XCR Forum banner

1 - 14 of 14 Posts

·
Registered
Joined
·
2,067 Posts
Discussion Starter · #1 ·
The idea that even the brightest person or group of bright people, much less the U.S. Congress, can wisely manage an economy has to be the height of arrogance and conceit. Why? It is impossible for anyone to possess the knowledge that would be necessary for such an undertaking. At the risk of boring you, let's go through a small example that proves such knowledge is impossible.

Imagine you are trying to understand a system consisting of six elements. That means there would be 30, or n(n-1), possible relationships between these elements. Now suppose each element can be characterized by being either on or off. That means the number of possible relationships among those elements grows to the number 2 raised to the 30th power; that's well over a billion possible relationships among those six elements.

Our economic system consists of billions of different elements that include members of our population, businesses, schools, parcels of land and homes. A list of possible relationships defies imagination and even more so if we include international relationships. Miraculously, there is a tendency for all of these relationships to operate smoothly without congressional meddling. Let's think about it.

The average well-stocked supermarket carries over 60,000 different items. Because those items are so routinely available to us, the fact that it is a near miracle goes unnoticed and unappreciated. Take just one of those items – canned tuna. Pretend that Congress appoints you tuna czar; that's not totally out of the picture in light of the fact that Congress has recently proposed a car czar for our auto industry. My question to you as tuna czar is: Can you identify and tell us how to organize all of the inputs necessary to get tuna out of the sea and into a supermarket? The most obvious inputs are fishermen, ships, nets, canning factories and trucks. But how do you organize the inputs necessary to build a ship, to provide the fuel, and what about the compass? The trucks need tires, seats and windshields. It is not a stretch of the imagination to suggest that millions of inputs and people cooperate with one another to get canned tuna to your supermarket.

But what is the driving force that explains how millions of people manage to cooperate to get 60,000 different items to your supermarket? Most of them don't give a hoot about you and me, some of them might hate Americans, but they serve us well and they do so voluntarily. The bottom line motivation for the cooperation is people are in it for themselves; they want more profits, wages, interest and rent, or to use today's silly talk – people are greedy.

Adam Smith, the father of economics, captured the essence of this wonderful human cooperation when he said, "He (the businessman) generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. ... He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain." Adam Smith continues, "He is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. ... By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." And later he adds, "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."

If you have doubts about Adam Smith's prediction, ask yourself which areas of our lives are we the most satisfied and those with the most complaints. Would they be profit-motivated arenas such supermarkets, video or clothing stores, or be nonprofit motivated government-operated arenas such as public schools, postal delivery or motor vehicle registration? By the way, how many of you would be in favor of Congress running our supermarkets?

Source: WND
 

·
Registered
Joined
·
449 Posts
In summary

Princes, however, have frequently engaged in many other mercantile projects, and have been willing, like private persons, to mend their fortunes by becoming adventurers in the common branches of trade. They have scarce ever succeeded. The profusion with which the affairs of princes are always managed, renders it almost impossible that they should. The agents of a prince regard the wealth of their master as inexhaustible; are careless at what price they buy; are careless at what price they sell; are careless at what expense they transport his goods from one place to another... No two characters seem more inconsistent than those of trader and sovereign.

The Wealth of Nations, Book V, Chapter II, Part I


Counterbalanced by

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is im-possible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and jus-tice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies...

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows, and orphans, by giving them a common interest to manage, renders such assemblies necessary.

An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole.

The Wealth of Nations, Book I, Chapter X
 

·
Registered
Joined
·
3,296 Posts
so, into whose hands would you put it?

tk
 

·
Registered
Joined
·
449 Posts
Two word answer, Bernie Madoff
 

·
Registered
Joined
·
113 Posts
Having a free market or not does not change the fact that you can be cheated if you're stupid or not paying attention.

The two important words are "personal responsibility". Giving up your freedom because you think the government will guarantee you won't be cheated is a pretty cheap way to sell your freedom for nothing of value.
 

·
Registered
Joined
·
142 Posts
Having a free market or not does not change the fact that you can be cheated if you're stupid or not paying attention.

The two important words are "personal responsibility". Giving up your freedom because you think the government will guarantee you won't be cheated is a pretty cheap way to sell your freedom for nothing of value.
Brilliant post, that is what the Government apologists never seem to understand.
 

