Economic (Mis)Education in Europe

[Economist]

Wow! I guess I didn't know how economically illiterate they are in Europe, until I read this article: http://www.foreignpolicy.com/story/cms.php?story_id=4095

From a French textbook:

"Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer."

I guess I can't blame them, when the public schools are teaching this unsubstantiated garbage.

 

[drankin]

LOL, that is funny.

 

[EnumaElish]

Would anyone say economic development has no cost, especially no human cost? Is it "some kind of free lunch," as they say in French?

I think the French textbook isn't wrong; although it may be selective. It could have added "despite these costs, lack of economic growth is even costlier."

 

[russ_watters]

It may not technically be wrong, but its purpose is: conditioning people to accept a life of mediocrity. French malaise will kill France as surely as Russian malaise killed the USSR.

 

[CaptainQuasar]

It may not technically be wrong, but its purpose is: conditioning people to accept a life of mediocrity. French malaise will kill France as surely as Russian malaise killed the USSR.

The Russians overthrew their own Imperial government, contributed a big part to the overthrow of Nazi Germany and Imperial Japan, got a satellite into space before the U.S. did, and came to control nearly half the world. You can call that malaise if you want to but it seems rather vigorous to me. I would say that the USSR's demise was far more attributable to violent dictators, political corruption, and provoking unwise wars. The U.S. certainly isn't as bad as the USSR was on those counts but we've got to stay on top of things, we're certainly prey to them.

Economist I think you were looking for the phrase "medically illiterate", though I don't agree with your assessment: economics is not what you'd use to prove whether or not overwork causes cancer. I agree with EnumaElish that taking an unalloyed positive view of industriousness and enterprise is foolish.

Conditioning people to think they're a special snowflake that deserves an SUV, an ipod, and a mansion of a house is just as much a sign of lost vitality and brittle national infirmity as the French wanting to kick back and take it easy is.

 

[Mk]

Conditioning people to think they're a special snowflake that deserves an SUV, an ipod, and a mansion of a house is just as much a sign of lost vitality and brittle national infirmity as the French wanting to kick back and take it easy is.

Conditioning people to think that they can be something and to understand if they work hard they can get something valuable for their family is just as much a sign of lost vitality and brittle national infirmity as the.. oh wait: no it isn't.

 

[CaptainQuasar]

Yes, if we start teaching those kind of values in the U.S. so that we hold them as dearly as, say, India and China do now we'll be doing well. But you don't really think that working really hard for your family is as central a part of the American attitude as it was in the past, do you? It seems to me like Americans expect to get a lot more for working a lot less than they ever have before. We're definitely having smaller families that don't get in the way of our personal recreational activities as much. If the French are uppity for pointing out health problems that can be caused by overwork we Americans are just as uppity for other reasons.

 

[Economist]

Would anyone say economic development has no cost, especially no human cost? Is it "some kind of free lunch," as they say in French?

There is no such thing as a free lunch, and what that phrase means in economic terms was not developed in france. In fact, that economic phrase was developed by American Economist Milton Friedman.

I'm not saying economic development has no costs, but I doubt it has the costs mentioned in the quote.

 

[Economist]

Economist I think you were looking for the phrase "medically illiterate", though I don't agree with your assessment: economics is not what you'd use to prove whether or not overwork causes cancer. I agree with EnumaElish that taking an unalloyed positive view of industriousness and enterprise is foolish.

No, actually I was looking for the term "economically illiterate." And you would still need economics to see if development causes cancer, or even if development causes overwork. It's very possible that people don't work as hard when nations become more developed. Either way, you'd need to be able to measure development which is all about economics.

Conditioning people to think they're a special snowflake that deserves an SUV, an ipod, and a mansion of a house is just as much a sign of lost vitality and brittle national infirmity as the French wanting to kick back and take it easy is.

I highly doubt we condition people to want these things. Rather people want ipods, SUVs, etc, because they add to the quality of life, and generally people already took care of their basic needs so they can spend the rest of their money on these luxuries.

That's fine if people want to kick back, as long as they are willing to pay for it. For example, if someone says that they don't want to work a 40 - 50 hour work week in a difficult stressful job, so they find an easier and more enjoyable job, that is great as they are exercising their freedom and pursuing the lifestyle that will make them happy. That's wholly different from saying you don't want to work hard, and therefore you want to impose legislation and abuse the governmental force to tax people who make more than you do and redistribute the wealth to you. Don't you recognize the difference?

 

[EnumaElish]

There is no such thing as a free lunch, and what that phrase means in economic terms was not developed in france. In fact, that economic phrase was developed by American Economist Milton Friedman.

I'm not saying economic development has no costs, but I doubt it has the costs mentioned in the quote.

My bad; I meant "hours d'oeuvres" ("happy hour" in English)

The mental image I was having when I typed ^<<"some kind of free lunch," as they say in French_>> was the phrase "some kind of free lunch" being pronounced in a heavy French accent. I should have posted ^<<"some kind of free lunch," as the French would say._>>

But I digress...

Two points:

1. If the phrase you quoted was meant as an introduction to the concept, it is lopsided, and has the comical effect that the French often inadvertently produce from an Anglo perspective. A similar example could be to introduce the concept of "life" with the opening phrase "life is the leading cause of death."

2. However, if the phrase is being used more as a caveat, then it certainly has a point. Otherwise, why pay people wages? Responsibility does produce stress, and stress does contribute to cardio dysfunction. If "the system works," then each worker is paid sufficient wages to afford regular exercise and thus avoid a breakdown.

3. I've just read the rest of the article, and let's just say that I get the drift. I also read some of the related articles (referenced at the bottom of the page). A quote that I love is: "September is also when the nation is back from holiday, which in French logic means it’s time to go on strike." (http://www.foreignpolicy.com/story/cms.php?story_id=3833 )

 

[Art]

Wow! I guess I didn't know how economically illiterate they are in Europe, until I read this article: http://www.foreignpolicy.com/story/cms.php?story_id=4095

.

For students not to be taught of the potential pitfalls and dangers of globalisation and unregulated capitalism would lead to economic ignorance. Don't you agree?? Or do you believe it is better to leave people in a state of ignorance? Are you yourself aware of the conditions in Europe 150 years ago which led to the beginning of the regulation of industry? Such as workers being paid their pittance in tokens that could only be spent in the company's overpriced shop or the match factory workers whose faces rotted away with 'phossy jaw' or 9 year old children working as chimney sweeps and other children as young as 8 working 16 hour days in the coal mines and cotton mills all without healthcare or education of course.

Personally I believe it is very important people understand their heritage and appreciate and cherish the rights they have secured after 1000s of years of near slavery and the potential threat to these hard earned freedoms from globalisation. For example it is hard for a western worker to compete on labour costs with a factory employing child slave labour in China! That's one of many similar reasons why Western jobs are being out-sourced to these 'developing' countries and why globalisation needs to be adopted in a sane and fair way.

