Capitalism is only harmful when bad people abuse it (and other conservative myths)

"Capitalism made America great – free markets, innovation, hard work – the building blocks of the American Dream. But in the wrong hands some of those dreams can turn into nightmares."

‘When Mitt Romney Came to Town’

Promoted by Winning Our Future, a pro-Gingrich super PAC, ‘When Mitt Romney Came to Town‘ features a series of poignant interviews with workers who lost their jobs, houses and health insurance coverage when the businesses they worked for were restructured or went under.

This misleading video illustrates what’s wrong with American conservatism today — an unwillingness to talk honestly about how free markets drive technological change and generate wealth. The economist Joseph Schumpeter called it ‘creative destruction’. Economies grow as new technologies replace older ones and industries and jobs move to where work can be done most efficiently. As W. Michael Cox and Richard Alm write:

A society cannot reap the rewards of creative destruction without accepting that some individuals might be worse off, not just in the short term, but perhaps forever. At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress.

Too many conservatives shy away from this reality. Videos like this encourage the idea that business failures and the unemployment are the result of unethical business practices rather than part of the normal functioning of a capitalist economy. And when joblessness and the misery it causes can’t be blamed on people like Romney, conservatives pretend that this is the result of some personal vice like laziness.

For these conservatives, there’s no need for a national, government supported health insurance system. No need for more investment in education and training, and no need for income support programs to for people who can’t find jobs. All that’s needed is personal responsibility and the promotion of virtue.

In reality people who’ve worked hard and done everything that was expected of them can find themselves on the trash heap. If the factory you work for produces something consumers are no longer willing to pay for, you’re probably going to lose your job. Managers can’t use shareholder’s money to run the business as a charity or a private welfare state if it doesn’t help the business turn a profit.

All of the misery this video blames on Mitt Romney is a normal part of how free markets work. But that doesn’t mean there’s nothing Americans can do about it. Instead of using tax payers’ money to prop up failing businesses, governments can let uncompetitive businesses fail. Instead of trying to generate jobs by picking winners, governments can leave the selection process to the market. Freeing markets will accelerate the process of creative destruction and create wealth. But that only solves half the problem.

To deal with the fallout of destruction, governments can protect individuals rather than corporations. In the US today, one of the reason’s workers and their families fear job loss is because they risk losing their health insurance. If you have a chronically ill child, this can be devastating. The lack of a national system of health insurance in the US isn’t just bad for workers. In some cases it’s been bad for corporations as well. One of the reasons America’s big car makers struggled with the global financial crisis was their enormous health insurance and pension obligations.

These obligations are often blamed on unions. But as Malcolm Gladwell explains, employer funded insurance wasn’t the unions’ first choice. According to Gladwell union leaders like Walter Reuther understood:

… that in the free-market system it makes little sense for the burdens of insurance to be borne by one company. If the risks of providing for health care and old-age pensions are shared by all of us, then companies can succeed or fail based on what they do and not on the number of their retirees.

If conservatives would confront the reality of markets honestly, then Americans could have a serious debate about how to protect individuals and families while allowing markets to operate as efficiently as possible. It’s a debate that might include issues like health insurance, education, social security and social assistance. And it would mean giving up the pretense that tax cuts and deregulation are the solution to everything.

219 thoughts on “Capitalism is only harmful when bad people abuse it (and other conservative myths)

  1. My theory is that Americans’ naive faith in capitalism and free markets is in keeping with their idealism about most things. It’s over-reach. Markets do a lot of things very well and in many cases deliver better results more efficiently than could ever be achieved via government.

    What markets don’t do well is in protecting the stability of the whole system and delivering equity. As we’ve seen in the financial crisis, they tend to generate excessive leverage and excessive risk taking. And worst of all, losses are socialised and profits privatised.

    The argument is over striking the right balance between encouraging free market forces and fostering public intervention to deliver stability, a measure of equity consistent with maintaining the social contract and a social safety net.

    Markets are tools, they are not an end in themselves, which is the idea projected by the uber-capitalists and libertarians – who like the Marxists have fallen in love with their ideology a little too much.

    There’s a nice piece on this published this weekend at Project Syndicate and written by Professor Michael Spence of New York’s Stern School.

    http://www.project-syndicate.org/commentary/spence31/English

  2. Tel, usually the ones whose business have failed. Libertarians on the way up, socialists on the way down (though they would never admit to the latter)

  3. “Too many conservatives shy away from this reality.”

    Really Don? Have you read any of the criticisms by other conservatives from the WSJ on down.

    So far there hasn’t been a great deal of agreement in conservative land supporting Gingrich’s attempt in trying to poison the well.

    Perhaps you can provide some evidence that Gingrich’s comments are widely supported in conservative circles.

    “Videos like this encourage the idea that business failures and the unemployment are the result of unethical business practices rather than part of the normal functioning of a capitalist economy. And when joblessness and the misery it causes can’t be blamed on people like Romney, conservatives pretend that this is the result of some personal vice like laziness.”

    Really? You think it would encourage indeps and conservatives to believe this tripe? Don’t thinks so, which is why I think Gingrich’s polls have been collapsing since.

    “For these conservatives, there’s no need for a national, government supported health insurance system. No need for more investment in education and training, and no need for income support programs to for people who can’t find jobs. All that’s needed is personal responsibility and the promotion of virtue.”

    I’m not that’s true. Each and every single Conservative candidate has a policy with regards to health insurance. You obviously consider a private model, not tied to a person’s job, as not being a decent health insurance policy stance though, but it is i think and it also aligns with free market principles. As for job training, the US has no centralized education policy, which even the Economist considered a few years ago in one of their specials, was perhaps the best non-policy policy of all.

    Not all US higher ed etc. is about Harvard or Yale, Don. There are countless local collages and training schools. Suggesting there is a lack of this form of ed is truly ignorant about the US. In fact, if i recall, that Economist article talked about how Americans seem to be by far the most active in adult ed. of any nation they researched.

    “In reality people who’ve worked hard and done everything that was expected of them can find themselves on the trash heap.”

    Trash heap? Really dramatic, no? I don’t really thinks that’s the case.

    “If the factory you work for produces something consumers are no longer willing to pay for, you’re probably going to lose your job. Managers can’t use shareholder’s money to run the business as a charity or a private welfare state if it doesn’t help the business turn a profit.”

    True. This is nothing new by the way. People like Gingrich ought to go back and read a speech Bill Clinton gave before the 92 election, which in some ways some pundits believe won it for him. He talked to a group of workers telling them he could not guarantee jobs but he would promise them help with retraining and tax credits for moving expenses etc. This is nothing new in other words.

    ” All of the misery this video blames on Mitt Romney is a normal part of how free markets work. But that doesn’t mean there’s nothing Americans can do about it. Instead of using tax payers’ money to prop up failing businesses, governments can let uncompetitive businesses fail. Instead of trying to generate jobs by picking winners, governments can leave the selection process to the market. Freeing markets will accelerate the process of creative destruction and create wealth.”

    Possibly one of the most perfect paras ever written.

    “To deal with the fallout of destruction, governments can protect individuals rather than corporations. In the US today, one of the reason’s workers and their families fear job loss is because they risk losing their health insurance.”

    This is somewhat true, but not completely. Americans have several choices when they lose their jobs. If they can afford it, they can access COBRA which means they can continue to pay the health insurance premium they carried with their jobs for 18 months after. If they can’t afford it, they then go on medicare or medicaid, which is the US government plan for people below certain income levels.

    “If you have a chronically ill child, this can be devastating. The lack of a national system of health insurance in the US isn’t just bad for workers. In some cases it’s been bad for corporations as well. One of the reasons America’s big car makers struggled with the global financial crisis was their enormous health insurance and pension obligations.”

    Then blame the current system, Don. This is the system where both Bush’s and various previous and GOP candidates have tried to change to a private system not tied to a job and in the past they have been crucified by the Dems. All present candidates have a policy to privatize the system in some form or another. However I presume you’re really pushing for a socialized system, right?

    “These obligations are often blamed on unions. But as Malcolm Gladwell explains, employer funded insurance wasn’t the unions’ first choice. According to Gladwell union leaders like Walter Reuther understood:

    … that in the free-market system it makes little sense for the burdens of insurance to be borne by one company. If the risks of providing for health care and old-age pensions are shared by all of us, then companies can succeed or fail based on what they do and not on the number of their retirees.”

    Oh really? Our system is partially privatized and the privatized version seems to work quite well. I also suggest you take a look at Singapore’s private system which is excellent and cheap.

    The reason the US system doesn’t work in its current format is that no-one gives a shit about cost containment and there are heavy duty mandates from state governments.

    I have a great link on another computer to an economist’s paper and will link to it in a few days when I get back home.

    I don’t understand why you think a market system works for pretty much everything but it stops at the hospital of doctor’s door. I think the Soviet model doesn’t work. We can pretend it does, but even in Australia it’s a horrible model.

    “If conservatives would confront the reality of markets honestly, then Americans could have a serious debate about how to protect individuals and families while allowing markets to operate as efficiently as possible.”

    Yes they are serious. The Ryan plan is a good one and the various candidates have policies that deal directly with what you’re saying, so i suggest you go to their websites and see what they say.

    ” It’s a debate that might include issues like health insurance, education, social security and social assistance.”

    Yep, they all pretty much deal with these issues if you took the time and read their policy statements. You may not like their solutions as they aren’t soviet models, but they are pretty good if you believe in the market system.

    Other than Paul, there is no candidate talking about reducing tax benefits or loans for job retraining, so I can’t imagine what you’re suggesting here.

    “And it would mean giving up the pretense that tax cuts and deregulation are the solution to everything.’

    Perhaps not tax cuts just yet if you don’t want to, but why not have a serious discussion about the 600 odd new regulations imposed by this current administration.

  4. And Don

    I have a kid currently studying /living in the US. The portion of the health insurance premium I paid for the year is around 1600 bucks. That offers a system similar to ours, which is the kid has to see a GP type before going to a specialist and open entry to any ER in the NYC area. Pharma is also covered. I don’t call it an expensive premium.

  5. Oh really? Our system is partially privatized and the privatized version seems to work quite well. I also suggest you take a look at Singapore’s private system which is excellent and cheap.

    The reason the US system doesn’t work in its current format is that no-one gives a shit about cost containment and there are heavy duty mandates from state governments.

    Our system has some very strange things in it, although I agree that it does mostly work (where “mostly” is subjective). For example, if you walk into a typical radiology practice, and ask to see their rate card, you will note that the Medicare rate is the baseline and the Worker’s Comp rate is between 2x and 3x more expensive than the Medicare baseline. Generally the explanation is that Worker’s Comp imposes a lot of paperwork on the practice which justifies the higher costs, but although I find paperwork a PITA myself, I rather suspect that really companies are being used to cross-subsidise the public health system. Insurance companies are a soft target when it comes to inflated bills, especially then those insurance companies can kick the costs onto someone who has no choice but to pay.

    This of course generates a hidden cost for Australian competitiveness and ultimately destroys jobs, but in a way that is very difficult to trace back to any cause (and who cares anyhow while we have mining and agriculture to fall back on).

  6. “Tel, usually the ones whose business have failed. Libertarians on the way up, socialists on the way down (though they would never admit to the latter)”

    Mr Denmore, you realize that your argument is logically weak. If a person no longer believes in a set of ideological positions that made him or her libertarian then they are no longer libertarian.

  7. JC, my experience is if a person no
    longer believes in a set of
    ideological positions, it is
    usually because reality intervened.

  8. Mel, I’m not sure why you linked to that dross on this thread? Can you elaborate?

    Don, according to this when’s Economist Romney devotes ‘several pages of his book, No Apology’, to creative destruction.

    I suspect that you have ruined an otherwise sensible point by misguidedly trying to conflate your straw man with Romney.

  9. 52% of republicans believe in a literal ‘creation’.

    Interestingly 22% of postgraduates also believe in a literal ‘creation’.

  10. Denmore

    You seem to want to believe the worst of your ideological opponents…. that they somehow don’t really believe what they say they believe.

    You’d be on much sounder footing if you were able to demonstrate the weaknesses in their ideological positions rather than thinking they’re always lying. Yes, Denmore there actually are some people that really do believe in the soundness of libertarian principles and will go to the grave believing this.

    The best example would be Milt Friedman. Can you recall any debates he ever lost as I don’t?

  11. John, if you believe in the book or mormon or Jesus or Allah or whatever then you are already capable of believing anything, so creationism is perhaps not such a biggie. But what does that tell you about this debate anyway?

    I think people too quickly conflate conservatives withpeople who believe in the virtues of classical liberalism, which these days is a pretty radical position. A true conservative is a church going, relatively prudish, social democrat and therefore likely to swallow any old mercantilist hogwash.

  12. JC, I believe you believe what you say. I just don’t agree with you. I’m not an expert on ‘Milt’ Friedman’s debates, though no doubt you have them all on DVD and watch them regularly at home while eating popcorn.

  13. No, don’t have them on DVD or anything like that Denmore.

    Tell us, you still believe we will achieve more democracy by killing pro-right media? Lol.

    And by the way, your first comment is primary school equivalent nonsensical crap I’d expect at Green party meetings…. I presume you have best of Bob Brown and Christine Milne on HDDvd, yea?

  14. pedro
    Many Americans believe that the world was made 45000 years ago because that is what they have been taught to believe . ( BTW evolution is not a problem for mainstream Christians and Jews at all.)
    The American propaganda machine for creationism is extremely well practiced at bullshit, smoke and mirrors, full of self righteous indignity and it essentially serves exactly the same sectional group referred to above as “American conservationism”

  15. John:

    You seem obsessed with the evolution thingi and your anti-Americanism sounds a little Australian “Bumpkinish”. Please note that it’s been around for the past 40 odd years and never seemed to have got out of flaired jeans and kaftan tops.

    I’m really curious though. If a person believes in a 6000 year old earth, how does that really impact you directly in any way?

