Growing Inequality (or How Libertarian Theories Go BOOM!)

[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.

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.

That was only part of what I said, I also went on to show the problems you get into when you go into your analysis without well-thought out concepts.

So let be begin by referencing my above post in response to another Simple Don post.

You need a market because of the law of supply and demand, and the subjective theory of value explains why the law of supply and demand works. And what do these to principles, among the most firmly established principles in economics that are accepted by virtually ALL schools of economics, mean? They mean that if you interfere with market prices you will distort values and produce shortages and/or surpluses. So why would you want to do it?

From that point on, the burden of proof now falls upon the 'regulator' to show why his regulation would produce a better result. But, in fact, very few economists actually advocate direct regulation of prices and wages. They advocate various manipulations of market values. But why is manipulation any better than direct controls?

But what about safety regulations? Austrians don't necessarily oppose those. Some do. It's a matter of dispute. But the important point is that the Austrian theory does not lead one to oppose safety regulations or health regulations, etc. Those aren't really regulations. They are laws. The do not involve the government interfering with the day to day operations of the market. The danger of such laws however, is that they can be used as an economic weapon by people who gain influence on the government. Laws of that sort can be used to increase the cost of entry into a certain economic field and therefore limit competition. You see that very clearly in such abuses as the requirements to become a doctor. Such requirements make if very expensive and very onerous, but the value of the requirements are very, very questionable.

So roughly, Austrian economics opposes the government trying to direct economic activity through interference in the normal functioning of the market, but it does not necessarily oppose any and all government intervention in non-economic matters as long as they aren't simply excuses for gaining economic advantage.

The primary tool for government intervention is the central bank so Austrians are opposed to central banking. Without central banking, however, fiat money will not work at all. So a gold standard is probably the best way to go. But many Austrians would be perfectly happy with no government money at all. Let anybody produce any kind of money at all and let them compete in the market place. If bitcoins win, so be it. But nearly all Austrians would argue that gold will win that competition.

So that's a very brief argument. As you can see, not all Austrians are libertarians, and not all libertarians are Austrians. There is much more that could be said, but that would mean introducing a host of other principles. I'm trying to keep it simple and brief.

 

[Underseer]

http://www.alternet.org/economy/how...letter986714&t=2&paging=off¤t_page=1#bookmark

Back in minute

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Basically, the lessons boiled down to this: Some degree of inequality is both unavoidable and desirable in a free market, and income inequality in the U.S. isn’t very pronounced, anyway. Libertarians starting with these ideas tend to reject any government intervention meant to decrease inequality, claiming that such plans make people lazy and that they don’t work, anyway. Things like progressive income taxes, minimum wage laws and social safety nets make most libertarians very unhappy.

Uncle Milty put it like this:


“A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom.… On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.”

Well, that turns out to be spectacularly, jaw-droppingly, head-scratchingly wrong. The U.S. is now a stunningly unequal society, with wealth piling up at the top so fast that an entire movement, Occupy Wall Street, sprung up to decry it with the catchphrase “We are the 99%.”

How did libertarians get it all so backwards? Well, as Piketty points out, people like Milton Friedman were writing at a time when inequality was indeed less pronounced in the U.S. than it had been in previous eras. But they mistook this happy state of affairs as the magic of capitalism. Actually, it wasn’t the magic of capitalism that reduced inequality during a brief, halcyon period after WWII. It was the forces of various economic shocks plus policies our government put in place to respond to them that changed America from a top-heavy society in the Gilded Age to something more egalitarian in the post-war years.

The book, Capital in the 21st Century,is causing quite a stir, but will it cause structural change in the global economy?

How does any of this in any way "debunk" libertarian theories? The whole point to libertarian ideology is to create an overclass to rule over us. Your problem is that you assume libertarians think income inequality is a bad thing. As far as they are concerned, the greater the income inequality, the better, because that brings us that much closer to being ruled by an aristocracy.

Because that will make us all more free.

 

[Jason Harvestdancer]

The whole point to libertarian ideology is to create an overclass to rule over us.

Please substantiate your claim that libertarians desire the same thing you do.

