Last December I took the time to explain capitalism for Angela Merkel:
Capitalism means both successes and failures. It is a fundamentally experimental system, with a continuous feedback mechanism — the market, and ultimately profit and loss. Ideas that work are rewarded with financial success, and ideas that don’t are punished with failure. With capitalism, systems, ideas and firms that fail to produce what the market wants fail. They go bankrupt. Their assets, and their debt is liquidated.
When that mechanism is suspended by a government or central bank that thinks it knows best — and that a system that is too interconnected to fail is worth saving at any cost — the result is almost always stagnation. This is for a number of reasons — most obviously that bailouts sustain crippling debt levels, and are paid for through contractionary austerity. But it is larger than just that.
In nature, ideas and schemes that work are rewarded — and ideas and schemes that don’t work are punished. Our ancestors who correctly judged the climate, soil and rainfall and planted crops that flourished were rewarded with a bumper harvest. Those who planted the wrong crops did not get a bailout — they got a lean harvest, and were forced to either learn from their mistakes, or perish.
These bailouts and interventions have tried to turn nature on its head — bailed out bankers and institutions have not been forced by failure to learn from their mistakes, because governments and regulators protected them from failure.
Obviously she did not read my advice.
Angela Merkel is not happy that financial markets have not made any contribution to resolving the financial crisis.
Right; financial markets need to contribute to resolving the financial crisis?
What financial markets? The markets have just become another manipulated manifestation of central planning. The more dollars, euros and yen that central banks pump into markets the less traders will be trading fundamentals — i.e. basing their trading on the inherent value of securities, and allowing the needs and wants of society to determine economic output — and the more they will be trading the prospects for more central bank and government intervention, more QE, more hopium.
Central planning always and inevitably has unsolicited side-effects (in this case, that markets would be corrupted and junkiefied), and usually side-effects which are not necessarily visible or detectable to the person doing the planning no matter how sophisticated their pseudo-scientific simulations appear to be. Central planners are always making decisions with incomplete information, and the missing information very often has a large and appreciable effect on outcomes. In a small and decentralised system, this is not a problem; decision-makers can usually locally adjust their behaviour to a new trajectory as they get new information. But for central planners, operating from the centre of a system, policy is always centralised and generalised, slow to adapt to local information, slow to adjust to local trends and patterns, broad and sweeping rather than subtle and local.
Very simply: the only way that financial markets could ever have solved the financial crisis is if government had left them alone enough for them to adapt to the new post-bubble reality. At the very most, this meant providing a safety net for the poor and the jobless while the market worked out its problems. Instead, our leaders chose to preserve and thus crystallise possibly the most-deranged and malinvestment-fuelled bubble economy in human history, full of greedy and parasitic companies of no real value to society, and which in a market economy would have gone bust long ago.
And now central planners (and Nixon was right — they’re all central planners now) want to whine about the markets not doing what they desire?
The great delusion of Western governments in this era has been that everything appears to them to be a problem for them to fix. If they identify a problem, they will find a way (usually with our tax money) to address it. They almost never realise or even consider that sometimes the problems that they identify are best addressed by being left alone (with at most the provision of a safety net for the poor and vulnerable). If you’re holding a hammer, every problem will look like a nail. And government keeps bashing society with the hammer of centralisation and central control. And society is not a nail.
Lao Tzu understood this in stating:
The wisest course is to keep the government simple and inactive, for then the world stabilises itself.
azizonomics 
Excellent John.
Note the Australian opposition party “Liberal Party” has called for smaller government and a review of welfare.
They must read your blogs or my annoying letters!
http://www.theage.com.au/opinion/political-news/hockey-blasts-attitude-of-entitlement-20120418-1x7zs.html
I don’t really have a problem with individual welfare, so long as it is run carefully and locally. We should be much, much, much more worried about corporate welfare. That is much more dangerous, because it corrupts a much larger segment of the economy.
Welfare will blow out if Governments restrict small business. I spoke to a man who lost his job, refused to go on welfare. He drove to Tasmania (Island State off Australia) with the worlds best apples. He brought back a trailer load of them and tried to sell in a roadside parking area. Weary drivers stopping for a break, could purchase. These apples are not available in the supermaket. They are organis and heirloom seed variety. He did a great trade.
