Before Resorting to Markets
I’m glad E. D. Kain’s post about markets has been recovered. It’s easier (and fairer) to critique something that actually exists. He writes:
Choice and economic liberty are only useful instruments within society because they avoid many of the traps that come along with big government picking winners, rewarding rent seekers, and so forth.
I can’t say I agree.
Let’s start with economic liberty. Although it’s true that a well-run market will avoid the traps that come with state action, markets are also good in another way. I’m sure he knows this, but it bears repeating.
Markets discover distributed and inarticulate knowledge about preference and utility. Markets are useful not only because they avoid the government picking winners, but also because outside of the market virtually no one, government or otherwise, can tell who the “winners” are at all, at least not if they act alone. The government may be bad at picking winners, but so is everyone else.
We need markets because we need to them to solve a very difficult problem, the problem of gathering up widely distributed, paper-thin, ever-changing knowledge about what people want and need. As Friedrich Hayek put it,
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate “given” resources — if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
Do markets do this perfectly? Certainly not. Markets can fail due to outside interference (see: government). They can also fail because defining property rights, reducing transaction costs, and accounting for externalities can be very hard. These difficulties must often be solved by resorting to politics, and thus incurring the problems of politics anyway.
But the real question is not whether markets work perfectly. It’s whether any of the alternatives can do the job as well or better. When we consider that the real work of markets is to gather up distributed knowledge and render it publicly legible, it seems clear to me that few other social institutions are even seriously trying. Many of the worst of them, government programs above all included, act as if this work has already been done — as if Hayek’s dispersed knowledge had already been aggregated once and for all, and as if the action at hand weren’t going to upset it all in the process.
To be perfectly clear, markets aren’t the be-all and end-all of public policy for me. They are, however, the option we ought to try first, because properly designed, they tend to tell us what’s going on. This is tremendously important, and it’s very difficult to admit that we don’t know it.
We should also resort to markets, possibly with creative modification, when the other avenues have failed. Not everyone will agree with me here, but I’d argue that “the” market seldom fails, as if “the” market were always and everywhere the same thing. It’s much more often the case that free choice constrained by the given ruleset has failed, so we need to rework the rules to better reflect market principles. Perhaps we’ll succeed, and perhaps we won’t. Politics may intervene, as it so often does.
And briefly, as to “choice.” I can’t believe that “choice” merely serves to avoid the pitfalls of government, and that it has no other function. (Does anyone?) The exercise of individual choice is aesthetically beautiful. It sharpens our powers of judgment and reasoning. It grants dignity and moral responsibility to all of us, and these should not be lightly surrendered.
A good post, I particularly like how you describe markets as the best way to gauge society’s preferences.
Where I grow a bit skeptical of people continually advocating market solutions to public policy problems is when the debate turns to the extent and depth of market failures. I know that often my disagreement with deregulation advocates for example, stems from arguments regarding how much asymetric information, imperfect competition, natural monopolies and externalities differ. More often than I’d like, there seems to be a subset of market advocates who don’t believe any of these things exist at all.
In general, I’d argue that markets are a very simplified model that allows the public writ large to choose its preferences through a set of choices. From a moral or philosophical stand point, that it’s a mechanism in which people are able to express autonomy and choice is what makes it desirable. I’d imagine this would create a lot of disagreement with other commentators and the gentlemen here, because there does seem to be an undercurrent that ownership of property is in fact a fundamental right and that markets express this ownership more perfectly as a reason for their superiority. (And by extension their belief in the delegitimacy of government.)
What do y’all think?Report
I suppose I agree, partially. My concern is this: For a market to function effectively, the consumers need to have a full array of accurate information about the products available. Meanwhile, it is in the best interests of the producers of those products to exaggerate [or flat-out lie about] the capabilities of their product. This is true regardless of the objective quality of the product. A market cannot accurately reflect the needs and wants of a set of consumers if those consumers are getting something different from what they think they’re getting. So if we want markets to function as systems for measuring society’s needs and wants, we need some way to ensure that consumers have access to the largest possible body of factual information about the various products on the market. The power of the state seems to be a reasonable option for making that happen.Report
Except that the solution you propose supposes that the State knows both what information is valuable and how best to communicate it. If people themselves don’t know what questions they’d like to have answered well enough to ask them themselves, why should we suppose that distant bureaucrats would have a better handle on the situation?
Also, I must ask, if companies continually deliver goods or services that fail to meet the customers’ expectations, why do the customers continue to patronize those establishments?Report
Your first point is a good one, your second one less so. In a free market, there is no downside to exaggerating about the effectiveness of your product. Therefore, everyone will do it, and there will be no recourse to consumers because there will be no other option.Report
No downside? You contend that a company that repeatedly makes exaggerated claims about its product will not receive any sort of negative backlash from its customers? I think the folks at Toyota might beg to differ.
And of course, in a free-market, there is plenty of recourse available to consumers. The people providing that recourse are called competitors, and if consumers value truth-in-advertising, the more trustworthy companies will earn more business.Report
The problems with Toyota were simmering along, beneath the consciousness and awareness of nearly all consumers. Then a federal agency took action, the problem became unavoidably newsworthy (Toyota is a big advertiser on TV, of course), and only then did consumers get the information they needed to make a choice.
