On Free Markets and Government Regulation:

[underlankers.livejournal.com]

One thing that does not surprise me these days is to see people making multiple millions of dollars advocating laissez-faire systems where they'd benefit greatly but very few others would. The question I have is a simple, if provocative one: isn't it better said that free markets are best made free by government regulation? The height of the Laissez-Faire era co-incided with the robber barons, and it was not a co-incidence. Bereft of things like the income tax and anti-trust laws, essential government regulations for any society making a pretense of freedom much less trying for the real thing the result was the emergence of wealthy and powerful men like Gould, Morgan, Vanderbilt, Astor, and Carnegie.

The "free market" system led not to freedom but to things like said robber barons calling in the US Army to disperse strikers with gunfire into the ranks of said strikers. It led to things like Black Friday, a known incident where a Robber Baron deliberately triggered an economic depression in 1869. The regulations that emerged under the Progressives, FDR, and the Great Society have led to a much deeper prosperity minus the brutality of right and left that resulted in the age of Laissez Faire at its finest, when poverty was also much vaster and deeper than it is today (when one out of every five Americans goes hungry).

So the question I have is simple: if Tea Party anarcho-capitalism gets its wish to rescind things like the income tax, like direct election of Senators, like the Federal Reserve, and like the various anti-trust laws that have been in effect for most of the 20th Century, how do they intend to deal with the emergence of latter-day Jay Cookes who'd have immense sums of money and like their predecessors would be just as keen to have Federal troops disperse any workers foolhardy enough to ask for their rights?

X-posted to my LJ and The_Recession.

Comments

[badlydrawnjeff.livejournal.com]

The question I have is a simple, if provocative one: isn't it better said that free markets are best made free by government regulation?

In other words, is a free market better when it's not free anymore?

So the question I have is simple: if Tea Party anarcho-capitalism gets its wish to rescind things like the income tax, like direct election of Senators, like the Federal Reserve, and like the various anti-trust laws that have been in effect for most of the 20th Century, how do they intend to deal with the emergence of latter-day Jay Cookes who'd have immense sums of money and like their predecessors would be just as keen to have Federal troops disperse any workers foolhardy enough to ask for their rights?

I think you need to read up more on the "robber baron" era. There's a great book, albeit dry, called The Myth of the Robber Barons that might be a good start.

[underlankers.livejournal.com]

In other words, how was it free with the Rockefeller and Carnegies around?

Perhaps you might summarize the source here, Jeff, as I'm hardly interested in a 67th Tigers-style "debate" where your argument is never able to source things or reference specifics in any sense of the terms which is your usual arguing style.

[ninboydean.livejournal.com]

You're right. The vast reappropriation of value really intensified with the expansion of fictitious (financial) capitalism. The robber-barons were like today's small business owners compared to the highest echelons of contemporary finance capital and their economic-political leverage today.

[brockulfsen.livejournal.com]

Eat the rich is more than a cute slogan.

The USonian Plutocracy face a problem they cannot see. Without the support of the majority of the population of the USA, they have no security. There are poor, dispossessed and dissatisfied people across the world who would happily nuke a country estate or gated community somewhere in the USA.

Paint on The Illusion of Security thickly enough and the majority of Americans will start acting like ghetto dwellers, reporting no activity, no matter how outrageous, for fear of being ground under the jackboots of authority.

Good luck with that. Australia needs bleach to get the 65%+ regular churchgoers in the Parliament down to a more representative 10%, but at least we still have a healthy distrust of authority.

[underlankers.livejournal.com]

The Soviets had far more ability to coerce than anyone in the USA has ever had and they couldn't do it. You vastly overestimate their ability to do anything like this.

[ninboydean.livejournal.com]

What does surprise me is how many people making nothing beside them clamoring for the rights of the millionaires and a laissez-faire economy.

[underlankers.livejournal.com]

Eh, that's usually the way class structures work. It's also why previous ruling classes were armed to the teeth and jumpy of revolts by the poorer classes. Even with its austerity the US welfare system is the main thing keeping the USA from having a 1919 of its own.