 

[AthenaAwakened]

http://www.alternet.org/economy/how...letter986714&t=2&paging=off¤t_page=1#bookmark

Back in minute

OK, back

Basically, the lessons boiled down to this: Some degree of inequality is both unavoidable and desirable in a free market, and income inequality in the U.S. isn’t very pronounced, anyway. Libertarians starting with these ideas tend to reject any government intervention meant to decrease inequality, claiming that such plans make people lazy and that they don’t work, anyway. Things like progressive income taxes, minimum wage laws and social safety nets make most libertarians very unhappy.

Uncle Milty put it like this:


“A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom.… On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.”

Well, that turns out to be spectacularly, jaw-droppingly, head-scratchingly wrong. The U.S. is now a stunningly unequal society, with wealth piling up at the top so fast that an entire movement, Occupy Wall Street, sprung up to decry it with the catchphrase “We are the 99%.”

How did libertarians get it all so backwards? Well, as Piketty points out, people like Milton Friedman were writing at a time when inequality was indeed less pronounced in the U.S. than it had been in previous eras. But they mistook this happy state of affairs as the magic of capitalism. Actually, it wasn’t the magic of capitalism that reduced inequality during a brief, halcyon period after WWII. It was the forces of various economic shocks plus policies our government put in place to respond to them that changed America from a top-heavy society in the Gilded Age to something more egalitarian in the post-war years.

The book, Capital in the 21st Century,is causing quite a stir, but will it cause structural change in the global economy?

How does any of this in any way "debunk" libertarian theories? The whole point to libertarian ideology is to create an overclass to rule over us. Your problem is that you assume libertarians think income inequality is a bad thing. As far as they are concerned, the greater the income inequality, the better, because that brings us that much closer to being ruled by an aristocracy.

Because that will make us all more free.

I am not assuming anything, but you seem to be.

And the average Joe who calls himself a libertarian usually doesn't favor aristocracy.

 

[funinspace]

A lot of good points in your post, but I had to comment a little on this para...

doubting writes:

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.

FWIW, I’d say the Repug rhetoric is basically Libertarian-lite only in the area of economics (but that was probably implicit in your comment). IMPOV the largest corporate welfare out there is the military-complex, and the Repugs are 110% behind that. The TARP bill was also pushed hard by Bush’s U.S. Treasury Secretary Henry Paulson and had Bernanke’s implicit backing, so that kind of evens out the whole idea of Repugs fighting the good fight... The latest Ag spending bill was not opposed by the Repugs, they just wanted to slash SNAP funding (SNAP really belongs within HHS, but then the SNAP-farmer welfare political symbiosis would be trashed).

Senate: Of the 32 Nay’s 9 were Dums, and 23 were Repugs
http://www.senate.gov/legislative/L...ote_cfm.cfm?congress=113&session=2&vote=00021

House: The Repugs went for the bill in a huge way:
http://en.wikipedia.org/wiki/Agricultural_Act_of_2014#Conference_committee

In the House, a majority of Republicans voted in favor of the bill (163-62) and the Democrats split almost evenly (89-103)

So if we grouped the two houses together we’d have a significantly higher percentage of Repugs supporting farm welfare (Note: roughly 70-80% of that farm welfare goes to well to do farmers):

Party Aye Nay % Aye
GOP 185 85 66%
Dem 133 112 54%

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?

As bad as the protection racket provided by the Administrations DOJ has been, the silence of the Repugs is deafening. The Repugs are the minority party, and they have purposely avoided their duty as a minority party to challenge this failure to prosecute. I can only assume they prefer it this way.

 

[boneyard bill]

A lot of good points in your post, but I had to comment a little on this para...

doubting writes:

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.

FWIW, I’d say the Repug rhetoric is basically Libertarian-lite only in the area of economics (but that was probably implicit in your comment). IMPOV the largest corporate welfare out there is the military-complex, and the Repugs are 110% behind that. The TARP bill was also pushed hard by Bush’s U.S. Treasury Secretary Henry Paulson and had Bernanke’s implicit backing, so that kind of evens out the whole idea of Repugs fighting the good fight... The latest Ag spending bill was not opposed by the Repugs, they just wanted to slash SNAP funding (SNAP really belongs within HHS, but then the SNAP-farmer welfare political symbiosis would be trashed).