Take the government out of the picture and it might be years before the problems with dangerous Toyotas became public knowledge.Report
What we need are politicians whose job it is to appoint people to make these distinctions on our behalf.
Which one ought we vote for?
The first one says that markets are complex and will only carry the best information in aggregate over a period of time.
The second one says that he’s on my side and he’s going to look out for me and protect me from special interests looking to exploit me.
Which brings us to the exact same dilemma we were having with corporations a mere few minutes ago.Report
The thing about strong market proponents, which I think fails for me, is that there is no way to prove that markets are so great. How do you know markets work well? How do you know non-market solutions couldn’t have done better? Now I think markets are a good thing. For many things there are officially great ( fondles ipod). For other things I don’t think they work ( health insurance). So just to be clear I am trying to form a theoretical question and am not anti-market.
Strong free market proponents, Jason in this case, seem to just assert markets are officially the bomb. But that assertion does not equally proof. And what are the proper metrics for deciding whether the market rulz. Is the amount of choices of laundry detergent equivalent to freedom and goodness? If everybody has an important thing ( like health care) but has less choice is that more or less Freedom?Report
We put West Germany right next to East Germany and waited.
That’s one test of the theory, at least.Report
That’s really only a test of whether markets work better than state communism…Report
Maybe we could look at immigration patterns.
What economies do the States with the most immigrants have?
What economies do the States with the most emigrants have?
Are there any States that threaten to shoot people who want to leave? What economies do they have?
Would that teach us anything?Report
“Come visit us again and again. This is a state of excitement. But for heaven’s sake, don’t come here to live.” Tom McCall Governor of Oregon.Report
Indeed. An additional question:
Are there any States that threaten to shoot people who want to stay? What economies do *THEY* have?Report
Is this a sneaky way to bring up the Minutemen and Border security?Report
Dude! It wasn’t, but it totally ought to have been!Report
JB, ol buddy, these kids gotta get out of bed real early to get one over on you! Reading this thread is fun! And, congrats on a good post…what the LOOG is leaning RIGHT?Report
so people don’t move to florida for the sun and beaches?Report
because there are only two possible choices????????????????????Report
If only we’d let the Russians occupy both, it would have been a fairer test.Report
I can only wonder if I’d get similar responses to suggestions of North/South Korea/Vietnam…
“It wasn’t a fair test!”
It’s the 1972 Olympic basketball finals all over again.Report
Damm! JB STOP IT! you’re killin’ me!
I can still see those damn commies playin’ and replayin’ the final seconds until they finally hit the basket.
I’m sittin’ there in Tiffin, OHio screamin’ at the TV, “GET THE TEAM OFF THE COURT…THEY’RE COMMIES!”
The wife just loved it, as did the neighbors.Report
Are you under the impression that South Vietnam was some sort of success?Report
Compared to what?Report
The extent to which the West Germany economy could have been considered a “market economy” is somewhat overstated. Ditto (if not moreso) about South Korea. In so far as that they had free exchanges of goods, sure I suppose you could consider them “market” economies.
Otherwise there were a host of factors, including the simple fact that the US poured money into them and allowed them relatively free access to a massive market of consumers without necessary reciprocation that can be said to have completely skewed the tables.
That is to say: Neither comparison exists in a vacuum.Report
Nob, I’m not comparing West Germany to the US.
I’m comparing it to East Germany.
I’m not comparing North Vietnam to the USSR. I’m comparing it to South Vietnam.
*THAT* comparison strikes me as useful.Report
What made you suppose that we had anything like a free market in health insurance? This is a perfect example of a very poor ruleset. Here are just a few of the defects.
Health insurance is overwhelmingly tied to your employer, owing to our tax law. It’s your employer, not you, who gets to do the choosing in this market. We should not be surprised, then, when the products seem stubbornly unresponsive to individual demand. Competition is reduced still further by the inability to buy insurance across state lines. How much does all of this really cost? The individual consumer often has little idea, little incentive, and possibly no ability to look for alternatives, even while he’s healthy.Report
i don’t think we have a free market in insurance, which is good because i don’t think it would work.Report
Quoth the raven: “But that assertion does not equally proof”Report
Greginak, this is my take. But I’d add a problem with responsibility.
Tobacco, lead paint, denture adhesive, colas, hamburgers, cars — a whole host of products with serious shortcomings. Some cause expensive illness, some environmental damage. Yet I don’t see markets creating a good mechanism for responsibility without regulation.Report
I’m going to juxtapose these things because I think it’s important.
“And what are the proper metrics for deciding whether the market rulz. Is the amount of choices of laundry detergent equivalent to freedom and goodness?”
“It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know.” (emphasis mine)
I believe the idea is that rather than arbitrarily or (by majority) choosing one metric or a few, markets reconcile the multitude of metrics that exist rather than taking one person’s preferences or a hsot of them and declaring that the “rulz” metric.
Also, I should point out that millions of Americans don’t have iPods, yet presumably you lose no sleep over that fact, because an iPod has improved your life, the lives of many other people, and doesn’t fall into the category of moral imperative for you.
Whereas health care – It seems to me that you care more about health care than health insurance – is something that you think most, if not all, people should have access to, so the fact that some go without causes you distress.
