Critique Libertarianism and purely freemarket economy

[Dustin Kesselberg]

“Hands off” economies include forms of capitalism such as Laissez-faire capitalism as well as libertarianism, where the government plays no role in the regulation of the actions of market entities including corporations as well as no way to prevent or remedy market failures. There are many flaws in a purely “hands off” economy which include but are not limited to unchecked monopolies, inability to remedy market failures, inability to prevent destruction of the environment as well as price gouging.

Monopolies are market entities that produce and sell goods just like any other business or corporation however in this case they are the SOLE producer or seller of the goods and lack any competition, which usually causes many problems for consumers. In a monopoly there is usually no incentive for innovation because there is no competition that would pressure them to increase quality of goods or innovate. There is also the problem of fixing the price of a product which a monopoly can do if unchecked by the government because there are no other competitors and the consumers are forced to by the product. There also tend to be barriers prevent small businesses from gaining any ground of a monopoly represents all of the market.

Lack of corporate regulation is yet another problem with a purely “hands off” free economy. Examples include environmental destruction and danger to consumers. Examples of environmental destruction that would be rampant in such an economy included massive amounts of CFC’s being pumped into the atmosphere, greenhouse gases, dumping of toxic waste and other pollutants, massacre of animal species, etc. Examples of dangers to consumers include lead based products as well as lack of health oversight which can cause the proliferation of dangerous or useless “alternative medicines” including homeopathy as well as new productions which haven’t been checked for effectiveness or health dangers.

In a purely “free market”, “laissez-faire” or “libertarian” economy, the ‘sustainability’ is incredibly low. Where there are multitudes of economic entities vying for domination and who operate without regulation destroy the environment and work without regard to human safety. In such an economy it would be only a matter of time before all resources are used and the environment destroyed. Leaders of corporations often have no regard for the environment or human health and care only for profit, the bottom line. In such cases if left unchecked, these economic entities would destroy each other and destroy everything else in the process.

[Beerina]

Quote:

In a purely “free market”, “laissez-faire” or “libertarian” economy, the ‘sustainability’ is incredibly low. Where there are multitudes of economic entities vying for domination and who operate without regulation destroy the environment and work without regard to human safety.

Evidence?

Julian Simon made a career of embarassing environmentalists who kept predicting gloom and doom. If "sustainability" is a problem, then it should be reflected in declining health, standards of living, and so on. Yet in free market economies, the trend is ever upwards, unlike economies more tightly controlled.

[corplinx]

What is this? Collecting notes for your book report for econ 101?

[Darat]

My rule of thumb:

The world is not an ideology, therefore expecting the world to conform to your ideology is crackers.

[CFLarsen]

Originally Posted by Darat

My rule of thumb:

The world is not an ideology, therefore expecting the world to conform to your ideology is crackers.

But it makes great crumbs.

[Darat]

Originally Posted by Beerina

Evidence?

Julian Simon made a career of embarassing environmentalists who kept predicting gloom and doom. If "sustainability" is a problem, then it should be reflected in declining health, standards of living, and so on. Yet in free market economies, the trend is ever upwards, unlike economies more tightly controlled.

None of the G8 countries have free market economies.

[D'rok]

Originally Posted by Darat

My rule of thumb:

The world is not an ideology, therefore expecting the world to conform to your ideology is crackers.

Good rule. Especially worrisome are those who not only expect, but force the world to conform to an ideology. The technical term for that is the slaughter-bench of history

[Admiral]

Hi Dustin. I'll go through your arguments:

Originally Posted by Dustin

There are many flaws in a purely “hands off” economy which include but are not limited to unchecked monopolies, inability to remedy market failures,

You mention market failures twice without ever being specific. What are you referring to? There are many phenomena that go under the term "market failures." Do you mean mispriced goods? Information assymetries? Externalities? My response to each is different.

Nearly all problems of the market get solved by people in the market themselves. Consider mispriced goods. What if, you ask, a good is cheap in one area of the market, but a company tries to ratchet up the prices in another area? Won't that company have the ability to cheat consumers all they want?

Nope- as soon as that happens, that creates an opportunity for arbitrage- buying goods in one area and selling them in another. Hedge funds and investors THRIVE on price differences- every time they find a place where the market mispriced a good, they have the chance to make money. And when they make money on price differences, they (unintentionally) fix the problem- the only way companies can survive is to lower their prices to the equilibrium in response.

Hedge funds get a bad reputation, but they're actually an example of the market working wonders- they're people that actually get rich by fixing market failures, whether it's mispriced stocks or mispriced assets.

But name a more specific kind of market failure and I'll respond to it.

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inability to prevent destruction of the environment

I get to this below.

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as well as price gouging.

We've had other threads on price gouging, explaining that "gouging" saves lives and prevents shortages. You can't just mention it then sit back and smile- what's your argument?

Quote:

Monopolies are market entities that produce and sell goods just like any other business or corporation however in this case they are the SOLE producer or seller of the goods and lack any competition, which usually causes many problems for consumers. In a monopoly there is usually no incentive for innovation because there is no competition that would pressure them to increase quality of goods or innovate. There is also the problem of fixing the price of a product which a monopoly can do if unchecked by the government because there are no other competitors and the consumers are forced to by the product. There also tend to be barriers prevent small businesses from gaining any ground of a monopoly represents all of the market.

Do me a favor: give me some examples of monopolies. Not just companies that have a huge market share- companies that lack competition.

Microsoft? Not really- it DOES have competition, and every time it screws up or doesn't innovate, other firms pick up the slack. When Microsoft didn't make an mP3 player, Apple saw the niche in the market and filled it. When Microsoft didn't start using a GUI, Apple responded by creating a GUI, which forced Microsoft to create a GUI themselves. The market FORCED them to innovate and improve quality! There's a difference between being a monopoly and being immensely popular. Microsoft is popular, but it's still kept on its toes by competitors.

So now name some industries where monopolies occur. Let's see... fast food? No, several big chains all competing (McDonalds, Burger King, Wendy's...). Supplying office supplies? Several big chains all competing (Office Depot, Staples, etc). Toothpaste? Several big firms all competing. And so on.

