Dou you believe in the Free Market?

1: ???????????? History began in 1992?
2: How do you think the computer you are posting on got in front of you?

since the Clinton era?

Um, try the free market system our society adopted when they ousted the British in 1770's? The only systems tried in the US have been mercantilism (via the British), a few socialist experimental societies out in the desert that failed, and free-market capitalism that mainstream America has embraced since the founding of the country.

While our government has fiddled with the markets in varying amounts throughout our history, it has NEVER abandoned the free market system...perhaps you should refine what you are arguing against?

If you truly think the US hasn't embraced Free Markets until 1990's, then you SERIOUSLY need a history and economics lesson.

I think what you mean is the degreeof free markets, such as laissez-faire as opposed to managed capitalism.

Hee hee, looks like a tough crowd here Scotteh! I do however look forward to reading your thoughts on our so-called free market!



Well, considering that the fundamental inception of the P.C was carried out by hobbyists and enthusiasts who worked together and freely shared knowledge without worrying about patents and profits I think that is a poor example Daiwa. Yes, today the P.C in front of you was manufactured by corporation XYZ and sold, but the underlying technology was developed for free and born out of co-operation, not competition!



Actually Eagle Seven it is you that I would suggest should brush up on your history! The United States never has actually operated under a truly free market. The closest it ever came to it was in the late 19th century, which interestingly enough came to be known as the Gilded Age or the days of the Robber Barons. This is because, contrary to the last 50 years of free market-ideology, in a truly unregulated environment competition suffers as a couple of big players end up on top and then they stomp the fuck out of any little guys who get in their way. Oh yeah, and they also robbed consumers blind, ran entire communities (ever heard of the dreaded "company store" that coal miners owed their lives to?) and sent goons in to beat up or kill anyone who wanted to form labor unions (you know, so that workers could get the weekend off and make enough money to actually put some of it away so they too could partake of the American Dream)

I believe in free markets. They need to be tempered a little by a bit of state influence, but mostly free is good.

Some examples of appropriate tempering: taxation, quarantine laws, health and safety legislation, mandatory fiscal reporting, state ownership of essential utilities

some examples of inappropriate tempering: state ownership of the majority of companies in any sector save infrastructure, excessive taxation, monetary controls, government oversight on wages

Clinton opened up the markets in the 1992, he removed a lot of regulation and believed that with less or no regulation the market would operate more efficentley, he argued also that due to the nature of captalisim and our understanding of how humans operate (based on John Nash's approach applied from Game Theory and Adam Smiths 'Invisible Hand' notion) that if everyone went around surving their best interest society would flourish.

I should have perhaps clarified this more so, my apologies.

Likewise, the US has never had a planned or command economy. I stipulated that yes, the US government has adjusted the market economy to differing degrees, but they never eliminated the free-market core of our most important industries. Contrast this with China, whose economy's core is planned by the government, and only recently have they allowed market forces to assert limited control over their industry. Is the glass 4/5s full, or 1/5 empty?

I also would like to point out that "sending goons into beat up or kill anyone who wanted to form unions" is fraud and physical coercion, one of the activities that the government must prevent in every free-market economy. Corporations that assault their workers or customers are not corporations, but organized crime. I think to use a failure of government to do its most basic responsibility, the protection of its citizens from crime and invasion, as a reason why free-markets are bad is very misleading.

Regarding the big corps stomping the little guys out of the way, the "big guys" are known as monopolies, and monopoly destruction (as in the breaking up of Standard Oil) is one of the primary functions of the government in free-market economics.

More often than not, such big corporations buy off the politicians to enact regulations that make it impossible to compete! For example, it is prohibitively expensive for small businesses to purchase a broadcasting license to start any decent-size television station. As a result, almost ALL of our television stations are owned by MASSIVE multi-national corporations. How do you plan to prevent this from happening on a much larger scale in your heavily regulated economy? In fact, this very problem of over-regulation is plaguing small businessmen in India...


The fact that there is no body to disrupt the OPEC oil cartel has allowed oil prices to rise as high as they have, and is a demonstration of how monopolies can cause markets to fail.

Contrary to what you seem to believe, free-market economics actually requires government protections to function at all.

I totally agree. I actually agree with Arty to some extent. We disagree on the over all role of government, not that government should not have one.



