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.

[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.

[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.

[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]

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.

[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.

[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.

[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...

[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.

[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.

[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.

[badlydrawnjeff.livejournal.com]

Indeed! They should totes vote for policies that would keep them poor instead!

[badlydrawnjeff.livejournal.com]

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

More to the point, you'd first have to demonstrate how that situation was worse than the alternative.

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.

In other words, I tell you that there's a book out there that will tell you what you need to know, and then you accuse me of not having sources or references. Right. Keep pushing that myth.

Here's the summary - your entire idea of the robber baron era is false.

[the-rukh.livejournal.com]

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

[ninboydean.livejournal.com]

We know who produces, innovates and creates. Its the working class.

The rich are predominantly made up of financiers. They add no value to products, and in fact (specifically in the case of derivatives) often inflate costs.

The rich need their finances reappropriated to serve the common interests. Then they can fuck off - things will look much better then. :-)

[ninboydean.livejournal.com]

I think you misread my post. If you think that the ruling class is "jumpy of revolts by the poorer classes," then one would assume that the poor in general are antagonistic to the ruling interests.

[underlankers.livejournal.com]

Simple: US troops firing on US citizens as law enforcement hired by the robber barons. If you don't see that as worse......

But no specifics as to how and why it's false. Yes, perfect 67th Tigers-style logic "What you say is false." "How is it false?" "What you say is false."

[underlankers.livejournal.com]

Yes, why don't they vote to rescind the income tax and direct election of Senators and the Sherman Anti-Trust Act? What could possibly go wrong?

[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.

[underlankers.livejournal.com]

The rich employ people. Left to themselves they stagnate. The masses are responsible for what is good in American society, if we had left things in the hands of the rich slavery would still be legal in the United States of the present day.

[underlankers.livejournal.com]

Only people in the 21st Century would ever seriously try to claim the USSR was a democracy of any sort as Soviet leaders themselves were very honest about the terror-state and what that meant in the real world.

And you might want to re-read the history books, as what I'm referring to is the 19th Century United States from 1869-1913. That by comparison to the USA of the Revolutionary War/Articles period is a completely different kind of society.

And no, the robber barons are actually quite a bit more powerful absent an income tax. Imagine what the likes of Bill Gates might due with multiple billions of dollars without *any* taxation of it (not that the Ultra-Rich do more than donate to charities they own to evade them).

Totalitarianism is also incompatible with what a dictatorial system in the USA actually has looked like in the past. The totalitarian states of the 20th Century were a particular result of WWI-caused mutations of European society and those of a lengthy and devastating civil war in China. They would not translate to the US situation.

[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.