Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!linus!decvax!cca!ima!inmet!nrh From: nrh@inmet.UUCP Newsgroups: net.politics Subject: Re: Re: Re: Re: Re: Re: 'Majority' rule - (nf) Message-ID: <1812@inmet.UUCP> Date: Thu, 15-Nov-84 00:38:58 EST Article-I.D.: inmet.1812 Posted: Thu Nov 15 00:38:58 1984 Date-Received: Sat, 17-Nov-84 02:38:40 EST Lines: 235 #R:ucbcad:-277800:inmet:7800178:000:11400 inmet!nrh Nov 13 15:42:00 1984 >***** inmet:net.politics / ucbcad!faustus / 12:32 am Nov 8, 1984 >> 3. People know what they want better than any group of planners. > > When it comes to politics, that's not true. Maybe they know what > kind of dishwashing detergent they like, but when it comes to > things like foreign policy, environmental protection, economics, > etc, they don't. (Or at least they don't know how to get what they > want). Oh yeah? Let's leave aside foreign policy -- if you have a strong enough government to require one, of COURSE you're in trouble already. As for "economics", the fact that "economics" happens in a market without explicit control is enough for me -- you don't need to have "decided" in advance, or by a few, as you would with foreign policy. Environmental protection -- under 19th century "nuisance" laws, individuals were able to sue other for polluting. You may, of course, thank politics (and a government already attempting to attack property) for this: .... For if some of the modern pollutants have only recently become known, factory smoke and many of its bad effects have been known ever since the Industrial Revolution, known to the extent that the American courts, during the late -- and as far back as the early -- nineteenth century made the deliberate decision to allow property rights to be violated by industrial smoke. To do so, the courts had to -- and did -- systematically change and weaken the defenses of property right embedded in Anglo-Saxon common law. Before the mid and late nineteenth century, any injurious air pollution was considered a tort, a nuisance against which the victim could sue for damages and against which he could take out an injunction to cease and desist from any further invasion of property his property rights. [ Murray Rothbard, "For a New Liberty", pg 257.] >> 4. Power corrupts, either by attrition (the people with power become >> corrupt) or by attraction (corrupt people attempt to gain that >> power). > > True, but the problem is, what system is least corruptable? In a > system where the government didn't have most of the power then > a few strong individuals would eventually get it all, and they > would probably be more corruptable than the government we have now. No, Wayne. (I note in passing your curious phrase: "where the government didn't have most of the power") In a system where the government cannot be used by the rich to keep the poor from becoming rich, economic power tends to spread out. I'd love to hear the basis you have for believing that a few strong individuals would get it all. > >> 6. In a free market, only transactions desired by both parties to the >> transaction will take place. (This is a surprisingly deep concept, >> consider that it means that the whole structure of a free market will >> be determined, not by ideals, or designs of what people should be like, >> but what people ARE like -- what they desire and what they produce). > > That doesn't necessarily mean that a completely free market > will work very well. Look at what happened in the late 19th and > early 20th centuries, when markets simply became too big for > complete freedom to be a viable policy. There were massive > depressions and crashes, because of the lack of control of the > economy by the government. (I shouldn't talk about economics > though, because I really don't understand it...) You shouldn't talk about history, either, if you don't understand it, or even have a handle on it: The "massive" depressions you speak of were quite mild compared to the great depression of 1929, were they not? I suppose you think the great depression the result of "unbridled capitalism"? The result perhaps (dripping sarcasm, here) of "the lack of control of the economy by the government"? A (not very) few words by Milton & Rose Friedman ("Free to Choose", chapter 3) on the subject: How can a panic be stopped once it is under way, or better yet, how can it be prevented from starting? One way to stop a panic is the method adopted in 1907: a concerted restriction of payments by the banks..... After the war the [Federal Reserve] System continued to increase the quantity of money rapidly.... Belatedly the system discovered its mistake .... plunging the country into the sharp but short depression of 1920-21..... These depressing effects of the stock market crash were strongly reinforced by the subsequent behavior of the Federal Reserve System.... The combined effect of the aftermath of the stock market crash and the slow decline in the quantity of money during 1930 was a rather severe recession. Even if the recession had come to an end in late 1930 or early 1931 as it might well have done if a monetary collapse had not occurred, it would have ranked as one of the most severe recessions on record. But the worst was yet to come.... [ discussion here of the Fed allowing the "Bank of the United States", a private bank in New York owned by Jews, to fail] Had the federal Reserve System never been established and had a similar series of runs started, there is little doubt that the same measures would have been taken as in 1907 -- a restriction of payments. That would have been more drastic than what actually occurred in the final months of 1930. However, by preventing the draining of reserves from good banks, restriction would almost certainly have prevented the subsequent