And What Was It that Milton Friedman Said about Business People and the Free Market?

by Don Boudreaux on July 31, 2011

in Books, Myths and Fallacies, Seen and Unseen

Here’s a letter to the New York Times Book Review:

Reviewing Jeff Madrick’s Age of Greed, Sebastian Mallaby reports that “In Madrick’s telling, a cabal of conservatives [from the 1970s forward], driven first by greed and second by ‘extreme free-market ideology,’ gradually seized power” (“Why We Deregulated the Banks,” July 31).

Although Mr. Mallaby ably exposes problems with Madrick’s thesis, he misses its fundamental flaw – namely, the fact that adherence to free-market ideology undermines, rather than serves, the anti-social goals of greedy political insiders.  Businesspeople who successfully seek political influence nearly always demand protection from the free market.  They lobby for regulations and taxes (such as tariffs) that impose disproportionately heavy burdens upon their competitors and, hence, upon consumers.  In doing so, such greedy businesspeople follow a course unmistakably opposite the course they’d follow were they really free-market ideologues.

By failing to see that political power unleashes greed to be used to undermine rather than to protect free markets, Jeff Madrick is a useful, if unwitting, idiot for the ‘greedy’ interests that he fancies himself standing in opposition to.

Sincerely,
Donald J. Boudreaux

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{ 114 comments }

Kirby July 31, 2011 at 6:06 pm

true

Jim July 31, 2011 at 6:08 pm

Don, there is another fundamental flaw with regulation that you have ably illustrated on this blog; national and international standards tend to amplify corrections when they occur.

Standards help market miscalculation to go on too long and inhibit market diversification and choice. And as we have seen, ratings agencies do not quantify this added risk well.

Doc Merlin August 1, 2011 at 9:21 am

+1

kyle8 July 31, 2011 at 6:09 pm

Absolutely, and that is why I am always suspicious of a politician who is “pro-business”, Pro business might mean that you want special protections and privileges for your favorite industry.

I would rather someone who was pro-markets.

J Cuttance July 31, 2011 at 7:21 pm

That’s right…pro-specific-business ?

MWG August 1, 2011 at 12:44 am

“I would rather someone who was pro-markets.”

An important distention, and one that I think fundamentally separates conservatives from libertarians.

MWG August 1, 2011 at 12:50 am

er… ‘distinction”…

Jack W July 31, 2011 at 6:55 pm

Except for the misguided sentiments on free trade, is there anything more misapplied than the concept that businessmen are pro-free markets? What makes it worse is that many businessmen will talk with strong, free-market rhetoric, but will play the insider’s game of killing the competition. In many cases, businesses will talk about the need for government regulation to weed out the “bad” companies who are robbing the unsuspecting consumers.

Well, now that I think about it, there is something worse than this: it is the businessmen and politicians who talk about the need to protect the consumers from “bad” businesses. I know of one industry where the FTC worked to weed out the bad businesses and the price for the services at issue doubled while the services provided decreased. Good job by the FTC. It got rid of the bad companies and it only cost the consumers twice their money in new fees.

John Sullivan July 31, 2011 at 10:00 pm

Your correct observation is not just of businessmen, but of human nature, and politely, ours included. We all like to think we’re exempt from human nature. This is a most difficult reality for people to grasp, mostly, with regards to our true nature. We’d all be different, given power to be different.

The nature of every businessman and every economic entity is that of the monopolist. Capitalism results when monopoly is broken down by both political and economic competition. A concentration of political power is required for monopoly and from its diffusion, springs capitalism. It can’t happen any other way.

Since most of us can’t be monopolists, the next best thing for us is to, at least, get free markets so we can openly compete. Our political enenemies are the people in positions of power who destroy our economic liberty. Ideologies don’t steal from us, people do. Know who they are.

I don’t see anything “wrong” with monopolists or protectionists. They’re merely doing what they can politically get away with–stealing, etc.

Politics is simple. It’s mainly about theft. You’re either stealing or trying not to be stolen from. That’s why smart people like Gordon Tulluck don’t vote. They view the democratic process as corrupt.

Liberals are theives. That sounds rash, but think about it. Everything they advocate and vote for is reducible to theft. Their arguments here, as elsewhere, are emotional justifications for it, such as using collective concepts like “democracy”, or “the common good”, etc. ad nauseam. And here we are on this site trying to give them technical, theoretical, and statistical reasons for not stealing from us, or others. Is that ironic, or just sad?

One of the brilliant talents of Ludwig Von Mises was his ability to break down every economic political policy and show who was stealing from whom. It’s not that hard to do, and it’s an effective way of debating the liberals if you’re quick to point out how they go about their stealing.

DG Lesvic August 1, 2011 at 3:56 am

John,

Libertarians have been screaming “taxation is theft” for as long as I can remember, and I am unaware of it ever having made the slightest dent in the liberal armor.

What has been denting it is the charge that taxation is sucking the life blood out of us all.

I would carry that even further, to what Don Boudreaux has called “the bottom line,” redistribution, and point out that it was counterproducive, that taking from the rich to give to the poor could not reduce but only increase income inequality and “social injustice.”

I have been preaching that approach here for years, and so far the response has been little more than a yawn.

How about you? Does it interest you at all?

John Sullivan August 1, 2011 at 8:45 am

Yes, the theft argument is boring, but it needs to be kept on the table for beginners. What’s going on in the world politically is serious. It’s truly dog eat dog. You can’t be completely civil and survive. It’s getting to the point where there are consequences to “not” arguing politics with your friends and acquaintances. I say this mainly for others–for people who’s futures aren’t yet secure.

Here are some cases where the ‘theft’ argument should be employed:

The liberals would like you to believe that they care for the poor, but if they really did, why do they rant about WalMart? Why would they want poor people compelled to pay much higher prices for their daily staples?

The people who are really poor, or, generally speaking, of the lower economic strata in our society, need to be educated that the Democrats are ‘stealing from them’ . I don’t think they have the acumen to see things in any other light. Where are the poltical ads zeroing in on this issue? How come I never see a strategy from the right that exposes the anti-consumer nature of the left’s policies–and how they amount to a redistriburtion of wealth from the poor to the wealthy?

Another rip off–grand theft– that the Right is too stupid to point out is that our Fed’s zero interest policy results in a massive redistribution of wealth from the middle class to the upper class. Where are the attack ads that show a family trying to save for their kids college with negative real interest rates alongside huge multinational corporations who are essentailly borrowing from them for free? How come the republicans aren’t pointing out this gross “theft” to the electorate? I’ll tell you why. Most Republicans believe it to be necessary to revitalize the economy, but that is a fallacy. We are stimulating the wrong end of the economy. The Producers should never be subsidized by the Consumers. As long as we do that, expect continued stagnation.

The type of liberals who post here aren’t the ones who’ll get hurt if Walmart raises prices. They are a different type of liberal. They aren’t as interested in helping people as much as they are in taking away profits from people. These types need to be dealt with differently. Ad hominem references, to a degree, should not be frowned upon, especially if people here post mile long diatribes from Ayn Rand, why can’t things get a little fiesty here and there?

DG Lesvic August 1, 2011 at 10:43 am

John,

The argument that redistribution proceeds not from rich to poor but from poor to rich or middle class to rich or from all of us to the policians has likewise been around for a long time, and, while, it all needs to be said, why stop there?

You’re still overlooking the best argument of all, the one that says it all, that comletely obviates the need for any other, and that all by itself would absolutely burn the Left to the ground.

Since the Left depends completely upon the assumption that taking from the rich to give to the poor reduces inequality and social injustice, it would be utterly demolished by the opposite-most conclusion, that it didn’t reduce but increased it.

Why is that one argument, the best of all, the one, including yourself, would use?

DG Lesvic August 1, 2011 at 10:44 am

John,

I meant to say, the one that no one, including yourself, would use.

John Sullivan August 1, 2011 at 11:59 am

DG,

The argument that redistribution of wealth from the rich to the poor is harmful to the poor is the least likely argument that the poor, or anyone, will believe, so I don’t argue that line. It is too abstract.