 

[CaptainQuasar]

No, actually I was looking for the term "economically illiterate." And you would still need economics to see if development causes cancer, or even if development causes overwork. It's very possible that people don't work as hard when nations become more developed. Either way, you'd need to be able to measure development which is all about economics.

And what, you wouldn't need to measure any of these things? "hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer" I think we can say that measurements necessary for examining the issue would involve both medical and economics knowledge.

But if there's some kind of scientific knowledge or principles out there that denies a connection between these things, such that unfamiliarity with it is tantamount to illiteracy, that's going to be medical knowledge.

I highly doubt we condition people to want these things. Rather people want ipods, SUVs, etc, because they add to the quality of life, and generally people already took care of their basic needs so they can spend the rest of their money on these luxuries.

Cripes dude, what do you think advertising is except conditioning people to want those things?

That's fine if people want to kick back, as long as they are willing to pay for it. For example, if someone says that they don't want to work a 40 - 50 hour work week in a difficult stressful job, so they find an easier and more enjoyable job, that is great as they are exercising their freedom and pursuing the lifestyle that will make them happy. That's wholly different from saying you don't want to work hard, and therefore you want to impose legislation and abuse the governmental force to tax people who make more than you do and redistribute the wealth to you. Don't you recognize the difference?

I do recognize the difference, and I also recognize the difference between those two things and the statement that economic growth can be correlated to health problems. You're overreaching in both calling that illiteracy or asserting that it has to be accompanied by the attitudes you describe above, or that its presence in a French textbook means that the U.S. is free from those attitudes and France isn't.

 

[Yonoz]

I highly doubt we condition people to want these things. Rather people want ipods, SUVs, etc, because they add to the quality of life, and generally people already took care of their basic needs so they can spend the rest of their money on these luxuries.

Perhaps your schools do not condition people to want these things, but our consumerist society does. Personally, I believe there are a lot of things that would improve the quality of my life a whole lot more than an iPod or an SUV; like everyone else I'm bombarded countless times a day by marketing attempts, sharing a common message - spending money will make you happy. Intended or not, this too is indoctrination, and it is more powerful than any state-education scheme considering current regulation (or lack thereof).

This is a matter of defining what role governments should play in education. As much as I disagree with the anecdotal evidence from the article, I believe there is good sense in matching consumerist indoctrination which promotes individualism and materialism with [edit] social indoctrination, promoting[/edit] values such as solidarity and altruism.

 

[Economist]

If "the system works," then each worker is paid sufficient wages to afford regular exercise and thus avoid a breakdown.

Says who? "The system" is one of voluntary exchange, where a buyer/consumer decides that he/she is willing to pay a certain amount for various tasks, goods, services, etc, and the seller/supplier decides that he/she is willing to except certain amounts of payment (usually in the form of money) for various tasks, goods, services, etc. An exchange only takes place when the demands of both are satisfied.

How does the consumer decide how much he is willing to pay? By seeing how much value the good/service/task adds. Then he has to see if there is actually someone willing to sell him the good or service at (or below) that price. Notice this has nothing to do with whether it will afford regular excercise. The excercise part will enter only into the decision of the seller (and only if he/she finds that an important criteria). Not to mention, regular excercise will be a decision made by the person himself/herself, and as is evident many people could excercise if they wanted to (they have the income and the leisure time), but they choose not to.

For students not to be taught of the potential pitfalls and dangers of globalisation and unregulated capitalism would lead to economic ignorance. Don't you agree?? Or do you believe it is better to leave people in a state of ignorance?

I think you're missing a key point. Capitalism and globalization have lifted hundreds of millions of people out of poverty. So to not teach this, and instead teach people that globalization is bad, is a very dangerous indoctrination. Not because it will hurt people in France (who on world standards are already very rich), but rather because it will lead to people from the developed world intervening, and making globalization more difficult for the people of the third world (and therefore not allowing them to rise out of poverty).

But yes, if there are pitfalls and dangers of globalization then they should be taught. However, I think you're also missing another key point. Why do people from third world countries choose to work for these multinational corporations? Don't you realize that capitalism and globalization is built on voluntary exchange, meaning that anyone who does not want to take part in "the system" does not have too? For example, if someone in America does not want to work, then they don't have to, as they can be homeless or they can live in the wilderness and fend for themselves (even building there own house, etc). Likewise, if you live in a small third world village and Nike sets up shop, you do not have to work for them. My point is that even if there are some negative aspects of capitalism and globalization, people are still choosing to take part (as Nike can't make anyone work for them). Why would someone subject themselves to these "negative" aspects? Well, usually because they are better than the alternative choice. The stress of a capitalistic lifestyle is better than the hunger, low life expantancy, etc, of the alternative lifestyle. There is something called "revealed preference" which basically means that you can tell someone's best possible option given their behavior. And, to interevene with someones best possible options will usually make them worse off.

And what, you wouldn't need to measure any of these things? "hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer" I think we can say that measurements necessary for examining the issue would involve both medical and economics knowledge.

I agree that you would need to measure these things in order to see if globalization causes these things. However, I believe that analysis might not do a whole lot of good, and in fact often misses the boat. I mean, obviously stress has many negative side effects, and obviously globalization and capitalism cause stress. Once again though, we need to ask ourselves why people are choosing to live this sort of stressful lifestyle. IMHO, the most logical conclusion is that people choose to because it is far better than the alternative. Many of us went to college, which is a very stressful time. Does that mean that France textbooks should be writing about the "pitfalls" of college? No, because people choose to go to college, and if they do go to college then we must assume that they felt it was worth it even in spite of the negative aspects. Furthermore, any attempt to interevene in their choice to go to college could only make them worse off. Or take dangerous activities that humans choose to take part in, such as, bungey jumping, sky-diving, drinking alcohol, doing other drugs, driving, unprotected sex, etc. Notice first, that someone could choose whether or not they want to do any of these things. Second, ask yourself why people choose to do these things (given they are all dangerous, cause death and other health problems)? Third, ask yourself if you should have any say in whether or not other people do these things?

If the only purpose of the research you mentioned is to inform people about the dangers and pitfalls of these things, then that is fine. Unfortunately however, often times this type of research is used as an excuse to implement legislation, regulation, and other policies, and essentially used as an excuse for intervention. In my opinion this is both dangerous and disgusting.

Cripes dude, what do you think advertising is except conditioning people to want those things?