The council shut him down. I don’t know where he is now. Perhaps on welfare.
That is an amazing story, and very instructive about the problems of barriers to entry.
The prroblem is the one Americans and the British always have when dealing with Central Europe. Germans do not have your conception of capitalism and never did. The German tradition is what they call “organized capitalism” and they do not subscribe to the idea that firm’s fail with all the terrible consequence that the failure has for the employees and the community. Germans modernized their country under their system and they did quite well. Why do you think that you need to lecture them when the Anglo-Ameican system is not doing well and has dragged them into its failure. You should ask them to forgive you and try to learn from them. What speculative US-UK finance did to them,, when it sucked their banking system into its orbit during the 1990s is the real crime.
“Organised Capitalsm” Fair points Mr Locke. I do know that German Industrialists use Union meetings to discuss production plans, or any other issues in a “Consultative” manner. The Germans also use long term Debt financing as opposed to Quarterly reporting Equity. This enables the business to gear for the future.
However this is not the matter at hand, and I think the excellent German system will be crushed under the financial support systems propping up the PIIGS. Despite what the Nazi’s though, Germans are not Superhuman.
On the ground — in terms of starting a business, in terms of being a worker — the Anglo-American system is much worse than the German system right now.
But on a wider supranational level we’re all part of the same system (which is probably more Anglo-American in nature than German) and that is where I am criticising Ms. Merkel. She is talking about equity markets and bond markets, and in these realms the Anglo-Americans and the Germans and all Western leaders have been involved in some very strong interventions which have totally obliterated the price discovery mechanism in the name of “stability” (i.e. liquidity has been pumped into markets so as to achieve a price floor).
what is the financial crisis? what does it mean to resolve? the so called “fight against crisis” is an attempt to preserve status quo, to keep failed politicians and businesses going on the cost of others.
I’d say markets have been already contributing to this fight for a long, long time, merely by accepting status quo, theft, inflation, price manipulations, struggle against Fed, subordinations. the fact that any soverign bonds, be it Bunds or US Treasuries, are still traded, is a farce. it will stop one day and they likes of Merkel will miss that self-hurting contribution.
Merkel just wants people with money to buy up all the bonds and equities and keep the system ticking over nicely. She (like most Western leaders) refuses to accept that markets are slowly rejecting the mess that Western leaders have created over the last 40 years.
Aziz, I know you are probably sick of me critiquing some of your economic views, but here I go again.
First off, I think this post smacks of “libertarian paternalism.” It goes back to the tone I perceive when I read libertarian writings. The tone of superiority, of we know best. You invoke the loaded term of central planners, as if to say that people who vote are mindless drones who unknowingly elected some authoritarian, communist regime. it’s quite condescending.
The other problem with libertarians – forgive me, I know this may not describe you most accurately – is that you fall into semantic traps such as this:
“In nature, ideas and schemes that work are rewarded — and ideas and schemes that don’t work are punished. Our ancestors who correctly judged the climate, soil and rainfall and planted crops that flourished were rewarded with a bumper harvest. Those who planted the wrong crops did not get a bailout — they got a lean harvest, and were forced to either learn from their mistakes, or perish.”
In other words, libertarians end up promoting social Darwinism even if the individual libertarian is personally against it. These arguments get co-opted by people that don’t give a shit about others, who then implement bogus “free market” policies that make it harder to survive if you aren’t rich. People arent stupid. People want to be looked after. Thats why they voted. Thats why we have a social contract. To some, Libertarianism becomes another name for neoliberalism.
Lastly, I feel like Libertarianism is plagued by myopia. Obviously the housing bubble was an awful thing involving many bad or irresponsible actors, but part of what was sold to the home owners and lenders was ideology: the idea of the American dream being associated with owning a home and having a nice place to live. Many citizens, as well as agencies, groups and activists, pressurized government to make housing more affordable. People want nice houses, and when you live in a country where a dude working for Goldman Sachs can earn $100,000 a year, sitting on his ass in a skyscraper fiddling with spreadsheets, why shouldn’t people get decent, affordable housing? When you live in a country that gives billionaires tax cuts why shouldn’t people get decent, affordable housing?
