We haven’t yet tried a free market
A discussion I had on facebook with my good friend Bryan about the Great Recession, plutocracy, free market capitalism, the role of government, and our current political state.
Bryan
This is an article summarizing The 15 best explanations for the Great Recession.
http://www.slate.com/id/2240858/
I’m anxious to hear the favored explanation from my conservative and libertarian friends! Do include any heterodox opinions not listed. Note, the author is a friend and former co-author of book with Robert R…ubin (former treasury sec under Clinton and now chairman of Citigroup).
Me
This article’s conclusion is that we need more regulation on big firms in the future. So you’re telling me that politicians can keep a company from failing better than the guys who built the company and have been running it all along? For all the large industries in the entire country? If a large company decides to take a risk, it is their own decision to make, and their own consequences to face. If the firm fails, another one will take its place.
Bryan
I think the deeper issue is what is to be done when the free market fails as spectacularly as it did in this case. You rather flippantly suggest letting the offending companies fail (e.g. almost every major bank in the US and Britain). Intellectual honesty requires you to consider the likely scenario had “politicians” not listened to the pleas of financial firms for a rescue package. That is, severe depression if not complete social and financial anarchy. I’m perfectly fine with a complete breakdown of Babylonian slave economy as you well know, but are you — and your ilk — really ready to brave such storm? I imagine the moment you felt any non-trivial curtailment of your materialistic desires you’d have pitch fork in hand screaming outside the doors of the nearest financial firm! There is a reason there is not a single industrial economy with a true free market, and that is that even sheople have limits on how much abuse they can tolerate!
Me
I disagree with the idea of using taxpayer money to support big businesses for the “common good.” I disagree with your statement that the free market model failed in this situation, since we don’t have a free market, as you admit near the end of your comment. The whole reason companies are able to become so gigantic is because of government regulations. In a truly free market, competition keeps monopolies at bay with no need for extra help from the government. In a free market, companies making poor decisions would get swept aside before they could ever become noticeable, let alone indispensable. With regards to the Great Depression, I postulate that one primary cause was the creation of the Federal Reserve, moving away from free market policies like the gold standard, and moving toward additional government regulation.
I would indeed be upset if my hard-earned money disappeared out from under my nose with neither my consent nor ability to regain it. In fact, that is exactly what I’m upset about right now with regards to the bailouts, the social security system, various other govt. programs and the majority of the taxes I pay. We need to push harder for smaller government and minimized government involvement.
Bryan
You have to have an acute case of historical amnesia to not understand why markets were once free and are now shacked by the heavy hand of the government (tongue firmly in cheek). Look into the gilded age and robber barons, when the economy was completely in the hands of sociopaths like John D Rockefeller, Dale Carnegie and JP Morgan. This is the era when child slavery was widespread and inequality was downright Babylonian in scope! The free market being free and all permits monopoly unless an outside force (e.g. god or government) intervenes. In an economy that is not so dominated by speculative finance and labor-powered-industrialization (like a Jeffersonian agrarian egalitarian Utopian, which I’m quite fond of incidentally) I would be completely supportive of the libertarian model of social and economic order. But within the current context it’s really nothing more than childish fantasy if not a peculiar strain of masochism.
Lastly, we both know the Federal Reserve is not a government agency – it was created by and is owned by some of the largest banks it’s intended to regulate and serve. And your right about baleful role it played in the great depression, among other factors. I think libertarians and liberals ought to unite in recognizing the destruction caused by banks throughout our history. We should start by abolishing the Fed and then instituting public funding of elections, so the precious free market is not subverted by campaign donations. But in doing either of these things you are really talking about a second revolution in American, so if your primary concern is sustaining and augmenting your materialistic lifestyle you should tone down the myopic libertarian rhetoric, and come to terms with the prevailing order.
Me
Interesting that you refer to Rockefeller and Carnegie (I assume you meant Andrew), two prominent philanthropists, as sociopaths. It is true that some of their business methods were underhanded, but can you discount the huge economic and industrial strides our country took because of the bold maneuvering of these captains of industry? Why is it that, as soon as the great “American dream” is fulfilled by a lone man who stands and achieves, he is denounced and hated? Why crave incompetence and mediocrity? Companies guilty of Enron-ian foul play are the vast minority. It may indeed be a fantasy to hope for a free market in the current political and economic context, but it strikes me as extremely fatalist to stick with what we have only to avoid ruffling any feathers.