We don’t really tax money and redistribute the cash that much. More to the point, we offer free services to people, such as the poor and seniors, who in many cases, don’t pay taxes.

Now, if you think you’re going to win an argument telling someone poor that their Medicaid benefit hurts them more than it is helping them, good luck.

If your logic was correct, wouldn’t corportations and unions who profit from the redistribution of wealth also be hurt more than they benefit? Only in an indirect and abstract way would beneficiaries of welfare be hurt more than they gain from the political advantages they accrue for themselves.

Your point amounts to arguing that if a monopoly overcharged everyone to such an extreme degree, they would be hurting their ability to make future profits from their customers. It’s sort of like arguing not to overwork your slave. The same holds for the reverse scenario. The recipient of welfare may suffer long run consequences, but its subject to the debate that those consequences will be greater than the benefits they received from the welfare.

Since you are a devotee of Mises, even he never argued that the direct recipients of political benefits become worse off for accepting them. Of course, he never argued the case of ‘moral hazard’ either. But he always pointed out that those who didn’t receive the benefits, but who helped pay for them, were hurt the most.

You’re welcome to argue from more abstract perspectives if you want.

DG Lesvic August 1, 2011 at 12:49 pm

John,

Thank you for another of your very well reasoned arguments. As you might have guessed, I am not completely convinced.

Before looking at your argument in detail, a few quick observations.

If taking from the rich to give to the poor did not reduce but increased inequality, what then could still be said for the policy? Yes, it makes society as a whole poorer, yes, it makes the poor as a whole poorer, yes, it increases inequality and social injustice, but I am still for it.

Why? What argument, moral, political, economic, could still be given for it?

After saying it was theft, it could still be said that it alleviated social injustice. After saying it made society as a whole poorer, it could still be said that it made the poor richer. After saying that it made them poorer in absolute terms, it could still be said that it made them richer in proportional terms.

But after saying that it made them poorer in proportional as well as absolute terms, what could be said for it, morally, politically, economically?

And what happens when you say it is theft? The other side says that it simply redresses the theft committed under the capitalist system.

So it is your moral value judgment against the other fellow’s.
But the argument that it doesn’t reduce but increases inequality is that it is immoral as well as uneconomic by his own and not just your standard

Which is better, your morality against his, or turning his own against himself?

If you know that taking from the rich to give to the poor couldn’t reduce but only increase inequality, why would you keep it a secret, even from other economists, why would you exclude it, not just from the rough and tumble of electoral politics, but even from the Austrian School itself? What other theory would you exclude or has been excluded on the ground that it was too abstract? Wasn’t Human Action pretty abstract? Would you burn it? If not, why would you burn this theorem, or, what is the same thing, in effect, exclude it from Austrian School Thought?

There is more that we need to consider, but I just offer this as a start.

DG Lesvic August 1, 2011 at 2:02 pm

John,

You wrote,

“The argument that redistribution of wealth from the rich to the poor is harmful to the poor is the least likely argument that the poor, or anyone, will believe, so I don’t argue that line. It is too abstract.”

But it can be simplified. Every day you are making the argument that the government’s policies make the nation as a whole poorer. How difficult would it be to extend that argument to the poor themselves. If the policies yield a larger share of the cake for the poor, it is a larger share of a smaller cake. Even if you couldn’t prove that it made them poorer in absolute terms, why couldn’t you challenge the other side to prove that it didn’t? Why would you just give them a free pass on the matter?

Whether you would go beyond that is another question. But one thing at a time. Let’s start out with the simple challenge. If you would say that the policy makes the cake smaller, why wouldn’t you try to shift the burden of proof upon the other side, from the burden upon you to prove that it made the poor poorer in absolute terms to the burden upon the other side to prove that it didn’t?

You wrote,

“We don’t really tax money and redistribute the cash that much. More to the point, we offer free services to people, such as the poor and seniors, who in many cases, don’t pay taxes.”

So, what’s the difference?

You wrote,

“If your logic was correct, wouldn’t corportations and unions who profit from the redistribution of wealth also be hurt more than they benefit?”

Not necessarily. One cannot prove that the bank robber suffers as much as the rest of us from his actions. But that doesn’t invalidate the proposition that the rest of us suffer from it.

I hope we’re not going to get into a long argument about this, but I submit that a theorem is subject only to its own presuppositions, and that if you want to attack it, you must do so without dragging in other questions. My theorem was not about the effect of redistribution upon all of the isolated beneficiaries of it, but only upon the poor as a whole, and, if you get into it, you will see, among the employed themselves.

You wrote,

“Only in an indirect and abstract way would beneficiaries of welfare be hurt more than they gain from the political advantages they accrue for themselves.”

You’re confusing the matter. I didn’t say anything about political advantages, whatever you mean by that. I said it makes the poor poorer. Let’s just stick to that.

You wrote,

“Your point amounts to arguing that if a monopoly overcharged everyone to such an extreme degree, they would be hurting their ability to make future profits from their customers. It’s sort of like arguing not to overwork your slave.”

Apart from the fact that it is bad business to price yourself out of the market, and to overwork your slave, confronting supposed analogies of my theorem are a pretty poor substitute for confronting the theorem itself. It was not about monopolists slave holders, nor corporate and union robber barons, but the poor. Let’s see if you can attack it on its own terms.

Finally, you get around to doing so. You write,

“The same holds for the reverse scenario. The recipient of welfare may suffer long run consequences, but its subject to the debate that those consequences will be greater than the benefits they received from the welfare.”

My theorem is that the consequences were not just in the long but the short run as well. And, of course it is all subject to debate, and that is all I am asking for.

You wrote,

“Since you are a devotee of Mises, even he never argued that the direct recipients of political benefits become worse off for accepting them.”

Yes he did. See Human Agony, P 678. But he also argued that it couldn’t be proven, that the question of whether the poor would be better off in absolute terms with the larger share of the smaller cake or smaller share of the larger cake was a quantitative issue beyond the scope of economics. But, if, as I argue, it was not a larger but smaller share of the smaller cake, the issue is no longer quantitative but “logical.”

You wrote,

“You’re welcome to argue from more abstract perspectives if you want.”

Is the Austrian School likewise welcome to ignore the argument?

John Sullivan August 1, 2011 at 3:34 pm

DG,

Your assertions have been speculative deviations from Austrian thought, and my own, for that matter. It is highly dubious to claim that the poor are worse off in the short run, let alone even in the long run. for accepting or receiving welfare. The correct position of the Austrian’s is that the aggregate wealth of society is worse off, but perhaps not the individual wealth of the people who profit off of the redistributionist policies.

There are other reasons why I wouldn’t argue your positions, even if they were advocated by Austrian theory. Theories have to pass mustard with me first. I am not a rubber stamp for anyone claiming affiliation with the Austrian school. This is not meant to be an affront to you. I find you highly engaging and thoughtful. Your quality posts have leaped out at me for some time now.

I’m going to beat around the philosophical bush here for a moment in order to make my point. Your thinking is very much like the Enlightenment philosophers Rousseau and Helvetius, and their diciples. Once you are convinced that your reason is superior to the reason of others, you want to take away their liberty to choose for themselves, and your justification is that they will be injured by their own choices. This is the philosophical contradiction within the framework of your own reasoning with regards to human liberty, and it is worth elaborating upon. You don’t outlaw stealing beause it might harm the thief. You outlaw it because it harms the victim. The former mentality will lead you to outlawing vices, rather than focusing on crimes that have a victim.

Libertarianism can’t be argued from the perspective of telling people that their choices are destructive to their interests. All the world’s tyrannies did that. It is the oldest method in the world. If people can steal, privately or through politics, they will in most cases be better off. The only argument you can make is that society may become poorer, but you have no proof that the people stealing are becoming poorer. Further, you have no grounds to make statements to them regarding a conjured thought of moral hazard. If people see a dollar on the road, they pick it up. You can’t make some absurd statement that they shouldn’t because it might destroy their incentive to work. The disutility of labor is a foundation of Austrian thought. You can’t make arguments that contradict it if you believe in the principle.

