Growing Inequality (or How Libertarian Theories Go BOOM!)

[boneyard bill]

I have read now the whole book. It is a rather compelling study of causes of wealth and income inequality. Its solutions half, what has to be done is somewhat less so compelling. Is there anyone else here who has read the book?

It is unreasonable to expect to discuss this book with an Austrian/Libertarian, as you have seen over this short thread. They reject the methodology of this book, which relies on evaluating historical data. Their methodology is based on logic applied to certain unassailable truths. They reject attempts to compare theory to actual historical data, going so far as to claim that deviations from the theory shown by the historical record must be caused by unknown economic factors, misallocations, corrupting the economy and the data. That their theory is absolutely correct, that if it was followed the data would fit the theory because the economy wouldn't be subject to corrupting factors, usually government interference in the economy.

They are in essence saying that their theories are not descriptive of the economy that we have now, today. That their theories are only valid for their idealistic free market economy. I don't believe that even the proponents of Austrian/Libertarian economics fully realize the degrees of separation between their fantasy economy, and the real economy that we have right now.

You see this repeatedly in the responses from our resident Austrian/Libertarians, Jason, Dismal, ColoradoAtheist and Boneyard Bill.

They disclaim any connection between their fantasy economics and the supply side economics or Reaganomics that is our current set of governing policies, although they will strongly defend these. It is sufficient for them in their minds to deny that the any negative outcomes are not the result of any of their theories or of even their influence. They preach against government regulation but aren't responsible in any way for the bad outcomes from deregulation. They support supply side theories reducing taxes on the very rich and increasing them on the poor but deny connection to income inequality. Alternately, they deny any problem for the economy resulting from income inequality, from the reduced demand in the economy that results from income inequality.

This level of denial would be sufficient reason to completely ignore them of course. Except that they are influential in the spectrum of movement conservatism's free market economics. Austrian/Libertarian economics provides much of the theoretical basis for the idea that a self-regulating, self-organizing free market can exist. That they do this mainly by repeating over and over again that the free market can exist and that it is capable of preventing bad behavior through the rather simplistic mechanism of supply and demand setting barter type prices, seems to not matter to the true believers. As if repetition was proof.

Austrian/Libertarian economics is neoclassicial economics-lite. Math free economics. Its main appeal seems to be in its simplicity, you only have to keep three principles in mind. The free market can exist and is the nearly perfect form of capitalism. The gold standard is the perfect form of money and anything else is flawed. The government can't do anything right, you have seen this in the DMV, any problem in the economy is the government's fault.

I don't know what you expect to accomplish by repeating your cartoonish presentation of free market economic theory. Austrian economics follows the rationalistic method called a priori reason to establish basic economic principles. Most of our knowledge of economics derives from this method. The idea of quantifying economic data and divining economic principles from them has only become popular in the last hundred years. The efficacy of such a method is still highly questionable.

The a priori method does not eschew facts. One cannot analyze anything if there is nothing to analyze. But it is important to answer the question, "What is the true nature of an exchange" before going on to use the concept of exchange in any further discussion. But the question being asked is about the nature of an exchange in the real world. It does not ask the question about the abstract nature of what might be considered a perfect or ideal exchange. It is not Platonic.

If anything, it the modern view that is Platonic because it would reduce everything to mathematical equations. Do these equations represent the real world? No. Numbers give you quantities they do not give you qualities.

As Einstein said, "Theory determines fact." Sifting through massive amounts of economic data don't tell you anything. The data is not self-organizing. It takes a theory to give the data meaning and turn it into fact. That's why the empirical method fails. It is always still dependent on theory to tell you what the data means. That's why econometric models are typically way off. They can be no better than the theory that went into them. And if you've got the theory right, you don't need the computer model. So empirical theories have proven themselves worthless because the models don't work.

Austrian economists do make predictions, and they are often right; but they are also right to insist that the field of economics is too chaotic to make precise predictions. You are always claiming "other factors equal" even as you know that other factors are not equal. Hence predictability is not necessarily the test of a theory.

But if you are treating two different events as an "exchange" when they are actually different events because you haven't defined your terms, you are going to be wrong or you are going to have to be very, very lucky.

The market isn't perfect. The market just is. If you interfere with the market, the market will still have its way. You may distort the way the market works, but it will still work. If you put controls on prices, you will get shortages and that will lead to a "black" market because people act, and they act according to incentives and to their needs.

Therefore, if the government seeks to control interest rates, as it quite openly says it is doing, the low interest rates will lead to "uneconomic" decisions i.e. decisions not based on actual values. When the real values eventually assert themselves, the system will crash.

This has to be the case if you accept the subjective theory of value. Who doesn't accept the subjective theory of value. I doubt that even the Marxist Piketty would reject it these days.

We're in for troubling times ahead, but I suppose that whatever catastrophe awaits us, it will not convince Simple Don who will insist, only in hindsight, that if we had only had more regulations it could have been prevented.

 

[boneyard bill]

They are in essence saying that their theories are not descriptive of the economy that we have now, today. That their theories are only valid for their idealistic free market economy. I don't believe that even the proponents of Austrian/Libertarian economics fully realize the degrees of separation between their fantasy economy, and the real economy that we have right now.

