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Why Free-Market Economics is a Fraud

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If there’s one thing everyone in America knows, it’s that free-market economics is true and free markets are best.

After all, we’re not communists, are we? They starved and lost the Cold War because they believed otherwise. And their watered-down European cousins the socialists? More of the same, only less so. Even liberals get this nowadays. All hail the free market!

Trouble is, things “everyone” knows are often wrong. And this is no exception.

It’s time to start getting honest about a very simple fact: Nobody, but nobody, really believes in free markets. That’s right. Not the Republican Party, not the libertarians, not the Wall Street Journal, nobody.

Here’s why: a truly free market is a perfectly competitive market. Which means that whatever you have to sell in that market, so does your competition. Which means price war. Which means your price gets driven down. Which means little or no profit for you.

Oops!

Naturally, businesses flee perfectly competitive markets like the plague. In fact, the fine art of doing so is a big part of what they teach in business schools.

That’s why businesses use strategies like product differentiation, so their competition is no longer selling the exact same product they are. That’s why they use strategies like branding, so their buyers don’t think the products are the same.

Businesses will, in fact, do almost anything to get out of the hell of pure head-to-head competition.

They don’t do it because they’re crooked; they do it because they have an intrinsic economic incentive to. Always.

This is part of the innate essence of capitalism. It is not a flaw or a defect.  It is part of what makes the whole system go. It is part of what makes capitalism capitalism.

People are the same way. Consider your own career. Why do you get paid more than the minimum wage? (I’m hoping you do.) Probably because you have some skill that everybody else doesn’t have. So you don’t have to bid against every unemployed person in your area to hold your job. Just a few of them. Which pushes your wage above the legal minimum.

That skill of yours is what economists call a “barrier to entry”—entry into the market for your job, that is. And if you’re anything other than a damn fool, you’ll cherish it like your very life.

I sure do.

Now let’s consider the other side of the equation. We’ve looked at free markets in things you sell. Now let’s consider free markets in things you buy.

Here everything gets turned around. If I’m buying something, I want the freest possible market in that product.

I don’t, to take an example recently on my mind, want there to be only one market for live Christmas trees in my town. I want there to be two (or more), and right next to each other so I can easily comparison shop. And I want to shop for more-easily shippable goods on the Internet, if possible, where I can potentially find the lowest price in the entire world.

I want, in other words, every seller’s nightmare. Which every smart seller will use every legal trick in the book to avoid.

As a result, nobody with any wits about them really believes in free markets. People believe in them when it’s in their interest, but not when it’s the other way around.

This is a systemic, structural condition, so anyone who tells you they believe in “free markets” is either lying, stupid, or hasn’t thought the whole concept through properly.

The latter category is quite common. Many people do their thinking about political ideology in an entirely different—and dreamily disconnected—mental space than they use for managing real life.

Frankly, everyone I’ve ever met gets the truth well enough in practice, in their own personal life or in how they run their business, so I just don’t believe anymore that anyone does believe in free markets.

Like any rational person, I’m open to counter-examples if anyone can show me any. But I’ve been asking around for a while on this, and haven’t come up with much.

This is not just an esoteric point, still less yet one more example of the familiar fact that people are hypocrites in politics.

Here’s why it matters. The political players in America today who claim to support free markets don’t. They support free markets in the things their backers buy, but maximum barriers to entry in the things their backers sell.

For example, one of the great unnoticed achievements of the Republicans (and their Democrat collaborators) from Reagan onward has been to gut U.S. antitrust law. Having a monopoly, or a cozy oligopoly with friendly rivals, is one of the best barriers to entry around.

As recently documented in Barry Lynn’s fine book Cornered: the New Monopoly Capitalism and the Economics of Destruction, American industry is now concentrated as it hasn’t been since before the era of Teddy Roosevelt and his trustbusters. (There’s a different kind of Republican for you, by the way. These truths are not liberal or conservative.)

Most Americans don’t realize this has happened because, unlike in the old days of Standard Oil, oligopolies today are cunning about masking their existence.

To take just one example, America’s eyeglass frame industry is now dominated by the conglomerate Luxottica. That’s why frames are so expensive. And any company, like Oakley the sunglass maker, that tries to break into the market? They find themselves shut out of a Luxottica-controlled distribution system. And retailers are now afraid to receive distribution from anyone else, lest they be cut off.

It’s a remarkably well-oiled scheme, and it has its parallels in many other industries. But the average consumer has no idea about this, because the range of brands, if not suppliers, in optical shops remains diverse.

We’re fat, dumb and happy.  We’ve been fooled.  But behind the smiling mask of a hundred labels smirks a single monopolist.

But aren’t there laws against this sort of thing?

Well, there sure used to be, enforced by unsung lawyers and bureaucrats (horrors!) at the Justice and Commerce Departments. Whom nobody considered very glamorous, but who were doing the rest of us a big favor. Talk about forgotten wisdom!

Consider some other examples:
·         Tyson in chicken
·         Smithfield in ham
·         Menu Foods in pet food
·         Frito-Lay in chips
·         InBev and MillerCoors in beer
·         PepsiCo, Coca-Cola, and Nestlé in bottled water
·         Dickinson in medical devices
·         Microsoft in operating systems
·         Iron ore (three companies)
·         Aluminum
·         Cement
·         Railroads
·         Banking
The number of problems caused by letting monopoly power—whose key consequence is known as “pricing power”—is astonishing.