    And can you please explain how you feel about the current president spending 20 years kneeling in Rev Wright’s church listening to sermons that Jews are pigs and that the White man introduced AIDS to American blacks. This same “Rev”. officiated at the president’s wedding and at one time suggested he was like an uncle to him. How’s that grab you eggsactly?

  16. Anti American ? Most of the ones I know are realy good people ,60% do not believe “in a 6000 year old earth,” however they have neither compulsory voting nor preferential voting.

    In creationism(anti-science/anti-gays and anti-Jews) they have a very professional and ruthless lobby group that is not the least troubled by reality.
    And because of ‘Creationist’ dominance of the biggest single purchaser of school text books , the Texas education system, they have enormous influence over the content of ALL American textbooks .

    As for
    “And can you please explain how you feel about the current president spending 20 years kneeling in Rev Wright’s church listening to sermons that Jews are pigs and that the White man introduced AIDS to American blacks. This same “Rev”. officiated at the president’s wedding and at one time suggested he was like an uncle to him. How’s that grab you eggsactly?”

    Give us a break.

  17. “Give us a break.”

    Ummm Why? Are you in denialist trance about where Obama spent Sunday mornings?

    “Anti American ? Most of the ones I know are realy good people ,60% do not believe “in a 6000 year old earth,” however they have neither compulsory voting nor preferential voting.”

    Frankly I’m at a loss in trying to understand what you’re saying here John. What has the US voting system have to do with creationism and why does it scare you?, as you seem really obsessed by it.

    Personally I’m more concerned with throwing $10 billion into Bob’s bank to finance generalized looting by rent seekers. Or in the US case calling the $800 billion a wild success.

    “In creationism(anti-science/anti-gays and anti-Jews) they have a very professional and ruthless lobby group that is not the least troubled by reality.
    And because of ‘Creationist’ dominance of the biggest single purchaser of school text books , the Texas education system, they have enormous influence over the content of ALL American textbooks .”

    It’s Frightening. It sounds like that NSW science text book discussing aboriginal science. Anyways, I’m not sure you’re right about your claim. I thought the Texas Supreme court struck down teaching creationism as science several years ago, no?

  18. John, the post was about conservatives being notso hotso on economic theory. You suggested that could be explained cause they were dumb creationists. Lots of Australian atheists are just has hopeless on economic theory and whinge just as much about the creative destruction that actually happens. Our latest car subsidies weren’t suggested by the Texas text book approval board.

    I’m with you in thinking that the religious believe stupid things, but how is that relevant to the post?

  19. Milton was the one who didn’t want to license doctors because the market would take care of it. “Sorry about taking your kidney by mistake, Mr Jones. Better luck next time.”

  20. It’s failed, Mel?

    Are you able to explain how without using a link?

    But here I’ll help.

    Monetarism has many facets and the part you must have read about briefly somewhere is about quantitative targeting to some tranche of the money supply.

    I suggest you explain your reservations to Ben Bernanke who has followed Friedman’s lessons on QE a couple of times since the GFC with some success and confounding the naysayers who suggested it would lead straight an inflationary spiral.

    In any event , monetarism seems to be making a comeback with the Economist suggesting the Fed ought to target Nominal GDP, which is straight out of Milt’s playbook.

    Sorry “champ” you’re wrong.

  21. Wrong thread, Mr Denmore, but don’t you think that if Doctors were completely unregulated various certification methods would have arisen? I.e. affiliation with specific hospitals, guilds, insurers or what have you?

    How dumb do lefties think that people are?

  22. Pedro I was just pointing to a general problem that is particularly easy to see in some parts of America ; A fixation on ‘theory” (in this case religious theory) over reality. As you say, It is not unique to American conservatives. Becoming stuck on theoretical representations of reality to the point that you violently reject nonconforming reality , is all to common.

    JC I am not Obama or the Rev Wright , personally Wright sounds like a very bad man but What has it got do with me? its like me implying that because ‘you’ are an Australian.Yes they cannot teach ‘creationism’, that’s why they came up with ‘creation science’. I do not know where the legal fight over that one is at. But they can and do wield influence what is Not in the texts.

  23. John

    Believing in creationism, especially the young earth theory is silly. However I’m not at all certain why you consider it damaging to anyone- even the people that believe in it.

    It wasn’t so long ago when all presidents were creationists of some sort or another and the country got on fine. A large number of Americans are religious and simply have faith that God created heaven and earth. It’s been around for a long time, this religion stuff and I personally am unfazed by it. I just don’t understand the knee jerk fascination by some Australians that seem obsessed by this. Why care?

    I also think you are mixing up your nouns. Other than young earthers, I would think creationism is based on faith rather than theory, no?

    In any event were moving away from the point of the thread. My point was that if you truly believe in free markets, you shouldn’t assume that guiding principle stops at the doctor’s door or the hospital. It even doesn’t end with retraining or unemployment benefits.

  24. JC @29:

    “I suggest you explain your reservations to Ben Bernanke who has followed Friedman’s lessons on QE a couple of times since the GFC with some success and confounding the naysayers who suggested it would lead straight an inflationary spiral.”

    The clowns at the Wall Street Journal have been warning of an inflation outbreak and some right wing economists in Australia, such as Sinclair Davidson, have aped these concerns. More capable economists, like the Keynesian Paul Krugman, correctly pointed out the inflation concern represented a fundamental failure to grasp the basics of macroeconomics. The Keynesians were right, as we now know.

    As to the Obama stimulus, most of the key Keynesian thinkers in the US said from the outset that the stimulus was not sufficient to pull the economy out of recession. Nonetheless, it ameliorated the recession for a while and obviously the cost of the stimulus was significantly offset by increased tax receipts and reduced transfer payments.

    It remains to be seen what, if anything, will pull the US out of recession, but it certainly will not be anything like the snake oil conjured up on the pages of the Wall Street Journal.

  25. Mel
    Actually the one capable and very competent economist on the neo-libertarian right who has been pushing NGDP targeting is Scott Sumner. In point of fact Krugman has been ambivalent at best about monetary policy preferring to spruik more fiscal spending. Like most Keynesians Krugman has had deep reservations monetary policy would work at zero bound, which is nonsense seeing the Fed is able to increase its balance sheet size without limit and thereby nudging NDGP higher.

    Having said that, I actually agree with you that the right has lost its bearings about monetary policy and some of these candidates have actually called for Bernanke’s firing. He’s a Republican appointed by a GOP prez for lords sake.

    There is some okish thinking behind their policy stance though, as it seems to hark back to the Austrian school, which favors liquidation of mal-investments. That’s a decent theory in my mind, however the US economy isn’t in that space… that will allow such a policy without outright depression, as the economy is perhaps too rigid and far too leveraged. It would cause an almighty thud, I believe.

    However lets get back to Friedman and your criticism of him. Bernanke is a Friedman disciple and is following Milt’s playbook almost to the letter. Perhaps not going far enough, but certainly in that direction.

    The US does has quantitative monetary policy in operation at this point in time with zero bound and QE. Milt, through Bernanke possibly is saving the US economy from depression.

    Well that’s what I think anyway. Having said that, I think the Right is perfectly correct with fiscal retrenchment with the debt level approaching 100%. I just wish they would get their monetary house in order though.

    Cemeteries are full of people that thought they were in-expendable, but in Milt’s case I really wish he lived forever as no one has replaced him as the glue that held all the disparate parts of the Right together.

  26. JC
    Believing in the young earth these days requires a hell of a lot more cognitive dissonance than it did in 1870. There are a lot of people in America who are well primed to believe the Merde that Newt is selling , no matter what the reality is.

    ‘mixing up the Nouns’ is what creation ‘science’ is aimed at. It is claimed to be a scientific theory and that it thus deserves equal time.

    As for “truly believe in free markets” what is the difference between that and a religious belief?

  27. “Believing in the young earth these days requires a hell of a lot more cognitive dissonance than it did in 1870.”

    You really think Presidents after 1870 weren’t creationists? Really?

    People believe in silly things but most are able to function in life. Lots of people believe in horoscopes for instance. Byron Bay is filled with alternative medicine bullshit.

    And some of us john, some of us really believe that Australia putting a high price on carbon emissions will induce China, India, the US and others to do so too. Hows that for dissonance?

    “There are a lot of people in America who are well primed to believe the Merde that Newt is selling , no matter what the reality is.”

    Newt isn’t my kinda candidate, but what’s he selling you have a problem with other than right wing policies? If it’s his recent criticism of Romney, I agree by the way. It’s crap and he’s poisoning the well.

    “‘mixing up the Nouns’ is what creation ‘science’ is aimed at. It is claimed to be a scientific theory and that it thus deserves equal time.”

    Well okay, that’s obviously bullshit, but why get so worked up about it?

    “As for “truly believe in free markets” what is the difference between that and a religious belief?”

    Okay, here’s an assignment for you, another one. Show me one economy that isn’t set up along liberal democratic lines that has done as well as the liberal democracies. One.

  28. JC
    “All of the misery this video blames on Mitt Romney is a normal part of how free markets work.”

    Of all the things you have to say is a pefect paragraph you chose this one. Although not stated the inferrence was about the tech company that fraud had occured by ratings agencies or banks lying about the viability of a company. This may or may not be true but if it is true then that is not normal free market unless you believe that telling lies is ok. Even Andrew Forrest got done for that in Australia.

    “that will allow such a policy without outright depression” You also have no idea what you are talking about with this one. The word depression was used up until the end of the Great Depression for any downturn in the economy the word since then has not been used, using recession instead so all you could be saying is that we may return to an older word.

    The health system in the US is not about the same as Aus it is rooted with about double the spending for a slightly lower outcome even spending more as a percentage of gdp on public health. http://data.worldbank.org/indicator/SH.XPD.PUBL.ZS http://data.worldbank.org/indicator/SH.XPD.PUBL.ZS

  29. “All of the misery this video blames on Mitt Romney is a normal part of how free markets work. But that doesn’t mean there’s nothing Americans can do about it. Instead of using tax payers’ money to prop up failing businesses, governments can let uncompetitive businesses fail. Instead of trying to generate jobs by picking winners, governments can leave the selection process to the market. Freeing markets will accelerate the process of creative destruction and create wealth.”

    Kelly,

    You posted a sentence that was part of the para. You left out the other parts for some reason.

    Regarding the rest of the comment, I have no idea what you’re talking about after reading it a few times. What are you trying to say here:

    “Although not stated the inferrence was about the tech company that fraud had occured by ratings agencies or banks lying about the viability of a company. This may or may not be true but if it is true then that is not normal free market unless you believe that telling lies is ok. Even Andrew Forrest got done for that in Australia.”

    Whatever about depression. I was inferring U6 in the high 20′s.
    I know you support Paul. I just think his monetary policy ideas would cause a depression. They’re silly.

    Yes, Kelly I know the US insurance system is rooted. I said that earlier. Obamcare doesn’t make it any better though.

  30. I didn’t have to put the rest of the paragraph because it said all. It was inferred that the good investment ratings given by the banks etc. and the prospectus were a known lie. If this was the case then it is not a part of the free market it is fraud (even if it can’t be proven in court).

    Although not in the video it appears Bain recieved public moneys

    “Mitt Romney says he saved Bain & Company, but he didn’t tell you that on the day he took over, he had his predecessor fire hundreds of employees, or that the way the company was rescued was with a federal bailout of $10 million,” notes the narrator in Sen. Kennedy’s unreleased ad as pictures of newspaper articles fill the screen. “He and others made $4 million in this deal which cost ordinary people $10 million.” http://www.thenewamerican.com/usnews/politics/10538-romneys-skeletons-his-bain-capital-received-millions-in-bailouts

    So I think the arguements for and against are not so simple as Romney is a capitalist. The capitalist system in the US and Australia to a lessor extent is corrupted and Bain for example may have taken advantage of the corruption. By corruption I mean it is crony capitalism not free market capitalism. Maybe the arguement should be is it ok to behave in a corrupt manner if that is how the system works and it is legal? I do think that if you have been corrupt even if it is legal it will be a major dissadvantage in an election campaign and if the above passage is true about the bailout of Bain that will not go down well. The fact that Goldman Saches likes to give such a large amount of money to both Obama and Romney would suggest they think that these people will not do anything to change the status quo.

  31. Prime example of dissonance is JC

    And some of us john, some of us really believe that Australia putting a high price on carbon emissions will induce China, India, the US and others to do so too. Hows that for dissonance?

    The reality is that Australia believes it should put a price on carbon as it is a responsible action in light of the evidence.

    What India or China or wherever believes is irrelevant – the point is that we should be able to construct national policy without having to seek approval from outliers. Otherwise we would be condemned to seek to approval from the lowest common denominator, which is where JC hails from.

    Heavens forbid.

  32. JC talks a lot of gibberish. And always at great length. The atrocious grammar is the most irritating thing of all.

    “Cemeteries are full of people that thought they were in-expendable…”

    Too funny. “Who”, dear, not “that”, though an understandable mistake coming from alienated you.

    And the prefix “in” before “expendable” is beyond gauche.

    What an embarrassment to the anti-libertarian Right. Are any of these dudes able to write a grammatical sentence with no typos?

    Vulgarity is a most unattractive trait.

  33. Kelly

    Bain didn’t receive a federal bailout. It’s dishonest nonsense that newt came out with. When Romney took over the firm was on it’s legs and he negotiated down interest what was owning to a new england bank then held by the FDIC.

    What is being described is regular stuff that goes on in near bankruptcy situations. The likely result in a liquidaton could have been that the FDIC lost the lot.

    This was discussed before at the cat and I think you also participateed in those discussions , so why raise it here again.

    I honestly don’t know what the rest of the stuff is about. Are you saying he ran an IPO that was fraudulent? What exactly? Explain it please.

    Look Kelly, I’ve told you other times what I think of Paul. Sorry, but that honest Abe routine doesn’t wash with me. Paul has voted against numerous spending bills while inserting his own earmarks for pork. It’s freakng dishonest.