You see this repeatedly in the responses from our resident Austrian/Libertarians, Jason, Dismal, ColoradoAtheist and Boneyard Bill.

The problem with that "rebuttal" is that it actually is true that our mixed Corporatist-Keynesian economy isn't a free market economy. It really isn't. Yes, there are business out there, and some of them are making profits while others are losing money, but that's not sufficient to say that our bailout economy is a free market economy.

It is true that Supply Side economics (and also Demand Side economics) is qualitatively different, both in theory and in implementation, from free market economics. This can be determined by asking what, exactly, Supply Side economics IS. Supply Side economics is the attempt by the government to boost the economy through stimulation of supply. What is so free market about that? Because it helps the rich? That's an awfully short sighted and distorted view of the problem.

Some here do have the absurd view that libertarian economic thought is influential in Republican circles. They clearly aren't basing that view on what Republicans propose to do to the economy, so I have to conclude that they are basing that view on what Democrats say about Republicans in their campaign rhetoric. But if you say there is no difference between a regulation that specifically helps the rich, one that specifically prevents the poor from holding the rich accountable, and a regulation that isn't there at all, then we're not dealing with the real world but an idealized faith-based version. Proponents of that claim don't fully realize the degrees of separation between their fantasy economy and the real economy we have right now.

You see this repeatedly in the responses from SimpleDon.

What this whole book, article about the book, and thread are really about is "Republican policies don't work. Libertarians say they are offering an alternative to what the Republicans offer, but I don't like their alternative. Let us try to say that their alternative is actually the same thing the Republicans are offering even though all the facts say otherwise."

I would defend supply-side economics as being more free-market oriented than the mainstream, but of course, many libertarians have argued that the claim that cutting taxes increase government revenue is an argument against cutting taxes not for it.

Of course, the basic supply-side claim is that it is supply, rather than demand, that enables the economy to grow. One would think that this is obvious, but it seems to be lost on Keynesians.

My big objection to supply-side economics is the name. It re-enforces the supply/demand dichotomy as if they were two different things. The fact is that supply and demand are both products or services. If I raise chickens and you raise goats and I trade some of my chickens for your goat, is it the chickens or the goat that is the supply? And which is the demand? It depends entirely on the point of view of the people in the transaction.

But now when you introduce a medium of exchange, modern economists want to label that medium as "demand." What is the intellectual basis for this? None that I can discern. Nonetheless, if you look at any modern textbook on economics it will have a supply and demand chart that lists the "supply" in units of some sort and the "demand" as dollars or some other currency. This is utterly false and extremely misleading, and it comes from not having carefully analyzed the meaning of an exchange.

Increasing the supply of money does not increase demand. It simply increases the amount of the medium of exchange and simultaneously lowers the value of that medium. Thus what "supply-side economics" advocates is not a way to increase supply (through lower taxes on investment) it is also a way to increase real, true demand.

So what should you do to increase demand when the economy crashes?

Let people get out of debt. If you want to increase real, true demand (which is a product or service) you need to let people and corporations get out of debt. The easiest, quickest way to do that is through bankruptcy. Let the defaults, the mergers, and the bankruptcies proceed. They are not the cause of the collapse, they are the effect. In short, the solution is deflation, not inflation. So how do you create deflation? Do nothing. When people default on debts, the money supply automatically falls with it.

So is the policy prescription of "do nothing" the result of some ideological commitment to laissez=faire? No. It is the logical conclusion of a serious analysis of the evidence. But it begins, of course, by defining your terms precisely. That is, with a priori reason.

 

[Jason Harvestdancer]

One interesting point about libertarianism as it is discussed on this board is how many people actually fail to discuss it. I would be willing to admit that a person who is generally libertarian on most points but isn't on a few points is basically a libertarian. After all, most of what that person believes is libertarian. Say, for example, this person is libertarian on all issues except X, Y, and Z.

I would be willing to say "sure, he's libertarian, except on X, Y, and Z. Overall, he's libertarian." But on this board people will point to him, ignore issues A, B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R, S, T, U, V, and W, and say "see, that guy shows us what the libertarian position is on X, Y, and Z."

When I point out that X, Y, and Z are where he deviates from libertarianism, I'm accused of all sorts of nonsense, ranging from "your beliefs have no basis in reality" to "no true scotsman."

The same can be said about economic systems in general. Take the absurd assertion that supply-side is a libertarian system instead of a conservoprogressive system. Well, technically according to strict definitions, supply side is only concerned with stimulating supply and has nothing to say about stimulating demand. Demand side, meanwhile, is only concerned with stimulating demand and has nothing to say about stimulating supply. Free Market economics has nothing to say about stimulating supply or stimulating demand. So supply side overlaps with the free market on the issue of stimulating demand, while demand side overlaps with the free market on the issue of stimulating supply.

And on that board, it means that supply side and free market are synonymous. I don't know why.

Once, on an older iteration of this forum, there was a guy who had a rather silly trap question he used on libertarians. Knowing that our position on most issues can be very easily derived from a few basic principles, he would ask libertarians their position on something obscure. He asked me. I thought "gee, I've never pondered this before, but being consistent my position is this" and answered his question. He knew he'd get an answer and he always responded with "no wonder you guys are losers, you waste your time on these piddling tiny insignificant issues." Most people on this forum would never be able to lay such a "trap" for me, because to do so would require understanding the subject, and understanding the subject would reveal that libertarians really honestly aren't attached to either half of the conservoprogressive ideology.

