Maybe They’re Better Now at Estimating….

I recall when I was young a few "Marxist" in my University still held to the ideas of Communism. For most of us they were laughing stocks, after all, we said, look at the conditions of Russia, the oppression of Eastern Europe, the situation in China. Clearly Communism didn't work.

And in response they inevitably said that "true communism" had never been accomplished. That Mao and Stalin had somehow misunderstood or misapplied the teachings of Marx and that they would ensure a proper implementation.

I notice the same thing among the "free market crowd." They excuse ever failure of globalized liberal trade regimes by saying that the systems of bankers and investors was never really "capitalism" or a "free market."

You hung out with some very stupid people in college.

Communism didn't exist in Russia, Eastern Europe or China.

We had socialism. The United Soviet SOCIALIST Republics had communism for about 12 days in 1917 but it completely collapsed the economy in that period of time, so the Bolsheviks dumped it in favour of totalitarian control over the population.

Further, failure is a feature, not a fault of free markets. It's Socialists and Communists who promise Utopia if only people would give up all their "worthless" liberty.

What free marketers are saying is that instead of allowing the market to naturally punish companies for missteps, the government has stepped in to so pervert the natural market process that giant, protected companies arose who are "too big to fail" because regulation and other government meddling has prevented competition and all of the benefits from it.

Now, you lot want more meddling in the fervent religious belief that if government only took over every banal decision of every human being, THIS time it won't be like the Soviet Union.

The totalitarian socialists had a blood feud over whether socialism should be nationalist or internationalist, but they all agreed that free markets and other personal liberties had to go. The one's who couldn't stomach (or thought impractical) mass purges and concentration camps just became Fabians and Progressives.

pretty much.

Marx claimed that communism will liberate people from making banal decisions about their lives so that they can move to a higher plane of being. It's the muirdiot mantra - to increase your liberty you must first get rid of it and submit to something like an Obama.

"Because it's the law" has never set well with me as a justification for something.
I want to hear the justification for the law.
Something other than "the person who wrote the law is smarter than you" or "a lot of time and effort went into crafting that law, do not question it".

I'm told that once upon a time people would routinely question the law, and those who enforce it. That is the mindset of a free people.

Now we're to blindly follow the law and unquestioningly obey those who enforce it. That is not the mindset of a free people, that's the mindset of a servant or slave.

What happened?

"once upon a time people would routinely question the law"

That CAN'T work today, because the law is all too often an abomination that cannot stand up to any questioning. Once you start questioning the law today, you realize that difference between governance and crime is mere stipulation.

Control of the law is a boon the thugs are not going to give up without a fight. And since they run the army, good luck with that.

Well, just try to question those the law forces you to obey and see how far you get!

What happened is that government has the monopoly on violent force. The other thing that happened is that the United States became more like the rest of the world. Human history is tyranny and misery. This was a unique experiment and it's come to an end.

maybe

I fear that you are right. I'm reading "Russka" by Edward Rutherfurd, a novelization of Russian history. Its recurring theme is the devolution of human freedom. Its depressing as hell, because the advance of authoritarianism is just too natural.

Freedom from choice.
Freedom from responsibility.
Freedom from consequence.

Just do what the government tells you (submit) and it will all be OK.

"And in response they inevitably said that "true communism" had never been accomplished."

They are right. Communism is complex theory (albeit one with self-contradictions and broken concepts). It has never, and can never be accomplished.

But your analogy to free markets doesn't work. You're comparing apples with oranges--complex theory with simple fact. Real human interactions can be classified as voluntary or involuntary. The 'free market' is simply the set of all the voluntary ones.

Unlike communism, the free market isn't a theory. There is a real tangible difference between you & I trading versus me just taking your stuff against your will. The difference has economic consequences. The free market is a fact, a tangible, and an every day experience. The free market is commonplace. It is you and your neighbor. You and your grocier. And it exists essentially everywhere people interact, even if it is as pathetic as just a Winston Smith and Julia capturing a bit of free choice in a totalitarian state.

And the complement set--involuntary interactions (or violence, force, coercion, however you want to refer to it) also exists essentially everywhere. It has a legitimized form, government, but also illegal and legal nongovernmental forms. So within nearly ANY group of interacting people, including an attempted communist society, the free market, and its complement, exists.

Economic blame is something you place on human interactions. If you are casting blame with reference to free markets, it therefore behooves you to categorize all of the interactions in the causal chain of the adverse event, into voluntary (free) or involuntary (violent). You then have to explain why you believe the particular violent actions are excusable, and the free actions offensive. Or vice versa. You might even blame the perpetual shortages in the USSR on the free market there, depending on which interactions you think were legitimate.