[nikoel.livejournal.com]

It's the American Dream, baby! My own parents vote against their own interests because they *hope* to one day be rich. It turned out that Joe the Plumber felt the same way. Working and middle class white people think if they just work hard enough, they'll become millionaires, despite years and generations of evidence that have shown otherwise. Not saying it's impossible, but the likelihood is quite obviously low.

[badlydrawnjeff.livejournal.com]

We know who employs us. We know who innovates for us. We know who's responsible for what's good about American society.

Go ahead - keep attacking the rich. Let's see how good things look when they're all gone.

[vnsplshr.livejournal.com]

The trick is getting to a free market where government is out of the way, but still by the market's side.

For instance... until I can buy a health care policy from another state without Minnesota mandating that said policy cover pregnancy, the health care market in MN is not free. This doesn't mean I wish to go without the safe medical practice protections MN's regulations gain for me.

[ninboydean.livejournal.com]

"The trick is getting to a free market where government is out of the way, but still by the market's side."

That's called graft.

[verytwistedmind.livejournal.com]

One thing that does not surprise me these days is to see people making multiple millions of dollars advocating laissez-faire systems where they'd benefit greatly but very few others would.

I argee, like Bill Gates "Capitalism Has 'Systemic' Problems Government Should Address "
http://www.newsmax.com/InsideCover/krugman-death-panels-vat/2010/11/14/id/377008?s=al&promo_code=B1AB-1
He's almost a Rand Paul clone!

George Soros the grand father of capitalism
"I consider the threat from the laissez-faire side more potent today than the threat from totalitarian ideologies."

Largy Page a well known crazy right winger who founded Google.
Eric Schmidt Google's current laissez0faire capitalist nut job.

John Kerry, Herb Kohl, George Lucas,

In the name of the Flying Spaghetti Monster are there any rich capitalists? I just want a few...

[nevermind6794.livejournal.com]

The Koch brothers come to mind.

[allhatnocattle.livejournal.com]

I dunno of a political or market system that did/does not have an elite wealthy class. Even socialist communism had an elite.

[meus-ovatio.livejournal.com]

But we're not talking about robber barons. We're talking about architects and hidden valleys. Sheesh.

[the-rukh.livejournal.com]

Your hidden valley can have a cook-off with Sophia_sadek's caesar.

[rasilio.livejournal.com]

Lets see, a laissez Faire economy means one without government interference on the behalf of any special interest group and yet...

"The "free market" system led not to freedom but to things like said robber barons calling in the US Army to disperse strikers with gunfire into the ranks of said strikers."

Now, last I checked the US Army was a government organization so how is this not a government interference into the market place on the behalf of the corporation?


And here you have your answer.

The so called Free Market of the 18th century was about as much of a free market as the USSR was a democracy. The 18th century government economic policy was dominated by Mercantilism in which policy was specifically crafted to the benefit selected industries which were strategically important and within those industries to the benefit only of the largest and most powerful corporations.

It was only laissez faire in that the government did not offer any protections to the consumer.

Now that said, yes it is true that a free market does require some level of government regulation because at a minimum the government will be tasked as the arbiter of last resort in resolving contract disputes and therefore will need regulations on what is and is not considered a valid contract.

However when that regulation is done to the specific benefit of various individuals or classes of individuals then the market is no longer free and becomes at best an example of crony capitalism.


Finally, as to how "the people" will resist a rich and powerful individual or group from using their power to influence government policy to their benefit in a market where government restrictions have been removed? Well there are 2 answers to that.

First, is to answer it with a question how do they resist it today when government regulations of business are in place? Have you not heard of little organizations like Goldman Sachs who routinely use treasury as their own little piggy bank? Are you not acquainted with the term regulatory capture? The fact is in all cases any attempts by government to restrict the power of corporations are in the long run made to the benefit of the corporation whose power they sought to limit because they either influence the politicians making the law or the regulators enforcing it.

This shows the essential flaw to your question, it isn't a valid concern, because the more regulatory power the government is granted by the populace over the economy the more power that is available to be abused by the rich and powerful. That is in a strong regulatory environment the "Robber Barons" are even MORE powerful than they are under a weal regulatory regime and not the other way around as your question assumes.

Second, the answer both today and under a free market is the same as the answer to the question of how the people use a Constitution to prevent a totalitarian dictator from rising to power? By staying informed and being active in the political process. The Constitution of the US is a meaningless document if the people themselves do not protect it by exercising their voting rights and even more importantly applying pressure to those in power to keep them in line.