For one thing, this is a huge part of what ails American farmers. Family farmers are caught between the agribusiness monopolies who push up the price of their inputs (feed, seed, fertilizer etc.) and the agribusiness monopolies who push down the price of their outputs. (The economists’ term for the latter is “monopsony,” with an “s,” but it works the same way as monopoly.)

It’s the perfect racket.

And it’s no surprise that on the other side of the equation, “free” market politicians are very diligent in imposing genuinely free markets where this suits the interests of the multinational “American” corporations that fatten their campaign coffers.

This is done, of course, as a matter of high principle and sophisticated economic rationality.  It’s remarkably easy to make wonderful after-dinner speeches about free markets.

Let’s start with labor. Post-Nixon Republicans have genuinely supported just about every policy designed to weaken the pricing power of labor. This starts with weakening unions and letting the inflation-adjusted minimum wage fall, but it doesn’t end there.

You think Ronald Reagan got in 1986, and George W. Bush wanted in 2007, amnesties for illegal immigrants because they were nice, compassionate people? To ask the question is to answer it. Whatever the ultimate merits of amnesty as policy, for them it was about cheap labor, plain and simple.

The reality is that the past prosperity of America has never been based on pure free markets—starting with the fact that we had the highest average income in the world in 1776 because the colonies had structurally tight labor markets due to the open frontier. (Europeans and other Old World peoples were trapped by the iron law of wages because they had nowhere to go.)
Free, or nearly free, markets do have their rightful place in many parts of the economy, and it would be foolish to sabotage them. But in other areas—above all, in labor markets—our prosperity was based on pricing power.
A number of areas other than labor also worked better thanks to a healthy dose of pricing power. Try advanced technology, for a start. The patent system, which is not natural, is a fairly recent invention, and does not de facto exist even today in much of the world, is one. Innovation doesn’t come cheap, and without pricing power for innovators, few companies could afford it.

Even the existence of scale economies, which are intrinsic to modern, large-scale, capital-intensive industry, implies markets that are less than free. Why? Because scale economies intrinsically imply a small  number of large producers and thus give rise to oligopoly, with the consequences mentioned earlier.

This is why most other industrialized nations aren’t romantics about free markets, are honest about their frequent nonexistence, and focus their policies on taming the negative effects of oligopoly while capturing the positive ones. They understand, for one thing, that big corporations are necessary but often pirates, and focus on making them share their loot with their crews.

We, on the other hand, live in a state of denial about the piracy.

So the next time someone tells you to believe in “free” markets, just tell them you’ll believe as soon as they do.

When pigs fly.

 

14 Responses to “Why Free-Market Economics is a Fraud”

  1. Bruce Bishop says:

    Fletcher says: ” . . . a truly free market is a perfectly competitive market. Which means that whatever you have to sell in that market, so does your competition. Which means price war. Which means your price gets driven down. Which means little or no profit for you.”

    Where is the evidence of a price war between Ford and Chevy? Between McDonalds and Burger King?

    People who are in business are not stupid. They recognize the need for peaceful coexistence. There may be cases where price wars drove one or both competitors out of business, but not in the savvy world of Fortune 500 companies.

    It appears that Fletcher is looking for a way to present central planning as something palatable. The operative term in free market is free. If we are willing to give up our economic freedom to a handful of elites who believe that they can “plan” the economy better than the collective decisions of millions of citizens, then we can prove to the world one more time that central planning results in EPIC FAIL.

    • Tom T. says:

      Bruce, any company with unlimited amounts of capital could capture even the burger industry. One would only need to undercut in price (and perhaps build the same product line in case there is value in the diversified burgers) all the other competitors until they were very weak, then swoop up and purchase them. This is essentially what China is doing to U.S. industries. The solar industry— the same thing. The trick is that China is using U.S. company’s marketing systems (like WalMart) to do that very thing to suppliers.

      Tom T.

      • Bruce Bishop says:

        Tom T.,

        I don’t argue hypotheticals. My question was, “Where is the evidence . . .”

        As to China, they have a labor cost advantage ranging from ten to one to one hundred to one. We simply can’t compete with that.

        U.S. industries chose to become importers — first of components, then of complete assemblies — rather than compete head-to-head with China. The familiar brand names stayed the same and the folks didn’t even realize they were buying products manufactured in China. Many still don’t.

        • Tom T. says:

          Bruce, the evidence is the capture of the U.S. markets. With a manipulated currency, the economic dynamics are there for this to happen. Further non market dynamics such as government subsidies, lower pollution control costs, and yes, a little on the labor.

          I spoke to a man in Texas who had the business of cutting mesquite wood that was milled into flooring. He said all of his sales went to China. I asked him if the labor costs were the reason. He said, no, the labor costs were pretty inconsequential. The major subsidy of the plant that produced it and the subsidizing of the shipping to China were the main factors.

          All trade of this nature with China is subject to the added costs of shipping materials there and then back. This, he said, was completely subsidized by China.

          I asked him further about the actual milling. He said that China had a state sponsored state of the art milling facility that actually required little labor cost because of the volume produced per Chinese.

          Of course China not only captured the market for the mesquite wood but the support industries that built the factory. Thus, they capture the multiplier effect of having the industry (plus someone is probably making some good BBQ charcoal or mesquite BBQ— my favorite choice in BBQ).

          I personally think the Chinese goal is to capture the industry of the United States to such and extent as to reduce our standard of living even if it means China government through its currency manipulation and other capital equipment subsidies come from the government. Why not? They have unlimited amounts of capital they have earned off of us. Instead of just buying Tbills, they will capture our industries and put Chinese to work while we lose the supplier side of the industry (except the man cutting mesquite). A business venture here in the U.S. to capitalize the equipment can thus be made obsolete by the strategic goals of the Chinese government.