But what about companies like Wal-Mart? Sure, they have competitors, but aren't they by far the biggest? Yes- which is why Walmart is known for its unfairly high prices. Companies get huge and make enormous profits by making their prices LOW! In fact, the main criticism of Wal-Mart is that its prices are too low and that they drive out smaller businesses!

So which is it- are big businesses unfair because their prices are unfairly high, or unfairly low?

But there ARE monopolies out there: The US Postal Service has a monopoly on sending (non-urgent) mail- oh, but that's right, it's ILLEGAL to compete with them. It is only legal to compete with them on sending packages (and urgent mail), and in all the areas where it is legal to compete with them, they're DESTROYED by FedEx and UPS.

How about the public school system? They're able to raise prices with impunity- after all, people have to pay them whether they use the public services or not. In fact, saying "We're going to give public schools more money!" is a great way to get Democrats to vote for you- even though what it means is "We're going to raise the price of our monopoly!"

Monopolies occur only when they have government force behind them.

Quote:

Lack of corporate regulation is yet another problem with a purely “hands off” free economy. Examples include environmental destruction and danger to consumers. Examples of environmental destruction that would be rampant in such an economy included massive amounts of CFC’s being pumped into the atmosphere, greenhouse gases, dumping of toxic waste and other pollutants, massacre of animal species, etc.

Now, HERE is the point where your criticism is sound- but your criticism isn't of some failure of the market, it's of an absence of a market. The problem is that of negative externalities, which means there is an effect on everyone else on the planet for which it is unreasonable to compensate them.

Here's what I mean by compensation: Imagine an example of a factory next to a river. There are, let's say, five houses downstream from the river. The factory wants to do some processes that pollute the river. Now, in a libertarian society (the kind I'm arguing for, anyway), it would be illegal for the factory to do so because it is harming all five of the houses downstream- the river is partly their property as well. The ONLY way the factory should be allowed to pollute the river is if it actually paid the five houses downstream however much each house wanted in exchange for being next to a polluted river (understand that the factory can't just say it'll give some set compensation it decides on. Since they're harming each consumer's property, the consumers can demand whatever price they want). All that is needed is a definition of property rights- since the market doesn't function if there isn't a rigorous definition of property. (I can sell you my car for whatever price I want, but I can't (legally) sell you your own car for whatever price I want.)

The problem, then, is obvious- property rights become ridiculously complicated when you're talking about air. (Obviously). Any real world example of pollution could never be analyzed in terms of property rights. Which is where, YES, there IS a proper role of government- to tax companies for polluting. Since they're hurting the rest of the people on the planet, they owe compensation to them, and government is the only reasonable way to do this.

The reason that I'm explaining this is to show that this isn't technically a market failure, it's a failure of property rights to adequately encompass the problem. The enviroment IS an area when government should step in.

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Examples of dangers to consumers include lead based products as well as lack of health oversight which can cause the proliferation of dangerous or useless “alternative medicines” including homeopathy as well as new productions which haven’t been checked for effectiveness or health dangers.

This is an interesting point, but it comes down to the idea that you think people should be protected from themselves.

I don't think homeopathy should be illegal, and I don't think that the government should be nearly as involved in drug regulation as it currently is. People are responsible for themselves- government shouldn't be a parent that makes sure people stay away from dangerous things that don't harm others. (The exception involves children- parents have responsibilities to their children not to give them bad medicine, not feed them, etc.)

Government involvement has serious and immediate effects in drug development. There are examples where (say) a disease has an 80% chance of killing someone through lung failure, and there's a drug that can cure the disease, but has a 30% chance of causing heart failure. If I'm a patient, I would want to take the drug, since it would greatly increase my chance of living (assuming I don't particularly care whether I die of lung or heart failure). However, the government would make the drug illegal since it has this side effect. Isn't it my choice whether to take the drug or not?

Quote:

In a purely “free market”, “laissez-faire” or “libertarian” economy, the ‘sustainability’ is incredibly low. Where there are multitudes of economic entities vying for domination and who operate without regulation destroy the environment and work without regard to human safety. In such an economy it would be only a matter of time before all resources are used and the environment destroyed. Leaders of corporations often have no regard for the environment or human health and care only for profit, the bottom line. In such cases if left unchecked, these economic entities would destroy each other and destroy everything else in the process.

You don't provide any good evidence for this claim in this post.

[Tony]

Originally Posted by Beerina

Yet in free market economies, the trend is ever upwards, unlike economies more tightly controlled.

Evidence? Since there has never been a free market ecomony, how do you know?

[egslim]

Originally Posted by Tony

Evidence? Since there has never been a free market ecomony, how do you know?

True. Every wealthy country has at least some regulations, practices protectionism (import tariffs or export subsidies) and interventionism (infrastructure, education). The closest to a free market are some third world countries where the government is too weak to enforce regulations (even if they existed), and too poor to invest in infrastructure or any kind of education. Any forms of protectionism may have been waved to secure foreign loans.

There are at least two reasons why the free market doesn't always work.
1) Individual interests may actual be detrimental to the common interest. For example, the hypothetical choice between a € 500 facemask or a € 100 car exhaust filter.
2) People aren't always rational, and especially poor in statistics.

[Admiral]

Originally Posted by Tony

Evidence? Since there has never been a free market ecomony, how do you know?

And again Tony comes back with his definition of free markets that he shares with absolutely no one on the planet...

Markets can be freer or they can be more regulated. No one else uses the term "free market" to mean anarcho-capitalism as if even the slightest government involvement means we're no longer talking about a free market.

It would be very easy to argue against liberals if every time they mentioned government regulation I responded, "You mean totalitarian socialism?" But it's not a reasonable way to argue.

[Darth Rotor]

Originally Posted by Admiral

It would be very easy to argue against liberals if every time they mentioned government regulation I responded, "You mean totalitarian socialism?" But it's not a reasonable way to argue.

How nice, a libertarian-turned-totalitarian-socialism-apologist.

(Teasing)

DR

[ImaginalDisc]

Purely free market economies fail to address tragedies of the commons and public goods.

If depleting the availability or quality of a resource that is not owned is a side effect of any enterprise, people will tend to effect that resource for as long as they can derive a benefit from it, even if that ruins the resource for others.

