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

@gamefreak9 said:

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.

I have no doubt that there are people in government with good intentions. However, if there is any lesson in the history of ideas, it is that good intentions tell you nothing about the actual consequences. But intellectuals who generate ideas do not have to pay the consequences.

@gamefreak9 said:

Do you have any evidence for this theme entrepreneurial spirit leaving the market, market power via legislation?

Yes, I do. Thomas Sowell illustrates the following example:

We all understand why the EPA was given the power to issue regulations to guard against oil spills, such as that of the Exxon Valdez in Alaska or the more recent BP oil spill in the Gulf of Mexico. But not everyone understands that any power given to any bureaucracy for any purpose can be stretched far beyond that purpose.

In a classic example of this process, the EPA has decided that, since milk contains oil, it has the authority to force farmers to comply with new regulations to file “emergency management” plans to show how they will cope with spilled milk — how farmers will train “first responders” and build “containment facilities” if there is a flood of spilled milk.

Since there is no free lunch, all of this is going to cost the farmers both money and time that could be going into farming — and is likely to end up costing consumers higher prices for farm products.

It is going to cost the taxpayers money as well, since the EPA is going to have to hire people to inspect farms, inspect farmers’ reports, and prosecute farmers who don’t jump through all the right hoops in the right order. All of this will be “creating jobs,” even if the tax money removed from the private sector correspondingly reduces the jobs that can be created there.

Does anyone seriously believe that any farmer is going to spill enough milk to compare with the Exxon Valdez oil spill or the BP oil spill?

Do you envision people fleeing their homes, as a flood of milk comes pouring down the mountainside, threatening to wipe out the village below?

It doesn’t matter. Once the words are in the law, it makes no difference what the realities are. The bureaucracy has every incentive to stretch the meaning of those words, in order to expand its empire.

@countinhallways said:

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.

Thank you, countinhallways! I am thrilled to hear you check out Thomas Sowell's Basic Economics 4th edition. You get it on Amazon here for around $20.

We are living in very serious times. I never studied economics before because I thought it was boring. But given our awful economic circumstances I wondered why recessions and depressions happened. Somehow I stumbled across Thomas Sowell and my whole outlook on economics and public policy changed. Here was a guy who grew up a Marxist his entire life, got degrees in economics from the most prestigious universities in the land, and it wasn't until he worked for the government before he completely changed his attitude on free markets.

Basic Economics is a little lengthy, over 640 pages. The first Thomas Sowell book I read was The Housing Boom and Bust, which is less than 200 pages (and under $5 at Amazon). No charts. No graphs. Just plain language. You may want to start with that book first. I would love to hear your thoughts on these books if you ever get a chance to read them.

Also, I'm also very proud to be apart of the Giant Bomb community. This thread has been very polite. When discussing public policy its very easy to get emotional. We shouldn't be afraid to share our ideas. It's important, however, to keep the discussion on ideas, not personal attacks.

Interesting discussion. Quick question... I will not be as eloquent as anyone in this thread but here goes nothing...

Why is it that whenever I read anything economics, there seize to be any sign of humanity? We all become numbers and it frightens me.

@Villageidiot9411 said:

Interesting discussion. Quick question... I will not be as eloquent as anyone in this thread but here goes nothing...

Why is it that whenever I read anything economics, there seize to be any sign of humanity? We all become numbers and it frightens me.

Because we use numbers to model reality. Of course, the algorithms themselves are based on human behaviour, but the input and output come in form of numbers. To say that there is no humanity is a sad misconception. Sadly, people interpret economics as not caring about people when it's the exact oppsite. If we don't understan how things worl, how are we supposed to plan for the future?

To quote Hayek: The curious task of economics is to demonstrate to men how little they really now about what they imagine they can design.

@AZ123: I would also like to thank you for an interesting thread. I plan to read it more carefully when exams are done, but from what I've read/watched, it's been really interesting.

Also (and this might have been mentioned already), if you're interested in economics I recommend the podcast EconTalk. It's very informative and nearly always relate to current events. I recommed checking out any episode with Mike Munger on it. That man can manke the Colombian bus system seem like the most interesting thing in the world.

@Villageidiot9411 said:

Why is it that whenever I read anything economics, there seize to be any sign of humanity? We all become numbers and it frightens me.

You must not be reading the right stuff. Read anything written by Thomas Sowell or Milton Friedman and you will discover more humanity in free market economics than you could imagine. We are not numbers; we are people, and capitalism is the only system that allows the individual to succeed beyond his wildest imagination.

Hmm, I don't like Capitalism, I think it leads to terrible things and I also dont think that it works. It is good in exploiting people and the environment in order to produce goods cheaply, but very bad in fulfilling human needs. Just look at how much more productive whe have become (by exploiting workers at home and abroad and destroying our planet) , still, there are people without homes (even in the west) and we still have to work 40+ hours a week. Also, I dont think this is the right way to discuss this (I mean over a message board). In response to your original point:

- just because people do not believe in capitalism does not mean they believe in the government

- the question of human nature is a hen and egg thing - you might argue that greed is what drives people, I'd say greed is one of our attributes, but capitalism really plays to it. There are other societies that are not based on greed and they have been much better of (a good read in this respect is "ancient futures").

Still, good to see that people talk about these things.

@AlmostSwedish: You are most welcome! I am happy you find this discussion fascinating. Good luck on your exams! When you finish with them, and get some video games in the mix, I hope you do revisit this thread.

Also, EconTalk is apart of the Library of Economics and Liberty which is a FABULOUS resource. Thank you for sharing the podcast here!

@AlmostSwedish: Oh, I do not subscribe to the whole idea that economics don't care about people... It's just seems that after a while, it seize to be a model for understanding and becomes something else. I just think it's difficult to move away from the subject of the meaning of economics when words like "efficiency" and "maximization" are involved. Now, I do not understand economics as you or AZ123 or anyone who actually studies the matter, but from the outside, it's a question worth asking.

Now let me elaborate a little bit, I understand that the idea of economics is to provide something tangible for human understanding for abstract ideas, but how far can these models project?

(I am not trying to criticize you, I actually want a better answer than just a "sad misconception")

Neither the rich nor the poor in the first world will ever allow free markets. Only the third world has had the awful privilege of experiencing free markets because it was enforced through U.S supported dictatorship. A quick survey of modern Latin American history reveals this. In the first world industries have been propped up by massive government subsidies while the right preaches free markets to the poor.

@Villageidiot9411:I understand your concern, and it is one I used to share. I hope I didn't offend you when I used the term sad misconception. I typing this pretty quickly since I really should be studiying right now :)

Now, I don't study economics (unless you count my casual interest in the subject), but from what I understand the models are usually pretty good predictions. Unfortunately, in times of financial crisis they work less well (which is a bummer since that is when you need them the most, right?).

And regarding economics seemingly not being about people; It's just what happens when things become more complicated. Take me for example. I study theoretical chemisty. I havn't been in an actual chemistry lab in years! All I do is perfom calculations, and as such I have to use word and concepts from mathematics and quantum mechanics. Seemingly, it has very little to do with chemistry, while in reality it is the fastest growing branch of chenistry since you can model thing without having to purchase and use expensive and potentially dangerous chemicals.

I don't know if thats the perfect analogy, but yeah. :)

@AZ123: While we're on the topic of econtalk... :)

I love these so much!

@Kaineda77 said:

Hmm, I don't like Capitalism, I think it leads to terrible things and I also dont think that it works.

Interesting perspective... In my opinion, capitalism has allowed individuals the freedom to pursue their own self interests and create wealth. The record of history shows that the societies which adopt free market principles wind up bringing millions of people out of poverty and improving their standard of living. Can you explain how it doesn't work?

@Kaineda77 said:

It is good in exploiting people and the environment in order to produce goods cheaply, but very bad in fulfilling human needs.

People who live in developing countries have lived in the worst form of poverty for hundreds of years. Over the past few decades industries have been investing their wealth in those countries, which has allowed people there to lift themselves, and their children, out of poverty. The poverty rate in India was cut in half during the 1990s because people were able to go to work and earn a living. Do you want to reverse this? How is this "very bad in fulfilling human needs"?

@Kaineda77 said:

Just look at how much more productive whe have become (by exploiting workers at home and abroad and destroying our planet) , still, there are people without homes (even in the west) and we still have to work 40+ hours a week.

Yes, free markets do promote productivity; this is a good thing. People who get hysterical about "destroying our planet" never consider efficiency and prices. One way to think of efficiency is to think of a calculator. Old calculators once had to fill an entire room to do the work that a hand-held calculator can do today. The same is true for microchips, which are getting smaller while holding more information. With garbage, we are actually using less and less space because we compact garbage better than we ever have in the past. And the truth is the Earth is compacted of TONS and TONS of resources that we don't even know how to use yet. The deepest mine is only 15 miles and it's 4,000 miles to the center of the Earth.

Prices have to deal with the fact that as prices naturally increase as resources become more scarce, people will ration those resources naturally without centralized planning. Thomas Sowell says that many people see prices as obstacles to getting the things they want. Those who want to live in a beach-front home, for example, may abandon such plans when they discover how extremely expensive beach-front property can be. On the contrary, the inherent reality is that there are not enough beach-front homes to go around and prices simply convey that underlying message.

@Kaineda77 said:

- the question of human nature is a hen and egg thing - you might argue that greed is what drives people, I'd say greed is one of our attributes, but capitalism really plays to it. There are other societies that are not based on greed and they have been much better of (a good read in this respect is "ancient futures").

Can you please name these societies that are not based on greed? Russia? China? Australia? Paraguay?

@AlmostSwedish: haha, I should also be studying. Oh, I was not offended... it's just the only way I know how to communicate online without sounding too aggressive. It's hard to communicate without facial cues. :P (EMOTICONS? OH WHY DIDN'T I THINK OF THAT?)

Just a quick point on the analogy, I think that's why it's necessary to stay constantly aware of what economics mean or in fact, anything that is taken for granted. In the case of chemistry, it's great that theories can replace one or two steps. But for economics, humans are more complicated than that and I find that economics is a very stubborn subject. Once a model is applied, it seems the only way theoretical supporters can continue in debate is to beat an idea over the head repeatedly to the point where it stops being a debate. It just becomes a shout match, not unlike something religious. What I am saying is that, whether something is contradictory, it is to be taken into account.

