

@GunslingerPanda

Well i don't get it... ? Wrestling ?

I'm amazed at how polite almost everyone is being here.

If it wasn't tearing the planet apart, I'd genuinely love the irony of contemporary economics rehashing patristic philosophy to argue shoddy science. This in particular:

It's true that capitalism is not perfect, but that's because human beings are not perfect. This is not a perfect world. Think for a moment about honesty. Imagine how much richer we would be as a society if we were all honest.

is a hilarious quote in that regard. "My faulty premise doesn't work, but it's not the premises' fault, it's reality failing to live up to expectation".

Whoa.

The truth is free market doesn't work according to model a lot of the time. There are self-defeating behaviours in a free market all the time. This is not a moral assessment regarding "greed", it's an observation of the world at work. There are things like technology that only a few players in the market can attain leading to monopolies, large scale infrastructure work where the need is perfectly solved once a single player has addressed it (nobody needs two railroad tracks between one city and the next, or two dams in the same river). There are mad men, and hoarders and embezzlers.

In American economics there is also a false argument at play. "Big government" against "deregulation". Which, of course, is not a real dichotomy. Once you accept any government at all (which modern anarcho-conservatives - you may call them "libertarians" actually reject at times) the problem is not size, it's, as in any other enterprise, optimization. Here's an idea: there is very little difference between public and private enterprise. There is nothing intrinsically inefficient about public enterprise if a working system of rewards, that is, a working economy, is in place to entice public officials to perform as well as they can.

There is this amazingly stupid idea in many Americans that their outdated, inefficient form of government is the only one possible. That is not the case. It's old and poorly designed. There is no reason why Americans (or anybody else, for that matter), shouldn't go in with what we now know about game design (desperately fishing for a relevant topic) and streamline that bitch until it's lean and efficient in doing its job. The notion that the public sphere automatically negates freedom is very stupid and outdated itself, an ideological construct that predates real democracy. The current issues in American and world economics are not about freedom or ideology, they're about inefficiency, archaic structures and overall politics overriding effective action.

@AZ123 said:

@Veektarius said:

FYI, you write like a mixture between an essay question, a video game tutorial, and a guidance counselor

Thank you for kind words about my writing style. I take it as a compliment that you notice an eclecticism in my prose ;-)

I'm not sure that was a compliment. 2/3 of those things aren't even human. Your writing style makes me feel like I'm reading something typed by a robot.

@AZ123 said:

I got in an argument with a girl about why a grocery store does not locate in a poor neighborhood. She said it's because the store did not want to ruin its image. My answer to her was that stores don't get built in poor neighborhoods because it's inherently riskier to build them there. To lower that risk the store needs to get insurance, and politicians mandate that insurance policies cover all sorts of things. In addition to insurance, the store will need security in the form of guards, cameras, and alarm systems -- all of which costs money (the guard needs a salary and benefits, the cameras need operators and maintenance, and the alarm system needs testing). In order to pay for that security, the store must raise the prices of its goods. The higher prices hurt the already poor neighborhood. So the store then locates in a safer neighborhood because there is less risk involved. Less risk means less security required, which means lower prices. If the store did not have to worry about vandalism and theft, then they would gladly locate in the poor neighborhood. The location of a store can make the difference between going bankrupt and making millions.

...

...Am I right or wrong in my story about the grocery store in the poor neighborhood?

You're wrong

(except for this)

The location of a store can make the difference between going bankrupt and making millions.

Your female friend is also wrong. Although she is slightly less so, since there are certain niche stores (like Whole Foods) that are hyper image/brand conscious.

Grocery stores (save dollar store models like Family Dollar, Save a Lot) and other mass market general hardline retailers often choose not to locate in low income neighborhoods due to low sales potential. The potential expense issues (shrinkage, vandalism, insurance etc) are secondary concerns and considered after the sales potential is assessed. That's it.

If there were good money to be made there, they would pay or attempt to mitigate those extra expenses assuming they could afford them (which they probably could as they would likely be offset by lower occupancy costs anyway). Yes theft can be a major issues for any retailer, but most can mitigate that. Retail is a heavy fixed cost business and grocery stores with the razor thin margins have the highest of the segment, thus they prioritize sales potential above all else. Expense risk is meaningless if the sales potential is insufficient to potentially support a store.

if you don't believe go read a grocer's site selection criteria, some major grocers share some of it publicly. You'll see they basically don't state any factor you mentioned. Instead demographics,number of other retail stores, number of college graduates in the trade area, average age of consumer and household size, density, Street quality and commuter routes, freeway access and other factors relating to potential sales will be listed.

It's all about the $ coming in, not the $ going out.

As for Sowell & Friedman - don't get me started on Ivory Tower Economists.

@RJMacReady: I actually agree with you to an extent. The effects of unemployment benefits can generational. I believe the states main focus in terms of the unemployed should be job creation and job training ie free or subsidized college/university tuition. There should be measures to discourage people to stay on welfare.

But if there was no welfare people who legitimately couldn't find a job would be unable to support themselves in any way.

@McGhee said:

I'm amazed at how polite almost everyone is being here.

