There's No Pain-Free Cure for Recession: Peter Schiff's Editorial in Wall Street Journal

As recession fears cause the nation to embrace greater state control of the economy and unimaginable federal deficits, one searches in vain for debate worthy of the moment. Where there should be an historic clash of ideas, there is only blind resignation and an amorphous queasiness that we are simply sweeping the slouching beast under the rug.

With faith in the free markets now taking a back seat to fear and expediency, nearly the entire political spectrum agrees that the federal government must spend whatever amount is necessary to stabilize the housing market, bail out financial firms, liquefy the credit markets, create jobs and make the recession as shallow and brief as possible. The few who maintain free-market views have been largely marginalized.

Taking the theories of economist John Maynard Keynes as gospel, our most highly respected contemporary economists imagine a complex world in which economics at the personal, corporate and municipal levels are governed by laws far different from those in effect at the national level.

Individuals, companies or cities with heavy debt and shrinking revenues instinctively know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system. In their view, absent the stimuli of the New Deal and World War II, the Depression would never have ended.

On a gut level, we have a hard time with this concept. There is a vague sense of smoke and mirrors, of something being magically created out of nothing. But economics, we are told, is complicated.

It would be irresponsible in the extreme for an individual to forestall a personal recession by taking out newer, bigger loans when the old loans can't be repaid. However, this is precisely what we are planning on a national level.

I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.

As a follower of the Austrian School of economics I believe that market forces apply equally to people and nations. The problems we face collectively are no different from those we face individually. Belt tightening is required by all, including government.

Governments cannot create but merely redirect. When the government spends, the money has to come from somewhere. If the government doesn't have a surplus, then it must come from taxes. If taxes don't go up, then it must come from increased borrowing. If lenders won't lend, then it must come from the printing press, which is where all these bailouts are headed. But each additional dollar printed diminishes the value those already in circulation. Something cannot be effortlessly created from nothing.

Similarly, any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. And if the government chooses to save inefficient jobs in select private industries, more efficient jobs will be lost in others. As more factors of production come under government control, the more inefficient our entire economy becomes. Inefficiency lowers productivity, stifles competitiveness and lowers living standards.

If we look at government market interventions through this pragmatic lens, what can we expect from the coming avalanche of federal activism?

By borrowing more than it can ever pay back, the government will guarantee higher inflation for years to come, thereby diminishing the value of all that Americans have saved and acquired. For now the inflationary tide is being held back by the countervailing pressures of bursting asset bubbles in real estate and stocks, forced liquidations in commodities, and troubled retailers slashing prices to unload excess inventory. But when the dust settles, trillions of new dollars will remain, chasing a diminished supply of goods. We will be left with 1970s-style stagflation, only with a much sharper contraction and significantly higher inflation.

The good news is that economics is not all that complicated. The bad news is that our economy is broken and there is nothing the government can do to fix it. However, the free market does have a cure: it's called a recession, and it's not fun, easy or quick. But if we put our faith in the power of government to make the pain go away, we will live with the consequences for generations.

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

John Maynard Keynes

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One of the contradictions in the representation of Keynes's theory is that he pleaded with FDR to stop the rampant spending, and to allow the market to take hold with its own motion. The brilliance of Keynes is not so much that what he said then would work today, but that he identified that economies are subject to universal laws like gravity and inertia. It was Keynes who noted that "the economy is in perfect balance" during the Great Depression. There was no demand, and no supply was being met. He suggested the creation of some artificial demand would result in true demand, which would result in true supply to meet that true demand.

If you consider a child in a swing at rest, a simple push is the dynamic needed for the child to achieve full swing PROVIDED his own energy is allowed to achieve full swing. We can also create artificial full swing by pushing the child higher on each back swing. Keynes suggestion to create some artificial demand, and subsequent pleas to stop the spending, seem to indicate that he would have preferred the child to achieve full swing through his own power.

If we were to create "some artificial demand" for American employment (i.e. tax credits), the people who receive those jobs are "truly employed." They will create "true demand," which will be met by increased "true employment." That degree of government policy would likely work. If not, it surely would not be worse than taxing companies for employing Americans, and giving the tax breaks to companies that outsource labor.

If the market were to operate freely, interest rates would be very high today. High interest rates was how Paul Volcker resolved the stagflation of the 1970s. However, Reagan, as did FDR, foolishly thought if a little is good, a lot is better. They seemed to lack the Keynesian thought that if a little is sufficient, then more is excess.