But if you just want to come out and say the US is a free market economy and therefore the free market created the current recession, no intelligent person can take you seriously. Given the size and complexity of the regulatory code, the deliberate central bank manipulation of interest rates, the virtual cartelization of US banks under the Congressionally-mandated central bank, the imposition of a monopoly fiat legal tender, the Federal government dominance of entire industries, the extensive subsidies, protections, and other causes of moral hazard, and the enormous amount of taxes and investment wealth that passes through the government, there is by no means ever a prima facie case against the free market.

So before you attribute something to a failure of human liberty, do yourself a favor and make sure you've at least attempted to account for the innumerable effects of the web of legal violence that permiates our system. If you have an aptitude for economics you may find that you agree with the free market crowd on the causal chain, but that you disagree on your acceptance of violence, and their aversion to it.

"You assume that funding for Medicare came out of nowhere, when in fact it came out of people's earnings and savings making them more dependent on government."

Well all government spending comes ultimately from the tax revenues. Duh. I mean this kind of reasoning just blanket makes the state bad, why would you use it for Medicare and not say defense spending or police or courts or all the other services of the state.

You have a very popular government program about to turn 45 years old and a private health care system with 50,000,000 Americans uninsured. So why should people over 65 go uninsured? What benefit will millions of other people not having any health insurance grant to them?

Frankly the entire private health care system has only made people more dependent on their jobs, leading to a massive burden on employers and less career innovation than could have been. How many Americans don't like their jobs and would like to try something else, but can't leave because they need the health insurance? Millions? Tens of Millions?

"So why should people over 65 go uninsured?" People over 65 shouldn't go uninsured. They should insure themselves.

Insurance is not for the uninsurable anymore than shoes are for the footless. There is no mutually beneficial risk pricing when risk is 100%.

1. Because there is a legal document that outlines the functions of the government, and specifically says everything else is left to the state and to the people?

2. You might be interested to know that people dependent on their employer for their health-care is a direct result of your beloved governments regulations.

"Well all government spending comes ultimately from the tax revenues."

1. Not if the debt isn't paid down.
2. Not if there is monetary inflation.


"You have a very popular government program about to turn 45 years old"

The popular program is the one people have had for 40 years, not the one they are going to get in future years. Why is it so hard for you to grasp the meaning of massively unfunded liabilities? Subsidy price spirals? In case you haven't noticed, Medicare financing is in nothing remotely resembling a steady state.

If people are so dependent on their jobs, of course it doesn't have to do with the cost of the U.S. virtual empire, various wars, government pension plans, etc.

Or does it?

Hasn't the the constant fiscal stimulation and loooow interest rates enticed people into consumption rather than savings?

Does not the cost of government itself take a squeeze out of individual fiscal independence?

You wouldn't dare to suggest that the cost of government has no deleterious effect on individual prosperity would you?

Talk about an alternate reality.

Oh I am sorry, I did not notice medicare collapsed. Gee in the world I live in the the massive investment banks that grew wildly out of the great deregulation and globalisation of the last 30 years collapsed and drove the economy in to a massive crisis and the period of governments embracing free market ideas and deregulation culminated in boom and bust and mass economic collapse with the investment community running to the public sector to save itself.

I clearly have, oddly enough, wondered in to a group thread from the Internet in some alternative reality somewhere, where the greatest economic threat people face is the government. Hello Internet users from another dimension, do they have that stupid show House in your Universe?

You wondered in, huh?

Are you aware of the massive unfunded liability that is Medicare?

From http://www.ncpa.org/pub/ba662

The 2009 Social Security and Medicare Trustees Reports show the combined unfunded liability of these two programs has reached nearly $107 trillion in today's dollars! That is about seven times the size of the U.S. economy and 10 times the size of the outstanding national debt.

The unfunded liability is the difference between the benefits that have been promised to current and future retirees and what will be collected in dedicated taxes and Medicare premiums. Last year alone, this debt rose by $5 trillion. If no other reform is enacted, this funding gap can only be closed in future years by substantial tax increases, large benefit cuts or both.

Social Security versus Medicare. Politi­cians and the media focus on Social Security's financial health, but Medicare's future liabilities are far more ominous, at more than $89 trillion. Medicare's total unfunded liability is more than five times larger than that of Social Security. In fact, the new Medicare prescription drug benefit enacted in 2006 (Part D) alone adds some $17 trillion to the projected Medicare shortfall - an amount greater than all of Social Security's unfunded obligations.