[ninboydean.livejournal.com]

"Lets see, a laissez Faire economy means one without government interference on the behalf of any special interest group and yet..."
...private interference from the privatized police, agricultural, medical, housing, media, military, banking and retail industries will skew the economic leverage of the ruling class far more than any single government could.


"By staying informed and being active in the political process. The Constitution of the US is a meaningless document if the people themselves do not protect it by exercising their voting rights and even more importantly applying pressure to those in power to keep them in line."

Oh, good. Your response to the economic leverage issue of libertarianism is solved by being "informed" (oops private media nullifies that one) and "following the constitution" (so we don't want a laissez-faire system).


The solution to the libertarian problem is to follow the laws of the state. Makes great sense.

[debergerac.livejournal.com]

brilliant. paft and stevo have have a worthy competitor.

one small niggle though, no good rant against free markets would be complete without a comparison to somalia. i like pirates. arrrrrh.

[a-new-machine.livejournal.com]

Yeah, I'm kinda surprised. I seem to recall lankers being less extreme.

[jerseycajun.livejournal.com]

The desire to see less interaction between government and business is a two way street. It does not follow that someone who does not want government to be an adversary to the market, approves or desires the market to use the government as its attack dog. Nor does it follow that government has to play adversarial role with business (which is mostly illusory in practice anyway) in order to also not to be in collusion with it.

[404.livejournal.com]

if Tea Party anarcho-capitalism gets its wish to rescind things like the income tax, like direct election of Senators, like the Federal Reserve, and like the various anti-trust laws that have been in effect for most of the 20th Century

It's a moot question because 1) it would never happen and 2) not all TP members are as you try to paint them.

[rasilio.livejournal.com]

All tea partiers?

I suspect fewer than 2% of tea partiers would qualify as anarcho capitalists, but then underlankers has consistently shown that he has no real understanding of what the term means but rather uses it as a bogey man in much the same way that Republicrats use "Socialist"

[gunslnger.livejournal.com]

The height of the Laissez-Faire era co-incided with the robber barons

Speaking of public myths...

Tea Party anarcho-capitalism

And that's just your personal myth.

[underlankers.livejournal.com]

Citation for any of this?

[reality-hammer.livejournal.com]

The question I have is a simple, if provocative one: isn't it better said that free markets are best made free by government regulation?

No.

Government regulation brought us the great housing bubble. Government regulation failed to stop a massive leak in the Gulf of Mexico. Government regulation first helped cause, then worsen the S&L failures. Government regulation has caused inflation, stagflation and the devaluation of the dollar.

"Robber Barons" like Soros may cause mischief but it's with the help of government regulation. Soros plays currency games with governments that set foolish, arbitrary limits on their currency exchange rates (for example). I'm more concerned about what Soros does with his billions to undermine governments (via legal, regulated processes of course) after he fleeces spineless governments for it.

This is not to say that any regulation is bad. Just that the same people you accuse of being "bad for society" when they are outside of government are the very same kinds of people who will be setting and running the regulatory agencies and processes. Will they suddenly turn into saints because they work for the government?

[nevermind6794.livejournal.com]

All your examples are of government getting too cozy with business (housing, S&L), or not regulating business tightly enough (oil spill, S&L). I don't want to get too far into defending the Fed, except to say that inflation is usually a good thing.

[kylinrouge.livejournal.com]

People are stupid. Asking millionaires to not fuck us is like asking a king to not fuck us. All we can do is ask the government to try to get the millionaires to stop fucking us.

Regulation created the middle class. Seems that everyone wants to go back to being either poor or rich (hint: none of you are gonna be on the rich side).

[steve-potocin.livejournal.com]

I suggest you read some history books....Jeff has already given you a good starter....needless to say it is Rich and Business Owners like me who are the most important members of society and not some whiney Socialists.....

[underlankers.livejournal.com]

I think that you're right socialists are not important members of society, which would in fact be relevant were I a socialist. I reject the ideology because it fails to adequately protect worker's rights, and its bloodier brother communism is one of the most evil systems ever devised by human hands with the bonus evil points from sounding on the surface kind of attractive.