 

[AthenaAwakened]

who said anything about a profiteer?

you really gotta stop debating arguments from your past and deal with the ones you are in now.[/QUOTE]

?????????[/QUOTE]

of course you don't get it. I didn't really think you would, but I thought I would give it a shot.

 

[AthenaAwakened]

I have read now the whole book. It is a rather compelling study of causes of wealth and income inequality. Its solutions half, what has to be done is somewhat less so compelling. Is there anyone else here who has read the book?

It is unreasonable to expect to discuss this book with an Austrian/Libertarian, as you have seen over this short thread. They reject the methodology of this book, which relies on evaluating historical data. Their methodology is based on logic applied to certain unassailable truths. They reject attempts to compare theory to actual historical data, going so far as to claim that deviations from the theory shown by the historical record must be caused by unknown economic factors, misallocations, corrupting the economy and the data. That their theory is absolutely correct, that if it was followed the data would fit the theory because the economy wouldn't be subject to corrupting factors, usually government interference in the economy.

They are in essence saying that their theories are not descriptive of the economy that we have now, today. That their theories are only valid for their idealistic free market economy. I don't believe that even the proponents of Austrian/Libertarian economics fully realize the degrees of separation between their fantasy economy, and the real economy that we have right now.

You see this repeatedly in the responses from our resident Austrian/Libertarians, Jason, Dismal, ColoradoAtheist and Boneyard Bill.

They disclaim any connection between their fantasy economics and the supply side economics or Reaganomics that is our current set of governing policies, although they will strongly defend these. It is sufficient for them in their minds to deny that the any negative outcomes are not the result of any of their theories or of even their influence. They preach against government regulation but aren't responsible in any way for the bad outcomes from deregulation. They support supply side theories reducing taxes on the very rich and increasing them on the poor but deny connection to income inequality. Alternately, they deny any problem for the economy resulting from income inequality, from the reduced demand in the economy that results from income inequality.

This level of denial would be sufficient reason to completely ignore them of course. Except that they are influential in the spectrum of movement conservatism's free market economics. Austrian/Libertarian economics provides much of the theoretical basis for the idea that a self-regulating, self-organizing free market can exist. That they do this mainly by repeating over and over again that the free market can exist and that it is capable of preventing bad behavior through the rather simplistic mechanism of supply and demand setting barter type prices, seems to not matter to the true believers. As if repetition was proof.

Austrian/Libertarian economics is neoclassicial economics-lite. Math free economics. Its main appeal seems to be in its simplicity, you only have to keep three principles in mind. The free market can exist and is the nearly perfect form of capitalism. The gold standard is the perfect form of money and anything else is flawed. The government can't do anything right, you have seen this in the DMV, any problem in the economy is the government's fault.

Bravo.

 

[Jason Harvestdancer]

I have read now the whole book. It is a rather compelling study of causes of wealth and income inequality. Its solutions half, what has to be done is somewhat less so compelling. Is there anyone else here who has read the book?

It is unreasonable to expect to discuss this book with an Austrian/Libertarian, as you have seen over this short thread. They reject the methodology of this book, which relies on evaluating historical data. Their methodology is based on logic applied to certain unassailable truths. They reject attempts to compare theory to actual historical data, going so far as to claim that deviations from the theory shown by the historical record must be caused by unknown economic factors, misallocations, corrupting the economy and the data. That their theory is absolutely correct, that if it was followed the data would fit the theory because the economy wouldn't be subject to corrupting factors, usually government interference in the economy.

They are in essence saying that their theories are not descriptive of the economy that we have now, today. That their theories are only valid for their idealistic free market economy. I don't believe that even the proponents of Austrian/Libertarian economics fully realize the degrees of separation between their fantasy economy, and the real economy that we have right now.

You see this repeatedly in the responses from our resident Austrian/Libertarians, Jason, Dismal, ColoradoAtheist and Boneyard Bill.

They disclaim any connection between their fantasy economics and the supply side economics or Reaganomics that is our current set of governing policies, although they will strongly defend these. It is sufficient for them in their minds to deny that the any negative outcomes are not the result of any of their theories or of even their influence. They preach against government regulation but aren't responsible in any way for the bad outcomes from deregulation. They support supply side theories reducing taxes on the very rich and increasing them on the poor but deny connection to income inequality. Alternately, they deny any problem for the economy resulting from income inequality, from the reduced demand in the economy that results from income inequality.

This level of denial would be sufficient reason to completely ignore them of course. Except that they are influential in the spectrum of movement conservatism's free market economics. Austrian/Libertarian economics provides much of the theoretical basis for the idea that a self-regulating, self-organizing free market can exist. That they do this mainly by repeating over and over again that the free market can exist and that it is capable of preventing bad behavior through the rather simplistic mechanism of supply and demand setting barter type prices, seems to not matter to the true believers. As if repetition was proof.