I know that it sounds like I am proposing we should argue in an infinite loop, but I think it goes without saying that it's a weird problem faced by academics and critical thinking. That to be persuasive, often, points are completely ignored not on the basis that it is universally false but on the basis that it is unknown (such as me with economics) or the need to convince others. I am here to admit that it is a delicate balance that is a necessary sacrifice to advance subjects. Or else, nothing would be published.. (and it's also why we have deadlines :)) right? :P

P.S I know this opens an easily pigeon-hole-able WORLD IS NOT FLAT or NAZI argument such as, "but it's not necessary to reopen the debate on whether or not the world is flat", seriously... that is not my point, I am simply saying that on things that are completely theoretical, abstract and intangible, it is a necessity to continue question it precisely because it is complicated.

ANYWAYS.. I AM OUT. BACK TO READING ABOUT SLAVES.

@AlmostSwedish said:

@Villageidiot9411:I understand your concern, and it is one I used to share. I hope I didn't offend you when I used the term sad misconception. I typing this pretty quickly since I really should be studiying right now :)

Now, I don't study economics (unless you count my casual interest in the subject), but from what I understand the models are usually pretty good predictions. Unfortunately, in times of financial crisis they work less well (which is a bummer since that is when you need them the most, right?).

And regarding economics seemingly not being about people; It's just what happens when things become more complicated. Take me for example. I study theoretical chemisty. I havn't been in an actual chemistry lab in years! All I do is perfom calculations, and as such I have to use word and concepts from mathematics and quantum mechanics. Seemingly, it has very little to do with chemistry, while in reality it is the fastest growing branch of chenistry since you can model thing without having to purchase and use expensive and potentially dangerous chemicals.

I don't know if thats the perfect analogy, but yeah. :)

Sadly, many economic models are not very useful in good or bad time, they work perfectly well as models but are not necessarily isomorphic between the model and the real world. These models have some assumption that do not really hold up very well (quantity theory, Say's law, representitive individual etc.), you touched on an important point with the calculus: its the same problem that economics suffers from, at least yours is a real science, economists use calculus and pretend that it makes the field a science. Economics is still dominated by these 'classical' ideas and its very hard to push something different through, to paraphrase J. Stiglitz: monopoly of the mind is more dangerous than market monopoly.

@AZ123: I don't like any economic system that can be abused. So I don't like any of them. I want to trade my fucking cow for a copper bar and a shovel.

@sanchopanza: Yeah, I'd accept that economy is not really a science (although it's a touchy subject when talking to some economists).

In a way, the problem of economics is also what makes it so fascinating. In my mind it would be so easy to draw parallells between economics and statistical physics; you have micro and macro economy in the same way you have micro and macro systems in thermodynamics. In physics it works because you have incredibly large samples, so fluctuations don't matter. That probably isn't the case for economy, but certainly there must be some rules that can be taken as "relatively true" (as absurd a concept as that is). Supply and demand seems like a pretty good idea, for example.

Also, in economy the problem of ideologies is much more prominent. You have some of that in physics as well, but a well designed experiment allows you to shut up all the critics that matter (time will sort out the rest). You can't really experiment in that way in economy (although it would be interesting to see what a bunch of economists could do to EVE online).

@AlmostSwedish: Yeh most of micro has a solid theoretical basis, its when you just try to scale that up and slap a macro label on the result (which is what most macro models tend to be) that you get issues.

The ideology problem you mention is too true, you have Austrians and neo and post and new Keynesians (all different by the way), recently heard Skidelsky say 'economists don't agree on anything' and its all too true. Thats not really a problem though, the problem comes about when some hog the mainstream literature and don't give anyone else a voice.

@spartanlolz92 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

I don't know much about economics so I won't argue. I do think 300 billion US citizens is a bit of an over estimate. If it's 300 million like I think then it comes up short to Europe's 857 million+ or the EU's 500 million. I realise they are separate countries, separate governments and separate social systems, but each system works for each. Why wouldn't it work in the US? especially if you divided responsibility up state-to-state. The NHS works fine for all the public in the UK, any problems are with the government and funding issues. It's clearly possible to administrate it. For instance with your brother, you wouldn't receive medical bills in the first place.

I don't understand the 3th & 4th points really. They seem like they're telling someone off for who they are or what they believe without really presenting an argument for them. I generally agree with them I guess. The problem with free education is that many universities will open up to provide free education to the less capable students using government money. Those students then turn up because a degree is good for their job prospects etc. In about 20 years, almost everyone has a degree and it only matter where you got it. Eventually it only matters if you have a masters. Everything becomes devalued and the government is paying for what essentially becomes a zero benefit education. I think it should be subsidised for sure, here in the UK we get loans which we pay back once we're earning a decent wage. If you don't get a decent wage for a long time then the debt gets written off. If the government is to fund higher education then they need to make sure it is still worthwhile to those who choose to follow that path, i.e. limiting places and imposing tougher entry requirements.

@NoelVeiga said:

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.

Gotta disagree. Public enterprise is intrinsically inferior to private simply because there is no requirement to please the customer. Public institutions are frequently horrible to deal with largely because there is little to no pressure to change things. Private enterprise has to do better or they go out of business. Such risks do not pertain to the government.

Let's use a simple example: Would you rather use a restroom at Walmart or one at any government agency? I'll pretty well guarantee you the WalMart one will be cleaner.

And government's priority concern is to perpetuate its own power.

@AZ123 said:

@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.

Actually only 30% of wealth can mathematically be explained by you education, your intellect, your hours worked etc, actually the coefficient of determination goes up the higher your income is and so does the explanatory power of your parents income. So no, the vast majority of wealth is not earned this is idealist bs talk. The vast majority of it is luck and as such it should be goal of a government to give people what they had less chances than someone else of achieving anyway. I strongly urge you to read more UPDATED books Fault Lines, which actually gives much more updated talk on the community reinvestment act. Its true that it helped cause the recession, but it in itself was a response to the failure of free markets.

The Government isn't one entity its broken down into hundreds of public enterprises all specializing in specific needs. The government is not a monopoly, its cure, the government merely sees where there is failure, and attempts to correct it, its not without fault. Monopolies emerge naturally in a free market society, and when you have monopolies and concentrated power, you are in fact going backward as far as your "freedom" is concerned. Concentration of power does lead to increase company bargaining power, which does stop real wages from increasing, which does mean people have to go in to debt to have a normal living. These people can only get out of this situation with LUCK, and most of them won't they have become slaves to the oligarchs. This is FACT, not idealism. Why don't you give up on outdated material and try reading some real economic commentary, start with Paul Krugman.

I hate it when people pick one fact and don't look at the whole picture, it just so happens that the new generation of rich people had alternative sources. Also look up Krugman's article on the 0.1 percent, because you will find that their income has increased by about 50%. Get off these idealistic views, learn how to read rigorous scholarly articles with solid data and forget this idealistic views that have long expired and have no place in the real world.

@AZ123 said:

@gamefreak9 said:

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.

I have no doubt that there are people in government with good intentions. However, if there is any lesson in the history of ideas, it is that good intentions tell you nothing about the actual consequences. But intellectuals who generate ideas do not have to pay the consequences.

@gamefreak9 said:

Do you have any evidence for this theme entrepreneurial spirit leaving the market, market power via legislation?

Yes, I do. Thomas Sowell illustrates the following example:

We all understand why the EPA was given the power to issue regulations to guard against oil spills, such as that of the Exxon Valdez in Alaska or the more recent BP oil spill in the Gulf of Mexico. But not everyone understands that any power given to any bureaucracy for any purpose can be stretched far beyond that purpose.

In a classic example of this process, the EPA has decided that, since milk contains oil, it has the authority to force farmers to comply with new regulations to file “emergency management” plans to show how they will cope with spilled milk — how farmers will train “first responders” and build “containment facilities” if there is a flood of spilled milk.

Since there is no free lunch, all of this is going to cost the farmers both money and time that could be going into farming — and is likely to end up costing consumers higher prices for farm products.

It is going to cost the taxpayers money as well, since the EPA is going to have to hire people to inspect farms, inspect farmers’ reports, and prosecute farmers who don’t jump through all the right hoops in the right order. All of this will be “creating jobs,” even if the tax money removed from the private sector correspondingly reduces the jobs that can be created there.

Does anyone seriously believe that any farmer is going to spill enough milk to compare with the Exxon Valdez oil spill or the BP oil spill?

Do you envision people fleeing their homes, as a flood of milk comes pouring down the mountainside, threatening to wipe out the village below?

It doesn’t matter. Once the words are in the law, it makes no difference what the realities are. The bureaucracy has every incentive to stretch the meaning of those words, in order to expand its empire.

If i wanted a theoretical example i could have one too. I mean REAL evidence that people find an alternative route to entrepreneurship, because they don't fact is nobody cares if their maximum gain from their venture will be 1 billion or 100 million. People do understand diminishing returns. I can perform mental acrobatics and come up with random stories to illustrate my stories too you know...

Also here's a nice interesting poll here from prominent economists to counter your commonly used argument that tax collection goes DOWN when you raise taxes... which is of course ridiculous and 99% of the time this is not the case, and when it is, this can usually be attributed to other variables. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_eM6AbvcBTI8MuvG

I happened to be strolling through the OT forum and figured I would add my reply.

While I find your enthusiasm for free market economics intriguing, I thought that I might add some counterpoints:

@AZ123 said:

Interesting perspective... In my opinion, capitalism has allowed individuals the freedom to pursue their own self interests and create wealth. The record of history shows that the societies which adopt free market principles wind up bringing millions of people out of poverty and improving their standard of living. Can you explain how it doesn't work?