People that create real wealth in many cases do not reap nearly as much as those people speculating on that wealth or moving money around. Point being, people see injustice and inequality everywhere and they petition their govt in order to change that. That’s what govts are supposed to be. For, by, and of the people. It just ends up that sometimes people don’t like or agree with the libertarian prescriptions; and when that happens, the libertarian has a cow and starts demanding German chancellors study capitalism in earnest. I think she has and sees certain flaws. Meanwhile, libertarians never do: It’s just cronyism! It’s not a true free market! Etc. Etc. on and on. People, overwhelmingly, want robust healthcare systems and social programs. Evens those that claim they don’t! How many people are on welfare/Medicare in red states?
“These arguments get co-opted by people that don’t give a shit about others..”
That should have read appropriated, not co-opted.
Hello Jon, Please see my observation about the Apple Merchant. I would not say I am a Libertarian, but if the Government was advised by Mises, instead of Keynes, the Merchant would have the freedom to set up his business where it serves the greatest good (His profit and the consumer’s nutrition and respite during a long drive)
P.S. Are you employed by a Government department or a Private Institution? Are you self employed or ever tried to run a business, including selling professional service (Consulting).
Jon,
After 200+ years of literature and 1000’s of real world examples and yet you still haven’t figured out that the free market capitalism is the most efficient economic system at satisfying both the wants and needs of society?
I find your above post both silly and naive. The arrogant opinion that you know what a society “wants” and that the government should be the transmission mechanism though which those “wants” is obtained, is childish.
A critical critque capitalism can and should always be had. But, honest discussions about it’s weakness, are known, constantly debated, tweaked and refined. This is one of the strengths of captialsim. By accepting the fact that we really don’t know everthing and that there is no “best” model for society, we come to the conclusion that society can constantly be working towards a goal that never can truely be attained. That is the beauty of capitalism.
Using words such as “decent” or “affordable” or “People want” distracts us from the already known fact, that central planning doesn’t work. To say that we don’t need governments or that the government doesn’t have a role in society, is not what I’m saying. But it has been proven, over and over, that when the government gets invovled in daily life, they usually make things worse.
How many 5 year plans were 50 million people starve to death do we need before we realize that we should leave the farmers be and let them do their job? How many historical examples do we need (North Korea v. South Korea, East Germany v. West Germany, USA v. USSR, ad infinitum) before I can get you off my back? I don’t want to change your opinion or convince you (despite the mountain of evidence) that your wrong, I just want you to LEAVE ME ALONE!
I guess that makes me a libertarian.
“Jon,
After 200+ years of literature and 1000′s of real world examples and yet you still haven’t figured out that the free market capitalism is the most efficient economic system at satisfying both the wants and needs of society?”
Where did you get this from? That is a bit of a stretch of what I am saying. In any case, I can pose the reverse of your question to you:
After 200+ years of literature and 1000′s of real world examples and yet you still haven’t figured out that the free market capitalism isn’t the most efficient economic system at satisfying both the wants and needs of society?”
Your statement is pure libertarian dogma; Not fact, not reality, not truth. I happen to think that capitalism with social controls and regulations is pretty efficient.
“I find your above post both silly and naive. The arrogant opinion that you know what a society “wants” and that the government should be the transmission mechanism though which those “wants” is obtained, is childish.”
Ha. I know you are but what am I? Ummmmmm… Considering that just about everyone in Europe, Canada, and well, almost the rest of the world except the U.S., has some form of universal healthcare id say it’s a safe bet to say people want it. The difference between your assertion and my statement is yours is just that – an assertion! When you have billions of people living on 10 dollars or less a day, I don’t think everyone has decided definitively about the efficiency of “free market economics.” Most people are born into the world with the game already being played and have no choice but to pick a team. Do you really think most people in this world are screaming yay free market economics! Yay! Less regulation! Yay! Less Pay! And I’m naive? We are lucky to be in the U.S. Or Europe if that’s where you’re from.
