Libertarianism Declared Dead

[SaulOhio]

Really now, which regulation caused the banks and hedge funds to issue tonnes of junk Mortgage Backed Securities and ~$60 trillion of completely unregulated Credit Default Swaps?

Because that's what turned this minor problem in the housing market into a global problem.

Have you been paying attention?

We have the GSE's Fannie Mae and Freddie Mac, we have the CRA, we had Clinton and Bush pushing for an "ownership society", and on top of that we had central banking, which is a government attempt to regulate the economy in order to promote stable, continuous growth. (Intentions and actual consequences don't always go together)

And did you look at that graph I posted of the Federal Funds interest rate? The Fed dropped its interest rate down to 1% in 2003, pumping huge sums of cash into the economy, a disproportional share of which went into the housing market.

If you call all of this deregulation, I need to know how you define deregulation.

You assert that but have not backed it up other than by suggesting "Libertarians just wouldn't be so nasty, OK?". Well what would stop them? Here I am merely repeating Darat's post 24 which you have avoided. Please get onto it.

OK, I missed that. So:

That is not really the question; most Libertarians on this Forum have said that people should be free to enter into whatever contracts they wish to enter into with no one else being able to interfere with that, therefore such a contract is in line with such a principle.

The basic principle here is the non-initiation of force, but a necessary corrollary to that principle is proportionality. Retaliatory force should be proportional to the initiation of force. Robbery and assault gets you prison time. Vandalism may get you community service and restitution. The death penalty, if used at all, and there is controversy among libertarians about that, is reserved only for murder.

Blowing someone's brains out because they were late on a couple loan payments is WHAAAAYY out of proportion. Insanely so.

The whole point of Libertarian principles is to KEEP people from blowing each others' brains out.

And here is someone else's arguments I missed:

False dichotomy. The only reason the alternative is starvation is because there are no labor laws in these third-world countries. (This seems at odds with your earlier claim that these markets aren't free.)

Not a dichotomy. My analysis allows at least four options:

1: Leave things as they are, and let workers accept jobs in sweat shops, which are better that what is available for them anywhere else in the economy.

2: Force the employers to increase wages: This would cause unemployment because the same amount of money would be diverted to paying fewer workers more.

3: OSHA type regulations: Compliance would cost money, and you have the same problem as #2.

4: Actually liberalize the economy. Secure property rights by making it easier and less expensive for the poor to register title to their property, including their own businesses, which de Soto has shown have a value exceeding that of all foreign aid sent to third world countries since 1947. This would stimulate economic growth, increasing real wages and creating jobs.

Perhaps each company would hire fewer workers, but the large labor pool wouldn't just go untapped. New companies would form, or foreign businesses would set up shop to tap this resource.

Why would they, if you have increased the cost of hiring workers there, thus reducing their prospective profits?

Only if the government doesn't provide subsidies to this end.

Same problem, again. You are drawing money away from wages. Where do you think that subsidy money comes from? If its from taxes, then most of it comes from the workers' wages. If they just print the money, inflation causes the real value of the workers' wages to fall.

This raises the question, what about the present conditions makes libertarianism unworkable?

Nothing at all. It just needs to be implemented.

In fact, that is often my question when debating free markets on the internet. I often get the objection that "Free markets were OK for the 19th century, but things are different now." I never get an answer when I ask how things are different that free markets won't work anymore.

The point is that the economic principles I am arguing from ALWAYS apply. It may be that there is an order in which certain free market reforms should be made. You can't just privatize government run businesses when there is no judicial structure to protect property rights. You end up just creating a monopoly. Abolishing the Fed and instituting a 100% gold reserve would be a very late reform. First we would have to greatly cut the federal budget.

It may be the wrong time for specific free market reforms, but it is never the wrong time for free markets.

 

[The Central Scrutinizer]

You assert that but have not backed it up other than by suggesting "Libertarians just wouldn't be so nasty, OK?". Well what would stop them? Here I am merely repeating Darat's post 24 which you have avoided. Please get onto it.

Shanek (aka Super Libertarian) would always refuse to answer when asked how disputes would be settled in Libertopia, since there would be no need for courts, the Constitution being the SUPREME LAW OF THE LAND (his words) and everything you need is in there. There would be no disputes, since it is obvious to everyone what the Constitution says. In Libertopia, first thing every morning, everyone forms a circle, holds hands, and sings happy, joyful songs praising President Badnarik. (those that don't are excecuted)

 

[Francesca R]

The basic principle here is the non-initiation of force, but a necessary corrollary to that principle is proportionality. Retaliatory force should be proportional to the initiation of force.