·
Registered
Joined
·
5,071 Posts
Having a free market or not does not change the fact that you can be cheated if you're stupid or not paying attention.

The two important words are "personal responsibility". Giving up your freedom because you think the government will guarantee you won't be cheated is a pretty cheap way to sell your freedom for nothing of value.

Yep. What ever happened to the concept of, "Best man for the job" and thinking like that? If your business failed, then guess what? You, and you alone, failed it! You don't go seeking hand-outs so you can start it back up just to fail again. No, you figure out what went wrong, learn from it, and you get back in the mix and try again. While I was in the service I had to repeat many times over my job description, "I'm responsible for all my squad does or fails to do." Period.


But, realizing that, yes, there is a huge problem with the economy, not just in the US, but the whole world, some of this being driven to near panic by our illustrious folks in the media department. I stopped watching the news a couple years back and maybe only catch a glimpse or two in passing or if the wife is watching it. It's amazing how fast your world shrinks and all the bad stuff they try and scare everyone with just goes away. I focus on what is important to the family and me, put in an honest day's work and enjoy life.
 

·
Registered
Joined
·
2,067 Posts
Discussion Starter · #9 ·
Everalm brings up a good point. Sometimes companies will in fact conspire together to fix prices. This recently happened with the LCD TV industry. However, it was found out and it was taken care of. Now, if people are willing to [ay for LCD TVs at those fixed prices, then so be it. Even when the prices were fixed, there were some companies like Vizio, etc, who had their prices lower. So people still had options.

A true two word answer is "the people". People will decide if they want to pay for something or not. I wasn't willing to pay for a Sabre Defense AR last year because they were way overpriced in my opinion and it was my money. So I went and found anther AR. I didn't feel that that the AR was worth that much money.
 

·
Registered
Joined
·
3,296 Posts
two words. Free Market.
This is glib, but not realistic. If you've been following the current debacle, you would realize that this is the concept, more than any other, that has gotten us into this mess.

The problem with completely free markets is the same problem as with anarchy as a political system -- the lack of regulation leads to violent movements and a powerful few ultimately end up in control. If you don't believe that this is the underlying cause, I suggest you read Alan Greenspan's testimony to Congress over this mess -- he freely admitted that he was wrong in his previous statements aboyt hos the markets would regulate themselves. Somehow, Greenspan and all of his minions couldn't grasp the essential concept that humans are greedy, and self interest in the short-term almost always trumps the shared good in the long term.

It's like the search for the ideal government: There has to be a certain degree of regulation or you end up with anarchy.

tk
 

·
Registered
Joined
·
449 Posts
People, on the whole, are usually nice.

People in a business are in the business of making a profit.

Unless there is a stick (in the form of oversight with teeth) in addition to the carrot (in the form of business friendly environment) then the consumer will almost inevitably get screwed over.

Lets take the case of Microsoft, a real rapacious, red in tooth and claw, robber baron, capitalist organization.

Bill Gates got his start with very sharp business practices when he and his company, nominally worked for IBM to develop a DOS based operating system for the IBM PC called PC-DOS. Shortly thereafter Microsoft terminated their agreement with IBM and started selling their own OS called MS-DOS which was stripped out of the IBM work.

Shortly after Bill re-engaged with IBM again to help develop a new graphical OS called OS/2 with the work being paid for by IBM. Again, as if by magic, Microsoft released a new graphical interface called Windows competing with OS/2. Etc etc.

From this point onwards Microsoft has been in continual lawsuits for anti-competitive behavior, dumping, intellectual property theft, monopolistic business practices and (I quote from the case of US v Microsoft) "abusive monopoly activities" and various anti-trust cases around the world.

Microsoft's published and embraced business philosophy is to use all means at their disposal to push the Microsoft platforms as the only option for users and business. These have included abusive litigation, buy out and closure of competitors, blacklisting journalists and publications regarded as "uncooperative", abusive pricing practices to organizations that want to sell something other than just MS products, locking out competitors by making their non MS products incompatible or unreliable via software code, etc.

All of these activities are "Free market" but inevitably are wholly anti-competitive and anti-consumer

The only organizations that can even attempt to constrain this type of organization is government sized, no-one else has the clout.

Those who seem to think the unconstrained "Free Market" is rational and wholly effective are deluding themselves. Unconstrained free market economics lead to monopolies, abusive practices and Corporate Capitalism.

