Thursday, August 4, 2011

Give Free Markets a Try?

Someone commented on one of my articles that it's time we "give free markets and personal liberty a try."  I guess my history lesson on the Gilded Age was not enough.

America has had a free market system since its inception, and to say that it is not a free market is pretty ridiculous in my humble economic opinion.  If you want the market to be freer than it already is, then I urge anyone with that notion to please do a little bit of research on the living conditions of the average American during the Gilded Age.

I read this article today that sort of bothered me.  It's about the perks that some CEOs were receiving even as the economy lay in shambles with over 8% unemployment.

Look, I'm not a god damned Communist, Socialist, Marxist or whatever.  I don't believe in wealth distribution, or a market that is strictly controlled by the government.  But I also know that all humans, whether they work for a private company or for the government, are susceptible to greed.

How can we say that the markets need to be freer when part of the reason we're in this mess is because of underregulation?  Who here can honestly tell me that repealing Glass-Steagall was a good idea?  We've seen what humans do to their fellow man when there isn't at least some regulation placed upon them.  No one argues that the Gilded Age was not an age of exploitation, so why do we want to return to that?

What kills me is that people on both sides of the argument seem to place way too much confidence in the benevolence of which ever group they're trying to stroke.  It's pretty ridiculous to assume that if given the chance private corporations would not screw over whoever they wanted in order to make more money.  Why?  Because the people at the top are fucking loaded and all they want is to be more loaded.

It's equally as ridiculous to assume that people in government don't enjoy the power that they have, and if they're not actively seeking to actually increase that power, they are at least always working to maintain whatever power they have.  Money and power are the two things that have the potential to corrupt even the kindest of heart and purest of soul.

I'm a via media (middle way) type of guy.  I understand that humans need to be as free as possible, but I also understand that too much freedom leads to injustice and ultimately less freedom.  So can we please stop acting like the solution to all of our ails is to adopt an extreme?  That is a request I pose to people on both sides of the aisle.  I think history is on my side in such a request.


Country Thinker said...

As a fellow student of history - and specifically the Gilded Age, I'm going to have to disagree with you here on many levels. Yes, conditions were horrible for many of the urban working poor, but still better than the rural poor, which is why they moved to the cities. Indeed, the mass immigration to the U.S. throughout the Guilded Age and up through WWII, living conditions - bad as they may have been, were better under a free market system than elsewhere.

If you haven't read Hayek's The Fatal Conceit, you might find it interesting. The slow progress of development is a repeating pattern well-documented over the ages. What we saw in the guilded Age is not unlike we're seeing in china, with rural poor moving to urban areas, which for a time are a place of squalor, but improve as the free market advances.

We may disagree over this point (which is fine, we're allowed) - but I think the lesson of the Guilded Age is quite the opposite of what you suggest here, namely, that free markets provide the path to a more equitable and prosperous society than any government-guided economy. That's why millions of people flocked to the squalor of Guilded Age America.

Jack Camwell said...

I contend that the squalor would have persisted had the greed of the Captains of Industry not been reigned in a little bit.

You can't improve your living conditions without an increased wage, and wages were not increasing without mandates. Also, working conditions were horrifying as well without regulation.

And what about the stock market crash in '29? Was that not a product of a highly unregulated market? If investers were not allowed to speculate as highly as they did, would the market have crashed and plunged the nation into the Great Depression?

And as for urban conditions being better, sure they were better because they at least had access to some of the amenities of urban life like running water and the like. But as I said, the squalor was unlikely to get any better so long as their employers were free to rip them off with impunity.

Harrison said...

Jack, I'm going to disagree. Capitalism works because being greedy and making money benefits others as when new products are invented, prices are lowered to sell more, and even when sales people help others so they can earn a buck. The Chicken Tax is an example of unhealthy regulation in our economy.

A main reason why the housing market crashed was because the government forced banks to lend money to people not qualified to buy homes, etc...

People will risk their money to make more of it but they won't throw it away, they will be careful with it. Some may lose but most won't.

Country Thinker said...

Jack - I disagreed so strongly that I posted a rebuttal over at my site. it is rare for me to respond in that way, but most pieces I disagree with are poorly written and reasoned. As usual, yours is well thought out and well composed, thus I felt it deserved a careful response. i thoroughly enjoy debating with you, so hopefully I don't offend you by responding as i have. (And hopefully some of my readers drop by here and check out your site!)

Anonymous said...

Jackie Jackie.... as others have pointed out I think your comparison to the gilded age is a bit of a stretch for what free market economists would like to see today in 2011.

You know what I'm about, so I can give you a bit of insight into an industry I am very familiar with - Automotive.

Ford Motor Company operates the most advanced and streamlined vehicle assembly facility on earth... but it's not in Dearborn, MI or even North America... it is in Camacari Brazil. This is a perfect example of what a company would LOVE to do in America, but because of the Union of Autoworkers and the government in general, it is impossible.