Many many people view the espousal of such a principle by libertarians as vaccuous and outrageously so. Don't libertarian doctrines hold that blowing out the brains of somebody to protect your privately owned property is both legitimate and "proportional"?

Blowing someone's brains out because they were late on a couple loan payments is WHAAAAYY out of proportion. Insanely so.

Your answer is the same as before, namely: "Trust a libertarian, they just wouldn't do that". Yet we ask, what would stop them beyond self-restraint, from making such contracts? In our non-libertarian society, it is resolutely illegal to set up a contract providing for execution of one of the parties in the event of their financial delinquency. Are you saying that a "libertarian government" will outlaw such a contract too?

 

[Foolmewunz]

Shanek (aka Super Libertarian) would always refuse to answer when asked how disputes would be settled in Libertopia, since there would be no need for courts, the Constitution being the SUPREME LAW OF THE LAND (his words) and everything you need is in there. There would be no disputes, since it is obvious to everyone what the Constitution says. In Libertopia, first thing every morning, everyone forms a circle, holds hands, and sings happy, joyful songs praising President Badnarik. (those that don't are excecuted)

Our friend Ace Baker actually proposed (in support of other more-notable whackos, I should add in fairness) a Libertarian Free Market courts system. Where attorneys and defendants and plaintiffs would be free to shop for the best judiciary. He got lost in Lala-Land somewhere amidst our discussion and never did actually posit how this form of idiocy would function, but I have to say, he at least went out there on that lonely limb for a while.


*For them that don't know, Ace Baker was Truthseeker1234, a prominent CTist of days gone bye.

 

[Mister Agenda]

On this point of extreme contracts the "blow your brains out" is a rather extreme example of an extreme contract but I mentioned in another thread the example of my own great-grandfather, who entered "willingly" into a contract that meant that if he couldn't work for any reason he and his family would immediately lose their home. That may have been over a hundred years ago however you only need to look at the (actual) sweatshops of the world today to see hundreds of thousands people entering into terrible contracts today of their own "free will" when the other "choice" is starvation for them or their families.

It is the idea that such contracts, that the conditions that force people to make such a "choice", should be of no concern to society is what is truly repulsive about the ideology often espoused by Libertarians.

Your rights to life, liberty, and property are inalienable, according to the ideology espoused by Libertarians. Since you are repulsed by this can we assume that people should be able to assign to someone else the power of life, death, or enslavement over them? Or have you gotten libertarianism confused with anarchocapitalism?

As to the sweatshop issue, why would you take away the best option of some of the most impoverished people in the world? Better to force them to starve in the streets than allow them to work in a sweatshop, eh? People only choose to work under those conditions when that choice is better than any other option they have. By your logic, I am an evil person if I provide a difficult job under harsh conditions that pays double what anyone else can offer in a place where people are already barely able to survive on what they can produce; but I am a BETTER person if I build an automated factory in a place where I can find skilled operators and pay them average Western wages--even though under the first scenario the jobs sometimes make the difference between the employee's children living or dying. I'm not following this logic.

 

[Mister Agenda]

Hold on - a libertarian who wants the rule of law? Don't you guys hate governments, laws and rules?

That's anarchists. Thinking the government we have is too big is not equivalent to hating governments. Rule of law is essential to liberty. Rules are an indispensable part of human interaction. That does not mean more laws/more rules always = better. The libertarian position on laws and rules is that you don't want more laws and rules backed by the power of the state than needed for protection of your essential rights.

It can be confusing because of all the anarchocapitalists out there who vote Libertarian because they like the direction we're going, and don't seem to have a problem presenting themselves as our representatives, but their legitimacy as Libertarians is similar to the legitimacy of communists as Democrats. They are extremists. Of course there's a spectrum between them and moderate Libertarians, just as there is between the moderates and extremists of other political parties.

There are also differences between goals and ideals. I think it would be nice if we had a smaller, less intrusive government that allowed us to make more personal choices (such as which consenting adults we may marry) and neither subsidized nor hindering commerce beyond protecting citizens from fraud and force. As a goal, I barely hope that the growth of government can be limited to be proportional to the growth of our population.

 

[Mister Agenda]

No fan of Libertarianism, but to be fair. most Libertarians think that the Anti Fractional Banking campaign is stupid.

Quoted for truth.