The classic example is a common field for grazing livestock. If the field can sustain 100 cows at maximum productivity, the introduction of one additional cow will degrade the quality of the grazing for all other cows. The owner of the 101st cow still has a benefit from grazing in the commons, but everyone else's productivity is harmed. Now, this is customarily the place there a libertarian would say, "Yes, but someone should own the field." Fair enough, but there are some unowned resources. Who owns the air? If a power plant pollutes the air, it degrades the air quality for everyone. There is no property owner to complain about having his atmosphere polluted, because the atmosphere is unowned. Demonstrating causal links between pollution at one source and harm to people, animals, crops or other things at a far removed place is scientifically and legally extremely problematic. If my child dies of mercury poisoning, how can I prove that power plant X, Y, or Z must be directly culpable, if we have an entirely libertarian system?

Also, public goods are largely ignored in free market systems. I'm quite fond of public education. We all pay a little bit to help get children educated. Now, a libertarian might say, "I don't have any kids, so why should I pay to educate them?" That attitude entirely misses the point, in my opinion. Do you like having a society full of doctors, lawyers, medical technicians, power engineers, and other skilled laborers? We all derive a strong, though indirect, benefit from having a more educated populace, with better educational opportunities.

The common defense is another good example. If it is possible to opt out of the financial cost of being safe from crime, fire, natural disaster or invasion, then there will be free riders who will derive the benefit without paying any cost. Antebellum Charleston, South Carolina had entirely privatized fire brigades and it was a fiasco.

Firstly, only wealthy clients could afford protection. Secondly, there were roughly half a dozen different companies in operation at one time. Finally, much of Charleston's "insured" homes were townhouses. If your house caught ablaze and it was not insured, no one would attempt to fight the fire. Uncontrolled fires, especially in a row of townhouses, represent a threat to all nearby buildings. But, since the brigades did not want to give away their services for free, they would only fight fires not on their clients' homes if such fires represented an immediate threat to their clients.

A system where only payees receive police protection, fire protection, or defense from foreign aggressors simply cannot work because those threats endanger everyone equally when they arise.

[Darat]

Originally Posted by Admiral

And again Tony comes back with his definition of free markets that he shares with absolutely no one on the planet...

Markets can be freer or they can be more regulated. No one else uses the term "free market" to mean anarcho-capitalism as if even the slightest government involvement means we're no longer talking about a free market.

It would be very easy to argue against liberals if every time they mentioned government regulation I responded, "You mean totalitarian socialism?" But it's not a reasonable way to argue.

So then why use a term like "free market" to talk about economies that do match what the term means? The most successful economies of the world are not anything but a mixture of stuff that "sort of works", whereas "free market" is a single concept economy.

[Tony]

Originally Posted by Admiral

And again Tony comes back with his definition of free markets that he shares with absolutely no one on the planet...

Markets can be freer or they can be more regulated. No one else uses the term "free market" to mean anarcho-capitalism as if even the slightest government involvement means we're no longer talking about a free market.

You have yet to provide evidence for any of this.

[Cain]

Originally Posted by Beerina

Evidence?

Julian Simon made a career of embarassing environmentalists who kept predicting gloom and doom. If "sustainability" is a problem, then it should be reflected in declining health, standards of living, and so on. Yet in free market economies, the trend is ever upwards, unlike economies more tightly controlled.

Always with the Julian Simon. Are you aware he placed at least one other bet and lost? Of course, no one seems to mention that, or the other numerous other wagers that were offered and declined. His ideas and beliefs are literally taken on faith by Internet libertarians, many of whom I bet haven't even bothered to read his books. They probably just saw it mentioned on a weblog.

After literally proclaiming markets "work wonders", Admiral writes:

Quote:

Microsoft? Not really- it DOES have competition, and every time it screws up or doesn't innovate, other firms pick up the slack. When Microsoft didn't make an mP3 player, Apple saw the niche in the market and filled it. When Microsoft didn't start using a GUI, Apple responded by creating a GUI, which forced Microsoft to create a GUI themselves. The market FORCED them to innovate and improve quality! There's a difference between being a monopoly and being immensely popular. Microsoft is popular, but it's still kept on its toes by competitors.

Psssht. Microsoft prints economic rent collection certificates with the support of the government. The very fact we have patents and copyrights is an intervention in the marketplace: it's a government generated incentive for people to do what they otherwise would not do -- create and innovate. We can even call it a form of social engineering.

The problems with so-called free markets are numerous: participants lack full information about the present and future; lack of competition (ideally everyone is fully informed, infinite number of sellers who are price takers, not price makers and homogeneous products); prices reflect true costs (meaning no externalities); no monopoly; no monopsony; no individual transaction can move the market; no resource is unemployed or underemployed (and no resource monopoly -- e.g., De Beers); no transaction costs; no barriers to entry or exit; no regulation or taxation (distortions).

One can argue government failure is arguably worse: bureaucrats lack the same information, they're life-time salaried employees without incentives and so on. However, it's worth noting Milton Friedman studied the banking industry for years and concluded we needed a centralized policy. Perhaps if he closely studied other areas of the economy he'd reach unlibertarian conclusions, finding banking is not the sole exception.

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Yes- which is why Walmart is known for its unfairly high prices. Companies get huge and make enormous profits by making their prices LOW! In fact, the main criticism of Wal-Mart is that its prices are too low and that they drive out smaller businesses!

So which is it- are big businesses unfair because their prices are unfairly high, or unfairly low?

Wal-Mart uses its purchasing power to negotiate lower prices, which allows it to not only undercut the competition but potentially generate better margins. As witnessed on an edition of PBS's FRONTLINE, Wal-Mart does not necessarily have the lowest prices. They advertise items in high traffic areas with insanely low prices, and people assume their other products are similarly low when compared to the competition when in fact their prices are often slightly higher. Of course, in a freer market people would have more information at their disposal. But also, in a freer market, I suppose, Wal-Mart WOULDN'T BE FRIGGIN' ABLE TO NEGOTIATE LOWER PRICES WITH ITS SUPPLIERS.