    I like most of his economic policies. His monetary policy and foreign policy suck big time as far as I’m concerned. You know that anyways. It’s Romney by default for me. I thought at one time newt had eluded lunacy, but he’s back to his old ways.

  34. Sally/ Phil

    You’re now resorting to checking iPad typos? Well thats good right? At least you’ve found a useful vocation in life instead of writing love peoms to the Fort Hood murderer, or pretending you’re me or members of my family at Bird’s house of many horrors.

    Honestly , I’m really pleased for you. It’s heartfelt.

  35. JC
    FDIC is not free market capitalism. The fact it maybe normal for a government owned institution to cut deals just shows how bad the system is. Government institutions should never have discretionary power to hand out money even if it is through changing a loan contract. The loan could have been sold in the open market by auction and let a capitalist vulture deal with Bain. If it is done in the free market ok fair enough but by a government owned institution it is not. Should be this simple pay up and if you can’t then you should be put into recievership and liquidated if that is what is required as Bain would do to others or sell the loan. Seems like a double standard. It is a requirement at least under Australian law that you do not operate a company while insolvent. That would be free market.

  36. Kelly:

    At around the time the deal was done, the FDIC was the proud owner of around 250 odd S&L’s and several mid level regional banks.

    It’s a different discussion if there ought to be any government involvement in the banking system at all. I think there should be free banking, but that’s not what we’re talking about.
    Your issue is if the FDIC/Romney deal was above board.

    Lacking any information suggesting otherwise, you’d have to assume it was. Anything else would have come out by now.

    Your suggestion the loan should have been sold in the open market needs to be considered. There was no on-sale possibility for these sorts of bad loans at the time, as the FDIC was up to its neck in assets having gone bad. You seem to think the FDIC simply okay-ed everything without looking into it and examining alternatives and immediately assume it was a bad deal for the FDIC. Why? What information do you have that you’re not sharing.

    Quite honestly this $4 million or $10 million was a drop in the ocean at the time for the FDIC and it proved to be a drop in the ocean for Romney too, as the firm ended up making over $1.5 billion for his investors over the time he was with Bain.

    As for Romney’s action in the deal.. what exactly did he do wrong. He realized the firm was unable to continue the way it was going, sort relief and negotiated out of some of the debt/interest. What did he actually do wrong? These aren’t irregular negotiations for a firm on the ropes, Kelly.

    I think you’re making a mountain out of a molehill.

  37. George Monbiot claims about Matt Ridley:

    Before he resigned on Friday, the bank had borrowed £16 billion from the government and had refused to rule out asking for more.

    Well more correctly, the money was not borrowed from the government, it was borrowed from the Bank of England which is owned by the government, but independently operates in the role of a reserve bank and lender of last resort (a role that is common to many nations, and which goes back many hundreds of years before the BofE was nationalised).

    I’m not expecting Monbiot or his readers to understand the subtlety but they should at least recognise that many other reserve banks do the same thing on a routine basis (e.g. RBA has been steadily buying up Mortgage debt from Australian banks in the form of RMBS to encourage liquidity during the past few years). You won’t find Monbiot wringing hands over that.

    George Monbiot also claims:

    Ridley and the other bosses blamed everyone but themselves for this disaster.

    Well Matt Ridley himself gave quite a different story:

    http://www.thisislondon.co.uk/standard/article-23871939-my-remorse-by-former-rock-chairman.do

    “I enormously regret what happened at Northern Rock,” he told The Journal newspaper.

    “It’s an incredibly painful memory for me and it’s something that I will live with for the rest of my life.

    “I have nothing but remorse for my role in what happened. I’ve apologised and explained as much as I can what happened before the Treasury Select Committee.”

    Indeed, Monbiot didn’t even see fit to mention that Ridley was a non-executive chairman, but regardless of that he did accept his share of the blame, and he resigned, and to the best of my knowledge did not walk away with a big bonus or anything. Then the rant really starts:

    It was allowed to do so because it was insufficiently regulated by the Bank of England and the Financial Services Authority. When his libertarian business model failed, Dr Ridley had to go begging to the detested state.

    Well actually, if Monbiot had been paying attention, he would note that Ridley got dragged out for questioning by the Treasury. They ended up taking the whole bank by force (and essentially writing off the shareholders equity) and selling it again (which I believe is Virgin Money now), so there was no shortage of regulatory power. If the BofE was insufficiently regulating the industry then it was the BofE who loaned out additional liquidity to cover up the problem, but anyhow all banks (including the BofE) are answerable to Parliament if that happens to be required.

    Besides all that, there is absolutely no such thing as a “libertarian business model” because the whole idea of being a libertarian is that people come up with a broad diversity of models… some of which succeed and some of which fail. Libertarians have always argued that bank failures are fundamentally unavoidable because a bank makes a profit from borrowing short term, and lending long therm — an intrinsically unstable thing to do. However, if banks are allowed to fail (and in the Northern Rock case, the slack was absorbed by shareholder losses, which is completely normal and yet another thing Monbiot either can’t understand or just conveniently fails to mention) then the system as a whole keeps going. If banks are propped up and prevented from failing then it moves to systemic collapse (which is looking like being on the cards in the next few years).

    Now when interviewed, Matt Ridley says, “We were all taken by surprise by that. There was almost nobody who saw it coming. Those who did were not in the right place to warn everyone else.”

    So did Monbiot’s brilliant insight allow him to see it coming first? Of course not! Did Monbiot’s wonderful government regulators see it coming? Oh no, they saw nothing. What’s more, Northern Rock was just the start of the trouble… so surely both Monbiot and all those regulators would have taken heed of this warning and started ringing out the bells before the crisis of 2008 that was just around the corner? Hmmm, no they failed on the second time round too.

    Basically one guy’s guess is as good as the other then. Truthiness… if in doubt blame some libertarians for being a bit different.

    Anyhow, it ain’t over yet. If Monbiot had a single bone of consistency he would be very concerned about rising government debt all over Europe right now (and blaming the libertarians absolutely will not help this time round). We are going to see government defaults, it’s only a question of when and how big.

  38. Pingback: Bain Capital did recieve government welfare (Aussie perspective) | AnnoyedAussie annoyedaussieATgmail.com

  39. JC
    What did he actually do wrong?(Romney)

    In answer to your question possibly nothing. You might think I am annoying especially if you believe Romney is a good guy, but he will have to answer the question on what happened and also if he is a capitalist how can he reconcile making money from the system he now wishes to stop (that is assuming he is a free market capitalist in which the FDIC would not exist). Hey and by the way I have not mentioned Ron Paul on this thread yet. I have put some comments regarding this subject on my blog.

  40. Kelly,

    Romney is not a libertarian. He is (I think this week) a closet social liberal Nor Easterner who is really freaking smart and may show some initiative in cutting back spending and possibly enacting some of the Ryan plan if pushed.

    He was for the bank bailout by the way.

    And what does he have to answer for? Doing the deal with the FDIC. That’s easy.

    “If he is a capitalist how can he reconcile making money from the system he now wishes to stop (that is assuming he is a free market capitalist in which the FDIC would not exist).”

    Kelly, do you understand that he didn’t actually make money out of the thing, that it in fact was a form of debt forgiveness, as a result of the firm he just took over being on skid row and about to tip over?

    I don’t see why you keep harping on this as though it will end his candidacy. Dude, it happened in 1994 or so. Get over it.

  41. JC
    You might be right but I think it is a serious threat to his candidacy and if he gets to be the repbulican nominee even more of a threat versus Obama. Debt forgiveness is the same as recieving cash.

  42. I missed Denmore’s critique of Milton Friedman

    “Milton was the one who didn’t want to license doctors because the market would take care of it. “Sorry about taking your kidney by mistake, Mr Jones. Better luck next time.””

    Yea Denmore blindly relying on credentialism is what I’m sure Milt was getting at.

    Good to know you rely on the simple faith of a government licensing board to inform you of your doctor’s capability.

    I presume you don’t support suing doctors, because you know, the government says they are all great.

    Oh hang on, a credentialed and fully licensed doctor killed about 13 people in Queensland. How could that possibly be seeing he was licensed by the government? Ummm

    And tell us, do how do measure a doctor’s abilities. Is it by his or her license or how you feel about him or her? Are you an expert in knowing prognosis and the treatment plan is the best medical science can offer?

    And how about the negative impacts of cartelization when numerous things could just as easily be treated by a nurse practitioner or a pharmacist with the potential of cutting costs.

    Denmore, you seem to have an emotional aversion to libertarianism and not one that’s intellectually based. The short sentences and little jabs won’t work.

  43. JC’s argument is akin to “why should car drivers have a govt license if there are road accidents”.

    Libertarianism means anybody should be allowed to drive and “the market will sort them out”.

  44. JC:

    “As for “truly believe in free markets” what is the difference between that and a religious belief?”

    Okay, here’s an assignment for you, another one. Show me one economy that isn’t set up along liberal democratic lines that has done as well as the liberal democracies. One.

    So you accept that any liberal democracy is an example of free market then? You’ll stop arguing that we should deregulate more or shrink the size of government smaller than another economically successful liberal democracy? Or is your idea of a free market well beyond what the historical evidence supports as being successful?

  45. JC:

    Good to know you rely on the simple faith of a government licensing board to inform you of your doctor’s capability.

    So how much market research are you planning on conduction to evaluate doctors the next time you break your leg or come down with an unbreaking fever? Or are you happy to just end up having any quack prescribe you drugs in your time of vulnerability?

  46. Don A, looking at some of the comments here, maybe it might have been better to have a post before this one actually asking the question about what a ‘conservative’ really is.

    It seems to me that before the demise of the former Soviet Union, there were a number of disparate groups who clumped together under the banner of ‘the right’ their fear and loathing of the FSU outweighing their otherwise disparate beliefs, but once the FSU collapsed, there was no reason other than habit for these groups to remain together. For example, libertarians and fundamendalist christians could both be vehemently opposed to the FSU and ignore their own differences, but when the FSU disintegrated, why would libertarians and fundamental christians share the same stage? Other than habit? Another example is that of the ‘feather duster’ conservatives and those who believe in free markets, which as was pointed out in the original post, are hardly ‘conservative’ in nature.

  47. ‘Debt forgiveness is the same as recieving cash.’

    Imagine that – a capitalist in favour of receiving favourable treatment. Must have been a once-off, surely.

  48. “So how much market research are you planning on conduction to evaluate doctors the next time you break your leg or come down with an unbreaking fever? Or are you happy to just end up having any quack prescribe you drugs in your time of vulnerability?”

    Are you on JC’s side or not? Each time I’ve been involved in a serious medical issue we have researched the doctors and their recommendations. Surely only a dummy would rely on their medical licence as sufficient evidence of competence.

    By the way, I don’t think I’ve seen anything in this thread that is evidence that “capitalism” is bad in any way. But I suppose we have to start with a definition of capitalism and then some assumptions about the other institutions in society.

    If capitalism is the accretion of capital through work, trading and saving then in a free market I can’t ever see how any person can claim to be harmed by it. The recent assertion that capitalism is bad because it makes people envious pretty much sums up the flimsiness of the accusation.

  49. Desipis:

    “So how much market research are you planning on conduction to evaluate doctors the next time you break your leg or come down with an unbreaking fever?”

    Desipis, I’m really shocked you of all people would come up with that argument, as I thought you were a worthy adversary.

    Do you seriously think there would be no privatized accreditation system that spring up that in many ways would be more varied and more helpful than the current system.

    For instance I would not have a doctor that wasn’t trained at one of the Sandstone universities as a very minimum. Do you get segmentation with the current licensing system, or do we simply get the old soviet model where one lousy boot is supposed to satisfy all.

    Here’s a question for you. Why are you happy with a soviet model?

    “Or are you happy to just end up having any quack prescribe you drugs in your time of vulnerability?”

    I’d have no problem with say a nurse practitioner or pharmacist prescribing certain drugs. In fact I have found myself at times asking a pharmacist for his or her opinion on which would be a better drug to suggest it to a doc.

    It’s really mindboggling how some people are so married to the state at times.

    “So you accept that any liberal democracy is an example of free market then?”

    No, it’s to show the variance at the extremes. And no, I don’t think Greece is say similar to Switzerland or Lichtenstein in it’s economic set up. But it is closer when comparing it to say the former Soviet Union. Is all this necessary to be spelt out to you?

    “You’ll stop arguing that we should deregulate more or shrink the size of government smaller than another economically successful liberal democracy? Or is your idea of a free market well beyond what the historical evidence supports as being successful?”

    Of course I would advocate shrinking government till we see bone…Don’t you? LOl.

  50. ‘If capitalism is the accretion of capital through work, trading and saving then in a free market I can’t ever see how any person can claim to be harmed by it.’

    Because as Marx pointed out, it’s intrinsically exploitative – I mean that in the technical, not perjorative sense. For profit to exist, workers must be being paid less than their labour is worth. By definition.

    I’m not a Marxist but this is a pretty obvious point.

  51. “I’m not a Marxist but this is a pretty obvious point.”

    Really? So you think say a neurosurgeon isn’t receiving his full marginal product? How about the CEO of Rio Tinto who also happens to be an employee

    You lefties need to get your stories straight, Dan. One minute you saying workers are being exploited and the next day some of you are on the street protesting against high pay on Wall Street or executive comp.

  52. (There is also such a thing as people in positions of power – sometimes conferred by possessing scarce skills – working the system.)

  53. “Of course I would advocate shrinking government till we see bone.”

    So would I. But I think the problem in some people’s thinking is that bigger is better and money spent is good. How often do you hear about how much will be spent on hospitals and schools. The spending may not improve outcomes at all but many people will vote based on spending not about policies. With deregulation it does not neccesarily mean worse regulations in fact it usually means better because when laws like tax become too big they become less efficient to the point where companies beat the tax office in court. In other cases it is duplication for example on environment with Federal and State both writing laws which will be for the same thing.

  54. “JC: I hereby acknowledge that there is such a thing as scarcity.”

    Really Dan.