 

[SaulOhio]

Many many people view the espousal of such a principle by libertarians as vaccuous and outrageously so. Don't libertarian doctrines hold that blowing out the brains of somebody to protect your privately owned property is both legitimate and "proportional"?

And the cops and courts would agree. If someone breaks into your home, you had better assume that he is willing to kill in order to complete his robbery, if you get in his way. There was a case here in Cleveland a few weeks ago when a homeowner confronted a man trying to break into his home. The homeowner pointed his gun at the intruder, and told him to stop. The intruder came at him, and he fired his gun, killing the intruder. No charges were filed against the homeowner.

Your answer is the same as before, namely: "Trust a libertarian, they just wouldn't do that". Yet we ask, what would stop them beyond self-restraint, from making such contracts? In our non-libertarian society, it is resolutely illegal to set up a contract providing for execution of one of the parties in the event of their financial delinquency. Are you saying that a "libertarian government" will outlaw such a contract too?

Yes, they would. For the reasons I gave.

Also, I need to repeat that I am not a Libertarian, as I stated in post # 19. I am an Objectivist. I agree that some of their representatives are seriouslyt nutty, and the anarcho-capitalist notion of competing protection services is unrealistic. However, what I said before stands, that most of their economic ideas are sound, and I got into this argument because it is wrong to blame Libertarian principles for the mess we are in, because it was the exact opposite of such principles that caused the mess. Libertarian economic ideas were CLEARLY not applied. What we have now, and have had since the the Fed was established, is NOT a free market.

 

[Mister Agenda]

More like an incestuous intertwining between big government and big business. I think there's a word for it.

 

[SaulOhio]

More like an incestuous intertwining between big government and big business. I think there's a word for it.

Political Capitalism

Political capitalism is a private-property, market-oriented system that is compromised by business-sponsored government intervention. It is a socioeconomic system in which many or most regulations, subsidies, and tax-code provisions result from the lobbying efforts of directly affected businesses and their allies.

 

[ponderingturtle]

Well that is certianly an option yes but generaly only has been tried by smaller economies (montenegro doesn't have a currency for example).

Generaly people tend towards finding an acceptable universal currency.

Sure but what private organization are you giving the power to print money? Sure they say that they have the gold, oil or what have to you back it, but you only have their word.

It seems that money goes against libertarian principles.

 

[ponderingturtle]

No. The communists actually got to try to implement their ideology. Maybe it could be argued that it was the circumstances at the time that were to blame (Though I don't believe so), but Libertarians don't need that excuse. They haven't even gotten the chance to try.

Because most of their specific proposals have been tried and failed. Please read up on the industrial revolution. That is the ecconomics that libertarians propose.

 

[SaulOhio]

Because most of their specific proposals have been tried and failed. Please read up on the industrial revolution. That is the ecconomics that libertarians propose.

I have read up, extensively, on the history of the industrial revolution. It was a time of unprecedented economic progress, when the common people went from living in mud huts and chronic famine to something closer to a modern city and the abolition of famine. The standard of living was improving at a faster rate than at any other time in history, thanks in most part to free markets.

Not that it was all fully laissez-faire, and there weren't big problems.

I have posted before on this forum about the massive intervention by governments into the railroad industry. There were government grants, exclusive licenses for certain railroads to enter ports, excluding others, creating monopolies, and so on. The railroad land grants caused overinvestment in the railroads, and that, along with the fractional reserve banking system we had even then, caused the typical boom-bust business cycle commonly blamed on the free market.

Original Land Grants

A number of federal land grants were made to support the development of transportation systems within the state during the 1800s. The largest of these were a series of grants to railroad companies to help fund the construction of the railroads. The role of the Board of Commissioners of Public Lands was to accept the lands on behalf of the state and then transfer the lands to the railroad companies. The railroad companies were then responsible for selling the lands as they chose. Normally, these lands were granted along the route of the railroad with the railroad company receiving alternate sections of land within an area paralleling the route. The federal government retained the other sections and could sell them as "improved" lands at higher price. All told, nearly four million acres of lands were granted to the railroads in Wisconsin.

Most of the criticisms of the 19th century I hear sound like impatience with the speed of progress. Sure, there was poverty in the 19th century. There were harsh working conditions. There were violent clashes between labor and business. That last would have been alleviated with a better understanding of economics and better enforcement of the rule of law, but most of the rest is the aftereffects of economies rising from the abject poverty of the Dark Ages. You know, the Dark Ages. "Bring out your dead", "I'm not dead, yet", "How do you know he's a King?, "Because he hasn't got &*^# all over him".