Senate: Of the 32 Nay’s 9 were Dums, and 23 were Repugs
http://www.senate.gov/legislative/L...ote_cfm.cfm?congress=113&session=2&vote=00021

House: The Repugs went for the bill in a huge way:
http://en.wikipedia.org/wiki/Agricultural_Act_of_2014#Conference_committee

In the House, a majority of Republicans voted in favor of the bill (163-62) and the Democrats split almost evenly (89-103)

So if we grouped the two houses together we’d have a significantly higher percentage of Repugs supporting farm welfare (Note: roughly 70-80% of that farm welfare goes to well to do farmers):

Party Aye Nay % Aye
GOP 185 85 66%
Dem 133 112 54%

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?

As bad as the protection racket provided by the Administrations DOJ has been, the silence of the Repugs is deafening. The Repugs are the minority party, and they have purposely avoided their duty as a minority party to challenge this failure to prosecute. I can only assume they prefer it this way.

I certainly didn't mean to suggest that Republicans were waging a campaign against corporate welfare particularly. As I said they are libertarian lite, but primarily in their rhetoric. What I meant was that where the opposition to corporate welfare has asserted itself, it has been from Republicans. Certainly, John Boehner is not aboard on any of these movements and neither is Mitch McConnell.

Eric Holder has been challenged by Congress on his failure to prosecute the bankers and basically replied that they're too big to jail. He claims that prosecuting the bankers could collapse the economy as if a bank CEO is somehow irreplaceable. But of course they can't get anywhere on this because they can't get cooperation from Holder even on something as egregious as Fast and Furious.

Some Tea Party groups still oppose cuts in defense spending, but I think most of them now admit that it would be quite impossible to get a real grip on our finances without defense spending cuts. I believe the Republican Study Group takes the same view, and that is definitely the view of the liberty movement Republicans.

But I agree that these are not the positions of the establishment Republicans. They are still coming to grips with the idea that the vast majority of rank and file Republicans oppose intervention in foreign disputes and haven't figured out that John McCain doesn't speak for the grass-roots any more, if he ever did.

 

[boneyard bill]

http://www.alternet.org/economy/how...letter986714&t=2&paging=off¤t_page=1#bookmark

Back in minute

OK, back

Basically, the lessons boiled down to this: Some degree of inequality is both unavoidable and desirable in a free market, and income inequality in the U.S. isn’t very pronounced, anyway. Libertarians starting with these ideas tend to reject any government intervention meant to decrease inequality, claiming that such plans make people lazy and that they don’t work, anyway. Things like progressive income taxes, minimum wage laws and social safety nets make most libertarians very unhappy.

Uncle Milty put it like this:


“A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom.… On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality.”

Well, that turns out to be spectacularly, jaw-droppingly, head-scratchingly wrong. The U.S. is now a stunningly unequal society, with wealth piling up at the top so fast that an entire movement, Occupy Wall Street, sprung up to decry it with the catchphrase “We are the 99%.”

How did libertarians get it all so backwards? Well, as Piketty points out, people like Milton Friedman were writing at a time when inequality was indeed less pronounced in the U.S. than it had been in previous eras. But they mistook this happy state of affairs as the magic of capitalism. Actually, it wasn’t the magic of capitalism that reduced inequality during a brief, halcyon period after WWII. It was the forces of various economic shocks plus policies our government put in place to respond to them that changed America from a top-heavy society in the Gilded Age to something more egalitarian in the post-war years.

The book, Capital in the 21st Century,is causing quite a stir, but will it cause structural change in the global economy?

How does any of this in any way "debunk" libertarian theories? The whole point to libertarian ideology is to create an overclass to rule over us. Your problem is that you assume libertarians think income inequality is a bad thing. As far as they are concerned, the greater the income inequality, the better, because that brings us that much closer to being ruled by an aristocracy.

Because that will make us all more free.

I am not assuming anything, but you seem to be.

And the average Joe who calls himself a libertarian usually doesn't favor aristocracy.