Also, Admirial, instead of having companies pay to pollute we can reach economically efficient outcomes by having the home-owners pay for the companies not to pollute. For some reason people don't usually take too kindly to that solution.

Libertarian society sounds great. We can have an underclass whose children go to work rather school and lack basic medical care. By all means let's abolish the basic scientific research that has so benefited humanity. Scientists disciplined by the free market can properly devote their energies to what really matters: helping bald middle-aged men get laid by growing hair on their crown, and then actually do the deed with boner pills. Meanwhile hundreds of thousands of worthless black people will needlessly die of malaria. Cool. Of course, that again assumes you have a government in place to restrict others from copying ideas. It's just insulting when self-described "libertarians" (the word taken from 19th century left-wing anarchists) call this state of affairs a "free" society.

egslim:

Quote:

The closest to a free market are some third world countries where the government is too weak to enforce regulations (even if they existed), and too poor to invest in infrastructure or any kind of education.

Somalia is one such example, and was even cited by a growing number of libertarians. It hasn't been doing so well as of late. In addition current anti-free market policies, it's also worth noting how countries got rich in the first place (hint: the free market nostrums prescribed by libertarians are historically off the mark).

[Darat]

Originally Posted by Cain

....snip....

Psssht. Microsoft prints economic rent collection certificates with the support of the government. The very fact we have patents and copyrights is an intervention in the marketplace: it's a government generated incentive for people to do what they otherwise would not do -- create and innovate. We can even call it a form of social engineering.

...snip...

(I have no links for this it's just chewing the fat.)

I was listening to a discussion on the radio the other day and someone was making a strong argument that the countries of the world that are rich today generally got rich because of a lack of patents, copyrights and all the paraphernalia of "intellectual property rights". In other words everyone copied everyone, so someone would move to a new land that did not have any widgets and would just start to make copies of widgets that someone in another land had invented. And this led to an overall increase of wealth in both lands.

It was just an interesting discussion point I thought I'd throw into the pot - I'll not expect payment if anyone wants to run with it.

[Darat]

Originally Posted by Cain

...snip...

Libertarian society sounds great. We can have an underclass whose children go to work rather school and lack basic medical care.


...snip...

I often think we could describe the time of the Industrial Revolution as a period where the UK adopted a libertarian society or at least libertarian ethos and we've spent the last 100 years trying to clear up the mess that made!

[Admiral]

Originally Posted by Tony

You have yet to provide evidence for any of this.

I guess the best way would be to provide an immense number of examples of people using the term "free market" without referring to anarcho-capitalism or anything close. (Note that I'm not making an argument about what these quotations argue, just how they use the term "free market").

Let's start:

Murray Rothbard:

Quote:

Free market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents. These two individuals (or agents) exchange two economic goods, either tangible commodities or nontangible services. Thus, when I buy a newspaper from a newsdealer for fifty cents, the newsdealer and I exchange two commodities: I give up fifty cents, and the newsdealer gives up the newspaper. Or if I work for a corporation, I exchange my labor services, in a mutually agreed way, for a monetary salary; here the corporation is represented by a manager (an agent) with the authority to hire.

Rothbard is one of the main theorists in the libertarian movement- if he doesn't know what "free market" means, who does?

Ronald Reagan:

Quote:

We who live in free market societies believe that growth, prosperity and ultimately human fulfillment, are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefitting from their success -- only then can societies remain economically alive, dynamic, progressive, and free.

Ronald Reagan, that anarcho-capitalist radical...

Michael Shermer:

Quote:

People have a hard time accepting free market economics for the same reason they have a hard time accepting evolution: it is counterintuitive.

Shermer- there's a rabid dogmatic anarcho-capitalist if I ever saw one.

Jef I. Richards (a professor at UT Austin who teaches about advertising):

Quote:

Advertising is the art and sole of capitalism. It captures a moment of time through the lens of commerce, reflecting and affecting our lives, making us laugh and cry, while simultaneously giving traction to the engine that propels this free market economy forward into the future.

William Anderson (a libertarian economist):

Quote:

Perhaps my optimistic colleagues are correct in saying that economists are moving more and more toward free markets. Yes, there are some good books out there, but if Schiller represents the mainstream, then the economics profession has a long way to go before it manages to give a believable answer to how the world really works.

Now let's look at some non-libertarians and how they use the term free market.

http://www.huppi.com/kangaroo/GOVERN...S_STORIES.htm- A site titled: "Government Success Stories and Free Market Failures." But wait- since by your definition, we've never had a free market, we've never had a free market failure, right?

http://www.nytimes.com/2007/01/08/op...rssnyt&emc=rss
A New York Times editorial titled "Free-Market Justice," about the fact that private defenders do better than public defenders.

The wikipedia article on "Conservatives" (not rigorous proof of anything, but clearly evidence of what is the accepted use of terms):

Quote:

On economic policy and the economic system, conservatives and the right generally support the free market, although less so in Europe than in other places.

As you can clearly see from this collection of examples, "free market" is just a convenient term that refers to, like Rothbard said, "an array of exchanges that take place in society." The more voluntary the exchanges, and the more comprehensive that array is, the closer that society is to a "purely" free market- but that doesn't mean you can't use the term "free market" in a discussion of today's societies.

[Tony]

Originally Posted by Admiral

Murray Rothbard:



Rothbard is one of the main theorists in the libertarian movement- if he doesn't know what "free market" means, who does?

And none of what he said there contradicts what I say.

Quote:

Ronald Reagan:



Ronald Reagan, that anarcho-capitalist radical...

Reagan was a crappy actor turned poltician. He was not an economic or political theorist.

Quote:

Michael Shermer:



Shermer- there's a rabid dogmatic anarcho-capitalist if I ever saw one.

????

This is meaningless.

Quote:

Jef I. Richards (a professor at UT Austin who teaches about advertising):

This is also meaningless. It's just a sentence where the guy uses the phrase "free market".

Quote:

William Anderson (a libertarian economist):

Same as above.

Quote:

Now let's look at some non-libertarians and how they use the term free market.

http://www.huppi.com/kangaroo/GOVERN...S_STORIES.htm- A site titled: "Government Success Stories and Free Market Failures." But wait- since by your definition, we've never had a free market, we've never had a free market failure, right?