I used to believe that, but I don't anymore. First of all, humans seem to like goods and services. Therefore, once you have a standard of living that affords basic needs (food, shelter, etc) people will choose to spend their money on other things, some of which you and I will call fairly materialistic and useless (but it's their choice). Are you telling me that you don't enjoy (and probably own) plenty of things that others deem as useless? And are you also telling me that the only reason you own these things is because you've been conditioned? Second, in order for companies to inform you about their product they usually need to advertise (and advertise well). That doesn't mean they don't try all kinds of clever little things to get you to notice and buy their product. However, the companies existence will mainly come down to whether or not consumers find the product useful and whether they enjoy the product. Lastly, if people were conditioned then we'd expect that companies would be able to charge higher prices. However, a very popular study showed that advertising actually causes prices to decrease (because advertising increases the competition among companies).

Perhaps your schools do not condition people to want these things, but our consumerist society does. Personally, I believe there are a lot of things that would improve the quality of my life a whole lot more than an iPod or an SUV; like everyone else I'm bombarded countless times a day by marketing attempts, sharing a common message - spending money will make you happy. Intended or not, this too is indoctrination, and it is more powerful than any state-education scheme considering current regulation (or lack thereof).

Again, I disagree. I think people want SUVs and Ipods because they can potentially improve the quality of one's life (enough to compensate for the price of obtaining one). Like I said above, there are plenty of things that we don't need, but we do want them. Just because you don't want an Ipod doesn't mean I don't. I like music, and my Ipod allows me to listen to music very conveniently at pretty much anytime and place. The beauty of capitalism is that you can choose to spend your money on the things that you like, and I can choose to spend my money how I like. If you think Ipods are a waste, then you don't have to buy one. All three of my living grandparents think cell phones are useless, so by choice they don't own one.

Do you own things you don't need? Do you have a cell phone? Do you have a car? Do you have a watch? Do you have any CDs? Do you own a computer? Do you ever eat at a restaurant? Do you ever go out and buy an alcoholic drink? I could go on and on, but it's pointless. The point I am trying to make is that you obviously don't need any of these things, but I imagine you own/buy at least some of them? Are you telling me that the only reason you own/buy these things is because you live in consumerist society that indoctrinated you? If so, then you should move to a non-consumerist society who won't indoctrinate you, because you'd probably be happier. This brings me to another point, why do so many people want to move to "consumerist" societies? I mean, if the main reason we like this "consumerist society" is because we've been brainwashed, then you would expect others to not want to come here (because they would realize that these things are useless).

Whether you like it or not, humans seem to enjoy these "materialistic" things. However, I think you are also missing the fact that humans enjoy many other things that money can't exactly buy (friends, family, jobs, volunteer work, hobbies, etc). To say that most people believe that "spending money will make them happy," I believe is a huge exaggeration and one that undermines the dynamics of human beings (and human decision making). Yes, people do spend money on trivial things, and yes, people generally want more money (if all else is equal, such as if someone offered to hand you a billion dollars in cash). However, people make all kinds of decisions that don't rely on money. Even when it comes to jobs/careers, many people often look for jobs that are personally fulfilling even if they have to take a pay cut. In my field, most PhD economists choose to be professors even though they could make double working in the private sector. They choose academia because it's fullfilling and more relaxing in their personal opinion. Others choose the private sector for a variety of reasons. Money is only one part of this decision, and the importance of it varies from person to person, and many people choose their career based on reasons much more dynamic then just salary. Even in college, people often choose majors they enjoy (as opposed to majors that make a lot of money). English, sociology, anthropology, philosophy, etc, majors aren't exactly in high demand in the job market, nevertheless, many people choose these disciplines. My point is that, stereotyping people (even in "consumerist societies") as primarily being money motivated and believing that "spending money will make them happy," is a gross exxaggeration, and misses the dynamics of human beings completely.

 

[CaptainQuasar]

Once again though, we need to ask ourselves why people are choosing to live this sort of stressful lifestyle. IMHO, the most logical conclusion is that people choose to because it is far better than the alternative.

Ah, I see... so when people value the same things you do, it's just logical, but when people value things like health or leisure and choose those over commerce it's indoctrination? That's not a very humble opinion.

I used to believe that, but I don't anymore. First of all, humans seem to like goods and services. Therefore, once you have a standard of living that affords basic needs (food, shelter, etc) people will choose to spend their money on other things, some of which you and I will call fairly materialistic and useless (but it's their choice).

But not inevitably. American culture has chosen to spend the wealth and surplus of its society on chattel and possessions and consumer services. But France and other European countries have chosen to spend their wealth and surplus on fewer material things and more leisure and caps on competition in the labor markets: working from 9 to 4 with a two-hour lunch, laws against working on weekends, a year or two of severance pay so that companies have to take hiring and firing very seriously, the entire month of August as vacation, etc. Both approaches have their advantages and drawbacks, and of course there's a heck of a lot more going on economically here, but to paint one attitude as reasonable and a product of natural human choice and the other as irrational dogma is silly.

Your characterization of capitalism as some kind of natural manifestation of human freedom is naïve. Yes, there's a lot of exercise of freedom and personal choice involved in American and third-world capitalism but there's a great deal of compulsion, manipulation, and indoctrination involved as well. I personally prefer the dynamicism of capitalism and market-based solutions to problems but that approach is clearly flawed and inferior enough in some instances that the Frances of the world are entirely justified in choosing a different way. I'm skeptical that today's third-world nations really have the option of choosing to follow in France's footsteps, though, given the amount of political power that multinational corporations hold.

 

[Economist]

Ah, I see... so when people value the same things you do, it's just logical, but when people value things like health or leisure and choose those over commerce it's indoctrination? That's not a very humble opinion.

I think you're really missing my point. Obviously, it's logical to value things like health, leisure, etc, and part of my point is that everybody does. In fact, I think it's logical for people to value whatever they damn well please, as long as they are not infringing upon others rights of life, liberty, and property. However, valuing something does not mean that you should be allowed to force other people to provide it for you (as doing so decreases their freedom).

That's very different from my original claim about indoctrination which didn't seem to rely on any scientific evidence, and furthermore, didn't argue both sides of the issue.

American culture has chosen to spend the wealth and surplus of its society on chattel and possessions and consumer services.

"America" doesn't spend money on anything, rather individuals who happen to be American spend money on things. Not "American culture" but rather individual decision makers. Did you know that individuals in America give more private foreign aid (and other private charity) than individuals from any other country? I guess you would also claim that "American culture has choosen to spend the wealth and surplus on philanthropic and charitable activities they pay for out of their own pocket (as opposed to forcing someone else to pay for it)."

But France and other European countries have chosen to spend their wealth and surplus on fewer material things and more leisure and caps on competition in the labor markets: working from 9 to 4 with a two-hour lunch, laws against working on weekends, a year or two of severance pay so that companies have to take hiring and firing very seriously, the entire month of August as vacation, etc.

This is not exactly true. They have put in place legislation that makes it illegal (or sometimes just very costly) to do many of things. This is very important, because these sorts of legislation have negative effects on other people (particularly the poor and low skilled workers in France).