    Here’s a hypothetical. Rio Advertises the CEO to all comers. Comp is 12 million bucks a year. How scarce do you think the resumes would be filling the front foyer of the office and do you think there would be enough space? Figure it out. A letter’s dimensions to the average space of a large multinational’s front foyer.

  55. Not at all. I have refuted your point. You argued workers receive less then their marginal product. Even Krugman by and large refutes this, which is saying something, but anyways..

    I asked you if some category professions are being “exploited”. You then suggested this was answered by “scarcity”. If it was scarcity that explained everything, the RIO CEO’s job wouldn’t be paying $12 million a year as the supply of hopefuls would equal the world’s population potentially.

  56. Not to mention the applicants would presumably possess scarce skills, access to exclusive networks, scarce previous jobs, blah blah blah. This is where class analysis comes in – lefties have thought a lot about this stuff; how managers fulfil a dual role as proxy owners but also employees.

    For the record, the CEO would make decisions worth billions upon billions, so yes, $12m is chump change in comparison. So in light of that, poor old Marius is (from a technical standpoint) exploited, assuming the business succeeds.

  57. Surely only a dummy would rely on their medical licence as sufficient evidence of competence.

    So ‘dummies’ don’t deserve decent medical treatment if they lack the skills necessary to distinguish a doctor with rudimentary skills from a complete quack? If you already have your own method of choosing a doctor, why does the existence of a state imposed minimum capability bother you?

    Why are you happy with a soviet model?

    Last I checked we didn’t have a soviet model.

    No, it’s to show the variance at the extremes. And no, I don’t think Greece is say similar to Switzerland or Lichtenstein in it’s economic set up. But it is closer when comparing it to say the former Soviet Union. Is all this necessary to be spelt out to you?

    So you’ve performed multi-variant analysis on the historical data to isolate the influence of (libertarian) free market policies (as distinct from social democratic policies) from all the other factors that can influence the economic success of a country, and conclusively show that it’s a better policy? This evidence will also show that moves towards a smaller government have no natural limit, that a single variable will always have the same net effect on a complex and evolving society, will it? Care to share this evidence?

    Or is simply that your ideology based merely on your own opinion on what is best, a basis that could reasonably be described as ‘faith’?

  58. Desipis – you’re asking free market ideologues to demonstrate an understanding of institutional economics and evidence-based policy. You’ll probably have about as much luck asking a King Charles spaniel about string theory.

  59. “Last I checked we didn’t have a soviet model.”

    Really? So our public health system is market driven, responsive to demand and supply/ price and about equal to our food markets, is it? I mean there a lots of competitive forces at work in our public health system. I’m frankly overwhelmed by them.

    Of course it’s a sovietized model. How isn’t it.

    I made a point, a fair point that the only show in town in terms of raising living standards has been one that can be broadly described as liberal democratic. Aping nonsense about multi-variant analysis to prove the point is isn’t just silly, it really is pixel wasting.

  60. JC@71 – you may or may not have heard that the so-called Communist Party in China have done an astonishing job of lifting millions out of poverty.

    Awful regime. Not liberal, not democratic. Capitalist, though, you’ll be pleased to hear, and increasingly so.

    But their credentials on the economic growth front simply cannot be doubted.

  61. JC
    “Of course it’s a sovietized model. How isn’t it.”

    Even if that is the case it is better than the US system even on public cost basis lol. What do you call their system? I don’t care what it is if it works.

  62. “Last I checked we didn’t have a soviet model.”

    Really? So our public health system is market driven, responsive to demand and supply/ price and about equal to our food markets, is it?

    Dan, I think you’re right. He doesn’t seem to be capable of spotting the obvious logical fallacies in his arguments.

    … that the only show in town in terms of raising living standards has been one that can be broadly described as liberal democratic.

    JC, your political position isn’t one in favour of all things broadly described as “liberal democratic” though. You argue in favour of a specific and limited end point of the liberal democratic spectrum. You can’t use evidence in favour of things broadly liberal democratic to back your particular subset of liberal democracy over other subsets of liberal democracy.

  63. Kelly@75 – you’re right about the current system. For all the harping in the Terror and Hun it’s a bloody good system with bloody good outcomes.

    As for the Commonwealth – well, everyone – including them – knows they’re a bit crap at service delivery, but clearer lines of accountability are on the other hand never a bad thing.

  64. “Even if that is the case it is better than the US system even on public cost basis lol. What do you call their system? I don’t care what it is if it works.”

    Kelly, the US insurance system is a heavily mandated interventionist Rolls Royce type system without any cost controls. To suggest its free market is laughable in the extreme. It’s also extremely complex and a couple of paras on a blog doesn’t do it any justice. But I think their service is superior to ours in many ways.

    A good quasi market model is the Singapore one if you’re looking for comparison. It’s not expensive and better than ours.

    Here’s some misinformation that’s interesting. Krugman came out and said that (US) medicare was administratively cheaper to run than private insurance. One economist was sceptical, but actually came to agree with Krugman! He found Medicare was spending far less on administration than the private carriers.

    Then came up with the clincher. There are government estimates that US medicare fraud runs between $60 to 90 billion a year! So of course it’s cheaper to run administratively. Lol

    MIAMI (AP) — Federal authorities charged more than 100 doctors, nurses and physical therapists in nine cities with Medicare fraud Thursday, part of a massive nationwide bust that snared more suspects than any other in history.

    More than 700 law enforcement agents fanned out to arrest 111 people accused of illegally billing Medicare more than $225 million. The arrests are the latest in a string of major busts in the past two years as authorities have struggled to pare the fraud that’s believed to cost the government between $60 billion and $90 billion each year.”

    Here’s the very funny post.

    http://www.themoneyillusion.com/?p=8909

  65. A pristine market model of medicine (and anything else for that matter) exists only in places where you don’t have any effective government. Somalia is one such example. Libertarians travel to Somalia from all over the world to experience the very best in libertine medical care. Only last week Australia’s very own LDP organised a plane load of crippled comrades to fly Ayn Rand airlines to Mogadishu to experience state of the art, cutting edge, no holds barred Hayekian acupuncture, secret Friedman herbs and spices and a Mises steam bath.

  66. Lol Mel… funny characterization.

    However, on a slightly more serious note. You know how I think you’re a brave, intrepid researcher not fearing to go where other less brave researchers haven’t been before.

    Check out the Sing model and report back. No links, Just your own words.

  67. Dan:
    “For profit to exist, workers must be being paid less than their labour is worth.”
    Oh, so how do you value labour and where is the evidence that people put that price on it? I guess we should bin the capital goods while we’re at it.

    Desi:
    “So ‘dummies’ don’t deserve decent medical treatment if they lack the skills necessary to distinguish a doctor with rudimentary skills from a complete quack?”

    That’s what I meant? Wow, I didn’t realise I was such a cunt.

    “If you already have your own method of choosing a doctor, why does the existence of a state imposed minimum capability bother you?”

    I never said it did. I do say that the current state imposed minimum capability needs changing to increase competition and I also say that only a dummy would think a medicare provider number of sufficient indication of quality.
    http://www.solicitoradvice.com/

  68. @Pedro:

    ‘Oh, so how do you value labour and where is the evidence that people put that price on it? I guess we should bin the capital goods while we’re at it.’

    Too easy.

    If revenue generated from the sale of the goods exceeds the cost of the inputs, this manifests as profit. To the extent that the profit is not shared between the workers responsible for production, this represents the concentration of wealth in the hands of the business owners (and yes, their proxies as well).

    To the extent that wages are priced below the value that they produce, that is a manifestation of competition. It’s an open secret that some unemployed people – aka a ‘reserve pool of labour’ is a good thing for capitalism.

    Re: capital expenditure – am I to take it you’ve never heard of a co-operative?

    Why is it that central planning is fine with right-wingers as long as it’s private central planning?

  69. Dan Please.

    Re: your exploitation theory

    The labor theory of value was completely refuted 100 or so years before Marx. It came from David Ricardo and when published was immediately destroyed. Unfortunately bad ideas sometimes have a habit of resurfacing which is when that very untalented economist (Karl Marx) picked it up and ran with it.

    Don’t argue with me though. If you think the Labor Theory of Value is valid, do a write up on it get published and you will in all probably walk away with a Nobel and people… minions and plebs like me.. will be in awe of you.

    Let me hasten to add that not even Krugman goes for your theory and thinks marginal product is the right theory.

    So don’t just keep bringing it up as though it’s a proven theory and not pure socialist crankery. Take a deep breath, push down and get to work proving its validity.

  70. “Why is it that central planning is fine with right-wingers as long as it’s private central planning?”

    Is this some sort of trick question …a number puzzle perhaps disguised as a word trick.

    Is the answer 55? Am I right?

  71. You’re dismissing something different from what I am talking about.

    Of course no-one agrees with the labour theory of value.

    However, that’s an entirely different claim from the one I am making, which is that accumulating profit exists and is a manifestation of an unjust power relationship.

  72. JC@84:

    A planned economy with the trappings of capitalism is still a planned economy.

    But I guess I should take my own advice from 70.

  73. Actually, let me say unequal rather than unjust. It is unjust, but that opens up a whole new thing about the nature of justice, where I’m very happy not to go. So let’s say uequal, because that’s manifestly correct.

  74. Dan Please;

    Earlier you said this to justify your “exploitation” theory.

    I’m quoting you now:

    Because as Marx pointed out, it’s intrinsically exploitative – I mean that in the technical, not perjorative sense. For profit to exist, workers must be being paid less than their labour is worth. By definition.

    I’m not a Marxist but this is a pretty obvious point.

    Now either knowingly or not, that is basically the bedrock of Marxist socialism- “the labor theory of value”. It was a mistake by Ricardo. It’s silly beyond belief. It basically suggests that if you go mining for gold and you end up with fools gold, the fool gold has the same value simply because there was the same value of labor input. Of course Marx found it valid and here we are with you peddling it.

    I’m sorry but morphing your earlier comment with this:

    However, that’s an entirely different claim from the one I am making, which is that accumulating profit exists and is a manifestation of an unjust power relationship.

    … is basically saying the same thing in a modern context but it is still the same drivel in that all labor inputs are basically the identical.

    In any event, good luck proving your theory. I really mean that because if you do you will have revolutionized economic thinking for the past 150 or so years.

  75. No, they are two entirely different claims. If you can’t see that they are different and insist on conflating them despite my best efforts then that’s on you. Other readers/commenters can make up their own mind.

  76. Dan:

    “Because as Marx pointed out, it’s intrinsically exploitative – I mean that in the technical, not perjorative sense. For profit to exist, workers must be being paid less than their labour is worth. By definition.”

    I’m a lefty but like most modern day lefties I think this line of reasoning is both false and uninteresting. If I open a fish’n'chip shop and employee workers and take home a profit I am not doing something intrinsically exploitative. You can only claim I am doing something exploitative if you believe my entrepreneurship and my risking my capital is worth nothing, which is an unsustainable argument IMO. On the other hand if I take advantage of high unemployment to pay my workers a pittance and take home a huge profit a “moral* argument may be made that exploitation exists.

    I think it is also possible to argue that the limited liability corporation, which is the engine of modern day capitalism and also a creation of the government, has certain social obligations because it occupies a privileged legal space.

  77. Pedro

    That’s what I meant? Wow, I didn’t realise I was such a cunt.

    Sorry, I read your comment as in support of JC’s argument for abolishing regulation of doctors.

    If capitalism is the accretion of capital through work, trading and saving then in a free market I can’t ever see how any person can claim to be harmed by it.

    That all depends on how you define harm. If you consider a person isolated in the desert, forced to fend for themselves, as the default state that you compare a result to, then it’s going to be difficult to show that a person is made worse off by capitalism. If you consider a person who endeavours to contribute a fair share of the effort required to keep society running is entitled to stability and protection of that society as well as fair share of the wealth created within that society, then it is much easier to show how a person is ‘harmed’ by capitalism.

  78. JC:

    “Let me hasten to add that not even Krugman goes for your theory and thinks marginal product is the right theory.”

    You must be thinking of Ludwig von Krugman rather than Paul Krugman. Marginal productivity is also a zombie idea.

  79. Mel

    What if your fish&chip shop was incorporated and you paid you workers the going wage etc. What other responsibilities do you think the entity has other than say not feeding your customers with rotten fish?

    Limited liability is simply a neat way of limiting risk that investors want to take and doesn’t go beyond pool. It’s basically a form of sticking 10 bucks on the red knowing that is all you’re risking. Incorporation does offer a privilege but it’s hardly out there beyond the example I just gave. And if you’re putting on your accountant’s eye-shades counting the cost of such a privilege to society, what are you doing in terms of tabulating the benefits too? Like it can’t be all bad, right?

    Desipis.

    “Sorry, I read your comment as in support of JC’s argument for abolishing regulation of doctors.”

    Wrong. I never said any such thing. Go back and read what I said again. I believe that government licensing is a crock, misused that creates cartelization, misleading and limiting the ability for the private market to improve on accreditation.

  80. “Marginal productivity is also a zombie idea.”

    Not many theories left, then Mel. Outside of MPT and LTofV that’s about it I think from my long memory.

    I think your fish&chip was a great example of MPT. You broadly described the inputs etc and offered a pretty decent example MPT at work. So you should believe in what you write.

    I’d offer one small digression to your example though that I think Hayek raised or it was some other economist in that camp.

    Neither you nor anyone else deserves a return for risking capital in the same way you don’t deserve a return for going to the track and betting it on horse 3. The return has to come on predicting your market and ensuring the inputs (land, labor and capital) are arranged in an efficient manner. In other words the business endeavor needs to exploit the price difference of your bundled inputs against what a customer will pay.

    Otherwise go for and hope you makes lots of money. Make sure you have battered scallops (sea variety as I can swallow them by the dozen).

  81. Mel@90:

    I was careful to point out that I mean it in the technical sense – that labour is exploited the way one would talk about the exploitation of, say, a natural resource. As such, it’s not incorrect; it’s in essence an accounting identity and as such may be dull, but it’s not incorrect.

