Castro has passed on

[caveman1917]

Yes, actually, it does. Simple supply and demand. If companies can make a profit selling X drugs at price Y, then they would jump at the chance to sell 2X drugs at price Y. That doesn't generally happen, because as demand is met, marginal demand decreases and price goes down.

In your scenario, the drug seller would be willing to sell for $100. The price cannot go below $100 until Bob gets his medicine. Since this $100 floor is above what the drug maker can make a profit at (otherwise Bob is screwed no matter what Charlie does), Bob will get his drugs. The drug company will keep churning out drugs for $100.01 until Charlie either runs out of money or decides that he doesn't want to waste more of it trying to keep Bob from getting any. The drug company will then make more drugs and sell it to Bob at $100.

Have you tried not assuming infinite capital?

 

[Craig B]

Have you tried not assuming infinite capital?

The issue of provision of medication to people needing it is a difficult one for markets to solve, so it is often circumvented at the point of use of drugs. Markets limit access to commodities, but in the case of necessary medicines the provision is limited by prescription. I get free medicine if it is prescribed by my GP. I don't even have any idea of the market cost of the prescribed drugs. That is also the best way of doing things, because people requiring medical treatment are often poorly provided with cash required to buy it. Also, I don't consume medications merely because I choose to do so; my involvement with them is not merely a voluntary act, but the result of expert advice.

Non-market economic systems are therefore quite well adapted to the provision of medications. Allocation by perceived need rather than consumer inclination is how they mainly function anyway. This means that such economies may perform better as regards medical provision than they perform as regards provision of consumer goods like clothing or household appliances. In highly market economies the reverse is the case. Therefore it is quite possible that Cuba, or the former USSR, have performed "better" in medical provision than the general standard of personal income in those places would suggest, and that the USA does "worse" than suggested by this criterion, while the "mixed" health services in W Europe fall between these extremes.

The issue to be resolved is the detail of generosity of provision, and the level of contentment felt by the Cuban users of that country's public services. Is the information published by Cuba honest or accurate? We don't know. If it is partly true, to what degree is it true? Again, we don't really know. I hope we will soon have dependable sources for this information.

 

[caveman1917]

The issue of provision of medication to people needing it is a difficult one for markets to solve

The issue of provision of anything to people needing it is a difficult one for markets to solve, unless you have a messed-up definition of "need". Try things like the market deciding to allocate an empty house to a rich person who collects houses rather than a homeless person, because the rich person's "need" for the house is plenty of dollars larger.

 

[Craig B]

The issue of provision of anything to people needing it is a difficult one for markets to solve, unless you have a messed-up definition of "need". Try things like the market deciding to allocate an empty house to a rich person who collects houses rather than a homeless person, because the rich person's "need" for the house is plenty of dollars larger.

Again, that's an excellent example of what I have in mind. Markets are not very good at this either, so public systems of provision and allocation of housing are often practiced even in market economies. Here in Glasgow, until quite recent times, the majority of houses in the city were owned by the City Council, and let on the basis mainly of need. This has in fact quite a lot in common with medical provision.

 

[Mycroft]

and if you don't apply them to the exclusion of all other principles, what is Libertarianism?

To me, this statement only makes sense if you're assuming we can only be guided by one philosophy, and once we choose we must adopt the most literal and extreme interpretations of that philosophy. Why would that be?

I think it's important to protect individual rights including property rights. I also think it's important that the poorest among us are taken care of, that they have adequate, health care, comfort, including having upward mobility so they're not stuck being poor forever. I don't know of any single political philosophy that would accomplish both those goals, and if such a thing were known to exist, we wouldn't be having this discussion.

Can it be applied in part? What ideological sense would that make?

Any ideal can be applied in part. That's kinda the point of democracy is that it can govern people who have different ideas of what "ideal" means. Even if the end result isn't perfect by any one person's standards, you still come to solutions that everyone has input on.

If it is to be diluted, moreover, where is the diluting substance to come from? Some kinda goddam commies? Believe me, religious bigotry exists in the real modern world. It is "social engineering" that keeps it in check. Your scepticism is well founded.

Do you agree that social engineering should be kept to a minimum? I believe you should have the freedom to worship God however you want, unless you believe that worship includes killing me. Surely there is a balance between allowing religious murder and stomping out religion altogether? The argument shouldn't be between one extreme or another, but where between the extremes we're going to settle upon for the best overall result.

 

[Mycroft]

Again, that's an excellent example of what I have in mind. Markets are not very good at this either, so public systems of provision and allocation of housing are often practiced even in market economies. Here in Glasgow, until quite recent times, the majority of houses in the city were owned by the City Council, and let on the basis mainly of need. This has in fact quite a lot in common with medical provision.