So, I completely reject the strategy of telling people that their greed will hurt them in abstract ways. The only way to make a case is to the people who are being exploited.

John Sullivan August 1, 2011 at 6:21 pm

I was having a hambuger when I asked to pass the mustard.

DG Lesvic August 1, 2011 at 8:31 pm

John,

You wrote,

“Libertarianism can’t be argued from the perspective of telling people that their choices are destructive to their interests.”

Isn’t that exactly what Mises said we must do?

Here is a link to The Forbidden Theory of Redistribution.

http://econotrashtalk.org/#The Forbidden Theory of Redistribution-New

It may or may not take you directly to it. If it just takes you to the beginning of my book, Dumb Jews, scroll down to Book Two in blue and click on it, then to the table of contents and to LXVIII, The Forbidden Theory, and click on that.

You will find my critiques of the work of Mises, Hayek, Rothbard, and Henry Hazlitt on this subject, and the critiques of mine by Rothbard, Hazlitt, Kirzner, Machlup, Larry White, Tom Hazlett, David Friedman, and Jack High

Here are the first and final sections of it.

The first:

The increasing inequality deplored by the Left is, at least in part, a consequence of its own policies, and the very ones meant to reduce it. For, in accordance with The First Law of Economics, that for every action against the market there is an opposite and more than equal reaction, taking from the rich to give to the poor could not reduce but only increase income inequality and “social injustice.”

Put simply: it doesn’t just draw money but manpower downward upon the hierarchy of production, and the manpower faster than the money. For manpower doesn’t merely follow money but anticipates it. And, with manpower and competition among the poor increasing faster than the redistributed money, they’ll be poorer than they would have been without it.

And since the Left depends entirely on the assumption that taking from the rich to give to the poor reduces inequality, it would be utterly demolished by the opposite-most conclusion, that it didn’t reduce but increased it.

But being a new idea, at least when first presented decades ago, and an affront to anyone who hadn’t thought of it first, it has been resented and shunned by the Right as much as the Left. Without it, all that the Right can ever say about inequality is that it isn’t really getting any worse. But that is to admit that there’s something wrong with it, and with capitalism, which depends on it.

The fact that there can be work without reward or reward without work doesn’t change the fact that any reduction of the one will result in a reduction of the other, less work in less reward, and less reward in less work, for “No system of the social division of labor can do without a method that makes individuals responsible for their contributions to the joint effort. If this responsibility is not brought about by…inequality of wealth and income…it must be enforced by…direct compulsion…by the police.”

Ludwig von Mises

So, our alternatives are either a Communist police state or at least some inequality. If the inequality, how much? All that an economist can say about it is that the market, always tending toward equilibrium, always tends toward the inequalities that would bring it about, and that forcible reduction of them, like any intervention in the market, would be counterproductive, that it wouldn’t reduce but increase inequality, and be unjust and immoral by the redistributionist’s own standard.
At the line between rich and poor, but one penny of income separates them. So, when it is taken from the rich and given to the poor, their stations are reversed. The rich become poor and the poor rich, which attracts manpower from the occupations of the one to those of the other. To restore the manpower allocations it preferred, the market must bid the net wages of the formerly higher paid occupations back up and of the formerly lower paid back down. But, anticipating increasing rates of redistribution, and compensating not just for the current but for the greater anticipated rates, the market must bid the net wages of the formerly higher paid to even higher levels and of the formerly lower paid to even lower levels than before, for differentials even greater than before.

Mises never got that far in his analysis, and, failing to see the solution, believed that there was none, that the greatest issue of economics was beyond it.

As he saw it: while redistribution interfered with production overall, and reduced society’s total net income, it increased the poor’s proportional share of it. The question then: would they be better off with the larger share of the smaller cake or smaller share of the larger cake?

While he agreed with the conclusion that the size of the cake would go down more than their proportions of it would go up, he contended that it couldn’t be proven, that “it is not based on praxeological considerations and therefore lacks the apodictic and incontestable argumentative power inherent in a praxeological demonstration. It is based on a judgment of relevance, the quantitative appraisal of the difference between the two magnitudes”…society’s total net incomes with and without redistribution…”in the field of human action such quantitative cognition is obtained by understanding with regard to which full agreement between men cannot be reached. Praxeology, economics and catallactics are of no use for the settlement of such dissentions concerning quantitative issues.”

Human Action, P 678

Steve Landsburg argued that “‘Taxing the rich’ cannot work unless you do it in a way that induces the rich to consume less.” In the case of taking from the rich to give to the poor, that would mean that, so long as the rich consumed as much as before, the poor could consume no more, and the tax would be consumption neutral for the poor. And when you consider the production effect, reducing the means and incentive for the rich to produce for the poor, the neutral gives way to the negative, and the overall effect could be positive only if the tax had been great enough to restrict the consumption of the rich, and if that positive effect had been great enough to outweigh the negative. And that’s still a quantitative issue.

The issue is not quantitative but logical. For there is no positive effect to weigh against a negative. Redistribution is completely counterproductive and negative for the poor, leaving them not with a larger but smaller proportional share of the smaller cake, and not reducing but increasing income differentials.

Like Mises, his greatest followers, Hayek, Hazlitt, and Rothbard, all labored under the misconception that redistribution had a mixed, ambiguous effect.

Let’s start with Hayek, analyzing the labor union policy of forcing wages above market levels. As he saw it…

And here is the final section:

Suppose our theorem collapsed, and we were right back where we started. We could follow Mr. Buckley, arguing not against redistribution but merely Federal administration of it, or Prof. Hayek, in a conversation with him, arguing against the ethical but not the economic assumptions of redistribution, and, in effect, conceding them, or Prof. Friedman, asked what the free market would do for the poor, proposing the negative income tax, a better means of redistribution.

Or, unable to prove that redistribution made the poor poorer, we could still make the other side prove that it didn’t, that the larger proportion of the smaller cake was not smaller in absolute terms.

And that would require no mathematics or morality, just the simple wit so little regarded in ethical and learned circles today, and the simple economics excluded from the Austrian School

John, I hope this entices you into reading the whole thing, and that you’ll give me the benefit of your usual splendid thinking and writing.

John Sullivan August 1, 2011 at 8:53 am

Regarding “taxation is theft”, it’s more important for people to realize that majortiy rule democracy is legalized theft.

However, if we subjected legislation to a more unanimous consent in order for it to be made law, even a super-majority requirement, I wouldn’t consider laws as theft.

Surely, it is within the power of people to structure their democracy so that laws can’t be made arbitrarily with just slim majorities needed.

vikingvista August 2, 2011 at 12:20 am

Like every other action, theft is measured at the level of the individual. It is irrelevant how many people approve of it.

vikingvista August 1, 2011 at 8:21 am

Yeah. I don’t blame someone for burying a knife in my back, so long as he was just doing what he could get away with.

Krishnan July 31, 2011 at 7:21 pm

So many times, in so many ways, Milton Friedman said that he is NOT pro-business (or anti-business) – but pro-freedom and pro-consumers who are free to make choices – AND Milton Friedman always reminded us of the dangers of big companies restricting competition once they get big – that those that call themselves “capitalists” are anything but – what they seek to do is restrict competition and do whatever they can to get all the goodies for themselves and their companies

But, as we discover – no matter what Friedman wrote or said – there will always be the loonies who distort or lie about what he actually said and meant … And yes, this happens on the right and the left …

John Galt July 31, 2011 at 8:17 pm

He said: The proposition that business can have social responsibility is a “fundamentally subversive doctrine.” In a free society there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, it engages in open and free competition without deception or fraud.”

John Sullivan August 1, 2011 at 9:36 am

“social responsibility” “corporate citizenship”

Newer types of collectivist idols that serve to enslave individuals to the will of those in power.