As Thomas Jefferson stated

"I hope we shall crush ... in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country"


There has to be a dynamic balance between private ownership of the means of production and public oversight and enforcement of sound economic, legal and ethical principles.
 

·
Registered
Joined
·
2,067 Posts
Discussion Starter · #12 ·
People, on the whole, are usually nice.

People in a business are in the business of making a profit.

Unless there is a stick (in the form of oversight with teeth) in addition to the carrot (in the form of business friendly environment) then the consumer will almost inevitably get screwed over.

Lets take the case of Microsoft, a real rapacious, red in tooth and claw, robber baron, capitalist organization.

Bill Gates got his start with very sharp business practices when he and his company, nominally worked for IBM to develop a DOS based operating system for the IBM PC called PC-DOS. Shortly thereafter Microsoft terminated their agreement with IBM and started selling their own OS called MS-DOS which was stripped out of the IBM work.

Shortly after Bill re-engaged with IBM again to help develop a new graphical OS called OS/2 with the work being paid for by IBM. Again, as if by magic, Microsoft released a new graphical interface called Windows competing with OS/2. Etc etc.

From this point onwards Microsoft has been in continual lawsuits for anti-competitive behavior, dumping, intellectual property theft, monopolistic business practices and (I quote from the case of US v Microsoft) "abusive monopoly activities" and various anti-trust cases around the world.

Microsoft's published and embraced business philosophy is to use all means at their disposal to push the Microsoft platforms as the only option for users and business. These have included abusive litigation, buy out and closure of competitors, blacklisting journalists and publications regarded as "uncooperative", abusive pricing practices to organizations that want to sell something other than just MS products, locking out competitors by making their non MS products incompatible or unreliable via software code, etc.

All of these activities are "Free market" but inevitably are wholly anti-competitive and anti-consumer

The only organizations that can even attempt to constrain this type of organization is government sized, no-one else has the clout.

Those who seem to think the unconstrained "Free Market" is rational and wholly effective are deluding themselves. Unconstrained free market economics lead to monopolies, abusive practices and Corporate Capitalism.

As Thomas Jefferson stated

"I hope we shall crush ... in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country"


There has to be a dynamic balance between private ownership of the means of production and public oversight and enforcement of sound economic, legal and ethical principles.


Everalm, would you be willing to explian your politcal views. I am confused as to where you stand exactly. I don't have a problem with what ever your views are as you are free to have them and i encourage you to express them to your hearts content. I am just curious so I know where you are coming from and we can have more intelligent conversations on this fourm.

If you don't wish to do so I understand as well and i will still continue to enjoy these discussions.

XCRFan
 

·
Registered
Joined
·
449 Posts
Anarcho-capitalist with significant chunks of Ordoliberalism, free trade supporter with a good dose of Thatcherism.

Any single political-economic viewpoint/label is by it's nature, rigid, of limited flexibility and typically encased in a straitjacket of history and (frequently failed) precedent.

Democracy, Capitalism and Constitutional Republicanism aren't perfect but a hell of a lot better than the current alternatives out there. For example, the view I gave on untrammeled "free market" economics shows where there are inherent contradictions between "free" and "freedom".

In the case of the US system, not perfect but strives to the greatest freedom for the greatest number. It does however have significant concerns such as the ongoing de-facto creation of a political caste as well as institutionalized corruption through mechanisms such as "pay to play", political appointments of judicial and legal positions etc etc.

The Parliamentary system as exemplified in the United Kingdom along with a robust and more independent non appointed, permanent professional civil service keeps individual corruption and pork barrel politics at a far lower level but at the cost of some of the US constitutional checks and balances along with some institutional inertia.

In the 30's in the US with the New Deal through to the end of WW 2, the US was arguably running a significantly command based economy with many of the characteristics of the 1920's "5 year plan " model of the USSR. It did however move rapidly back to the more untrammeled raw capitalist economic model from 1947 onwards, the infamous "Military-Industrial Complex"..... ::) Economics and politics run in staggered complementary cycles swinging across more rigid to more flexible over time.

No one perfect solution, you have to be aware of the alternatives. The Anglo-American models have shown that they tend to be the most flexible and practical as well as capable of meeting short term goals whilst always being able to return to the core of individual liberalism.
 

·
Registered
Joined
·
2,067 Posts
Discussion Starter · #14 ·
Thanks everalm. I truly appreciate you explaining your views. ;D
 
1 - 14 of 14 Posts
Top