That’s not a market failure per se, it’s a failure of the market (as a tool) to achieve an outcome for which it is ill-suited. Markets don’t give everyone, everything they might possibly need or want. They aren’t magic, they aren’t the lottery. Markets are information clearinghouses, for that job, they are exceptionally well suited.Report
I guess my feeling, having not read very much on this topic, is that the market is just one sphere of society and should remain thus. I’ll give you an example: to save money (more for their sports programs) many public universities are cutting back on departmetnts that don’t have sufficiently high enrollment. One reputable university I just read about cut out their entire classics program, including the language classes. The argument for this, and I think it’s a market argument, is that a course with only 5-10 students is not worth maintaining. The market has decided the utility and value of learning ancient Greek as compared to, say, business management. The argument against it is, sorry to put this less calmly, holy shit, there are now legitimate public universities where you can’t take Latin!
But, alas, the American university is a cultural institution that has been reshaped, quite intentionally, over the last few decades along the lines of consumer capitalism. My point is that something can be a moral good without being a marketable good.Report
There are a great many moral goods that are not particularly marketable.
The Jesuits talk about a great many of them, for example.Report
Wait, I thought dead languages was the kind of thing you could learn on your own (like programming languages) or at independent institutes. I seriously doubt my own university (National University of Singapore) has a Latin or Sanskrit program.Report
Well, that’s definitely where American universities are headed. When my parents were in school, it was the norm for all American students to learn Latin, usually in high school. The idea was that Latin was the scholarly language of the west for nearly a millennium, the basis of the romance languages, to be educated you supposed to have a good grounding in western history, and… ah, I feel like an old man now! But, yes, they’re gradually getting rid of the dead languages. Actually, a number of the state universities are also phasing out such arcane language programs as French and German.
Ah, now, I’m getting out the Jack Daniel’s.Report
“A gentleman need not know Latin, but he ought to have forgotten it.”Report
There are definitely some areas where the markets fail horribly. I wouldn’t count health care necessarily into that category because it’s a murky issue though certainly there is a salient point that when it is ones life one is bargaining with the potential exists to distort the relative power of the entities involved to the point where the market can’t function.
Still I’d say the jury is out on healthcare. We’ll have to see what the countries that have a largely privatized healthcare system end up looking like when they approach Western levels of economic development. Still there are some fields where the markets fail unambiguously; I’m amused by my unconscious irony in saying fields since they’re an example. I’m referring of course to the tragedy of the commons. I’ll illustrate with a quick anecdote from home in eastern Canuckistan.
When I was just a pup I read in the history books about the days when the cod was so thick in the North Atlantic that you could lower a basket over the side and then pull it up full of fish. Even in my own youth I can remember fishing with my Grandfather (I hated it, manual labor, ick!!) for the swimmy buggers. But in that same era when I was growing up the market discovered that if you lower a huge whopping dragger over the back of a big factory fishing trawler you could sweep up all the fish (and everything else) you wanted! Better yet you could do this with a lot fewer workers than long-lining, trawl lining or even with traditional nets. Fish were as cheap as dirt, maybe cheaper. The government didn’t involve itself much; this was kind of before environmentalism took hold very hard I guess. Certainly there were no government subsidies of the fishing or much else government involvement a libertarian could blame. We all of course know how this story ends, turns out that baby fish like the bottom of the ocean to be not churned up into a wreck. Turns out that even big ecosystems like the Atlantic notice when you sweep all the life out of the water like a broom. The waters of Eastern Canada today are as empty as George Minor’s brain or Dick’s conscience. The great factory trawlers rust in heaps outside the emptied out fishing towns. I hear they’ve about done in the tuna now as well and are hard at work on the other fish stocks.
Another example is air. Industry discovered back in the 80’s that if you put your smokestack high enough so that the pollution doesn’t rain down for a couple of states you’re in the clear. Acid rain came close to totaling the fresh water fish (the trawlers and draggers couldn’t fit up the rivers) in the northeast. In that case government actually did get involved and forced the polluters to install scrubbers and now thanks to the heavy hand of government acid rain is a minor issue and the fish stocks are recovering there.
Anyhow, suffice to say, when it comes to things that one person can’t (and shouldn’t) own then markets suck big time. Which is one reason I’m a neoliberal instead of a libertarian.Report
Externalities don’t really invalidate markets so much as require that they be factored into the cost of the market good.
From the way you phrased your comment, am I to assume you believe the split between a market liberalism and libertarianism is that the former actually believes externalities exist while the latter don’t?
If so, how’d you come to that formulation?Report
Only one reason Nob, nowhere near the only one. As to pricing externalities the problem is I have not heard nor read any scheme yet for dealing with the commons that sounds even remotely believable.Report
Have you read Elinior Ostrom? There are voluntary or small scale types of commons solutions which tend to avoid a lot of the common resource problems.
See: http://www.pnas.org/content/103/51/19224.full.pdf+html?sid=02eeb3be-77b8-42bb-8282-1f342726323c
I would argue instead that the problem is that global markets creates rather large distortions in how commons problems are considered.Report
So Nob you’re saying… local governments are the libertarian solution to the commons?Report
North:
I’d say there’s a point to people who advocate localism at least in terms of dealing with commons issues in terms of common pool resources. However, the simple fact is communications, transportation and markets themselves have outgrown the ability of local governments to actually effectively regulate the commons.