Hayek noted Bertrand Russell as one of his greatest influences in the article you linked to in another thread. Bertrand Russell and John Maynard Keynes were close friends, and often discussed philosophy and economy.

Though it is popular to suggest that free markets would resolve everything, consider how many people bitch about dealing with outsourced customer services on their cell phone plans without considering their own contribution by basing their buying decision only on which had the lowest price. Perhaps the greatest irony today would be two people bitching about unemployment in a Walmart parking lot.

Starbucks offered "living wage goods" in response to WTA attacks on the company. People could buy the same products for higher prices if they wanted to assure the people supplying their coffee were able to live on the wages they earned. People wouldn't pay the higher prices.

If you offered a product that was the result of one hundred people getting their heads smashed to put on the market, consumers would buy it if it saved them a dime in price. Only those whose family members had their heads smashed would complain. Mises, apparently, would say that was okay if the market demanded that people get their heads smashed, even though some of those people would likely have not taken those jobs if consumers would buy safely produced goods without someone stepping in and saying goods produced with the lives of workers are not available.

To think that Keynes would be in support of the economy as it is today is to not consider how the British economy ran with Keynes as its Chief Economist.

Goldwing Tom wrote:“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers,’ who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

John Maynard Keynes

------------------------

One of the contradictions in the representation of Keynes's theory is that he pleaded with FDR to stop the rampant spending, and to allow the market to take hold with its own motion. The brilliance of Keynes is not so much that what he said then would work today, but that he identified that economies are subject to universal laws like gravity and inertia. It was Keynes who noted that "the economy is in perfect balance" during the Great Depression. There was no demand, and no supply was being met. He suggested the creation of some artificial demand would result in true demand, which would result in true supply to meet that true demand.

...

To think that Keynes would be in support of the economy as it is today is to not consider how the British economy ran with Keynes as its Chief Economist.

You have inspired me to begin a thread on Keynes. I will start that as soon as I get a minute.

Goldwing Tom wrote:Though it is popular to suggest that free markets would resolve everything, consider how many people bitch about dealing with outsourced customer services on their cell phone plans without considering their own contribution by basing their buying decision only on which had the lowest price. Perhaps the greatest irony today would be two people bitching about unemployment in a Walmart parking lot.

Starbucks offered "living wage goods" in response to WTA attacks on the company. People could buy the same products for higher prices if they wanted to assure the people supplying their coffee were able to live on the wages they earned. People wouldn't pay the higher prices.

If you offered a product that was the result of one hundred people getting their heads smashed to put on the market, consumers would buy it if it saved them a dime in price. Only those whose family members had their heads smashed would complain. Mises, apparently, would say that was okay if the market demanded that people get their heads smashed, even though some of those people would likely have not taken those jobs if consumers would buy safely produced goods without someone stepping in and saying goods produced with the lives of workers are not available.

1. No one claims that the free market solves bitching. If you are looking to solve the complaining problem, you should be hopeless.
2. You do not have any idea what Mises taught if you think that he would say that its okay to smash people's heads if the market demanded. I am not sure how in the world you could come to a conclusion, unless you have never read any of his writings. Mises believed in law and order, personal property rights (including your head), and the free market. He did not believe in acting violently to get what you want. Instead, he believed in voluntary exchange.

Hey, of those people chose to work in a job where their heads got smashed, it's their own faults.

B-Ran wrote:Hey, of those people chose to work in a job where their heads got smashed, it's their own faults.

If someone agrees to get their head smashed for money, then sure. GT is not referring to people who are volunteering to have their heads smashed.

My reference about heads getting smashed has to do with workplace safety and consumer ethics. We had already covered this in another thread. If consumers can save a nickel, they don't care about the consequences to those who produce what they bought. Unless the free market Mises talked about included costs added to ensure worker safety, then he is leaving that aspect to the market to correct. The market won't correct it any more so than it corrects outsourced labor by paying more for to preserve American labor.

Goldwing Tom wrote:My reference about heads getting smashed has to do with workplace safety and consumer ethics. We had already covered this in another thread. If consumers can save a nickel, they don't care about the consequences to those who produce what they bought. Unless the free market Mises talked about included costs added to ensure worker safety, then he is leaving that aspect to the market to correct. The market won't correct it any more so than it corrects outsourced labor by paying more for to preserve American labor.

