Debt Rattle June 2 2015
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Lewis Wickes Hine Berrie pickers, Seaford, Delaware. ‘Seventeen children and five elders live here’ 1910 • Velocity of Money Below Great Depression Le
[See the full post at: Debt Rattle June 2 2015]David Stockman has a doctrinaire or ideological faith in markets and a corresponding dislike of government. What ideologies always miss is that any and all systems will be corrupted by people. Governments and markets will always be corrupted,as all systems will be.
In the case of these two broad systems it’s usual that their corruption is mutual and Complimentary. I can usually agree with much of what he says but his faith that markets are perfctable and superior to government is an error. The error of ideology itself.
rapier,
I should probably begin by pointing out that rigged markets cannot persist for long without government support. Assuming you agree with that, let’s pretend you had to make a choice between free markets or government. One or the other, but not both. In the present political environment, it’s a choice between freedom and fascism. David Stockman chose wisely, and with a little thought, I trust you would, too. Ideology has absolutely nothing to do with it. Theft is a business model, not an ideology.
Easy Access to Money Keeps US Oil Pumping: Disproving the old axiom that production doesn’t happen unless marginal benefit is greater than marginal cost.
You can never choose between one or the other because they will both always exist. What Free Market advocates miss in a big way is that although markets are larger than governments, cultures are larger than markets. Markets are a subset of the population they live in, they exist in that ecosystem.
That being so, markets can NOT exist without a wide and crucial variety of social norms and guarantees. Property rights. Trust. Enforcement of contract. Penalties for theft, fraud, murder. Relative Peace. Lack of the neighboring tribe coming over and taking your things.
Guess what? All those things are part of (although not exclusive to) government. Without a functional government you don’t have a free market in the way they describe. You have warlords. Maybe Sarajevo or Mogadishu or Ukraine are their idea of “free markets”, where anything can be bought and sold, but they’re not. They’ll let you show up, sell you goods, then kill you and take both the money and the goods. If they like your business, your property, your wife and daughter, they’ll muscle you out of them. When that happens, people stop working, capital drops to survival levels and stays down for 1,000 years if necessary, as the fall of Rome proved.
So your Ayn Rand level of free markets is not going to work. You need a social contract that is solid, understood, and vigorously enforced, whatever it is or however you do that. A rule of law that doesn’t have two tiers, one for Lords and one for the rest of us. It’s what we in the west call the “Rule of Law”, and it’s what we don’t have anymore. Without it, “Free” markets don’t work anymore either, and goods don’t move when the only law is power.
An exhaustive study of nations found there is one and only one predictor of whether a nation will be prosperous. That was property rights and rule of law. With it, the poorest nation like Japan can succeed. Without it, the richest nation like Congo wallows in poverty and war. Free markets aren’t free.
Diablo,
The hypothetical choice I proposed between free markets and government was merely a thought experiment designed to make a point. I think you missed my point.
Paraphrasing your response, you appear to say free markets don’t work without government, but government is why we don’t have free markets. So now I’m unclear on what your own point was. Governments everywhere and always are crime syndicates predicated on theft for their very existence. Here is what “rule of law” looks like these days:
https://www.washingtonsblog.com/2015/06/systemic-corruption-has-destroyed-america.html
If you sell your lawn mower to a neighbor for a price you both willingly agree to, you’ve generated a transaction in an “Ayn Rand level” free market, plain and simple. No government was needed to make that transaction. If your neighbor takes the mower home but his check bounces, which recourse would you choose:
1. You call the cops. They’ll tell you there’s not much they can do at this point. You take the loss and move on. On the other hand, maybe they come and rough-up your neighbor, maybe shoot his dog and maybe even shoot him. You get interviewed, go to court, waste time and money in the legal system, and maybe or maybe not get your mower back.
2. You endure “buyer beware” the hard way and learn the lesson. From now on, no more deals with that neighbor, and only cash-on-the-barrel-head from now on. You can also tell your story to your other neighbors. You realize calling the cops is unlikely to be constructive.My point here is that free markets already flourish worldwide in the total absence of government. Yes, there is theft and fraud, but mankind would perish in a week if nobody felt he could trust his counter-party. I’ve purchased hundreds of items on Amazon without a hitch. In the very rare instances where there was a hitch, the vendor bent over backwards to either make things right or provide a refund. No “rule of law” was needed for this level of cooperation, and that level of cooperation occurs not because of the threat of government force, but entirely due to free market incentives.
Free markets are ubiquitous worldwide in spite of all the ways governments undermine them. “A social contract that is solid, understood, and vigorously enforced, whatever it is or however you do that” is pie-in-the-sky idealism that cannot work as long as some people adopt theft as a business model. And nowhere is that business model more embraced than within the halls of government.
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