It's one thing when someone goes out there and decides that he/she will not work at a job that doesn't have two hour lunch breaks and working on weekends. It's something else to make that illegal, so that people who want to work more are not allowed to do so. To tell someone when and how long they can work is a direct infringement on their human liberty/freedom.

As many economists have found through researching these topics, France has high unemployement (especially for poor, low skilled people) precisely because of the legislation that you mentioned above. These laws do many things. For one, required increases in vacation and lunch hours, tend to decrease the wages because you've increased the cost of hiring employees. Making it difficult to fire people, makes companies less likely to hire people in the first place (in other words, it's more difficult to find a job). It's better to let individual employees and employers work out these conditions on their own, on a case-by-case basis. Furthermore, these laws disproportionally harm poor people (because they tend to have lower skills). It's not the college educated manager who won't get hired under these conditions, but rather the janitor. In my opinion this is very cruel legislation/regulation.

Both approaches have their advantages and drawbacks, and of course there's a heck of a lot more going on economically here, but to paint one attitude as reasonable and a product of natural human choice and the other as irrational dogma is silly.

Sorry, but I do find it unreasonable to infringe upon the human rights of other people. I think it is dispicable to have laws which don't allow people to marry who they please, say what they want, or be part of whichever religion they choose. Just like I find it dispicable to tell someone when they can work, for how much money, how long there lunch is, and how long there vacation is. Especially when you learn about the negative side effects such legislation causes, it makes them even more dispicable.

I'm trying to draw a distinction between a system based upon voluntary exchange, such as capitalism, markets, etc, and a system based on using the force of government to impose laws and regulations on people which infringe upon there rights of life, liberty, and property.

Obviously, all societies are a mix of the two, however, I think we can still generally compare countries which tend to have more of one over the other (such as France vs US). Likewise, I also think that much of the US legislation is also unreasonable and dispicable, because it also infringes upon individual freedom and liberty (however, we're not bad as France yet).

Your characterization of capitalism as some kind of natural manifestation of human freedom is naïve.

Sorry but I disagree with you on this point. Capitalism is not created, rather it happens naturally. Furthermore, I don't like other people using the political process to harm me by making choices that decrease my freedom. I'm not saying markets and capitalism are perfect, but rather that they are by far the best system at preserving freedom and improving the lot of the ordinary person. When people hold a utopian vision of Government, then obviously the reality of Capitalism can't compete. However, when people hold a realistic view of both Government and Capitalism, then Capitalism usually wins out.

 

[EnumaElish]

If "the system works," then each worker is paid sufficient wages to afford regular exercise and thus avoid a breakdown.

Says who? "The system" is one of voluntary exchange, where a buyer/consumer decides that he/she is willing to pay a certain amount for various tasks, goods, services, etc, and the seller/supplier decides that he/she is willing to except certain amounts of payment (usually in the form of money) for various tasks, goods, services, etc. An exchange only takes place when the demands of both are satisfied.

How does the consumer decide how much he is willing to pay? By seeing how much value the good/service/task adds. Then he has to see if there is actually someone willing to sell him the good or service at (or below) that price. Notice this has nothing to do with whether it will afford regular excercise. The excercise part will enter only into the decision of the seller (and only if he/she finds that an important criteria). Not to mention, regular excercise will be a decision made by the person himself/herself, and as is evident many people could excercise if they wanted to (they have the income and the leisure time), but they choose not to.

You are concentrating on a static partial equilibrium (in the labor market) while ignoring the dynamic general equilibrium (in the economy). If the equilibrium wage cannot provide for maintenance/reproduction of the labor force, then in the latter sense the system is not working "properly" (read: "to my liking").

As to whether capitalism comes naturally, doesn't that depend on one's definition of capitalism?

If capitalism comes naturally and therefore represents some kind of historical equilibrium in a society, then how do you explain all this anticapitalist discourse in French textbooks (and more generally in Europe), other than a "vast communist conspiracy"? And just when everyone thought communism was defeated once and for all?

 

[Art]

Economist your basic premise is fundamentally flawed. Employers and employees do not have equal bargaining powers and so choice is non-existant other than do as we say or die.

Employers act in unison with the aim of maximising profits and the only effective counter-measure to this is gov't regulation. When I say without laws employers would exploit their workers it is not a theory it is a proven fact as I detailed in my earlier post.

The problem with globalisation is it allows companies to circumvent employment, environmental and safety laws by operating in unregulated economies leading to such things as the Bhopal disaster and child slave labour in China.

This is not an all or nothing scenario, there is a happy medium. Capitalism is good provided it is regulated and globalisation is good provided there is a level playing field. That is the message promoted in parts of Europe.

For capitalism's long term future it is in the interest of companies to promote distributed wealth in their own markets to create customers for their products but unfortunately companies do not take the big picture view as they concentrate on the next quarter's results. That is why gov'ts get involved.

Personally I do not believe the raison d'etre of the human race is to work like busy little soldier ants until they die. There needs to be a balance between work and home. The reason the gov't gets involved in setting the number of hours worked is because otherwise employers would pressurise workers to work longer hours and don't say they wouldn't because as a manager I've done it myself to meet targets set by my bosses.

Another reason for regulation of working hours is imbalances between work and home lead to other social problems. For eg. With both parents working long hours children get neglected leading to personality disorders and anti-social behaviour which negatively affects all of society.

 

[CaptainQuasar]

"America" doesn't spend money on anything, rather individuals who happen to be American spend money on things.

A pretty large percentage of the U.S. national GDP, something like a fifth or a fourth, is tied up in U.S. government expenditure and purchases. Not even including state and municipal government expenditures. This very much is a civic matter rather than an exclusively private one.

You're asserting that freedoms of commerce are the "true" liberties or something, rather than the freedoms and liberties that the French democracy has chosen to place above them. Believe me, in case you missed the part of your history classes on the French Revolution(s), their choices are founded on valuing liberty and treating people equally, not disregarding freedom. As nations France and the other more Socialist European states have had much longer and deeper experience with oppression of freedom than the U.S. has. They're by no means taking it lightly.

They have put in place legislation that makes it illegal (or sometimes just very costly) to do many of things.

So has the U.S.! Do Anti-trust laws or OSHA regulations or child labor laws sap our freedom?

It's one thing when someone goes out there and decides that he/she will not work at a job that doesn't have two hour lunch breaks and working on weekends.

There aren't any jobs like that in the U.S., unless you're already rich or having a large part of your livelihood provided by someone else. That's my point - the French society has chosen to make those sorts of jobs available to the average worker without as great a loss of prosperity and financial and health security that an American would have to accept to pursue that kind of lifestyle. That's what I mean when I say that as a country they've chosen leisure rather than possessions. They've chosen to exchange the freedoms of laissez faire economics (Note how it's a French term for that? D'ya think they might have gotten experience with it at some point, maybe?) for other freedoms which, to be provided, require societal restraint on commerce.

Of course there are repercussions from these choices. France has lots of economic and social problems. So does the U.S.

