Ain't It So?!

by Don Boudreaux on August 25, 2007

in Trade

Here’s the opening few lines of a report appearing on CNNMoney.com:

ALARM OVER the continuing flood of imports is spreading from a few
zealots in the auto and steel industries to nearly every corner of the
economy. Pressure is building, from both business and labor, for
Congress to do something. More than 400 trade bills have been
introduced this year, many to protect specific industries and bash
specific countries. As emotions rise, Congress is toying with ever
broader measures, dangling the tantalizing prospect in front of
Americans that tough laws — including high tariffs — can narrow the
trade gap, trim the budget deficit, and best of all, get foreigners to
pick up the tab.

Oh, the date of the above report is August 19, 1985.

Protectionists are like cockroaches: annoying, ever-present, sneaky, scavenging beasts.  (And I think of Cafe Hayek as something of an insecticide.)

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Joe Grossberg August 25, 2007 at 2:25 pm

"Protectionists are like cockroaches: annoying, ever-present, sneaky, scavenging beasts."

Please don't dehumanize them like that.

That's the kind of language that Communists would have used to describe capitalists, and disconcertingly similar to classical anti-semitism.

Some Protectionists are misled, some are stupid, some are selfish, and they are all wrong, but they are not vermin.

Sorry if this sounds like moral grandstanding mixed with oversensitivity.

But I really appreciate you being such a stalwart for free trade and don't think you need to resort to name-calling to effectively advocate the case for free markets.

dave smith August 25, 2007 at 2:52 pm

This is a proper use of a simile.

Don is only saying that both protectionists and roaches are "annoying, ever-present, sneaky, scavenging beasts." He is not saying that protectionists are roaches.

Rob Dawg August 25, 2007 at 3:21 pm

What about the recent protectionist surge concerning lead tainted toys? Are those efforts the actions of scavenging beasts? After all they are attempting to prevent free trade by imposing unreasonable rules on imported goods.

Point is once you agree that soverign nations have the right to protect its citizens from potentially harmful foriegn goods and services you've already conceeded we are all protectionists and we are merely arguing how much protection is appropriate.

Ask any US software developer if they are getting the benefits in Asia of lower regulation and enforcement.

John August 25, 2007 at 4:04 pm

Thank you, Dr. Boudreaux.

Good inspiration for a topic that can never get enough exposure.

I've used as a base for a Front Page Article at Swords Crossed.

Good food for thought for over the weekend….and everyday thereafter.

Chris August 25, 2007 at 5:18 pm

Rob –

Imported toys have the same rules that US goods have — neither one of them are allowed to be coated in lead paint. And, if they are, then both the manufacturer and seller (in most states) are liable for the harm. I see no reason why domestic producers should be allowed to produce more dangerous goods than foreign producers.

The problem lies with the manufacturers who have been outsourcing manufacturing without maintaining adequate quality control, and with the resellers, who have been lax in requiring quality control. If anybody has actually been harmed by dangerous goods, rest assured that those parties will be held accountable. In fact, this is exactly what you want — private monitoring by the people who are already in the position to monitor, and who have a lot to lose by not monitoring.

As far as software development goes, there is very little regulation or enforcement in the US. It's hard to imagine that getting any lower in Asia.

Ray G August 25, 2007 at 6:43 pm

Awright Dr. Boudreaux!

Cockroaches!

I like that, it's about time you let that blue blood air dissipate a little and get down to business.

Bruce Hall August 25, 2007 at 9:31 pm

For a differing perspective, check the recent post at: http://buchanan.org/blog/?p=827

dave smith August 25, 2007 at 11:12 pm

There is so much ignorance in the PJB article I don't even know where to start.

I wonder if he thinks the corn laws were good. I'll bet many people's living was secured by them.

Grzesiek August 26, 2007 at 6:11 am

Article 20 of the General Agreement on Tariffs and Trade (GATT) allows governments to act on trade in order to protect human & animal life.

Where is the WTO on this issue?

SaulOhio August 26, 2007 at 6:31 am

Can anyone say "Smoot-Hawley"?

Wojtek August 26, 2007 at 8:34 am

I was recently listening to a CBC call-in radio show where people dialed in to vent their frustration over cheap Chinese toy imports that are "killing our children". A large portion of people insinuated that it would be best if we just went back to simpler and safer toys like sticks and stones; or the old safer toys made during the 50s in North America.

I am of the opinion that sticks and stones wouldn't pass the most basic child safety tests, and toys a few decades ago weren't even tested for lead.