That is to say: Unless you’re willing to dismantle a large part of what makes us modern, we’re kinda screwed.Report
Or unless we’re willing to embrace governments and regulations that are bigger than strictly local?
Iceland, for instance, has strictly and successfully regulated their commons and their fish stocks are being harvested sustainably. In my own youthful home turf the shellfish and lobster fisheries have been strictly regulate by provincial and federal (statist) intervention and are not in danger of extermination.
Meanwhile the fisheries that exist in deep international waters like tuna for instance which cannot be regulated by any one government (essentially a libertarian ideal) teeter on the brink of commercial extinction (with actual extinction powdering her nose in the wings). The response of the unfettered markets; some kinds of tuna flesh are worth an absolute fortune now assuring that even though the amount that can be harvested is decreasing that decreased amount is still worth extracting.
I take no joy in this at all. In economics I hew in the libertarian direction more often than not. But there are some fields where statist intervention seems to be not merely unavoidable but desperately necessary.Report
I’d imagine the lesson is more: Regulatory bodies need to meet the size and scope of the markets they regulate.
And on this we’ve kinda missed the boat vis globalization. We need better, more effective (but perhaps smaller and sharper focused) global regulatory regimes for things like finance and environmental concerns. There just isn’t a power that does that right now and we get all sorts of distortions as a consequence. The Bretton-Woods institutions certainly aren’t filling that gap, at any gait.Report
How do you factor in the externalities without government intervention in the form of regulation?Report
Commons are exceptionally troublesome.
The easy libertarian answer is “ownership”. If Jaybird God Emperor owned the oceans do you think I would trawl? Heck no! Indeed, if I even saw a trawler come out, I would order the trawler sunk. Turn the fishermen into chum and feed my stock.
If absolutely anybody could go anywhere and do anything, well, you’d be a fool *NOT* to trawl. It’s gonna get trawled anyway and if it’s not you that does it, that’s money directly into someone else’s pocket, right?
Now, I hear you ask, how do you determine “ownership” in the absence of deity and/or royalty?
It’s like my right hand when Maribou is in Canada.Report
It’s funny Jay, I’ll give you that, but your hand ain’t an answer unless there’s meaning on your palm that I’m missing.
How, without invoking either a government or a government like entity, would you deal with say the Atlantic fisheries for one example. In the absence of a government forcing those scrubbers over the smoke stacks what would have been the ideal method of dealing with acid rain?Report
“beats me” was the punchline to that one.
Anyway, the issue of Acid Rain is a toughie. Canada got all of the US’s acid rain there for a while in the 80’s and Reagan and Mulroney hammered it out and, turns out, an agreement and accord was reached… and now China deals with all of it. Manufacturing, pollution… all of it.
So now I wonder this: Let’s say that the US took China’s attitude and said “we don’t really care about pollution and even less about pollution that doesn’t affect us.”
What could have been done in response to that stance (e.g., the stance China is taking on it now)?
Is there *ANYTHING*?
The problem was fixed in North America because the governments in question were vaguely analogous to “moral” on the issue.
What do you do when the government has, well, not *immoral* priorities but culturally different ones?
Is there anything?Report
So the question is as I’m hearing it: “I acknowledge that libertarians don’t have a solution to this example, I also acknowledge that the states involved solved this problem with government power but imagine instead that the states involved were immoral and didn’t solve the problem. What would you do then?” In the context of North America if the governments involved were immoral on this issue I personally would vote against them. In the context of a non-democratic state like China I suppose it’d be an issue of either revolution or war? Fortunatly for us China’s acid rain falls in the Pacific or on China though I do hear the Chinese are eager to clean the issue up simply because the fix isn’t immensly hard.Report
It’s more that the answer is this: “every solution I see involves kicking the can down the road and hoping some other poor sap is stuck having to clean up the mess.”
“Get a vasectomy” doesn’t strike me as a particularly sustainable answer to the problem. It only works for a couple of generations before the wreckers who only faked theirs outnumber the rest of us.Report
The critique of markets is the simplest thing imaginable: we don’t have the resources necessary to make a paradise on earth, but we do have more than enough resources to establish a minimum level of comfort for all people in certain areas of tangible need (say, food, shelter, clothing, education, health care). We don’t not because of insufficient resources but because of how those resources are distributed. There are some true ideologues who will deny such a thing, but most people at least admit that it is unfortunate that, say, a 13 year old could go on television, point to a pile of shoes literally taller than himself, and brag that he would never even wear the large majority of them, while people go cold for the lack of a couple hundred dollars in gas. Or that we have had, do have, and will continue to have the kinds of parties where ice sculptures piss $200 a bottle vodka, and have had, do have, and will continue to have persistent and debilitating hunger in this country. For example. Markets are not good at distributing resources in a way that prevents certain hardships due to lack of resources, and for this reason, to me, markets are a moral failure.
The problem is that people beg the question in assuming that permitting those people to keep their resources is a superior democratic and moral virtue to preventing the suffering of those who need it. Once you begin from that assumption, the world of the possible is dramatically shrunk. I simply don’t believe that there is a superior ethical or moral compulsion to privilege existing ownership over mitigating suffering. When people say “that’s not fair,” as if that is a position that all reasonable people must agree to, that’s exactly the question begging I’m talking about.