While I find the first part of this statement uncontroversial, I must disagree with the latter. Many nations which chose to adopt free market economic changes wound up suffering terrible inflation and dramatic economic recessions (i.e. Indonesia and South Korea). Many countries with well-established welfare states (i.e. France and Sweden) have historically done a good job of maintaining a better standard of living. The problem with an unmitigated free market model is that it generally leads to cycles of boom and bust and dramatic wealth consolidation. It all boils down to market power and negative externalities; two things which free market capitalism has historically done a bad job of dealing with.

Yes, free markets do promote productivity; this is a good thing. People who get hysterical about "destroying our planet" never consider efficiency and prices.

The problem here is that you have overlooked the conventional trade-off between equality and efficiency (i.e. pursuit of the one leads to a neglect of the other): increased efficiency at producing a good does not necessarily offset the waste involved in its processing; firms - especially in a free market system - grow according to an economy of scale along with increased demand for their product. It is not necessarily the case that there would be sufficient reason for every firm to pursue rank efficiency when their real concern is, after all, the increase of total revenue over total cost.

Prices have to deal with the fact that as prices naturally increase as resources become more scarce, people will ration those resources naturally without centralized planning. Thomas Sowell says that many people see prices as obstacles to getting the things they want.

As for the question of prices: prices are simply an indication of what people are willing to pay for an item, the issue of free market capitalism - again, I am referring to the completely laissez faire style - is that it has no endogenous remedy for the problem of market power, so you wind up with a single firm (or perhaps very few) in control of a resource, which allows them to engage in price discrimination and rationing. This means that the very economic exchange which is at the heart of capitalism becomes incurably frustrated. I should also point out that the circumstance which you describe above is actually an example of a problem in the market system (see: supply shortage); the economy is supposed to find a balance where there is neither shortage or surplus and the total cost is equal to the total revenue for each unit.

I like capitalism as much as the next guy, and you certainly won't find me on the idealistic side of your interlocutor, but the most salutary and preferable market economy is one with effective and competent government regulation. After all, a planned economy and a market economy both amount to the same thing on paper, but they are very different beasts when you turn them over to the caprice of interested men.

@gamefreak9 said:

Actually only 30% of wealth can mathematically be explained by you education, your intellect, your hours worked etc, actually the coefficient of determination goes up the higher your income is and so does the explanatory power of your parents income. So no, the vast majority of wealth is not earned this is idealist bs talk.

My Brother,

Where are you getting this 30% figure? You're saying 30% of wealth comes from people's education, intellect, and hours worked, while the rest of the 70% of wealth is from luck? I'm sorry, but I'm very skeptical of these figures. Do you use these statistics to explain the wealth of Kim Kardashian, Paris Hilton, Tim Tebow, or LeBron James?

@gamefreak9 said:

The vast majority of it is luck and as such it should be goal of a government to give people what they had less chances than someone else of achieving anyway.

The government can give entrepreneurs a chance to achieve wealth, if they create attractive environments to do business (i.e. lower taxes, less regulation). That sounds like such a talking point, I know, but I swear to you it is the truth.

@gamefreak9 said:

I strongly urge you to read more UPDATED books Fault Lines, which actually gives much more updated talk on the community reinvestment act. Its true that it helped cause the recession, but it in itself was a response to the failure of free markets.

That's interesting that you urge me to read updated books about the Community Reinvestment Act. I read Thomas Sowell's The Housing Boom and Bust revised edition published in 2010, and his Basic Economics 4th edition published in 2011. Those seem pretty updated to me. I cannot imagine what new updates about the Community Reinvestment Act there can be since the time of their publication. How can the current recession be blamed on failure of the free market when it was the government threatening banks with legal punishment if they did not adhere to its arbitrary housing quotas?

@gamefreak9 said:

The Government isn't one entity its broken down into hundreds of public enterprises all specializing in specific needs. The government is not a monopoly, its cure, the government merely sees where there is failure, and attempts to correct it, its not without fault.

You are correct that the government has several departments and agencies, but you are wrong when you say the government is not a monopoly. I'll give you another Thomas Sowell example:

"When a natural disaster strikes some part of the Unites States, emergency aid usually comes from the Federal Emergency Management Agency (FEMA) and from private insurance companies whose customers' homes and property have been damaged or destroyed. FEMA has been notoriously slower and less efficient than the private insurance companies. Allstate Insurance cannot afford to be slower in getting money into the hands of its policy-holders than State Farm Insurance is in getting money to the people who hold its policies. Not only would existing customers in the disaster area be likely to switch insurance companies if one dragged its feet in getting money to them, while their neighbors received substantial advances from a different insurance company to tide them over, word of any such difference would spread like wildfire across the country, causing millions of people elsewhere to switch billions of dollars worth of insurance business from the less efficient company to the more efficient one.

A government agency, however, faces no such pressure. No matter how much FEMA may be criticized or ridiculed for its failures to get aid to disaster victims in a timely fashion, there is no rival government agency that these people can turn to for the same service. Moreover, the people who run these agencies are paid according to fixed salary schedules, not by how quickly or how well they serve people hit by disaster."

@gamefreak9 said:

Monopolies emerge naturally in a free market society, and when you have monopolies and concentrated power, you are in fact going backward as far as your "freedom" is concerned. Concentration of power does lead to increase company bargaining power, which does stop real wages from increasing, which does mean people have to go in to debt to have a normal living. These people can only get out of this situation with LUCK, and most of them won't they have become slaves to the oligarchs. This is FACT, not idealism.

Now, gamefreak9, you strike me as someone who loves specifics, so let me give a very specific example because you deserve the truth. Let's look at the government postal service in India:

When Mumbai Region Postmaster General A.P. Srivastava joined the postal system 27 years ago, mailmen routinely hired extra laborers to help carry bulging gunnysacks of letters they took all day to deliver.

Today, private-sector couriers such as FedEx Corp. and United Parcel Service Inc. have grabbed more than half the delivery business nationwide. That means this city's thousands of postmen finish their rounds before lunch. Mr. Srivastava, who can't fire excess staffers, spends much of his time cooking up new schemes to keep his workers busy. He's ruled out selling onions at Mumbai post offices: too perishable. Instead, he's considering marketing hair oil and shampoo.

India Post, which carried 16 billion pieces of mail in 1999, carried less than 8 billion pieces by 2005, after FedEx and UPS moved in. The effects of competition from private-sector couriers on the government-run postal service in India were described on page A1 of the October 3, 2006 issue of the Wall Street Journal, in an article titled “As Economy Zooms, India’s Postmen Struggle to Adapt.”

My point? Government is a monopoly that is less efficient than the private sector.

@gamefreak9 said:

Why don't you give up on outdated material and try reading some real economic commentary, start with Paul Krugman.

I DO read Paul Krugman, every chance I get. And every time I find myself disagreeing with him wildly :)

@gamefreak9 said:

I hate it when people pick one fact and don't look at the whole picture, it just so happens that the new generation of rich people had alternative sources.

Amen!! I absolutely hate, hate, HATE it when people pick one fact and don't look at the whole picture. I could NOT agree with you more. But that's very interesting that you reference a new generation of rich people. I'm going to address this after we look at your next comment.

@gamefreak9 said:

Also look up Krugman's article on the 0.1 percent, because you will find that their income has increased by about 50%.

As a matter of fact, I DID read Krugman's article on the 0.1 percent. And Krugman is correct... partially. It's true that if you look at the percentage of income that went to the top 20% in Year A, and then a decade later that percentage has gone up. Well that settles it, doesn't it? The rich are getting richer. Not exactly. Paul Krugman is comparing abstract categories of income brackets and not flesh and blood human beings.

On the other hand, income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005. The top one percent, "the rich" who are supposed to be monopolizing the money, saw their incomes decline by a whopping 26 percent.

People move in and out of income brackets all the time. People in their 20s are most likely to have higher incomes in their 40s. You even admit this to be true when you commented that "it just so happens that the new generation of rich people had alternative sources".

@gamefreak9 said:

Get off these idealistic views, learn how to read rigorous scholarly articles with solid data and forget this idealistic views that have long expired and have no place in the real world.

I do read rigorously scholarly articles with solid data. Thomas Sowell's Basic Economics 4th edition has 71 pages of footnotes, which you can read on his website. See them for yourself. If you ask me, it's pretty damn rigorous and scholarly.

@gamefreak9 said:

If i wanted a theoretical example i could have one too. I mean REAL evidence that people find an alternative route to entrepreneurship, because they don't fact is nobody cares if their maximum gain from their venture will be 1 billion or 100 million. People do understand diminishing returns. I can perform mental acrobatics and come up with random stories to illustrate my stories too you know...

The example I gave you of the EPA regulating farmers about oil found in milk is real, but I'll give you another very specific example.

In Washington DC, they are closing the Dupont Circle station to renovate 3 escalators over a period of 10 months. TEN MONTHS. The Empire State Building in NYC is about 1200 ft. and over 100 floors. It was created during the Great Depression in ONE YEAR AND 45 DAYS. Why does it take 10 months to build 3 escalators, when it took one year and 45 days to build the Empire State Building? From the environmental impact studies, to filing for building permits, to accommodating union rules, and smothering regulations, nothing can get done today in this country!

Here's a link to this very specific story.

@gamefreak9 said:

Also here's a nice interesting poll here from prominent economists to counter your commonly used argument that tax collection goes DOWN when you raise taxes... which is of course ridiculous and 99% of the time this is not the case, and when it is, this can usually be attributed to other variables. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_eM6AbvcBTI8MuvG

That poll has the likes of Austan Goolsbee in it. For those of you who don't know, Austan Goolsbee was the former Chairman of the Council of Economic Advisers for President Obama. There are many members of the intelligentsia in this poll, so I'm suspicious that it may be biased.

There you go, gamefreak9. I realize this is a lot to swallow. Just know from the bottom of my heart that I appreciate you allowing me this opportunity to share with you my perspective and ideas on these very important issues. As always, I eagerly await your reply :-)

No, but I do know who Frankie Boyle is.

@MikeinSC said:

Gotta disagree. Public enterprise is intrinsically inferior to private simply because there is no requirement to please the customer. Public institutions are frequently horrible to deal with largely because there is little to no pressure to change things. Private enterprise has to do better or they go out of business. Such risks do not pertain to the government.