My defintion is the same as yours. A free market is a market without government regulation. And no, such a market has never existed.

Quote:

As you can clearly see from this collection of examples, "free market" is just a convenient term that refers to, like Rothbard said, "an array of exchanges that take place in society." The more voluntary the exchanges, and the more comprehensive that array is, the closer that society is to a "purely" free market- but that doesn't mean you can't use the term "free market" in a discussion of today's societies.

Your "argument" is the equivalent of a fundy quoting Abraham Lincoln to show that the US is a christian nation. My point stands that a free market has never existed, is impossible, and would be a disaster if an attempt were made to ever implement it.

[shanek]

Originally Posted by Dustin

There are many flaws in a purely “hands off” economy which include but are not limited to unchecked monopolies,

How do you have "unchecked monopolies"? How do you have monopolies at all???

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inability to remedy market failures,

Such as?

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inability to prevent destruction of the environment

Compare the national ponderosa forest (managed by the government) to the forest right next to it owned by Boise-Cascade and then come back and tell me that.

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as well as price gouging.

Price gouging is impossible in a free market.

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Monopolies are market entities that produce and sell goods just like any other business or corporation however in this case they are the SOLE producer or seller of the goods and lack any competition, which usually causes many problems for consumers.

And the only way you can have this is with government support, such as local phone and power utilities.

Quote:

Lack of corporate regulation is yet another problem with a purely “hands off” free economy. Examples include environmental destruction and danger to consumers.

I've dealt with the environment above. As for danger, explain why UL has been around for so long. That's a product of the free market.

Quote:

lack of health oversight which can cause the proliferation of dangerous or useless “alternative medicines” including homeopathy as well as new productions which haven’t been checked for effectiveness or health dangers.

It isn't the lack of health oversight that does it. The health oversight we have in this country makes it incredibly expensive to get a product to market. So the purveyors of "alternative medicine" have a direct advantage here, an advantage given to them by government.

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Where there are multitudes of economic entities vying for domination

I thought you just said they were monopolies??? Make up your mind.

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In such an economy it would be only a matter of time before all resources are used and the environment destroyed.

No, that's what a free market prevents. What you're talking about is caused by the Tragedy of the Commons.

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Leaders of corporations often have no regard for the environment or human health and care only for profit, the bottom line.

The environment and human health affect the bottom line, and any corporate leader with any sense knows that.

[Admiral]

Originally Posted by Tony

Your "argument" is the equivalent of a fundy quoting Abraham Lincoln to show that the US is a christian nation. My point stands that a free market has never existed, is impossible, and if it were ever fully implemented it would be a complete disaster.

My claim, as I made very clear, was about the common usage of the term "free market." You said, in a previous thread (Legalizing Marijuana):

Originally Posted by Tony

The freemarket is anarcho-capitalism.

<snip>

The vast majority of countries in the world have a capitalist system, none have a free market.

The reason your definition bothers me is simple- it invents a strawman, since you can attack anyone that uses the words "free market" by claiming they're an anarcho-capitalist, which simply isn't true.

My point was that people commonly use the term "free market" to refer to systems that don't even come close to anarcho-capitalist. My evidence was that if I'm wrong to use the term in that way, then so are Ronald Reagan, Michael Shermer, that guy Jef Richards (whose quote said "propels THIS free market economy," referring to America as a free market economy), and so on.

ETA: Let me point out that I'm not making an argument as to what kind of economy we have, or what kind of economy we SHOULD have- I'm just defining a term.

[brodski]

Originally Posted by shanek

How do you have "unchecked monopolies"? How do you have monopolies at all???

are you claiming that monopolies cannot exist in a free market?
Even in situations where the natural barriers to entry are so high that once one firm has achieved dominance no competition is practicable? (take telephone networks for example, or railways)

[shanek]

Originally Posted by ImaginalDisc

Purely free market economies fail to address tragedies of the commons and public goods.

Free markets avoid the Tragedy of the Commons.

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If depleting the availability or quality of a resource that is not owned

And that is the reason why the free market is better. With property ownership, the problems are eliminated.

Whereas government ownership of resources is a recipe for disaster. The clearcutting, polluting, etc. that people keep complaining about take part on government land. Companies do an excellent job of taking care of their own property.

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Also, public goods are largely ignored in free market systems.

No, public goods are handled quite well by the free market. They just aren't turned into government goods.

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I'm quite fond of public education.

As am I. But public education doesn't have to be government education, and in many parts of the world it isn't.

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The common defense is another good example. If it is possible to opt out of the financial cost of being safe from crime, fire, natural disaster or invasion, then there will be free riders who will derive the benefit without paying any cost. Antebellum Charleston, South Carolina had entirely privatized fire brigades and it was a fiasco.

Really? Most of the volunteer fire departments in Arkansas are private, and they do quite well. As did most of the fire brigades in the US when they were handled by the insurance companies.

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A system where only payees receive police protection, fire protection, or defense from foreign aggressors

is not proposed by free marketeers.

[Tony]

Originally Posted by Admiral

My claim, as I made very clear, was about the common usage of the term "free market." You said, in a previous thread (Legalizing Marijuana):

The reason your definition bothers me is simple- it invents a strawman, since you can attack anyone that uses the words "free market" by claiming they're an anarcho-capitalist, which simply isn't true.

I have yet to see any evidence that the freemarket is anything but a state of no government regulation.

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My point was that people commonly use the term "free market" to refer to systems that don't even come close to anarcho-capitalist.

What systems would those be?

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My evidence was that if I'm wrong to use the term in that way, then so are Ronald Reagan, Michael Shermer, that guy Jef Richards (whose quote said "propels THIS free market economy," referring to America as a free market economy), and so on.

Based on how I've seen the term thrown around by our freemarket evangelists on JREF, they are wrong. A freemarket is a market without government regulation, yes or no?

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ETA: Let me point out that I'm not making an argument as to what kind of economy we have, or what kind of economy we SHOULD have- I'm just defining a term.

Ok, then define it. Is the freemarket a regulated market or not?

[shanek]

Originally Posted by Cain

The very fact we have patents and copyrights is an intervention in the marketplace: it's a government generated incentive for people to do what they otherwise would not do -- create and innovate.