Again a matter of degrees(until the last one - I dont agree there). I see a role for government, but not a major or intrusive one.



Agree again! You going conservative on us Cacto?

I look forward to your future article. And to a small degree I agree with you. Clinton was many things, but at least he was not a complete idiot. I think he did some of the things because he knew they were for the best (NAFTA) and some because he got his arse whooped in 94.

But I suspect the excesses you will write about really had nothing to do with Clinton, and are a natural part of capitalism - and part of that is the opportunity to fail and be a sucker. Capitalism does not guarantee sucess. Many businesses fail and should be allowed to for many reasons. The Dot Com boom and bust had nothing to do with Clinton policies and practices - but with capitalism taking care of its own faults.

This is true. I do however think that we are disagreeing because we are thinking of "the free market" as two different things. The current system we are and have been operating under is what is called a mixed economy. This means that for the most part business is free to do what it wants but the government is responsible for playing the role of traffic cop to make sure everyone plays fair. Also, in extraordinary circumstances (like the great depression or WW2) they can step in and institute price controls, rationing, or nationalization of businesses or necessary functions so that average folks can still afford to buy the basics like bread and milk and continue to go about their lives. Also, under a mixed economy the government is able to  impose tarriffs on imports (to help out local businesses in the domestic economy) or if foreign businesses do come into the country they can stipulate and enforce that a pre-determined percentage of that businesses profits must stay in the local economy.

The last 50 years of economic ideology referring to the free market however is very different indeed. The policies of Milton Friedman (for whom I have a great deal of respect although I disagree with vehemently) say that the only way we can have a truly free market is if the government steps out altogether.

The underlying premise is that the economy is similar to a force of nature and any meddling in it (such as the hand of a government looking out for it's people) is seen as a disturbance that throws it out of whack. So, today the term "free market" actually means this:

1) No more government regulation or oversight. All businesses become 'self-policing' which means that we run on the honour system. This has far-reaching consequences. Can anyone say Enron??? Under this system foreign investors (or local business, Haliburton just moved their headquarters to Dubai) can move all their money in or out of the country as they see fit. This leads to an economy that is like standing in the shower and blasting oneself with scalding hot water then two seconds later switching to ice cold water. The result is usually what we call a 'failed' state!

2) Cut taxes to the bone. In order to do this, most government programs have to go, and a basic very minimal 'flat' tax is imposed on everyone. Essentially the only purpose of the government becomes to protect the property rights of owners and maintain social order (basically the military, police, and justice system) Social security, medicare, the education system, roads and bridges, ALL of it must be in private hands. Because this is usually very unpopular with most average joes there tends to be a lot of civil unrest, which has been illustrated in several countries that have tried to adopt Friedman's vision of a free market.

 

As Arytsim already demonstrated we already have a managed economy vice total free markets.

 

Scotteh, you really seem to need a dramtic reality bath.

 

The world didn't spring into existance the day you started paying attention to it.

You might want to have a little talk with Bill Gates about that. The above scenario applies to damn near everything and it is a perfect example. Furthermore, the 'hobbyists and enthusiasts' had to use tools provided by the free market to develop their 'hobbies & enthusiasms'. And if you think those enthusiasts weren't 'competing', you are quite mistaken. We take for granted what the free market mechanism provides much too cavalierly. It's what allowed those hobbyists and enthusiasts the opportunity in the first place.

Using a tool brought to you by the free market, whatever its roots or genesis, to claim that free market 'doesn't work' is rich irony indeed.

Which countries have 'illustrated' this?

There's plenty!

Chile is a great example. The military dictator Augusto Pinochet orchestrated a coup (sanctioned and aided by the CIA, although that is another story) in which the leftist president Salvador Allende was killed. Allende's policies were very popular with most folks at the time- he instituted price controls so that average people could afford staple food stuffs and utilities, and he nationalized the major cash cow industries (like tin and copper mining I believe) to pay for these programs. There were also many stringent laws for foreign business- he passed legislation that ensured that big foreign business could only take so much profit out of the country and would have to reinvest a certain percentage, either through taxes or other initiatives.

While these measures were popular for the average Chilean, they were very unpopular with businesses State-side- why? Because companies like Ford and Dupont had invested almost 1 billion in the country and reaped over 5 billion in profit from that investment. Allende's measures threatened to reduce this ongoing profit markedly, which is a sin in the eyes of free market proponents.