We’ve come a long way from the days of “the proletariat” and “the master race”

Invisible Backhand July 31, 2011 at 8:41 pm

Actually, the giant corporations and ultra-rich want lower taxes and deregulation, and they’ve been wildly successful at getting it. They are the sharks in a pool of minnows, they don’t need protection from the free market, and don’t want anyone else to have protection from them-er, I mean the free market.

muirgeo July 31, 2011 at 9:18 pm

Yep… and since deregulation we’ve seen campaign donations, lobbying and regulatory capture like never before.

DEREGULATION = HANDING THE FEDERAL PURSE TO LARGE CORPORATIONS.

The real world facts are clear but these guys don’t like reality. They totally ignore it and its so obvious to us with freeminds… these people are captured as well. Reality is optional for them.

Krishnan July 31, 2011 at 9:32 pm

(not that it matters) … or (FWIW)

“Handling the federal purse to large corporations” IS NOT deregulation

If anyone spoke out forcefully of the unholy alliance between GOVERNMENT and corporations, it is Milton Friedman – who has written extensively about what “deregulation” means and how “corporatism” is NOT “capitalism”

(NTIM and FWIW)

Invisible Backhand August 1, 2011 at 10:16 am

Krishnan, you reversed the order of the sentence and claimed it didn’t say what the original said. Really?

Dan J July 31, 2011 at 10:47 pm

100 bucks says Muirgeos complains and sees regulations and govt intervention for the Airline industry in the recent situation. The dems have intentionally sat on a continuing of payment for FAA resulting in taxes on tickets to be suspended and 200 dollar tickets of which 40 dollars are taxes. The airlines kept the price at 200 dollars, since that is the market price. Bet Muirgeo thinks that the tickets should be at 160 dollars and that govt should step in to assure the lowered price.

Gary July 31, 2011 at 11:27 pm

Muirgeo: What’s the difference to you between a campaign donation and an entitlement, in terms of bribery? In one case, the public pays in an attempt to sway a politician, and in the other, the politician pays in an attempt to sway the public.

muirgeo August 1, 2011 at 10:57 am

In most cases large campaign donors are wealthy minority special interests seeking perperetial treatment. Entiltlements like Medicare and Social Security are paid for and desired by the majority of people seeing a combined positive effect by pooling resources.

There’s a BIG difference.

Subhi Andrews August 1, 2011 at 3:18 pm

THey all give it democrats for some reason.

? July 31, 2011 at 11:53 pm

Muir,

For all your talk about deregulation why don’t you post the name of the bills that supposedly handed the purse to corporations? Also, how do you reconcile the fact that Phillip Morris supported the Family Smoking Prevention and Tobacco Control Act of 2009 which bans the sale of clove, cinnamon, and fruit cigarettes, all of which Phillip Morris does not make; thereby hurting every other tobacco company. However PM did get the law to exempt menthol, the flavored cigarette it does make. Deregulation, my ass.

brotio August 1, 2011 at 12:36 am

?,

Yasafi is in full support of corporate welfare – so long as he gets to choose who the welfare goes to.

BTW, are you the ? of ?, And The Mysterions?

? August 1, 2011 at 1:19 am

Nope. I had to Google your reference, I’m just a lowly person in search for a good handle.

brotio August 1, 2011 at 1:21 am

:D

maximus August 1, 2011 at 1:25 am

?,
You gotta be as old as Brotio to remember ?. Killer Detroit rock in the mid-60′s. Their platter makes to the turntable now and again when I wanna howl at the moon.

Invisible Backhand August 1, 2011 at 12:12 am

I’ve noticed. It’s like the no true Scotsman fallacy. They say ‘no Scotsman would do this’ but then I point out a Scotsman doing that, and they come back with ‘no true Scotsman would do that.’

MWG August 1, 2011 at 12:54 am

“They say ‘no Scotsman would do this’ but then I point out a Scotsman doing that, and they come back with ‘no true Scotsman would do that.’”

No you didn’t. You said, “the giant corporations and ultra-rich want lower taxes and deregulation”. You mean giant corporations like… GE? US steel producers? Chevy?

Doc Merlin August 1, 2011 at 9:23 am

Muirego.

You scream a lot of deregulation, can you point specifically to the financial deregulations you didn’t like.

Greg Webb August 1, 2011 at 9:32 am

Close, George! Actually, it is:

REGULATION = HANDING THE FEDERAL PURSE TO POLITICIANS AND THEIR CRONIES.

You are the one ignoring reality just like other statists who argue that people in business cannot be trusted, yet somehow people in government can be trusted.

BTW, have you been on any hiking trips lately?

DG Lesvic August 1, 2011 at 11:01 am

Greg,

I still haven’t seen any apology from you for the slanderous statements you have made about our host as well as myself.

Slandering anyone was bad enough, but to have taken advantage of a man’s hospitality to slander him, and to continue availing yourself of it without a word of apology is outrageous.

Greg Webb August 1, 2011 at 12:17 pm

DG, as you know, I did not slander Don Boudreaux.

And, for that matter, I did not slander you. I carefully pointed out your previous despicable and disingenuous behavior, which includes:

1. Weaseling out of a promise to “leave Cafe Hayek never to return” once Don Boudreaux provided you with the requested example;

2. Imposing previously unmentioned conditions in order to get out of your promise to “leave Cafe Hayek never to return”;

3. Pretending to be a victim of character assassinations all the while attempting to assassinate the character of others;

4. Making malicious false statements about others;

5. Implying that others were subhuman just because they disagreed with you and tried to hold you to your broken promise;

6. Editing other people’s comments in order to misrepresent what they said;

7. Demeaning your children by implying that they have “hooves,” “horns,” and “tails”; and

8. Demeaning your wife by calling her “an unreasonable and illogical creature.”

And, that is not slander. It is merely the truth about your despicable and disingenuous behavior on Cafe Hayek.

DG Lesvic August 1, 2011 at 2:29 pm

Greg,

Putting aside what you said about me, let’s see what you said about Don.

In the first place, you had said outright that the issue was not about economics but about me, that it was personal.

And then you said that it was the same with Don, that he too didn’t care about economic truth and error but only personal matters.

Whatever you intended it to be, it was a serious accusation. And on what did you base it? Nothing more than your imagination. It was what you wanted to believe, and that was enough to make it a fact..

So much for any of your facts, and accusations against anyone.

Greg Webb August 1, 2011 at 2:56 pm

DG, you said, “Putting aside what you said about me, let’s see what you said about Don.” I said that Don chose not to respond to your whining about his example not meeting your newly-created conditions for it to be a valid example requiring that you “leave Cafe Hayek never to return.”

You said, “In the first place, you had said outright that the issue was not about economics but about me, that it was personal.” Wrong again. I said that the issue was not about economics. Rather, it was about your despicable and disingenuous behavior here on Cafe Hayek. Please see the list about of your poor behavior.

You said, “And then you said that it was the same with Don, that he too didn’t care about economic truth and error but only personal matters.” Nope. I said that Don Boudreaux chose not to respond to the conditions that you provided after-the-fact as you tried to weasel your way out of your promise to “leave Cafe Hayek never to return.”

You said, “Whatever you intended it to be, it was a serious accusation. And on what did you base it? Nothing more than your imagination. It was what you wanted to believe, and that was enough to make it a fact..” I did not accuse Don Boudreaux of anything except not wanting to engage in an argument with someone who provides conditions to his promise after-the-fact. And, I did not accuse you of anything. I merely recorded your despicable and disingenuous behavior for all to see.

You said, “So much for any of your facts, and accusations against anyone.” I see that you are still pretending to be a victim and cowardly running away from your despicable and disingenuous behavior by making false, malicious statements about other. But, you can’t run away, DG. It is what you have chosen to be.

DG Lesvic August 1, 2011 at 4:30 pm

Greg,

You’re not contradicting but confirming what I’ve said, and adding to your slander of Don.

Now you have him as illogical and unfair as yourself. He believed like you that the validity of the example didn’t matter, that a false was as valid as a genuine example, and, since the false was none at all, that none was needed, that I had agreed to depart the Café whether anyone provided an example or not, that all I required was that someone say he had done so.