And of course the preeminent position that both countries share in the world as first-world nations is because of imperialism, because much of the wealth that has put them where they are today was sucked out of the rest of the world. So attributing the success of either country purely to its cherished principles requires a bit of a wink wink, nudge nudge.

It's not the college educated manager who won't get hired under these conditions, but rather the janitor.

Oh, well good thing the janitors in the U.S. are so well off. How many janitors in the U.S. are even American citizens at this point?

Just like I find it dispicable to tell someone when they can work, for how much money, how long there lunch is, and how long there vacation is.

I think what you mean is that it's despicable if a government tells an employer these things, but if a capitalist employer tells it to employees you're A-okay with it.

In reality I think it's not so hard for an employee to break the law and work two jobs if he or she really, really wants to. It's the employers who really get in hot water, not the employees. The French are much more interested in French employees getting to work where and when they want than, say, Americans are interested in American employees filling jobs instead of illegal immigrants.

I'm not saying markets and capitalism are perfect, but rather that they are by far the best system at preserving freedom and improving the lot of the ordinary person. When people hold a utopian vision of Government, then obviously the reality of Capitalism can't compete. However, when people hold a realistic view of both Government and Capitalism, then Capitalism usually wins out.

To bring a little current affairs, are you saying that this United States of ours where the government monitors what books we can take out from the library, illegally wiretaps our phones, tortures people in secret prisons, initiates preemptive wars, and supports all sorts of corporate exploitation and corporate imperialism all over the world is the place where freedom is best preserved? And I voted Republican in the 2000 election, by the way, though not for George W. Bush.

What planet do you live on that people usually choose capitalism for securing their freedoms instead of government?

Speaking of education and indoctrination, I can't help but think that these views you have are based upon an extremely skewed or lacking knowledge of history, even U.S. history.

Also, by the way, if capitalism is the economic system that comes naturally, that means that almost all of the failed economies and civilizations in history have been capitalist ones. Not a really great advertisement for your principles, you might not want to hang on to that "capitalism is natural" thing.

 

[Yonoz]

Again, I disagree. I think people want SUVs and Ipods because they can potentially improve the quality of one's life (enough to compensate for the price of obtaining one). Like I said above, there are plenty of things that we don't need, but we do want them. Just because you don't want an Ipod doesn't mean I don't. I like music, and my Ipod allows me to listen to music very conveniently at pretty much anytime and place. The beauty of capitalism is that you can choose to spend your money on the things that you like, and I can choose to spend my money how I like. If you think Ipods are a waste, then you don't have to buy one. All three of my living grandparents think cell phones are useless, so by choice they don't own one.

Do you own things you don't need? Do you have a cell phone? Do you have a car? Do you have a watch? Do you have any CDs? Do you own a computer? Do you ever eat at a restaurant? Do you ever go out and buy an alcoholic drink? I could go on and on, but it's pointless. The point I am trying to make is that you obviously don't need any of these things, but I imagine you own/buy at least some of them? Are you telling me that the only reason you own/buy these things is because you live in consumerist society that indoctrinated you? If so, then you should move to a non-consumerist society who won't indoctrinate you, because you'd probably be happier. This brings me to another point, why do so many people want to move to "consumerist" societies? I mean, if the main reason we like this "consumerist society" is because we've been brainwashed, then you would expect others to not want to come here (because they would realize that these things are useless).

Whether you like it or not, humans seem to enjoy these "materialistic" things. However, I think you are also missing the fact that humans enjoy many other things that money can't exactly buy (friends, family, jobs, volunteer work, hobbies, etc). To say that most people believe that "spending money will make them happy," I believe is a huge exaggeration and one that undermines the dynamics of human beings (and human decision making). Yes, people do spend money on trivial things, and yes, people generally want more money (if all else is equal, such as if someone offered to hand you a billion dollars in cash). However, people make all kinds of decisions that don't rely on money. Even when it comes to jobs/careers, many people often look for jobs that are personally fulfilling even if they have to take a pay cut. In my field, most PhD economists choose to be professors even though they could make double working in the private sector. They choose academia because it's fullfilling and more relaxing in their personal opinion. Others choose the private sector for a variety of reasons. Money is only one part of this decision, and the importance of it varies from person to person, and many people choose their career based on reasons much more dynamic then just salary. Even in college, people often choose majors they enjoy (as opposed to majors that make a lot of money). English, sociology, anthropology, philosophy, etc, majors aren't exactly in high demand in the job market, nevertheless, many people choose these disciplines. My point is that, stereotyping people (even in "consumerist societies") as primarily being money motivated and believing that "spending money will make them happy," is a gross exxaggeration, and misses the dynamics of human beings completely.

As I said, this is a matter of defining governments' role in education.
Us humans are a social species. We crave attention and validation from our peers. Stereotypes aside, it's fair to make the following generalization, which is supported by sociological experiments: every group follows certain trends; http://en.wikipedia.org/wiki/Milgram_experiment" , even to the point of betraying their own values. Authority can take many forms. In the western materialist/consumerist society, one can easily point to authorities that urge individuals to consume. The question is: does the government's role include curbing the power these authorities hold? Consider that the key social advances we hold so dear all attempt to prevent the accumulation of power, and consider the size of the marketing/advertising industries.
Second, absolute freedom, like all other absolutes, is impossible. Whatever choices I make will have some sort of effect on others around me. Personal freedom is forever in competition with other rights, and some sort of compromise is always needed. My freedom of movement is restricted as I cannot simply walk into a prison or a military camp; I cannot hold a rally in a public place without the necessary permits; etc. The government decides where to draw the middle ground between all these rights through the laws it enacts. Moreover, just as the government saw fit to outlaw advertising of alcohol and tobacco to youths, and to promote certain health practices through the education systems, it may decide to limit marketing in general and/or promote certain types of social behavior.
Perhaps it is not the government's role - but there can never be an authority vacuum. I recommend looking up psychologist Alexander Mitscherlich's "fatherless society" theory.

 

[denverdoc]

All I know is when I made the decision to not watch TV or listen to commercial radio, life took an interesting turn. I read more, played more, and ultimately cut back the hours I voluntarily worked from 75+ to closer to 30. My income was quartered. Fortunately a quarter of a lot is still more than enuf to subside. My life has never been fuller, and while I do less medicine, the quality is so much greater that I am convinced I'm doing more good than before. I buy a lot fewer toys, but so much more time to fully enjoy the few I do, and finally even enuf time to understand the artificiality of the toy experience, and the constant craving to do a "bigger dose." That hunger alluded to by Buddhism and other religions which can never quite be filled, as each new toy makes the hole bigger, not smaller. Plainly I agree with the original premise, and wish I had more success in de-conditioning my patients from the materialistic merry go round.

