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The problem with this analysis as I see it is that the US and entire developed world are so far away from so-called free market economy, which requires near perfect competition that this is now just a myth, like the rugged individualism of pioneers setting off for the frontier. Massive transnational corporations dominating market are price setters rather than price takers. The price of the most important natural resource, petroleum, is controlled by the swing producer. Global labor is now fungible due to transportation and communications technology and a neoliberal policy of free trade and free flow of capital. This is an economic situation that severely disadvantage workers, not to mention all the efforts of powerful interests to undermine the bargaining power of labor. We have to deal with real condition such as exist, not ideal conditions that we fantasize about.
A thoughtful and civil post as always from Ed Harrison.
I understand a lot of the arguments coming form the libertarian and/or Austrian camp about the role of cronyism in the dysfunctions of the current US economy. But they really ought to consider the possibility that what blew up the economy is not primarily cronyism introducing distortions into what otherwise would be the smooth functioning of a truly free market economy running on the principles of genuine liberty. Rather, as I think Minsky persuasively argued, the tendency toward instability is built into the very structure of modern capitalist finance, and can only be suppressed if government takes vigorous ongoing steps to stabilize the financial system.
I would argue that the tendency toward increasing economic inequality is also built into the distributional mechanisms of market capitalism, and thus any society that relies primarily on the market system but that does not take vigorous ongoing steps to ameliorate inequality is sowing the seeds of its own social self-destruction.
A laissez faire system, if it ever did exist, would not by a self-regulating economic ecology. It would be a wildly unstable and chaotic dynamical system.
The US government used to play a more active role in stabilizing finance and ameliorating or attenuating inequality. It stopped doing so, and the results have proven disastrous. The JG does not represent a massive paradigm shift toward socialism, as Ed suggests. It represents a proposal to expand the role of the private sector in what will still be an overwhelmingly private economy. I see it as a shift in the direction of standard mixed market social democracy, such as is common in the most successful European countries, and which effectively used to be the dominant paradigm and policy in the US.
No civilized economy in the modern world has ever practiced laissez faire economics of the kind preached by the Austrians. If anything is a pipe dream, the laissez faire model is one. Ron Paul and the other Austrians are preaching an extremist, radical doctrine. It is only because of the temporary triumph of extremism of the kind preached by Paul, Grover Norquist, Ayn Rand the Kochs and others in the motley camp of radical individualists that reasonable proposals like the JG now seem like strangely radical to people who have imbibed many of these views.
The American system right now is failing. That system is still very rich because it is so large. But we have been suffering through four decades of socio-economic decline that is undermining the social fabric of our democracy and dividing the US into a neo-feudal order of haves and have-nots. And I don't mean only that the "1%" are screwing everybody else through their insider crony connections. I mean that a rather large segment of privileged winners is benefiting from the inequitable distribution system.
These Americans have to begin to ask themselves, just as Americans did in the antebellum US, whether they can any live with themselves morally on the privileged end of pole of these gross injustices.
Laura: A shift to socialism would entail worker-owned businesses. The JG and BIG would not accomplish this. The right-wingers need to calm down.
The free market advocates consider anything but a so-called free (read unregulated market) to be socialism. We know from experience where that leads, and it is not nirvana other than for the people at the top. It's just playing the "class warfare" card, and it is transparent self-serving sophistry.
The US and entire developed world are so far away from so-called free market economy, which requires near perfect competition that this is now just a myth
Yes absolutely. Not only that, even if laissez faire were possible, a corporation does not exist in a free market. Well, how exactly does something like limited liability spontaneously form in a market? A C-corp is an act of government, just like income taxes, regulation etc: I wonder how may many shareholders Apple will have, if they were subject to full liability?
I am certainly not saying we should get rid of corporations, just that free market advocates aren't being consistent. As Tom says, big multinational corporations are the biggest economic distortion in a market. The government as our representative should be able to level the playing field, but that hasn't happened in a long time, and hence we are in this mess.