Let's use a simple example: Would you rather use a restroom at Walmart or one at any government agency? I'll pretty well guarantee you the WalMart one will be cleaner.

And government's priority concern is to perpetuate its own power.

See, that's where Americans make the wrong assumption.

There is no requirement to please the customer in private enterprise. There is an incentive to optimize revenue and expenses. To get a lot of income and as little expenditure as possible. Good customer service generates income, so unless it causes a higher expense than it generates revenue, it is encouraged. If it does cause a higher expense, then it isn't.

In a democratic public sector it's exactly the same, just the currency at play is not money, it's votes. The goal in government is to maximize the votes the government party will get in the next election. Provide poor service and your approval goes down, your voting intent in the polls decreases and you risk losing the next election and forfeiting power. Same core balance, different variables.

Of course, that means if your electoral system is fucked up the public system is fucked up. If private companies could print their own money we all agree that the free market would not generate an optimal result, right?

That's where the great American fallacy happens. You guys are using a patchwork system that was the first try from pioneers centuries ago. Of course it's borked, it must be, but you all seem to be under the impression that it's both the only possible arrangement of a democracy and that it's impossible to change it into something that works better. You're not alone there, either. The European Union failed to approve an effective Constitution for itself a few years ago, which is why its assembled leaders can't get together to fix the current crisis (don't listen to anybody that tells you that big government is at fault, the truth is the EU gave itself a singular currency over multiple fiscal, debt and free market systems, effectively breaking its economic system).

But there is no direct relationship between inefficiency and a public system. Both the free market and public enterprise optimize different elements. That's why they're best working together. There are things the free market won't optimize (health, education, national security, infrastructure and basically anything with a rigid demand, that is, anything that 100% of the population absolutely needs) and there are things the public sector won't optimize (consumer goods, competence-friendly services).

Oh, and public sector toilets where I'm from are pristine. Good luck sitting on the bowl of a pub without a hazmat suit, though. I'm not even sure why you brought that example up. Are American toilets in public buildings known to be filthy? It's the first I hear of it.

@AZ123 said:

@gamefreak9 said:

Actually only 30% of wealth can mathematically be explained by you education, your intellect, your hours worked etc, actually the coefficient of determination goes up the higher your income is and so does the explanatory power of your parents income. So no, the vast majority of wealth is not earned this is idealist bs talk.

My Brother,

Where are you getting this 30% figure? You're saying 30% of wealth comes from people's education, intellect, and hours worked, while the rest of the 70% of wealth is from luck? I'm sorry, but I'm very skeptical of these figures. Do you use these statistics to explain the wealth of Kim Kardashian, Paris Hilton, Tim Tebow, or LeBron James?

@gamefreak9 said:

I strongly urge you to read more UPDATED books Fault Lines, which actually gives much more updated talk on the community reinvestment act. Its true that it helped cause the recession, but it in itself was a response to the failure of free markets.

That's interesting that you urge me to read updated books about the Community Reinvestment Act. I read Thomas Sowell's The Housing Boom and Bust revised edition published in 2010, and his Basic Economics 4th edition published in 2011. Those seem pretty updated to me. I cannot imagine what new updates about the Community Reinvestment Act there can be since the time of their publication. How can the current recession be blamed on failure of the free market when it was the government threatening banks with legal punishment if they did not adhere to its arbitrary housing quotas?

@gamefreak9 said:

The Government isn't one entity its broken down into hundreds of public enterprises all specializing in specific needs. The government is not a monopoly, its cure, the government merely sees where there is failure, and attempts to correct it, its not without fault.

You are correct that the government has several departments and agencies, but you are wrong when you say the government is not a monopoly. I'll give you another Thomas Sowell example:

"When a natural disaster strikes some part of the Unites States, emergency aid usually comes from the Federal Emergency Management Agency (FEMA) and from private insurance companies whose customers' homes and property have been damaged or destroyed. FEMA has been notoriously slower and less efficient than the private insurance companies. Allstate Insurance cannot afford to be slower in getting money into the hands of its policy-holders than State Farm Insurance is in getting money to the people who hold its policies. Not only would existing customers in the disaster area be likely to switch insurance companies if one dragged its feet in getting money to them, while their neighbors received substantial advances from a different insurance company to tide them over, word of any such difference would spread like wildfire across the country, causing millions of people elsewhere to switch billions of dollars worth of insurance business from the less efficient company to the more efficient one.

A government agency, however, faces no such pressure. No matter how much FEMA may be criticized or ridiculed for its failures to get aid to disaster victims in a timely fashion, there is no rival government agency that these people can turn to for the same service. Moreover, the people who run these agencies are paid according to fixed salary schedules, not by how quickly or how well they serve people hit by disaster."

@gamefreak9 said:

Monopolies emerge naturally in a free market society, and when you have monopolies and concentrated power, you are in fact going backward as far as your "freedom" is concerned. Concentration of power does lead to increase company bargaining power, which does stop real wages from increasing, which does mean people have to go in to debt to have a normal living. These people can only get out of this situation with LUCK, and most of them won't they have become slaves to the oligarchs. This is FACT, not idealism.

Now, gamefreak9, you strike me as someone who loves specifics, so let me give a very specific example because you deserve the truth. Let's look at the government postal service in India:

When Mumbai Region Postmaster General A.P. Srivastava joined the postal system 27 years ago, mailmen routinely hired extra laborers to help carry bulging gunnysacks of letters they took all day to deliver.

Today, private-sector couriers such as FedEx Corp. and United Parcel Service Inc. have grabbed more than half the delivery business nationwide. That means this city's thousands of postmen finish their rounds before lunch. Mr. Srivastava, who can't fire excess staffers, spends much of his time cooking up new schemes to keep his workers busy. He's ruled out selling onions at Mumbai post offices: too perishable. Instead, he's considering marketing hair oil and shampoo.

India Post, which carried 16 billion pieces of mail in 1999, carried less than 8 billion pieces by 2005, after FedEx and UPS moved in. The effects of competition from private-sector couriers on the government-run postal service in India were described on page A1 of the October 3, 2006 issue of the Wall Street Journal, in an article titled “As Economy Zooms, India’s Postmen Struggle to Adapt.”

My point? Government is a monopoly that is less efficient than the private sector.

@gamefreak9 said:

Why don't you give up on outdated material and try reading some real economic commentary, start with Paul Krugman.

I DO read Paul Krugman, every chance I get. And every time I find myself disagreeing with him wildly :)

@gamefreak9 said:

I hate it when people pick one fact and don't look at the whole picture, it just so happens that the new generation of rich people had alternative sources.

Amen!! I absolutely hate, hate, HATE it when people pick one fact and don't look at the whole picture. I could NOT agree with you more. But that's very interesting that you reference a new generation of rich people. I'm going to address this after we look at your next comment.

@gamefreak9 said:

Also look up Krugman's article on the 0.1 percent, because you will find that their income has increased by about 50%.

As a matter of fact, I DID read Krugman's article on the 0.1 percent. And Krugman is correct... partially. It's true that if you look at the percentage of income that went to the top 20% in Year A, and then a decade later that percentage has gone up. Well that settles it, doesn't it? The rich are getting richer. Not exactly. Paul Krugman is comparing abstract categories of income brackets and not flesh and blood human beings.

On the other hand, income tax data recently released by the Internal Revenue Service seem to show the exact opposite: People in the bottom fifth of income-tax filers in 1996 had their incomes increase by 91 percent by 2005. The top one percent, "the rich" who are supposed to be monopolizing the money, saw their incomes decline by a whopping 26 percent.

People move in and out of income brackets all the time. People in their 20s are most likely to have higher incomes in their 40s. You even admit this to be true when you commented that "it just so happens that the new generation of rich people had alternative sources".

@gamefreak9 said:

Get off these idealistic views, learn how to read rigorous scholarly articles with solid data and forget this idealistic views that have long expired and have no place in the real world.

I do read rigorously scholarly articles with solid data. Thomas Sowell's Basic Economics 4th edition has 71 pages of footnotes, which you can read on his website. See them for yourself. If you ask me, it's pretty damn rigorous and scholarly.

@gamefreak9 said:

If i wanted a theoretical example i could have one too. I mean REAL evidence that people find an alternative route to entrepreneurship, because they don't fact is nobody cares if their maximum gain from their venture will be 1 billion or 100 million. People do understand diminishing returns. I can perform mental acrobatics and come up with random stories to illustrate my stories too you know...

The example I gave you of the EPA regulating farmers about oil found in milk is real, but I'll give you another very specific example.

In Washington DC, they are closing the Dupont Circle station to renovate 3 escalators over a period of 10 months. TEN MONTHS. The Empire State Building in NYC is about 1200 ft. and over 100 floors. It was created during the Great Depression in ONE YEAR AND 45 DAYS. Why does it take 10 months to build 3 escalators, when it took one year and 45 days to build the Empire State Building? From the environmental impact studies, to filing for building permits, to accommodating union rules, and smothering regulations, nothing can get done today in this country!

Here's a link to this very specific story.

@gamefreak9 said:

Also here's a nice interesting poll here from prominent economists to counter your commonly used argument that tax collection goes DOWN when you raise taxes... which is of course ridiculous and 99% of the time this is not the case, and when it is, this can usually be attributed to other variables. http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_eM6AbvcBTI8MuvG

That poll has the likes of Austan Goolsbee in it. For those of you who don't know, Austan Goolsbee was the former Chairman of the Council of Economic Advisers for President Obama. There are many members of the intelligentsia in this poll, so I'm suspicious that it may be biased.

There you go, gamefreak9. I realize this is a lot to swallow. Just know from the bottom of my heart that I appreciate you allowing me this opportunity to share with you my perspective and ideas on these very important issues. As always, I eagerly await your reply :-)

The regressive study I have performed personally as part of my OLS polynomial econometrics course, the challenge was to maximize the explanatory power of over 20 variables of which the most one could achieve was 40% but winded up sacrificing a couple of important multicollinearity problems. The survey data is from the World Bank.