 

[Economist]

You are concentrating on a static partial equilibrium (in the labor market) while ignoring the dynamic general equilibrium (in the economy). If the equilibrium wage cannot provide for maintenance/reproduction of the labor force, then in the latter sense the system is not working "properly" (read: "to my liking").

Can you explain this in a little more detail, because I'm confused as to exactly what you are saying.

If capitalism comes naturally and therefore represents some kind of historical equilibrium in a society, then how do you explain all this anticapitalist discourse in French textbooks (and more generally in Europe), other than a "vast communist conspiracy"? And just when everyone thought communism was defeated once and for all?

Well, what I meant by that is that Capitalism, markets, firms, money, etc, all seem to arise naturally. This is a strong distinction (in my opinion) from Socialism (aka Central Planning). The key difference is in who makes decisions. In a Capitalistic system decentralized decision making is what happens (bottom up decision making) while in Socialism you have centralized decision making (top down decision making).

Economist your basic premise is fundamentally flawed. Employers and employees do not have equal bargaining powers and so choice is non-existant other than do as we say or die.

This doesn't seem supported by the facts nor the theory. Are you saying that because the Employer is the one making the decision to hire the Employee that they have more power? If so, then this would also imply that Safeway doesn't have equal bargaining power as you (since you decide whether to buy the steak or not). Would you claim that you have any real influence over the prices at Safeway?

Furthermore, what you're saying doesn't explain some of the facts of labor markets. Such as, why do some people make so much money working for companies/corporations if they have such little power? Did you know that people who work for large companies/corporations tend to make 10% - 15% more than individuals with similar jobs for smaller companies? Also, if what you were saying is true then more people should be making the minimum wage. However, the minimum always accounts for a very small percentage of the labor force (currently, I think it's like 2% - 3%).

Employers act in unison with the aim of maximising profits and the only effective counter-measure to this is gov't regulation. When I say without laws employers would exploit their workers it is not a theory it is a proven fact as I detailed in my earlier post.

If by acting in unison you are implying that they collude to keep wages low, this is also not supported by the facts. The fact is that companies often have to compete with each other for high skilled employees, which is why their wages can get so high.

Also, collusion rarely works because companies usually have huge incentive to cheat which has been studied by many game theorists (this is why cartels often break down on their own).

The problem with globalisation is it allows companies to circumvent employment, environmental and safety laws by operating in unregulated economies leading to such things as the Bhopal disaster and child slave labour in China.

I love how you call it "slave labor." Is anyone forcing these people to work? Or do they choose to work? If the working conditions are so bad, and the companies are so horrible, how on Earth do they (easily) find employees that are willing to work for them?

This is not an all or nothing scenario, there is a happy medium. Capitalism is good provided it is regulated and globalisation is good provided there is a level playing field. That is the message promoted in parts of Europe.

I agree that there needs to be a happy medium, but I bet we strongly disagree on were that happy medium lies. Not to mention, it has been pointed out again and again that harmful consequences generally result from governmental intervention/regulation in business.

For capitalism's long term future it is in the interest of companies to promote distributed wealth in their own markets to create customers for their products but unfortunately companies do not take the big picture view as they concentrate on the next quarter's results. That is why gov'ts get involved.

LOL. Companies may care about the short-term more than the long-term, but they still care greatly about the long-term. This is why companies try to keep a positive image and satistfy customers, because they greatly care about future profits as well.

Personally I do not believe the raison d'etre of the human race is to work like busy little soldier ants until they die. There needs to be a balance between work and home. The reason the gov't gets involved in setting the number of hours worked is because otherwise employers would pressurise workers to work longer hours and don't say they wouldn't because as a manager I've done it myself to meet targets set by my bosses.

If people don't want to work "like busy little soldier ants" they don't have too. But why should it be a law that they can't? Why can't different people choose different amounts of hours to work?

It's simply not true that companies always want people to work long hours. My buddy works at a movie theatre making minimum wage, and they won't let people work more than like 30 hours a week (and in fact, they encourage less). Likewise, my mother works at a multinational retail/department store making minimum wage. And even there, they will not let her work more than 35 hours a week (even if she wants too).

What's wrong with letting employees and employers come to mutually agreeable terms?

I think your also missing a key element to why some people love these laws, which is that they protect them from being out competed. Image I am lazy, and I don't want to work more than 20 hours a week. I know that I will never be able to get a job, because everyone else is willing to work 40 hours a week. However, if I can get a law enacted that says 20 hours a week is the maximum, then I'm no longer at a disadvantage (even though I may have made others worse off by limiting their bagaining power). Or imagine if a business owner doesn't want to stay open 24 hours a day, even though his competitors are. The best thing he could do is get a law passed that makes it illegal to be open any more than 14 hours a day.

If you don't think this actually happens, you should read Walter Williams book "South Africa's War Against Capitalism." The racist white unions down there were getting killed because low skilled black labor was bidding their jobs away by working at lower wages. The unions tried forever to stop this, but to no avail. Then they had a brilliant idea, if they could get a minimum wage (actually they called it "equal pay for equal work") enacted, people would no longer hire the blacks (because they were lower skilled). If you have to pay $5 for a low skilled worker and $10 for a high skilled worker, then you'll have to weight the costs and benefits of both, and either may get the job. However, if you are forced to pay $10 an hour, then the white higher skilled worker will win out every time. This is the way in which people sometimes use the political process for their own self interest.

Is it any surprise that being use the political process for their own gain, even at the expense of others?

Another reason for regulation of working hours is imbalances between work and home lead to other social problems. For eg. With both parents working long hours children get neglected leading to personality disorders and anti-social behaviour which negatively affects all of society.

I think this is the most valid point you've made so far, because now you're talking about the degree to which one individuals decisions harm anothers. However, I still don't find it very convincing/persuasive as it is a very slippery slope, as it leads to more and more arguments for infringing upon someone else's personal liberties.

There are many things that people do which can have negative effects on others, so where do we draw the line. You could probably make the same case about drinking alcohol, smoking, unhealthy eating, lack of excercise, unprotected sex, number of sex partners, etc. How much of a decision should we have on the eating, drinking, sex, etc, habits of others?

All I know is when I made the decision to not watch TV or listen to commercial radio, life took an interesting turn. I read more, played more, and ultimately cut back the hours I voluntarily worked from 75+ to closer to 30. My income was quartered. Fortunately a quarter of a lot is still more than enuf to subside. My life has never been fuller, and while I do less medicine, the quality is so much greater that I am convinced I'm doing more good than before. I buy a lot fewer toys, but so much more time to fully enjoy the few I do, and finally even enuf time to understand the artificiality of the toy experience, and the constant craving to do a "bigger dose." That hunger alluded to by Buddhism and other religions which can never quite be filled, as each new toy makes the hole bigger, not smaller. Plainly I agree with the original premise, and wish I had more success in de-conditioning my patients from the materialistic merry go round.