“A critical critque capitalism can and should always be had. But, honest discussions about it’s weakness, are known, constantly debated, tweaked and refined. This is one of the strengths of captialsim. By accepting the fact that we really don’t know everthing and that there is no “best” model for society, we come to the conclusion that society can constantly be working towards a goal that never can truely be attained. That is the beauty of capitalism.”
So whats the problem? I was having that and you started kicking and screaming about it.
“Using words such as “decent” or “affordable” or “People want” distracts us from the already known fact, that central planning doesn’t work. To say that we don’t need governments or that the government doesn’t have a role in society, is not what I’m saying. But it has been proven, over and over, that when the government gets invovled in daily life, they usually make things worse.”
Uh huh. So why do you want the “central planners” protecting your rights and property, which can be taken from you at anytime? And since when did govt of, by, and for the people become tyrannical and too big when it actually attempts to care for the people?
When most people want it and you don’t it’s tyrannical. When you want it and no one else does, it’s free market Libertarianism and therefore it’s right.
“How many 5 year plans were 50 million people starve to death do we need before we realize that we should leave the farmers be and let them do their job? How many historical examples do we need (North Korea v. South Korea, East Germany v. West Germany, USA v. USSR, ad infinitum) before I can get you off my back? I don’t want to change your opinion or convince you (despite the mountain of evidence) that your wrong, I just want you to LEAVE ME ALONE!”
Hang on a sec. Hahahahahahaha!!! Pure. Comedy. Gold. It’s pretty easy to criticize an argument you pulled out of your ass that doesn’t represent anything I actually believe. I think they call this a straw man!!! You folks are great! The only way your particular beliefs hold is when they are set against the backdrop of outrageous, communist terror and totalitarianism. Yeah, fo-sho, I want famine! I want to tell people that know how to form to sell there lives and labor to the state for a pittance! I want death and dictatorship! Is that the best you can do you loon? The only way to win is to say that I believe in communist dictatorship?! lol. Yeah. Thought so.
You don’t have to worry about changing my opinion – you invented it from scratch and ranted on and on about how shitty north Korea is. Brilliant.
Mountain of evidence? For unfettered, free-market, neoliberalism? More like a mountain of baseless assertions. These policies have been fleshed out in the experimental laboratories of state governments and countries. The left a bunch of poor people worse off and made rich people richer! But then again I am for famine and death and destruction, and I hate god and love Satan!!!!
“I just want you to LEAVE ME ALONE!” lol! Ok. So then move in the woods and fend for yourself.
The problem is you want everyone to be alone with you. And when they reject your libertarian medicine, you kick and scream about how right you are and how wrong everyone else is!
Bye, fo-sho! Wish granted!
I guess that makes me a libertarian.
Your response was expected.
So allow me to to show you 2 real world examples of how universal healthcare doesn’t work as advertised.
My aunt lives in Hungary. This is what she does when she goes to the doctor/hospital. She wakes up, pulls out an empty white envelope, drives to the ATM, pulls out money from the ATM, puts money in said envelope and THEN goes to the doctor/hospital.
Why does my aunt go to the ATM before the her visit? Because, if the doctor were to find/diagnose an ailment that may require a solution above and beyond the normal scope, an envolpe stuffed with cash IS THE BEST WAY to get the needed drug, surgery etc.
That is what happens in the real world in a universal healthcare system. It may not start out like so, but it always end up that way. I hear that this now happens in Greece as well.
Second. I worked for 5 years under a Danish couple who immigrated from Denmark to the USA in the late 1990’s. They were hard working, smart and successful people. We had many discussions about universal healthcare during those 5 years. Over and over, they would tell me how inefficient the Danish healthcare system was. They would remind me that our healthcare system was MUCH better then their Danish system and they would offer proof.
This is one example.
In Denmark, you are assigned a neighborhood doctor. It was about 800 people per doctor in Denmark in the 1990’s, according to them. You have no choice in regards to picking your own doctor. The Danish couple (being in the restaurant biz), would constantly see their doctor up late at night getting drunk in their establishment. It doesn’t take a rocket scientist to figure out that a hungover doctor my not be working at the top of his or her abilities. But since you had no choice in choosing your doctor, you were stuck, drunkard and all.