Future Payroll Tax Burdens. Currently, a 12.4 percent payroll tax on wages funds Social Se­curity and a 2.9 percent payroll tax funds Medicare Part A (Hospital Insurance). But if payroll tax rates rise to meet unfunded obligations:

When today's college students reach retirement (about 2054), Social Security alone will require a 16.6 percent payroll tax, one-third greater than today's rate.
When Medicare Part A is included, the payroll tax burden will rise to 25.7 percent - more than one of every four dollars workers will earn that year.
If Medicare Part B (physician services) and Part D are included, the total Social Security/Medicare burden will climb to 37 percent of payroll by 2054 - one in three dollars of taxable payroll, and twice the size of today's payroll tax burden!
Thus, more than one-third of the wages workers earn in 2054 will need to be committed to pay benefits promised under current law. That is before any bridges or highways are built and before any teachers' or police officers' salaries are paid.

I'd like to cast my vote for overt and immediate Federal government bankruptcy. It would be nice to see the Federal Reserve's balance sheets instantly fall by $5 trillion. And it would be a good lesson for anyone who in the future ever thinks about investing in US government expansion.

Well, your partisan bias is evident.

Somehow I thought it was widely held that prolonged low interest rates from the FED is what caused the boom that resulted in the bust...they tend to go together like that.

All the regulatory climate did was determined where and how the boom manifested, which of course, was where the most damage occurred.

"Great deregulation", eh? "Free market"? Riiiight. Bought any bridges lately?

Can you show us how the extent of regulations, regulatory budgets and regulatory personnel where cut?

Bet you can't.

He's talking about all of those thousands of pages that were added to the CFR that apparently consists of nothing but chapters and chapters of regulatory repeals.

...and all the personel who were permanently hired to undertake those repeals.

Check out this chart.

It's funny that we're currently at the peak of a rapid explosion in growth, but the prediction is that instead of continuing on from here, it will first rapidly decline and then grow more slowly. The line between past reality and future prediction makes for a fascinating discontinuity.

The good news is that what cannot happen will not happen. With taxes already at the peak of the Laffer curve, all the greenage in that chart simply cannot happen. Benefits will have to be cut. The only question is whether the cuts will take the form of applying the brakes or of hitting the barricade.

applying the breaks is politically unpopular. The barricade will be slammed into.

Everyone's standard of living will decrease and people who rely on the entitlements will not get them. Only the well connected will be able to secure access to them and the wealthier will pay out of pocket. The poor in whose name the entitlements were created will not even have the opportunity to find a way to pay for it and they'll just do without. This is not an untested model by any means.

All that entitlements ensure is grinding poverty for the least advantaged in society - if not right away then eventually.

"Only the well connected will be able to secure access to them"

Reminiscent of the elite's Moscow hospital versus nearly every other hospital in the Soviet Union? I spoke to one ex-Soviet (from Moscow) who talked about how great health care was. You just walk into a pharmacy and pick up whatever you need. Then I spoke with a career nurse from a large hospital in Lithania's second largest city Klaipeda under the USSR. Since they didn't have STRETCHERS, patients were carried from surgery to their rooms on a sheet. Nursing in the USSR was almost literally back-breaking work. Doctors dealt with their glorious jobs by coming to work drunk.

But they had universal coverage, and life was fair.

I was a victim ("patient", in this country) of Soviet medicine for several years as I battled a series of life-threatening problems (which are a lot less life-threatening here, btw). Also, one half of my family practiced medicine - in Riga and Moscow. Every story save one is a horror story, by American standards. Unless Americans suddenly think that awesome medical care is reusing unsterilized needles on multiple patients, overflowing toilets, 1 toilet per 76 patients, preventing family members from visiting sick children, abdominal surgery with local anesthesia (which they ran out of in the middle of surgery sometimes - happened to me with an adenoid surgery when I was 4 years old. fun), and sadistic nurses beating the life out of sick children when the child passed out (no way to alert the nurses to that, btw. that's expensive equipment) and wet the bed. Why not? Can't be fired. Unions and all. How about ambulances that arrive but refuse to take you to the hospital unless you pay them a bribe? Or doctors who refused to treat you without a bribe (assuming they weren't on the verge of an alcaholic coma whilst seeing you, which is quite an assumption in Russia).

And that's just what happened to me. In the "good" hospitals. I was bumped up to this super duper care because my family was very well connected (we left for idealogical reasons, not because we lacked material goods - most of which my father obtained on his frequent travels abroad.) The surgeons in my family have even worse stories. I didn't even understand we were in a medical facility when I saw my first hospital in the United States.