It amazes me what forms justification for protectionism people come up with.

Me, I don't mind being able to buy 10 toys for $10 for my toddler to play with on our quarterly flights across the continent. Man, things really were better in 1950.

muirgeo August 26, 2007 at 9:36 am

I'm still convinced Free-trade is simply another phrase that really means Global Rule by Multi-National Corporations and abandonment of government.
The believers in free trade paradoxically want to avoid central government planning of the economy because they think free trade allows for the invisible hand to self-organize the economy when nothing could be further from the truth. Small groups of the wealthy elite in Orwellian fashion come together and plan the economy for us. And they do such a good job they have most of the media and academia advocating in their favor.

Free trade as I see it pits low environmental standers against low environmental standard, it pits worker against worker (with an un-limited pool of unemployed workers) and community against community (with an unlimited supply of poor communities to exploit). Free trade rarely has anything to do with increasing productivity except when you count exploiting one community against another and one worker against another as increased productivity when in fact all you've done is externalize your cost on their backs and onto their communities. The prior false analogy of cheap labor with mechanical efficiency just doesn't hold.

It appears to me that while "protectionist " are indeed like cockroches…because I 'm pretty sure we will never go away….we ARE the people who live in these places and communities and unlike free traders we do hold loyalties to place, to community and to country. So cock roaches?…sure I almost find nobility in it….but what term is there for those who hold profit governed by the elite above ALL else?

muirgeo August 26, 2007 at 9:58 am

Remember this post? Tax Burden? Basically how the middle class is , over the last 30 years, paying a greater share of their expenses in the form of taxes. Welcome to free trade.

http://cafehayek.com/2007/08/tax-burden.html

Here's an example of how it works in the real world from, When Corporations Rule the World by David C Korten

The global economy has created a dynamic in which competition among localities has become as real as competition among firms. Moore County, South Carolina, won a competitiveness bid in the 1960's and 1970's when it lured a number of large manufacturers from the unionized industrial regions of the northeastern United States with promises of tax breaks, lax environmental regulations, and compliant labor. Proctor Silex was one of the companies attracted. Later, when Proctor Silex expanded its local plant, Moore Conty floated a $5.5 million municipal bond to finance necessary sewer and water hookups- even though nearby residents were living without running water and other basic public services. Then in 1990, the company decided that Mexico offered more competitive terms and moved again. It left behind 800 unemployed Moore County workers, drums of buried toxic waste and the public debts the county had incurred to finance public facilities on the company's behalf.

You should see what they did to the Mexicans…..can you say maquiladors?

Wow….I just realized the sub-title of Cafe Hayek….."where orders emerge"…that helps a lot.

MT August 26, 2007 at 1:04 pm

What would be 3 examples of corporations ruling or controlling in the U.S.? I've lived here 40 years and haven't seen it in my life, but maybe I'm missing something.

John Pertz August 26, 2007 at 4:23 pm

Ha ha ha

Somebody in the comments section of this blog actually wrote that the U.S government makes trade laws to protect it's citizens from POTENTIALLY harmful goods and services. HAHAHHAHAHAHHAHAHAHAHA. I cant believe that there are people in this country who really believe that governments protect their citizens from harmful imports. You dont believe that domestic industries may benefit from such laws?

John Pertz August 26, 2007 at 4:33 pm

So basically Muriego equates free markets with corporate cronyism and protectionism with social solidarity. My question to you is why are sugar tariffs that result in consumers spending double the market price for sugar good for society? I mean in a world of scarcity this should be viewed as an extreme negative, correct? Im sorry Muriego but I view you as nothing more than a corporate sycophant who indirectly emboldens the power of entrenched interests under the guise of trying to support some imaginary loyalty to community.

John August 26, 2007 at 5:44 pm

Muirgeo,

If were new here and to the POV espoused here was new to you, I'd bother explaining how silly your comments are. But since neither is true, I won't bother telling what I and others think of your comment…not to mention what you already uncomfortably KNOW to be true in spite of what you wrote.

You cannot possibly read and write here as much as you do and have no idea how wrong you are on multiple levels.

I think you just "play" a contrarian role to get attention.

ben August 26, 2007 at 5:54 pm

Muirgeo, it is free trade that protects you from the control of elites (however they are defined). If anybody can simply import goods the minute the elite attempt to raise local prices, then they don't have control. Preventing consumers from free trade makes them vulnerable to control by the elite.