    Problems arise because of:

    a) the dual nature of labour (what is an economy for, if not to provision the very people who populate it – and work within it? See Polanyi for more on that)

    b) the problem of finding sufficient demand for goods produced by workers who receive less in wages than they add in value (this is one source of economic crisis).

    As for risk – I think its laudability is greatly overstated. It’s risky being a worker too. And the people who take the very biggest risks often don’t bear the brunt of them – but we all know that already.

  82. “the dual nature of labour (what is an economy for, if not to provision the very people who populate it – and work within it? See Polanyi for more on that)”

    Interesting perceptive. Doesn’t sound like corporatism and the duty of the citizen to the society and the state much. Where have I heard that one before I wonder.

    ” the problem of finding sufficient demand for goods produced by workers who receive less in wages than they add in value (this is one source of economic crisis)”

    And why should the worker give a shit if the firm sells the goods for less than cost. Would a subbie give a toss if the developer in the end loses money on a project? If so why?

    ” It’s risky being a worker too. And the people who take the very biggest risks often don’t bear the brunt of them – but we all know that already.”

    Risky in what sense, losing a job? How is that equal to an investor losing his capital. Spell this one out for me without melodramas.

  83. ‘Interesting perceptive. Doesn’t sound like corporatism and the duty of the citizen to the society and the state much. Where have I heard that one before I wonder.’

    What? Oh, never mind.

    ‘And why should the worker give a shit if the firm sells the goods for less than cost. Would a subbie give a toss if the developer in the end loses money on a project? If so why?’

    Come onnn. Because if there is a systematic oversupply, they are likely to have difficulty finding work. Look at the construction industry in the US.

    ‘Risky in what sense, losing a job? How is that equal to an investor losing his capital. Spell this one out for me without melodramas.’

    Yes, you hit this one on the head. Much worse to lose your job and not be able to feed your family than to lose $1m and still have $70m (or whatever).

  84. JC, yes, we’re all very familiar with your undying faith in the market process and how it blinds you to the potential downsides of using such a process to manage an economic sector.

  85. Desipis, Are you self aware? You’re describing my undying faith in the market process as though your position of an undying faith in essentially bureaucratic diktat isn’t faith based? Mine is a position while yours isn’t? How did you manage to walk into this cul de sac?

    By the way, I’m still waiting for an example of an economic system that has done as well as the liberal democracies in raising living standards.

  86. “If you consider a person who endeavours to contribute a fair share of the effort required to keep society running is entitled to stability and protection of that society as well as fair share of the wealth created within that society, then it is much easier to show how a person is ‘harmed’ by capitalism.”

    Is that what you think we are doing when toddling off to the grindstone each morning? I’m just earning a wage and trying to raise my family and lead an enjoyable life. And of course that gets us back to Smith’s butcher and baker.

    The wealth created within capitalist societies is actually created by trade, investment and work and people pay and receive market prices where the market is not being skewed by govt regulation. So Kerry Packer making a motza is not depriving me of anything at all, even though I’m just a poor wage schlub. You have to subscribe to Dan’s labour theory of value to take a different view. Any claims about fair prices and such are just arm-waving over differences of opinion most often driven by a degree of self-interest. Even the Rawlsian claim is rooted in an appeal to self-interest, namely, what obligations would you like to be imposed on others for your potential benefit if you didn’t know whether you are to be one of life’s winners or losers.

    But it gets worse, what exactly is there about that simple description of capitalism that suggests tax and transfer could not be happening along side it?

  87. Pedro@101 – Marxian analysis has influenced my thinking, sure. In a sense we are all Marxians (in the sense that we’re all Protestants). Whether I am a Marxist or not is another matter entirely; in fact since I don’t subscribe to the idea of praxis (or a lot of other stuff in Marx, including the LTV).

    If you’d read any Marx, you’d know that what he termed Communism involved the devolution of a lot of political power. I’m not defending him, merely saying you are blathering. At least try to get your insults straight.

    The idea that there is not and cannot be such a thing as worker exploitation – in either the technical or vernacular sense of the term – is ludicrous, and you don’t need the LTV recognise it.

  88. your position of an undying faith in essentially bureaucratic diktat isn’t faith based?

    I don’t have an undying faith in bureaucratic diktat. I just think that a system that has proven as relatively effective as our health system shouldn’t be changed wholesale on the basis of a simplistic ideology. I’m perfectly fine with changes to laws or government that are based on evidence or at the very least a sound reasoning that provides adequate analysis of the way markets can fail to deliver effective or efficient outcomes.

  89. The wealth created within capitalist societies is actually created by trade, investment and work and people pay and receive market prices where the market is not being skewed by govt regulation.

    That trade, investment and work doesn’t occur in a vacuum. Much of this economic activity depends on the social, economic and political stability created through good government (including regulation).

    So Kerry Packer making a motza is not depriving me of anything at all.

    It has the potential to deprive of you things if only through the effects of price inflation. The more capacity the “top 1%” have to shift labour to meeting their demands, the less labour is available to serve the demands of the rest. This lower supply means higher prices, meaning people can afford less.

  90. Dan:

    “Marxian analysis has influenced my thinking, sure.”

    Marx had a few key insights but most of the best ones had already been spelt out by others. I have on occasions described myself as Marxian (not Marxist).

    In terms of genuinely original and transformational ideas, Marx’s contributions would fit on the back of an envelope.

  91. desipis@104 – it’s another false choice.

    Either you are pro-free market (although what’s meant by that keeps slipping around) or you’re with the terrorists Communists.

  92. Mel@106 – I’m certainly aware of the classical political economists’ influence on Marx (Smith, Ricardo) and how his understanding of Hegel formed his underlying philosophy, but if you can enlighten me as to any precursors to his analysis of the tendencies of capitalism towards disequilibrium/crisis (which is what I’m really most interested in, in both his and subsequent others’ work) I’d be really appreciative.

    Have any of you read John Cassidy’s How Markets Fail? I thought that was a great exposition from a basically orthodox perspective.

  93. It has the potential to deprive of you things if only through the effects of price inflation. The more capacity the “top 1%” have to shift labour to meeting their demands, the less labour is available to serve the demands of the rest. This lower supply means higher prices, meaning people can afford less.

    This is pretty unique argument Desipis. In fact I’ve never seen it before. No kidding.

    So run with me for minute. The 70′s marked the peak of two things- the high inflation rate cycle well in the double digits and high tax regimes with rates coming down from around 75% to 90% ( 90%in the UK)- across the West. It was also marked by high unemployment.

    The 80′s, on the other hand, began to see inflation rates coming down and tax rates falling with unemployment gradually easing and it began the period of the “great moderation” that last around 20+ years.

    You think you’re theory still holds true, or is it time to quietly ditch it?

  94. Pedro @100:

    “The wealth created within capitalist societies is actually created by trade, investment and work and people pay and receive market prices where the market is not being skewed by govt regulation. So Kerry Packer making a motza is not depriving me of anything at all, even though I’m just a poor wage schlub.”

    That’s moronic. Packer wouldn’t have made a dime if it wasn’t for LLC law that helped him raise capital etc.. and a Government licencing regime that meant a tiny oligopoly could practically print money by running a TV station. Joe Blow would have been thrown in jail, quite literally, if he tried to open a non-licenced TV station in competition with the oligopolists.

    What’s more, Government provides law and order, commercial law, infrastructure etc without which capitalism cannot flourish. Once again, I suggest you contemplate ungoverned badlands such as Somalia.

    I think you may be out of depth here, Pedro. With all due respect, JC is a much more capable advocate for libertarianism than yourself.

  95. I’m certainly aware of the classical political economists’ influence on Marx (Smith, Ricardo)

    Dan, he took Ricardo’s mistake ( value of labor theory) and trotted off with it at a well paced speed (which for him was like doing a marathon after seeing pics of him and his umm weight issue).

    His contribution was appalling.

    But anyways lets get back to the thread. What do you think of the opinion contained in the thread?

  96. ‘Even the Rawlsian claim is rooted in an appeal to self-interest, namely, what obligations would you like to be imposed on others for your potential benefit if you didn’t know whether you are to be one of life’s winners or losers.’

    Kind of takes the ethics out of ethics, doesn’t it, as John Ralston Saul points out.

    I have an idea: don’t bloody think about it this way – instead exercise some imagination.

  97. JC@112:

    He was also pretty interested in land ownership, a trait he shared with Ricardo and which is often neglected today.

    What does your question mean?

  98. That’s moronic. Packer wouldn’t have made a dime if it wasn’t for LLC law that helped him raise capital etc.. and a Government licencing regime that meant a tiny oligopoly could practically print money by running a TV station. Joe Blow would have been thrown in jail, quite literally, if he tried to open a non-licenced TV station in competition with the oligopolists.

    Totally 100% freaking true. That’s not capitalism, it’s pure cronyism and wealth created that way justifiably puts a meaningful number of punters offside.

  99. What does your question mean?

    Oh sorry. I meant what do you have to say about Don’s thread… what we shou;d really be talking about instead on Marx.

  100. JC, you’re a pretty cool guy. I disagree with you on a good 87.9% of things but who’s counting; you’re refreshing and sometimes quite surprising and I reckon I could happily have a couple of beers with you.

  101. Dan @108:

    I don’t believe Marx provides any insight into what you term disequilibrium/crisis, nor do 99.9% of economists as far as I can gather. Even John Quiggin, who is one of the very few economists who considers Marx worthy of any attention at all today, says this:

    “As the theoretical basis for a proletarian revolution, Marx’s value theory had some obvious merits. Given its central claims, that the return to capital arises from exploitation (scientifically derived as the expropriation of surplus value) and that the declining rate of profit means that the intensity of exploitation must increase, we are led to the conclusion that revolution is inevitable. The claim about the declining rate of profit (not specific to Marx – most of the classical economists also saw the rate of profit declining) hasn’t turned out to be true, at least not in a sense that requires steadily increasing exploitation or brings the system ever-closer to collapse.”

    Marx’s genuine contributions are in areas like our understanding of ideology, although it is implicit in comments you’ve made on other blogs that you reject a Marxian approach to the study of ideology.

    As you are probably aware from your own studies of Marx, thinkers like Helvétius pre-empted Marx’s basic ideas on ideology and power by 150 years.

  102. In short, Don is right; social risks should be borne by society; that implies an activist/reformist state to some extent (I’m not saying anything here that Hayek didn’t say); where markets work they should do their thing; where they don’t, the market need not go.

  103. Mel@108: That’s another Dan. I only comment at JQ’s blog and this one. On FB I’m a viking, though.

    Thanks for the Helvetius tip though, looking forward to digging into his stuff a bit.

    Who would you say does say something useful about crisis? I’ve been read Minsky (and others on Minsky) lately, as well as David Harvey (a Marxian, even a Marxist).

  104. Dan @120:

    “Who would you say does say something useful about crisis?”

    Unfortunately I haven’t read anyone who I’d be itching to recommend, but I’ll look into Harvey. Thanks for the tip.

    An abridged Helvetius quote of note is this:

    “The prejudices of the great are the laws of the little people … If opinion rules the world … it is the powerful who rule opinion … Our ideas are the necessary consequences of the society in which we live.”

    I love that quote!!!

  105. I believe he is. And it ended in the failure and chaos presently enveloping much of the world. As he once said to me, ‘Keep aiming low.’

  106. JC, are you suggesting an expansionary fiscal policy funded by large increases in public debt, that greatly benefited the top 1% while the wages of average workers remained stagnate as the pinnacle of economic policy?

    Oh see, so you’re justifying your crank theory that demand by the wealthy caused stagnant wages. They don;’t save a lot more, they just spend it all. Funny that because the savings rate is much, much higher with the wealthy than it is lower down, so it all isn’t going to spending some of it must be going to create this equation S=I (savings equals investment)

    What do you want to tackle first, the stagnant wages argument or your crackpot theory? Let’s go with your theory first. It’s baseless. You can argue as much as you like but two corresponding economic periods disprove it. And if make an extraordinary claim such as this one, it justifies extraordinary evidence to support it.

    Let’s get back to your stagnant wages set up. There are around 100 million workers in the US, which divided up in quintiles (obviously) means there are around 20 million workers in each segment. It’s true that wages lagged in the bottom quintiles in the US for much of the period from the 80′s onwards. It’s also true that 12 million or so illegals crossed the southern border looking for work. In all the discussions I see the left have when they talk about the bottom 1/5 of US workers experiencing stagnant wages, I never come across this pregnant elephant in the room. Most of these illegals were and are competing for jobs in the bottom quintiles.

    So desipis what do you reckon happens to the wage rate with such a sudden onslaught hitting the job market over that period (and they are still coming, perhaps at a slower pace since the GFC)? Keep in mind that demand and supply curves slope downward? Answer it for me.

    Also keep in mind that the aggregate income expanded at very healthy clip in lower segments, so demand for labor was there and in fact it’s a testament to the US that it was able to accommodate such a long term and sustained supply shock in the labor force. I’m not passing any opinion on illegal immigration in the US by way, as I’m kind of go hot and cold on the idea of open borders. However I also recognize that American lower income earners wages have been impacted.

    Having said all that, to see lefties like you grumble about stagnant wages when there’s this pregnant elephant in the room about to drop twins isn’t my idea of giving people a complete picture of what’s going there.

    As for the rest of the West (excepting Japan from the 90′s), it didn’t have this issue to any of large extent. Wages at the bottom have risen despite a drop in tax rates and a steep fall in the inflation rate.

  107. Dan, I am that Mel.

    You’ll note that in our discussion of the Iraq War I said the proximate cause of the war corresponded more or less to the casus belli outlined by the Bush Administration whereas the ultimate cause pertained to resources, namely oil. To put it another way, the casus belli was the ideology while the resources availability was the underlying structural dynamic. This is traditional Marxian reasoning. On the other hand, you said matters of ideology were, in your own words, “bullshit, and that the Bush Administration instead secretly conspired to grab direct control of Iraqi oil on behalf of certain American corporate entities. Such reasoning is neither Marxist nor Marxian, rather it is a conspiracy theory, although sometimes it is referred to by students of Marx as “Crude Marxism” (non-pejorative).