I have never denied that government is less efficient than the private sector so i don't know what's the point your trying to make, I was merely saying that Friedman was stuck on his narrow minded delusional ways in believing free markets are the way to go. Try a real scholar, INTRODUCING the best, smartest, and the man who i've met who's influenced my life most of all with his lectures at LSE: DANI RODRIK. http://www.project-syndicate.org/commentary/rodrik62/English. Also no... that's NOT a rigorous economic study that format of study is merely one where one searches through piles of evidence to find isolated examples that fit his own reality. Here's what a rigorous unbiased economic study looks like, there's a link to dl the whole thing http://rodrik.typepad.com/dani_rodriks_weblog/2011/09/unconditional-convergence.html. Though i'm not sure if its very readable by people who won't specialize on economics. Yes the new generation of rich people had alternative sources, that is the internet, the most famous effect of the net, as documented by Robert Shiller in "New financial Order" is in fact the "Winner take all" effect where less people are getting more money due to a lack of locality demand. He also has a rigorous study proving this if you look it up on somewhere like Proquest.

Your escalator example is very much biased, I assume your not a qualified civil engineer who understands the risks associated with renovating something that is underground and populated by people every day... so no making such simple generalizations is narrow and quite frankly, the epitome of idiosyncratic thinking. I am not qualified to really say anything about it either, so you might have a point, but you really are in not position to tell.

Okay if 30 economists from the most esteemed universities are not enough to convince you... well maybe you really have got to review your approach to things. Just in case you become rational, there's also a CBO projection here http://www.cbo.gov/ftpdocs/121xx/doc12187/ChangesBaselineProjections.pdf .

I can give you about 40 links which I have compiled for my possible PHD analysis on Policy and Inequality but I am not under the impression that you really want to learn as much as you want to confirm. FYI I used to be Hayek's biggest fan, I have read all of his books but then i started reading books with less history and theory and a little more analysis and i found out how irrelevant they were in the real world.

@gamefreak9: Did he just get served?

OOOooo *cover mouth* Daimmmmm

@Villageidiot9411:

I don't dance around... pun intended

Why don't you give up on outdated material and try reading some real economic commentary, start with Paul Krugman.

...

Also look up Krugman's article on the 0.1 percent

Can I read somebody who is actually credible these days?

@NoelVeiga said:

@MikeinSC said:

Gotta disagree. Public enterprise is intrinsically inferior to private simply because there is no requirement to please the customer. Public institutions are frequently horrible to deal with largely because there is little to no pressure to change things. Private enterprise has to do better or they go out of business. Such risks do not pertain to the government.

Let's use a simple example: Would you rather use a restroom at Walmart or one at any government agency? I'll pretty well guarantee you the WalMart one will be cleaner.

And government's priority concern is to perpetuate its own power.

See, that's where Americans make the wrong assumption.

There is no requirement to please the customer in private enterprise. There is an incentive to optimize revenue and expenses. To get a lot of income and as little expenditure as possible. Good customer service generates income, so unless it causes a higher expense than it generates revenue, it is encouraged. If it does cause a higher expense, then it isn't.

In a democratic public sector it's exactly the same, just the currency at play is not money, it's votes. The goal in government is to maximize the votes the government party will get in the next election. Provide poor service and your approval goes down, your voting intent in the polls decreases and you risk losing the next election and forfeiting power. Same core balance, different variables.

Of course, that means if your electoral system is fucked up the public system is fucked up. If private companies could print their own money we all agree that the free market would not generate an optimal result, right?

That's where the great American fallacy happens. You guys are using a patchwork system that was the first try from pioneers centuries ago. Of course it's borked, it must be, but you all seem to be under the impression that it's both the only possible arrangement of a democracy and that it's impossible to change it into something that works better. You're not alone there, either. The European Union failed to approve an effective Constitution for itself a few years ago, which is why its assembled leaders can't get together to fix the current crisis (don't listen to anybody that tells you that big government is at fault, the truth is the EU gave itself a singular currency over multiple fiscal, debt and free market systems, effectively breaking its economic system).

But there is no direct relationship between inefficiency and a public system. Both the free market and public enterprise optimize different elements. That's why they're best working together. There are things the free market won't optimize (health, education, national security, infrastructure and basically anything with a rigid demand, that is, anything that 100% of the population absolutely needs) and there are things the public sector won't optimize (consumer goods, competence-friendly services).

Oh, and public sector toilets where I'm from are pristine. Good luck sitting on the bowl of a pub without a hazmat suit, though. I'm not even sure why you brought that example up. Are American toilets in public buildings known to be filthy? It's the first I hear of it.

The only requirement in private enterprise is to please the customer. They can always go elsewhere and you need to keep their business. They have a reason to have good customer service.

There isn't a government agency that has customer service worth a damn. Rude, surly, slow, and incompetent drones doing menial jobs poorly for high pay and insane benefits. With public agencies, people never hold the party in power since the power is held by bureaucrats they have no control over. In the States, DMV's are notoriously horrible (my former Governor is the only one in any state I know of who forced massive improvements with severe opposition from the Legislature).

If private companies could print their own money, yes, they wouldn't produce a good result. But they can't do that. Government, on the other hand, can. And they DO provide terrible results. Pretty universally.

Again, in the States, there is known to be hundreds of billions wasted on agencies that do the exact same thing. Yet nobody can cut them. No private enterprise would tolerate that. But in the government, it is the norm.

There is a direct relationship between government and inefficiency. When the government and private enterprise do the same thing, the private enterprise always does it better, faster, more reliably, and for less money --- and that is while having their money confiscated to support the inefficient public institution. It is the height of foolishness to TRUST a government. They don't like you. They want to control you. The only good government is one that can be drowned in a tub.

And, yes, public toilets in the US are the most vile places on Earth.

Try a real scholar, INTRODUCING the best, smartest, and the man who i've met who's influenced my life most of all with his lectures at LSE: DANI RODRIK

And for an alternate view on some of his scholarship...

http://www.iie.com/publications/papers/paper.cfm?ResearchID=1824

Just wanted to say that the amount of actual discussion of things in this topic really makes me think it's just some king of an elaborate joke that I'm not getting. Either way, really nice to see something like this. Can't really contribute to the discussion but as a person who lives in Russia I can't imagine how would it be if we didn't have free clinics. On the other hand just inherently I am against the communist way just because the country ended up in a pretty sideways situation, with a corruption focused economy (look up how ikea tried to expand here for three years before realizing that you have to bribe people to get things done) and a very confused culture. Just wanted to say good job guys, those walls of text are almost sexual.

@gamefreak9 said:

I have never denied that government is less efficient than the private sector so i don't know what's the point your trying to make, I was merely saying that Friedman was stuck on his narrow minded delusional ways in believing free markets are the way to go.

The point I'm trying to make is the one promoted by Milton Friedman and Thomas Sowell: Free markets ARE the only way to go. Centralized planning leads to disaster every time, just ask Stalin's Soviet Union, Mao's China, and Pol Pot's Cambodia.

@gamefreak9 said:

Try a real scholar, INTRODUCING the best, smartest, and the man who i've met who's influenced my life most of all with his lectures at LSE: DANI RODRIK. http://www.project-syndicate.org/commentary/rodrik62/English.

Milton Friedman won a noble prize in economics. The University of Chicago has a place called the Becker Friedman Institute for Research in Economics. I'm pretty sure Dr. Friedman counts as a "real" scholar. Thank you though for bringing Dani Rodrik into the discussion; I have no idea who he is and I look forward to hearing what he has to say.

@gamefreak9 said:

Also no... that's NOT a rigorous economic study that format of study is merely one where one searches through piles of evidence to find isolated examples that fit his own reality. Here's what a rigorous unbiased economic study looks like, there's a link to dl the whole thing http://rodrik.typepad.com/dani_rodriks_weblog/2011/09/unconditional-convergence.html. Though i'm not sure if its very readable by people who won't specialize on economics.

It's interesting how you interpret Thomas Sowell's 71 pages of citations as "isolated examples". How are they different from "regular" examples? I guess if you mean "rigorous" to defined as "needlessly complex and deliberately unreadable by the masses to make so-and-so look really damn smart," then I guess Thomas Sowell isn't the economist for you.

@gamefreak9 said:

Your escalator example is very much biased, I assume your not a qualified civil engineer who understands the risks associated with renovating something that is underground and populated by people every day... so no making such simple generalizations is narrow and quite frankly, the epitome of idiosyncratic thinking. I am not qualified to really say anything about it either, so you might have a point, but you really are in not position to tell.

No, I'm not a civil engineer. But you don't have to be in a special position to wonder how the Empire State Building in NYC was built in 1 year and 45 days during the Great Depression, standing 1200ft with over 100 stories, but the 3 escalators in Dupont Circle station in Washington DC need 10 months to construct. My opinion is that it's due to excessive government regulation in the form of environmental impact studies, getting building permits, filing tax registration forms, collecting insurance policies, complying union worker rules, and list goes on and on. I think the Empire State Building was FAR more dangerous to construct than 3 underground escalators.

@gamefreak9 said:

Okay if 30 economists from the most esteemed universities are not enough to convince you... well maybe you really have got to review your approach to things. Just in case you become rational, there's also a CBO projection here http://www.cbo.gov/ftpdocs/121xx/doc12187/ChangesBaselineProjections.pdf .

George Orwell famously said some things are so foolish that only an intellectual could believe them, for no ordinary man could be such a fool. In my opinion, it is impossible for a small group of elites to know better than the great unwashed how to run their lives.

Also, the Congressional Budget Office does honest work. But it can only use the numbers that Congress supplies – and Congress does dishonest work. It is not the CBO's job to give their opinion as to whether any of the marvelous things that Congress says it will do in the future are either likely or possible. The Congressional Budget Office is like a computer: Garbage in, garbage out.

@gamefreak9 said:

I can give you about 40 links which I have compiled for my possible PHD analysis on Policy and Inequality but I am not under the impression that you really want to learn as much as you want to confirm. FYI I used to be Hayek's biggest fan, I have read all of his books but then i started reading books with less history and theory and a little more analysis and i found out how irrelevant they were in the real world.

Believe it or not, I DO want to learn as much as I can. Why else would I start this thread? I wanted to learn what people knew or thought about Milton Friedman and Thomas Sowell. This whole thread has been very rewarding for me. I hope it's been as enjoyable to you.