          Labor, once again, was not the big driver.

          Tom T.

          • Bruce Bishop says:

            Tom T.,

            Conjecture, backed up with obscure anecdotal evidence, is not all that convincing.

            I would suggest that you read what you have written and apply some common sense to it to see if it holds water.

            You have twisted yourself into a pretzel trying to prove that the labor differential between us and China is “not the big driver.” Give me a break!

          • Tom T. says:

            Bruce, I will never say that labor is not a huge problem. Labor, when supplied by a country with as few freedoms to allow the labor to capture their part of the economy can be viewed in much the same way as capital in China. Some industries are more labor intensive than others and when they are, the labor can and is a more important factor than capital, so I am not disagreeing with you that labor is not as big a factor as capital. It is just as manipulated by the government that China has. I am just saying that in a non free market or politically non-free economy like China has, either labor or capital can be and is manipulated by the government for their own purposes and not for the purposes of China’s economy of helping the average Chinese.

            Where is the demand from China? It is being captured by the government to predate U.S. businesses and market instead of sharing the wealth down the line with the market participants like labor.

            When looking at labor issues, I am much less concerned about an economy like Canada because their labor is roughly on board with U.S. labor partly because they have a free and open society that can require that earnings produced by manufacturing actually gets passed down to the people in the economy.

            I did give one example where capital backed by the Chinese government predated a U.S. supplier.

            I am sure there are many examples where their communist labor does the same thing, and perhaps may even be a bigger factor than just capital in many industries. Both are important and one does not over ride the other necessarily. What does over ride is the trading with a country and having them have access to our markets when there is not an equalization of labor standards and costs and other factors of costs like pollution.

            The different standards mean that China can use those standards to predate U.S. suppliers while we have merchants in the U.S. willing to take them up on this by buying their products. This happens because they do have a cheaper cost of production but that cheaper cost of production does not include all of the costs we, as a society, have built into the costs like labor standards or environmental standards.

            Tom T.

      • Joe Brooks says:

        Bruce, Tom, All,

        You may find this debate regarding Anarcho-Capitalism [Libertarianism, Free Trade] interesting.

        http://www.scottmanning.com/content/communist-body-count/#comment-1151

        • Anonymous says:

          Well I’m not sure why it is I cannot respond to you on that website no longer, but you have asked that I consider continuing the discussion here, so I will try and respond to as much of what you have typed as possible. Keep in mind a lot of what you have posted forward is simply rehashings from Wikipedia (a link is enough) laced with a lot of falsehoods, which I would like to address foremost.

          “Anon, you have pretty much answered yourself, here. The Germans and Japanese currently have non Marxist Socialism, they practice State Capitalism [Corporatism] just like the USSR did and the PRC does, but instead of enslaving their populations, they actually want their countrymen to be successful.”

          Erm… what? I responded to the point made that the Nazis were ‘Socialist’ in the economic sense, and I asked what you meant but all you did to backup your argument was to list the translated name of the Nazi party as your proof. When I highlighted that such a literal interpretation makes no sense when you apply this to Communist countries that had ‘Democratic’ as a part of their countries or political parties name, your next response was to change the argument and talk about the modern economic systems championed by Germany and Japan. Very non-sequitur.

          The economic system advocated by Nazi Germany is more accurately described as Keynesian (London School of Economics), in the sense that it is statist/corporatist, and was highly dysfunctional by extension. Hitler supported the printing of money and unleashing it onto the market causing hyper-inflation, the kind of economic thinking supported by John Maynard Keynes (to list one example). Keynesian economic theory =/= Socialism, unless you want to argue it in the sense as opposed to Free Market Capitalism, but even in a true Socialist state; there is no economic freedom or private sector, only bureaucracy and government operation and ownership of the means of production. In a Keynesian state, there is private property and ownership, but there is also more state control and corporatism, which also bears more resemblance to the kind of system currently run by the Obama administration.

          “Very good, you have made my point for me. There is absolutely no difference between Anarcho-Capitalism and Psycho-Babble “Classical Libertarianism, Classical Liberalism [BTW-how is this economic conservatism?], and Anarcho-Communist “free markets”.”

          Apart from the Classical Liberalism point (as I wasn’t placing it for the question you posted); where does Milton Friedman or Thomas Sowell (for example of Libertarian-minded Free Market advocates) support absolutely no regulation in the private sector or for international trade? The reason I ask is because Libertarianism =/= Anarcho-Capitalism, which advocates the complete dissolution of the nation state and all regulations thereof (including the military, police, legal systems, etc…). Most Libertarians and their supporters I have come across do not argue for this to happen, or that international trade has no limitations for imperialist Communist countries to destroy the financial and economic institutions of the United States. This is paranoid and fallacious in nature.

          On this subject, I’d like to hear your viewpoint on Henry Kissinger and Richard Nixons rapproachment policy with the Peoples Republic of China that has led to the economic dependence on them that you are against. I’d like your own viewpoint, not a copypasta straight out of Wikipedia.