    As with Marx, I see nation state capitalism, up to a certain point, as being progressive. I also have absolutely no interest in the currently fashionable bourgeois-left ethno-religious identity politics and as such I had no trouble supporting the imposition of bourgeois democracy in Iraq through the barrel of a gun. It worked in West Germany and Japan after WW2, and I suppose there is still a bee’s dick of a chance that it will work in Iraq.

    As you may be aware, various splinter Marxist groups, such as the Strange Times crew, developed a similar analysis.

  108. I think you missed an end-quote, which could be confusing for other readers.

    The primary casus belli was initially the WMD claim, which anyone who bothered to do, I don’t know, 15mins of leg work could see was bunk. Then (after, surprise, surprise, no WMD were found) the emphasis shifted to regime change (we’re already moving away from proximate to post-hoc). If Bush was drinking his own ideological Kool-Aid, that’s on him – there were many much more cynical players in and around that administration. I am with Sgt. Phil McSorley in thinking (as I did from the outset) that the officially stated line is ‘pretty thin’ and it seems bizarre to me to privilege inconsistent and contradictory ideological and diplomatic claims from a nation that has historically (as nations do) always aimed to act squarely in its own interests over, well, an attempt for that nation to act squarely in its own interests (and particularly in the interests of the stakeholders the Bush regime was most predisposed to listen to). That it was a failure is another matter entirely.

    If regime change was the main game, why Iraq and not, say, Syria? Zimbabwe? Burma? I think the question answers itself.

    In order to ‘impose democracy’ (as tortured as that concept intrinsically is), you need something like a Marshall Plan. Instead, Iraq is gutted and Iraqis are humiliated.

    ‘there is still a bee’s dick of a chance that it will work in Iraq.’

    Now that the US has (on paper at least) pulled out?

    But we’re way OT.

  109. Mel@118:

    ‘one of the very few economists who considers Marx worthy of any attention at all’

    You might want to tell all the heterodox economists. And Nouriel Roubini (wherever he sits on the heterodox/orthodox continuum).

  110. Condoleeza Rice recently confirmed that they did not invade Iraq to bring democracy and in fact their only reasons to nvade were that they had run out of options and Iraq lied.

  111. Dan, all you’re demonstrating is that you’ve completely failed to grasp the concept of ideology and as such you are not in any way shape or form a Marxian.

    “You might want to tell all the heterodox economists. And Nouriel Roubini (wherever he sits on the heterodox/orthodox continuum).”

    How many academic heterodox economists teach Marx in the classroom? But yes, thanks for reminding me of Roubini.

  112. Incidentally, US regimes have lied about all sorts of stuff.

    If what you say is true, Condi has painted the utterly strange picture of the US lying about the reason for invasion really being lying.

    I assume she’s not of the opinion that the US should have been invaded on those grounds?

  113. So Saddam most of our hospitals had weapons of mass destruction nuclear waste from medical uses and he did not provide any evidence whatever for their proper disposal.

    The subsequent search for the WMD concluded that it was unlikely (in a country with vast areas it is just impracticable to search) to find any.

    So, I guess the solution for our nuclear waste disposal problem is to just say that they don’t exist, destroy or fudge the records, and put them somewhere nobody will find them?

    I am sure the anti-nuclear lobby in this country would accept the same logic, surely?

    Or perhaps there is a logical problem with accepting as fact the line that just because we can’t find the things, it does not mean they never existed (just ask the Kurds).

  114. Mel@134: try Sydney Uni political economy department – they go bananas for Marx there. Weeks 4 and 5 of the masters core concepts course.

    Marks: yes, but as Scott Ritter said, when you have remnants of a WMD capacity totaling maybe 5-10% of a program, you don’t have a capacity or a program.

  115. Oh see, so you’re justifying your crank theory that demand by the wealthy caused stagnant wages.

    No that wasn’t my ‘theory’. My key point was that the economic recovery you pointed to was funded by public debt. The secondary point as this public debt was used to fuel demand of the wealthy (through tax cuts) rather than demand for the less well off (through government services or transfer payments), the wealthy greatly benefited. The point about the wage stagnation was just a further illustration of how the 80′s were not a great time economically.

    As for the impact of illegal workers:

    The most respected recent studies show that most Americans would notice little difference in their paychecks if illegal immigrants suddenly disappeared from the United States. That’s because most Americans don’t directly compete with illegal immigrants for jobs. … a study by Economist Giovanni Peri concluded that between 1990 and 2004, immigrant workers raised the wages of native born workers in general by 4%.

    I do find it interesting you can see a potential systematic effect of the existence of workers on labour supply and prices, but deny any potential systematic effect of the existence of wealthy people on demand and the price goods and services.

  116. No that wasn’t my ‘theory’.

    I added on to your logical fallacies.

    My key point was that the economic recovery you pointed to was funded by public debt.

    Expand on this a little. There were periods in the last 25 years when the deficit was even in surplus such as part of Clinton’s time in office.

    Are you actually suggesting that public debt/interest on public debt stimulates the economy? If so, you’re creating another “unique” theory and I’m honored to be the first person to read it.

    The secondary point as this public debt was used to fuel demand of the wealthy (through tax cuts) rather than demand for the less well off (through government services or transfer payments), the wealthy greatly benefited.

    Dude, 50% of Americans don’t pay tax and in fact are and have been recipients of tax credits. Secondly income taxes in the US are perhaps the most progressive in the western world. Your theory is bunk.

    The point about the wage stagnation was just a further illustration of how the 80′s were not a great time economically.

    Oh yea, it was a replay of the depression all over again.

    I do find it interesting you can see a potential systematic effect of the existence of workers on labour supply and prices, but deny any potential systematic effect of the existence of wealthy people on demand and the price goods and services.

    Of course you’d find it interesting. You come up with a cockamamie theory that demand by the wealthy causes inflation without even thinking about the effects of monetary policy and then think that supply shocks in the labor market can’t occur.

    Go back and read what I said again please. I told you that aggregate income in the lower reaches of US income levels rose, which means people looking looking for work in those segments were mostly accommodated. That’s a good thing. However there was certainly some downwards pressure on wage rates too.

    Desipis, what you’re doing is trying to glue some theory to your ideology. It doesn’t work like that.

  117. Dan

    I should have added income tax, that true. No biggie. In any event if you take tax credits into account it possibly is true.

    The point is the the lesser off are not getting shafted. The US Treasury is.

  118. ‘it possibly is true.’

    C’mon, have a go at verifying your claims. You’re better than saying ‘possibly’ and crossing your fingers.

  119. JC: The stimulating effect of expansionary fiscal policy is a “unique” theory now?

    Dude, 50% of Americans don’t pay tax and in fact are and have been recipients of tax credits.

    I was talking in relative changes, not in absolutes.

  120. The stimulating effect of expansionary fiscal policy is a “unique” theory now?

    You weren’t clear on what you were saying. I wasn’t certain if you were talking about the actual spending (the deficit) or the interest being paid on the debt.

    I was talking in relative changes, not in absolutes.

    My comment still applies.

    Desipis, what you seem to be doing is peddling a perverted version of Marxist economics where everything is zero sum. In your case you think that someone going out and buying a Porsche or a big house removes resources from the needy because it takes away resources from something else that you consider is more deserving.

    We’ve tried the evening out schtick for 70 years with the soviet union and its satellites. It doesn’t work and turns people into zombies, frightened stiff there will be a knock on the door at midnight.

    I’m still waiting for an answer to the question I posed up thread. Please show me an economic system that has raised living standards equal to the liberal democracies.

  121. China was the best I could think of.

    In response, Pedro presented some uselessly abstracted data which didn’t take into account a baseline (I guess the point just before economic reform began).

    I’m happy to be wrong on this but I don’t think it’s been addressed yet.

  122. What about Venezuela under Chavez (again, bearing in mind some baseline point)?

    Do the Scandy countries count as liberal democracies? Because most people would say they have better quality of life than more… liberal liberal democracies.

  123. where everything is zero sum.

    I’m not saying everything is zero sum.

    Please show me an economic system that has raised living standards equal to the liberal democracies.

    I’m not arguing against liberal democracy.

    We’ve tried the evening out schtick for 70 years with the soviet union and its satellites.

    I’m not arguing for a soviet style economy.

    I’m arguing against simple minded ideologically driven economic policy, not putting forward a theory of my own. However, since you seem content to constructing straw-men to attack, I think I might just leave you to wait for your straw-men to answer you.

  124. I’m not saying everything is zero sum.

    You’re certainly alluding to it. What other conclusions can one draw from your theory that the rich cause price inflation. Isn’t that what you said?

    Here, let me quote you:

    The more capacity the “top 1%” have to shift labour to meeting their demands, the less labour is available to serve the demands of the rest. This lower supply means higher prices, meaning people can afford less.

    You’re clearly describing vulgar Marxist zero sum argument mixing it all up with OWS stuff.

    I’m arguing against simple minded ideologically driven economic policy, not putting forward a theory of my own.

    Well you are, revealing little pieces of it as you go along. That’s okay, I really don’t much care what you believe, however it’s easier in a discussion if you’re straight up and not beating around bushes.

  125. Dan, the point of the data is that china is still a very poor place over all so whoever lauded the joint as a riposte to JC’s claim about the superior economic performance of liberal democracy has got a fair bit of waiting to do before we get to the bell lap.

    Desi’s claim about the rich is that they make prices rise because of their higher purchasing power. I don’t know what the inflation in the 70s and 80s has to do with that claim, but the honest rich got that way by producing stuff people want to buy and, through their nasty capital accumulation, driving prices lower not higher. Productivity growth requires the application of capital, don’t believe me, ask Paul Krugman, http://books.google.com.au/books?id=awA0yp1V8c8C&pg=PA11&lpg=PA11&dq=krugman+productivity+growth&source=bl&ots=3fWyY5H_yp&sig=a36W00LggwvjVr9bXg2onlxQFVI&hl=en&sa=X&ei=skUWT7SFD4uamQWL4LXKAw&ved=0CCQQ6AEwATgK#v=onepage&q&f=false So, as evidence against the claim that your honest wealth doesn’t hurt me, it’s a fail.

  126. … the honest rich…

    As far as I recall we weren’t talking about the ‘honest’ rich. We were talking about the rich in general. If you want to limit it to the rich whose wealth simply reflects the net wealth they’ve personally created then sure, the net affect on others would be positive. However, I am sceptical about exactly how much of the wealth is actually ‘honest’ in this sense.

  127. However, I am sceptical about exactly how much of the wealth is actually ‘honest’ in this sense.

    Sceptical about what exactly? If you have evidence that someone is stealing money or committing a fraud then report them to the police or ASIC. That route is of course available to you.

  128. Bubbles are a hindsight thing and only be understood after they burst. In any event why blame people responding to incentives?

    Bubbles are not easily understood in my opinion. We look back now and conventional wisdom suggests there was a tech bubble followed by a crash and that it was bad. But was it really? We had a suite of revolutionary technology being put to the market by start ups, which investors frankly had no idea of their true worth. It was hard at the time trying to figure out what was going to win out, how massive the technology was going be in terms of impact and lastly what valuation to place on those firms in that space. Who really knew? All we knew was that it was freaking huge, revolutionary and absolutely fantastic. Eventually reality set in the valuations collapsed. So what though? What do you or I really care if XYZ inc. start up failed and Joe Schmoe lost a bundle on internet stocks. But the world gained something, didn’t we? All those sky high valuations sparked a gold rush and tremendous innovation. So we gained a staggering ton of new technology.

    Regarding the housing collapse.

    My hunch is that the Fed made two huge mistakes. They were too loose in the earlier part of the decade despite the inflation rate being reasonably well behaved. I think this mistake was unavoidable as they were extremely concerned with the tech crash and the compounding concerns with 911/the war and the effect on confidence. The second mistake was avoidable however. The Fed should have been more forward looking and far less stingy before Bear Stern. In fact I think they were indirectly responsible for the Bear stern and Lehman collapses. They turned what at one time looked like localized distress in one segment of the credit market (sub-prime) and managed through stubborn inaction to turn it into an all encompassing collapse. They were too tight until late 2009 when they began to finally understand the gravity of the problem and acted to liquify the system.

    I always had a hunch they caused it. Scott Sumner explains it far more succinctly. He correctly suggests in my view, that the economy didn’t look like it was tanking even immediately after the Lehman collapse. It was when the minutes of the next Fed meet were published suggesting the Fed still didn’t get it that sent asset markets and the economy tanking.

    That’s just the Fed. The ECB was appalling throughout that period and they even had the hide to raise rates mid year saying they feared inflation…. as their banking system was crashing around them.

  129. I recall a paper that demonstrated that only if the top few companies of the tech boom survived and ate up all their competition, they were still overvalued. Does that ring any bells for you (or any other commenters)?

    And of course there are people like Steve Keen who have an entirely different approach to macroeconomic analysis and say that we in Australia are in a big housing bubble. My Irish friends say they’ve seen it all before as well.

  130. Prices are falling in most capital cities and expected to fall further this year with the exception of Sydney perhaps (only from what I’ve read). In the city I live prices could be down 20% from their peak in 2011, but no one seems to care much.

    The real concern is if there is a dramatic economic slowdown which means incomes fall and people have a difficult time servicing their debt. That’s where trouble starts. You can’t predict that stuff though.

    And Steve did make the long trek to Mt. Kosciusko :-)

  131. I hope prices stagnate or fall in Sydney this year as I’m planning to buy an apartment (and have no intention of selling soon after that).

  132. I could say without hesitation that Frank Stillwell would look nice in a tutu but that doesn’t make him an economist. Political economy and economics separated eons ago. They are not the same thing and, in truth, the two disciplines barely speak to each other.

    Hopefully one of the economists who comment on this forum will come forward and set the record straight.

  133. I have to admit that I agree with Mel.

    After I misinterpreted the reference to Sydney Uni political economy department as a joke I thought I had better leave Dan to it though.