I would love for you to share your 40 links. Good luck on your possible PhD.

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.

@Vinny_Says said:

When I think of cooperation I think of people building a house for a homeless family or just helping out someone who's fallen on hard times, not a bunch of random unrelated people who do a series of unrelated tasks for pay that in the end becomes a product someone can buy. How does that foster harmony and peace in the world when these people never even meet? I'm no English proffessor but that seems like a clear logical fallacy.

With all due respect, your definition of cooperation seems very narrow. Can one person make a whole pencil? No. However much we may think of ourselves as individuals, we are all dependent on other people for our very lives, as well as being dependent on innumerable strangers who produce the amenities of life. Few of us could grow the food we need to live, much less build a place to live in, or produce such things as computers or automobiles. Other people have to be induced to create all these things for us, and economic incentives are crucial for that purpose. Prices are at the heart of these incentives in a market economy.

Believe it or not, those random unrelated people who do a series of unrelated tasks for pay that in the end becomes a product that raises your standard of living. The prosperity we enjoy is precisely because of the free market. Do you ever wonder why we have this prosperity? When you have seen scenes of poverty and squalor in many Third World countries, either in person or pictures, have you ever wondered why we in America have been spared such a fate? When you have learned about the bitter oppressions that so many people have suffered under, in despotic countries around the world, have you ever wondered why Americans have been spared?

Have scenes of government-sponsored carnage and lethal mob violence in countries like Rwanda and the Balkans ever made you wonder why such horrifying scenes are not found in on the streets of America?

The czars in Russia, the shah of Iran, the Batista regime of Cuba, were all despotic. But they look like sweethearts compared to the regimes that followed. For example, the czars never executed as many people in half a century as Stalin did in one day.

The free market has brought millions of people out of poverty, and we enjoy unprecedented standards of living in the Unites States precisely because of it. Imagine what kind of world we would live in if every country adopted free market principles. If that ever happens, then maybe you can explain to me how that fosters harmony and peace in the world.

Thank you for taking an interest in this thread. I hope you've gotten something out of it. I would love to know your thoughts :-)

@AZ123 said:

The point I'm trying to make is the one promoted by Milton Friedman and Thomas Sowell: Free markets ARE the only way to go. Centralized planning leads to disaster every time, just ask Stalin's Soviet Union, Mao's China, and Pol Pot's Cambodia.

I have also never stated I was for fully centralized planning, as Dani's article references, the best successes are from MIXED economies. Also what's really off the charts astounding is when free market enthusiasts blame what went wrong and suggest what should be done different next time, but when its about Centralized economies, like the Soviet Union, which brought about some of the fastest growth ever recorded, they blame the system. What if they thought practically about centralized planning too? what if you find out what went wrong, and take care of it? I mean maybe you could suggest JIT production, maybe with today's internet infrastructure you would not see such a lack of transparency that occurred back then. Also China is(was) a planned economy and has thrived just fine, even before opening up its trade barriers. You are not looking critically!

@AZ123 said:

Milton Friedman won a noble prize in economics. The University of Chicago has a place called the Becker Friedman Institute for Research in Economics. I'm pretty sure Dr. Friedman counts as a "real" scholar. Thank you though for bringing Dani Rodrik into the discussion; I have no idea who he is and I look forward to hearing what he has to say.

Nobel prizes don't really mean much its just a popularity contest. With the exception of this year where the Princeton professor(i forgot his name) won it for his stochastic processes in policy application models which was ingenious and has already changed every model published today, giving much clearer results. Not sure if it's the same Becker so correct me but it must be, but I do follow the Becker Posner blog, and really their "Research" involves pretty words and almost no empirical evidence to support them, in fact a nebula of empirical evidence has come out bashing flat taxing, and Becker is still supporting it even in light of this evidence, he is one of those who don't listen to reason. Here's the blog entry i am referring to so you can tell me if its the same guy.

@AZ123 said:

It's interesting how you interpret Thomas Sowell's 71 pages of citations as "isolated examples". How are they different from "regular" examples? I guess if you mean "rigorous" to defined as "needlessly complex and deliberately unreadable by the masses to make so-and-so look really damn smart," then I guess Thomas Sowell isn't the economist for you.

Have you looked at the Article I sent? He makes his assumptions clear, its what real empirical evidence looks like, this is how you differentiate causality and correlation. Its not "Needlesly" complex this is the tools we have to measure things, it truly is, if you wish to understand the economy you must familiarize yourself with the tools that are used to break it down you can't just pick out whatever you want. I mean I can say all sorts of things that could be true because they are correlated, Women are stupider than men because they don't engage in rigorous mathematical study, I can say that capitalism creates divorce, i can say that people with big shoes are better at testing on Iphones(there is a correlation between shoe size and iphone ownership).

@AZ123 said:

No, I'm not a civil engineer. But you don't have to be in a special position to wonder how the Empire State Building in NYC was built in 1 year and 45 days during the Great Depression, standing 1200ft with over 100 stories, but the 3 escalators in Dupont Circle station in Washington DC need 10 months to construct. My opinion is that it's due to excessive government regulation in the form of environmental impact studies, getting building permits, filing tax registration forms, collecting insurance policies, complying union worker rules, and list goes on and on. I think the Empire State Building was FAR more dangerous to construct than 3 underground escalators.

I don't know that its far more dangerous to construct... and you don't know either, i can tell you that the construction of those escalators probably affects more meter squared than the empire state building(which is like 2 blocks?). Don't make such assumptions, the article didn't seem to make them and I am sure there is legitimate reasons why it's taking so long.

@AZ123 said:

George Orwell famously said some things are so foolish that only an intellectual could believe them, for no ordinary man could be such a fool. In my opinion, it is impossible for a small group of elites to know better than the great unwashed how to run their lives.

Also, the Congressional Budget Office does honest work. But it can only use the numbers that Congress supplies – and Congress does dishonest work. It is not the CBO's job to give their opinion as to whether any of the marvelous things that Congress says it will do in the future are either likely or possible. The Congressional Budget Office is like a computer: Garbage in, garbage out.

Yes let's bring in a literature person in to talk about economics because it sounds nice. This is the kind of thing that annoys me, its fine to disagree with some qualitative work since its highly subjective, and even quantitative, you have to agree with the assumptions and the variables created. But you know these people have been especially chosen for their expertise in this fields, all of these surveys that are run use different specialists, aka they won't get a development economist to talk about taxing the rich. Disagreeing with such a unanimous group of experts is just plain irrational. I consider the CBO to be fairly reliable the data I use from them seems to match World Bank data, and if you don't think that's reliable well... your a nihilist and i don't see why your siding with the free market enthusiasts.

Believe it or not, I DO want to learn as much as I can. Why else would I start this thread? I wanted to learn what people knew or thought about Milton Friedman and Thomas Sowell. This whole thread has been very rewarding for me. I hope it's been as enjoyable to you.

I would love for you to share your 40 links. Good luck on your possible PhD.

Well to be honest, although I am very familiar with Friedman's work, I had maybe heard Thomas Sowell's name only a few times in my readings. Though I don't find him particularly convincing and I am very skeptical to work where the person analysing is "picking" examples that illustrate their point. Because then that illustrates a lack of tautological coherence which pretty much means it can't be applied anywhere else because it looks at only two possible things. To illustrate my own point, imagine a couple breaking up, and you know one cheated on the other, it might be easy to say that they are breaking up because one of them cheated, but its probably far from the truth, the cheating itself could have been caused by something else, maybe bad sex life, maybe lack of communication, maybe disagreeing on marriage, maybe racism, maybe family pressure, you just don't know.

Capitalism may just be one of the effects of technology and not the other way around, and taking it for granted that it is is a mistake of grand magnitude. What I love about Danny Rodrik is how he manages to apply his critical thinking to all sorts of things, for instance, the world is becoming globalized regardless of what kind of policies, freedom, or technology is being implemented(unconditional). Or how he basically mathematically disproved the norm of dummy politicians claiming dogmatically that having a stock market increases growth, by showing that access had the same effect as ownership. There is more to the world than theories, and no there is no free market god that fixes everything but the market is a powerful force that can be aimed in some very positive directions.

The markets are best used as a source of information, for instance imagine a government funding the departments of higher education with the best job prospects. So if for instance economics offers 20% employment rate whilst a mathematics department offers a 90% employment rate to its graduates then the government will adjust funding and make the economics degree more expensive relative to the math department making less people able to afford the economics one and pushing people unto mathematics, eventually using such a system all higher education will yield the exact same job prospects and will be responding to the markets. This system would automatically create equality on its own, this is but an example of how government and markets can have synergistic effects together. Somehow people have come to think of the government as the "bad" person, but really all the government ever does is defend the weak and this image of corrupt burecrats you hear is a very rare anomaly.

Free markets are flawed, instead of clinging desperately to them we should be using them as a stepping stone to achieving the next great system. I don't believe that today's entrepreneurs are any better than the old ones, I consider Thomas Edison to be a much more value adding man than that annoying Facebook kid who created a time wasting platform that encourages short attention spans, so why should he be rewarded so much? You might think that its fine since it doesn't affect much, but in reality due to diminishing marginal utility, your saving rate goes up, and with you holding a higher proportion money than everyone else and not spending it, you are creating inflation because enterprises still want to grow but you are spending less so they have to just raise their prices.

So...he's black huh? leaves thread

People always blame the government, rich people, "the powerful," etc. for being too greedy and somehow exploiting the system to the extent that it ruins everything else. And while their behavior often does have serious problems, a lot of it boils down to two principles: 1) misaligned incentives with public welfare, and 2) a tendency for money and power to accumulate.

This isn't just true of capitalism, it is true in almost every society in the world. In some sense I think it's unavoidable, but I think we can try and have stricter standards of accountability and also reward people for philanthropy more. But we should also stop just pointing fingers and saying "it's all their fault!"

Because it's not.