If that is what you were trying to say, you missed an entire side of the market. You are talking about consumers not being concerned with worker's safety (generally). You forgot that workers are concerned with their safety (generally). The free market DOES include costs added to ensure worker safety. The difference is that the costs added to ensure worker safety are incluenced heavier by worker demand and not by the bureaucrats. The market more accurately represents the safety regulations workers demand, while not eliminating options for the poorest in society. The market accurately represents workers demands and consumers demands. Again, if you read Mises' work, you would already know that your characterization of his stances are nothing similar to what Mises said.

You suggest that the market fails to "correct" outsourced labor by paying more for American labor? You are missing the point. If people valued paying extra for things to not have jobs outsourced, it would happen. If people don't (and they don't), it won't happen. Outsourcing is not a bad thing anyway... but we don't have to go there right now.

I know that I "mischaracterized" Mises. Do you recognize that you "mischaracterized" Keynes?

Keynes was not in favor of inflation. He was aware of economies being subject to universal laws, and that, at times, universal dynamics could be utilized to overcome gravity or inertia.

Once again, Hayek cited Bertrand Russell as one of his greatest influences. Bertrand Russell and John Maynard Keynes were close friends. I suspect Russell respected Keynes on matters of economics, or they would not have been close friends. Keynes was a capatilist, as was Hayek. Keynes suggested creating some artificial demand in order to create some true supply in order to get the nation out of the "perfect balance" of the Great Depression. He then spent the rest of his life pleading with FDR to stop spending. He also wrote about how inflation confiscates wealth indiscriminately.

That combination seems to indicate that rampant increases in money supply for no reason other than to increase the money supply are not "Keynesian" concepts. It is, however, easy to say the free market would have resolved the problem since it did not happen. However, it has the same integrity as saying that electing Gore would have prevented 9/11. It is speculatory at best, non-sensical at its core, and can never be proved.

Goldwing Tom wrote:I know that I "mischaracterized" Mises. Do you recognize that you "mischaracterized" Keynes?

Keynes was not in favor of inflation. He was aware of economies being subject to universal laws, and that, at times, universal dynamics could be utilized to overcome gravity or inertia.

I have not mischaracterized Keynes. Even if I had, why would you want to do the same to another's ideas?

The fact is, Keynes was in favor of inflation of the money supply. He was the same man that argued that in a depression, any governemnt spending was good. He even argued that hiring unemployed people to dig holes, bury money, and hiring other unemployed people to dig up the money, would be good for the economy. Keynes believed in inflation of the money supply, which is what inflation is. He may say that he did not believe in the consequences of an inflation of the money supply, but he was flat wrong in his belief. What have I said that mischaracterized Keynes beliefs? Keynes believed that in a downturn an addition to the money supply is needed (and a contraction of the money supply during a boom). Keynes also claimed that there would never be a recession again, right before the Great Depression.

Goldwing Tom wrote:Once again, Hayek cited Bertrand Russell as one of his greatest influences. Bertrand Russell and John Maynard Keynes were close friends. I suspect Russell respected Keynes on matters of economics, or they would not have been close friends. Keynes was a capatilist, as was Hayek. Keynes suggested creating some artificial demand in order to create some true supply in order to get the nation out of the "perfect balance" of the Great Depression. He then spent the rest of his life pleading with FDR to stop spending. He also wrote about how inflation confiscates wealth indiscriminately.

Keynes was for government intervention in the money supply and believed that recessions were unable to be solved effectively by the free-market and needed government intervention. If you want to know what Hayek thought, read his books. Reading his writing will be a greater insight to his thoughts then who he named his influences as. It will at least give some context to that influence.

I agree with him that FDR should have stopped spending. I also agree that inflation confiscates wealth from some and gives to others. Even though I agree with Keynes on some things, I disagree with him on many also. Most importantly, I disagree with many things that he advised Roosevelt to do. Here is an example of something that I disagree with, and which Schiff referred to:

"Individuals must be induced to spend more out of their existing incomes; or the business world must be induced, either by increased confidence in the prospects or by a lower rate of interest, to create additional current incomes in the hands of their employees...; or public authority must be called in aid to create additional current incomes through the expenditure of borrowed or printed money."
- Keynes to Roosevelt in 1933

Goldwing Tom wrote:That combination seems to indicate that rampant increases in money supply for no reason other than to increase the money supply are not "Keynesian" concepts. It is, however, easy to say the free market would have resolved the problem since it did not happen. However, it has the same integrity as saying that electing Gore would have prevented 9/11. It is speculatory at best, non-sensical at its core, and can never be proved.