This is the dynamic that shapes much of my participation around here, and the reaction to it. As much as many people who post here are outsiders from conventional American politics, they mostly (like the large majority of people) think that letting people keep what they’ve already got is a central moral virtue. Which is fine. What I would like is the right to not have that conversation be preempted by the insistence that letting people maintain ownership over resources, no matter how they came to get them, is a matter of first principles. I would also like more honesty about the fact that even in this advance capitalist state, the markets fail spectacularly to provide all people with the necessary resources needed for minimal material comfort.Report
Well, let’s abandon first principles (who needs them?) and discuss the pragmatic issue of addressing injustices such as too many cold people when we have piles of tennis shoes.
Can we look at stuff that has been done in the past that has directly resulted in higher standards of living and look at the stuff that has been done in the past that has directly resulted in greater misery and talk about doing more of the former and less of the latter?
Is the comparison of what happened in Eastern Europe/Asia in the 20th Century and comparing it to North America and the per capita number of cold people starting in 1910 and compare to the per capita number in 2010?
If not, why not?Report
Because human kind has demonstrated an ability to develop superior answers to problems than they ones it has developed in the past.
Can I compare the ability of Scandinavian countries to both provide heat for its cold people and still preserve the ability of its people to buy tennis shoes to the similar abilities in America? And if not, why not?Report
Sure! Absolutely.
Which brings me back to questions of immigration, emigration, and the economy. Hell, it brings up questions of sustainability.
It might even lead to questions of Geert Wilders.
I don’t know how I feel about the intuition that the US ought to be more like Denmark (or Finland or Sweden). One feels that whenever one says “oh, that particular trait isn’t particularly relevant to the comparison” one might be engaging in a little sleight-of-hand…Report
Freddie, I hesitate to point this out, but there are hungry and impoverished people in the Scandinavian countries.
I will agree, heartily, though that if we were more like the Swedes in government and populace then we’d probably be better off… thing is I don’t think we’re like them.Report
The sentiment and intentions are 100% noble Freddie and I salute you for them. But we’re dealing in economic systems, not sentiment. The road to hell is paved in good intentions, noble sentiment and life insurance salesmen.Report
the ironic bones of life insurance salesmen?Report
I was thinking more like entire life insurance salesmen but bones can work.Report
Freddie, it doesn’t sound like you took much from the Hayek quote that Jason included in his post. Might you care to address how “we” are supposed to determine both who needs what and how it is to be allocated and delivered absent the mechanism of the market? Do you have this information handy? Do you know someone who does?Report
I don’t take much from Hayek because the central thesis of his most widely read work has been proven spectacularly wrong. The European social democracies have never descended into a totalitarian nightmare, and in fact in some ways they have superior democratic and individual rights than we do in America. Some respond by saying that Hayek wasn’t talking about European social democracies but some hypothetical socialist states, which if true certainly means that Hayek’s work is of spectacularly little interest to America. If Hayek’s work is referring to a kind of socialism too far to the left to be applicable to Sweden, it is certainly not of interest to the United States.Report
This is me at my most Burkean, but, it seems to me that the world in which you describe quite literally has no precedent in the whole of human experience. That fact alone, does not make it impossible to achieve, but – I think – does mean that skeptics don’t warrant the opprobrium you throw their way.
Indeed there is a substantial difference between, let’s work to ensure that all those on the brink of starvation have adequate access to food and we should regulate certain components of the food and beverage industry because they’re making us unhealthy.
I seriously doubt that certain, specific policy proposals and goals represent actual progress towards the goals you outline but that doesn’t mean I want poor people to die in the street.
I don’t think people want to be hungry, sick, or unable to work. However, I also don’t think everyone at risk or experiencing such things wants aid, or education, or the type of health care we’re giving them, etc… I think we ought to ask people, what they want, what they need, and work to make those things realistically attainable. I don’t think we ought to look at someone, assume they should want something and give them what we think they ought to want. That respect for individual autonomy, for pluralism and diversity, is something that I find present in libertarianism and derisively ill-considered in liberalism.
If the flaw of libertarians as you put it is to, “beg the question in assuming that permitting those people to keep their resources is a superior democratic and moral virtue to preventing the suffering of those who need it,” the flaw – in equal measure – of liberalism is to beg the question that there are superior democratic and moral virtues to begin with.Report
Freddie,
You’re confusing market efficiency with compassion for the unfortunate. There’s no perfect system where everyone gets what they need. There is compassion and charity, though, outside government, and in a free market, charity would advance the positions of those left behind much better than our incompetent welfare programs which are on the verge of financial collapse. You, obviously, don’t have faith in the compassion of the American people, but I do. I envision a prosperous free society where charity efforts would be innovative and much more effective than our government efforts — much of the efforts in the free society would go toward helping those who can help themselves with a little assistance and training to become independent. Government redistribution and welfare programs have actually harmed the poor more than they’ve helped.Report
The exercise of individual choice is aesthetically beautiful. It sharpens our powers of judgment and reasoning. It grants dignity and moral responsibility to all of us, and these should not be lightly surrendered.