Your ex-soviet was obviously never sick. The polyclinics were AWESOME. They positively overflowed with gauze, pills of varying effectiveness (usually ineffective since they were cut with crap like chalk to meet production standards which were usually pill count, not the effectiveness or safety of the medicine), and iodine. So, if you have a scrape on your knee, the Soviet system was awesome.

Bottom line is that I survived my multi-year ordeal only because my family had connections. Anyone not well connected just died - usually in the hospital when the hospital refused to treat them or caused their death by reusing needles or carelessly exposing patients to things they knew the patient was allergic to. But it won't happen here. right?

Whatever.

And the program has improved the quality of life for millions of Americans and is extremely popular.

And it is interesting that the US economy has not collapsed in to socialism in the 45 years since it was introduced.

I mean read this one over and over again with a bit of an open mind. Medicare has been around for 45 years, that is the key fact.

And we spend more on health care than all other industrialized countries, with worse results - to use one of your favorite talking points. In fact our universal system for people 65+ is the most expensive of any other industrialized country.

So, the current bill is being sold as a solution to all these issues, but we all know that is a lie.

I am open to a universal system (because I think it is inevitable), but it would look more like Singapore's, than Canada's. The Obama "plan" sucks.

Yeah, but big insurance is always denying coverage. It just doesn't work. We need government insurance to make sure people's claims get paid.

BTW, of the nation's 15 largest insurers, you know which one leads in claims denials? You guessed it--Medicare.

receiving lots of free stuff is always popular among the receivers.

It's paying for it that's a lot less popular.

(1) Actually, Medicare was supposed to get rid of the problem of elderly poverty caused by health care costs; it hasn't even come close to that. (2) The popularity of something says very little its virtues (or lack thereof).

"And it is interesting that the US economy has not collapsed in to socialism in the 45 years since it was introduced."

Yes, the U.S. economy has instead collapsed into a corporatist state. Not all bad outcomes are called socialism.

Wait Medicare was suppose to get rid of all elderly poverty? Really? I
mean the plan was suppose to ensure that the elderly all had health
coverage, how was that "suppose to get rid of the problem of elderly
poverty". Seems the only thing any rational person could say for Medicare
is that it would prevent elderly people from entering poverty because of
health coverage.

In a democracy the popularity of a program is generally all we have.

As for the US economy, I would agree that it is corporatist capitalism, but
that is hardly Medicare's fault. Probably the decline of labor unions
probably had a much larger impact in the rise of a few very powerful
corporations.

Are you saying that say American 1910 was some kind of paradise, a true
"free market" that was the best for everyone then? Well surely, oh whats
the point.

I personally find Hayek an interesting thinking and probably, just my own
biases here, am about 80% what scholars would call a "neo-liberal." I have
spent my life following markets and my entire job is centered around market
liberalization and globalization. But I am a deep realist. The fetish of
the "free market" as a kind of no need to think answer for all problems has
passed its shelf date.

"...a true 'free market' that was the best for everyone then?"

So what if a free market does not produce what is best for everyone? Neither does the alternative, the exploitation of a political class.

You think that my giving priority to freedom is a fetish, a religion, or whatever. I think exactly the same of those who give priority to the whims of a political class.

Let me be blunt. I don't care if the world has problems. Its not my world and they're not my problems. I have my own problems, on which I could make much better progress if all the busybodies of the world would stop mandating that I be involved in theirs.

"Wait Medicare was suppose to get rid of all elderly poverty? Really?"

Yes, really. That was its express purpose.

"In a democracy the popularity of a program is generally all we have."

Actually, that isn't even remotely the case. If it were then we would have (a) a lot less free speech, (b) a lot less freedom of religion, and (c) and lot more restraint on trade. A great deal is done to undermine what is popular because what is popular often sucks. Anyway, are you some sort of "democratic fundamentalist?" That's what this statement of yours appears to point to. Later on in your statement you seem to be attacking market fundamentalism; why is democratic fundamentalism superior?

"Probably the decline of labor unions probably had a much larger impact in the rise of a few very powerful corporations."

By definition labor unions are part of a corporatist state. Labor unions are after all very powerful corporate bodies (just like a lot of religious entities are). Corporatist doesn't equal the modern corporation in other words.

No, 1910 was not a paradise; see neither Hayek nor libertarians are conservatives.

"...and my entire job is centered around..."

Things, people, objects, etc. do not "center around" anything; either they center on or upon them or they revolve around them. The center does not revolve around itself in other words; it is the center.

"But I am a deep realist."

A "deep" realist? As opposed to a shallow one? Either one is a realist or one is not a realist. I'm a just a realist. I realize that capitalist economies provide far more safety, security, joy, love, etc. than their competitors. I also realize that state intervention is nearly also at the behalf or is being manipulated by groups, people, etc. interested in rent seeking or worse.