So not only do you attribute to me something I could not possibly have said nor anyone in his right have thought, but you attribute it to Don as well, and without any basis in fact, without him having said that was what he thought, and without your having asked him, nor done anything but imagine it.

And it is solely by your imagination that Don and I and anyone else coming into your cross hairs is to be judged.

Such judgments are reserved to Heaven, or madmen on Earth.

Greg Webb August 1, 2011 at 6:01 pm

DG, I see that you are still pretending to be the victim, falsely implying that I said anything bad about Don Boudreaux, and using half truths and non sequiturs. Have you no integrity?! No, you have shown time and again that you don’t. It is your testament to yourself: Despicable and Disingenuous.

DG Lesvic August 1, 2011 at 7:57 pm

Greg,

You said nothing bad about Don Boudreaux?

You said that he didn’t care about economic truth and error, but only about what DG Lesvic had done?

To say that an economist doesn’t care about economics is not to say anything bad about him?

You said that, like yourself, he didn’t understand the difference between saying you had done something and actually doing it, and that, like yourself, he thought it was enough just to have said you had done it.

In other words, if you entered into a contract to build a house, you didn’t actually have to build it, just say that you had done so, and the buyer was obligated to pay you, as though you had actually done so

And to attribute such nuttiness to him was not saying anything bad about him?

Don, you may be interested to know that you don’t really care about economics, nor the truth at all, just the assertion of it.

This is what Greg Webb is saying about you, but not to worry, for he also assures us that there is nothing wrong with that, and that therefore he has said nothing bad about you.

In fact you should really be flattered by the assertion that you’re just like him, caring nothing about economics or the truth at all.

Greg Webb August 2, 2011 at 11:21 am

DG, you said, “You said nothing bad about Don Boudreaux?” No, I did not. This is just another one of your attempts to assassinate someone else’s character. Again, it says volumes about your despicable and disingenuous behavior.

You said, “You said that he didn’t care about economic truth and error, but only about what DG Lesvic had done?” No, I said that he choose not to respond to your after-the-fact conditions that you used to try to weasel out of your promise to “leave Cafe Hayek never to return.” It is perfectly logical to choose not to respond to someone who says that he will do something and then whines that he should not have to comply with his promise once it is fulfilled. I choose to respond to you in the hopes that you will grow up and quit acting despicably and disingenuously. But, it looks like a lost cause because your ego is so fragile that you invent issues in order to make yourself not look as despicable and as disingenuous as you are.

You said,” To say that an economist doesn’t care about economics is not to say anything bad about him?” No, I clearly said that he choose not to respond to someone who acted so despicably and disingenuously by not keeping his promise to “leave Cafe Hayek never to return.” Don care about and understands economics. You are an abusive old man looking for the fame that you never achieved by tempting people to answer your issue that mathematical economics has no value to the field of economics. You ask for an example so that you can batter them down unfairly with quotes from Ludwig von Mises. I doubt seriously that you have read Human Action or any of Mises’ books. You are simply using the Library of Economics website to pull up those quotes so that you can use them out of context to bully anyone who dares to provide an example of mathematical economics. Mises was right in fighting a growing trend to treat economics as a hard science when it is not. But, you are wrong to bully others with those quotes because mathematical economics, like the literary method, helps us better understand and explain various aspects of the field of economics. And, your behavior is clearly despicable and disingenuous in playing this silly game of yours.

You said, “You said that, like yourself, he didn’t understand the difference between saying you had done something and actually doing it, and that, like yourself, he thought it was enough just to have said you had done it.” DG, more meaningless drivel? Please provide exact quotes.

You said, “In other words, if you entered into a contract to build a house, you didn’t actually have to build it, just say that you had done so, and the buyer was obligated to pay you, as though you had actually done so.” You offered to “leave Cafe Hayek never to return” if someone provided you with an example of mathematical economics. Don Boudreaux accepted your offer and provided the requested example of mathematical economics. Then, you breached the contract by imposing conditions that you never mentioned before Don accepted your offer. Thanks for proving that you don’t understand contractual law as well as economics.

You said, “And to attribute such nuttiness to him was not saying anything bad about him?” I never said that anyone was a nut…not even you. Don Boudreaux is a well-respected economist. You, however, are a despicable and disingenuous old man who pretends to have important new economic ideas. You don’t. But, you do have a remarkable imagination. Is that an innate ability or thorazine induced?

You said, “Don, you may be interested to know that you don’t really care about economics, nor the truth at all, just the assertion of it. This is what Greg Webb is saying about you, but not to worry, for he also assures us that there is nothing wrong with that, and that therefore he has said nothing bad about you. In fact you should really be flattered by the assertion that you’re just like him, caring nothing about economics or the truth at all.” Wow! The thorazine must have really kicked in when you wrote these flights of fantasy. No wonder Ken called you a “schmuck,” “douche bag,” “ass,” “clown,” and “fool.” Those are all good descriptions for you. But, I prefer to say that your comments continue to be a testament to what you really are: despicable and disingenuous.

muirgeo August 1, 2011 at 11:07 am

Hey Greg,

No I have been busy with a work transition but will be hiking all over The Sierra the next couple of months. The big trip is to hike the Italian Dolemites and Cinque Terra in the spring with my wife.

Sorry I haven’t replied over at my own blog but I have read your excellent post and will demolish them with an even more excellent rebuttal shortly (LOL). Thanks for doing the discussion… I am enjoying it.

On this post I would argue NEITHER people in business or government can be trusted that’s why you need rules set up democratically to control the excesses of individuals.

Greg Webb August 1, 2011 at 12:31 pm

George, I have not yet hiked the Sierras, except for a portion of the Sierra Madre Mountains in Mexico. It sounds like a lot of fun. Also, I have not yet made it to the Italian Dolomites, but hiked the Cinque Terra and stayed in Vernazza. It’s a beautiful place, which should be particularly beautiful in the Spring. I went in September of last year and spent 15 days in central Italy…Rome, Florence (Firenze), Vernazza, Siena, etc. A great trip…I love the history, especially Roman history, and the beauty of the area. Have a great time!

I look forward to our continued discussion about libertarianism v. liberalism. Just let me know when you post a response.

Well, I argue all the time that NEITHER business nor government can be trusted. That is why government power must be limited through the Constitution and other checks and balances devised by the Founding Fathers. That is also why competition is good for business as it keeps business serving the consumer. And, the rule is always BUYER BEWARE! One should neither trust the government official promising to help nor anyone offering to sell you a good or service that he promises will make your life easier, more fun, etc. For you cannot make a better human, but you can protect yourself from both bad and well-meaning people who do not really know what is best for you.

brotio August 1, 2011 at 1:05 pm

How much CO2 is going to be spewed into the air so that you and your wife can enjoy that extravagant vacation to the Dolomites at the expense of the poor and starving, and Mother Gaia?

Hypocrite.

You constantly harp about wealth inequity, and CO2-caused climate change, yet you have enough excess wealth to traipse across the globe, and spew your CO2 all over the atmosphere in the process.

muirgeo August 1, 2011 at 5:03 pm

Greg,

I was in Vernazza last May ( at Tonino Basso’s place)! I felt like I was in paradise. I could talk all day about that place… hiked all day south on the Sentiero Azzurro and took the train back…. It makes me happy to know another person who has been to this heaven on Earth.

Greg Webb August 1, 2011 at 5:56 pm

George, it is a small world. I stayed at Tony Basso’s place in Vernazza last September. It was beautiful hiking the Cinque Terra.

Captain Profit August 1, 2011 at 9:37 am

Umm… *whose* purse?

John Sullivan August 1, 2011 at 10:45 am

Hello Muirgeo,

Relax and try to see things from a different perspective. Nobody here is arguing for business consolidation of power. We are all, in spirit, with you.

You don’t comprehend the role of ‘competition’. It is impossible to rip off consumers or to charge monopoly prices in competitive markets. The market titans in any industry are not pro-deregulation. They may talk that way, but their actions are different. Look at the airline industry. Almost every major airline that dominated the markets before deregulation went out of business. Without deregulation, no one would be able to afford to fly anywhere and a few giant carriers would still be dominating the market. Deregulation allowed new companies to enter the market and drive prices downward to levels that made flying as cheap as it used to be for a greyhound bus trip.