          “Read these please, and you will no longer be baffled. The Libertarians [Rothbard, Paul, Friedman, etc.] are self proclaimed Anarcho-Capitalists, the very ideology that we both agree on that is the legacy of the 1920s thru 1980s and current communist infiltrators.”

          lol now you’re comparing Rothbard to Friedman, yet the latter never advocated the system we are in ‘agreement’ on, but he was influential in the Libertarian movement; that I can agree on with you. There are Libertarians who are pro-life, and Libertarians who are pro-choice; it just goes to show there are disagreements within every political faction on every issue, but to equate Rothbard and Friedman in the same sentence is intellectually lazy. Friedman argued that government is necessary for some amount of regulation and control, Rothbard saw the state in every sense as a hamper to Capitalism. Even Hayek denounced Anarchism on more than one occasion in his life, and he a long with Friedman were certainly not closet-Communists or subversives, or even Rothbard for that matter.

          “Many of the US infiltrating Communists subscribed to the London School of Economics [free trade].”

          Keynesian economy theory (the same school you are talking about) argued against the old classical economic theories that are supported by Hayek and Friedman in numerous ways, especially on the point of the government intervening into the private sector to stimulate employment and to recover from a crisis. Indeed the overwhelming majority of Libertarians that you claim support these ideas are actually against most, if not all of Keynes ideas; including Ron Paul. lol

          I’m not necessarily a Ron Paul supporter myself, I just like some of his points on social issues and economics, but disagree with him on foreign policy. Then again I’m not necessarily a true Libertarian in the purist sense, I tend to have mixed or fusionist political views.

          “Friedrich Hayek [A known Fabian Communist free trader-JB]”

          This is getting ridiculous. Yes he was a part of the Fabian society early on in his life, but he clashed with members there on more than one occasion including the famous George Bernard Shaw that you mention later on in your response. The Fabians themselves were ‘Democratic Socialists’, and Hayek later rejected many of their ideas, as well as Communism in general. Do you seem to subscribe to the idea that if someone affiliates or supports a Socialist movement early on in their life, that they cannot change their minds or see the falseness in Socialist economic theory? Many of the defectors of the Eastern Bloc during the Cold War were former Socialists and Communists, are you going to say you wouldn’t believe their intelligence reports that the Soviet Union and their allies were not engaged in a permanent state of warfare simply because of the people it originates from? Be a little bit more distinctive than that.

          “was far from supporting such crazy ideas (he academically criticized them often in his life {a hoax –JB}”

          On what grounds do you assert that it was a hoax, i.e; that it was just a cover for subversive activities? Same goes for your next part about Ayn Rand, what section exactly? Please provide evidence for your claims.

          “The London School of Economics was founded in 1895[18] by Beatrice and Sidney Webb,[19] initially funded by a bequest of £20,000[20][21] from the estate of Henry Hunt Hutchinson. Hutchinson, a lawyer[20] and member of the Fabian Society,[22][23] left the money in trust, to be put “towards advancing its [The Fabian Society's] objects in any way they [the trustees] deem advisable”.[23] The five trustees were Sidney Webb, Edward Pease, Constance Hutchinson, William de Mattos and William Clark.[20]”

          There are academic institutes, schools of thought, and universities all over the planet from the past and even in the present which have been founded by people who latter rethought their ideas, or were life-long crackpots; yet the students who came to these places may have viewed things differently. If you are going to be consistent with this viewpoint, then you are left with few to no academic schools on Earth that weren’t started either by a Communist, Fascist, Colonialist, Religious Extremist, or whackjob of some description, and that their successors and students by extension are all the same just because they happen to subscribe to ideas from that school (irrespective of whether or not those ideas contradict). It could also be argued if we were to use this viewpoint in other instances; that the founders of the US, the American School of Economics, and Protectionism were racists, because many of them who supported these ideas engaged in discrimination laws against the Native Indians, as well as the short lived colonialization of the Phillipines and Liberia, and the plight of Africans through slavery. Anyone who thus supports Protectionism is thus a ‘racist’ and a ‘colonialist jackboot fascist.’ In reality, I think you need to make better distinctions than what you have put forward, because the same logic applied to other schools of thought and history you would all of a sudden disagree if it was applied to your own or other schools of thinking.

          “Shaw was a murderous Communist scumbag.”

          http://www.youtube.com/watch?v=WgpaKkrZex4

          I’m fully aware of people like George Bernard Shaw, I don’t support his political views (as should nobody else), but he also supported the Nazis and engaged in Anti-Semitism, and Holocaust denial.

          Shaw and friends simply admired totalitarianism and hated Democracy and Capitalism; ideas that are predominantly Western in nature. That seems to be the best explanation I’ve seen for why Shaw supported both Fascist and Communist regimes and denied the evils they committed. Many people supported these kinds of movements also due to the idea that because they supplanted an evil authoritarian or colonialist state that came before it, the successors themselves must therefore not be so bad after all. When faced with the fact that these regimes engaged in wholesale murder and starvation of their people, a lot of people started to cold-shoulder Socialist, Communist, and Fascist thinking. Shaw is an example of the handful of people who were not in this group, no different to Neo-Nazis who deny the Holocaust, but in the same breath say that one is on its way for the Jews of the world.

          “Friedrich August Hayek CH (German pronunciation: [ˈfʁiːdʁɪç ˈaʊ̯gʊst ˈhaɪ̯ɛk]) (8 May 1899 – 23 March 1992), born in Austria-Hungary as Friedrich August von Hayek, was an economist and philosopher best known for his defense of classical liberalism and free-market capitalism against socialist and collectivist thought [A hoax-JB]”

          “From 1925 to 1926, Kuznets spent time studying economic patterns in prices as the Research Fellow at the Social Science Research Council. It was this work that led to his book Secular [Secular= Communism in practice-JB]Movements in Production and Prices, published in 1930.”