Why does the rich person collect houses? The most likely answer is so he can rent them to people who can't yet afford to buy them. If it's just because the rich person wants different places to stay around the world, then those are not houses the poor person would have been in the market for anyway.

 

[Mycroft]

Have you tried not assuming infinite capital?

Do you mean capital or money? Either way, nothing in what he said assumes an infinite supply of it.

I don't think your example can be salvaged, but let's move on anyway. The point you're trying to demonstrate is that a Libertarian system doesn't guarantee that everyone gets everything they need.

What do you suggest is a superior alternative?

 

[Craig B]

Why does the rich person collect houses? The most likely answer is so he can rent them to people who can't yet afford to buy them. If it's just because the rich person wants different places to stay around the world, then those are not houses the poor person would have been in the market for anyway.

Oddly deferential to property speculators, that post. I just love the "yet" second line. That's a gem!

 

[Mycroft]

I did not make a claim about a hypothetical libertarian society, I - quite thoroughly - refuted your claim that if my example did describe market allocation of resources in a real society there wouldn't be any "Charlie".



See above, it refutes your claim about "there wouldn't be any Charlie".

Nothing in your study suggested there are wealthy people buying medicine so that poor people can't have it, or even that poor people are not getting medicine they need because they are in competition with rich people for it.

You also seem to be confused that poverty being a contributing to a person's death means they were too poor to afford their medication.

Finally, we live in a system that produces such studies. We look for the flaws in our system so we can identify and correct them. There are other systems in the world that don't make studies because they don't want to be shamed by the results, and so they don't seek to identify the problems that need correction.

One such system is the topic of this thread.

 

[Mycroft]

Oddly deferential to property speculators, that post. I just love the "yet" second line. That's a gem!

What's speculative about it?

And what's the real resource in question here? Is it home ownership? Or is it shelter?

Because not everyone wants to own their home, but everyone wants shelter. The person who chooses to rent and not buy still gets shelter.

 

[Craig B]

What's speculative about it?

And what's the real resource in question here? Is it home ownership? Or is it shelter?

Because not everyone wants to own their home, but everyone wants shelter. The person who chooses to rent and not buy still gets shelter.

You weren't referring to people who rent houses all over the world, but people who buy them. Housing is a limited resource, unlike washing machines or billiard tables. If the price of these things goes up, the market responds by increasing the supply. If land is occupied by mainly empty private houses, or rented housing unaffordable to the average worker, then it is not being used for accessible owner occupied or rented housing - and land is a limited resource. That is the main reason why there often has to be social intervention in the housing supply chain, even in market oriented countries.

And it was loans to facilitate property speculation, mainly involving housing, that got us into this current god damned mess, back in 2008. In Iceland the perps were sent to the slammer. Best place for them. Here politicians grovel to them.

 

[caveman1917]

Again, that's an excellent example of what I have in mind. Markets are not very good at this either, so public systems of provision and allocation of housing are often practiced even in market economies. Here in Glasgow, until quite recent times, the majority of houses in the city were owned by the City Council, and let on the basis mainly of need. This has in fact quite a lot in common with medical provision.

Markets are not very good at anything, unless you count "serving the whims of the rich at the expense of the needs of the poor" as "good". Because, again, markets are only "efficient" in the sense that relative "needs" are compared by how much money backs them, and given the properties of a utility function (decreasing marginal utility of money as you have more money) this means that the market will allocate resources to fulfill the whims of the rich (small utility but which equates to a lot of money because the person already has a lot of money) at the expense of the needs of the poor (large utility which still ends up equating to less money because the person doesn't have a lot of money).

And that's the big problem with liberalism or social-democracy. You just assume that market-based allocation is the "rule" and that the examples I'm giving (medication, housing, ...) are exceptions which the market is not very good at. But that's not true, the markets are handling these things exactly as designed, just like with all other products (say jackets). It's just that you seem to have a stronger response when it's about medication or housing than some other product.

 

[caveman1917]

Do you mean capital or money? Either way, nothing in what he said assumes an infinite supply of it.

Capital, and yes he's assuming an infinite supply. He claims that, as long as there is still some profit to be made selling something at a lower price that the production company will do so. This ignores the opportunity cost of capital (or equivalently, assumes infinite capital). If there is a larger profit to be made using limited capital to produce yachts than to produce more medication at a lower (but still profitable) price, then the capital will go towards making yachts rather than medication.

I don't think your example can be salvaged, but let's move on anyway. The point you're trying to demonstrate is that a Libertarian system doesn't guarantee that everyone gets everything they need.

What I have demonstrated is that a market-based resource allocation scheme puts a higher priority on allocating resources to fulfill the whims of the rich than the needs of the poor. This both follows directly from theory and can easily be observed in practice.

