The Free Market vs. Subsidies

[soliloquy76.livejournal.com]

This started out as sort of a thought dump in my journal, but a fetching young lass convinced me to post it here as well. Pardon any lack of cohesion.

I've been thinking about the free market and how that could work (or not) in the United States in a global economy. First, I should disclose that I'm by no means an expert in economics. Second, let's define some terms. A free market is defined as:

An economic system in which prices are determined by unrestricted competition between privately owned businesses.

This is the foundation of the Austrian school of economics pushed by libertarians and some conservative-types. The global economy can be defined as:

The international spread of capitalism, especially in recent decades, across national boundaries and with minimal restrictions by governments.

As we all know, we currently live in a global economy where various level of the free market exist. Each country has their own regulations, wage and human rights laws, etc which ultimately determine the cost of goods and services from those countries. China, for example, is the fastest growing economy in the world because their human rights laws and wages are so poor that workers are a cheap commodity. It's why we're all able to afford PCs, iPods, LCD TVs, etc. It's also why manufacturing in the United States is virtually nonexistent and (arguably) why we're seeing such high unemployment as jobs are outsourced to countries like China, India, and Mexico.

So how does the United States compete and get those jobs back? In a free(r) market, we would have to reach parity (or come close to) with the lowest common denominator. American workers would have to be competitive with Chinese workers, for example. Our quality of life would necessarily suffer. Is this something free market proponents accept, and by accepting this reality, advocate?

What got me thinking about this was my recent purchase of a Chevy Volt. For those who don't know, it's a Plug-in Hybrid Electric Vehicle (PHEV) produced by GM. GM, of course, was saved by the federal government in 2009 because of the credit crisis of 2008 and the subsequent recession. If GM hadn't been saved, not only would millions of jobs have been affected or lost, the Volt would have never seen the light of day and the US would be considerably behind the curve in development of next-generation vehicles. Japan already has the Prius (with a new PHEV variant), and the Leaf which is totally electric.

Now I was on board with the "end government subsidies" crowd not too long ago, but in conversations with some rather rabid anti-government conservatives, it got me thinking that not only are government subsidies not always a bad thing, they're necessary if the United States is to compete with the rest of the world. Every auto-producing nation in the world receives some sort of government subsidy, including Japan. By removing ours, we're effectively killing that industry in the United States.

My question for the free market advocates out there is that, given the global market we're in where other countries are subsidizing their industries, how do we reconcile not doing so domestically to remain competitive? I realize this is an oversimplification of a complicated issue, and like I said, I'm not an economics expert. Hopefully any free market advocates in here can set me straight.

Comments

[underlankers.livejournal.com]

Yeah, except where there is no government there is also no capitalism, instead there's noble landowners oppressing serfs whose misery is overlooked by everybody. The existence of government and capitalism go hand in hand, but I don't expect that such mundane reality would mean much as it is because there's never any level of government's existence not considered repressive. Even the old South where the government didn't exist outside the post-office is too controlling for libertarians, as opposed to anarcho-capitalists, given the immense number of arguments I've seen where the sharecropping economy bereft of a working class as sociologists consider the term and a very narrow government in terms of economic action (narrow in fact meaning non-existent) is too much government.

[underlankers.livejournal.com]

Yes, I'm sure I am. It's why in my contact I have yet to see libertarians define an optimum level of government influence for a mutual discussion, preferring instead to say what they would not as opposed to what they would. It's very Cromwellian.

[underlankers.livejournal.com]

The optimum level of governmental influence is that seen in the industrializing UK, USA, and German Empire, which blends positive building of viable economics while constricting the monopolies that inevitably result from attempts to have a purely free market. Now your turn, though I'm sure for a variety of reasons such an optimum level will never exist just as in Marxism the least sign of any thought other than the vast and useless proletariat is a sign of the effective brainwashing power of the legion of doom-er corporate media's powerful influence.

[underlankers.livejournal.com]

No I don't. I've simply noted that every libertarian I've met thus far knows what they don't want with government, not what they would want, and scream bloody murder when what they theoretically claim to want is actually done.

That's a non-answer to my question, which is about *governmental influence*. Nice statement of principle but it's not what I asked.

[underlankers.livejournal.com]

It's not an answer because I provided something specific, you gave an answer suited to a beauty pageant. When someone asks "What would you define as a good economic policy" and one person answers with an answer that reflects economic reality, shows knowledge of the system, reflects an understanding any possible changes and how they would actually work in practice, and other person says "I want everyone to be treated justly and equally" without saying how, one of them is an answer, the other's a slogan.