Are you saying there was no innovation without patents? Okay: prove it!

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The problems with so-called free markets are numerous:

Pretty much everything in that list is a strawman. The free market does not depend on everyone being rational, or fully informed, or an infinite number of sellers (in fact, the model wouldn't work with that!), or anything else.

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However, it's worth noting Milton Friedman studied the banking industry for years and concluded we needed a centralized policy. Perhaps if he closely studied other areas of the economy he'd reach unlibertarian conclusions, finding banking is not the sole exception.

Why do people keep assuming that Friedman was a libertarian? He was mostly libertarian later in life, but he started out as a dyed-in-the-wool Keynesian. He's the one responsible for tax withholding and promoted the idea of a "negative income tax" (which we sort of have in the EIC).

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Wal-Mart does not necessarily have the lowest prices. They advertise items in high traffic areas with insanely low prices, and people assume their other products are similarly low when compared to the competition when in fact their prices are often slightly higher.

Are you honestly saying they're the only ones that do that???

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But also, in a freer market, I suppose, Wal-Mart WOULDN'T BE FRIGGIN' ABLE TO NEGOTIATE LOWER PRICES WITH ITS SUPPLIERS.

Why wouldn't they?

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Libertarian society sounds great. We can have an underclass whose children go to work rather school and lack basic medical care. By all means let's abolish the basic scientific research that has so benefited humanity.

Strawman, strawman.

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Scientists disciplined by the free market can properly devote their energies to what really matters: helping bald middle-aged men get laid by growing hair on their crown, and then actually do the deed with boner pills.

Strawman. Gee, I wonder how we ever managed to be so innovative in the 19th century with the almost-completely-free market we had then? You know, the one with the "sweatshops" and the "robber barons" where every year the economy grew at a far greater rate than it does today.

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Meanwhile hundreds of thousands of worthless black people will needlessly die of malaria.

Only because government banned DDT.

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Somalia is one such example, and was even cited by a growing number of libertarians.

I haven't talked to a single libertarian who's pointed at Somalia as any kind of example.

[hgc]

Originally Posted by Tony

Evidence? Since there has never been a free market ecomony, how do you know?

There hasn't? You forgot about these guys...

[shanek]

Originally Posted by Admiral

Rothbard is one of the main theorists in the libertarian movement- if he doesn't know what "free market" means, who does?

Was. He died about 10 years ago. And he did end up being quite libertarian; he started out rather crazy, though. Read his later works. They're much more sane. I highly recommend The Case Against the Fed.

[hgc]

Originally Posted by shanek

Was. He died about 10 years ago. And he did end up being quite libertarian; he started out rather crazy, though. Read his later works. They're much more sane. I highly recommend The Case Against the Fed.

1) Started out crazy; ended up libertarian. I don't see the transformation.

2) So there's hope for Badnarik.

[Tony]

Originally Posted by shanek

I haven't talked to a single libertarian who's pointed at Somalia as any kind of example.

Of course not. Just like you haven't talked to a single communist who has pointed to N Korea as an example of a utopian paradise. All woos count the hits and ignore the misses.

[UserGoogol]

One sort of market failure comes from transaction costs. People would buy from a different person if they wanted, but that would be too hard, so they don't, and quasi-monopolies form. (That is, firms with competition, but not as much competition as they could have.) Admittingly, competitors try to drive transaction costs down using technology or whatever, (and they often succeed) but that isn't good enough! If the market cannot provide perfection, we must look elsewhere for means to supplement the market. Government seems to work "okay" as a supplement to the market.

[Wat Tyler]

I have yet to see anyone agree the details of what constitutes 'Libertarianism', so I cannot critique that, but...

...if you want to know what a world run on the lines of 'Global Free Trade' looks like, you need only look at the history of the British Empire.

Pay particular attention to the cartoons of Mr. Hogarth, the novels of Mr. Dickens, and the cause of the Irish Famine and the famine that sparked the Indian mutiny of the 1850's.

Both saw millions of people starving while the granaries were full - because the owners of the grain knew that they could make more money by selling it on the free market in London.

It always amuses me that many of the people who advocate 'Free Trade' also call themselves 'Christians'.

They seem to me to actually be the legitimate heirs of Cain; who else would try to 'justify' their socio-economic model with "Am I my brother's keeper?"?

ETA: by 'Cain', I mean the character in the Bible, not Cain.

[The Central Scrutinizer]

Originally Posted by hgc

1) Started out crazy; ended up libertarian. I don't see the transformation.

2) So there's hope for Badnarik.

[shanek]

Originally Posted by Tony

Of course not. Just like you haven't talked to a single communist who has pointed to N Korea as an example of a utopian paradise. All woos count the hits and ignore the misses.

1) Cain said that Somalia was an example Libertarians pointed to.

2) Show how Somalia is in any way Libertarian and you might have a point.

[shanek]

Originally Posted by UserGoogol

One sort of market failure comes from transaction costs. People would buy from a different person if they wanted, but that would be too hard, so they don't, and quasi-monopolies form. (That is, firms with competition, but not as much competition as they could have.)

Then explain why Rockefeller had to keep prices competitively low even in the absence of competition. (I, like any free marketeer, knows why.)

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If the market cannot provide perfection, we must look elsewhere for means to supplement the market. Government seems to work "okay" as a supplement to the market.

So, if it ain't perfect, we need to get rid of it. And please give one example of government working "okay." And then, you might want to say why the government working "okay" is better than the free market operating "almost perfectly."

[CFLarsen]

Originally Posted by Cain

Meanwhile hundreds of thousands of worthless black people will needlessly die of malaria.

Originally Posted by shanek

Only because government banned DDT.

You have got to be kidding, shanek.

You want to use DDT?

That's not just ignorant, that's dangerous.

[Cain]

Originally Posted by shanek

Are you saying there was no innovation without patents? Okay: prove it!

Where did I say, imply or suggest there would be NO innovation without patents? Did I make the dangerously naive assumption that people on this board are aware of the fact that humans develop technologies before the creation of patents? And then you have the gumption of accusing me of a straw man in your typically pathetic, incoherent quote/reply-without-developing-an-idea "response":

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Pretty much everything in that list is a strawman. The free market does not depend on everyone being rational, or fully informed, or an infinite number of sellers (in fact, the model wouldn't work with that!), or anything else.