  134. John Quiggin, perhaps?

    I am well aware of the ‘schism’ as it were.

    Economics became (and is) dominated by neoclassical thinking. That’s orthodox economics. But there is heterodox economics too.

    One of my classes last semester was taught by a former chief economic adviser to a number of premiers and a deputy PM. I think she would claim that she is an economist. Feel free to take her on, though I’d suggest you wear a helmet.

    But ultimately it’s just semantics and you’re making something out of nothing.

  135. Dan, given that your studies in political economy have led you to believe that history is primarily propelled along by a series of lies and conspiracies rather than through deeper structural dynamics refracted through ideology, I must say I am hugely unimpressed. That God I’m a Melbournian rather Sydneysider (or wasm, these days I live on a hobby farm)!

    My tertiary studies, like yours, were in the social sciences but I did electives from an economics course because I find the topic very interesting. I think its given me the chance to have a foot in both camps and to see that both economics and political economy have their limitations and I’m very grateful for that.

    ps. Do you consider John Quiggin a neoclassical economist?

    pps. My sister studied home economics. Does that also make her an economist ;)

  136. Nono, I’m very interested in deeper structural dynamics.

    That the Bush regime were dishonest about their reasons for invading Iraq is now a matter of historical record, but in any event has no bearing on my postgrad studies (in fact predates them by almost a decade).

    Someone quite eminent (I forget who) described John Quiggin as ‘ruthlessly neoclassical’. I would say his neoclassical chops are very impressive but he is an interdisciplinary thinker.

  137. “That the Bush regime were dishonest about their reasons for invading Iraq is now a matter of historical record … ”

    You produce a smoking gun that would hold up in a court of law and I’ll buy into your conspiracy and lies theory :)

    BY the way, were all of the 34 CoW countries that sent troops to Iraq part of the conspiracy? What about Hans Blix and the UN? Were they in on it? If so, what loot did they get? Have you got proof? How much money did Bush make out of the conspiracy? Really, Dan, your script has more gaps than an episode of MacGyver.

    Do you also believe global warming is a conspiracy and that the IPCC and its henchmen are lying? What other conspiracies are you alleging?

  138. No, the science is clear on climate change.

    I reject the characterisation that my views on Iraq represent a conspiracy theory.

    No other conspiracy theories here either.

    Thanks, over and out.

  139. Gee Dan just re-read Men’s comment. If you can get your head around the fact that your ‘theory’ requires either
    1) Bush to be an evil genius (and he isn’t even Jewish, you are clearly not very good at ‘theories’)
    or
    2) for most of the leaders of the world and nearly anyone with any involvement in the matter to have been in on it,

    you should then be able to work out why not many people who have graduated continue to hang around uni political economy students ;)

  140. Dan, you may deny all you like but you have most certainly confected a conspiracy theory. Here is an Oxford dictionary definition of conspiracy:

    “a secret plan by a group to do something unlawful or harmful”

    And here is what you’ve been telling us:

    @169: “That the Bush regime were dishonest about their reasons for invading Iraq is now a matter of historical record … ”

    And at Quiggin’s site:

    “My guesstimate is that the war’s profitability is a near thing on the hard numbers, but given the risks and costs associated with leaving Western energy reserves less certain, and the possibility of vast untapped resources in Iraq, the war probably made – and makes – good business sense.”

    And:

    “If you believe that wars like Iraq, Afghanistan, Vietnam have ideological underpinnings, no wonder you got taken in like a dupe. Ideology in this context is just PR. ”

    And:

    “Mel, forget the ideology bs, because it’s lies. Instead, work out who the intended beneficiaries are.”

    You have asserted without equivocation in the above comments that persons in the Bush Adminstration secretly concocted a plan to profit from Iraqi oil and that the reasons the Administration gave for the invasion were nothing more than a series of confected lies. That, my old china plate, is the very essence of a conspiracy as defined by the Oxford dictionary.

    Why not just cut the crap and admit you are a conspiracy theorist?

  141. I admire your bravery (or is it Dunning-Kruger?) in linking to a thread on which you got taken to the cleaners, the pitiful denouement being your defense of the illegal invasion of Iraq on the grounds that condemning it constituted appeasement! Completely backwards.

    If you insist on calling a country aiming to secure its energy resources a conspiracy, okay; my sense is that it was out in the open.

    In any event, the fact is that from time to time there are hidden agendas. For instance, believing that Brutus plotted to kill Caesar does not make one a ‘conspiracy theorist’.

    Finally, if you really take what diplomats and intelligence officers say publicly at their word… you’ve never spoken to an ex-diplomat or ex-intelligence officer.

  142. Patrick@173:

    a) my ‘theory’ requires nothing of the sort, though if anyone was going to be taken in by Mel’s bargain-basement straw man, it would be you.

    b) hilarious stuff. As a person of Jewish heritage myself, I was falling off my seat. You want to have a go at some blood libels gags? I hear they get laughs.

  143. Mel,

    Here’s Dennis Kucinich in 2003:

    ‘Why is our nation preparing to use the most powerful military machine in history to wage an assault against the people of Iraq[...]?

    There is no answer which can separate itself from oil economics, profit requirements of arms trade, or distorted notions of empire-building.’

    From now on, if you ever feel the irrational and ugly need to call me a conspiracy theorist, can you please add on, ‘like Dennis Kucinich’, so I am reminded I am in the best company the US Congress has to offer. Thanks!

  144. I agree Patrick @ 178.

    I also have to yawn a bit at the confected outrage over the ousting of a brutal dictator who did have weapons of mass destruction, used them on civilians and did not account for their disposal.

    Far better to hate the USA.

  145. The ousting I have no issue with.

    The thousands upon thousands of civilian deaths I do.

    I like the US but their foreign policy is often myopic and hypocritical.

  146. Iraq is not the only invasion that causes heaps of civilian deaths. And arguably the better approach is to say that the invasion triggered the inevitable civil war which caused the heaps of civilian deaths. But which ever way you look at it, there are only three main claims:

    1 the invasion was a good thing but big mistakes were made and someone should be slapped;

    2 the invasion was a good thing and you have to accept that people don’t have great foresight and mistakes are always made, so learn but don’t get too over-excited;

    3 we should have left Saddam in place because that is better than any possible alternative involving an invasion.

  147. Happy New Year Pedro and no Ken I am not going to assist in dereiling the thread but I could say they were between Iraq and a hard place

  148. We have to accept the principles of Darwinism whether we like them or not. In every society some will succeed and some will fail. Trying to prevent this can only end in disaster.

    One of the main problems of Western civilisation these days is that we try to make everyone equal. This may be effective in the short term but in the long one it’s a recipe for disaster.

  149. Fascinating. Can’t make a civilised society, don’t bother trying.

    Of course, you’ve (probably inadvertently) snuck in the quaintly Enlightenment-era assumption that the unit of analysis that bears examination is the individual, as opposed to the species, or the hive (city? society? culture?), or the gene. Darwin weeps.

    Have you just inadvertently demonstrated your own thesis in a stunning turn of Dunning-Kruger?

  150. Dan
    A functioning society cannot reward failure the same as success, the badly done is too numerous and too easy to achieve. It would soon swamp the good in a swamp of velocity.

  151. john, a decent society would find something that everyone can be successful at, and it would not elevate one form of achievment – making money – over others. We could all be ‘good’ if the group realised that this is the only decent way to deal with the distribution of ability in the human race.

  152. Julie
    “reward”(encouragement) cannot be evenly spread if it is to mean much.

    “be successful at”, quite a few people have a marked talent for authority how many regulatory positions can we afford?

  153. john intrinsic rewards, are sposed to work better than extrinsic – or is that psychobabble from the luvvie left, you think?

    Are you so sure about the way in which this society distinguishes success from failure; it seems a bit simplistic to me. I do think there is room for some innovations here.

    I’m into self-regulation myself; but I see little evidence of any self-regulation on the part of the “one percenters” and the onepercenter wannabees, so for my protection, I’d vote – if I voted – for as much regulation as is on offer.

  154. BTW
    The ability to spot, guide and nurture talent is one of the rarest talents of all.

    I think you would have to redefine the identification of “successful” (and decent).

  155. @189
    “intrinsic rewards, are sposed to work better than extrinsic” yes to a degree Money is a means not a end. but means are necesities.

    “Are you so sure about the way in which this society distinguishes success from failure; it seems a bit simplistic to me. I do think there is room for some innovations here.”
    Agree, especially about need for reining in the rewards for asset speculation.

    Regulation is very necessary , we are by nature clever and destructive. The eternal problem is that Authority not based in good performance, is a talent that is very common in the species.

  156. John I’m thinking that we are getting closer to being able to identify the things that will help us maximise every person’s talents right from birth.

    http://www.theatlantic.com/magazine/archive/2009/12/the-science-of-success/7761/

    The identification of the moral foundations that will work for out species is as important as sorting out the economic rules and perhaps we could even combine them.

    David Rose of the University of Missouri, St. Louis and the author of The Moral Foundation of Economic Behavior talks with EconTalk host Russ Roberts about the book and the role morality plays in prosperity. Rose argues that morality plays a crucial role in prosperity and economic development. Knowing that the people you trade with have a principled aversion to exploiting opportunities for cheating in dealing with others allows economic actors to trust one another. That in turn allows for the widespread specialization and interaction through markets with strangers that creates prosperity. In this conversation, Rose explores the nature of the principles that work best to engender trust. The conversation closes with a discussion of the current trend in morality in America and the implications for trust and prosperity.

    http://www.econtalk.org/archives/2012/01/david_rose_on_t.html

    It seems currently that, as individuals, we have the right to define these important things in the way the way that we prefer, but if we want to build a society that self-organises, we do need a common goal. That seems to be clear from all the information about self-organising systems.

  157. Julie

    As far as ‘talents’, a important part of development is “doing all the dumb things”. Creativity is ultimately about doing things that you have not yet thought of…. risky.

    As for morals … I am roughly christian , I would not disagree much with what Rabbi Sachs has to say in today’s (17 feb) Fin review.

  158. John

    It seems to me that ‘talents’ can be conceptualised as individual differences and these are much more important, in psychology and economics, than we currently accept. David Buss (2009) thinks that the current neglect of individual differences in psychology is due to the assumption in evolutionary biology that natural selection has reduced or eliminated heritable differences; that these are best viewed as “noise” and thus are irrelevant to the basic functioning of the species.

    http://pps.sagepub.com/content/4/4/359.abstract

    This seems to be the fundamental assumption of economic theories also.

    But, it is becoming clear, even to those of us who like things to be simple and ordered, that there are significant individual differences in personality characteristics such as; ability to tolerate complexity, dominance vs submissiveness, agreeableness vs aggressiveness, etc; there are large differences in intelligence and specific abilities such as spatial, numerical, verbal etc; differences in ‘cheater detection’ abilities, and in how ‘exploitable’ we are etc.

    Surely this evidence shows that the basis of the capitalist model that sees humans as self-regulating individuals, all equally capable, is quite wrong.

    Perhaps creativity is an ‘emergent’ property that develops from a set of circumstances in which the individual feels safe to take a risk and think something different? And, if we accept that people are not all the same, then we accept that the circumstances in which creativity emerges in any individual will vary, and there won’t be one set of conditions, that will maximise human creativity.

    I do like small c christians; I’d like big C Christians to repudiate the old testament and to be less hypocritical.

    I fancy myself as a small b buddhist. But here is a great deal of similarity in the philosophical assumptions of both these moral codes, and, of course, among all the moral codes that have been developed to manage individual differences in human ability.

    I couldn’t find the Rabbi Sachs article. But I have another really really interesting link on the topic of evolution and morality. Dennis Krebs argues that “Nothing in morality makes sense, except in the light of evolution”.

    http://www.epjournal.net/wp-content/uploads/EP103538.pdf

  159. John it ‘feels’ authoritian to me and the attitude doesn’t do much for the self-esteem of people like me who have not managed to self-regulate appropriately. But I just sing the Beck song ‘I’m a Loser, So Why Don’t You Kill Me’ when I ‘feel’ criticised by talk of welfare bludgers.

    But really I think the reason the idea of the rugged independent individual as the model for everyone was adopted by some people, was because it was idealistic and romantic – how cool is the hero in Atlas Shrugged? LOL I thought he was wonderful when I was 12, I’d offer him a referral to a good psychologist now.

    And simplicity is convenient; it reduces the complexity of human behaviour to something easily modelled. This is a problem according to John Kay, who writes that economics suffers from the belief that models are not just useful tools but also are capable of yielding comprehensive and universal descrptions of the world”.

    http://www.johnkay.com/2011/10/04/the-map-is-not-the-territory-an-essay-on-the-state-of-economics

  160. Julie
    I don’t know anybody that really completely ‘self-regulates appropriately’.
    I hope that your despair will pass.
    Some of the Books of the old testament are very wise- the book of Ruth is one of the best writings on refuges that I have read and the Book of job!
    Wasn’t thinking of rugged individualism, more like free association for mutual benefit. The freedom to get it wrong is a important part of freedom (and ‘free will’)is

  161. BTW]
    Julie you mentioned Buddhism . Do you practice; do you belong to a Sangah? If not perhaps you should go to the temple/Zendo, it might help.

  162. LOL John – I’m not despairing, I was aiming to present an insoucient ‘in your face’ attitude; now I am dissapointed that you think I have let ‘them’ win and determine my state of mind. I do believe – a delusional belief I am sure – I have exercised ‘free will’ in rising above the widespread disdain for those like me who are less than adept at getting ahead.

    Re the old testament, I can’t get past genesis and the appalling attempt by Adam to blame Eve and the snake. It was like when I tried to read ‘The Bell Curve’. I couldn’t get over the ignorance of human psychology that the author demonstrated in the introduction; it meant that for me the whole edifice of his argument was flawed and not worth bothering with.

    Fran Kelly is at the moment, on RN, interviewing Alain de Botton on the use of christianity by athiests. This is I think, a good attempt to counter the Dawkin type fundamentalism and recognise all the useful things that christianity has provided to moderate human differences.