When Pinochet took power, he removed all price controls. He laxed laws governing foreign business, giving them massive tax breaks. He allowed money to come and go as businesses pleased, and relaxed government regulation and oversight of the stock market.

These measures were wildly unpopular with the average Chilean. Within a couple of years, the price of bread, milk and cooking oil accounted for almost 25 - 50% of the average monthly income (no more price controls). Jobs were created and lost overnight as foreign businesses came in, bought up a bunch of industries and companies and then spun them off to make a quick buck. The stock market had a near implosion as with lax government oversight a group of investors who came to be known as "the piranhas" nearly bankrupted the nation through massive speculation and derivatives trading. And lets not forget the near elimination of social security, medical care and education as most of that was privatized and therefore could only be afforded by a small percentage of the population.

Because these measures were so unpopular, the only way for Pinochet to pass these laws and cut social spending was to keep an iron grip on the country. His troops turned a local stadium into a mass interrogation center where thousands of civillians (most of whom were leftists or labor leaders) were rounded up, questionned and then never seen from again. Such notable supposed 'communist' agitators were people like folk musician Victor Jarra (spelling?) who was tortured, then had his fingers broken so he could never play guitar again Using military intimidation, he kept the populace so terrified that he was able to pass political and economic measures that he otherwise would have never been able to do.

An entire battalion of infantry was sent to Ford's main factory to provide 'security' from supposed communist sabotage (even though there was no strong communist presence in the country, as was illustrated by the fact that the police and military took over the country in one day with no resistance) where they promptly rounded up any union leaders, many of whom were never seen again.

Ford thanked Chile for dealing with it's pesky union problem by donating a large number of green Falcons to the government free of charge. They were used almost exclusively by the Chilean Secret Police (who also terrified the populace by pulling people from their homes without warrant or warning, also many who were never seen again) so much so that whenever someone would spot a green Ford Falcon cruising around it spread panic as folks assumed the secret police were in the area and they were gonna nab someone! 

This is not an isolated incident- Similar situations have occured in Columbia, Bolivia, Cuba, Mexico, the Congo, Venezuela, Indonesia, the Phillipinnes, etc

That's Friedman's vision of a free market? What am I missing here?

He doesn't mention the violence, but you're a man of the world, have you ever heard of an unregulated free market economy that doesn't end in repression?

Have you ever heard of a command economy that doesn't end in the Gulag?

It goes back to the imperfection of man. Nothing is going to be truly utopian, but the best system is that which is corrupted least. And distribution of power is the way to assure the least corruption. That is why Monopolies are the worst, oligopolies next, and competitive markets the best. Command economies are monopolies. Free Markets are competitive since no one controls them.

I think a free market with certain government interventions is best. We need the government to promote the common good of all people over the common good of an individual, and to realize economies of scale in certain industries where an individual's resources are not enough on one's own to do whatever it is that needs to be done. I suppose in a truly free market situation that a corporation could be formed instead of the government, but in the area of actual human necessities (food, water, shelter) that could lead to profiteering and repression, whereas if the government regulates it, everyone gets what they need with those with much able to have the option of buying more or better food, water, or shelter.

You could make the argument that the government is a corporation that has the unique ability to wield lethal force in order to enforce its policies, and that the citizens are shareholders who vote for new CEO's and board members every couple of years!

Exactly, you need a balance. Friedman has some interesting ideas, but I'd hate to see them made a reality.

Free markets result in the most efficient outcome that maximises the net benefit of society (assuming an absence of imperfections+failures). The case of market imperfections+failures there can be a case for government intervention to correct them, and result in the most efficient outcome being chosen, but the markets are still needed to achieve this.

The alternative extreme, that is completely state controlled markets (i.e. communism) is terribly inefficient and destined to failure.

 

At great risk of repeating myself, Clinton opened the markets considerably in 1992 on the advise of several Economisits, remember the whole 'Big Govermer era is over'?

If you think the world or you economoy was the same before 1992, then it is you my friend that is in need of a 'reality bath'.

Actually it was later (as he was not president in 92) and I dont think NAFTA is the world.

1996 he gave the big goverment speech, it was before he was even offically sworn into goverment that he was encouraged to start the ball rolling.

I've not got around to finishing the article yet because the weather where i am, rather bizzarely, is quite nice :HOT:.