Which is why praxeology is needed to study economics.

Again you misinterpret Keynes. He did not argue that hiring unemployed people to dig holes to bury money, then hiring other unemployed people to dig it up, was the answer. His suggestion was that by burying the notes, businesses would employ people to go after the buried notes creating employment. It also should be noted that he said there are better ways to increase employment, but this would be better than doing nothing. His point, of course, was that the economy was in perfect balance in the Great Depression, and that money would start flowing in the form of real income if there were some demand for employees.

So, let's examine your comments on Mises. If it is left for the workers to accept unsafe jobs or not, then the formation of unions to dictate to owners is not only a predictable result, but is fine. The government need not dictate safety, for unionized labor forces eventually will anyway. Furthermore, when the average income of one hundred people is the real income of one and no income to 99, then the praxeology of the 99 taking the wealth of the one is also fine. These things have not only been predicted before, these things have occurred.

This is the problem with the absolute free market. Even Orwell said that despite the brilliance of the theory, the problem would be the irresponsibility of mankind. It works provided people live beyond human natures, but people have never lived beyond human natures.

The answer lies with consumers and voters taking responsibility for themselves, but that, too, is contrary to human nature. Consumers do not concern themselves with the suffering of workers; they buy whatever is cheapest. Voters do not concern themselves with the sources of stipends; they vote for whomever will give them the most.

Churchill once said that if you took two economists, you would get two opinions about what was best, unless one of those economists was Keynes, in which case you would get three opinions. Later in his life, Keynes told Hayek that he no longer believed in his own General Theory, and that Hayek's theories were correct for the times. That flux is what made Keynes unique among economists. There is no one way to resolve economic problems. You must deal with whatever the problems are at the time.

There are times when it is wise to diet, and times when it is wise to eat. Which is best depends on factors at the time the decision to eat or not eat is made. There is no one universal answer that is best for all people all the time, and only a fool would purport there is only one answer for all people all the time.

Goldwing Tom wrote:Again you misinterpret Keynes. He did not argue that hiring unemployed people to dig holes to bury money, then hiring other unemployed people to dig it up, was the answer. His suggestion was that by burying the notes, businesses would employ people to go after the buried notes creating employment. It also should be noted that he said there are better ways to increase employment, but this would be better than doing nothing. His point, of course, was that the economy was in perfect balance in the Great Depression, and that money would start flowing in the form of real income if there were some demand for employees.

OK, I mistated that. The government wouldn't hire people to do that, businesses would. That has no bearing on how rediculous of an idea that is. This would not be better than doing nothing, it would be worse. Inflating the money supply and putting people to meaningless work does not increase production of goods, which is where real wealth comes from.

Goldwing Tom wrote:So, let's examine your comments on Mises. If it is left for the workers to accept unsafe jobs or not, then the formation of unions to dictate to owners is not only a predictable result, but is fine. The government need not dictate safety, for unionized labor forces eventually will anyway. Furthermore, when the average income of one hundred people is the real income of one and no income to 99, then the praxeology of the 99 taking the wealth of the one is also fine. These things have not only been predicted before, these things have occurred.

I am not sure if you are saying that there is moral authority, that history has shown examples of this happening, or if it is better for a society.

Goldwing Tom wrote:This is the problem with the absolute free market. Even Orwell said that despite the brilliance of the theory, the problem would be the irresponsibility of mankind. It works provided people live beyond human natures, but people have never lived beyond human natures.

The answer lies with consumers and voters taking responsibility for themselves, but that, too, is contrary to human nature. Consumers do not concern themselves with the suffering of workers; they buy whatever is cheapest. Voters do not concern themselves with the sources of stipends; they vote for whomever will give them the most.

Churchill once said that if you took two economists, you would get two opinions about what was best, unless one of those economists was Keynes, in which case you would get three opinions. Later in his life, Keynes told Hayek that he no longer believed in his own General Theory, and that Hayek's theories were correct for the times. That flux is what made Keynes unique among economists. There is no one way to resolve economic problems. You must deal with whatever the problems are at the time.

There are times when it is wise to diet, and times when it is wise to eat. Which is best depends on factors at the time the decision to eat or not eat is made. There is no one universal answer that is best for all people all the time, and only a fool would purport there is only one answer for all people all the time.