You have it exactly backwards.

ben August 26, 2007 at 5:56 pm

That should have read: "Protecting consumers from free trade…"

muirgeo August 26, 2007 at 9:09 pm

MT,

http://www.stateofworkingamerica.org/tabfig/01/SWA06_Fig1W.jpg

Let me keep it simple.
You would have to agree that the economy has grown more productive by leaps and bounds over the last 30 years and even over the last 100 years.

Shouldn't that mean the average family should be seeing their hours worked decline some what remarkably? Including considerations for "improved" standards of living.

Do you think from your life experience that is what's happening? I don't. It's not even close.

Now the guys on top aren't working any more hours. No not them…I'm talking the ones on the very top that have had their wealth habded down through the generations. They are living off their dividends and stock options. You my friend are a serf for Paris Hilton and nothing more. You work for her no matter what you think.

Here's my other line of reasoning expressed in the following facts.

"Today, 47 of the top 100 economies are actually transnational corporations, 70 percent of global trade is controlled by a just 500 corporations, and a mere one per cent of the TNCs on this planet own half the total stock of foreign direct investment. At the same time, the new free market and free trade regimes (eg. GATT, NAFTA) have created global conditions in which transnational corporations and banks can move their capital, technology, goods, services – freely throughout the world unfettered by the regulations of nation states or democratically elected governments."

http://www.converge.org.nz/pirm/mechcorp.htm

Nasikabatrachus August 26, 2007 at 9:20 pm

I wonder how people's attitudes would change if you called a Trade Deficit a Capital Account Surplus instead.

"Those ferenners are investin' in ar country! We gotta do somethin'!"

muirgeo August 26, 2007 at 9:30 pm

John,

I know I sound pretty looney. How about these guys?

"There is an evil which ought to be guarded against in the indefinite accumulation of property from the capacity of holding it in perpetuity by…corporations. The power of all corporations ought to be limited in this respect. The growing wealth acquired by them never fails to be a source of abuses."
- James Madison

"I hope we shall… crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country." –Thomas Jefferson

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money-power of the country will endeavor to prolong it's reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic is destroyed.”

Abraham Lincoln

“The mischief springs from the power which the monied interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges which they have succeeded in obtaining…and unless you become more watchful in your states and check this spirit of monopoly and thirst for exclusive privileges you will in the end find that the most important powers of government have been given or bartered away….
- Andrew Jackson, Farewell Address, 1837”

If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.

Thomas Jefferson

T Sowell fan August 26, 2007 at 10:29 pm

Muirgeo:

Here's another view of what the founding fathers' thought about David Korten's ideas in "When Corporations Rule the World":

http://www.pamij.com/99_4_1_dunn.html

John Pertz August 26, 2007 at 11:56 pm

I think it is safe to say that we have reached the point of no return with Muriego. It really is not worth arguing with him any more.

muirgeo August 27, 2007 at 12:55 am

No need to argue John. Just explain to me/us why the average American family is working so many more hours considering how much productivity has gone up. It makes no sense. And that's a reasonable question to ask. I think really you just don't like defending your positions.

Russell Nelson August 27, 2007 at 2:01 am

Rob Dawg writes "Ask any US software developer if they are getting the benefits in Asia of lower regulation and enforcement."

Sure, ask me. I go work eight weeks a year in India, and that provides me with enough income to do nothing the rest of the year. Lower regulation and enforcement? I love it!

ben August 27, 2007 at 6:35 am

Muirgeo

Today, 47 of the top 100 economies are actually transnational corporations

Martin Wolf addressed this in his book Why Globalization Works.

He described the claim you cite as "a howler" i.e. an elementary error.

That stat, 47 of the top 100 economies are corporations, is produced by comparing the revenue of corporations with the GDP of countries. They are completely different measures and make comparison meaningless.

The correct comparison with GDP is the value a corporation adds i.e. the difference between its revenues and costs, which is roughly profit minus the cost of capital.

Once you have corrected for that, the correct figure (in 2000 when the study was done) is just 21 of the top 100 are corporations, and only 2 appear in the top 50, Exxon at 45 and General Motors at 47.

ben August 27, 2007 at 6:39 am

Of course the other point is: so what? There is much less concerned about large companies which have no power to coerce individuals (even Exxon has to win your business from its rivals) than I am about large countries with powerful governments.

MT August 27, 2007 at 8:59 am

Muirgeo,

People work hard because there are so many opportunities to do so. It improves their standard of living. They have so many opportunities for better quality of life than even 20 years ago, let alone 40.

