A Perfect Government discussion

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Is this a free-market?

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message 1: by Heather (new)

Heather Clapp | 3 comments Mod
I want to learn peoples thoughts as to whether or not, we actually live in a free-market economy. I have my own thoughts but I'll keep them to myself for now.

This is kind of important because it seems that a lot of the socialist fervor out there is in reaction to capitolism=free-market=what-we-have-here, but do we really? Are people actually reacting against something much different that has not yet been appropriately named?


message 2: by Margaret (new)

Margaret Kaplan | 2 comments We definitely do not have a free market in the USA or anywhere in the world that I know of. It is an ideal and one I have been trying to champion for years. Milton Friedman was my mentor and I received a lot of encouragement from him.

Not time to post much now but I hope you are familiar with Von Mises--tons of great books and other information and events on their website.


message 3: by Heather (new)

Heather Clapp | 3 comments Mod
I've recently discovered Von Mises and I'm impressed so far. Thank you for referring me there.


message 4: by Sara (new)

Sara Branmore (sarabranmore) | 3 comments Hi Heather! This country started out that way (as did the UK) but having moved from the UK when I was 18, I've seen the slippery slope of the USA down the same path as the UK.

Read "Atlas Shrugged" for a really really really good insight as to what this country is turning into. Disclaimer: I'm just over half way through the tome, so I'm keeping my fingers crossed that Ayn Rand sheds light on how to do more than merely 'survive'.

I'm also a BIG fan of Glenn Beck...


message 5: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments I may be tripping over some rule about pushing one's own book, but it just so happens to be highly relevent to to this discussion.


message 6: by Sara (last edited Jun 26, 2013 06:42PM) (new)

Sara Branmore (sarabranmore) | 3 comments Hi Jim, yes, I agree there has to be "some" government, otherwise some citizens would run amok - and we'd be back to 'square one'. And yes, we're still 'head and shoulders above the rest'... but for how much longer do you think? Cheers, Sara. Have a good night!


message 7: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments How 'free' a market is depends on much it is regulated. The Congressional Research Service did a study, in which the amount of regulation was more-or-less assumed to be proportional to the number of pages in the Code of Federal Regulations (today only about a third of the pages are truly regulation.) Records started in the 1930's.

In 1940 there were roughly 40,000 pages. In the next 30 years—to 1970— that doubled to 20K pages. then during the seventies it really took off and grew to 90K pages. Reagan was very pro-free-market and was the only President to decrease regulation—to about 50K pages. It has grown since then under Bush and Clinton and Bush to about 80K pages. In 2012 it was 82K pages. Kind of turbulent for the last 15-20 years.

I suspect the whole 19th century was pretty free-market, and where we are now is very unfree market. I think that is cause for worry; it is bound to restrict entrepreneurship, the source of our economic (and job) growth.

Jerry


message 8: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments MIstake! In 1940 it was 10,000 pages. Sorry.

Jerry


message 9: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments Jim, I agree with you: a totally free market, in the sense of no constraints whatsoever on anyone's actions, is probably going to produce all kinds of bad things. But I also think that free people "self-organize". Sometimes its for mutual protection: some entrepreneurial person with the concurrence of others, sets up a police department. In the middle ages, guilds were organized out of the free-market (i.e., the king didn't set them up)—these were part labor union, part fraternity, and part quality control (the apprentice system). These, of course, made the market less free in they sense that they constrained behavior on the part of their members.

Later, these guilds (or whatever they came to be called), added insurance and retirement schemes for their members.

Free markets self-organize, making themselves less free. The danger comes when they get organized in favor of some one group. I'm not sure how far one could push the notion that we, with a people-in-charge type of government, have organized ourselves into a government with too much power that is unfreeing the market with too much regulation that imposes huge penalties on innovation, entrepreneurship, and job creation.

Jerry


message 10: by Craig (last edited Jun 29, 2013 10:34AM) (new)

Craig Bolton | 2 comments I have read through this thread and I don't have a clue what the discussion is about. This is particularly peculiar in that I have a Ph.D. in Economics and taught that subject at the university level for a decade.

For instance, what does this mean: "a totally free market, in the sense of no constraints whatsoever on anyone's actions"? Does that mean that contracts are not enforceable? Does it mean that there are no property rights? Does it mean that there is no tort law? Or does it mean that government does not "make things better" by setting up vast bureaucracies that promulgate literally thousands of idiot rules without the benefit of any legislative input?

Could you guys be a bit more specific regarding what you're saying?


message 11: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments Craig, we are just thrashing around. But it triggers some thoughts.

"a totally free market, in the sense of no constraints whatsoever on anyone's actions" is a kind of interesting place to start. (I doubt that there was ever a "totally free market" even in some hunter-gatherer tribe.) Then conjecture about how the many different kinds of constraints evolved to get us where we are today, which in my view is well-characterized by your phrase "vast bureaucracies that promulgate literally thousands of idiot rules without the benefit of any legislative input" (and even with it).