    It seems to me that trust is a more useful and basic concept than freedom; if we could trust ‘the other’, we’d all be free. Living in a small community where trust is high, I can see how much freedom this social organisation provides.

  163. Julie
    Glad that you tricked me.

    Alain de Botton is good on the Book of Job , have you read his piece on Job , the sublime and Edmond Burke? think its in the book on Travel.

    Semantics is an emergent quality of syntax, if Botton, a ‘atheist’, practices the complex form then the content will come no matter what.

    Re the old and new books . We evolved in small groups of about 1000 strong that treated each other as kind and who also regularly went out and bashed up the neighboring tribes of not kind.
    A underlying theme of the Book is the gradual extension of ‘kindness’ to those of other tribes(of Israel) and then to the world of barbarians and losers.

  164. We are still learning about the evolution of social systems; but it seems to me that our aboriginal people developed a very different way of organising themselves from the rest of the world and their social organisation, given it’s stability is worth investigating.

    I see somebody above says that there never has been a stable egalitarian society but that is exactly what the australian aborigines created.

    It would have been so much better if we western people had been interested in the way they managed things like inter-group conflicts and justice. Seems obvious that they did things differently because they didn’t have the pressures that come from invasion and war’s of conquest that western societies faced – thinking about Celtic Britain as portrayed in the TV show currently on SBS.

    Another thing that we don’t seem to see as important is that the groups we evolved in, were members of a family; this is clearly the fundamental organisation of the species and yet the family relationship doesn’t seem to be factored into any economic theory.

    But I can’t see that christianity is the answer – for sure it could be part of the answer – but it has never been enough to stop the species behaving badly and has at times, provided justification for people to behave very badly and as you point out above, the christian right and their denial of evolution is a real stumbling block in the search for ‘truth’ and the development of a common moral code.

    So, I think we need something else to go with this imaginary species wide moral code that I am imagining, some set of assumptions that makes it clear to us all that that there can be real benefits in terms of intrinsic rewards from accepting a loss of personal freedom for the good of the group.

  165. Julie
    The indigenous tribes were endlessly skirmishing , it was mostly at the level of scrappy and short engagements and did not involve the alien idea of conquest , but it was bloody warfare none the less.

    ‘loss of personal freedom for the good of the group” sounds a bit like ‘patriotism’ unpacked : the last refuge of the scoundrel.

    Alexi Sayle has spoken of his Marxist parents as: ‘people who did not really object to power.. what they objected to was that they did not have power’

  166. julie
    Val Plumwood, before she died, was increasingly focused upon the problem of our ‘destructiveness ‘ as something that is deeply ingrained in our roots, long before capitalism socialism and liberalism. She was a very moral philosopher( vaguely annoying), some links to late papers :
    http://valplumwood.com/2008/03/08/sustainability/
    http://valplumwood.com/2008/03/08/review-of-raymond-gaitas-the-philosophers-dog/
    http://valplumwood.com/2008/03/08/ecological-death/

  167. John the skirmishes happened and they stole women, and it was ugly and brutal by our judgement, but the wars or fueds were managed by the overarching laws of the land that all the tribes in an area accepted and these laws minimised the damage to the individual and meant that ongoing feuds did not become a problem.

    According to the current consensus in anthropology, I think, there was only one ‘wave’ of people who populated Australia, so all the tribes are descended from one group of people and it isn’t difficult to imagine that they could have retained a philosophy in which all people were regarded as one people and everyone was part of the whole, no matter how different the beliefs and practices that each tribe evolved.

    The level of violence in their culture is very disturbing to us, but it was a deliberate choice they made, something like the Spartan philosophy perhaps, to see pain as character building and the ability to withstand pain as something to be developd and admired.

    Giving up personal freedom for the good of the group works like this for me; I’m willing to give up my personal freedom to drive really really fast for the good of the community.

    I’m a deliberate optimist John, Perhaps I’ll change my name to Pollyanna. So I’m not convinced that we are basically destructive. I don’t think we would have survived if this was a ubiquitous charcteristic of the species.

    I’m reading Charles P. Mountford who lived with the aborigines for decades from the ’40′s onward. He writes about the food distribution system, in particular the way that a hunter who had killed an animal and carried it back to camp, simply gave it to another member of the tribe who cooks and distributes it, and apparently the hunter actually gets the dregs of the carcass.

    Mountford says that this system means that in the long run, everyone gets an equal share of the food but the real function is to ensure that the power of the old men, who govern the tribe, is not undermined by the younger hunters who could barter their kills for extra priviliges.

    Mountford writes under aboriginal law the hunter gains no material advantage from his hunting prowess. “His skill is of more value to his people than to him; his pleasure is in the joy of achievement (intrinsic reward) and the approbation of his fellows, powerful factors in any community, primitive or modern”

    It seems reasonable to me, that the hunter gain no particular advantage over other people, because he was born with the physical characteristics that make him a better hunter than the others.

  168. Many ideological arguments contain a thread of the old ‘We are natural born killers’ Vs ‘we are born Innocent.. societies to blame’ dispute. Wont be adding to that scrum.
    Christians (and Buddhists) believe in both the need and the possibility of redemption .. optimistic pessimists??

    Evidence that the arrival of humans was the reason for the (slow) mass extinction of Australias megafauna is compelling, to date no articulated remains dating to post about 45 thousand years ago have been found and large grass eaters were just as affected as large browsers and tree dwellers; I.E climate change is a poor explanation.

  169. “His skill is of more value to his people than to him …”

    Exactly the same as any highly trained modern worker, be it doctor, lawyer, engineer, etc.

    “his pleasure is in the joy of achievement (intrinsic reward) and the approbation of his fellows”

    In the modern world we have a systematic approach to bestowing “approbation” upon people, which generally goes under the name “money”, but that’s perhaps a broad term, we could refine that down to “fiat currency” which has zero material value and ONLY serves as a token of “approbation”.

    “… not undermined by the younger hunters who could barter their kills for extra priviliges …”

    Which is just silly because by earning respect and status within the tribe, they ARE bartering. Think about it, you have no refrigerator, no salt, and limited ability to build a smokehouse. What are you going to do with a large lump of meat that might take you several weeks to eat all on your own?

  170. Actually they were good at scoffing down abundance when it came to hand, Bungarre was reported as eating something like 16 whole breams in one sitting at the governors house.

  171. I can’t believe we are seriously having an ‘Aborigines as noble savages’ discussion.

    They were human, they were social animals and they lusted and coveted and stole and cheated, and valued status above nearly all else, and sought each to restrain one another in their stealing and cheating as best they could.

    The alternative theory is that they were either aliens or non-sentient.

  172. Tel My point is that money is not acting as a useful measure of success for all of us. I have been told, by people like you, I suppose, that if I am not successful at earning the approbation of my society in the accepted way, by successfully making money, then I am not worthy of being part of the society and should be allowed to die out.

    Do you also think that if I am not fit enough to do well in this, the best of all possible worlds, then I shouldn’t try and change things so that I would be better off?

    But you have misunderstood my point about bartering in a tribe. I think that in a tribal social organisation people would find it impossible – emotionally – to have and keep lots of meat while others didn’t eat. I am quite sure that if there was approval for this sort of greed and selfishness, as there is in our society, the individual would have found a way to keep his meat for himself.

    Patrick, you might be having a discussion about aborigines as noble savages but I am not. Are you deliberately missing the point or have you been rendered ‘stupid’ by your right wing ideology? I think most of us have gone past the idea that ‘noble’ or ‘savages’ has any useful meaning for a discussion of how other people managed to regulate their behaviour.

    My point was that social animals can restrain each other in a way that provides security – both emotional and material – for each person in the tribe; which is something that our society is not able to do. As an aside, to support my call for security alongside liberty, I do believe that part of the declaration of the rights of man and the citizen, back in 1789, included security, as well as liberty, property, and resistance to oppression.

    I want my right to security; I think I would have found it in a tribal society.

    The alternative theory is that because they had a completely different history to that of most of the rest of the world, they might have evolved a different social organisation that has some alternative ideas about human nature, to offer.

    Perhaps you are so happy with the current way of organising things because it suits your individual psychology and ability. Is that what conservatism is all about; wanting to feel better than other people?

    John, thanks for the conversation; for allowing me to rush in where angels fear to tread. I do enjoy advocating for a real understanding of the aboriginal way of dealing with human nature. Have you watched the First Australians series on SBS

    http://www.sbs.com.au/firstaustralians/

    Bungarre may have over indulged and horrifed his hosts at goverment house but I am sure that Bennelong had noted the ‘manners’ of the time and restrained himself appropriately.

    One more thing; the question whether we are innocent or essentially self-destructive is just not relevant if one accepts that evolution is the most useful framework within we ask questions about our selves; both psysical and psychological. I think dichotomies are better thought of as distributions.

  173. Julie: “money is not acting as a useful measure of success for all of us”

    If you want to measure success in a different way, then no one can make that decision except for you. Be my guest and measure it any way you like.

    “I have been told, by people like you, I suppose, that if I am not successful at earning the approbation of my society in the accepted way, by successfully making money, then I am not worthy of being part of the society and should be allowed to die out.”

    Told by me? Really? I wish you all the best, but honestly I’m not stressed over whose approbation you earn, nor how you do it, nor what you do with it after that. Look, the universal monetary standard wasn’t my idea, it was foisted on me. I don’t even terribly like the idea, I’m merely pointing out that your description of aboriginal food gathering is very much parallel to our modern approach… we are just a lot more formal about it.

    If I took a turn driving the bus, you would have free banking, gold and silver, bitcoin, and any other system that you could find a bunch of people silly enough to agree with. I’m certainly not going to stand in the way if you want to start your own tribe.

    However, I will point out that whatever you want to do, the Australian government will feel entitled to extract what they see is their fair share of tax, and they seem to have this preference for being paid in Aus $. If you ever figure out how to pay that tax in coloured shells or roo skins then you make sure I hear about it, OK? Until you figure that one out, you are stuck on the money earning treadmill… just like the rest of us sods. Don’t you dare tell me I put you there.

    “Do you also think that if I am not fit enough to do well in this, the best of all possible worlds, then I shouldn’t try and change things so that I would be better off?”

    Go for it. Have by blessing… at least until you come around to attempting to force me against my will to work harder so I can pay for your better world; then I’ll probably be a little less understanding, and I hope the reason might be clear, at an emotional level and all that.

    “I am quite sure that if there was approval for this sort of greed and selfishness, as there is in our society, the individual would have found a way to keep his meat for himself.”

    Slabs of raw meat represent a poor choice for long term wealth accumulation. That’s not a property of social organisation.

    As I already mentioned, you can offer your approval on any basis you like, but it seems to me that what you want is to be able to control other people’s approval. I agree, that would be very handy, if I could do it I’d no doubt find lots of uses for that.

  174. Tell
    “you want is to be able to control other people’s approval. I agree, that would be very handy, if I could do it I’d no doubt find lots of uses for that.’

    Personaly the whole buz of performance is when you gain ‘approval’ that has been freely given by people who owe you nothing.

  175. Tell You seem very defensive, for very little reason it seems to me reading back over what I wrote. I never mentioned making you work harder, or taxing you more; do you over react all the time?

    Anyway, the only thing that I could find in your reply that had anything to do with what I was talking about was your claim that the way the aborigines related to each other is no different to the way we organise our society.

    Is that your point?

    So apparently to refute this idea, you say that “slabs of raw meat represent a poor choice for long term wealth accumulation”. I totally agree with you, who would think that meat without refrigeration would be a good choice for long term wealth accumulation? But wtf does that have to do with the insights that Charles P Mountford had about their society?

    Have you ever heard of Sea steading? I always wonder why more freedom loving libertarians don’t take advantage of this opportunity to experience total freedom from taxation and it’s benefits.

  176. Very true John; the only true security comes from within; I actually read that on a computer game; Zuma, I think it was.

    But we are all comforted by illusions; the idea that pure capitalism would bring us wealth and happiness was, unfortunately, another illusion, just like religion.

    It gave us lots of great stuff but, despite all the evidence from the happiness studies that income equates to greater happiness; this doesn’t seem to work for all of us, as the increasing suicide rate seems to show.

    I heard Bob Katter talking about the rise of suicides among young people in his electorate, and he said something like; ….and it’s not just the no-hoper class; it’s happening in good families too!

    What do you think that Jesus meant when he said, the meek shall inherit the earth? He did say that?

  177. You are talking about things that do not exist , like ‘pure capitalism’.

    In the place were I live the poor are not left out in the frost to die, they have pensions and a fair degree of health care.

    Suicide in men in rural areas is a complex awfull issue ( I remind you that I am a member of a community charitable group) your willingness to use ‘suicide’ for pushing a ideological barrow (up hill) is as tasteless as it is unprincipled .

  178. John oops sorry to have mislead you as to my ideology. It doesn’t matter but as the title of the blog says, there’s Nothing wrong with Capitalism – just bad people stuff it up. Well nothing wrong with capitalism, in principle, theoretically. So I’m not sure what your problem is but then I never understand other people.

    But when some people in this society have so much, I just don’t think it is good enough to say that we keep the poor from dying in the frost. For some reason, it seems to me that we ‘should’ do better; the rich ‘could’ make the lives of the poor a lot better if they chose to, without suffering in any way themselves.

    Why don’t they choose to? Because they are able to think of the poor as no-hopers? and that allows them to sleep at night.

  179. Julie, if you want to hold your hand up and solemnly declare that you have no intention of increasing my tax burden, then I’ll hold up my hand and solemnly apologize for ever having doubted you.

    In terms of the insights of Charles P Mountford… the fact that the aboriginal hunter shares his kill does not demonstrate that he forgoes any opportunity to accumulate wealth; because keeping the kill to himself would not deliver any opportunity to accumulate wealth. You can’t use a forgone opportunity as evidence for any sort of behaviour when that opportunity never even existed in the first place.

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