Congratulations! I truly find that commendable. However, you did this out of choice, and you can't expect everyone else to have the same preferences as you and make the same decisions as you. It sounds like you are a doctor? Did you work long hours for many years? Because people tend to work more hours when they are younger and then work less as they age. Furthermore, you probably still are able to afford a decent standard of living despite the fact that your income was quartered, and many people would not have that luxury. This is why I am such a huge proponent of freedom, because it allows each individual to make the best decisions for himself/herself.

P.S. I didn't have time, but I will try and respond to some of the other comments later.

 

[Art]

Economist - I've already detailed working conditions prior to gov't regulation of industry are you disputing the facts?? Are you disputing that employment conditions in unregulated economies today are appalling??

When I said slavery in China I meant slalvery, here's an example covering both safety and slavery

Linfen mayor ousted for mine blast
(China Daily/Xinhua)
Updated: 2007-12-20 07:49


The mayor of the city of Linfen in Shanxi Province has been removed from his post as the city's deputy Party chief after being found responsible for the coal mine blast that killed 105 and injured 18 others earlier this month, provincial authorities said Wednesday.

Li Tiantai was also expelled from the city's standing committee of the Communist Party of China (CPC) for failing in his duty to supervise mine work safety, the Shanxi provincial CPC committee said in a notice.

The provincial CPC committee also suggested to the People's Congress of Linfen, the city's legislature, to remove him from the mayoral post.

He will be replaced by Xia Zhengui, the former mayor of the city of Jincheng, the notice said.

Investigations found colliery managers had delayed reporting the explosion on December 5 at the Xinyao Coal Mine in Hongtong county to local authorities.

The blast is believed to be the nation's second deadliest mining accident this year.

In August, 181 people died when heavy rain flooded two mines in Shandong Province.

Li issued a public apology about a week after the explosion, saying the tragedy, which made it hard for him to sleep, had revealed security loopholes in the city's coal mining industry.

Police detained 36 people allegedly linked to the explosion, including mine owner Wang Donghai. The authorities also cracked down on illegal coal mines following the blast.

Hongtong county made the headlines in summer when a scandal involving slave labor at a brick kiln there was exposed.

In June, 359 people including 12 children were rescued from illegal brick kilns in the province, 31 of them from Hongtong.

http://www.chinadaily.com.cn/china/2007-12/20/content_6334547.htm

In the UK employers collude through their representative body the CBI. Here's an example of their lobbying efforts to suppress wages

A rich complaint
Overpaid executives have got a cheek to stand against increases in the minimum wage, writes Victor Keegan

Economic dispatchguardian.co.uk, Thursday September 28 2006

One of the great unsolved problems in economics - whether in the United States, Europe or the rest of the world - is how to reconcile growth with a fairer distribution of income. Nowhere is this seen more starkly than in the debate now going on on both sides of the Atlantic about the level at which the minimum wage should be pitched. In Britain this week the main employers' lobby, the Confederation of British Industry (CBI) warned that further increases in the minimum wage (which is about to go up from £5.05p to £5.35, making it among the highest in the world) will damage business and boost the black economy because some firms will be forced to take on cheap labour in order to survive.

In the UK, regular above-inflation increases in the minimum wage are one of the under-trumpeted achievements of Tony Blair's government about which it has good reason to be proud. It was introduced in 1999 (at £3.60) amid dire warnings from the CBI that it would create unemployment. Since then it has been increased significantly faster than both inflation and average earnings, without generating any measurable loss of jobs. Since 2002 the minimum wage has risen by 27% in the UK whereas in America it has been estimated (by the Economic Policy Institute) that its inflation-adjusted value is 30% lower in 2006 than it was in 1979 (though US comparisons are complicated by health care assistance and tax allowances).

Leaving aside for a moment the economic arguments, one has to admire the sheer cheek of the CBI warning. The top executives of British industry - who are one of the driving forces behind the CBI - have for many years been receiving pay and remuneration increases way above 10% a year (and sometimes above 20%) and from a far higher base than those on the minimum wage yet with a straight face they can set themselves against more significant increases for the poor. In fact many of these top executives earn such high bonuses they could afford to put some of it aside to help fund non-inflationary increases in low pay and still leave themselves with a bonanza.

http://www.guardian.co.uk/business/2006/sep/28/economicdispatch.politics

If you think companies include 'increasing the purchasing power of their employees' as part of their long term strategic planning then I'm afraid you live in cloud cuckoo land.

Not sure why when referring to laws governing max hours worked you cite examples of 20 or 30 hours per week. I know of no country which has legislated for such low levels. In most of the EU there is a 39 hour week with a max permissable average of 8 hours OT per week over a 3 month period, I believe in France their base is the lowest at 35 hours (which is currently being increased).

 

[Smurf]

Sorry but I disagree with you on this point. Capitalism is not created, rather it happens naturally. Furthermore, I don't like other people using the political process to harm me by making choices that decrease my freedom.

That's not really a matter of opinion. Markets are created and maintained by "political" institutions. They are tools. That's the consensus within economics, political science and pretty much everyone else. Markets (hense capitalism) are tools, and because of this, they have no real relevance to concepts of 'freedom'.

Employers act in unison with the aim of maximising profits and the only effective counter-measure to this is gov't regulation.

On that note, it's worth noting that even unions are legislative bodies. They exist because of political institutions that create and maintain them.

 

[mheslep]

That's not really a matter of opinion. Markets are created and maintained by "political" institutions. They are tools. That's the consensus within economics, political science and pretty much everyone else. Markets (hense capitalism) are tools, and because of this, they have no real relevance to concepts of 'freedom'.

A matter of nomenclature then? Yes markets require property rights and the rule of law to be put in place by political institutions before they can exist. But the market itself, an aggregation of free exchanges where both parties agree on the terms without coercion, certainly must spring from you, me, etc acting independently and, well, freely. We need not subscribe to any political institution to participate.

 

[Economist]

A pretty large percentage of the U.S. national GDP, something like a fifth or a fourth, is tied up in U.S. government expenditure and purchases. Not even including state and municipal government expenditures. This very much is a civic matter rather than an exclusively private one.

Yes, it is true that government spending is approximately 25% of GDP. My point was that it is somewhat misleading to say that "America" has decided to spend this money in such and such way. Especially, given the fact that most American citizens have no idea how much of that money is spent.

You're asserting that freedoms of commerce are the "true" liberties or something, rather than the freedoms and liberties that the French democracy has chosen to place above them. Believe me, in case you missed the part of your history classes on the French Revolution(s), their choices are founded on valuing liberty and treating people equally, not disregarding freedom. As nations France and the other more Socialist European states have had much longer and deeper experience with oppression of freedom than the U.S. has. They're by no means taking it lightly.