Jon,
Also, I used REAL WORLD examples to backup many opinions.
I’m still waiting for you to find a utopia that we can use as a guideline to fill the “needs” and “wants” of a society.
I myself have looked for such a “utopia” for the last 15 years. I have yet to find a society that has excelled though central planning. In fact, I have discovered, over and over, that central planning has lead to a lower standard of living for a society/country as a whole.
You are very good at showing us the problems of capitalism, but you are short on solutions to these problems.
Everybody wants a “decent house.” A, yeah, no kidding. We tried that in the US and it was one of the main facilitators of our current malaise.
Everybody wants “good wage.” Thank you Sherlock. I think I learned this mowing lawns when I was 12 years old.
Everybody wants “universal healthcare.” Except for the people that have universal healthcare.
Jon,
Lastly, I think you could learn very much from Aziz. Heck, we all could.
Your “government is the solution to every ill on the planet” opinion just doesn’t fly in the real world. That opinion has long since been disproved. You just late to the train station.
Aziz writes many articles pointing out how a government’s “good intentions” usually end up making the orginal problem worse. He uses real world examples, backs them up with data, explains the problem and very often, offers a sensible solution.
This is the main reason I come to this blog. I like the work Aziz does and I especially like the solutions he offers.
@ fo-sho
Sigh.. Your argument is still predicated upon a straw man, namely, that I think “central planners” have all the solutions. “Central planners” could simply mandate that a certain amount of federal funds be allocated to health care and let state and local governments develop plans that work for them. The only thing the central planners would have to do is put the money and and maybe mandate that everyone be covered. The rest is up to the people.
I find it funny you use one the worst examples to rail against universal healthcare. From what I understand Hungary is pretty corrupt, and certainly very different from many places. Not that any of that matters. Canadians seem to enjoy there health care, Swedes, Germans, The French, the Brits, the Aussies. In Britain only 8% of the population has a private health care plan. Britain is unique in that it is probably the only true socialist health care system. Each one of these countries is different in it’s implementation of health care, some are private/public, but they all lower the costs and essentially cover everyone for at least basic medical, dental care. But you leave all of that out of your cute little story.
All of these countries spend less of their GDP on health care than the US.
How tyrannical is that! How evil! What’s more hysterical is that instead of trying to fix the kinks you would rather say to hell with anyone that can’t afford care – you would rather scrap the whole thing and let the market (read insurance companies) decide who lives and who dies.
It’s better to not have a health system at all then to be at the mercy, of the evil, evil “central planners” we elected!
Jon,
Its funny you should bring up Europe. Perhaps you don’t read the news these days, but Europe is the middle of a debt crisis. Once the debt crisis has run its course and economic reality has set in, one of the sectors that will be negatively effected, will be healthcare. This is 100% FO-SHO!
I understand and agree with your POV that all governments are not evil or tyrannical.
But what I keep trying to point out to you, using real world examples, is that governments that try meet the “needs” of their population, invariably fail. That the historical evidence is so much in my favor, is undisputedable.
You seem to be able to quantify your opinions without using any actual facts and figures. Using only baseless opinions that the Aussies or the Germans are “happy” does not cut it in the real world.
I would help you out by pointing that Taiwan has a healhcare system in place that should serve as a model for proponents of government run healthcare, but, alas, its a subject that I have long since stopped caring about.
Also,
As you correcty point out, the US spends a much larger % of our GDP on healthcare.
Much of this spending comes from two “government run” schemes, medicare and medicad.
The reason that healthcare cost in the USA are high, as a % of GDP, has much to do with these programs. (I am not making judgement, just a statement)
You see Jon, when the government gets involved in a sector of the economy, they change the cost structure of that sector. Throught the ability to tax and the printing press, they can and do effect the information mechanism that price (as measured by money) offers.
This pricing mechanism is how producers and consumers allocate scarce resources to what they see as fit. If there is a nurse shortage, hospitals will raise the pay of nurses. This raise in pay will attract new participants into the nursing field, alleviating the shortage of nursing. This sytem is called capitalism and it works much better then any other system out there.