Your error in ‘understanding’ is your failure to see ‘competition’ as being the great ‘regulator’ of societies and economies. Any other form of regulation is corruptible, accept fierce competition.

Deregulation is desireable for companies seeking to expand ther market share against those who have greater market share due to the regulations being in place. High prices and confiscatory profits go hand in hand with regulated markets.

Classical liberalism emerged in the 18th century as an awareness that only human competition kept people honest. Laws that reduced competition led to econmic tyranny.

We’re all seeking justice, but we need to closely examine the means to which we apply toward the satisfaction of our chosen ends. If you see differently, please, show me how fiercely competitive markets lead to abusive price gouging?

The other contradiction inherent in your philosophy is that you like to shout out about large abusive corporations that you accuse of making extreme profits at the expense of ‘society’, yet you fail to specifically identify them so we can invest in them and profit along with them. Or, is it really that these GIANT CORPORATIONS are bad investments? Which is it, my friend?

If you want to impress us. Name a corporation ripping us off. Let’s then together evaluate its financial statements, here, online for everyone to plainly see, and for you to finallly prove your point.

Sadly, the only companies that you’ll find ripping us off are the ones firmly saddled in bed with the government, who rely on mandates that prohibit the consumer from employing free choices.

John Sullivan August 1, 2011 at 10:48 am

Forgive my usual typos, and “accept” should have been ‘except’.

Beth August 1, 2011 at 2:10 pm

Muirgeo,

You have it entirely backwards. Regulation is what keeps big and established business going. They are big enough to absorb costs and taxes to absorb them in and continue going (along with political goodies and favors they get in the meantime as well) while the small business cannot. The small business’s worst enemy is regulation. Big business’s best friend is regulation.

Ken July 31, 2011 at 9:36 pm

IB,

“the giant corporations and ultra-rich want lower taxes and deregulation”

False. Obamacare was written largely by insurance lobbyists. Big-pharma largely writes the regulations the FDA enforces.

“they don’t need protection from the free market, ”

False. There are only two industries I can think of that were substantially deregulated in the past few decades: airlines and telecoms.

In 1934 the federal government granted telecoms monopoly rights to AT&T. Fifty years later, in 1984, this monopoly ended. The only way AT&T could get and maintain a monopoly on the telecoms industry was through government regulation. Today, instead of controlling nearly 100% of telephony in the US, it controls around 40%. So much for deregulations in the telecoms industry leading to monopoly. In addition to the ending of a government granted monopoly, telephony services have exploded, while prices have dropped dramatically.

In 1978, the airline industry was deregulated resulting in a proliferation of new airlines that resulted in more flights and lower prices to the extent that what in the 1960s was limited to businesses and the wealthy became a mode of travel that even the poorest Americans can afford today. Is there any airline that monopolizes the skies? No. So deregulation failed to produce the fabled monopoly in airlines.

IB, it seems all your musings about economics are based of false assumptions, which obviously lead you to draw incorrect conclusions.

Regards,
Ken

Invisible Backhand August 1, 2011 at 12:04 am

“There are only two industries I can think of that were substantially deregulated in the past few decades: airlines and telecoms.”

If I say “September, 2008″ can you think of any more?

Ken August 1, 2011 at 12:58 am

IB,

“If I say “September, 2008″ can you think of any more?”

No, but I’d love to here what pieces of legislation passed in September 2008 that you consider to be deregulation.

Regards,
Ken

Invisible Backhand August 1, 2011 at 10:12 am

I’m gobsmacked you think such an amateurish rhetorical trick would actually work.

Now say, “What amateurish rhetorical trick?”

Ken August 1, 2011 at 10:44 am

IB,

Look at all that information and logic you’re using to argue your case. Let me know when you want to get serious and can must actual evidence of whatever it is you want to prove.

Regards,
Ken

Ken August 1, 2011 at 10:53 am

Edit: and can muster actual evidence

John Sullivan August 1, 2011 at 12:03 pm

Isn’t the richest man in the world..Carlos Slim.., a beneficiary of regulated Mexican telecom markets?

What does that tell us?

John Dewey August 1, 2011 at 5:37 am

Ken: “There are only two industries I can think of that were substantially deregulated in the past few decades: airlines and telecoms.”

I think it is more correct to say that airlines and telecoms are much less regulated than they were 35 years ago. These industries are not completely deregulated. For example, in flights between U.S. cities, U.S. airlines are still protected from airlines of other nations.

The trucking industry is also much less regulated than it was in the mid-1970s.

The Staggers Rail Act of 1980 was a partial deregulation of the rail industry.

The Ocean Shipping Act of 1984 and the Ocean Shipping Reform Acxt of 1998 together opened up competition and pricing for U.S. shippers.

Financial institutions are still heavily regulated, but are certainly less protected than they were four decades ago.

Electric utilities are not completely deregulated, but face much more competition than they used to face as a result of deregulation.

Oil price controls were eliminated in January, 1981, in the first month of Reagan’s presidency. While the petroleum industry is certainly not deregulated, it is much less controlled than when I worked for energy companies in the 1970s.

It would be incorrect to say that these industries are completely deregulated. But barriers to competition have been removed in all of them over the past 35 years.

Ken August 1, 2011 at 10:58 am

Congratulations, JD, you join the illustrious ranks of muirgeo and company. His basic argument is that since free trade never existed anywhere in history, no one can legitimately argue in favor of free trade.

Now you come to the shocking conclusion that telecoms and airlines weren’t “deregulated” since they are still subject to regulation. Please, tell us just what industry ISN’T subject to some regulation and is completely deregulated.

The reality is that these industries weren’t just partially deregulated, they were substantially deregulated, removing enormous chunks of regulation that stood in the way of innovation in the past.

Regards,
Ken

John Dewey August 1, 2011 at 11:48 am

What is you problem, Ken? You cannot take any disagreement with any comment you write?

I didn’t write that airlines and telecommunications weren’t deregulated. I wrote that they were less regulated than in the past. I’ve worked in the airline industry for the past 25 years, and I guarantee I understand the impact of less regulation far more than anyone who hasn’t worked in the industry.

There’s not a damned thing wrong with someone clarifying a comment that you write. You better get used to it.

Ken August 1, 2011 at 11:59 am

“What is you problem, Ken? You cannot take any disagreement with any comment you write?”

Seriously? I’m just supposed to role over to idiotic replies to my comments? Last week you went ape shit because you had a special secret definition, which you termed “narrow” and “technical” and used these secret definitions in response to one of my comments. Today you make the stupid comment that the telecoms and airlines weren’t deregulated because they were still subject to regulation.

My problem is weak thinkers like you.

“There’s not a damned thing wrong with someone clarifying a comment that you write. You better get used to it.”

There’s not a damn thing with me responding to your stupid comments. You better get used to it.

Regards,
Ken

Ken August 1, 2011 at 11:59 am

Edit: There’s not a damn thing wrong with me responding to your stupid comments. You better get used to it.

John Dewey August 1, 2011 at 12:41 pm

Ken: “you make the stupid comment that the telecoms and airlines weren’t deregulated because they were still subject to regulation.”

I made no such comment, Ken.

Competition in the airline industry is much more restricted than is competition in most other industries in the U.S. I was simply making the point that airlines are not completely deregulated. If you understood my industry, you would know why deregulation is only partially complete.

Ken August 1, 2011 at 1:31 pm

JD above: “I think it is more correct to say that airlines and telecoms are much less regulated than they were 35 years ago. These industries are not completely deregulated. ”

JD now: “Ken: “you make the stupid comment that the telecoms and airlines weren’t deregulated because they were still subject to regulation.”

I made no such comment, Ken.”

Looks like you did indeed make the comment that they weren’t deregulated because they are still subject to regulation. How else to interpret your first comment?

Regards,
Ken

Sam Grove August 1, 2011 at 2:32 pm

Trucking.