But, of course, this is precisely what is denied to those who labor under persistent poverty. Look, I’m from Hartford. It is not hard– not hard at all– to find people in Hartford who are from their family’s third or fourth generation in poverty. What the bootstrappers of the world insist is that this is because of their own lack of virtue. They choose to be that way. And you have to ask– really?
Even on its own terms, it has always seemed to me that libertarianism fails to confront the very real ways in which freedom and liberty (the, ahem, aesthetics of individual choice) are denied to the poor. Beyond that, yes, I do believe that there is a moral question about a system from which people are neither free to exit nor capable of improving themselves within. I do believe there is a moral dimension to politics, and weighing the bourgeois values of aesthetics and beauty against it seems weak tea. And I also think that the anger that tends to be generated merely in asking the question is ultimately just a way to preempt the conversation, out of an understanding of the inability of libertarianism as it is currently constituted to really confront issues of poverty and powerlessness.
I really do feel that the libertarian mainstream has not begun to develop moral solutions within their framework to the questions of persistent poverty. Part of the reason for that is the anger at the very asking of the question. This is why dear old Jaybird is so spectacularly unfriendly to my positions; he insists, again and again, that there is something untoward or ill-mannered about even framing political questions (resource allocation questions) in terms of morality. But I do believe– I truly, truly do– that recognizing the valence of those problems, the duty to confront them, is a necessary and natural evolution for libertarianism. I may not and probably won’t love the decisions and solutions that libertarianism devises, but this anger and dismissal towards even having the question articulated is not a sustainable position.Report
Are we back to having first principles again?Report
I never said don’t have first principles. I said don’t assume that yours are the truth of man. I don’t pretend my morality is transcendent.Report
Neither do I!!!
Which is why I think it very important to allow other people to live their lives without my interference and *CERTAINLY* without me making their moral choices *FOR THEM*.Report
This is why dear old Jaybird is so spectacularly unfriendly to my positions; he insists, again and again, that there is something untoward or ill-mannered about even framing political questions (resource allocation questions) in terms of morality.
You *COMPLETELY* misunderstand my position.
My position is that if you do so, you ought not be like the Pharisees who argue that they are the only ones who are on speaking terms with God but that you ought be more open-minded and realize that the universe teems with moral systems and God only knows why you ended up with yours.
Why is yours better than mine? Better than his? Better than hers?
My problem is not that this ought not be framed as a moral question. Of course it’s a moral question!!!
My problem is that I do not believe that you have a direct telephone line to God no matter how loudly you proclaim that you and He are tight.
You and Dobson are a pair.Report
But I don’t say that, and have never said that. You insist I say it because you are uncomfortable with my positions.
I believe there is a more equitable and compassionate way to distribute resources, Jay. I don’t think it would even be that hard. What makes it hard is the attitude you get upthread– that there will only ever be two ways to distribute resources, the wonderful perfection of markets, or COMMUNISM! I happen to think that human beings, while inherently fallible, have shown a pretty decent capacity for innovation. Surely, we can come up with some new methods, and work these problems out. What stops us is hoary old Manichean red-baiting bullshit. What stops us is the insistence that if you aren’t Grover Norquist, you’re nothing but Chairman Mao. I say, no.
Because the need to eat is not a moral value. It’s a fact of life. The need for heat in winter is a fact of life. The need for health care is a fact of life. So: in the face of that need, what do you do?Report
Was there any particular reason you excluded the need for employment or housing as being facts of life as well?Report
Or education, or recreation, as the 1960 Democratic Party platform urged?
I’m always struck by two aspects of arguments like Freddie’s.
First, they seem to presume a callousness on the part of free-market advocates that I find deeply insulting. It’s almost as if they really think we’d never considered the problem of poverty — because, look, the solution is just so obvious! Give the poor… stuff!
The trouble is that I have considered this option. This brings us to my second problem with his argument — simply giving material goods to the poor via the state has huge problems. When we look at the states that have explicitly made this their central mission, they contain vastly more poor people than the states that have tended more to let the poor alone.
It is this paradox, and not my lack of consideration for the poor, that brings me back around to favoring a free market with perhaps only a very minimal state-provided social safety net.Report
Surely poverty preexist state attempts to alleviate it. Given that, how can we conclude the causality runs from state provision of aid to greater poverty. Granted, I con’t prove it doesn’t. But wouldn’t make sense that those states that face the greatest poverty challenges would make public provision of resources a greater part of their program than those where it is a less pressing, and therefore less visible, problem? Additionally, wouldn’t the provision of access to a decent level of resources for living for all get exponentially more difficult to accomplish as the extent of the poverty problem faced increases? Is this any reason to conclude it is an equally fruitless exercize in richer societies (which still of course have grinding poverty in some quarters, albeit with less justification)?Report
The natural experiment of North and South Korea does a good job of answering this. Both started poor and in desperate straits following the Korean War. One escaped poverty, and the other only got worse.Report
Jason,
I have no problem addressing what people think are the theoretical shortcomings libertarianism has with respect to poverty, but perhaps it would be equally enlightening to discuss the reasons that those who have attempted to use public policy as a means to eliminate poverty haven’t.