Hard to believe that there's something I actually agree with you about. And since I know that you're a country music fan, I thought I'd post this little blurb by a Joe Sixpack-type libertarians. (Although I don't know if he actually calls himself one).

http://www.youtube.com/watch?v=ZLvziNM2eyE

 

[laughing dog]

laughing dog writes:

Nonsense. Plenty of workers end up without getting paid when a company closes.

Unfortunately, I have to say that this is typical of your nit-piking responses. OK, I agree. The world is not perfect. You can't get blood out of a turnip. So the worker might have to end up with a legal claim to property which he is never able to collect on fully. But the legal status of the worker is that he does not take a risk, and the legal status of the entrepreneur is that he must pay the worker whether or not he makes money. That's the best we can do.

You just admitted the worker takes a risk. And it is a legal risk. It may not be the same type of risk, but it is a risk nonetheless. And the effect on a worker may be more of those unpaid wages than the loss to an entrepeneur.

 

[boneyard bill]

laughing dog writes:

Nonsense. Plenty of workers end up without getting paid when a company closes.

Unfortunately, I have to say that this is typical of your nit-piking responses. OK, I agree. The world is not perfect. You can't get blood out of a turnip. So the worker might have to end up with a legal claim to property which he is never able to collect on fully. But the legal status of the worker is that he does not take a risk, and the legal status of the entrepreneur is that he must pay the worker whether or not he makes money. That's the best we can do.

You just admitted the worker takes a risk. And it is a legal risk. It may not be the same type of risk, but it is a risk nonetheless. And the effect on a worker may be more of those unpaid wages than the loss to an entrepeneur.

Another petty, nit-piking argument. The world isn't perfect so sometimes people get screwed. So what? That doesn't negate my original point.

 

[laughing dog]

laughing dog writes:

Nonsense. Plenty of workers end up without getting paid when a company closes.

Unfortunately, I have to say that this is typical of your nit-piking responses. OK, I agree. The world is not perfect. You can't get blood out of a turnip. So the worker might have to end up with a legal claim to property which he is never able to collect on fully. But the legal status of the worker is that he does not take a risk, and the legal status of the entrepreneur is that he must pay the worker whether or not he makes money. That's the best we can do.

You just admitted the worker takes a risk. And it is a legal risk. It may not be the same type of risk, but it is a risk nonetheless. And the effect on a worker may be more of those unpaid wages than the loss to an entrepeneur.

Another petty, nit-piking argument. The world isn't perfect so sometimes people get screwed. So what? That doesn't negate my original point.

It completely rebuts your point on two front. First, you wrote "But note that the worker does not assume any risk. " Your point is based on a falsehood. Your premise that that workers bear no risk indicates an underlying bias ideology and a lack of understanding of the notion of risk and economic relations.
Second, the handwaving dismissive retort "If the world is not perfect, so sometimes people get screwed" also holds for the entrepeneur as well. In that case, you are, in essence, tacitly dismissing your entire point about entrepeneurial risk.

 

[dystopian]

Sidetrack here for a bit, but I just discovered this interactive map of income inequality around the world and thought it cool enough to share: http://explorables.cmucreatelab.org...lIGluY29tZSBzaGFyZXxDaGluYXxOZXRoZXJsYW5kcw==

I was actually quite surprised by how low the inequality is here in the Netherlands; relatively speaking; and how it's been dropping. Although admittedly the numbers only go to 2012 and since then we've had a some policy changes that are likely increasing the divide. You can also quite clearly see how the inequality in the US started rising in the 80's, with a sudden sharp spike up in '86.

 

[AthenaAwakened]

If it's not working perfectly, all that means is that it's not real libertarianism.

Yes, the wise and thoughtful man need only see the libertarians consistently racking up 1 or 2% vote totals every election to understand we live in a society dominated by libertarian ideas.

are you saying that libertarian ideas hold no sway in conservative think tanks, ALEC, GOPAC and the GOP?

Not much. Libertarianism is a POLITICAL theory. It typically uses free market arguments to justify that theory, but the claim is still political. Free market economics is an ECONOMIC theory. The two are not the same. The Communist Chinese decided to introduce free market reforms. That didn't make the Chinese Communists libertarians. It made them pragmatists. They realized that it was impossible to organize an economy efficiently without utilizing at least some information from the market.

and yet libertarians here spend much time arguing economics. Libertarianism and Austrian school economics may not be the same thing but they sure are joined at the hip.