series of bank failures in 1931, 1932, and 1933, just as restriction in 1907 quickly halted bank failures then. Indeed, the Bank of the United States itself might have been able to reopen, as the Knickerbocker Trust Company had in 1908. The panic over, confidence restored, economic recovery would have very likely have begun in 1931, just as it had in early 1908. [Description here of other, repeated weird things the Fed did to the money supply in the face of later banking crises in the '30s. The zigged, repeatedly, when they should have zagged]. One ironic result of the perverse monetary policy of the Federal Reserved board.... was a complete victory for the Board against both New York and the other Federal Reserve Banks in the struggle for power. The myth that private enterprise, including the private banking system, had failed and that government needed more power to counteract the alleged inherent instability of the free market, meant that the system's failure produced a political environment favorable to giving the Board a greater control over the regional banks. >> Given that a government does exist, if it wields power it will become corrupt. >> Unlike (say) a corrupt insurance corporation, it will not be destroyed by >> market competition with its (presumably less corrupt) competitors. >> Once corrupt, it will grow, if it can, in order to extend its power. > > The sort of corruption that occurs in private enterprise is not > the sort that makes them less competitive, it is things like > bombing their competitors and establishing monopolies, which > makes them more competitive. This is MOST interesting. The notion that government is the only way to prevent bombings is one that I suggest you argue with Pinkerton. As for "establishing monopolies", this is an interesting point, handled below. >> There are equilibrium forces, in a republic -- the government dare not >> offend enough to lose the popular vote. In a totalitarian society, it >> must avoid revolution. These strictures are so much less rigorous than >> the market forces that dictate moral behavior there that they allow for >> free play by the power-hungry, compared to what their scope would be in >> a private firm. > > What do you mean? I don't see how that follows. Why should a lack > of power hungry individuals in a private firm make it more > likely to succeed? > The individuals may be as power-hungry as they like, but as long as they must CONVINCE people to deal with them without the use of force or fraud, the power hungry remain hungry. Once in a government, particularly in the taxing part of the government, the power-hungry may act out their little desires on the heads of the people being taxed. American Express executives, for example, must be far more restrained in how they treat even the worst deadbeats. American Express can be sued for damages -- the government, except if it wants to be sued, may not be sued. >> Governments will claim to be doing what they do for the good of the people. >> The problem is that governments understand that good less well than the people >> involved. A truly beneficent government would be economically redundant >> (the market already assures that mutually agreeable trades will happen) >> and depending on what power the government owned, it would become a >> festering roost for the power-hungry (those who could not become powerful >> in a market because they don't serve human desires could become powerful >> in a government because they may oppress). > > In a free market, things aren't always as idyllic as you suppose. I do not suppose them to be idyllic -- merely free. > You can make an awful lot more money in the private sector than > in government, Not so. One makes the most money being closely associated with the government, though not on the government payroll, I admit: The largest owners of land were the emperors, the relatives of emperors, and the intimate associates of emperors. Livia, wife of Augustus and mother of Tiberius, became the largest property holder in the Roman Empire. It is said that in terms of acreage owned, she was the largest private landowner in the history of the world. [ Max Shapiro, "The Penniless Billionaires" pg 50] A little more recently, Hugo Stinnes assembled the largest industrial conglomerate in history. He did it with the collusion of the 1920's German government, which supplied him with low-interest loans (actually, its more complex than that, but it's what happened) during a period of hyperinflation. In the last nine months of 1923, the Stinnes concern made a PROFIT of over 428 QUADRILLION marks. His PERSONAL estate was estimated to be over $1 billion in 1923 (about 4 octillion marks). He was a member of the Reichstag. > In a completely > free market, life would be nasty, brutish, and short You're confusing "state of nature" with "free market". > (except > for the most ruthless, who establish monopolies and get incredibly > rich). Now this is a very often held, but quite puzzling idea. Certainly if one COULD establish a monopoly, one would. BUT -- find one. One NOT backed by government, regulated by government, encouraged by government. One that stays around for a long time. Let me know if you find one. I'm still looking. In the meantime, concede the monopoly point -- there's almost no indication that they are stable short of government intervention. For backing, see "Machinery of Freedom", by David Friedman. I'm also trying to get hold of a book called "Uncle Sam the Monopoly Man", but I haven't read it. To anticipate you: The phone company is not a natural monopoly, and was facing severe competition when it formed (you'll find reference for this in a Time magazine article written about the Bell breakup at about the time the breakup took effect).