You have to unlock your thinking in terms of "classes." We have a very fluid economy, with most people spending different parts of their lives in different quintiles of wealth. The world is made up of individuals, each with their own problems, hopes, and dreams.

Corporations are created by individuals, for the benefit of individuals (shareholders). They become large when they succeed in pleasing customers (or sometimes when they are granted protection status from the state). Large, successful corporations don't wield power over individuals. They exist to serve individuals.

SaulOhio August 27, 2007 at 10:09 am

muirgeo asked:"No need to argue John. Just explain to me/us why the average American family is working so many more hours considering how much productivity has gone up. It makes no sense. And that's a reasonable question to ask. I think really you just don't like defending your positions."
People work so much more because they WANT more. They are working to pay off a mortgage on a 2-car garage, 3 1/2 bath, 3 bedroom house when they could have gotten a smaller one. They are also working to pay for the artificially inflated value of the land that is the consequence of "open space" and "smart growth" legislation. They are also paying for higher education costs, as teachers excuse their own failures by demanding more money and lobbying for it through powerfull teachers unions.

Isaac Crawford August 27, 2007 at 10:12 am

Why are people working the same or more hours now? Probably because they want more stuff. Nothing FORCES people to work longer. If they want the bigger houses, extra cars, or other niceties in life, they have to pay for them. Surely you would agree that there's more to buy now than at any time in the past? I'll second the question that you have repeatedly failed to answer, which corporations control you or us? It's true that many of them have sweetheart deals from the liberal democracy you love so dearly, but who controls you? You have also not been able to explain how corporations would be able to control anyone if they were not protected from competition.

Your doomsday pontificating about the middle class has grown tiresome, you have nothing to back up your paranoid claims, you ignore all evidence of these ideas working, and you seem to be one of the gloomiest people around. There ARE interesting critiques of many libertarian positions, but the one you keep trotting out is "You guys are all wrong" is both idiotic and quite boring. Either come up with a real critique (and that does not include anecdotal "evidence" like "The middle class is unhappy and being controlled by multinationals") or just go the hell away.

Isaac

muirgeo August 27, 2007 at 10:17 am

MT,

I can admit the good things about corporations but I also see serious dangers. Others here seem completely unable to admit to the dangers of corporations. They ignore the words of our founding fathers and bid allegiance to and protect corporations at all cost in what I would claim to be an Orwellian fashion.

A Corporation Like News Corp that owns Fox and so many media outlets is very dangerous. To assume they wield no power over individuals in naive at best.

I think a very good argument can be made that we went to war in Iraq because of corporate interest (Media, Defense and Oil).

Seriously I have people claiming to be Libertarian and making unconditional defense of a corporate world and all I can think of is the movie Invasion of the Body Snatchers.

Our country was set up to give people both the power of democracy as well as the power of the purse. I don't understand the point of ceding power of either.

muirgeo August 27, 2007 at 10:33 am

People work so much more because they WANT more.

Posted by: SaulOhio

I can't deny that's PART of the answer. But where is that coming from but the "mind control" of the mass media and commercialism. The science behind mass media and marketing is scary. I know you are a rugged individualist Saul but odds are that you have given in to some of the control that their marketing that pits us all to keep up with the Jones. They are so powerful we've all gotten fat and lazy and we die earlier then any other developed country.

Yes, the average American has a bigger house and more things in that house but he also has a smaller yard, spends more time at work, more time in the car driving alone, less time with his family, his friends or his community. The only thing we have left to do is consume things. Consuming seems to make us happy and that's the way they like us to think.

MT August 27, 2007 at 10:44 am

Muirgeo,

Being somewhat new to this forum, I can't resist the attempt.

I haven't seen anyone here "bid allegiance" to corporations. I have seen a lot of allegiance to markets, which is entirely different (allegiance based on mountains of evidence, not on faith).

In free markets, many corporations will succeed. Some very wildly. So what? Isn't that great? Who are they harming?

Is your esteem of the public so low that you think Fox Corp. can controll them? What about all of the other sources of information: network television, USA Today, Wall St. Journal, NY Times, Tribune Co., millions of Internet outlets (e.g., Cafe Hayek), NPR, and my favorite, government-run schools.

On the last one, I should mention that I learned of the "evil of corporations" in fifth grade, but luckily I'm able to think for myself (as are the other 300 million people in this country) and was able to rise above my public school education.