There are other things too, like the EPA and what not that hinder the industry, and other more subtle things beyond the scope of a simple comment.

As I have been self-employed during my entire adult life, I see the issues plaguing businesses these days. I would rather have the businesses be deregulated and the government regulated, esp the governments role in buying up bad capital just because and screwing the people who are saving.

Make no mistake, we don't have capitalism, we have corporatism.

Anonymous said...

I agree wholeheartedly with all who disagreed with Jack's post.

I'm old enough to have had close personal contact with the generation who emigrated to the USA during the latter part of the nineteenth century, and know firsthand that they were able to perform wonders in the area of upward mobility just by working hard, practicing thrift and exercising self-discipline. This was all before Progressivism, the Federal Reserve, the Income Tax the New Deal and the Welfare State made that impossible and fucked us up for a fare-thee-well.

I'm seventy-years-old. When I was ten, my parents bought a very nice house in the suburbs of New York City for less than $20,000.00. Today that same house -- even in this down economy -- would sell for close to half a million. Five years ago it would have fetched over eight-hundred grand.

Does this make sense? Does this seem right to you?

It's MUCH harder for a young couple starting out today to live as pleasantly and graciously as my parents did -- even though they are earning ten and fifteen times the money.

Since the glory years immediately following the end of World War Two "The American Dream" has become increasingly distant and unattainable with each passing year.

Why is this?

Because the fucking bastards who are in control have seen to it that our currency isn't worth the paper its printed on. Wooden nickels have more intrinsic value.

We've been living in a world of illusion. We are beginning the slow painful process of waking up to the Nightmare of Reality.

And for Christ's sake stop knocking the so-called Robber Barons. The thoroughly mixed blessing of Modern America could never have come into being were it not for the tremendous contributions they made to real progress in Science, Industry and Technology. Without those guys we'd all be picking cotton, shucking corn, felling trees, digging up stumps, plowing our fields by hand, fetching water in the old oaken bucket from a hand-dug well down the hill, and shittin' in an outhouse freezing our asses off in the dead of winter.

Sorry, Jack, but you got his one wrong. I'm afraid you're too young to have been properly informed about our true history. You -- like too many millions of others -- got the commie version that has polluted and subverted our culture and softened us up for the kill -- which is coming faster than any of us would like to think.

All I can say is I'm damned glad I'm seventy and not seventeen right now. Thanks to Cultural Marxism of which you are obviously a victim the future looks like its going to be DOA.

What a pity! What a God-damned shame!

~ FreeThinke

Jack Camwell said...

I'm disappointed, FreeThinke, that you think I buy into the cultural Marxism horseshit.

I think I referred to them as Captains of Industry more than Robber Barons in this post, and I think I put Robber Barons in quotes.

Are you disagreeing with the notion that they exploited workers for their own ends? Sure, some of the things they did created some good, but you can't ignore the human cost.

I mean look at the "Gospel of Wealth." Carnegie basically told poor people that it was their station in life to be poor, and that wealth was a sign of God's grace and fortune upon a person. That doesn't sound at least a little bit nefarious to you? And that's not cultural Marxism, that's straight from Carnegie's thoughts. I know that Carnegie was also an avid philanthropist, but that doesn't change the fact that he exploited workers.

Who was it that was hired to beat down the workers every time they went on strike for fair hours and fair wages? The Pinkertons?

Silverfiddle said...

Jack: I also strongly disagree. You keep pointing to the Gilded Age, but that was also an age of falling prices, bringing consumer goods to working class people and making their lives easier.

You need to read a little less Howard Zinn and a little more Bill Bennett.

There is not perfection on this earth, rotten things happen, but on the balance the Gilded Age was a boon for America and for poor people who were lifted out of poverty and who had their lives improved.

Also, the logic is specious. Somebody burned down a house with matches, so you ban them?

Finally, you again employ the straw man by invoking the specter of corporations running rampant. No one is for that.

I will agree with you on Glass Steagall, only I say we did not regulate enough. When we repealed it, we should have also removed all safety nets from the banks and let them roll on their own.

That was the problem: We only half-deregulated. Our problem, Jack, is crony crapitalism. We give Wall Street free reign and a get out of jail free card, so of course they will be swimming in money made from reckless gambling, because they know when they shoot craps Uncle Sugar will turn you and I upside down, shake the money out of our pockets and give it to the bankers.

Ag subsidies, sugar subsidies and import tariffs, cutting GM bondholders off at the knees...

That's not free market captitalism. It is state-sponsored corporatism.

Jack Camwell said...

And you think by deregulating everything Wall Street is suddenly going to come to its senses and play fair?

Silver, as long as there are human beings running government and business, greed will prevail and and the little guy will get screwed.

Of course no one is for corporations running rampant. Well, corporations are for corporations running rampant.

What baffles me is how much a lot of you seem to be ignoring. You tell me I need to read less from one person and more from another. Why? Are my assertions that Americans lived in squalor and were exploited incorrect?