Austrian/Libertarian economics is neoclassicial economics-lite. Math free economics. Its main appeal seems to be in its simplicity, you only have to keep three principles in mind. The free market can exist and is the nearly perfect form of capitalism. The gold standard is the perfect form of money and anything else is flawed. The government can't do anything right, you have seen this in the DMV, any problem in the economy is the government's fault.

I don't know what you expect to accomplish by repeating your cartoonish presentation of free market economic theory. Austrian economics follows the rationalistic method called a priori reason to establish basic economic principles. Most of our knowledge of economics derives from this method. The idea of quantifying economic data and divining economic principles from them has only become popular in the last hundred years. The efficacy of such a method is still highly questionable.

The a priori method does not eschew facts. One cannot analyze anything if there is nothing to analyze. But it is important to answer the question, "What is the true nature of an exchange" before going on to use the concept of exchange in any further discussion. But the question being asked is about the nature of an exchange in the real world. It does not ask the question about the abstract nature of what might be considered a perfect or ideal exchange. It is not Platonic.

If anything, it the modern view that is Platonic because it would reduce everything to mathematical equations. Do these equations represent the real world? No. Numbers give you quantities they do not give you qualities.

As Einstein said, "Theory determines fact." Sifting through massive amounts of economic data don't tell you anything. The data is not self-organizing. It takes a theory to give the data meaning and turn it into fact. That's why the empirical method fails. It is always still dependent on theory to tell you what the data means. That's why econometric models are typically way off. They can be no better than the theory that went into them. And if you've got the theory right, you don't need the computer model. So empirical theories have proven themselves worthless because the models don't work.

Austrian economists do make predictions, and they are often right; but they are also right to insist that the field of economics is too chaotic to make precise predictions. You are always claiming "other factors equal" even as you know that other factors are not equal. Hence predictability is not necessarily the test of a theory.

But if you are treating two different events as an "exchange" when they are actually different events because you haven't defined your terms, you are going to be wrong or you are going to have to be very, very lucky.

The market isn't perfect. The market just is. If you interfere with the market, the market will still have its way. You may distort the way the market works, but it will still work. If you put controls on prices, you will get shortages and that will lead to a "black" market because people act, and they act according to incentives and to their needs.

Therefore, if the government seeks to control interest rates, as it quite openly says it is doing, the low interest rates will lead to "uneconomic" decisions i.e. decisions not based on actual values. When the real values eventually assert themselves, the system will crash.

This has to be the case if you accept the subjective theory of value. Who doesn't accept the subjective theory of value. I doubt that even the Marxist Piketty would reject it these days.

We're in for troubling times ahead, but I suppose that whatever catastrophe awaits us, it will not convince Simple Don who will insist, only in hindsight, that if we had only had more regulations it could have been prevented.

Bravo.

 

[doubtingt]

What this whole book, article about the book, and thread are really about is "Republican policies don't work. Libertarians say they are offering an alternative to what the Republicans offer, but I don't like their alternative. Let us try to say that their alternative is actually the same thing the Republicans are offering even though all the facts say otherwise."

Republican and Libertarian policies are not the same, Libertarian policies are the most extremist version of Republican policies. Take all the various ways in which Republican economic policies differ from Dems and from those of other Western European nations that are doing reasonably well in overall wealth and have much lower income disparity than the US. The dimensions on which and the direction in which Repub econ polic differ from those comparisons is the same way that the Libertarians differ but just more extreme in magnitude. Thus, the data (along with all plausible economic theory) says that the more econ policy moves in the direction of Libertarianism, the more and more extreme wealth disparity and its socially and morally destructive correlates will become.

Your argument is like saying that a person who smokes 50 packs of cigarettes per day is not more prone to cancer, because they are not the same as the 1-3 pack per day smokers who comprise the heaviest smokers in the current data we have.

 

[maxparrish]

At the moment I don't have time to comment, but some critical assessments are warranted, starting with a recently published economic discussion paper by Stefan Homburg of the University of Leipzig:

http://www3.wiwi.uni-hannover.de/Forschung/Diskussionspapiere/dp-530.pdf

6. Conclusion
From a macroeconomic perspective, Piketty’s book, written in a truly dialectic style,
makes for hard reading. It lacks a coherent analytical framework and spreads its theses
over several hundred pages. Almost every contention is repealed or qualified later
on, and every strong statement has a “possibly” attached. In a nutshell, the book’s
core message is that something terrible may happen over the next hundred years unless
governments start expropriation now.

...Conceptually, however, the book’s most significant pitfall is
the misleading equalization of the terms “capital” and “wealth”. Due to this semantic
maneuver, readers are liable to get the impression that recent rises in land prices indicate
an industrial revolution which will change the income distribution in favor of
capital. Such a presumption is unfounded because rising land values boost wealth
but leave production processes unaffected.

 

[Jason Harvestdancer]

What this whole book, article about the book, and thread are really about is "Republican policies don't work. Libertarians say they are offering an alternative to what the Republicans offer, but I don't like their alternative. Let us try to say that their alternative is actually the same thing the Republicans are offering even though all the facts say otherwise."