MT August 27, 2007 at 10:48 am

I can't resist responding to this one:

"Yes, the average American has a bigger house and more things in that house but he also has a smaller yard, spends more time at work, more time in the car driving alone, less time with his family, his friends or his community. The only thing we have left to do is consume things. Consuming seems to make us happy and that's the way they like us to think. "

Americans have more options than anyone at any time in history. More options of where to live, where to work, what hours to work, what to eat, what to consume, what to read, and how to spend their time. We are consuming more "LIFE."

SaulOhio August 27, 2007 at 11:00 am

You know, I PREFER to have a smaller yard. Less mowing to do. I can think on few more mindlessly useless tasks than mowing a lawn. You should see what I prefer to do with my spare time. Saturday left me feeling dead tired, all my muscles aching, and I loved it. We are free to pursue liesure activities as we choose. Some choose to be more active, like me. Other choose something more sedentary. The choice is theirs. You would want to impose something else?

muirgeo August 27, 2007 at 12:45 pm

Quick aside while I'm thinking of it, from Thom Hartmann at Air America Radio, "Does the economy exist to serve the people or do people exist to serve the economy?".

muirgeo August 27, 2007 at 12:48 pm

Is your esteem of the public so low that you think Fox Corp. can controll them?

Posted by: MT

It's not my esteem its the facts. Surveys have shown repeatedly that Fox viewers are far more likely to believe Saddam Hussien attacked us on 9-11.

muirgeo August 27, 2007 at 1:06 pm

Saul, MT,

You asked me how corporations were forcing anything on you now, considering both your last posts, you tell me how government is forcing anything on you. The answers are obvious but for sake of further discussion entertain me and give me your best examples….oh heck…let me expedite this. You're supposed to say taxes. The I'll ask, "do you know what percent of your taxes go to corporations"….actually I don't know that answer but I bet it's at least half.

So unless you have a disagreement with this line of arguement I think I've linked how corporations are "forcing you at the end of a gun" to buy their product.

I think the insidious nature of it has lots more roots then the obvious.

John Dewey August 27, 2007 at 3:24 pm

SaulOhio, MT, Isaac Crawford,

Cafe Hayek has been for me an enjoyable forum for exchanging ideas about liberty and free markets. But it is just not so much fun anymore to wade through the endless arguments you guys have with the now-resident anti-capitalist. Do you not reach a point of diminishing return in your efforts to defend American capitalism from the unfounded assertions of an unswayable zealot?

Sadly, I've also reached the conclusion that John Pertz expressed last night.

MT August 27, 2007 at 3:58 pm

I've also reached the point where this is a waste of time. I need to go consume something.

ben August 27, 2007 at 8:18 pm

Muirgeo,

This idea is that hours worked should certainly decline with income is simply wrong.

If you ever do a first year course in economics, you will be taught about the choice between labour and leisure, and what happens to hours worked when wages increase.

The answer is two things happen when wages go up. One, there is an income effect. Provided leisure is a 'normal' good (meaning more of it is consumed when income goes up), higher income will cause more leisure to be consumed (and therefore fewer hours to be worked).

But there is also a substitution effect. Higher wages for labour stimulate substitution away from leisure and towards more labour.

Which effect dominates is an empirical question. There is absolutely no reason to think higher wages will always reduce hours worked.

Muirgeo: please LISTEN to what is being said here and CONSIDER your view in light of it. Please be prepared to accept a reasonable counterpoint.

Gil August 28, 2007 at 12:10 am

Then again, from a laissez-faire point of view, what is there to argue? Any problem in life? Free the market! I'd have thought it'd been repetitive following a line of argument that goes 'this or that industry is not operately very efficiently, it's because of government intervention, those (*@##s!, just free the market and let the industry self-correct, problem solved!, maybe?

muirgeo August 28, 2007 at 1:47 am

Muirgeo: please LISTEN to what is being said here …..

Posted by: ben

Show me where I said a THING about wages in relation to time off. Yes Ben the LISTEN thing goes both ways. I've made many good inquires often with NO decent reply to be found. You guys are NOT able to answer a lot of the issue I raise up with any ideological consistency. The only thing consistent is to say I'm the one no listening.

It's common sense that if productivity goes up and all else is the same your hours should go down NOT up. Don't tell me I'm the one being dense. Middle class America's getting RIPPED OFF and guys like you have every sort of excuse under the sun why its alright for a $50 millionaire to make $250 million. That's BS and the only way they are doing it is off the backs of good hard working Americans.