That you continue to argue with me without providing a solid evidence to support your opinions, makes me laugh. Please, your “FO-SHO is using another straw man” BS, is really just an ad hominem attack on myself, without delving into the meat of the conversation.
@ fo-sho
If you get a chance try reading the shock doctrine or a people’s history of the U.S. Peoples history may be too “commie” for you, but try to read it anyway. It really is a good read.
You can also google income inequality or polls that show the popularity of health systems, the pros and cons, etc. Etc. No one believes they are 100 percent correct so stop using outrageous hyperbole to make your points. And there is really no point going back and forth with me arguing about where I get my facts from when you cite none of your own, and when much of what you say is patently false. The world economy crashed because of banking. The damn system is corrupt, and it is so intertwined with everything else that when a large economy like a America collapses or goes into recession, other places feel it too – perhaps you should read the articles where Aziz talks about that!
Anyway, my job isnt to spoon feed you information but I will throw you a bone today. Check out this article:
http://pleasecutthecrap.typepad.com/main/2012/03/healthinsurancearoundworld.html
Keep in mind that I disagree with about 97 percent of what this guy says and the way he goes about it, but this article struck chord. It’s seemed reasonable and when I began my research into his information it seemed true. I haven’t finished looking into all of the cases though. Let me know if where his missteps may be.
Jon, I don’t believe you answered Fo-Sho’s question.
For an example of Communism in all its glory see
http://www.holodomorthemovie.com
Australia is supposed to have the best Healthcare system in the world. I paid $900 in compulsory taxes (Medicare Levy @ flat 1%) And visited the Dr once. That is an expensive visit. I don’t mind paying taxes to assist the sick and elderly, but it is well known the Dr is abused to rort the Disability Pension system, and many use the system to “Talk” to someone.
The Bulk Billing system is rorted. i.e. no cash is paid upfront for people on welfare or a pension. I admit it encourages sick people to visit a Dr, but it needs to be tightened up.
The US health system is in decay because Dr are scared of lawsuits, so their fees are too high. In a free market system, recent immigrants could practice and they could charge a market rate for their services.
How do we encourage social good without rorts and rip offs?
Seeing as we have flipped up the conversation to healthcare, I have two cents to add:
I am not completely against socialist healthcare, so long as it is run and funded locally and simply. The scale and centralisation is the main thing I have a problem with (which is one reason why I oppose Obamacare in America, and would possibly on balance be in favour of Romneycare in Massachussetts) although I can tell you for sure from anecdotal experience that as someone who lives in Britain, and has experienced Britain’s healthcare system that while it is good for accidents and emergencies there are many huge problems with it, particularly as regards long term and progressive illnesses (and that is beside the problems of excessive cost).
Frankly, I think the main problem with Obamacare is that it is is a bailout to insurance companies, some of which operate as monopolies and duopolies. I would be happier, for example, with the Federal government cutting back the war spending, and using some of that to expand medicare to the very poor as a stopgap measure. That is humane, and would probably extend opportunity to a lot of people who would otherwise be too sick to work. But the individual mandate is just an indulgence in complexifying and pointless legalism.
However, I probably think that the best system is where localities (e.g. states) decide what flies under their own terms. If Massachusetts and California want to introduce single payer, great. If Texas and New Hampshire choose not to, great. Diversity is strength, because there is the empiricism of different systems competing against each other to attract citizens and money.
So do not think that I am against some small socialist enterprises. I am very open minded, and very pragmatic. But believe me, the insurance companies already wield too much political power. Why would we want to give them a guaranteed income stream so they can just buy more lobbyists and cancel out the benefits of Obamacare (e.g. covering pre-existing conditions), while retaining the mandate that guarantees their revenue. Because believe me, that is their goal, and now they are in bed with government they have a platform to achieve it.
I also recommend reading stiglitz and David Harvey.
Jon,
Its funny that you talk about “facts” when you provide none.
I have read through your posts and have countered with both histroical and anecdotal evidence to support my own opinions. I have yet to see a persuasive arguement from you that is supported and countered by facts.
You talk of “needs” or “decent housing” or “bad bankers” without understand core issues such as the quantity theory of money, or the dead weight loss from taxation or malinvestment due to government interference. These are issues that I did not make up. They have been and are understood by most “educated” (Whatever that means) people.