I think that's because we're discussing ideas, not each other. It's quite refreshing, actually. I'm proud to be apart of the GB community. :-)

@RJMacReady said:

@gamefreak9 said:

@AZ123 said:

Look at the big picture, think logically and critically... is this faith in the free market god also known as the "invisible hand" really warranted?

I've seen this rhetorical ploy used often and i find it curious how the individual using it reconciles the inverse: that a centralized regulatory agency would be all knowing or omnipotent. Not only are regulators able to forecast future events but they even have the incentive and beneficence to do so because these political agents "love" us dearly and are creating an Eden for us.

Now that we can show that both means of diminishing the others arguments are nothing more the Strawmen and discard them( i sure hope we can i hope the left do not believe such absurdities about the political class) we can then engage in comparative institutional analysis. We can talk about the incentives of politicians, we can talk about how regulation serves to incentivize entrepreneurs to exit the market and become political entrepreneurs and attempt to capture rents because gaining market-power via legislation is much more profitable then operating in teh market. We can compare the incentives of a voter to a consumer in deploying their political capital vs their actual capital etc. We can talk about epistemological issues like where is knowledge in society? Is it centralized in a few geniuses that can then be easily identified and extracted from the gross population via democracy or is knowledge fragmented , decentralized or even contradictory and do we need more dynamic solutions to tap into this knowledge or cap it when it fails to yield benefits or intrudes on social domains it does not belong because it was too specialized to begin with?

@GunslingerPanda

Well i don't get it... ? Wrestling ?

The rhetorical ploy is relevant, I never said the government was efficient or perfect but at least it has a role that aims to help the many. So undermining the credibility of free markets is relevant... and believe it or not there are selfless individuals out there in government working to help the many.

Do you have any evidence for this theme entrepreneurial spirit leaving the market, market power via legislation? I don't think so... I remember reading a study about how little higher top marginal tax rates affect the behaviour and game theorists concluding that the most efficient way to both create growth and protect the many was a 70% rate. I don't see the point of all this knowledge fragmentation point your making, why don't you just say "antisymmetric information" and be done with it?

@gamefreak9 said:

"The community reinvestment act was undertaken to give more people wealth because of how upwardly the wealth was over these free market decades."

My Brother from another Mother,

I'm sorry, but I cannot agree at all with your ideas. Wealth is EARNED, not GIVEN. It is NOT the role of the government to "give more people wealth". The Community Reinvestment Act of 1977 was the government mandating that banks lower their lending standards to poor people who could no way afford to pay back their mortgage loans. Politicians on both sides have rhapsodized for decades about "affordable housing," but their intentions are not the same of their effects. As Thomas Sowell said, "Social crusaders are not forced to confront the consequences of their choices, even in their own minds or consciences, much less pay a tangible price for the havoc they leave in their wake while feeling noble." I strongly urge you to read Sowell's The Housing Boom and Bust to get a new perspective on the Community Reinvestment Act. Perhaps no single piece of legislation is more responsible for the financial crash of 2008. Again, government interference on banking policies led to disaster.

@gamefreak9 said:

You don't own your destiny, rich people own your destiny, if there was no government, monopolies would occur(which the government is stopping atm), and power would be concentrated in FAR fewer sources.

I would partially agree with you; rich people in government can own my destiny by mandating the amount of taxes I pay, the type of food I'm allowed to eat, the kind of healthcare I must provide as a small business owner, and so on and so forth. I challenge you to see the government as a monopoly. Wouldn't you agree that power is concentrated in FAR fewer sources when the monopolistic government can mandate how individuals want to live their lives? Bill Gates cannot raise my taxes. Bill Gates cannot create laws that I go to jail for if I break them. Monopoly is the enemy of efficiency, whether under capitalism or socialism. The difference between the two systems is that monopoly is the norm under socialism.

@gamefreak9 said:

Sure the official might not know what's best for you, but the business man in the top not only doesn't know what's best for you, but doesn't even care because its not part of his interest and if he did care, it would be because he would be able to use you to make himself even richer, making the inequality gap grow even further. And inequality as I have said before is a cause for great unhappiness.

Of course neither the government official nor the business man in the top know what's best for me -- only I know what is best for me. The difference is that the government official can claim to know what's best and enact policies that can in fact devastate people's lives. The entrepreneur, however, can enable me to create a living for myself. The entrepreneur can create wealth, lots of it. The government cannot create wealth, ever. The government can only take wealth away from others and give it away.

Can you explain to me the inequality gap? Do you take into account age as a factor in those inequalities? The shrill rhetoric about differences in income proceeds as if income inequalities are talked about between different classes of people. It would be hard to get the public all worked up over the fact that young people just starting out in their careers are not making nearly as much money as their parents or grandparents make. While the rhetoric is about people, the statistics are almost invariably about abstract income brackets.

Again, as Thomas Sowell (one of the men to whom this thread is about) says: "The Internal Revenue Service can follow individual people over the years because they can identify individuals from their Social Security numbers. During recent years, when "the top one percent" as an income category has been getting a growing share of the nation's income, IRS data show that actual flesh and blood people who were in the top one percent in 1996 had their incomes go down -- repeat, DOWN -- by a whopping 26 percent by 2005."