          Yet again, please provide evidence for these claims, otherwise they are little more than paranoia and ad hominem attacks. Attending the London School of Economics or publishing a book that influenced Keynesian economic theory is not evidence of Communist subversion, as that is an extremely black and white way of looking at the dynamics of economic theories.

          “Friedman’s political philosophy, which he considered classically liberal and libertarian, emphasized the advantages of free market economics and the disadvantages of government intervention and regulation, strongly influencing the opinions of American conservatives and libertarians [Anarcho-Communists JB]”

          lol. Yes, Libertarianism, the movement which seeks to reduce spending of a big government, that places value on the individual and promotes economic freedom; is a system of thought that according to JB here is to abolish private ownership, and in turn bring in the dissolution of economic prosperity through government ownership. I have to give you credit for supporting one of the most Orwellian viewpoints I have ever come across. I could also point out that many of the founding fathers of the US were Libertarian thinkers themselves,

          The rest is waffle that is starting to increasingly make you look like a conspiracy theorist. Just because a few Anarchists engaged in anti-American activities, does not mean all Anarchists or Libertarians are therefore Communists or support anti-American activities. While I don’t agree with Rothbard, calling all Anarcho-Capitalists or people who support Free Market Capitalism as being subversives is little more than paranoia.

          “It is very interesting that most of the creators [von Mises, von Hayek, Kuznets, Rand, Freidman, Rothbard] of Libertarian and Objectivist free trade were all highly educated German aristocrats or USSR era Russian immigrants, or children of highly educated USSR era Russian immigrants. How did the Russians get out of a police state that used barbed wire and machine guns to keep persons [especially educated individuals] in country to facilitate the USSR’s goals?”

          So the evidence you bring fourth that they must be traitors of some kind, or closet-Communists is because they or their parents fled from Central or Eastern Europe prior-to or during Nazi Germany and the Soviet Union? lol, are you really going to be this dense?

          Although if you are so hung up over this point, why is it that Friedmans parents immigrated to the US prior to either of these two regimes coming into existence in what was Hungary at the time? What about Adam Smiths economic theories that influenced or paved the way for much of these thinkers (particularly Friedman)? He was a Scottsman living under the British monarchy, and an influential member of the Enlightenment. Was he also a Anarcho-Communist Anti-American? What about the Englishman John Stuart Mill who advocated limited government control and regulation?

          I’m not fond of Anarchists, but I’m not going to accuse all of them in the way you have of such ridiculous points without evidence, or only on the basis that they happened to hail from Eastern Europe.

          “Silvermaster and many other Russian free traders were discovered spies, how many more were undetected and more competent or had better cover stories?”

          You mean a long with Harry Dexter White and Elizabeth Bentley that you mentioned before? H.D.W was a friend of Keynes and supported many of his economics theories, but this only goes to show that the majority of the subversives you have listed who turned out to be Communists (from the Venona project) used the economic systems they purported to support as a means to win trust amongst European and North American non-Communist states to filter intelligence to the Eastern Bloc. Yet again, this has no bearing on these economic systems, nor does it prove your point simply because they happened to originate in certain parts of Europe or because they claimed to support Austrian or British-based economic schools of thought.

          Another way to put it; because a handful of them hated the United States and wanted to destroy it from within, therefore Free Market Capitalism, and anyone who advocates it or is attached somehow, must be a Communist traitor? This is actually starting to turn into conspiracy theories that are cringe-worthy to read through.

          “All of this type of hysterical, pseudo-intellectual, European/Eurasian Psycho-Babble Ideology/Economic Theory leads to wars, Globalism, criminal government, free trade, anarchy, slave labor and poverty. They are methods to implement Communism and overturn the Constitution. Libertarianism, Anarcho-Capitalism, Objectivism, Communism, Anarchy are all variations on this same theme: Criminal Communist free trade looting of anti-Communist countries, followed by full-blown Communist Criminal governments.”

          This alone would convince me that you subscribe to Alex Jones, David Icke, or some kind of conspiracy theorist. Some of the Soviet spies were members of the US armed forces, FBI, CIA, and other government organizations. Does that mean the US forces or intelligence networks were solely designed to bring down the US according to your own logic? Of course not. Yet a lot of information from defectors came from people who immigrated or fled out of the Warsaw Bloc, or other Communist states.

          “Why would Americans contemplate anything but the American School of Economics, with a little Fordism [Ford was an American]-The essential meaning is that the worker must be paid higher wages in order to afford the products that the industrialist himself produces, causing an economy that runs full-circle.”

          Ford openly admired Adolf Hitler, and the Nazi German regime. By your own logic, American economists and the School attached is a fig-leaf cover for a Nazi agenda. lol

          Not that I actually believe that, but this is the fruit of your method of historical analysis.

          “David Friedman is the son of economists Rose and Milton Friedman. His son, Patri Friedman, has also written about anarcho-capitalism, particularly seasteading. David Friedman holds an A.B. from Harvard University and a Ph.D. in Physics from the University of Chicago, although he is most known for work in other fields. He is currently a professor of law at Santa Clara University, and a contributing editor for Liberty magazine. He is an atheist.[2]”

          An ATHEIST with a Ph.D. in physics? Heaven forbid…

          “Anarcho-capitalism
          In his book The Machinery of Freedom (1973), Friedman sketched a form of anarcho-capitalism where all goods and services including law itself can be produced by the free market. This differs from the version proposed by Murray Rothbard, where a legal code would first be consented to by the parties involved in setting up the anarcho-capitalist society. Friedman advocates an incrementalist approach to achieve anarcho-capitalism by gradual privatization of areas that government is involved in, ultimately privatizing law and order itself.”