Republican and Libertarian policies are not the same, Libertarian policies are the most extremist version of Republican policies. Take all the various ways in which Republican economic policies differ from Dems and from those of other Western European nations that are doing reasonably well in overall wealth and have much lower income disparity than the US. The dimensions on which and the direction in which Repub econ polic differ from those comparisons is the same way that the Libertarians differ but just more extreme in magnitude. Thus, the data (along with all plausible economic theory) says that the more econ policy moves in the direction of Libertarianism, the more and more extreme wealth disparity and its socially and morally destructive correlates will become.

Just curious, have you ever actually tried to find out what it is that libertarians believe economically? Because to say that it is merely a difference in scale brings that question up.

For instance, one of the two believes in government subsidies, plush government contracts, bailouts, protective tariffs, and the other doesn't.

It is the difference between the free market, corporatism, and welfarism.
Free Market - no government intervention in the economy
Corporatism - government intervention in the economy for the benefit of the wealthy.
Welfarism - government intervention in the economy for the benefit of the poor.

Perhaps you say "since they don't believe in intervening for the benefit of the poor they're just like everyone else who doesn't believe in it", a very short-sighted view. Of course you think my view of "they both believe in intervention" is short-sighted, but seriously if it is then it is far less so than yours.

Your argument is like saying that a person who smokes 50 packs of cigarettes per day is not more prone to cancer, because they are not the same as the 1-3 pack per day smokers who comprise the heaviest smokers in the current data we have.

Your argument is like saying "Democrats are completely different from Republicans, they smoke non-menthol and we smoke menthol."

 

[laughing dog]

boneyard bill writes

As Einstein said, "Theory determines fact." Sifting through massive amounts of economic data don't tell you anything. The data is not self-organizing. It takes a theory to give the data meaning and turn it into fact. That's why the empirical method fails. It is always still dependent on theory to tell you what the data means.

This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

 

[boneyard bill]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

 

[AthenaAwakened]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

1. So why choose Austrian theory?
2. How do you know the author is Marxist?

 

[laughing dog]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

If you are going to say that the statement "when two items are not the same, then they are unequal" is a theory, then you are misusing the term "theory". If one is measuring whether incomes are unequal, then it is obvious to simply compare incomes to see whether they are unequal. Now, if you are saying that one needs some theory to address to what degree inequality is bad, I would agree. But to measure without making judgments, you are flat wrong.

I noticed you claimed both points were wrong, but you failed to address the 2nd one. Politely phrased, your claim that Piketty is a Marxist is unsubstantiated.

 

[doubtingt]

It is the difference between the free market, corporatism, and welfarism.
Free Market - no government intervention in the economy

The mere existence of legal entities of "corporations" is 100% a government creation that intervenes on the market for the benefit of the wealthy. So are you and all libertarians unequivocally for the total elimination of all corporations and forms of limited liability partnerships?
Also, absolutely every single feature of government "intervenes" on the economy, especially the existence of a military, law enforcement, roads, interstate freeways, and airways. Are you for the total elimination of government in all of these areas? If not, are you at least for the government funded political parties and elections since unlimited private funds guarantees that these and all government functions will be corrupted to benefit the wealthy?

Corporatism - government intervention in the economy for the benefit of the wealthy.

Wrong. Corporatism is not about "intervention" but about setting policy to benefit corporations and the wealthy. While occasionally that entails intervening to protect particular corporations, more commonly it entails empowering all corporations via deregulation and inaction which strips citizens of the ability to protect their interests, health, and natural environment from harmful abuses by corporations and other companies that "create" most of their profits by externalizing their true costs onto society. Republicans and Libertarians are quite on the same page regarding eliminating virtually all forms of legal recourse that the public has to protect itself against such abuses.

Welfarism - government intervention in the economy for the benefit of the poor.

IOW the public having the power to protect its collective welfare from abuses of the "commons" by the wealthy, and to correct destabilizing societal damage inherently done by market activities in which there is extreme imbalance of power and almost no regulation to constrain dishonest and unethical practices (which is the current state of regulation in the US).

Perhaps you say "since they don't believe in intervening for the benefit of the poor they're just like everyone else who doesn't believe in it", a very short-sighted view.

No, it is a very long-sighted and accurate view since lack of intervention for the poor = extreme abuses of the poor and the middle class by the wealthy. The biggest factors creating wealth disparity and harm to the non-wealthy are not interventions on behalf of the wealthy but lack of intervention to contain the extreme harm they will inherently do to everyone else, if not kept in check. The wealthy do no need help to harm others. They have economic power to so, and since free market reward unethical harm to others with more wealth, free markets ensure that those most willing to use their wealth to harm others will have more wealth with which to do so. The interests of the poor and middle class can only be protected by uniting to protect their common interests, which is what you call "government intervention". The western European countries that have a good standard of living but with much less wealth disparity have government intervention that controls the wealthy's abuse of the commons, massive wealth redistribution to reduce the hardships of poverty, and have publicly financed political systems to reduce the influence of wealth and corporations on legislation, and they also have gov interventions that protect various industries and even particular corporations. Particular industries and corporations can be of high benefit to all people in a region, but it is never a benefit to all people to allow corporations as a whole to have excessive power to do as they want without constraints. Libertarians are opposed to all of these things, while Republicans and the current US economy are opposed to the things in bold but are only willing to do the latter interventions in red. So, while the Republicans position and the current US economy is at odds with those practices that yield reduced wealth disparity while still maintaining economic growth and standard of living, the Libertarian position is even more in opposition to those practices, thus will produce even more extreme wealth disparity.