But again, gamefreak9, I am still very much interested in your ideas and opinions about mine (and Sowell's and Friedman's). I really appreciate you taking the time to respond to me. I look forward to your next post.

@yoshimitz707 said:

I'm not sure that was a compliment. 2/3 of those things aren't even human. Your writing style makes me feel like I'm reading something typed by a robot.

I guess that makes me 1/3 human. Dang.

@AZ123: What we have learned during the crisis is that markets are not self regulating, when you incentivise the brightest graduates to deceive each other you end up with the disaster we are currently living through.

Secondly even when this bubble had not burst real wages in the United States declined by over 20% from the 70s onward. While businesses posted double digit growth for the 90's.

So free markets do not generate prosperity for all and in fact heavily endanger the taxpayer by leaving him on the hook when they fail.

There is a lot of absolutism in this thread, if someone points out a flaw in Friedman, they are asked does Communism work. Are the problems in Honk Kong acceptable because its better than China? Thats not the question and is laughable.

Capitalism is the only method we have to generate wealth, unregulated it is the best way we know to destroy wealth. As shown by the fact that the derivatives market was 10 times the value of the actual output of the planet.

@EdIsCool said:

@AZ123: What we have learned during the crisis is that markets are not self regulating, when you incentivise the brightest graduates to deceive each other you end up with the disaster we are currently living through.

I respectfully disagree with you, my friend.

Like I said to gamefreak9, I strongly urge you to read Thomas Sowell's The Housing Boom and Bust because it documents how the current crisis we're experiencing is a direct result of government intervention, starting with the Community Reinvestment Act of 1977 mandating that banks lower their lending standards so that people with poor credit history can afford to buy a home. The intention was noble, making housing affordable for all, but the outcome has lead to the crisis we are facing.

@EdIsCool said:

Secondly even when this bubble had not burst real wages in the United States declined by over 20% from the 70s onward. While businesses posted double digit growth for the 90's.

Where are you getting these statistics? Despite the statistics that show real wages going downhill over time, somehow Americans are consuming more than ever and have a larger net worth than ever. As of 1970, for example, only about a third of American homes had both central heating and air conditioning, while more than four-fifths had both in the 1990s. Moreover, the homes themselves were more than one-third larger. Just over one-fourth of American households had a dishwasher in 1970 but more than half did by the 1990s. Only 34 percent of households had color television in 1970 but 98 percent did in the 1990s.

How could this be, with lower real wages? Were we just going deeper and deeper into debt? Actually the net worth of Americans more than doubled during those same years. Was there some kind of economic Houdini who could perform such magic?

Fun fact about the 1990s -- the federal tax rate on capital gains was lowered in the US from 28% to 20% in 1997. Revenues were assumed to fall below the $54 billion collected under the old rates in 1996 and the $209 billion projected to be collected over the next four years, before the tax rate was cut. Instead tax revenues ROSE after the capital gains tax rate was cut: $372 billion were collected in capital gains taxes over the next four years, nearly twice what was projected.

Why did this happen? People adjusted their behavior to a more favorable outlook for investments by increasing their investments, so that the new 20% tax rate on the returns from these increased investments amounted to more total revenue than that produced by the old 28% tax rate on a total amount of investment that was not as large.

@EdIsCool said:

So free markets do not generate prosperity for all and in fact heavily endanger the taxpayer by leaving him on the hook when they fail.

Our economy is not centrally planned; there is no "they". In a market economy coordinated by prices, there is no one at the top issuing orders to control or coordinate activities throughout the economy. Free markets do not generate prosperity for every single individual alive, but it gives the most people the best chance to improve their standard of living.

@EdIsCool said:

There is a lot of absolutism in this thread, if someone points out a flaw in Friedman, they are asked does Communism work. Are the problems in Honk Kong acceptable because its better than China? Thats not the question and is laughable.

Of course it is laughable; Hong Kong had the freedom to create wealth and millions rose out of poverty because of that. When someone points out a flaw in Friedman, I then challenge them. There are problems in all societies because this is not a perfect world. But again, free markets give the most opportunities for individuals to succeed.

@EdIsCool said:

Capitalism is the only method we have to generate wealth, unregulated it is the best way we know to destroy wealth. As shown by the fact that the derivatives market was 10 times the value of the actual output of the planet.

How does unregulated capitalism destroy wealth? Where are you getting this derivatives market statistic?

I'm interested in your ideas. Please check over what I have said and let me know what you think. I look forward to reading your thoughts.

This thread is great. Polite and informed discussion abound. Good stuff.

However this thread also reminds me how remarkably ignorant I am of many of the things which govern our societies. Having studied sciences all my life I have certainly neglected to inform myself about many of these topics.

@AZ123: I am going to check out the Economy book linked to in the original post as an entry point. Thanks for starting the thread!

To be honest the title/default icon/large amount of text that I saw upon first entering the thread made me expect some inane forum ramblings, but I am delighted to have been proven incorrect.

Wait, never mind I thought we were talking about Milton Bradley.