An optimum level of government influence to me is one where the government's policies are clearly bent on promoting things the private sector clearly will not and can not. Things like infrastructure and development of new technology later expanded about by the private sector fall into that category. But I'm sure in another universe private industry would have done all this even though full privatization left Europe the poorest, most illiterate corner of Asia for the thousand years between Constantine and the Black Death, when government for any real sense of government did not exist.

[underlankers.livejournal.com]

Sigh, and this is why Jerseycajun is such a rarety. Every single damn time I so much as try to have a discussion in good faith with any other libertarian it's either this or the complete refusal to answer questions and twisty, slippery evasion of said questions.

[jerseycajun.livejournal.com]

Funny you mention my name, as I'm reading and re-reading this thread, I'm finding it difficult to see much difference in the specificity between your two answers, and I think it has much to do with the nature of the question being asked. It is, in my opinion, a necessarily abstract question. Criticizing it for lacking specificity brings into question the reason why the question was asked. Only policy as written offers anything truly specific, and it's usually devoid of showing signs of of the overall first principles of those who wrote it. Your answers were wordier, but also abstract in this way. It can still mean a great number of very different things, depending which of a number of very different but no less equally valid ways one looks at the same situation one chooses to see it.

Just my 2 cents.

[underlankers.livejournal.com]

No, I gave examples like railroads and canals, and all he said was this: "The optimum level is that which protects the rights of individual action and independence and restricts the use of coercive force on others." I could have just as easily said nice pretty rhetoric about why governmental action is invariably superior to meaningful economic development but I provided examples like this: "The optimum level of governmental influence is that seen in the industrializing UK, USA, and German Empire, which blends positive building of viable economics while constricting the monopolies that inevitably result from attempts to have a purely free market."

The difference between a beauty pageant contestant's answer and my answer, using the UK, USA, and German Empire and differentiating between positive influence and potential negative results of that influence is that of night and day. I'm sure, however, that saying an answer Miss America would come up with is totally equal to providing repeatedly examples of what positive intervention by governments look like and repeatedly getting evasions and non-answers.

[jerseycajun.livejournal.com]

I'm not trying to raise your ire. Your perspective is historical and mine is more in the arts and engineering. As such, when I see a question such as "where should the optimum level between government and individual rights lay", I'm thinking of an equation. Not in the characteristic sense that an equation can reliably and predictably take input and give a set output, but in the characteristic sense that a question that asks for such a line in the sand is like asking for another person's equation for society. A general function that informs how they might answer on any number of specific questions.

The specifics, to me, resemble any number of specific outputs, like "5" or "2.75". The trouble with specific answers is, is that it informs little about the principle (or that line in the sand that was the subject of the question) that got you there. "5" is the 'correct' answer to "2*x-3" when "x=4" but also to "4x+5" when "x=0". Same specific answer, two completely different guidelines to get there.

I'll correct myself in that yes, you offer examples. When I'm reading your response, I see both (though they were in separate responses. Railroads and canals may or may not be something two people agree that government should provide, but it doesn't answer the question of their respective 'lines' that got them to the answer.

For one person, railroads should be provided because they think government should be responsible for all 'critical' systems, transportation included. Others arrive at the same conclusion because they think the "optimum level of governmental influence is that seen in the industrializing UK, USA, and German Empire, which blends positive building of viable economics while constricting the monopolies that inevitably result from attempts to have a purely free market.

Even then, if you were to run into someone else who shared that exact wording as their answer to the question, they could still arrive at two different specific interpretations because it is still nebulous enough to generate that kind of dual response when it comes to policy, which, as I noted, is the only kind of specificity that matters in politics, in my estimation.

In summation however, I don't think it's necessarily fair to expect a specific answer to a necessarily (as I see it) abstract question.

[underlankers.livejournal.com]

Given that libertarians as a rule talk a lot about what they don't want the government to do I think it's damn well fair to ask them to make positive statements about what they would, as any damn fool can say what he would not.

[jerseycajun.livejournal.com]

Ask us about our positions on murder, rape, theft, and fraud more :)

[jerseycajun.livejournal.com]

And thanks for the bon mots again. Means something extra coming from you.

[dzlk.livejournal.com]

"the effective brainwashing power of the corporate media's powerful influence."

That's not how ideology works.

Ideology is a worldview that's accurate from the standpoint of a given class. Another class may have a view that's different from or even directly contradictory to the other, and that's not because one is "brainwashed" (or even necessarily wrong) but because the world appears differently depending on where you stand in it.

Nobody can be reasonably expected to have a universally valid viewpoint as long as the world is structured to present different and mutually exclusive truths to competing classes.

I'll grant that plenty of self-described "Marxists" are horribly unclear on this. I explain that by observing that people generally a) don't like to read, b) like to invoke authoritative names to back up their intuitive certainty that everyone else is a fool.