 

[Highly Selassie]

Not a dichotomy. My analysis allows at least four options:

1: Leave things as they are, and let workers accept jobs in sweat shops, which are better that what is available for them anywhere else in the economy.

This is the option that I called a false dichotomy.

Why would they, if you have increased the cost of hiring workers there, thus reducing their prospective profits?

If there is a potential for a profit, the potential will be tapped. People won't just say "Well, I could have made a million, but now I can only make a hundred thousand, so screw it, I'll just work in a sweat shop and live in poverty." If the business excels, they could buy up their competitors and get big enough to rake in the real profits. There's also the influence of foreign investment.

Same problem, again. You are drawing money away from wages. Where do you think that subsidy money comes from? If its from taxes, then most of it comes from the workers' wages. If they just print the money, inflation causes the real value of the workers' wages to fall.

If the subsidies come from taxes, it pays itself off because the workers are able to work harder for a longer portion of their life, benefiting both the economy and society. But, in a third-world economy the tax base is likely too small for the subsidy to come from taxes, so it would likely come from IMF/World Bank loans or printing money (saying this would cause inflation is a circular argument.)

 

[Highly Selassie]

As to the sweatshop issue, why would you take away the best option of some of the most impoverished people in the world? Better to force them to starve in the streets than allow them to work in a sweatshop, eh? People only choose to work under those conditions when that choice is better than any other option they have. By your logic, I am an evil person if I provide a difficult job under harsh conditions that pays double what anyone else can offer in a place where people are already barely able to survive on what they can produce; but I am a BETTER person if I build an automated factory in a place where I can find skilled operators and pay them average Western wages--even though under the first scenario the jobs sometimes make the difference between the employee's children living or dying. I'm not following this logic.

More straw men and false dichotomies. Nobody is proposing banning sweat shops and then simply leaving people to fend for themselves. The point of government intervention is to prop up a better alternative, one that given enough time will result in a more robust and vibrant economy and larger tax base than could ever have been achieved with a sweat shop economy. What that better alternative is depends on the needs of the economy in question; there is no panacea.

 

[SaulOhio]

This is the option that I called a false dichotomy.

It is also the option commonly ascribed to Libertarians and other advocates of free markets. So I agree, it is false, but not a dichotomy.

If there is a potential for a profit, the potential will be tapped. People won't just say "Well, I could have made a million, but now I can only make a hundred thousand, so screw it,

They will invest their money elsewhere, in some other country. Or in commodities. Or they will spend more of it, and invest less. Your argument implied that the interventionist measures would persuade more people to spend more of their money on investments, but there is no reason to believe that. In fact, people will invest less if there is less prospect for profit.

I'll just work in a sweat shop and live in poverty."

Huh? We are talking about the investors, the people who own the businesses, not the people who work there. You switch between one and the other.

If the business excels, they could buy up their competitors and get big enough to rake in the real profits. There's also the influence of foreign investment.

Which Hernando deSoto has proven is negligible, compared to the value of the assetts in the informal market. If you bring that into the formal market by helping poor business owners gain title to their property, and

According to de Soto, the assets of the poor in those nations amount to "dead capital." In other words, because of problems dealing with legal ownership of assets, the poor cannot transform what they own into capital through the process of offering collateral needed for business startups and expansions. Instead, the vast majority of the world’s poor operate in the underground economies of small-scale enterprises, squatter "settlements," and payoffs to bureaucrats and the police.

From Capital and Property Rights, which I quoted before.

If the subsidies come from taxes, it pays itself off because the workers are able to work harder for a longer portion of their life, benefiting both the economy and society.

If you take a ladle, scoop water out of a bucket with it, then pour the water from the ladle back into the bucket, have you added water to the bucket? Most likely you have spilled some in the process.

But, in a third-world economy the tax base is likely too small for the subsidy to come from taxes, so it would likely come from IMF/World Bank loans or printing money (saying this would cause inflation is a circular argument.)

As I said, de Soto has shown how insignificant that is, compared to what you would get by simply helping the poor gain title to their property.

 

[Highly Selassie]

It is also the option commonly ascribed to Libertarians and other advocates of free markets. So I agree, it is false, but not a dichotomy.

You don't know what "dichotomy" means.

They will invest their money elsewhere, in some other country. Or in commodities. Or they will spend more of it, and invest less. Your argument implied that the interventionist measures would persuade more people to spend more of their money on investments, but there is no reason to believe that. In fact, people will invest less if there is less prospect for profit.