I can imagine two different sources of growing constraints. One is self-organization: someone recognizes that things would work better with some rules, persuades others to agree, and in a kind of democratic process, articulates some rules and put in place methods of enforcement. The second source is from whatever power structure can force actions on the "free market": the "strong man", the king, the bureaucracy—they just say 'here are some rules". Constraints arise from within and without.

It appears to me that underneath all this discussion by us non-economists is a groping for an understanding of how the world works. A lot of it is an uneasiness about where we are. There is a general feeling that the private sector is made up of nothing but a bunch of rapacious rascals, and that government is made of only selfless people totally dedicated to the general good and smart enough to do just the right things to rein in the all the bad things a "free market" might otherwise do.

Where did you teach?

Jerry


message 12: by Craig (new)

Craig Bolton | 2 comments Jim, I think that your reformulation makes a great deal more sense. In order to know whether or not a market is "completely free" you have to first know a great deal about what "free markets" look like and if there is just one sort of "free market". I don't think you can have this discussion in terms of "completely free market" until you have THAT discussion.

OTOH, you certainly can talk about more or less regulation. More or less government competition with private producers. More or less subsidies, etc.

The two topics are not the same, not nearly.


message 13: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments Jim et al: I commend this article. I don't know how to make it hot—hope you can cut and paste.

http://www.washingtontimes.com/news/2...

Jerry


message 14: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments Jim,

You are quite right; Rahn doesn't take the causes apart (and I doubt if it's possible to say much difference is due to what specific area. For example: what impact does "corruption" have? There are several practices that people label as corruption, and Rahn doesn't differentiate. First, it might be a sloppy legal system where decisions can be bought. That's likely to be bad, but how bad? A common practice throughout the world is where "free" services have to be speeded along—or even made happen— with a little extra bribe [or if it's to waiters we call them tips]. Probably economically harmless, or nearly so .)

I ramble. But I plan to return to the "free trade" issue when I have a bit more time. It's interesting —— it's ALL interesting, I think. How does the world really work???

The book mailed today. Hope you find it interesting and thought provoking.

Jerry


message 15: by Jerry (new)

Jerry Ward (jerry6030) | 27 comments This thread began with the question: “Is this a free market?. We thrashed around a bit expressing our various perspectives, leading Craig (a real economist) to chide us, quite properly, for sloppy definitions. He noted that. “In order to know whether or not a market is "completely free" you have to first know a great deal about what "free markets" look like and if there is just one sort of "free market".

This prompted me to begin at the beginning. A “market” can be a place to buy fresh vegetables or something more encompassing. I don’t know how an economics text would define it, but I will offer a perspective. Divide a tribe or society or nation in to two parts: the part we will call the market produces and distributes all the stuff—the goods and services—that support us; the other part, the government, makes and enforces all the rules that the market sector must follow. One part plays the game, and the other part makes the rules and referees the game. In this perspective the market is essentially the “private sector” in the US.

It seems to me that the “freeness” of the market depends on the “freeness” of the agents—the individual people and the companies— that make it up. Freeness has many dimensions: my religious beliefs may keep me from doing lots of things, the law and law enforcement can be tight or loose, in olden days one’s social level determined what they could and couldn’t do, accounting standards can be detailed rules or more policy oriented, labor unions constrain actions, trade rules restrict actions and there are all kinds of regulation imposed by the government that constrains action. I do not see how it is possible to draw one anywhere and say on one side the market is free and on the other it is not. There are only degrees of “freeness”, and very different kinds of markets—constrained in different ways— that we might intuitively call free.

Compared to Hong Kong, we are not very free. Compared to Cuba and North Korea we are remarkably free. We are much less free than we were in 1930 (see my post of June 27th). I would call us highly regulated, but still moderately free.

Some constraints are good and necessary (no murder, stealing, breaking contracts willy-nilly, dumping dangerous chemicals in rivers, putting bad stuff in food) some are borderline and arguable (small cars get better mileage but kill more people in accidents), some are clearly bad (requiring perfection when perfection is not possible).

We can observe that the nations we intuitively see as more free market have healthier economies and grow faster (Hong Kong, S. Korea) than highly regulated economies (US, UK, Europe, Japan, India) than totally constrained, centrally planned economies (old Soviet, N. Korea, Cuba, Venezuela). Why? Because growth comes from invention & innovation, new things and new thinking, the freedom to fail, and not just from turning the same old crank. Entrpreneurship is more probable when people are unconstrained. There need be motivation: the right to gain from one’s accomplishment, to have reward tied to effort (it is not in communes, and most communes fail). That is why capitalism works, in spite of the negatives associated with it.

This post is very long—sorry—but it takes too much work to make it shorter. I hope it ignites some more discussion.

Jerry


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