@MikeinSC said:

Try a real scholar, INTRODUCING the best, smartest, and the man who i've met who's influenced my life most of all with his lectures at LSE: DANI RODRIK

And for an alternate view on some of his scholarship...

http://www.iie.com/publications/papers/paper.cfm?ResearchID=1824

Great I link Dani Rodrik, the father of Diagnostic thought and you link me to a qualitative article that makes no attempt to actually disprove Dani's position with anything but words.

@MikeinSC said:

There is a direct relationship between government and inefficiency. When the government and private enterprise do the same thing, the private enterprise always does it better, faster, more reliably, and for less money --- and that is while having their money confiscated to support the inefficient public institution. It is the height of foolishness to TRUST a government. They don't like you. They want to control you. The only good government is one that can be drowned in a tub.

Also thanks for linking me to your response so I can bash it down, which is easy when you use words like "always", private enterprise does not ALWAYS do it better. Insurance is also one which naturally makes the government more efficient by becoming immune to adverse selection and allowing for lower premiums. E-government initiatives have even shown to surpass private sector efficiency, they talk about it here but I dno how you can get access to it without paying if ur not part of an institution that pays for it...

Please keep in mind that Public institutions help YOU, unless your some spoiled rich kid. Stop spreading childish nonsense, government isn't an Entity its god dam people, people who are less motivated by greed and more about people's well-being. The government doesn't have meetings to talk about how to drain you, they have meetings about how its probably best to improve your schooling. Whilst private enterprises have meetings to discuss how to make the product your going to buy have a short life so that you can buy another one, they are trying to MILK you. Stop being a moron, government is the good guy.

@gamefreak9 said:

Please keep in mind that Public institutions help YOU, unless your some spoiled rich kid. Stop spreading childish nonsense, government isn't an Entity its god dam people, people who are less motivated by greed and more about people's well-being.

My brother,

You have no way of knowing what motives the people in government have. You are assuming that people who don't use public institutions are "spoiled rich kids" and that is an unfair sweeping generalization. It is not childish nonsense to suggest that the government is nowhere near as efficient as the private sector -- there more than ample evidence for that.

You're correct that government is made of people, but who are these people? Politicians and bureaucrats micromanaging the mortgage sector of the economy is precisely how today's economic disaster began. Why anyone would think that their micromanaging the automobile industry, or executive pay across a wide sweep of other industries, is likely to make things better in the economy is a mystery.

@gamefreak9 said:

The government doesn't have meetings to talk about how to drain you, they have meetings about how its probably best to improve your schooling.

Yes, they do -- just not so bluntly. Look at the state of New Jersey as an example. Before Chris Christie became the governor in 2009, NJ went through 10 years where property taxes rose 70 percent, primarily to fund the local salaries, pensions and health care that mayors say account for 75 percent of their costs. Previous NJ administrations had raised taxes 115 times in eight years. Let me repeat that: Taxes were raised 115 times in eight years in New Jersey. According to a Boston College report from January 2010, an estimated net worth of $70 billion of wealth left the state of NJ from 2004 to 2008.

People in government may have good intentions, but that does not matter. Results matter.

@gamefreak9 said:

Whilst private enterprises have meetings to discuss how to make the product your going to buy have a short life so that you can buy another one, they are trying to MILK you.

Private enterprises create products to raise your standard of living. Unlike the government, private enterprises cannot force you to do anything. In a free market you have the freedom to choose. Apple does not make me buy an iPhone; Exxon Mobil does not make me buy gas; Pixar does not make me watch their movies. If you don't like or want a company's product, THEN DON'T BUY IT. Of course they're trying to "milk" you -- they are trying to stay in business! They want to make as much profit as possible so they can expand their business, provide more people with jobs, and raise everyone's standard of living. Some companies succeed, and others fail. That's the beauty of the free market.

@gamefreak9 said:

Stop being a moron, government is the good guy.

gamefreak9, please be respectful. We're having a discussion of ideas. Personally attacking someone who disagrees with you is not helpful.

@MikeinSC said:

The only requirement in private enterprise is to please the customer. They can always go elsewhere and you need to keep their business. They have a reason to have good customer service.

YES.

@MikeinSC said:

There isn't a government agency that has customer service worth a damn. Rude, surly, slow, and incompetent drones doing menial jobs poorly for high pay and insane benefits. With public agencies, people never hold the party in power since the power is held by bureaucrats they have no control over. In the States, DMV's are notoriously horrible (my former Governor is the only one in any state I know of who forced massive improvements with severe opposition from the Legislature).

YES!! The DMV experience I had was just dreadful!

@MikeinSC said:

If private companies could print their own money, yes, they wouldn't produce a good result. But they can't do that. Government, on the other hand, can. And they DO provide terrible results. Pretty universally.

YES, YES, YES!!

@MikeinSC said:

Again, in the States, there is known to be hundreds of billions wasted on agencies that do the exact same thing. Yet nobody can cut them. No private enterprise would tolerate that. But in the government, it is the norm.

THIS IS SUCH AN AMAZING POINT; ROCK ON DADDY-O!!!

@MikeinSC said:

There is a direct relationship between government and inefficiency. When the government and private enterprise do the same thing, the private enterprise always does it better, faster, more reliably, and for less money --- and that is while having their money confiscated to support the inefficient public institution. It is the height of foolishness to TRUST a government. They don't like you. They want to control you. The only good government is one that can be drowned in a tub.

MikeinSC, I love you. I have not the slightest idea who you are, but I think you're the greatest person in the world.

@MikeinSC said:

And, yes, public toilets in the US are the most vile places on Earth.

Indeed.

@Vinny_Says said:

When I think of cooperation I think of people building a house for a homeless family or just helping out someone who's fallen on hard times, not a bunch of random unrelated people who do a series of unrelated tasks for pay that in the end becomes a product someone can buy. How does that foster harmony and peace in the world when these people never even meet? I'm no English proffessor but that seems like a clear logical fallacy.

With all due respect, your definition of cooperation seems very narrow. Can one person make a whole pencil? No. However much we may think of ourselves as individuals, we are all dependent on other people for our very lives, as well as being dependent on innumerable strangers who produce the amenities of life. Few of us could grow the food we need to live, much less build a place to live in, or produce such things as computers or automobiles. Other people have to be induced to create all these things for us, and economic incentives are crucial for that purpose. Prices are at the heart of these incentives in a market economy.

Believe it or not, those random unrelated people who do a series of unrelated tasks for pay that in the end becomes a product that raises your standard of living. The prosperity we enjoy is precisely because of the free market. Do you ever wonder why we have this prosperity? When you have seen scenes of poverty and squalor in many Third World countries, either in person or pictures, have you ever wondered why we in America have been spared such a fate? When you have learned about the bitter oppressions that so many people have suffered under, in despotic countries around the world, have you ever wondered why Americans have been spared?

Have scenes of government-sponsored carnage and lethal mob violence in countries like Rwanda and the Balkans ever made you wonder why such horrifying scenes are not found in on the streets of America?

The czars in Russia, the shah of Iran, the Batista regime of Cuba, were all despotic. But they look like sweethearts compared to the regimes that followed. For example, the czars never executed as many people in half a century as Stalin did in one day.

The free market has brought millions of people out of poverty, and we enjoy unprecedented standards of living in the Unites States precisely because of it. Imagine what kind of world we would live in if every country adopted free market principles. If that ever happens, then maybe you can explain to me how that fosters harmony and peace in the world.

Thank you for taking an interest in this thread. I hope you've gotten something out of it. I would love to know your thoughts :-)

@gamefreak9: Brother, I have question for you, if you don't mind answering.

Why do you suppose Thomas Sowell was a devout Marxist for decades, even under the tutelage of Milton Friedman, and suddenly became a free market capitalist as soon as he got a job in the government? How did this happen? Why did this happen?

What is it about the economy and government that you and Dani Rodrik know that he does not?

I'm extremely interested in your answer to this. I greatly look forward to hearing your thoughts on this.

@AZ123

It is the height of foolishness to TRUST a government. They don't like you. They want to control you. The only good government is one that can be drowned in a tub.

I was actually responding to this, it is completely irrelevant to efficiency, It just angered me to hear this kind of hippy talk... that is full of ignorance.

@AZ123 said:

You're correct that government is made of people, but who are these people? Politicians and bureaucrats micromanaging the mortgage sector of the economy is precisely how today's economic disaster began. Why anyone would think that their micromanaging the automobile industry, or executive pay across a wide sweep of other industries, is likely to make things better in the economy is a mystery.

Executive pay has risen without any substantial increase in skill level or training, the financial sector's rise is proof of the inefficiency of markets. The government bailout of GM was something I disagreed with on offset, yet I think I was proven wrong since GM is back up and profitable today, jobs were saved. You could argue that no bailout would have had other entities pick up the pieces, but there is no guarantee that that would have happened over the demand being met by imported cars. I think it paid off fine.

@AZ123 said:

Yes, they do -- just not so bluntly. Look at the state of New Jersey as an example. Before Chris Christie became the governor in 2009, NJ went through 10 years where property taxes rose 70 percent, primarily to fund the local salaries, pensions and health care that mayors say account for 75 percent of their costs. Previous NJ administrations had raised taxes 115 times in eight years. Let me repeat that: Taxes were raised 115 times in eight years in New Jersey. According to a Boston College report from January 2010, an estimated net worth of $70 billion of wealth left the state of NJ from 2004 to 2008.

People in government may have good intentions, but that does not matter. Results matter.

Look i'm not american, i don't know what Jersey's GDP contribution is so that 70b doesn't really tell me anything nor does it explain where it went precisely. Also i'm assuming they had an agenda to raise taxes that many times, did it succeed? You say results matter but your only looking at the input... also were taxes in Jersey relatively lower anyway?@AZ123 said:

Private enterprises create products to raise your standard of living. Unlike the government, private enterprises cannot force you to do anything. In a free market you have the freedom to choose. Apple does not make me buy an iPhone; Exxon Mobil does not make me buy gas; Pixar does not make me watch their movies. If you don't like or want a company's product, THEN DON'T BUY IT. Of course they're trying to "milk" you -- they are trying to stay in business! They want to make as much profit as possible so they can expand their business, provide more people with jobs, and raise everyone's standard of living. Some companies succeed, and others fail. That's the beauty of the free market.

