Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: $Revision: 1.6.2.16 $; site inmet.UUCP Path: utzoo!linus!philabs!cmcl2!harvard!think!inmet!nrh From: nrh@inmet.UUCP Newsgroups: net.politics.theory Subject: Re: Re: Re: Newsflash! [JoSH on Socialis Message-ID: <28200160@inmet.UUCP> Date: Tue, 8-Oct-85 15:38:00 EDT Article-I.D.: inmet.28200160 Posted: Tue Oct 8 15:38:00 1985 Date-Received: Sat, 12-Oct-85 05:39:16 EDT References: <876@water.UUCP> Lines: 330 Nf-ID: #R:water:-87600:inmet:28200160:000:16021 Nf-From: inmet!nrh Oct 8 15:38:00 1985 >/* Written 12:24 pm Oct 2, 1985 by lkk@teddy in inmet:net.politics.t */ >In article <28200134@inmet.UUCP> nrh@inmet.UUCP writes: >> >>>/* Written 5:14 pm Sep 26, 1985 by lkk@teddy in inmet:net.politics.t */ >>>In article <28200103@inmet.UUCP> nrh@inmet.UUCP writes: > Uh oh. Maybe I'd better post it again. I claimed: >>>Whoa! Let's have some historical examples please, of a government that >>>CREATED wealth. Granted that governments seldom actually started out >>>to destroy wealth, I've never heard of one that actually engaged in >>>NET creation of wealth (such a government would not need to tax people, >>>as it would turn a profit). Localized increase of wealth is no trick at >>>all for a government, but to call this "creation of wealth" >>>amounts to assuming that the money in the tax-collector's coffers >>>just "appears from nowhere". > > and highways> > > >>I think you'd better go on. I asked for an example of a government >>that created wealth. In the list above, *NO* governments appear, and >>as I understand it, the government behind them all had to tax people >>to support its enterprises. If you think this is not an important >>distinction, I suggest you give me ALL of your money, so that I may go >>on a wild trip around the world. I will then claim to have done great >>things with your money, and should anyone argue that you might've done >>greater things, I'll say: "Oh, look at him, he just goes to soup >>kitchens while I go to Paris. What proof is there that he would have >>done anything important had he been allowed to keep his own money?". > > >OK, this is getting totally rediculous. The fact of the matter is that >there are such things as positive externalities. Your spending my >money in some arbitrary fashion does not count as one of them. If I understand you correctly, you're saying that "Your spending my money in some arbitrary fashion does not count as dealing with positive externalities, hence is not acceptable (unlike government spending, which is acceptable because it IS dealing with externalities)". Well, an interesting point. Unfortunately for you, the government has no good way of limiting itself to doing good things. I invite you, for example, to show me how the Viet-Nam war was a positive externality opportunity, or how McCarthyism benefited us all in ways we could not have been made to pay for. In short, I invite you to show that government is a NET good (a tough task). To argue that it, unlike the market, can take advantage of positive externality situations, or deal properly with negative externality ones, is not enough. The fact is that government does NOT limit itself to this, and does many bad things as well. This is not nit-picking. To argue that the government COULD do things well, if only it were (say) honest, or the way you want, is to ignore the cruel fact that one cannot simply put any conceivable dynamic (as David Friedman puts it) into a system. If, for example, the government was really interested in dealing with positive externalities, we'd see Clarke taxes everywhere, but I certainly haven't heard of any.... >>After all, *I*'ve spent the money in showy, flashy ways, perhaps used >>it to get in good with some corrupt official, but it would be >>ludicrous to claim that I'd "made" money -- I had to take it all from >>you. > >Your conception of wealth (value, money) does not make any sense. >If I produce something of value, but get paid for it, does that mean I didn't >create any wealth, since I merely transferred the salary I got paid into >the product I made? Of course not. Similarly, if the govt. gets paid (thru >taxes) for the products it creates (thru organizing people into large projects >for instance), it is still creating wealth. Nope! If I pay you for something freely, and you build it, it means that each of us valued the thing he got (in my case the widget, in yours the salary) MORE than what he had (in my case the money, in your case the time to build the widget). Free commerce is thus a positive-sum game; we both have more at the end than we had, and we BOTH think so. Taxation is not like that. The government does not, every year, offer me some range of services in response to my offer of money. It provides those services (poorly) willy-nilly, and demands the money upon threat of imprisonment. For those who like it, fine, but I'm not one of them, hence for me (and for everyone who thinks the government *ISN'T* worth its cost) this is not obviously a positive sum game. Certainly it *could* be, but short of the Clarke-tax mechanism (which you will note is not widespread) there's no basis for thinking that the government is increasing NET public good. >>Remember, we've no way NOW of knowing what would have been >>done with the money left in private hands, except that it would have >>been employed according to what those people thought