RichardR
17th March 2004, 10:06 AM
Or perhaps not.
I wondered if anyone had any thoughts on this Alternet article (http://www.alternet.org/story.html?StoryID=18147) which claims that there is no such thing as a "free market" and that the "middle class" is the creation of government intervention in the marketplace.
I can debunk some of this debunking myself, but there are some aspects that I am unsure of, especially (as a foreigner in this land), some of the historical claims. I have quoted some passages below (I hope I haven't quoted too much), and would be interested in any views.
Governments provide a stable currency to make markets possible. They provide a legal infrastructure and court systems to enforce the contracts that make markets possible… I would agree that the success of the free market depends in part upon a system of laws and other infrastructure etc. and I doubt if anyone but the most extreme Libertarians would say otherwise. In any case the free market is not debunked by this, IMO.
Which explains why conservative economics wiped out the middle class during the period from 1880 to 1932, and why, when Reagan again began applying conservative economics, the middle class again began to vanish in America in the 1980s Does this make sense to anyone?
Which requires us to puncture the second balloon of popular belief. The "middle class" is not the natural result of freeing business to do whatever it wants, of "free and open markets," or of "free trade." The "middle class" is not a normal result of "free markets." Those policies will produce a small but powerful wealthy class, a small "middle" mercantilist class, and a huge and terrified worker class which have traditionally been called "serfs." I would have thought the middle class was a result of both political and economic freedom, although I admit I haven't studied cause and effect very closely.
When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans. Does anyone claim that protectionist policies caused the depression? Surely the issue is, did the protectionist measures make things better or worse?
Of course, they can't explain how it was that the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression, while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class. (The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.) Again, cause and effect. Following this logic, we should increase taxes back to 70% (or maybe 91%) and prosperity will be resumed.
Most of the Founders advocated – and all ultimately passed – tariffs to protect domestic industries and workers. I snipped a lot of argument from authority quoting the Founders.
Seventy years later, Abraham Lincoln actively stood up for the right for labor to organize, intervening in several strikes to stop corporations and local governments from using hired goon squads to beat and murder strikers. I just know that Shane will have something to say about that.
American reaction to these disparities gave birth to the Populist, Progressive, and modern Labor movements. Two generations later, Franklin Roosevelt brought us out of Herbert Hoover's conservative-economics-produced Great Depression and bequeathed us with more than a half-century of prosperity. Am I the only one who is irritated by the left's appropriation of the word "progressive" to describe its policies? Calling a policy progressive doesn't make it so, although this new meaning of the word (and its implication) seems to have passed unnoticed into the lexicon.
Is there an alternative view of what brought the US out of the depression? I'd be interested if anyone has any references on this that I could read.
I wondered if anyone had any thoughts on this Alternet article (http://www.alternet.org/story.html?StoryID=18147) which claims that there is no such thing as a "free market" and that the "middle class" is the creation of government intervention in the marketplace.
I can debunk some of this debunking myself, but there are some aspects that I am unsure of, especially (as a foreigner in this land), some of the historical claims. I have quoted some passages below (I hope I haven't quoted too much), and would be interested in any views.
Governments provide a stable currency to make markets possible. They provide a legal infrastructure and court systems to enforce the contracts that make markets possible… I would agree that the success of the free market depends in part upon a system of laws and other infrastructure etc. and I doubt if anyone but the most extreme Libertarians would say otherwise. In any case the free market is not debunked by this, IMO.
Which explains why conservative economics wiped out the middle class during the period from 1880 to 1932, and why, when Reagan again began applying conservative economics, the middle class again began to vanish in America in the 1980s Does this make sense to anyone?
Which requires us to puncture the second balloon of popular belief. The "middle class" is not the natural result of freeing business to do whatever it wants, of "free and open markets," or of "free trade." The "middle class" is not a normal result of "free markets." Those policies will produce a small but powerful wealthy class, a small "middle" mercantilist class, and a huge and terrified worker class which have traditionally been called "serfs." I would have thought the middle class was a result of both political and economic freedom, although I admit I haven't studied cause and effect very closely.
When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans. Does anyone claim that protectionist policies caused the depression? Surely the issue is, did the protectionist measures make things better or worse?
Of course, they can't explain how it was that the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression, while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class. (The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.) Again, cause and effect. Following this logic, we should increase taxes back to 70% (or maybe 91%) and prosperity will be resumed.
Most of the Founders advocated – and all ultimately passed – tariffs to protect domestic industries and workers. I snipped a lot of argument from authority quoting the Founders.
Seventy years later, Abraham Lincoln actively stood up for the right for labor to organize, intervening in several strikes to stop corporations and local governments from using hired goon squads to beat and murder strikers. I just know that Shane will have something to say about that.
American reaction to these disparities gave birth to the Populist, Progressive, and modern Labor movements. Two generations later, Franklin Roosevelt brought us out of Herbert Hoover's conservative-economics-produced Great Depression and bequeathed us with more than a half-century of prosperity. Am I the only one who is irritated by the left's appropriation of the word "progressive" to describe its policies? Calling a policy progressive doesn't make it so, although this new meaning of the word (and its implication) seems to have passed unnoticed into the lexicon.
Is there an alternative view of what brought the US out of the depression? I'd be interested if anyone has any references on this that I could read.