I see where Freddie’s coming from with Hartford as I’ve seen the same thing in other major cities as well. Well-paying jobs moved out of the area and they’re not moving back in any meaningful way.Report
I haven’t been to South Korea, but I am going to go out on a limb and predict that there is still grinding poverty there, and that the state undertakes programs to distribute some of the wealth generated by the private economy downward.
How on Earth it is you could think using North Korea — where all private economic activity is eliminated — as a proxy for state attempts in a market economy to alleviate poverty is a meaningful “experiment” is beyond me. I suppose it’s because to you there is no distinction between a limited welfare state and out-and-out authoritarian Communism.Report
http://bit.ly/bUYoZ3Report
I suppose that’s true Freddie, though it does bear noting that if someone invented a new system of distribution, Capitalism, Communism and then something new, Newism lets call it, the world would beat a path to his door. Fame, fortune and acclaim would be theirs for the taking. Why hasn’t someone done this yet? What is the third way?Report
Freddie, I assure you. I am *NOT* “uncomfortable” with your positions.
I assure you. They fit like a glove.
“I believe there is a more equitable and compassionate way to distribute resources, Jay.”
Equitable? Sure. That’s measurable.
“Compassionate”? I don’t know. That’s a word that contains a lotta things. My compassion may not be your compassion may not be someone else’s compassion. To come out and say that that other person isn’t “compassionate” because they aren’t like me is… well. It’s sleight-of-hand.
“I don’t think it would even be that hard.”
I imagine it’s about as hard as recognizing that “compassion” manifests itself differently in different moral systems.
“there will only ever be two ways to distribute resources, the wonderful perfection of markets, or COMMUNISM!”
Really? I’m a “wonderful perfection of markets” guy?
I was more of the opinion that it’s a choice between Scylla and Charybdis… and I understand that as much as the casualties that we get from Scylla are awful, the casualties we will get from Charybdis are total.
“What stops us is hoary old Manichean red-baiting bullshit.”
I’d like to get rid of Manicheanism entirely. There’s more than one way to do it, after all.
“So: in the face of that need, what do you do?”
I take care of those who are dearest to my heart to the best of my ability and endeavor to make sure that they never go cold or hungry.
I’ve seen, far too often, people abuse the best intentions of others and turn food for starving peoples into guns for vicious guerrillas.Report
As Mike Farmer points out above, many libertarians would argue that one of the main drivers of generational poverty is the distortion of incentives created by government welfare programs. It’s not that most poor people are inherently lazy; it’s that they face terrible incentives (like punitive marginal tax rates) that would require extraordinary determination and willingness to sacrifice in order to overcome. That kind of grit is something that most all of us lack.Report
Read Voegelin, guys!Report
Don’t worry Bob. Though I fear I may regret it I have added Voegelin (who I shall from now on refer to affectionately as “The Kraut”) to my reading list.
Do you know if The Kraut had anything to say about east Atlantic fisheries? I’d be surprised, he’s a philosopher after all, but then again Germans are a pragmatic bunch.Report
Northie, I’m not all the way through all 34 volumes, and sometimes I go back and re-read, but so far nothing on fisheries, but there’s an essay on British philosophers you’d like.
Let me know when you’re ready to start reading him. I’d like to recommend what books to read first. Also, they’re available from The University of Missouri Press. He’s a man who sought truth and reality and his journey was spectacular!Report
“They are, however, the option we ought to try first, because properly designed, they tend to tell us what’s going on.”
But there’s the rub, isn’t it? How do we know in real time whether markets are properly designed? Was the US housing market properly designed in 2002? How about 2005? How about 2007?
I completely agree that unfettered markets are excellent devices for price discovery. I tend to agree with Freddie, however, that price discovery may not be most important value in all situations.Report
This begs a whole host of other questions about the value of information, the way information can be distorted into generating false signals and the consequences of those false signals. What the mortgage brokers and loan originators knew about the underlying quality of their loans never made its way in to the market. Had that have been the case, my sense is that investors would have demanded higher yields and priced out a lot of those crappy subprime-backed bonds but that goes to a discussion about how markets can fail due to information asymmetry.Report
If there wasn’t a competition block, caused by government, among CRAs, the information would’ve come forth.Report
Can you please explain how you think this would have happened?Report
There would have been more competition to give investors good information — small CRAs hungry for business would have done a better job arming investors with the information they need to make informed decisions, and these companies who became good would be very valuable and make lots of money.Report
CRAs protected by government favor became lazy and politically influenced, and blind when Barney said see nothing, hear nothing, speak nothing..Report
I don’t disagree Mike but we have also seen CRA’s become captive to large clients with the same result but no government interference. Arthur Anderson for instance.Report
Yes, there will always be companies who play dirty, but with unrestrained competition, this is not likely to happen as often, because when it’s revealed, it’s devastating for those who get caught — and when there are plenty of competitors to blow whistles, the cheating companies won’t last long, and once everyone sees what happens as a consequence, no one is likely going to take a chance. The great majority of companies will concentrate on quality results, and the crooks will go out of business paying damages from law suits.Report
Markets are the dominant reality in this country and all but a few others. The benefits of choice and the preference aggregating function of markets work on the distribution of goods with nearly unfettered freedom nearly everywhere. No one anywhere is seriously proposing any alternative to markets as the primary distribution mechanism of goods and services in this country or indeed most of the world. It’s fine to defend markets, but it’s not fine to pretend there’s much at all they need defense from. They reign. That makes the enterprise of critiquing markets a very worthwhile social exercize. But the facts that social critics critique markets and the government regulates them does not mean that their establishment is under assault. They are secure as our distributive mechanism. Moreover, the fact that any markets are regulated does not mean they stop giving the bulk of the benefits they produce as markets. They are still markets — they still perform those functions. It would be a profound rhetorical coup for free-market ideologues to put over on the world to get the notion accepted that any market that is interfered with by regulation at all does not perform its preference function. In the main, it will.