Finally, not that I am a master of prose, but do edit better next time; I really have very little respect for the arguments of crappy writers.

It is interesting and very instructive that you would state that freedom has passed its shelf date.

But you have notorious company in that concept, ex President Clinton, speaking to a college crowd in upstate New York, said the same thing. "Americans have too much freedom."

Since you've never seen a free market here in America, how would you come to the conclusion that it is not the answer to all the "problems"?

For instance, let's just take one tiny part of the market and talk about how tightly it is regulated, ok?

My wife is one of the very small group of people in the Houston Shell Oil headquarters that handles exports. Her arena of responsibility is the Americas, from Canada to Chile. She was telling me about a mistake her co-worker made the other day by including a spread sheet as an attachment that went out to everyone she and my wife deal with, from producing plants to customers to freight forwarders to trucking companies. That list was a sacred close held secret as it told everyone who was charging what, or bidding what.

In her explanation to my questions, she told me how minutely detailed government regulations are regarding every minute detail of the simple act of shipping an order to a customer outside the borders of the USA. It was hearing a verbal list of insanity, kind of like seeing the insane list of regulations and laws that Michael Smith (on this blog) has been good enough to document for us.

So, again I ask. Never having seen a free market in the USA (not ever) how do you know it isn't the answer?

We have seen socialism here in the USA, we have seen socialism and it's steroid bloated brother communism imposed around the world and so seeing we know the ruin and devastation that always brings to the people, so we know that isn't the answer.

You can't escape by saying that well we can go a little down that road and that won't hurt. But, again you'd be denying history and human nature. A little bit is never enough, the move to total comes as sure as the sun is seen coming over the horizon in the morning. That move to totality may come slow or it may come fast, but it always comes.

We have a flourishing free market in this country: illegal drugs.
With it's complete lack of regulation it ensures that any American, in any city or town, regardless of their age or social status, has access to all the prohibited chemicals that they desire.

Okay, I revise my question in light of your correct comment.

When have we seen a nationwide open legal free market (ever) in this nation in the last 130 years?

Get used to buying lots of products that way, btw.

Now now. You know it won't be that way here in America. We will never run out of other people's money.......hells bells, that would just be plain unamerican.

Enron was around for a while. So was Russia. North Korea is still a going concern. Strangely, China and India have decided to try some new rules. I wonder why.

Your first point goes as such: I like it when I rob you and buy large screen TV's for my family. My family likes it as well. Ergo this is a successful and popular program.

Or, we could say its only been around for 2 generations and it is failing. That would seem to be the expectation for a ponzi scheme. The first generation benefits at the expense of the 2nd, the 2nd generation is lucky to get back anything close to what they put in, and the 3rd generation just gets hosed.

The eldery have alway required the aid of the younger generations to live how is any more controversial than poor families having as many children as possible to care for them in their old age?

Farmers have always employed manual laborers to help them in the fields. How was it any different for an antebellum Virginia plantation owner?

The methods of exploitation practiced by the political class are in no way akin (pun intended) to the agreements made within families. The idea that they are is propaganda disseminated by the political class.

One word: force.

The question is: what did Medicare displace?

You assume that funding for Medicare came out of nowhere, when in fact it came out of people's earnings and savings making them more dependent on government.

"And the program has improved the quality of life for millions of Americans and is extremely popular."

And just about everyone who will ever benefit from it will soon be dead. Almost all who remain will only feel the deprivations of squandered savings and the bill for their deceased fathers.

"And it is interesting that the US economy has not collapsed in to socialism in the 45 years since it was introduced."

It hasn't? Don't worry. If you're not convinced yet, more is on the way.

You got that right, VV. If he doesn't recognize what reality is now, what will it take to strip the blinders off his eyes?

Without the nation having already been introduced to socialism by FDR and his administration, particularly with the social security program; without the nation having already grown accustomed to a socialist government and way of life, how would such a program as medicare have been sold to the people?

I am always sad to see so many people in America who have no idea what socialism is and how deeply it is part of their enculturation. They have no clue.

We don't have a national identity (name) as the Socialist United States of America, the SUSA, but it is irrelevant to the actual way the government is administrated.

and it's economically not feasible. much like social security it's about to collapse under its own weight.

My rule of thumb is to take the highest government cost estimate and multiply by 10. As this example illustrates, that seems to be reasonably accurate.

You would have been wrong.

They were only off by a measly 792%

A trifle.

That, and some related points made here:

http://spectator.org/archives/2010/03/02/americ...

Yeah, but government is more believable now than in 1965. /s