No, it accurately describes an ideal free market, which of course does not exist in the real world. But different industries instantiate these ideals to different degrees (compare medicine against agriculture, for example). What's naive and silly is to think the free market reigns in virtually all things. Now, back to the first point, shall I assume you believe government intervention in the market place in the form of (temporary) monopolies on ideas (i.e., erecting a barrier to entry) is a good thing?

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Why do people keep assuming that Friedman was a libertarian? He was mostly libertarian later in life, but he started out as a dyed-in-the-wool Keynesian. He's the one responsible for tax withholding and promoted the idea of a "negative income tax" (which we sort of have in the EIC).

That's the EITC, and he WAS a small 'l' libertarian as the term is used in contemporary America. He wrote _Capitalism and Freedom_ in the early 60s, before the creation of your holy church (The Libertarian Party) and prior to the ascendence of the free market B.S. in the coming generation.

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Are you honestly saying they're the only ones that do that???

Did I claim they're the only ones doing that??? Man, I've forgotten how stupid you are.

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strawman, strawman.

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Strawman. Gee, I wonder how we ever managed to be so innovative in the 19th century with the almost-completely-free market we had then? You know, the one with the "sweatshops" and the "robber barons" where every year the economy grew at a far greater rate than it does today.

Yeah, and I wonder why virtually nobody wants to return to those halcyon days. Also, countries in their beginning stages naturally grow faster than advanced economies for reasons not unlike why infants grow faster than children.

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Only because government banned DDT.

More ********. Being a libertarian is so simple it just takes a complete lack of intellectual curiosity. "Robber Barons" were evil? Read _Myth of the Robber Barons_ and that will give you an accurate history. People dying of malaria? It's the government's fault as usual -- invoke DDT. In economics the answer is always more competition and less regulation -- see _Economics in One Lesson_. Facile answers to every complicated world problem spouted knowingly by tell-it-like-it-is blowhards who speak as an authority without ever reading deeply. Environmental problems? See the patron saint of optimism, Julian Simon. One would get the impression that people who have spent years studying these issues have uniformly reached similar conclusions, and if they've haven't then they're in the grips of a highly politicized statist narrative.

http://scienceblogs.com/deltoid/ddt/

Crying about "strawmen" never hurts either.

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I haven't talked to a single libertarian who's pointed at Somalia as any kind of example.

Geez, you remind of the SNL sketch on Bill O'Reilly.
O'Reilly: Professor, you say there are more people in California than New York? I've been on the streets in both New York and California. New York is crowded -- can't move. California -- it's empty.
Professor: Uh, Bill, that's just not true.
O'Reilly: Yes it is. I've seen it with my own eyes. I'll let you have the last word.
Professor: Well, uh, we could look it up in Almanac.

I've seen it mentioned on Huben's Critiques of Lism site, on libertarian related newsgroups, and enthusiasts on _Reason's_ blog. It's a culture I've been perversely fascinated with and repulsed by for years. And although this might be a gratuitous comment, you're one of the dumber, clumsier, less reflective true believers I've encountered in all my years. Then again you've also described me as a "BIGOT" and a "LIAR."

A stronger libertarian response to people dying needlessly of malaria, and the ridiculous of use of resources on treating relatively minor things "plaguing" fat, rich society, is "so what?" Prices will be wrong so long as our values are wrong.

_______________

Interestingly, Admiral endorses Murray Rothbard's, Ronald Reagan's, and Michael Shermer's definitions of a free market (among others). We can probably dismiss Reagan not only because he's a politician but because it's unlikely he actually generated his own thoughts. I know for a fact Murray Rothbard was an anarcho-capitalist, and did offer what is perhaps the clearest, purest expression of libertarian ideals. Among other things he says we should be able to kill children, sell children, hit children, blackmail, and so on (See: _The Ethics of Liberty_, which should be available online).

Michael Shermer is a former devotee of Ayn Rand and a long-time anarcho-capitalist. Not until he began writing the _Science of Good and Evil_ did he alter those beliefs (and that was published around '04). I don't recognize the other authors, but it doesn't matter by your own self-imposed standard: "if [Rothbard] doesn't know what "free market" means, who does?"

[shanek]

Originally Posted by Wat Tyler

I have yet to see anyone agree the details of what constitutes 'Libertarianism',

The basis of Libertarianism is the non-initiation of force principle. No one, not individuals, not businesses, not government, is allowed to initiate force. If they do, then anyone, individuals, businesses, or government, can use force to stop them. The effect of all this is, you can live your life as you see fit as long as you don't interfere with anyone else's right to live their lives as they see fit.

Feel free to critique it on those grounds all you like.

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...if you want to know what a world run on the lines of 'Global Free Trade' looks like, you need only look at the history of the British Empire.

What, you mean like stopping Indians from making their own salt and demanding that colonists pay a tax on every shipment that comes in to their ports, and waging war against anyone who tries? Oh, yeah, such a paragon of free markets that was...

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Pay particular attention to the cartoons of Mr. Hogarth, the novels of Mr. Dickens, and the cause of the Irish Famine and the famine that sparked the Indian mutiny of the 1850's.

Um, the Irish famine was caused by the Irish government promising the potato stocks away. Oh, and while the government was helpless to stop people from starving, the Quakers came in and set up soup kitchens.

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Both saw millions of people starving while the granaries were full - because the owners of the grain knew that they could make more money by selling it on the free market in London.

That's a gross mischaracterization. Here's some good info:

http://www.mises.org/freemarket_detail.asp?control=88

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In fact, the most glaring cause of the famine was not a plant disease, but England's long-running political hegemony over Ireland. The English conquered Ireland, several times, and took ownership of vast agricultural territory. Large chunks of land were given to Englishmen.

These landowners in turn hired farmers to manage their holdings. The managers then rented small plots to the local population in return for labor and cash crops. Competition for land resulted in high rents and smaller plots, thereby squeezing the Irish to subsistence and providing a large financial drain on the economy.