We should be secure in our sense that markets are the way we distribute goods, reveal preferences, etc. in our society is through markets. No one is putting that up for debates. There is no need to conjure a shibboleth that suggests a threat the place of markets in our society. That place is secure.Report
Regulated markets in a mixed economy aren’t free — yes, we have a market — there will always be a market — but the question is whether free market principles are allowed to work, or not — it’s been — or not — for decades.Report
I agree there aren’t free markets everywhere. Whether markets “work” is an extremely complicated, value-laden question.Report
I agree there aren’t free markets everywhere. Whether markets “work” and what it would mean for them to be “allowed to work” are extremely complicated, value-laden questions.Report
Sorry for duplicate.Report
I’ve been thinking about this.
When it comes to markets, “working” may be analogous to “living”.
Lemme tell ya, I have been living for a while. I intend to keep doing it for a while.
I’m not going to do it forever. To dismiss me as someone with fundamentally flawed design because I am going to die, yes, die seems to miss a great deal of really awesome “up until that point” data.Report
I think that may be almost exactly what I’m trying to say. Markets do exist; they’re not in danger; they carry great benefits — all over the place — even when they’re interfered with/regulated — and in that sense they work; and in that sense they do work, and are being allowed to work — just as things are. Which is not to say that arrangements couldn’t be improved. The problem is how. Any proposed changes in policy are going to be subject to extensive investigation and discussion of what the desired ends are, what it means for a particular arrangement to be “working,” whether the proposal would in fact deliver the improvements it is intended to, and the like, and the people doing the discussing will have very different views on the answers to all those questions. And everyone’s views count.Report
While I agree that markets are prevalent and can deliver benefits even if subject to government interventions, I do think that there are significant areas of economic activity even within developed nations where the scope of the market is constrained to the point of being almost irrelevant. In the U.S., two of the biggest areas would be health care and education. Also, in these areas, the current movement is even further away from free markets, so I think there is good reason to have this debate which appears far from as settled as you make it seem.Report
No doubt there are areas where markets are more established and accepted than others.
U.S. markets in health care are currently constrained and distorted, but not to the point of irrelevancy. There is broad freedom to purchase health care, and even health insurance, from those private entities one chooses.
Education is a different case. I don’t oppose the introduction of greater market forces into our education system, but I would consider that an experiment not dictated by the basic nature of the activity. You say it is an “economic activity.” I think many if not most Americans would say that it is a social and a human activity, with attendant guarantees of public provision. To some extent we are moving in that direction on health care, though keeping provision of insurance private.
What market reforms in education do you propose?Report
Wrt health care, I agree/concede that the market is not entirely irrelevant, but with the government already directly funding almost half of the activity and severely limiting the extent of acceptable products and practices through licensing and the FDA, it seems to me that most movement in the industry are largely driven by spurious command and control concepts rather than individual choices driven by inherent consumer demand.
Wrt to education, first things first, I would get rid of the federal department of education. I don’t think there should be any federal involvement at all. After that, assuming I’m in charge of a state policy, I’d move towards non-refundable education tax credits which could also be used by wealthy individuals and corporations to fund scholarship-granting organizations. No curriculum standards. No government-run schools. The state would only serve as a partial conduit for funding.Report
Non-refundable — so if you don’t actually pay enough taxes to get enough back to actually cover tuition somewhere, it’s home schooling for you? Or did you mean refundable? Non-refundable would indeed be the orthodox market position.
I figured this was your vision. It is certainly a market-oriented one, and more power to you. I think American society simply doesn’t regard K-12 education in a market-oriented way; it’s a societal obligation we undertake together, from which one can opt out in terms of participation if not finance. If this view had any relevance to actual American attitudes, there would be some proportion of non-retirement municipalities that do not have public education systems. To my knowledge there is not, but perhaps the movement is afoot.Report
In extreme cases, this “regulation” takes the form of outright legality, such as in the case of marijuana, or tragically, in the case of Ibogaine.
In a particularly extreme case of regulation is intellectual property. While more moderate classical liberal and libertarian writers such as Thomas Jefferson and Frederick Hayek thought copyrights were defensible due to their well-defined nature, almost all thought patents were extremely objectionable and gave the state ambiguous power to grant monopolies over ideas. (Jefferson and Benjamin Franklin produced many inventions they refused to patent, and wrote long attacks on the ideas of patenting).
There is the use of eminent domain for private purposes. Not hugely used now, but it’s growing.
And more generally, the fact that nearly 40% of GDP is government spending – far higher in European countries – while few seem to be advocating the immediate overthrow of the free market and the establishment of communism, it is not unreasonable to believe that over time we could end up with a substantially similar system.Report