Yes, the Fed is privately owned. But its existence is enabled by government regulation. I couldn’t agree more that we need to abolish it. I also agree that something must be done to prevent big money from controlling our legislative process. And yes, these would represent a serious revolution in our country, but that does not make my viewpoint as nearsighted as you make it sound. This country was founded on the idea that if you don’t like something, you try to change it. Unfortunately, the military might of our government makes a traditional revolution pretty much impossible, so it must be a revolution of ideas. (this is why one of my music projects is named Stainless Revolution)
Jennifer
I agree with you wholeheartedly, Bryan. Let’s not forget that the US government subsidized the robber barons with free land, no income or business taxes etc. Enabling them to quickly and ruthlessly establish themselves without competition. This was anything but a free market at the time. I happen to believe that the US would have made those strides anyway as it was happening all over the industrialized world. But what they did at the time was anything but hands-off.
Bryan
Yeah, let’s not forget all of that! Thanks for chiming in Jennifer.
With respect to industrialization, we’ve seen numerous cases of it occurring under quasi-command and control economies (s Korea, Israeli, china, India, most European counties, etc). Industrialization was not “caused” by these great “captains of industry” (btw, could you sound anymore sycophantic!). If it wasn’t them it would have been someone else, and our country would have been better off with people less prone to control and manipulate solely for self-aggrandizement at the helm of key industries. The robber barons did indeed give away large sums of money (often to suspect causes, like the council of foreign relations). But the money they gave away was a fraction relative to their wealth, which of course has persisted through their noxious families dynasties. Besides, most conquers — be they of the political or financial type — will do some good, even if on accident. Hitler made the trains run on time, Napoleon made the legal code more progressive, etc. But for us to celebrate people who engage in vanity charity and then erect statutes to commemorate themselves is kind of sad.
I will close this increasingly boring debate with a quote:
This “disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition…is…the great and most universal cause of the corruption of our moral sentiments.” That’s Adam Smith. If the great captains of industry were able to pair their financial acumen with a moral philosophy like Adam Smith’s many of us would be far more tolerant of the libertarian worldview, but when the system is dominated by heartless predators who misuse their intellect and energy to control and exploit others the end result is tyranny masquerading under the banner of freedom. But I guess as long as some “great man” is out there maneuvering boldly false freedom is okay with you.
Me
I do not despise poor people. I despise laziness and a lack of productivity. I know that not all poor people are lazy and unproductive. But I do admire people who became rich by virtue of their own productivity, ingenuity, and incredibly long hours of work. People who become rich by the exploitation of other people are not really heroic any more. They are leeches of an even more egregious sort than those parasites who eat your and my incomes on social government programs. Where the agreement ends is that I do not believe men who are successful of their own merit, true captains of industry (and perhaps men like Rockefeller do not belong in that number), owe anything at all to the poor. The men of true industry have already provided jobs, bolstered the economy, and often provided some new invention to make better the lives of all men.
“I think we have more machinery of government than is necessary, too many parasites living on the labor of the industrious.” – Thomas Jefferson
Jennifer, thanks for joining our little discussion. I did not know the details of government subsidization in the case of Rockefeller and crew. If you guys really hate those industrialists as much as you claim, then this is definitely an argument in favor of my claims that government regulation can never know which move to make as well as the market itself. It goes back to my claim that monopolies are enabled by government regulations.
In my mind, it all boils down to one concept, one rule. Altruism is not bad. Forced altruism is bad. When the government or any other entity is forcibly taking my money to help someone they deem “needy,” forced altruism has been established. If you don’t think it’s forced, just imagine the succession of events if I refuse to pay a portion of my taxes. The final event is that men show up at my door with guns and drag me to prison. It is no different from a man approaching me on the street, putting a gun to my head, and saying “gimme your money.”
–
I think it’s rather hilarious that Bryan’s friend’s arguments fell on my side of the fence. It makes me think I’m not communicating my position very well.