 

[SimpleDon]

They are in essence saying that their theories are not descriptive of the economy that we have now, today. That their theories are only valid for their idealistic free market economy. I don't believe that even the proponents of Austrian/Libertarian economics fully realize the degrees of separation between their fantasy economy, and the real economy that we have right now.

You see this repeatedly in the responses from our resident Austrian/Libertarians, Jason, Dismal, ColoradoAtheist and Boneyard Bill.

The problem with that "rebuttal" is that it actually is true that our mixed Corporatist-Keynesian economy isn't a free market economy. It really isn't. Yes, there are business out there, and some of them are making profits while others are losing money, but that's not sufficient to say that our bailout economy is a free market economy.

It is true that Supply Side economics (and also Demand Side economics) is qualitatively different, both in theory and in implementation, from free market economics. This can be determined by asking what, exactly, Supply Side economics IS. Supply Side economics is the attempt by the government to boost the economy through stimulation of supply. What is so free market about that? Because it helps the rich? That's an awfully short sighted and distorted view of the problem.

Some here do have the absurd view that libertarian economic thought is influential in Republican circles. They clearly aren't basing that view on what Republicans propose to do to the economy, so I have to conclude that they are basing that view on what Democrats say about Republicans in their campaign rhetoric. But if you say there is no difference between a regulation that specifically helps the rich, one that specifically prevents the poor from holding the rich accountable, and a regulation that isn't there at all, then we're not dealing with the real world but an idealized faith-based version. Proponents of that claim don't fully realize the degrees of separation between their fantasy economy and the real economy we have right now.

You see this repeatedly in the responses from SimpleDon.

What this whole book, article about the book, and thread are really about is "Republican policies don't work. Libertarians say they are offering an alternative to what the Republicans offer, but I don't like their alternative. Let us try to say that their alternative is actually the same thing the Republicans are offering even though all the facts say otherwise."

Of course the economy that we have today isn't a free market economy. The free market economy is an unobtainable fantasy. It never has existed, it never can exist. There is no reason to believe that it would be more desirable than the economy that we have even if it were possible.

The purpose of the conservative/Republican supply side economics is not to bring on the fantasy free market, it is to make the rich richer and the poor and the middle class poorer. The Republicans realize that the free market is an unobtainable fantasy. Certainly they are corporatists, certainly more than the Democrats, and corporations and the rich are the winners in this economy that we have now. The fantasy that has its grip on you would reduce profits to the minimum that would keep the minimum number of suppliers in business, right? Why would they want to work harder for lower profits?

The supply siders and the movement conservatives are happy to have the Austrians and the Libertarians as useful idiots to lend a certain amount of academic support to their arguments that the government should only interfere in the economy to redistribute money to the rich. They have convinced a large number of the people in this country that the pro-corporation, pro-wealth economics that they preach are the optimum policies for the nation as a whole. The concept of a free market sounds good and is much more approachable than trying to understand our increasingly complex economy. It is a fantasy like a full length Disney cartoon movie, so simple that a two year old can understand it. But it is not the real world.

I said nothing about regulations "that specifically helps the rich, one that specifically prevents the poor from holding the rich accountable, and a regulation that isn't there at all, then we're not dealing with the real world but an idealized faith-based version." In fact I can't really find a coherent point in that statement. I assume that it is a clumsy attempt to prove that my economics is a fantasy economics.

My economics is based on understanding the economy that we have, not to dream about an economy that we could have. Especially one that is not even possible, the so-called free market economy, one that exists beyond government oversight and control. It is a simplistic, idealistic, totally ridiculous idea. The concept of a free market is nothing more than a thought experiment along the lines of what would it take to have a market where supply and demand setting prices is sufficient to police the market and prevent or punish bad behavior by some of the economic actors involved. It would require perfect competition. It would require acceptance of deflation and a way to have growth in a deflationary period. It would require substantial changes to the existing economy that is the way that it is because of centuries of evolution, centuries of market choice. Changes that would have to be imposed somehow on the economy that we have now. Changes imposed on the market in the name of market freedom. Changes imposed on the market by whom we don't know. None of the free market proponents will tell us.

These are simple questions that seemingly none of the free market enthusiasts, the free market fundamentalists, either can't or won't answer.

Perfect competition requires many small suppliers close to their customers. Perfect competition requires a low cost to enter or to leave a market. Perfect competition requires that all products sold buy competitors are identical. Perfect competition requires perfect knowledge by consumers about producers, products and prices. Perfect competition requires producers who can't effect prices.

Perfect competition describes a simpler, more agrarian and artisan economy than we have now. It would sacrifice the many advantages that we have from our large corporations, for example, the economies of scale, the advantages of self-financing, the research and development that only large corporations can afford.

So your free market, Jason, does it require perfect or near perfect competition?

If your free market doesn't require perfect or near perfect competition why doesn't it? Perfect competition was developed as the answer to the question what does the market need to operate as a free market without government oversight. What is your answer then?