You are missing the fact that the free market does not rely on benevolence to help the individuals in the economy. With property rights enforced and voluntary exchange allowed, by looking out for yourself, you are helping other's meet their needs. The only way to become wealthier, is through choosing how to use your resources in the best manner to meet someone else's wants. Think about it. Can you show me an example that contradicts this? Can you show me how someone will become more wealthy without offering other's what they want in exchange, in such an economy?

Goldwing Tom wrote:Again you misinterpret Keynes. He did not argue that hiring unemployed people to dig holes to bury money, then hiring other unemployed people to dig it up, was the answer. His suggestion was that by burying the notes, businesses would employ people to go after the buried notes creating employment. It also should be noted that he said there are better ways to increase employment, but this would be better than doing nothing. His point, of course, was that the economy was in perfect balance in the Great Depression, and that money would start flowing in the form of real income if there were some demand for employees.

Enron wrote:OK, I mistated that. The government wouldn't hire people to do that, businesses would. That has no bearing on how rediculous of an idea that is. This would not be better than doing nothing, it would be worse. Inflating the money supply and putting people to meaningless work does not increase production of goods, which is where real wealth comes from.

I believe Keynes's statement that there are better ways to do this indicates that he, too, thought it was ridiculous to do it that way. The point, though, was that there was need for some 'outside force' to counter the inert employment market. He contended that the economy was in perfect balance in the Great Depression. There was no demand; no supply was being met.

Goldwing Tom wrote:So, let's examine your comments on Mises. If it is left for the workers to accept unsafe jobs or not, then the formation of unions to dictate to owners is not only a predictable result, but is fine. The government need not dictate safety, for unionized labor forces eventually will anyway. Furthermore, when the average income of one hundred people is the real income of one and no income to 99, then the praxeology of the 99 taking the wealth of the one is also fine. These things have not only been predicted before, these things have occurred.

Enron wrote:I am not sure if you are saying that there is moral authority, that history has shown examples of this happening, or if it is better for a society.

History has shown examples of this happening. There is no moral authority for it. It is merely human nature to do whatever is necessary to survive. It is certainly not better for society. History has also shown that the same divisions of wealth occur in successor economies, and that power corrupts even when the power is gained under the auspices of benevolence or security as with police forces, labor unions, or communist governments.

Goldwing Tom wrote:This is the problem with the absolute free market. Even Orwell said that despite the brilliance of the theory, the problem would be the irresponsibility of mankind. It works provided people live beyond human natures, but people have never lived beyond human natures.

The answer lies with consumers and voters taking responsibility for themselves, but that, too, is contrary to human nature. Consumers do not concern themselves with the suffering of workers; they buy whatever is cheapest. Voters do not concern themselves with the sources of stipends; they vote for whomever will give them the most.

Churchill once said that if you took two economists, you would get two opinions about what was best, unless one of those economists was Keynes, in which case you would get three opinions. Later in his life, Keynes told Hayek that he no longer believed in his own General Theory, and that Hayek's theories were correct for the times. That flux is what made Keynes unique among economists. There is no one way to resolve economic problems. You must deal with whatever the problems are at the time.

There are times when it is wise to diet, and times when it is wise to eat. Which is best depends on factors at the time the decision to eat or not eat is made. There is no one universal answer that is best for all people all the time, and only a fool would purport there is only one answer for all people all the time.

Enron wrote:You are missing the fact that the free market does not rely on benevolence to help the individuals in the economy. With property rights enforced and voluntary exchange allowed, by looking out for yourself, you are helping other's meet their needs. The only way to become wealthier, is through choosing how to use your resources in the best manner to meet someone else's wants. Think about it. Can you show me an example that contradicts this? Can you show me how someone will become more wealthy without offering other's what they want in exchange, in such an economy?

And you are missing the point that human natures will always be stronger than human principles. Without accepting that point of contention, it will be difficult to demonstrate that some will become rich through wars that people don't really want, but believe are necessary, whether it be a war against another country, a war against drugs, a war against illegal immigration, a war against monopolies, a war against unsafe working conditions, or a war between the rich and the poor.

I have long contended that any philosophy the end of which is some sort of utopia lacks the human nature factor. People live on a conscious level, not a conscience level. Until that changes, which likely will never happen since it never has, it is better to deal with it than to try to circumvent it just because the math works.

Goldwing Tom wrote:I believe Keynes's statement that there are better ways to do this indicates that he, too, thought it was ridiculous to do it that way. The point, though, was that there was need for some 'outside force' to counter the inert employment market. He contended that the economy was in perfect balance in the Great Depression. There was no demand; no supply was being met.