          Clearly a Communist at heart.

          “This is a complete embrace of the USSR/Red Chinese system of “government”. How do you think the USSR murdered 60 million of their citizens, and the PRC has, to date, murdered 70 million, without judicial and police prosecution of the mass murderers? Everything is for profit; the laws, the legal system, the prisons, the politicians are stooges of the criminal corporate Communists, there is no beneficial rule of law for anyone but the wealthy [the inner party], the vast majority of the population are nothing but slaves, with no hope for improvement. Of course, once Criminal Communist governments are implemented “free trade” goes out of the window and economic protection of Communist Corporations reigns.”

          Wait, are you arguing that the Communist states of the 20th century were actually Anarcho-Capitalist or held Libertarian viewpoints? Hahahahaha…

          The reason those murderers are not prosecuted, is because the governments there have complete control of everything; the complete opposite form of system to that supported by Libertarians or Anarcho-Capitalists. In these systems, the state owns the media, economic infrastructure, the armed forces, absolutely everything. If it engages in an action that is morally dubious or horrific in nature, it is unaccountable to no-one as it is the law itself. You should actually listen to what most die-hard Communists (the ones who deny Soviet and other states attrocities) their thoughts on the political and economic ideas in question, and they were entirely against them. Even Marx and Engels, supports of Socialist economic theory, laughed at the idea of individual liberty, private property, and any concept which would take away from something that is statist in origin.

          “Your future under Communism:
          The Black Book of Communism, a set of academic essays on mass killings under Communist regimes, details “‘crimes, terror, and repression’ from Russia in 1917 to Afghanistan in 1989″.[39][40] Courtois claims an association between communism and criminality—”Communist regimes … turned mass crime into a full-blown system of government”[41]—and says that this criminality lies at the level of ideology rather than state practice.[42]”

          Careful there Joe, that book itself was written by former Communists. Why not dismiss it as a Communist method of weaseling into American society through propaganda by saying the Soviets and Co. were all bad and that the authors are on our side? Yet again, your own reasoning falls flat here. lol

          It could even be said that it’s a Communist ploy to hide the REAL numbers of people that have been killed, after all it has been criticized by Rummel and other political scientists/historians that their numbers (100 million) are under-representative. Okay now I’m just being tongue in cheek, but it is interesting to note that Rudolph Rummel supports a Free Market Capitalist model, and agrees with Friedman and others that it provides the free exchange of goods and services more so than most other systems. I bet you Rummel has Eastern European or German relatives, and a Hammer and Sickle hidden in his home somewhere… Good grief.

          “Anon, I think we can lay this issue to rest “free trade” Anarcho-Capitalism/Communism and Libertarianism, Objectivism, Anarchism, Classical BS, whatever you want call it are the same thing.”

          They are not the same thing at all, and your narrative on this system is largely grounded in irrational thought. There is nothing inherently wrong with the American School of Economics, and the people who academically discuss it (Friedman, Rothbard, Rand, Hayek, etc…) aren’t all enemies of the state or trying to bring down America in some way.

          “I agree that economics may not be an exact science, but it is obvious to anyone who studies this field, that is has been inundated with Marxists, Anarchists, Libertarians, Objectivists, Foreign Lobbyists, Idiots, Morons, Spies, that 99% of US economic theory is just plain hidden agenda Psycho-Babble, devised to enrich a special interest; be it a country, a corporation, or an ideology.”

          I would happily agree with you that the Socialists and Marxists have ruined political and economic discourse ever since they opened their mouths on the subject from the 18th century on, and have helped to obscure or damage certain political movements (Liberalism comes to mind here), but Objectivism, Anarchism, and Libertarianism do have some viable roles in the current age, are ideas that are common amongst Conservatives in the US, and some of the founding fathers of the US were very much Libertarian in their ideas (Thomas Jefferson and Thomas Paine are good examples). These ideas aren’t perfect, and I do have my disagreements with people who are ‘purists’ on these subjects, but that’s another story.

          The rhetoric you are using against Free Markets have nothing to do with whether or not the American School is viable or not, and appear to be a Red Herring/fallacious on many levels. Protectionism is still alive and well in the current US economy, Bush and Clinton both supported these concepts in practice, and Obamas current economic system is more accurately described as Corporatist; as opposed to Free Market. Look at the mess that is getting America into.

          “The American School of Economics is not an experiment. Protectionism works. Period. The Japanese, Germans, Red Chinese, Indians, Brazilians, 150 other nations all practice protectionism. They all have industry and a future [in Red China, the CCP members, anyway]. Only the US practices idiot free trade and we have just seen why.”

          That’s actually not true, if anything history will show that it’s quite opposite to the picture you just painted; most democratic countries in the world (except the US) are Free Market, including my home country, and the greatest prosperity and individual freedom has come from this system.

          The US hasn’t had a proper Free Market system since the 1920s, even Friedman could have told you that one for free. Maybe hints of it during the 80s under Reagan, but that’s about the closest America has had. Bush was Protectionist, so was Bill Clinton before him, and numerous other US presidents and yet they were unable to stave off the impending GFC that hit in 2008. Americas current system is Keynesian, which is actually different from Free Market theory.