And how do we transition from the mixed corporatist Keynesian economy that we have today to the free market? Incremental steps, specifically not regulating the rentiers in the financial markets, have had disastrous results, that is the Great Financial Crisis of 2008 that nearly destroyed the economy. If we can't transition incrementally how do we do it?

 

[boneyard bill]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

1. So why choose Austrian theory?
2. How do you know the author is Marxist?

For God's sake, I just wrote a lengthy post on the subject of why you should choose Austrian theory. If there are some points that you don't understand or want clarification on, please ask and I will try to elaborate on those points, but there is really no point in my answering the same question I have already answered.

Various reviewers have referred to him as a Marxist and that is why I did. However, he served as an adviser to the Socialist Party presidential candidates in France and the Socialist Party is a Marxist party. From what I've read of his book, he also seems to take the view that capitalism contains a contradiction within itself which would appear to reflect the idea of the Marxist dialectic. I would not expect, of course, that he follows Marx dogmatically. France is not the Soviet Union.

 

[boneyard bill]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

If you are going to say that the statement "when two items are not the same, then they are unequal" is a theory, then you are misusing the term "theory". If one is measuring whether incomes are unequal, then it is obvious to simply compare incomes to see whether they are unequal. Now, if you are saying that one needs some theory to address to what degree inequality is bad, I would agree. But to measure without making judgments, you are flat wrong.

I noticed you claimed both points were wrong, but you failed to address the 2nd one. Politely phrased, your claim that Piketty is a Marxist is unsubstantiated.

More of your nikpicking. Yes, I can claim that pigeons are unequal in weight and conduct an experiment and guess what? The pigeons will not only be unequal, everyone of them will be of a different weight. Nothing is exactly identical so there will be differences anytime you measure anything. Such exercises are absolutely useless unless you've got a theory to test.

See above regarding Piketty.

 

[boneyard bill]

doubting writes:

The mere existence of legal entities of "corporations" is 100% a government creation that intervenes on the market for the benefit of the wealthy. So are you and all libertarians unequivocally for the total elimination of all corporations and forms of limited liability partnerships?

The corporate form of organization is a legal structure that existed long before private, for profit, enterprises used it. Municipalities are corporations. Yale University is run by the "Yale Corporation." Most profit-making enterprises began as sole proprietorships or as partnerships and still do. The law did not create the corporate form of organization to allow profit-making enterprises. In fact, before the 16th amendment, the corporate form carried a big disadvantage because corporations were often taxed and even now the corporate form of organization results in a double-taxation of corporate profits since they are taxed on profits and the stockholders are taxed again on the dividends.

Also, absolutely every single feature of government "intervenes" on the economy, especially the existence of a military, law enforcement, roads, interstate freeways, and airways. Are you for the total elimination of government in all of these areas? If not, are you at least for the government funded political parties and elections since unlimited private funds guarantees that these and all government functions will be corrupted to benefit the wealthy?

The military and the police hardly represent government "intervention" in the economy. Highways and airways are a minimal form of government intervention. Of course, taxes are a government intervention so you could argue that any government activity at all is intervention if in involves tax dollars. But that is stretching the point a lot farther than it can reasonably go.

Wrong. Corporatism is not about "intervention" but about setting policy to benefit corporations and the wealthy. While occasionally that entails intervening to protect particular corporations, more commonly it entails empowering all corporations via deregulation and inaction which strips citizens of the ability to protect their interests, health, and natural environment from harmful abuses by corporations and other companies that "create" most of their profits by externalizing their true costs onto society.

Jason has every right to define "corporatism" as he chooses. Your decision to change the definition does not in any refute his point or even address it. So this clause merely evades the issue under discussion.

But you are not in the odd position of claiming that intervention includes the government not acting. If a regulation is repealed that is "corporatism," but by the same token, a regulation that is never passed in the first place must also be corporatism so the failure of the government to run corporations entirely constitutes "corporatism." If you're going to address this in any coherent way at all, you might first want to ask just what areas of economic behavior, corporate or otherwise, are appropriate for the government to undertake. If you don't start with limits, you will never get to them.

Republicans and Libertarians are quite on the same page regarding eliminating virtually all forms of legal recourse that the public has to protect itself against such abuses.

Not at all. The first line of defense for the public is the ability not to patronize a merchant that they do not prefer. The second line of defense is private property law. What "abuses" by entrepreneurs cannot be dealt with through private property law? And I'm not limiting it to current law. Show me where such abuses cannot be dealt with even theoretically by private property law?

Welfarism - government intervention in the economy for the benefit of the poor.

IOW the public having the power to protect its collective welfare from abuses of the "commons" by the wealthy, and to correct destabilizing societal damage inherently done by market activities in which there is extreme imbalance of power and almost no regulation to constrain dishonest and unethical practices (which is the current state of regulation in the US).

What do you mean by the public's "collective welfare"? The "public" isn't a "collective" to begin with. It is not a unitary entity. It is a mass of people with very different welfares. The "state" is a collective. It IS a unitary entity (largely at least). Entreprenuers sell to the these masses of people and are therefore dependent upon them for their profits. How is that an "imbalance" of power? The "collective" corporation is only collective in its internal structure. But when it comes to its customers (except when it sells to the government), it's base is just as decentralized as the "public."