Right. Keynes knew this was a ridiculous idea, but suggested that it would do real good in the economy, nonetheless. Keynes, the same guy who was blindsighted by the depression and whose models were proven failures in the 70's, said that the economy was in perfect balance. He completely missed the fact that the monetary policy of the 20s caused the depression of the 30s. I understand his views, just disagree with them.

Goldwing Tom wrote:So, let's examine your comments on Mises. If it is left for the workers to accept unsafe jobs or not, then the formation of unions to dictate to owners is not only a predictable result, but is fine. The government need not dictate safety, for unionized labor forces eventually will anyway. Furthermore, when the average income of one hundred people is the real income of one and no income to 99, then the praxeology of the 99 taking the wealth of the one is also fine. These things have not only been predicted before, these things have occurred.

Enron wrote:I am not sure if you are saying that there is moral authority, that history has shown examples of this happening, or if it is better for a society.

Goldwing Tom wrote:History has shown examples of this happening. There is no moral authority for it. It is merely human nature to do whatever is necessary to survive. It is certainly not better for society. History has also shown that the same divisions of wealth occur in successor economies, and that power corrupts even when the power is gained under the auspices of benevolence or security as with police forces, labor unions, or communist governments.

You and I disagree on this. I do believe in objective morality. The moral code that I believe is supreme does not allow for stealing. I will not try to convince you that stealing is immoral on this thread. In order to do so, we would need to talk about God, objective morality, and such, and it would lead us off topic. It is sufficient to say that we disagree.

Goldwing Tom wrote:And you are missing the point that human natures will always be stronger than human principles. Without accepting that point of contention, it will be difficult to demonstrate that some will become rich through wars that people don't really want, but believe are necessary, whether it be a war against another country, a war against drugs, a war against illegal immigration, a war against monopolies, a war against unsafe working conditions, or a war between the rich and the poor.

I have long contended that any philosophy the end of which is some sort of utopia lacks the human nature factor. People live on a conscious level, not a conscience level. Until that changes, which likely will never happen since it never has, it is better to deal with it than to try to circumvent it just because the math works.

I disagree that human principles are weaker than "human natures". I believe in free will. With free will, people are able to choose to go with their principles or to go with their natural wants. However, this too is beside the point. The free market is an arrangement that does not require people to have good intentions. The free market can have everyone only looking out for themselves, and still thrive. Now, do I think there would be no benevolence in a free market? No, far from it. I would think that there would be more good done by charity than ever before. However, the free market does not rely on this to be true in order to function. The beauty of voluntary exchange is that you can only benefit yourself by benefiting others. Since human nature is such that we want to benefit ourselves, we will be driven by our nature to help others in an attempt to help ourselves. For example, if I realize that people in my town really enjoy eating organic produce, I can take advantage of this fact and make myself better off. By specializing in growing organic produce, I can spend my time working on growing this food that other people want in order to make money. In search of profit, I produce something that meets another person's needs. Even if I do not like the people who buy my produce, I still provide them with an option that they value more than anything else that they could use that money for. As long as I am meeting their needs to the point that they are willing to pay my price, we have both become better off. By only relying on my selfish interest, I have provided my customers a product that they choose to spend their money on. Since they choose the produce over the canned goods at the store, they value my produce more than the same amount of canned goods that they could buy with their limited supply of money. Do you see how the market does not rely on a violation of human nature in order to work?

Dang, the internet ate my post... Let's see if I can reconstitute it:

One point that GT has made consistently throughout his posts is that given the choice to remain poor in a free market system or overthrow their "bourgeois oppressors," many people might (and have in history) chose the latter option. I think this is a point that deserves some consideration.

Remember, choices are never made based on reality; human beings can be realists philosophically, but are always positivists in practice. Perceptions are all that play in the minds of individuals.

B-Ran wrote:Dang, the internet ate my post... Let's see if I can reconstitute it:

One point that GT has made consistently throughout his posts is that given the choice to remain poor in a free market system or overthrow their "bourgeois oppressors," many people might (and have in history) chose the latter option. I think this is a point that deserves some consideration.

I agree, that does deserve consideration, however, he has not shown that such is more likely in a free-market economy than in an economy with a government that has intervened immensely in the economy. I believe that it is more likely to happen in countries that more government control exists. It would be an interesting conversation anyhow.