John Sullivan August 1, 2011 at 9:49 am

You can’t have it both ways. K street wouldn’t exist if corporations were for deregulated markets. As a rule, giant powerful corporations prefer onerous regs in order to keep undercapitalized potential competition from entering the market. The more complex the laws, the better.

The status quo fears the market. Newcomers need the market.

Regulations always consolidate economic power. You guys need to read more history of legislation and economic interventionism. The giant corporations always justified the regulations as being good for the “society”. They’re just like you guys. They use the collectivist idols to justify the laws they calculate will enrich them at the expense of others.

There’s a good book on labor legisaltion called “Only One Place of Redress” by David E. Bernstein. It shows how labor legislation supposedly written to help African Americans had the exact opposite effect.

All regs are designed by the entities that control the market in order to reduce competition.

The best friend of the common man is the existence of free competition.

Sam Grove August 1, 2011 at 2:26 pm

Everyone prefers lower taxes on themselves.

muirgeo July 31, 2011 at 9:15 pm

That made absolutly no sense. Since the cabal of conservatism and the rise of Friedman we have seen deregulation and rent seeking rise side by side. Never have businesses flocked to DC as they have the last 3 years and the average incomes of families living in the surrounding counties has skyrocketed.

http://en.wikipedia.org/wiki/Highest-income_counties_in_the_United_States

If you are living in the DC area you ARE a benificiary of deregulation and the resulting rent seeking.

Ken July 31, 2011 at 9:38 pm

A completely non-sensical comment. I would have expected nothing less from you, muir. Well done.

Regards,
Ken

Slappy McFee August 1, 2011 at 9:14 am

“If you are living in the DC area you ARE a benificiary of deregulation and the resulting rent seeking.”

More proof you don’t even pay attention to the words you write.

Deregulation = less centralized control

Rent-seeking = more centralized control

So let’s edit your sentence using our correct terminology:

“If you are living in the DC area you ARE a benificiary of less centralized control and the resulting more centralized control.”

Doc Merlin August 1, 2011 at 9:24 am

Muir. Can you please point me to the specific deregulations you didn’t like?

muirgeo August 1, 2011 at 11:15 am

The Gramm–Leach–Bliley Act ( Clinton) and The Commodity Futures Modernization Act of 2000 (also Clinton).

Also there was a lot of good legislation put forward by the Pelosi Congress that never was allowed to be voted on because Republicans have made it such that a supermajority is needed for anything to pass.

Sam Grove August 1, 2011 at 2:41 pm

He picks those because he read some left-progressive’s interpretation that these caused the melt down and that interpretation suits his preconceptions.

muirgeo August 1, 2011 at 5:05 pm

No I pick them because I know YOU nor anyone can not explain how the housing bubble happens with out them.

Ken August 1, 2011 at 9:38 pm

Standard. Completely ignore all regulations surrounding Fannie, then you completely ignore the problem.

Regards,
Ken

Dan J August 2, 2011 at 12:37 am

Even Pat Caddel, the Democratic pollster admits that Fannie and Freddie are the major instruments in the Housing boondoggle….. yet another Govt boondoggle.

vikingvista July 31, 2011 at 9:18 pm

Nice job on the Bob Zadek show today. More good points than I could count.

nailheadtom July 31, 2011 at 10:44 pm

In 1853, Stephen Pearl Andrews told this to Horace Greeley:

“Give up…the search after the remedy for the evils of government in more government. The road lies just the other way-toward individuality and freedom from all government… It is the inherent viciousness of the very institution of government itself, never to be got rid of until our natural individuality of action and responsibility is restored. Nature made individuals, not nations; and while nations exist at all, the liberties of the individual must perish.”

vikingvista August 1, 2011 at 8:14 am

Nice.

John Dewey August 1, 2011 at 5:45 am

Every time someone starts bashing big business (and small business) for seeking government favors, I’ll make this same point:

The goal of hired business leaders is not to seek free market competition. Rather, their goal is to represent the interests of business owners. We should always expect business leaders to seek to gain advantage.

The evil in rent-seeking is not with the rent-seekers. Rather, it is with the rent-granters who do not act on behalf of the electorate.

Corporate executives are bound by contract and bound by law to act on behalf of shareholders. Let’s not expect anything else. Let’s not demonize them for doing exactly what they are required to do.

Gil August 1, 2011 at 7:40 am

Gee is the contract corporate executives held to are wrong then? Being an assassin is wrong but hiring an assassin isn’t? One is an act of violence and the other a business transaction? So if a business in Libertopia hires a gang to harrass business competitors it’s AOK?

Ken August 1, 2011 at 10:50 am

Gil,

“Gee is the contract corporate executives held to are wrong then? ”

No. The incentives put before them by gov officials are wrong.

“Being an assassin is wrong but hiring an assassin isn’t?”

If gov officials legalized assassinations and incentivized these assassinations for corporations to get ahead, would you be surprised that CEOs used assassinations in the course of business? Would you be more upset that they used a legal tactic or that that tactic was legal to begin with?

“So if a business in Libertopia hires a gang to harrass business competitors it’s AOK?”

It’s not that it’s OK. It’s that gov officials actually encourage and incentivize bad behavior, like bribery, regulatory capture, and crony mercantilism. If you elect politicians who encourage businessmen to behave poorly, don’t be upset with the businessmen behave poorly, be upset with the politicians for setting up a system in which the best way to get ahead is to behave poorly.

Regards,
Ken

Gil August 1, 2011 at 11:02 am

Gee, in others words, it would be a shame if a company hires a gang to harass competitors in Libertopia but it’s not really that bad because a private company doesn’t have the resources of a governement and thus it won’t last long? Then again, in Libertopia there’s no government therefore there’s no law others than what PDAs and security forces mete out.

Sam Grove August 1, 2011 at 2:44 pm

Way to mis-interpret, or perhaps I should say, mal-interpret.

Are you actually doing that consciously, or is it that you can’t help it?

Ken August 1, 2011 at 11:37 am

“it would be a shame if a company hires a gang to harass competitors in Libertopia but it’s not really that bad because a private company doesn’t have the resources of a governement and thus it won’t last long?”

No. Reading comprehension fail. I was using an analogy, in which the government legalizes and incentivizes and obviously bad behavior, not that the government has more resources, so that a private business won’t last long. I’m not even sure how to misread my comment so badly to make that conclusion.

There are many bad things that aren’t illegal that shouldn’t be, but there are some that things that should be legal. Thankfully, assassination is illegal; however, government sponsored corporate welfare and tax breaks and apparently blatant wealth transfers from taxpayers to political cronies are not, as long as you call it stimulus or TARP. You want to blame the businessman for pursuing things like this, but completely ignore the root cause: political power. If politicians couldn’t hand out these special favors, businessmen couldn’t try to get them.

“in Libertopia there’s no government ”

Straw man, since I’ve never argued for no government. It’s like you’ve never read any of my comments.

Regards,
Ken

vikingvista August 1, 2011 at 8:06 am

You don’t think deficit-spending pork-barreling favor-trading politicians who get reelected over and over are pleasing their electorates?

John Dewey August 1, 2011 at 9:12 am

In the short run, perhaps the local electorate is pleased.. But my argument was not about whether the electorate is pleased. Rather, I argued that elected officials are not acting in the best interets of the electorate. IMO, most of the electorate does not understand how much such pork barrel legislation hurts them over the long run.

vikingvista August 1, 2011 at 12:36 pm

It is important to understand the role of incentives. But that doesn’t mean you should withhold moral judgement. A scoundrel acting on the best interests of his constituents, or his shareholders, should be condemned.

John Dewey August 1, 2011 at 1:35 pm

vikingvista: “A scoundrel acting on the best interests of his constituents, or his shareholders, should be condemned.”

I do not agree that corporate leaders who take advantage of government favors are scoundrels.

Perhaps you could be more precise about what moral behaviors by corporate executives causes you to view them as scoundrels.

vikingvista August 2, 2011 at 12:25 am

Asking politicians to steal.
Asking politicians to employ force against the competition.
Asking politicians to employ force against the consumers.