Perhaps you say "since they don't believe in intervening for the benefit of the poor they're just like everyone else who doesn't believe in it", a very short-sighted view.

No, it is a very long-sighted and accurate view since lack of intervention for the poor = extreme abuses of the poor and the middle class by the wealthy. The biggest factors creating wealth disparity and harm to the non-wealthy are not interventions on behalf of the wealthy but lack of intervention to contain the extreme harm they will inherently do to everyone else, if not kept in check.

Except where is this harm? As I have already pointed out, all entrepreneurs, corporate or otherwise, are dependent on their customers for their profits. How would a corporation expect to gain the patronage of their customers if they do them harm? What I find is that if I don't like what I purchased from a merchant, I can usually take it back and get my money back. I can't do that with the government. I take what they dish out whether I like it or not. They don't have to worry about the money because they can force it from me through taxation.

The western European countries that have a good standard of living but with much less wealth disparity have government intervention that controls the wealthy's abuse of the commons, massive wealth redistribution to reduce the hardships of poverty, and have publicly financed political systems to reduce the influence of wealth and corporations on legislation, and they also have gov interventions that protect various industries and even particular corporations. Particular industries and corporations can be of high benefit to all people in a region, but it is never a benefit to all people to allow corporations as a whole to have excessive power to do as they want without constraints.

Western European governments do NOT have massive wealth distribution. They tax capital much less than the US does, and they have much higher income taxes on low-income brackets (we have none). Their personal income taxes are higher than ours but LESS progressive. Their corporate income tax rates are lower than ours, but they have much higher consumption taxes. It is the lower and middle-income tax payers who pay for Europe's welfare state not the rich. In other words, the welfare state is just the government telling you how to spend your money.

Libertarians are opposed to all of these things, while Republicans and the current US economy are opposed to the things in bold but are only willing to do the latter interventions in red. So, while the Republicans position and the current US economy is at odds with those practices that yield reduced wealth disparity while still maintaining economic growth and standard of living, the Libertarian position is even more in opposition to those practices, thus will produce even more extreme wealth disparity.

In their rhetoric, the Republicans are basically Libertarian-lite, but they don't deliver well on their campaign promises. Still, they are better than the Democrats. It was mostly Republicans who defeated the TARP bill the first time around. They have tried to abolish the Export-Import Bank, the paradigmatic example of corporate welfare, and they tried to reduce agriculture spending. In all these cases of getting rid of corporate welfare, they were thwarted by the Democrats. Under Obama, the Federal Reserve has funneled literally trillions of dollars to the big Wall Street Banks while refusing to file criminal charges against these same bank executives even after they have lost civil suits for fraud and money laundering of drug money and even for terrorists. So what good does it do to have all these regulations when we don't even enforce laws against outright criminal behavior?

 

[boneyard bill]

SimpleDon writes:

Of course the economy that we have today isn't a free market economy. The free market economy is an unobtainable fantasy. It never has existed, it never can exist. There is no reason to believe that it would be more desirable than the economy that we have even if it were possible.

OK. Let's drop the word "free." To what extent do you think an economy can function without a market? We begin with the subjective theory of value? No product has any "intrinsic" value. That's because value comes from human beings. A product or service is worth what someone is willing to give up in exchange for it. It is the market price that conveys that subjective value to others. As Milton Friedman put it, the price tells the producer "everything he needs to know and only what he needs to know." The price went up. Therefore it is profitable to incur more costs to produce more. The price went down. Therefore, it is not profitable to produce more at the lower price.

What is the value of interfering with this information by "regulating" the price and therefore creating shortages or surpluses that go to waste?

 

[AthenaAwakened]

boneyard bill writes
This is utter nonsense, and goes to the core of the problem with Austrian economics. If data shows a measure of inequality has risen, there is no need for a theory to interpret the fact the measure has risen.

boneyard bill writes

I doubt that even the Marxist Piketty would reject it these days.

There is no disinterestedd evidence that Piketty is a "Marxist" other than he wrote a book that contains material some people disagree with, even though they have neither read the material nor have the intellectual tools or honesty to comprehend it.

Both of your points are wrong. In point one, it may be true that the theory of what constitutes inequality was established before the data was gathered, but you still need a theory that says, "this is the data that we need to decide that there is inequality."

1. So why choose Austrian theory?
2. How do you know the author is Marxist?

For God's sake, I just wrote a lengthy post on the subject of why you should choose Austrian theory. If there are some points that you don't understand or want clarification on, please ask and I will try to elaborate on those points, but there is really no point in my answering the same question I have already answered.

Various reviewers have referred to him as a Marxist and that is why I did. However, he served as an adviser to the Socialist Party presidential candidates in France and the Socialist Party is a Marxist party. From what I've read of his book, he also seems to take the view that capitalism contains a contradiction within itself which would appear to reflect the idea of the Marxist dialectic. I would not expect, of course, that he follows Marx dogmatically. France is not the Soviet Union.

you answer as to why Austrian theory was best read more like a hymn to a priori reasoning than an argument for why it was better than other theories

So some other people said so. All socialists are Marxists forever. And he thinks there is a contradiction in capitalism and no one ever thought that without first being a Marxist.

Riiiight.