The issues you bring up about healthcare are fair. But your evidence to support your healthcare opinion seem to be “The people seem happy” which is far from supporting any rational arguement in regards to your opinion.
I could go on to say that much of your opinions are amateurish, because, frankly, they are. Income equality, providing the “needs” and “wants” of a society, the government’s role in the economy have been discussed ad infinitum, long before you and I were on this planet.
The overwhelming amount of evidence supports the thought that free markets are best at providing the “needs” and “wants” of society. Perfect, it is not.
I support such programs as medicaid and WIC, but I also understand (which you seemingly do not) that there is finite point at which a government can no longer meet its promises to its people. With the US Federal government going into debt at $1 Trillion+ plus a year, the marginal productivity of additional US debt now negative and ability of the US to find new sources of revenues dry up as the means of production leave this country for greener pastures in the Asia, we are not looking the US government providing more and better healthcare in the future, we are in fact looking at the US Government providing less healthcare options in the future. The math says so. (This is not my opinion)
The marginal productivity of new US debt IS NEGATIVE now.
The US government (and its people) are saturated with debt levels that are unsustainable today.
The Federal Reserve is monetizing our debts today because we as a society are in a liquidity trap.
State and local governments are cutting back services because they are unsustainable in their current form.
Income equality (As measured by the Gini coefficient) is at its highest point BECAUSE of government interference. (See Fannie, Freddie, FHA for housing, the FED for banking, tax subsidies for US corporations, barriers of entry for new firms into the market place and so on.)
The evidence is overwhelming, that you can not find a counterargument to the contrary is not a mistake. It is because, it does not exist.
How is that for hyperbole?
This is the key point that we all need to confront, and which I attempt to confront in today’s post:
https://azizonomics.com/2012/04/19/why-the-left-misunderstands-income-inequality/
“Its funny that you talk about “facts” when you provide none.”
oh please, like you do? You have managed to convince yourself that I am a communist as evidenced by your stupid rant about north Korea, USSR, and MAO’s China. What the hell did that have to do with anything?
“I have read through your posts and have countered with both histroical and anecdotal evidence to support my own opinions. I have yet to see a persuasive arguement from you that is supported and countered by facts.”
Look who’s talking!!!
“The overwhelming amount of evidence supports the thought that free markets are best at providing the “needs” and “wants” of society. Perfect, it is not.”
Riiighttt. Which is why we have over a billion people in the world living on less than 10 dollars a day. But this entire statement is subjective anyway. Who are you to say that most people’s needs and wants are met? Last I check America comprised 5% of the world population. Now of course you will object and say like you so predictably did the first time: Who are you to claim to know what the people need and want! Well it’s a bit of contradiction when you use that against me, isn’t it? I mean you just said it except you replaced govt with the free market. Oh, and you also exaggerated what I said and you fucking know it! You sit there and write like I am a communist or think that the govt is the solution to all the problems. All I am saying is that an overwhelming majority of people like govt to provide social safety nets, health care included. But what do you do? You talk about nonsense and throw in bunch of red herrings to muddle my point. You did that and you fucking know it!
“I support such programs as medicaid and WIC, but I also understand (which you seemingly do not) that there is finite point at which a government can no longer meet its promises to its people. With the US Federal government going into debt at $1 Trillion+ plus a year, the marginal productivity of additional US debt now negative and ability of the US to find new sources of revenues dry up as the means of production leave this country for greener pastures in the Asia, we are not looking the US government providing more and better healthcare in the future, we are in fact looking at the US Government providing less healthcare options in the future. The math says so. (This is not my opinion)”
Dude, what the fuck are you talking about? For someone that writes as well as you do you sure have poor reading comprehension skills. Where on earth did you gather from anything I wrote that I believe govt debt isn’t bad and that govt can infinitely pay for stuff?! Where do you come up with this shit!? You pull it out of your ass, and it’s pisses me off because you know you are making it up and you are pretending like you aren’t!