You're missing my point by a country mile.

Huh? We are talking about the investors, the people who own the businesses, not the people who work there. You switch between one and the other.

Alright, I misunderstood, but my point still stands. Investment is not simply going to stop just because potential profit is reduced. The amount of investment may be reduced temporarily, but investment will still occur.

Which Hernando deSoto has proven is negligible, compared to the value of the assetts in the informal market. If you bring that into the formal market by helping poor business owners gain title to their property, and
From Capital and Property Rights, which I quoted before.

I lack the economic expertise to formulate a proper critique of that article. Does this work of de Soto's appear in a peer-reviewed journal of economics? The Mises Institute is hardly an unbiased source.

 

[SaulOhio]

If you take a ladle, scoop water out of a bucket with it, then pour the water from the ladle back into the bucket, have you added water to the bucket? Most likely you have spilled some in the process.

Come to think of it, this was an inadequate response. You claimed that the improved working conditions would help extend the lives of the workers, producing economic gains.

What about the wages that are reduced right now, and the workers that don't get jobs right now? The lower wages mean poorer diet and poorer living conditions at home, resulting in health liabilities (for lack of a better word) that balance out the benefits. And the workers that don't get jobs because of the higher taxes or higher costs to the employers don't get the benefits at all.

This all is the result of impatience with the pace of economic progress and a desire to get something for nothing. Its as if you think that if we can just get government to MAKE businesses pay more and provide better working conditions, things will improve. Government doesn't have a magic wand. (It does have the guns )

 

[SaulOhio]

Alright, I misunderstood, but my point still stands. Investment is not simply going to stop just because potential profit is reduced. The amount of investment may be reduced temporarily, but investment will still occur.

Thats exactly it. It WILL be reduced. I never said it would stop. And it won't be temporary. it will last as long as the high taxes or other measures imposing higher costs on the investor.

I lack the economic expertise to formulate a proper critique of that article.

There is no economic jargon, no complex concepts. The article was written for an intelligent layman to understand. Have you even tried?

Does this work of de Soto's appear in a peer-reviewed journal of economics? The Mises Institute is hardly an unbiased source.

Why not just judge the article on the facts it presents? And the article itself isn't by de Soto. It is a review of his books. I get the feeling that de Soto doesn't care much about peer review. He is out working to put his principles into practice, organizing poor businessmen to lobby for simpler registration processes, consulting with government leaders on how to reduce corruption and bring the poor into the formal market, and BTW, dodging bullets sent his way by the Shining Path.

Hernando de Soto's Biography

For his efforts, the Peruvian Marxist terror group Shining Path targeted him for assassination. The institute's offices were bombed. His car was machine-gunned. Today the Shining Path is moribund, but de Soto remains very much alive and a passionate advocate. Delivering formal property rights to the poor can bring them out of the sway of demagogues and into the extended order of the modern global economy. "Are we going to make [capitalism] inclusive and start breaking the monopoly of the left on the poor and showing that the system can be geared to them as well?" That's de Soto's challenge and his life's work.

You know he's got to be a serious threat to communism if the Shining Path tried to kill him.

 

[Highly Selassie]

Come to think of it, this was an inadequate response. You claimed that the improved working conditions would help extend the lives of the workers, producing economic gains.

What about the wages that are reduced right now, and the workers that don't get jobs right now? The lower wages mean poorer diet and poorer living conditions at home, resulting in health liabilities (for lack of a better word) that balance out the benefits. And the workers that don't get jobs because of the higher taxes or higher costs to the employers don't get the benefits at all.

Once again you are creating a straw man by shoehorning libertarian ideals into my argument. First off, the ladle/bucket analogy is completely inappropriate. An economy can expand or contract, a bucket cannot significantly do so. Second off, it is your own assumption that wages will be reduced by these measures. A government that is willing and able to improve working conditions would also be willing and able to construct subsidies and safety nets to minimize the effects of the measures on wages and poverty. I'm not so naive to think such a safety net would be perfect. Even in developed nations people still fall through. You seem to be convinced that no matter what the government does, it's not going to be effective because they won't see it through to completion.

This all is the result of impatience with the pace of economic progress and a desire to get something for nothing.

Do you care to back up that claim?

I get the feeling that de Soto doesn't care much about peer review.

I think this quote speaks for itself.

You know he's got to be a serious threat to communism if the Shining Path tried to kill him.

Argument by assassination attempt, that's a new one.