          In the other examples you list, it has actually failed all of those other states in various periods. Prior to 1991, Indias economy was both Socialist AND Protectionist, it staved off American and European attempts to trade and buy assets in that part of the world, and simultaneously staved off prosperity and economic freedom. Since 1991 it has adopted a Free Market system that has brought it into the top 10 world economies in a very short period of time. It is also going to be a future rival to Communist China in terms of foreign policy and competing to sell goods to the West due to the historical grievances the two share over the last 60 or so years. Indias success (and also the success of the state of Chile) has come from adopting many of Milton Friedmans ideas, so I fail to see the success that you are purporting.

          Japan also went through a Corporatist/Protectionist phase during the late 80s and early 90s, where the government tried to bail out failed firms, businesses, and banks while protecting its own interests through sizable handouts, and was the cause of the Lost Decade in which Japan went from the second largest economy in the world, to further down the list with stunted growth. Japan is only now barely starting to recover from it.

          Germany’s economic model in the present (where it is achieving large amounts of success) is predominantly Free Market in nature, but it also had the Keynesian period during WWII which led to inflation and unemployment, as I have mentioned before. Brazil likewise is enjoying prosperity through a similar system.

          Chinas success is not due to Protectionism either, the once closed Communist country opened up its markets during the late 70s, and has ever since prospered due to foreign investment and a more ‘Free Market.’ Although technically speaking, it’s not a real Free Trade system, as the majority of the countries success and assets are still controlled by the CCP. It appears to be more of a version of Red colonialism.

          “Anonymous, there really is no legitimate debate with regard to a nation’s inherent duty to protect its own citizen’s prosperity. It is a given that if the nation wants to survive, it will protect itself. Otherwise, it is just a money pit for scoundrels, bums, foreign lobbyists and looters. 140 nations are currently doing so. The evidence is beyond overwhelming, it is a simple statement of the blatantly obvious facts. I agree that some unethical opportunists will try to game the system; that is why regulation is needed. Regulations control the actions of people, not the market.”

          The founding fathers of the US allow tariffs into the constitution as a safety blanket to protect its market from foreign hostile takeovers or monopolization from foreign hostile states, I agree, and in cases where the US is engaging in economic diplomacy with other democracies (Britain, France, Germany, etc…) it should encourage a policy with these states (mind you, it should be mutual, not one-sided) of free trade between these countries. It could also be pointed out that not all emerging free states on the planet can produce all of the same goods and services for its people that others can, and it would be ideal that they create a competition in the international market on the goods and services they can provide or adopt somehow. I have no issue with free trade between these states, but with totalitarian states like China, or countries that only pursue their own national interests at the expense of American or other democratic countries goods and services; sure, go nuts with a tariff. If it comes at the expense of the consumer to FREELY CHOOSE between a product that is cheaper or better quality made, then that impinges upon the freedoms of the average American.

          If you are against the fact China is engaging in an economic war with the United States, then your criticism should be leveled at the likes of Kissinger and Nixon who brought forward the wonderful idea of rapproachment with Communist China in the middle of the Cold War, under the guise to further the ‘Sino-Soviet split’, but all it has done in reality is to bolster a future threat to the free world. Nixon, ironically, was also a Keynesian.

          “I hope to see your arguments, in a proper setting, Joe Brooks.”

          I would prefer not to do a Ring-Around-the-Internet and just argue in one place preferably, and this isn’t exactly a ‘neutral’ setting for a debate of the Free Market, more so website full of people who agree with your viewpoint.I would hope you would take the time to watch Milton Friedmans ‘Free to Choose’ documentary, which would do more justice to the system we are arguing than I could possibly hope to do. Just a thought.

          • Tom T. says:

            Anonymous, this probably isn’t the site for you. People here are trying to figure out what is going on here, now, not some trip down historical economic theory trail. It is interesting background but takes one out of the present picture. Perhaps a philosophical historic econ theory site would be up your alley.

            Many of Keynes’s theories are were based on his present day situation. Today we have a U.S. economy that is heavily influenced by trade with China and they don’t have a floating exchange rate. That means many of the adjustments that need to happen are not happening.

            A stimulus package to the average citizen, for instance, in our present economy, would not have the straight Keynesian effects but would flow directly to China because U.S. consumers and the average citizen buy so many Chinese products. Yes, the merchants like Walmart would take their small cut and try to out compete companies relying on U.S. suppliers. It is a war on the suppliers and China is rigging the game to win that war.

            I am not against trade with China. I am against China rigging the rules. That is what a manipulated currency does. I would be happy if China had a system where labor could demand its price and their earnings would end up becoming demand. China does not allow that to happen. It is rigged.

            Whether it is the oligopolists here or in China, it does not matter. They have sold the idea that the lowest cost is all that matters. It hides all the costs and consequences of a rigged game. The regular people end up paying and the oligopolists, whether they be communist Chinese leaders (all big businesses in China are run by communist party members which are a small part of the population and control the country) or oligopolists here in the U.S. changing the rules and laws of the land to favor them with their money buying our political leaders does not matter. It is not the free market. It is the bought market. It is bought with the power that China uses to manipulate their currency or bought with the power of the oligopolists here to get out of the rule of law. It is against the average citizen and will lead to the same results we had just prior and during the Great Depression

            I don’t care to get into an argument with you on which economic theory was correct or which one was aligned with what party in the past. That is interesting history but unless you can show parallels that are succinct to what is happening now, leave them behind. They are excess baggage.

            Tom

    • Jim Crawford says:

      You have already given up your economic freedom, it just happens to be to a handful of elites in China, instead of a democratically elected government of your own choosing that gives a damn about the future of America.

      And you do not even seem to know very much about classical economic theory, which does understand what an oligopoly is: i.e., a market controlled by a limited number of producers.