 

[boneyard bill]

If it's not working perfectly, all that means is that it's not real libertarianism.

Yes, the wise and thoughtful man need only see the libertarians consistently racking up 1 or 2% vote totals every election to understand we live in a society dominated by libertarian ideas.

are you saying that libertarian ideas hold no sway in conservative think tanks, ALEC, GOPAC and the GOP?

Not much. Libertarianism is a POLITICAL theory. It typically uses free market arguments to justify that theory, but the claim is still political. Free market economics is an ECONOMIC theory. The two are not the same. The Communist Chinese decided to introduce free market reforms. That didn't make the Chinese Communists libertarians. It made them pragmatists. They realized that it was impossible to organize an economy efficiently without utilizing at least some information from the market.

and yet libertarians here spend much time arguing economics. Libertarianism and Austrian school economics may not be the same thing but they sure are joined at the hip.

Of course, that's more or less what I said. Libertarians use free market arguments in support of their theory. If you NEEDED government intervention to maintain a healthy economy, then the libertarian argument loses a good deal of its appeal.

On the other hand, General Pinochet in Chile used free market economics to revive the Chilean economy after the socialism of Allende had ruined it. But General Pinochet's use of free market economics hardly made him a libertarian.

 

[ksen]

It's going to take me a minute to try and reconcile the use of death squads by a free marketeer . . . hold on.

 

[Jason Harvestdancer]

If it's not working perfectly, all that means is that it's not real libertarianism.

Yes, the wise and thoughtful man need only see the libertarians consistently racking up 1 or 2% vote totals every election to understand we live in a society dominated by libertarian ideas.

are you saying that libertarian ideas hold no sway in conservative think tanks, ALEC, GOPAC and the GOP?

Not much. Libertarianism is a POLITICAL theory. It typically uses free market arguments to justify that theory, but the claim is still political. Free market economics is an ECONOMIC theory. The two are not the same. The Communist Chinese decided to introduce free market reforms. That didn't make the Chinese Communists libertarians. It made them pragmatists. They realized that it was impossible to organize an economy efficiently without utilizing at least some information from the market.

and yet libertarians here spend much time arguing economics. Libertarianism and Austrian school economics may not be the same thing but they sure are joined at the hip.

That's because about one third of the time, politics is "what bill shall we pass to do things to the economy?" So when we're discussing that bill, we're discussing both politics and economics.

- - - Updated - - -

It's going to take me a minute to try and reconcile the use of death squads by a free marketeer . . . hold on.

"But General Pinochet's use of free market economics hardly made him a libertarian. "

I think it is pretty clear that the free marketer was not expressing approval of death squads.

 

[boneyard bill]

If it's not working perfectly, all that means is that it's not real libertarianism.

Yes, the wise and thoughtful man need only see the libertarians consistently racking up 1 or 2% vote totals every election to understand we live in a society dominated by libertarian ideas.

are you saying that libertarian ideas hold no sway in conservative think tanks, ALEC, GOPAC and the GOP?

Not much. Libertarianism is a POLITICAL theory. It typically uses free market arguments to justify that theory, but the claim is still political. Free market economics is an ECONOMIC theory. The two are not the same. The Communist Chinese decided to introduce free market reforms. That didn't make the Chinese Communists libertarians. It made them pragmatists. They realized that it was impossible to organize an economy efficiently without utilizing at least some information from the market.

and yet libertarians here spend much time arguing economics. Libertarianism and Austrian school economics may not be the same thing but they sure are joined at the hip.

That's because about one third of the time, politics is "what bill shall we pass to do things to the economy?" So when we're discussing that bill, we're discussing both politics and economics.

- - - Updated - - -

It's going to take me a minute to try and reconcile the use of death squads by a free marketeer . . . hold on.

"But General Pinochet's use of free market economics hardly made him a libertarian. "

I think it is pretty clear that the free marketer was not expressing approval of death squads.

Yes. Such a post hardly even deserves a response especially since the distinction between politics and economics has been a continuing theme of this tread.

After all, China also adopted a lot of "free market" reforms, but they never for a second suggested that broader principles of individual freedom were what they were about.