Or, if I encouraged my neighbor to steal your car, would you not think I deserved to be condemned? Perhaps if I were doing it to benefit my family, then you’d be fine with it?

Slappy McFee August 1, 2011 at 9:19 am

JD –

I agree with you somewhat, but lets lay the blame where it properly should be. The electorate who granted power to the politicians who then provided the incentives to the rent-seekers.

In short — ‘we’ get what ‘we’ deserve

John Dewey August 1, 2011 at 9:53 am

Good point, Slappy. The electorate has neglected to oversee the actions of its elected officials and neglected to learn how granting power to government ultimately works against them.

vikingvista August 1, 2011 at 12:43 pm

If only voters had the power democracy advocates claimed, then such blame could be placed.

John Dewey August 1, 2011 at 1:37 pm

I think voters do have that power, but choose not to exercise it.

vikingvista August 2, 2011 at 12:27 am

Well, I’ve been a voter for a long time, and I have never had such power. The only people I know who think they have such power, are the ones whose interests just happen to coincide with the looting interests of the state. What those folks don’t understand, is that blowing against a receding tornado doesn’t mean that your breath is pushing it away.

John Dewey August 2, 2011 at 5:11 am

Well, vikingvista, I’ve also been a voter a long time. Over that time I’ve manned phone banks, walked door-to-door to get voters registered, handed out campaign literature at public events, contributed money to campaigns, wrote letters to the editor, and wrote many letters to elected officials. Almost all of the politicians I helped elect made a difference once in office. You probably will not believe that, but perhaps some others who read my comment won’t be so cynical.

vikingvista August 2, 2011 at 3:43 pm

“Almost all of the politicians I helped elect made a difference once in office.”

So I can blame you for the government’s current problems? Or will you join me in my cynicism and realize that all of your noble and hard work was futile?

nailheadtom August 1, 2011 at 2:14 pm

You don’t have to explore ideas of government very extensively to find all kinds of objections to the outcomes, if not the theories, of “democracy”. That’s why the animus toward “tribalism” on this site and in the west in general is so curious. Lowland ScotTobias Smollett talks about Scottish clans through the voice of squire Mathew Bramble in the classic “Humphrey Clinker”, written in 1771:

“The chieftainship of the Highlanders is a very dangerous influence operating at the extremity of the island, where the eyes and hands of government cannot be supposed to see and act with precision and vigour. In order to break the force of clanship, administration has always practiced the political maxim “Divide et impera”. The legislature hath not only disarmed these mountaineers, but also deprived them of their ancient garb, which contributed in a great measure to keep up their military spirit; and their slavish tenures are all dissolved by act of parliament; so that they are at present as free and independent of their chiefs, as the law can make them: but the original attachment still remains, and is founded on something prior to the feudal system, about which the writers of this age have made such a pother, as if it was a new discovery, like the Copernican system. Every peculiarity of policy, custom, and even temperament, is affectedly traced to this origin, as if the feudal constitution had not been common to almost all the natives of Europe. For my part, I expect to see the use of trunk-hose and buttered ale ascribed to the influence of the feudal system. The connection between the clans and their chiefs is, without all doubt, patriarchal. It is founded on hereditary regard and affection, cherished through a long succession of ages. The clan considers the chief as their father, they bear his name, they believe themselves descended from his family, and they obey him as their lord, with all the ardour of filial love and veneration; while he, on his part, exerts a paternal authority, commanding, chastising, rewarding, protecting, and maintaining them as his own children. If the legislature wouild entirely destroy this connection, it must compel the Highlanders to change their habitation and their names. Even this experimentation has been formerly tried without success….”

Smollett, a well-educated and well-traveled individual, could grasp the positives in a traditional, personal relationshiip that is, of course, denigrated by statists as primitive and barbaric.

Sam Grove August 1, 2011 at 2:47 pm

That’s why the animus toward “tribalism” on this site and in the west in general is so curious.

Because it is the instincts of tribalism that make political government manifest as it does (very badly).
Successful politicians are good at appealing to those instincts.

Ken August 1, 2011 at 12:45 pm

Slappy,

Exactly. Turnout rates are very low in most elections meaning elected politicians can NOT represent the majority of voters, since in most elections, the majority don’t even vote. Yet, delusions of grandeur on the politicians’ parts and the rational position many adults take (not taking much of an interest in politics) politicians run amok.

I often wonder if we should have a system where if no one can get the majority of eligible voters’ votes and not just the majority of voters’ votes that cast a vote, then that position just goes unfilled. After all, if a political position is so unimportant that most people can’t even be bothered to show up at the polls, how important is that position? If it really is important a term of office without anyone in that position will make people’s lives worse off and they will vote in the next election. Conversely, a term of office with no one in that position may just demonstrate very clearly how unimportant that office really is.

Regards,
Ken

Greg Webb August 1, 2011 at 9:25 am

Excellent letter, Don! It goes right to the heart of the matter. It seems that Jeff Madrick is either a useful, but unwitting, idiot or a greedy and fame-seeking author who is willing to sacrifice the truth in order to create an error-filled book designed to appeal to a small, but profitable, market of truly useful idiots who advocate statist ideologies.

James August 1, 2011 at 9:36 am

Ayn Rand spelled out the sycophantic relationship between big business and Government in Atlas Shrugged over 50 years ago….current events prove her right yet again…

Dan H August 1, 2011 at 10:01 am

Just heard a bunch of people at my work (JP Morgan) talking about how “awful” the “tea baggers” are for “holding Obama and the country hostage ont eh debt ceiling plan”. Then I thought to myself “gee, I work with a lot of progressives”.

Don’t kid yourself. Wall Street is highly progressive (dare I say fascist, as they LOVE the tight relationship between the corporation and the state). They fear the end of the Fed and deregulation. Some of us cheer for it though. I’d say 70% of our company worships Obama, 15% just don’t care to think about politics, and 15% are Ayn Rand-loving libertarians. There really aren’t any neoconservatives. But the vast majority of the company is further left than they even realize.

Rpuncveg August 1, 2011 at 10:51 am
DG Lesvic August 2, 2011 at 6:49 am

John Sullivan,

You have inspired me to rewrite one of my chapters.

Here it is, with my thanx.

The Last Economist Standing

“I’m still waiting for Professor Horwitz to face the challenge of an amateur’s new idea, and redeem the honor of the profession.”

“Mr. Lesvic, I’m sure you’d like me to spend my time demonstrating the truth or falsity of your…theory…because it would distract me from contributing to the economics profession and thereby increasing…evil in the world, but it ain’t gonna happen. The…profession will have to somehow soldier on minus its redemption by Horwitz or its destruction by Lesvic.”

“Professor Horwitz, I appreciate your admission, however grudging, that the theory is correct. Now, all that remains is putting it to use.”

All that remained was banishing its author again.

The Austrian School has abandoned its efforts to refute the theory, but still has no use for it. There is a place for every Marxian and Keynesian error and Austrian truth, but not for this one. What is wrong with it, why is it alone to be excluded?

We know the real answer, but what is the rationale?

It is impractical, too abstract and difficult for the masses to comprehend.

What other theorem has been excluded for that? Do the masses have any idea what the flap over the debt ceiling is about, have they mastered Austrian Business Cycle Theory, are they conversant with Ricardian Comparative Advantage?

It is quite true that the masses will never comprehend the new theory, and inconsequential. For, as Mises observed: “The most amazing thing concerning the unprecedented change in earthly conditions brought about by capitalism is the fact that it was accomplished by a small number of authors and a hardly greater number of statesmen who had assimilated their teachings. Not only the sluggish masses but also most of the businessmen who, by their trading, made the laissez-faire principles effective failed to comprehend the essential features of their operation. Even in the heyday of liberalism only a few people had a full grasp of the functioning of the market economy. Western civilization adopted capitalism upon recommendation on the part of a small elite.”

The Anti-Capitalist Mentality, Pp 34, 35

The theory is still standing, but the profession is not.

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