This argument is general for any market-based resource allocation scheme, not just Libertarianism, although it is my understanding that Libertarians want to put even more of society's resources under market control?

 

[Mycroft]

You weren't referring to people who rent houses all over the world, but people who buy them.

Yes, but the commodity is "housing", not "houses. People who rent also have access to this commodity.

Housing is a limited resource, unlike washing machines or billiard tables. If the price of these things goes up, the market responds by increasing the supply. If land is occupied by mainly empty private houses, or rented housing unaffordable to the average worker, then it is not being used for accessible owner occupied or rented housing - and land is a limited resource. That is the main reason why there often has to be social intervention in the housing supply chain, even in market oriented countries.

Yet new housing is being built all the time. Real estate developers identify housing needs, then build housing to fit that need. They are motivated by profit to do this.

And it was loans to facilitate property speculation, mainly involving housing, that got us into this current god damned mess, back in 2008. In Iceland the perps were sent to the slammer. Best place for them. Here politicians grovel to them.

Back then I worked in mortgages and saw the crisis develop from the inside. It wasn't driven by people buying houses and letting them stand empty for speculative purposes. It was too easy credit driven by ever loosening underwriting standards. Then it was lying about how loose those underwriting standards were in order to sell mortgage backed securities.

A libertarian solution to that problem would have been to let those banks that were "too big to fail" fail along with the insurance companies that covered them. The resulting immense loss of wealth among the investor class would have done more to prevent these sloppy practices in the future than any sort of government regulation. Meanwhile these assets of these banks wouldn't just vanish, they would be bought up by the more conservative and responsible financial institutions were were in a position to profit from this sloppiness because they were more responsible.

 

[caveman1917]

Nothing in your study suggested there are wealthy people buying medicine so that poor people can't have it, or even that poor people are not getting medicine they need because they are in competition with rich people for it.

You also seem to be confused that poverty being a contributing to a person's death means they were too poor to afford their medication.

Not necessarily medication. Death by poverty means quite exactly what I claimed, that the market is allocating resources to rich people who don't need them as much as poor people, yet their "need" is valued higher by the market - for these resources - because these people are rich.

Charlie would be the rich person getting the resources, Bob the poor person dying from lack of resources. And it doesn't necessarily have to be medication, that was just an example, and like I said above it has nothing to do with Charlie's "personal evilness" or "doing it on purpose so that poor people can't have it".

Finally, we live in a system that produces such studies. We look for the flaws in our system so we can identify and correct them. There are other systems in the world that don't make studies because they don't want to be shamed by the results, and so they don't seek to identify the problems that need correction.

How would you like this paragraph packaged? The national anthem playing as the text appears? Maybe the red, white & blue slowly waving in the wind in the background, perhaps an eagle passing by?

 

[Mycroft]

Which pretty much equates to half of the world's property, if we measure the amount of property in terms of its value - which seems the obvious measure to use.

Math is not your strong suite.

The top X number of people have the same amount of wealth as the bottom 50%.

Say the population in question is 18 people. Three people have 0 credits of wealth, 3 people have 1 credits, 3 people have 2 credits, and so on through 3 people having 5 credits each. Assume that 0 is poverty, 1 is struggling, 2 and 3 are middle class, 4 is professional class, and 5's are wealthy.

The top two people (any two of the three 5s) have a total wealth of 10. This is a little greater than the total wealth of the bottom 50%, who have wealth totaling 9. The total wealth in this system is 45. That's a little more than 22% and nowhere near 50%.

Extrapolate that to the population of the Earth, and that 22% shrinks even further.

True, I misread that. The point stands though, the mere cost of buying a ring of land is not the limiting factor. So you can't hide behind "nobody would do that because it costs so much".

The limiting factor is only partly not having enough money to do it. It's also not having a good enough profit incentive. If you charge enough in tolls to recover this huge investment, you only incentivize people to find new places to live and work where your exorbitant tolls are not pulling them down. You also incentivize finding alternative ways to bring people and supplies in and out of the city, such as by air. (Heard of the Berlin airlift?)

The more people leave and or use alternatives, the less profit you make. When enough people leave the city or adopt alternatives, the more likely you are to collapse financially from your nefarious yet foolish investment.

There are reasons why cartoonish villainy is only found in cartoons. This scheme has the feel of something cooked up by Mr. Burns from the Simpsons.

 

[caveman1917]

Yet new housing is being built all the time. Real estate developers identify housing needs, then build housing to fit that need. They are motivated by profit to do this.