of as their >>best choices. > >Which, as in any tragedy of the commons situation, would not have been >the best macro choice. That's quite true. I'm most intrigued to hear this. Do you have some notion that the government IS responding well to tragedy of the commons? A revenue bill was making its way through congress with a rider attached (pardon me if I've got the terminology wrong) that in some way condemns Satanism. Is this dealing properly with tragedy of the commons? How about the Star Wars defense? Is that dealing properly with some economic externality? >>People interested in this question should read "What is Seen and >>What is Not Seen", by Frederic Bastiat (an essay about 50 pages long) >>or "Economics in One Lesson", by Henry Hazlitt. >> >>I suggest that the idea of "creation" of wealth be treated as follows: >>If I steal $1000 of your money, and make a nickel on it (say I bet >>at 1 to 20,000 odds that the sun will rise tomorrow", I've >>made 5 cents, but you've lost (say) 30 cents interest on that >>money, so in fact the money has earned $0.25 LESS than >>it would have. I have thus LOST money, because even if I give you >>ALL of it back, you've $0.25 less than you did have. If I operate >>like a government, I'll probably bill you for the "service" I've >>performed, my burglar tools, and so forth, so you've probably >>lost more. > >This assumes that the return on investment in govt. is only 5 cents. >I'd say its quite a bit higher. > And there it is, ladies and gentlemen. Larry Kolodney "says" it's higher. Of course, in the face of the quickly-shrinking deficit, we should believe him. In the light of the strict "spend it all on positive externality opportunities" philosophy of Congress, we should believe him. In the light of the near-universal use of Clarke taxes, we should believe him. Pfui! >>By the way, private space programs exist (although NASA dislikes them) >>private nuclear research would be something I suspect you'd make illegal, >>Harvard, MIT, and UCB accept money from the State, but could hardly be >>termed (last I heard) wealth creators. My understanding was that >>colleges depended (2/3'rds on average) on the Alum contributions. > >Totally irrelevant information. Private space programs exist by parasitical >use of technology developed by NASA. Not relevant. There's no reason to think that private space programs NEEDED NASA to develop the technology on their own. Left to their own devices, private industry would surely have developed technology for dealing with the space environment, just as private industry developed techniques for dealing with the ocean environment. To argue that ONLY government could do it because government did it FIRST is rather silly. >Forget about ACCEPTING money from the state Harvard, MIT and UCB were created >by the state. MIT is land grant, Harvard was created by the Mass. Bay Colony >govt., UCB is owned and run by the state. > >I don't know about the others, but MIT total budget is around $600 million, of >which almost all comes from government funding. Perhaps they rely on alumni >contributions for 2/3 of their educational costs, but those are relatively >small compared to research. I called MIT to verify this interesting statistic. Here's a rough breakdown of the MIT FY 85 projections. $717.1 million for FYI 1985 cost (how much it costs to run things) $710.3 million rev (money coming in) Of that last figure: $102.1 million tuition $97.9 investment income, gifts, funds, etc. $25.9 million, dining, dorms, etc. 485.4 million (sponsored reasearch, not all gov't) Of that 485.4 million: $225 million on campus research. 80% of which is government sponsored (DOE 55 million DO Heath & human services, 40 million DOD 38 million NSF 34 million industry 33.5 million) 260 million Lincoln Labs (off campus) 100% government spending The source was Mr. Charley Ball, Asst' director of the MIT news office, Lincoln labs is run by MIT under contract from the government, but is not a "part" of MIT. It's not on campus, as Mr. Ball puts it. Including Lincoln Labs, we have: (0.8 * 225 + 260)/717.1 = 62% paid for by the Feds. Excluding Lincoln Labs (after all, that money is not going to support MIT proper but Lincoln Labs, a research establishment of the government) we have: 225/(717.1 - 260) = 49.2% This will certainly make me view with great interest future claims by Larry that this or that is "almost all" supported by government. > >Not to mention GSL, and Pell grants, and ROTC scholarships. > Agreed, the government does these things -- but in the "I take your money and do what I want" scenario, I can also give some of your money to freezing little match girls, or use it to send friends of mine to schools. Just because I do SOME good things with your money doesn't excuse the fact that I stole it. >>>Of course the money doesn't appear from nowhere, it comes from >>>govt. printing presses!! (This isn't as facetious as it sounds. >>>The entire economy, without which the concept of wealth would be meaningless. >>>Is based on a governmentally created and controlled system of commerce.) >> >>Governmentally Created? I find that MOST difficult to believe. What >>records do you have to substantiate that government created commerce, >>rather than distorting what was there? > >Well, I can point to the fact that the grandaddy of all "free-market" systems, >in 19th century England, was created by the