Your kidding right? the point is that we have the technology and means to reduce the maintenance in our standard of living but our system holds us back... they build think so they will break... I'm not not going to buy a computer because it will break, since it eases my lifestyle, but if this were a centralized economy, my computer's life expectancy would surely rise because people would be trying to come up with ways to maximize its life instead of minimize. It might seem like its productive but its not, If you stop wasting man hours to remake the same product you could have been developing brand new technology or innovations, but the system holds you back... its like that old movie "man in the white suit" where he develops a suit that never needs cleaning and can't be torn, and capitalism tries to get rid of it because it doesn't fit with its own structure.

@AZ123 said:

gamefreak9, please be respectful. We're having a discussion of ideas. Personally attacking someone who disagrees with you is not helpful.

Yes your right I apologize.

Chicago School < Keynesian

@AZ123:

Well I can ask you the same question with Richard D Wolff, though being a Marxist has pretty much guaranteed he becomes ignored(until recently he has been growing in popularity). I dno how you can be a Marxist before achieving your education... that sounds like bias to me. Not saying there's no merit in Marxism just that you should not be a libertarian or Marxist if you haven't researched and understood the alternative enough.

Its actually very expected route. Actually maybe even too expected, underprivileged childhood= belief equality. The he does well for himself and changes his views and has an internship with inneficient nightmare government (puerto rico) to support his view.

You should also note that his PHD was done after he converted to free market principles(hence why he chose Chicago).

Well the approach i've always liked was objectivity in numbers, and I was fortunate enough to stumble unto Dani Rodrik and his work and motto of diagnostic thought through mathematical rigour.

Actually upon just looking him up I discovered the kind of man he is, who just observes an interesting statistic, and then comes up with his own conclusion about it. The difference is that when Dani Rodik does something, he doesn't come up with conclusions, he merely lists possibilities and probabilities. This probably doesn't hold for someone as esteemed as Cowell but generally when I hear about Bachelor of Arts in Economics, it sort of hurts my heart inside since there are tools that have mathematical precision that can be used and I do get tired of Arts economists coming and rambling about cause and effect when all they really understand is what a couple of guys said. I'm not a Keynesian and I am not a Marxist, I like to look at what works and consider possibilities on why it does so or why it doesn't, ideally come up with solutions.

You realize Sowell has taken a back seat as an entertainment theorist in economics, especially after his comparison of Obama and Hitler. This is the guy who gets support from Palin. I really despise academics for the most part though, mainly due to this style, where they have loyalty to one side and fight hard to make it seem right... Paul Krugman disappointed me when he was defending ISLM an obsolete model... Rodrik is a beacon of hope... too bad he doesn't release as many papers as i would like... my second favourite, though not as strong an econometrician is Robert Shiller.

Here's some interesting links to some controversies in free market principles.

http://unlearningeconomics.wordpress.com/2011/11/17/free-market-double-standards/

http://unlearningeconomics.wordpress.com/2011/12/14/more-free-market-double-standards/

@Vinny_Says said:

Ok what are you even going on about? What does What does the ethnic cleansing of Bosnia have to do with a free market economy? Your reasoning is: because these people are poor (because they haven't adapted the same free market principles as the US) they are more likely to commit genocide and participate in atcrocities against others (or themselves)?

My point is that in America we have freedom. We have a free market economy that has raised our standard of living that is unprecedented in all of human history. The people who don't live in free societies have lower standards of living, sometimes despairingly low. For example, back in 2001 Afghanistan was the world's third-poorest country. Less than 10 percent of the population had access to health care. More than four out of five women were illiterate. Life expectancy was a bleak forty-six years. Societies mired in poverty and disease foster hopelessness. And hopelessness leaves people ripe for recruitment by terrorists organizations like Al-Qaeda.

The ethnic cleansing of Bosnia demonstrates how societies that are not free are subject to corrupt leaders like Slobodan Milosevic. Societies that don't have free market economies, but rather centralized planning economies, have a poor track record (e.g. Stalin's Soviet Union, Mao's China, and Pol Pot's Cambodia). Tens of millions of people died in these societies. Why?

@Vinny_Says said:

If that's the case then how does the mightiest, most prosperous and most peacful nation on earth find itself in Afghanistan and Iraq fighting some pretty useless wars? (and install dictators such as Batista & Pahlavi).

The mightiest, most prosperous and most peaceful nation on earth finds itself in Afghanistan and Iraq fighting some pretty useless wars because the United States was attacked on Sept. 11, 2001.

And I would say calling them "useless" completely ignores the progress made in the Middle East. What kind of progress you ask? However unstable the political environment is, the fact is that Iraq is now a multi-religious, multi-ethnic democracy and an ally of the United States led by Prime Minister Nouri al-Maliki. This was not the case under Saddam Hussein. In Afghanistan the Taliban has been driven out and Osama bin Laden is gone forever. Women and girls can now attend school in Afghanistan. There has been enough blood and treasure invested in those areas. Who's to say that those areas won't be thriving democracies with higher standards of living fifty years from now. Only time will tell.

@Vinny_Says said:

The system works in America; ignore the trillion dollar debt for a moment, and be thankful you live in a free society.

You're right; the system does work in America. The debt is actually $15 trillion, but who's counting? I am thankful that I live in a free society. That's one other reason why I started this thread. I was curious to know what others thought about free societies and free markets espoused by Milton Friedman and Thomas Sowell, and challenge them if necessary. The whole thread has been very rewarding for me. I hope you've gotten something from it :-)

@Vinny_Says said:

But there's a lot more at play than just the free market economy.

Like what?

@Vinny_Says said:

Your dream is nice but we live in a world where an Arab is not allowed to sell his property to a Jew, and having them "understand" the free market isn't going to change that.

You're right. Race relations are have a long way to go before achieving peace. Once that peace happens (I hope), then we can begin applying free market economics.

@Vinny_Says said:

Also come on, in a day? In one single day? Saying sensationalist things like that just makes you sound like you're from Fox News. Give the reader some credibility....

I got that information from Thomas Sowell's The Thomas Sowell Reader. He does not work for Fox, so you can relax.

@MikeinSC said:

The only requirement in private enterprise is to please the customer. They can always go elsewhere and you need to keep their business. They have a reason to have good customer service.

There isn't a government agency that has customer service worth a damn. Rude, surly, slow, and incompetent drones doing menial jobs poorly for high pay and insane benefits. With public agencies, people never hold the party in power since the power is held by bureaucrats they have no control over. In the States, DMV's are notoriously horrible (my former Governor is the only one in any state I know of who forced massive improvements with severe opposition from the Legislature).

If private companies could print their own money, yes, they wouldn't produce a good result. But they can't do that. Government, on the other hand, can. And they DO provide terrible results. Pretty universally.

Again, in the States, there is known to be hundreds of billions wasted on agencies that do the exact same thing. Yet nobody can cut them. No private enterprise would tolerate that. But in the government, it is the norm.

There is a direct relationship between government and inefficiency. When the government and private enterprise do the same thing, the private enterprise always does it better, faster, more reliably, and for less money --- and that is while having their money confiscated to support the inefficient public institution. It is the height of foolishness to TRUST a government. They don't like you. They want to control you. The only good government is one that can be drowned in a tub.

And, yes, public toilets in the US are the most vile places on Earth.

Try a real scholar, INTRODUCING the best, smartest, and the man who i've met who's influenced my life most of all with his lectures at LSE: DANI RODRIK

And for an alternate view on some of his scholarship...

http://www.iie.com/publications/papers/paper.cfm?ResearchID=1824

You do realize that all of those arguments you just made apply exclusively to the American system and are blatantly not true about a number of countries around the world, right?

First, private enterprise does not care about pleasing the customer in a number of situations where that is not profitable. Just yesterday a coworker of mine was completely unable to get a customer rep from an airline to talk to him (they guy actually hung up on him... twice) when complaining about his brand new suitcase being destroyed during a flight. Simply put, there are not enough airlines that this guy can avoid this one every time he travels, so there's literally no incentive to pay for his stupid suitcase, since he will continue to pay them money regardless of whether he's pleased with their service or not. When there is no incentive for the private sector to please a customer, they won't. Pretending that there are no situations where that occurs is just being in denial. We've all been there at one point or another.

Meanwhile, many public agencies around the world are efficient and friendly. Call the local equivalent of IRS here and you get amazing service, because there is an incentive for the government to make paying your taxes easy (it avoids fraud). You get a personal rep. If there's a problem, they'll call you back. They'll confirm everything in a text message. If you are not tech savvy, they'll fire up the web page you use to pay your taxes (yes, we have a web page to do that) and they'll ask you for your data personally or on the phone and do it for you. Hell, they'll do it for you regardless. Every year they'll send you a draft and ask you if you're cool with it or you want to change something on it. If the draft is correct, you don't even have to do anything about it, you just call them or log in to their site and tell them it's fine, and that's it.

Getting a new passport or, yes, a new driving license is the same thing. You set up a date online, get there at the right time and they'll print one for you in about ten minutes. They take your picture, pull up your old personal data, ask you if you want to make any changes, take your prints in a little portable scanner and give you a new passport on the spot.

Also, the bathrooms are really clean?

Sure, when the incentives are misaligned, government can be bureaucratic, slow, wasteful and intrusive. But nope, inefficiency not intrinsic to the public sector. It just happens to be how the disastrously badly planned public sector in the US works. In fact, plenty of public agencies around the world pay for themselves or actually make money. Trust me, I've worked in the private sector long enough to have seen misaligned incentives there also generate bureaucratic, slow, wasteful and intrusive behaviour.

In fact, if I had to point at an engine for inefficiency, it wouldn't be public or private investment.

It would be size.

The larger you get, the higher the amount of procedure, middle ranks, paperwork and opportunity for unidentified non-productive behaviour. I've seen multiple large companies generate superfluous tasks, pay too much for work that could be done cheaper and generally be terribly inefficient.

The free market is good but the state and reasonable regulations are also important. Pure free market or pure centralism would both end in disaster, things worked the best somewhere in the middle.