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The problem with this analysis as I see it is that the US and entire developed world are so far away from so-called free market economy, which requires near perfect competition that this is now just a myth, like the rugged individualism of pioneers setting off for the frontier. Massive transnational corporations dominating market are price setters rather than price takers. The price of the most important natural resource, petroleum, is controlled by the swing producer. Global labor is now fungible due to transportation and communications technology and a neoliberal policy of free trade and free flow of capital. This is an economic situation that severely disadvantage workers, not to mention all the efforts of powerful interests to undermine the bargaining power of labor. We have to deal with real condition such as exist, not ideal conditions that we fantasize about.
A thoughtful and civil post as always from Ed Harrison.
I understand a lot of the arguments coming form the libertarian and/or Austrian camp about the role of cronyism in the dysfunctions of the current US economy. But they really ought to consider the possibility that what blew up the economy is not primarily cronyism introducing distortions into what otherwise would be the smooth functioning of a truly free market economy running on the principles of genuine liberty. Rather, as I think Minsky persuasively argued, the tendency toward instability is built into the very structure of modern capitalist finance, and can only be suppressed if government takes vigorous ongoing steps to stabilize the financial system.
I would argue that the tendency toward increasing economic inequality is also built into the distributional mechanisms of market capitalism, and thus any society that relies primarily on the market system but that does not take vigorous ongoing steps to ameliorate inequality is sowing the seeds of its own social self-destruction.
A laissez faire system, if it ever did exist, would not by a self-regulating economic ecology. It would be a wildly unstable and chaotic dynamical system.
The US government used to play a more active role in stabilizing finance and ameliorating or attenuating inequality. It stopped doing so, and the results have proven disastrous. The JG does not represent a massive paradigm shift toward socialism, as Ed suggests. It represents a proposal to expand the role of the private sector in what will still be an overwhelmingly private economy. I see it as a shift in the direction of standard mixed market social democracy, such as is common in the most successful European countries, and which effectively used to be the dominant paradigm and policy in the US.
No civilized economy in the modern world has ever practiced laissez faire economics of the kind preached by the Austrians. If anything is a pipe dream, the laissez faire model is one. Ron Paul and the other Austrians are preaching an extremist, radical doctrine. It is only because of the temporary triumph of extremism of the kind preached by Paul, Grover Norquist, Ayn Rand the Kochs and others in the motley camp of radical individualists that reasonable proposals like the JG now seem like strangely radical to people who have imbibed many of these views.
The American system right now is failing. That system is still very rich because it is so large. But we have been suffering through four decades of socio-economic decline that is undermining the social fabric of our democracy and dividing the US into a neo-feudal order of haves and have-nots. And I don't mean only that the "1%" are screwing everybody else through their insider crony connections. I mean that a rather large segment of privileged winners is benefiting from the inequitable distribution system.
These Americans have to begin to ask themselves, just as Americans did in the antebellum US, whether they can any live with themselves morally on the privileged end of pole of these gross injustices.
A shift to socialism would entail worker-owned businesses. The JG and BIG would not accomplish this. The right-wingers need to calm down.
Yes, the railroad and the machine won the west not "The Virginian" and all the glory of the fabled cowboy.
said cowboy was killed by railroad
just as video killed the radio star
Laura: A shift to socialism would entail worker-owned businesses. The JG and BIG would not accomplish this. The right-wingers need to calm down.
The free market advocates consider anything but a so-called free (read unregulated market) to be socialism. We know from experience where that leads, and it is not nirvana other than for the people at the top. It's just playing the "class warfare" card, and it is transparent self-serving sophistry.
The US and entire developed world are so far away from so-called free market economy, which requires near perfect competition that this is now just a myth
Yes absolutely. Not only that, even if laissez faire were possible, a corporation does not exist in a free market. Well, how exactly does something like limited liability spontaneously form in a market? A C-corp is an act of government, just like income taxes, regulation etc: I wonder how may many shareholders Apple will have, if they were subject to full liability?
I am certainly not saying we should get rid of corporations, just that free market advocates aren't being consistent. As Tom says, big multinational corporations are the biggest economic distortion in a market. The government as our representative should be able to level the playing field, but that hasn't happened in a long time, and hence we are in this mess.
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