If I'm so wrong then why was there such a public outcry after the Gilded Age? Why were so many Americans fed up with the way they were being treated by businesses? Why did the Progressive Era even happen? Did the workers strike and form unions because they were greedy?

History is not about choosing to view the past in the way that suits whatever points you're trying to make. If you're objective about it, you would see that along with the economic growth and technological advancements, there was a high human cost paid. Are you denying the existence of overcrowded tenements, child labor, 12+ plus work days, and wages that were barely enough to live on so long as every member of the family, children included, worked their fingers to the bone?

Silverfiddle said...

@Jack: If you're objective about it...

That is my point.

My other point is about human nature. If there is no downside to an action and it makes you money, people will take that action.

If, on the other hand the "brave" crony crapitalists and banksters had to eat their losses, even to the point of auctioning the mansion and selling the silverware, they would not be taking such irresponsible gambles, and the ones who did and lost would matter nothing to us since it cost us nothing.

Why did wall street tycoons jump out of the window during earlier crashes? Why hasn't any of them done it lately?

Jersey McJones said...

The Middle Way, Jack, is obvious.

We have to stop borrowing without raising commensurate taxes to pay the incurred debt. It striked me as so obvious, so simple, yet so blithely ignored, it just blows my mind.

This Friedman school of economics we've been enduring for all these years has left us with a debt through the roof, Wall Street growing 1000% while most of us are only materialistically a little better off, endless booms and busts with far too much consequence to their necessity. It's been a failure. Period.

We have to pay our bills. That is the Third Way. We have to raise taxes and PAY OUR FRIGGIN' DEBT. NOW.

Dontcha' think?


William McCullough said...

I would agree with you that Gilded Age was only golden for those in power; the robber barons and their corrupt political lackeys.
Upton Sinclair gave perhaps the best synopsis on the Gilded Age in his book, The Jungle:

"Here is a population, low-class and mostly foreign, hanging always on the verge of starvation and dependent for its opportunities of life upon the whim of men every bit as brutal and unscrupulous as the old-time slave drivers; under such circumstances, immorality is exactly as inevitable, and as prevalent, as it is under the system of chattel slavery."

To anyone who has studied U.S. history from that time, there is not disputing Sinclair's view.

Most pampered American today would have been lucky to survive. Just my opinion....WM

Silverfiddle said...

The Guilded Age ended before Sinclair wrote his brilliant piece of socialist propaganda. I am not dissing the book. It is an excellent literary work and it does concord with contemporaneous historical accounts of the time. I own a copy and read it every few years.

Of course abuses occurred, but it was also a time of unprecedented growth and industrial advancement for our nation. Would you prefer the workers paradise of the Soviet Union as an alternative?

Life is messy.

William McCullough said...

I do thank you for the correction. I also have a rather old copy from my high school days in the mid 60s. His book was originally published in 1903 some years after the so called 'Gilded Age.'
My passion sometimes rather than being the better part of valor in my political thinking can sometimes be a stumbling block. Again thank you....WM

Silverfiddle said...

No problem William. My own ancestors, including my mom, came here from Eastern Europe, and no one likes to see people starving and treated poorly

Anonymous said...

I know I commented earlier, but let me just be clear for what most free market economists would like to see in America.

Let the people determine the value of goods and services, not Ben Bernanke and his goon squad. What is essentially going on right now Jackie, is they are mass producing counterfeit money to pay REAL debts and mal-investment. On a small scale sir, if you went around town paying for everything with fake money... someone is getting ripped off, and its not the people who are using the fake money and getting away with it. Our government gets away with it because we just happen to own the reserve currency of the planet, plus our government can utterly destroy any country they wish.

The lynchpin of Keynesian economics basically revolves around a constantly growing economy. If for any reason the economy goes stagnant, the system starts to break down. You run massive debt today to make even more money tomorrow... it works in theory but so does communism =p

So apart from main street setting prices as opposed to wall street, the free market people would also like to see us trade with more people in a more reasonable manner... there are too many restrictions placed on it atm.

Right now China is purposefully debasing its own currency to boost production, and with all that cheap labor available the businesses have incredible short term leverage. Eventually this is going to catch up to them in a big way, wouldn't be too surprised to see an all out civil war break out there within the next 15-20 years.

Another problem with America right now... is we don't make or produce hardly anything for export anymore.
Sure we make SOME stuff, and produce SOME things... but when a pack of cigarettes has more real intrinsic value than a stack of $20 bills does, we have a problem. Manufacturing means jobs. Period.

So basically, stop the government paying for everything with monopoly money that WE have to make right, get America back to work making things with real value and off the teat of the working class taxpayer, free up businesses to provide that opportunity, and stop the reckless spending into the black hole. We will never get the money back from war, nor will we ever get the money back sent out on entitlements. When the money really has no more value, we will be forced to tighten up the belt anyways.

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