No they don't. You are twisting the term "need". Craig was clearly using it in the sense of homeless (or other) people having a "need" for housing. Your use of it is different, in your use "need" = "effective demand" (ie demand backed by money). A homeless person's need for housing doesn't even enter into the market until this person has enough money to back their need with.

 

[caveman1917]

Math is not your strong suite.

Oh please, the very next sentence I concede to having misread the claim. Do you have no better arguments to make that you're now just trying to score cheap points by claiming my math was incorrect when mine was clearly based on a different premise than yours?

The limiting factor is only partly not having enough money to do it. It's also not having a good enough profit incentive. If you charge enough in tolls to recover this huge investment, you only incentivize people to find new places to live and work where your exorbitant tolls are not pulling them down.

Yes, and everybody leaves the city handing their property inside to me as either toll for letting them go or just buying it ass-cheap. And when pretty much anyone is gone the entire city is my property, and I can open it up again and extract rent. Or something like that.

But then again, the main point wasn't the financial viability of such undertaken but the legal framework surrounding it in a Libertarian society.

 

[Craig B]

Yet new housing is being built all the time. Real estate developers identify housing needs, then build housing to fit that need.

On what do they build them? On existing land. In your city is there no zoning or similar "social engineering"? Are there no building standards that must be complied with, even if the market would generate shantytowns or gerrybuilding, left to itself? Is there no security of tenure preventing the free commercial exploitation of rented property? Abandoned to its own devices the market in housing would result in a few expensive gated communities (cos people buy their own protection, don't they?) and a mass of shantytowns. That is what happens in third world places where only market considerations, and the depredations of hired gangsters, operate.

As I'm saying, "property rights" are not a "given"; and owning a pair of socks is not the same uniform thing as owning residential property, or a factory, or a forest or a farm. "Libertarianism" is an absolutism that says on the contrary it is so. Your outlandish meditations on the property bubble indicate that you concur.

A libertarian solution to that problem would have been to let those banks that were "too big to fail" fail along with the insurance companies that covered them. The resulting immense loss of wealth among the investor class would have done more to prevent these sloppy practices in the future than any sort of government regulation. Meanwhile these assets of these banks wouldn't just vanish, they would be bought up by the more conservative and responsible financial institutions were were in a position to profit from this sloppiness because they were more responsible.

The assets did just vanish, in substantial part, like the "assets" generated in any bubble.

Panic runs on banks are very rare in the U.K. There was not a single one in the 20th century. Last in England 1866, Scotland 1879. So Northern Rock in 2008 was a big shock. That bank had recently boomed. Why? Because it was offering loans up to 120% of the assessed value of a property, to a total of six years' worth of the borrowers' income. Guess what happened to such "assets" when the bubble popped. What happens to "leveraged" assets when "the music stops" and then the inevitable crash arrives? They simply vanish. May I counsel you to peruse that indispensable work The Great Crash 1929 by J K Galbraith?

ETA Out of interest, why would only "the investor class" have suffered if these banks had been permitted to fail? What about employees, and pension fund holders of these banks, or employees of undertakings holding normal business loans from them? What about depositors' balances in accounts held in these banks? It's the owners who should have suffered legal sanction, but they didn't to any measurable degree. And the regulations previously in place that would have inhibited the bubblers' shenanigans ... would Libertarians say these regulations ought to have been kept in operation?

 

[Mycroft]

Capital, and yes he's assuming an infinite supply.

No, not infinite. Only sufficient to meet the demand. It may take a lot of resources to develop a medication, but once developed it doesn't take that much capital to manufacture it. If it's both life saving and something rich people want for fun, then every qualified pharmacist should be willing to make it.

What I have demonstrated is that a market-based resource allocation scheme puts a higher priority on allocating resources to fulfill the whims of the rich than the needs of the poor. This both follows directly from theory and can easily be observed in practice.

And it also produces more resources to distribute.

The problem with communism is it assumes every resource is limited and the only question is how to distribute these resources to those who need them most. The capitalist understands that resources are created, and that the first step to meeting everyone's needs are to create as much of these resources as possible.

Your model assumes the rich guy is an ******* who doesn't value human life, and I think that particular prejudice on your part is influencing your perception. Market models don't consider human altruism, but the real world allows for it.

This argument is general for any market-based resource allocation scheme, not just Libertarianism, although it is my understanding that Libertarians want to put even more of society's resources under market control?

I think Libertarians have a different belief as to what are "society's resources" and what resources belong to the individual. If Alice purchased more medication than she needs, is the extra medication her resource or society's? Why does Bob need to depend on Alice giving up or selling her surplus to get what he needs? If Alice, Bob and Charlie were all taxed, and if a small portion of those taxes were used to ensure that all the Bobs in the world had their life-saving medicine, would that be theft?