      Imports do not automatically produce comparative advantage for a nation even it they are cheaper than domestically produced goods. For example, if an economy lacks viable investment alternatives an unlimited amount of cash can pile up in savings and still not produce economic growth. This is, of course, our current problem as the more than $1 trillion in cash corporations are sitting on attests too. But do not despair, as soon as Americans are willing to work under the same conditions as Chinese workers classical economics promises to re-employ them.

  2. Bruce Bishop says:

    Quoting from Fletcher: “For one thing, this is a huge part of what ails American farmers. Family farmers are caught between the agribusiness monopolies who push up the price of their inputs (feed, seed, fertilizer etc.) and the agribusiness monopolies who push down the price of their outputs. (The economists’ term for the latter is “monopsony,” with an “s,” but it works the same way as monopoly.”

    The problem with the “family farm” is that the labor input is not sufficient to generate a middle class income. It is only through economies of scale that “agribusiness corporations,” can make a sufficient profit to stay in business.

    In his 1926 book, “Today and Tomorrow,” Henry Ford documented the labor required to operate a 350 acre farm. He sent factory workers, as needed, to do the tilling, planting and harvesting. By keeping careful records of the labor inputs, he exploded the myth of the “family farm.” This lesson has still escaped our government, which spends billions of our tax dollars to “save the family farms.” Worse still, the bulk of that money winds up in the coffers of agribusiness corporations.

    You can take this to the bank: Any time our government gets involved in the free market, they make the problems worse and end up hurting the people they claim they are trying to help.

    It is unfortunate that economists like Fletcher have so very little experience in the real world that debunked theories still capture their imagination. There are still those economists who will argue that the failure of the Soviet Union was due to fifty years of “poor harvests.”

    To quote Thomas Sowell: “Some ideas are so plausible that they can fail nine times in a row and still be believed the tenth time. Other ideas sound so implausible that they can succeed nine times in a row and still not be believed the tenth time. Government controls in the economy are among the first kinds of ideas and the operations of a free market are among the second kind.”

    • Tom T. says:

      Bruce, I could give you the inside scoop of one part of agribusiness and their economic frauds with respect to their family farmner suppliers.

      Done that, have the T-Shirt and it is much more real world than Sowell or Ford can touch. I am pretty confident in saying that with the company Fletcher keeps, he too is pretty informed on the issues. I will, however, read the book you mentioned. 1926 and today are way different worlds in agriculture but there may be some economic parallels worth finding out about. I will mention one thing regarding the farm. The work is one thing but the responsibility is a whole different can of worms.

      Tom T.

  3. Tom T. says:

    “This is why most other industrialized nations aren’t romantics about free markets, are honest about their frequent nonexistence, and focus their policies on taming the negative effects of oligopoly while capturing the positive ones. They understand, for one thing, that big corporations are necessary but often pirates, and focus on making them share their loot with their crews.

    We, on the other hand, live in a state of denial about the piracy.”

    I totally agree with you here, Ian. What would our economy look like if we didn’t prohibit natural monopolies with market power from capturing all of the wealth they could? Imagine if your local electric company was able to charge you on the amount they thought you could or would pay instead of the same rate for everyone? Imagine if they could increase the amount customers pay on their free market extent calculated by the best economists?

    We have limited some oligopsonies or monopolies like power, water and sewage systems in granting them the ability to a geographic monopoly (if that was the natural basis for their monopoly power) if they follow the rules.

    We took the “socialist” step of limiting their profits or making them public entities, not run by some profit maximizing board of directors or by regulating their profits. It has benefited our economy greatly.

    Other market based laws are not being heeded or enforced properly. It allows those who control the oligopoly to capture huge swaths of the economy without sharing the wealth they capture from the economy because the rules are not enforced.\

    The worst for the economy has been the oligopsonists in marketing who use foreign products to sidestep the standards we have on the environment and labor. They actually undercut these standards by substituting goods from other countries that do not enforce these standards. Sam Walton would be rolling in his grave over what his children are doing to our economy in order to maximize their profits and capture parts of the economy. It is akin to cannibalism.

    I think you hit the nail on the head on this one, Ian.

    Thanks,

    Tom T.

  4. Anonymous says:

    @Tom T’s response to me (I cannot respond to your last one so I’ll just make a quick one here).

    I do apologize for the sizable response you have seen here, but Joe asked me to respond in one of two particular places continuing this debate and it so happened to be this website. The historical narrative dealing with which president supported what kind of economic policy is largely in response to his point that the US has predominantly been Free Market when it hasn’t had such a system since Calvin Coolidge. Reagan is probably the closest someone could argue of a recent president to this extent, but even this is a limited comparison.

    Most of these points were unecessary anyway, as the original discussion was whether or not Nazi Germany subscribed to the same left wing economic theory the Soviets and Chinese once did, and it has derailed into something else.

    I agree with your point about the current system not being Fre Market, and about Keynesian economics; frankly I only see it as beneficial during a major crisis and when the US economy can stand on its own feet, but as you’ve already pointed out it cannot as most of the stimulus money is going straight into the hands of the CCP. Protectionism could play a role in swinging the advantage back into Americas court, economically speaking, but at the same time there probably needs to be sizable cuts made in the current US budget which another front of which the US relies on China due to the 700 billion that is currently owed (not to mention other countries).

    If worst comes to pass, then Americans should probably consider nationalization of industries and assets currently owned by China. Seems extreme, but it’s only a measure worth taking if an extreme scenario comes about. After all, if the commies want to engage in economic imperialism, the US should have every right to play the same game back.

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