The reason we are so stressed right now is because we are a nation of war! Period! We want to fight wars of choice and we don’t want to pay for it! That is an issue! We also fight a pointless drug war that has killed hundreds of thousands, if not millions of people. We don’t tax assholes, that’s what they are, that haven’t been paying their fair share of taxes for years because they bitch and moan like school yard children. We waste in energy, we consume stupid shit, and we having some of the dumbest fucking clowns on Earth representing us! We are cutting shit at the state and local levels to give tribute to the MIC and the filthy fucking rich!! It creates jobs, jobs, jobs!!!
“The evidence is overwhelming, that you can not find a counterargument to the contrary is not a mistake. It is because, it does not exist.” The evidence is overwhelming, therefore the evidence is overwhelming! -FO-SHO say what!
Yeah… Circular reasoning isn’t really a sign of a strong argument. Talk about amateurish.
So save your sanctimonious libertarian bullshit for someone else, because I agree with just about everything you people say except for some of the economic myths!
I have written quite extensively about the problem of innocent and honest libertarian thought being co-opted by people with nefarious intentions.
I could write much, much, much more extensively about innocent socialist thought being co-opted by people with nefarious intentions.
Ideas will always be co-opted. I try to be careful not to give those I passionately dislike ammunition for their schemes, but I know that to some extent my words can always be taken out of context and used to support schemes that I abhor, e.g. pure social Darwinism or “right-wing paternalism”.
Where does injustice and inequality stem from? Is it “libertarianism” or “libertarian solutions”; no, it can’t be, we haven’t had anything approaching a libertarian system since previous to the second World War.
If you want to address the problem of income inequality, you need to address the power of banks and government to print as much money as they like and give it to their friends. That’s where income inequality began to creep in, 1971, when Nixon decoupled from gold.
I don’t really believe that what governments do today reflects the public will much. Certainly, people petition their government to intervene in lots of situation. Mostly, they end up pursuing the ends of their friends. Government is a hammer, and every problem looks like a nail, but in the end the only nails that get bashed are the ones that will produce the results the corporatocracy and the military-industrial complex will be pleased with.
People do like social programs (just as corporations like corporate welfare programs). They don’t like paying the taxes to fund those programs. Which is one reason why governments get into debt crises.
Society can have nice things. But probably we just need to pursue them more carefully and slowly and strategically and with less central planning, so that we do not end up creating iatrogenic solutions that cause more harm than good (e.g. the housing bubble).
What do we have if not central planners? Are they not centralised? Are they not planning? The aspect of democracy doesn’t seem to change their fundamental role. Many of the people making the most important decisions (e.g. Ben Bernanke) are totally unelected. They are like communist politburo members.
I don’t really understand the idea that libertarians think they “know best”. I think the whole point of libertarianism is that we don’t know best; that we believe that Mother Nature (rather than some statistician running a simulation in a laboratory) knows best. Yes, some form of central planning is inevitable. Government is a necessary ill. I’m not saying I “know best”. In fact I’m really doing the opposite; calling out people (bureaucrats, planners) who believe they know better than Mother Nature, when the evidence leads me to believe they really don’t.
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Great post. Big corporations of course appear to benefit from the actions of the central planners and regulators, they prevent competition with barriers to entry and regulatory capture. It needs to be stated that individuals are all moral agents…if the system culture dismisses ethics and morality and there is no incentive to be moral then people will do what they like and if there appears to be short term personal gain in some unethical but legal action then they will do it. This unperceived process undermines the whole system.
In the long run, big corporations destroy themselves through this behaviour, because they become parasitic and non-robust.
Isn’t the idea of transforming debt into equity a way of having the financial markets contribute to a better outcome (less catastrophic, less pain for all involved)? I would think so.
Yeah, but I think the only viable way to do it is by consent, and it will be very difficult to convince the financial sector of the value of doing this when they can instead just go for the short-term gain of foreclosing on distressed assets…
I don’t know. I was talking more about the sovereign level here (like she probably does). And I don’t think that foreclosing even leads to a profit when everyone is doing it at the same time. Was just trying to find common ground with her because I don’t believe she was entirely wrong.
Although sovereigns cannot really foreclose on one another (other than declaring war or economic war, which is what I lie awake worrying about), I think the only way to do it at the sovereign level is by consent, too.