Call me a ranting lunatic but gosh darnit go back and read those quotes from the founding fathers. I KEEP GOOD COMPANY!

ben August 28, 2007 at 2:42 am

Muirgeo, fair enough, you never used the word wages, you said productivity. So your argument is that if higher productivity translated to higher wages then workers would work less hours. People are not working less because productivity gains are not being passed to workers. That's your argument, yes?

Well its wrong for the reasons I gave in my last post. The income and substitution effect destroy a consistent relationship between productivity when passed back to workers and hours worked.

ben August 28, 2007 at 2:48 am

Muirgeo, it turns out your entire argument is wrong from the start. Hours worked is declining and leisure time has increased substantially in the last 40 years. From the abstract of Mark Aguiar and Erik Hurst "Measuring Trends in Leisure: The Allocation of Time over Five Decades":

We document that a dramatic increase in leisure time lies behind the relatively stable number of market hours worked (per working-age adult) between 1965 and 2003. Specifically, we document that leisure for men increased by 6-8 hours per week (driven by a decline in market work hours) and for women by 4-8 hours per week (driven by a decline in home production work hours). This increase in leisure corresponds to roughly an additional 5 to 10 weeks of vacation per year, assuming a 40-hour work week. We also find that leisure increased during the last 40 years for a number of sub-samples of the population, with less-educated adults experiencing the largest increases. (emphasis added)

So your basic argument is wrong. Earlier you wrote:

"Now the guys on top aren't working any more hours. No not them…"

Well, thats wrong too:

Lastly, we document a growing "inequality" in leisure that is the mirror image of the growing inequality of wages and expenditures…

ben August 28, 2007 at 2:49 am

That last para was quoted from the abstract. I forgot the tags.

ben August 28, 2007 at 2:52 am

It's common sense that if productivity goes up and all else is the same your hours should go down NOT up.

No, it absolutely isn't clear why that would be true for precisely the reasons I already gave. I don't know if you're assuming higher productivity is passed back to workers through wages. If it is, then income/substitution effects make change in hours worked unclear. If it isn't, then workers have no reason to change their hours worked since their circumstances are unchanged.

T Sowell fan August 28, 2007 at 7:12 am

Thomas Sowell thorougly rebuts the "Greed Fallacy" promoted by muirgeo and his fellow cultists in this article: http://www.theconservativevoice.com/article/22248.html.

Just a couple of money quotes:

– Think about it: I could become so greedy that I wanted a fortune twice the size of Bill Gates' — but this greed would not increase my income by one cent.

If you want to explain why some people have astronomical incomes, it cannot be simply because of their own desires — whether "greedy" or not — but because of what other people are willing to pay them.

– If people who are capable of being outstanding executives were a dime a dozen, nobody would pay eleven cents a dozen for them.

– The idea that everything must "justify itself before the bar of reason" goes back at least as far as the 18th century. But that just makes it a candidate for the longest-running fallacy in the world.

Given the high degree of specialization in a modern economy, demanding that everything "justify itself before the bar of reason" means demanding that people who know what they are doing must be subject to the veto of people who don't have a clue about the decisions that they are second-guessing.

It means demanding that ignorance override knowledge.

– Now that oil prices have dropped big time, does that mean that oil companies have lost their "greed"? Or could it all be supply and demand — a cause and effect explanation that seems to be harder for some people to understand than emotions like "greed"?

T Sowell fan August 28, 2007 at 8:55 am

muirgeo misrepresents the views of his many opponents on this site by claiming they blindly, unconditionally defend corporations. No sensible person believes corporations are perfect and, therefore, warrant unconditional defence.

Indeed, Adam Smith himself warned in "The Wealth of Nations" about the dangers of capitalism:

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy
against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which
either could be enforceable, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary."

Because of this accepted wisdom, we have many necessary laws regulating corporations. The real conflicts on this site are related to the degree to which governments interfere with the operation of competitive free markets or pursue an undefined goal of "social justice".

The majority of posters to this site want the kind of government described by Milton Friedman in "Capitalism and Freedom" (in the conclusion to Chapter II):

"A government which maintained law and order, defined property rights, served as a means whereby we could modify property rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary framework, engaged in activities to counter technical monopolies and to overcome neighborhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented private charity and the private family in protecting the irresponsible, whether madman or child — such a government would clearly have important functions to perform. The consistent liberal is not an anarchist. (T Sowell fan believes the consistent libertarians on this site are not anarchists.)

Yet it is also true that such a government would have clearly limited functions and would refrain from a host of activities that are now undertaken by federal and state governments in the United States, and their counterparts in other Western countries."

He goes on to list 14 examples of many more unjustified government activities.

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