govt. Before the turn of the >19th century, England was still a feudal society. Most of the population lived >on Manors, where they worked the land owned by the Lord. > >The Lords discovered that it was more profitable to use this land for grazing >sheep, which could be used in the growing wool industry. So they had a law >passed, "The Enclosure Acts", which kicked all of the peasantry off the feudal >manors, and into the city, where they provided an abundant labor force for the >growing class of factory owners. THIS is what you're calling the "grandaddy of all 'free-market' systems" >By almost any comparison, life in the city was >much worse than life on the manor. Excuse me, but I'd like a little more evidence, please, that the folks at the manor had to be forced to go to the city. The way *I* heard it was that they went to the city because of superior opportunities there. Of course, one may argue that certain aspects of life were better on the manor, but it flies in the face of the fact that the people from the farms evaluated things differently (else they'd have stayed on the manors). Of course if the legitimate OWNERS of the manors kicked them off, then where's your kick? If I decide that "by almost any comparison", it's more pleasant to enslave you and live off your wages, you can legitimately argue that it is not the NUMBER of possible comparisons that matters, but their relative validity. >This move heralded the start of the rise of brittish "free-market" capitalism, >although from this example, we can see that there was nothing free market about >it. > Huh? That it "heralded the start" says NOTHING about its being a necessary part, or a consistent part of a later laissez-faire economy. Economic prosperity in Germany may have been said to "herald the start" of German imperialism in WWII, but economic prosperity is hardly a road to or determinant of war. >POINT: No economic system has ever existed in a vacuum. It is always the >result of certain power relations within a society. POINT: I'm not contesting that. An economic system must involve people, and people must have power relations. Your statement is (so far) nugatory. >There has never in history been anything like your mythical free market. Now, Larry, didn't you just get through implying that Great Briton WAS like this (although you had hold of the wrong end of things)? >To create one, using the power of the state, would be just as arbitrary and >coercive and creating any other system. Tsk! Not so. To have a state which merely refrains from coercion except to prevent coercion is hardly as coercive as having a state that coerces regularly and arbitrarily. The US constitution places limits on the government's power to coerce (not very strong limits, but...) and hence is a less coercive document (when instituted) than, say, the Code Napoleon. >The relations of power in society >today have an historical basis in govt. interference. To withdraw the role of >the govt. now would simply institutionalize certain arbitrary inequalities that >exist today. Excuse me, but I doubt if that's true. It amounts to an acceptance of the notion that only the rich get richer, and that they don't sometimes get poorer. Simply not true. > In particular, the use of >>non-government-created money (such as gold) predates official money, >>with (so far as I know) the first government inflation being that of >>ancient Rome. > >Official money does not a govt. controlled economy make. (You seem to have >this fetish with money). It does if it's enforced by the state. In France, at one point, there was a death penalty for asking if you were to be paid in Silver or in paper money. If the state may issue unlimited paper money, and execute people for not taking it (for even ASKING about it) then you have a government controlled economy in the same way that if I can kill you for publishing something I don't like, we would then have a "Nat Howard" controlled press. >How about govt. controlled agriculture in Egypt in >5000BC. How 'bout those Red Sox? (What you hear me saying is that you're wandering). >In fact what differentiated "civilizations", in the early history of >man, from mere roaming nomads, was the use of some "authority" to control >agriculture (and thus commerce). True, but doesn't for a moment implied that government created commerce. It would be like saying that "Government invented hatred", or "Government created the you-cut-and-I'll-choose trick", or "Government created taking turns". Government may abet these things, but it's rather silly to think that government CREATED them. >>Government "controlled"? Why yes, that's quite true, but it doesn't >>explain why the Chinese starvation dropped when their government >>began allowing folks to sell crops privately. In short, you've confused >>"controlled", with "aided". > > >Non Sequitor (but what else is new). It's hardly a non sequitur. Your point was that government aids commerce, that government is RESPONSIBLE for commerce. It would follow that greater government involvement would mean better commerce, hence (and I'm assuming we agree that better commerce means more prosperity) more prosperity. In China, it didn't happen this way, despite a very large degree of government control over commerce. In fact, the degree of prosperity went up when the Chinese government RELAXED its control, so I hand you a counterexample, not a non sequitur.