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The Irish suffered from many famines under English rule. Like a boxer with both arms tied behind his back, the Irish could only stand and absorb blow after blow. It took the "many circumstances" of English policy to create the knockout punch and ultimate answer to the Irish question.

Free-market economist J.B. Say was quick to note that the system of absentee landlords was deplorable. He accurately diagnosed this cause and grimly predicted the disastrous results that did follow.

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Repeal drastically impacted the capital value of farmland in Ireland and reduced the demand for labor as Irish lands converted from grain production to pasture. It should be clear that while free trade did bring about these changes, the blame for both stimulating pre-famine population growth and the subsequent depopulation (the Irish population did not recover until 1951 and net emigration did not end until 1996) rests with English protectionism and the Corn Laws.

These price shocks made a population decline inevitable. As emigration became a viable option, most Irish decided to take the long and dangerous journey to the New World rather than the ferryboat to the factories of England.

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Far from allowing the market to work, England launched a massive program of government intervention, consisting mainly of building workhouses, most completed just prior to the onset of the Famine.

Earlier, the Irish Poor Inquiry had rejected the workhouse as a solution to poverty. In the report, Archbishop Whately--attacked today for his free-market stand--argued that the solution to poverty is investment and charity, but these "radical" findings were rejected by the English who threw out the report and appointed George Nicholls to write a new one.
The workhouses, an early version of New Deal make-work programs, only made the problem of poverty worse. A system of extensive public works required heavy taxation on the local economy. The English officials directed money away from projects that would increase productivity and agricultural output into useless roadbuilding.

Most of these roads began nowhere and ended nowhere. Worse yet, the policy established by Sir Charles Trevelyan to pay below market wages, which you can well imagine were pretty low, meant that workers earned less in food than the caloric energy they typically expended in working on the roads.

He also goes on to mention other factors. Suffice it to say, it was NOT because of any free market policies.

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It always amuses me that many of the people who advocate 'Free Trade' also call themselves 'Christians'.

They seem to me to actually be the legitimate heirs of Cain; who else would try to 'justify' their socio-economic model with "Am I my brother's keeper?"?

What can I say to that but, ?

[UserGoogol]

Originally Posted by shanek

Then explain why Rockefeller had to keep prices competitively low even in the absence of competition. (I, like any free marketeer, knows why.)

Because he still had competition, as I said. Competition always exists, the question is whether you have as much competition as you could have. Competition from "refusing to use oil in the first place" and "the hypothetical competitors who might be able to wring some customers away from him" was apparently sufficient. And of course, when you're the richest man on earth, you don't want to mess with a good thing, so you keep your prices low.

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So, if it ain't perfect, we need to get rid of it. And please give one example of government working "okay." And then, you might want to say why the government working "okay" is better than the free market operating "almost perfectly."

No, if something isn't perfect, we need to make it better. I suppose that once you add government regulations to a free market, it's not "free" anymore, (and thus the free market has been "destroyed") but saying that we have to destroy something if it's imperfect seems like a misrepresentation of what I'm saying, even if it's true in a pedantic sense. But "almost perfect" + "okay improvement" = "better" by definition, I think. And even if it's worse, well, at least we learned. I think that in the long run, it is better to do something which might screw things up than it is to keep things at a suboptimal level, since if we screw things up we can fix them and learn and eventually improve, whereas if we stay the same, we stay the same.

As for an example of successful government intervention in the economy... I admit I can't find one. My assumption that government intervention can be okay is based largely on the fact that many economists agree that government intervention is "sometimes" okay, so I'm basically just assuming that those economists aren't retarded. Maybe I could do some research to see what some of the typical arguments are so I can judge them but I'm lazy, so I might not do that during this thread. (The only one I know off the top of my head is the Keynesian argument, which seems slightly irrelevant to the discussion at hand.) And without a training in economics (or even with one), it's hard to determine whether a particular action was really beneficial, because there are far too many variables in society that aren't controlled for. I really have no way of knowing what life would have been like if (for instance) AT&T hadn't been broken up, but I do think that maybe... environmental regulations (the ban on CFCs seems of note) and pure government research might be examples of "okay" government intervention.

[shanek]

Originally Posted by Cain

Where did I say, imply or suggest there would be NO innovation without patents?

Right here:

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The very fact we have patents and copyrights is an intervention in the marketplace: it's a government generated incentive for people to do what they otherwise would not do -- create and innovate.

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No, it accurately describes an ideal free market,

No, it does not, not in any way, shape, or form. The free market neither requires nor postulates anything in that post. It's a complete strawman.

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Now, back to the first point, shall I assume you believe government intervention in the market place in the form of (temporary) monopolies on ideas (i.e., erecting a barrier to entry) is a good thing?

No.

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That's the EITC, and he WAS a small 'l' libertarian as the term is used in contemporary America. He wrote _Capitalism and Freedom_ in the early 60s, before the creation of your holy church (The Libertarian Party) and prior to the ascendence of the free market B.S. in the coming generation.

Sentences like that prove you should not be taken seriously.

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Did I claim they're the only ones doing that??? Man, I've forgotten how stupid you are.

Oh? What, you don't know a QUESTION when you read one? YOU singled out Wal-Mart and used that one aspect to differentiate itself from others in the free market. I want you to justify that.

Your post is nothing more than your usual insults, lies, and strawmen.

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Then again you've also described me as a "BIGOT" and a "LIAR."

Because you are. For proof, people need look no further than the very post I'm replying to.

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A stronger libertarian response to people dying needlessly of malaria, and the ridiculous of use of resources on treating relatively minor things "plaguing" fat, rich society, is "so what?"

No, it's not. That's more of your LIES, born out of your own BIGOTRY, which you keep denying exists but keep displaying in post after post after post.

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I know for a fact Murray Rothbard was an anarcho-capitalist,

As I said, he was more anarchist in his early years, more libertarian in his later years.

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Michael Shermer is a former devotee of Ayn Rand and a long-time anarcho-capitalist. Not until he began writing the _Science of Good and Evil_ did he alter those beliefs (and that was published around '04).

I read the book. I've got a copy right here. Autographed. It seems very libertarian to me.

Now stop with the lies, insults, and strawman, and actually argue the points for once.