I am not saying that economic freedoms (what you called freedom of commerce) are the only true liberties. However, it seems that they are a very important part of a free society. The freedom to buy what you want, from who you want, who to work for, etc, are a very important part of our liberty. These economic freedoms are among some of the most important reasons that we've been able to escape the trend of grinding poverty (which is a pretty remarkable feat when you take a look at history, and even when you take a global look today).

The "freedoms" that France is choosing is one in which people are forced through government to act in certain ways, and one in which employees and employers are severly limited to the degree in which they can enter into voluntary contracts/relationships. I don't really call this "freedom," but rather what John Stuart Mill referred to as "tryranny of the majority."

So has the U.S.! Do Anti-trust laws or OSHA regulations or child labor laws sap our freedom?

I don't know. I've heard people debating about whether Anti-trust laws help or harm consumers. With regards to child labor laws, I guess the questions really comes down to whether parents should be allowed to decide whether their children should be allowed to work, or whether the government should make this decision. I wish starving children in the underdeveloped world did not have to work and could instead go to school. However, given that many people in the underdeveloped world are having a difficult enough time obtaining their basic human needs, I don't know if child labor laws will address this problem. I realize this is only anecdotal, but my own grandfather grew up in France during the Great Depression and dropped out of school at age 12 to become an apprentice to a baker. He worked long hours (something like 10 - 14 hour days, 6 days a week). When you talk to him about it, he points out that that's what he had to do in order to help his family put food on the table, and he never speaks about it regretfully. Do you think that child labor laws would have made him and his family better off or worse off?

There aren't any jobs like that in the U.S., unless you're already rich or having a large part of your livelihood provided by someone else. That's my point - the French society has chosen to make those sorts of jobs available to the average worker without as great a loss of prosperity and financial and health security that an American would have to accept to pursue that kind of lifestyle. That's what I mean when I say that as a country they've chosen leisure rather than possessions. They've chosen to exchange the freedoms of laissez faire economics (Note how it's a French term for that? D'ya think they might have gotten experience with it at some point, maybe?) for other freedoms which, to be provided, require societal restraint on commerce.

Are you serious? There aren't any jobs in the US unless you're rich? I guess that's why are unemployement rate is so low. I didn't know places like McDonalds, Burger King, Texaco, etc, only hired "rich people" as they don't seem to have much trouble filling jobs. Furthermore, why are so many people immigrating here to work? Are you claiming that all of the immigrants from Mexico are "rich" which is why they can find jobs here?

You're point about France being able do something America couldn't do, by maintaining a certain lifestyle is completely undocumented. Explain to me how Sarcozy got elected if there aren't people who are fed up with these sorts of economic regulation. You can only pursue policies like that for so long until they catch up with you, because they are not based on solid economic realities.

Again, I don't call it "freedom" by undermining the voluntary decisions people make with one another. I don't call it freedom to tell someone how many hours they can work, how much vacation must be supplied, etc. In fact, I call this "tyranny of the majority" because essentially you're using the political system of democracy to limit other peoples freedoms and liberties.

And of course the preeminent position that both countries share in the world as first-world nations is because of imperialism, because much of the wealth that has put them where they are today was sucked out of the rest of the world. So attributing the success of either country purely to its cherished principles requires a bit of a wink wink, nudge nudge.

I disagree. Much of the wealth comes from a relatively free enterprise system which allows people to create wealth. Just look at the way in which China and India are having rediculously high economic growth rates. In the past, countries often did get rich by screwing over others. This is what makes capitalism such a beautiful system, precisely that you get rich by producing something of worth to your fellow man, and people voluntarily cooperate and interact with one another (even when they don't know each other, are members of a different race or religion, don't live any where near each other, etc). We are much richer today then we ever where when we plundered and "sucked resources from the rest of the world."

Oh, well good thing the janitors in the U.S. are so well off. How many janitors in the U.S. are even American citizens at this point?

What do you mean? I never said that janitors are well off? I only said that any attempt to try to help them through regulation and legislation will probably do more harm than good. This applies regardless of whether the janitors are American citizens or not.

I think what you mean is that it's despicable if a government tells an employer these things, but if a capitalist employer tells it to employees you're A-okay with it.

Yes. What is wrong with that? Governments act with force, while companies act through voluntary decision making. If the Government comes to your house and says "No smoking in here" that is an infringement upon your liberty in my opinion. If you tell your guests "No smoking in here" that is well within your rights (as you own the property) and no one has to come to your house. If you go to a mechanic and say, "I want my car done within 2 days" that's fine because they don't have to enter into a contract with you. But if the government says "All cars must be done within 2 days" that is undermining your arrangement with your mechanic (not to mention, it would probably make rates go up but that's another story). If an employer says, "I want you to work 50 hours a week," what's wrong with that? You don't have to take the job, and if you don't want it, then leave it for someone else who wants the job.

If an employer says something, it doesn't mean jack because he can't force anyone to do it. In fact, he can only get someone to do it if they choose to. An individuals wants don't mean anything unless he can find someone who is willing to accommodate. I'd love to date a Victoria Secret Super Model right now, but that doesn't mean jack if I can't find someone on the other end who wants me as well. Likewise, many employers would love to hire people for minimum wage, but often times they can't find anyone competent enough who is willing to do that job at that price. They key different is about force and choice (in other words, it's about freedom). Governments force people to do things, while individuals generally work together and come to mutually agreeable terms. See the difference?

To bring a little current affairs, are you saying that this United States of ours where the government monitors what books we can take out from the library, illegally wiretaps our phones, tortures people in secret prisons, initiates preemptive wars, and supports all sorts of corporate exploitation and corporate imperialism all over the world is the place where freedom is best preserved? And I voted Republican in the 2000 election, by the way, though not for George W. Bush.

Look, I don't competely agree with everything you said above (although I do agree with some of it). And yes, I do think it is equally disgusting when the US government infringes upon our freedom. I think we have many instances in which freedom is inhibited in the US, and truthfully it disgusts the hell out of me. I wish we had much more freedom. Furthermore, I refuse to vote because I have yet to see a canidate/politician who truly gives a !@#$ about freedom. I wish this weren't the case, and I wish everyone (including Americans had much more freedom). With that said, Americans have more freedom than many other countries, and therefore I would say we are relatively free. Sometimes I'm afraid because I think the trend is towards less freedom. Furthermore, the only way the government has the ability to do the dispicable things you mentioned above is precisely because we've given them way too much power. Asking them to get involved in increasingly more areas, will also continue increase their power.

Trust me, there are many things that piss me off about the US government because it decreases freedom. I am not only an advocate of freedom in the economic sphere. I wish people could marry whoever they want, I wish people could choose to do drugs if they wanted, I wish people could use school vouchers to choose what school to spend their children too, and many, many more things.

What planet do you live on that people usually choose capitalism for securing their freedoms instead of government?

I agree with you that we need government to secure our freedoms. I am not an anarchist, I do believe we need government (albeit a limited one). Government should concern it's self with having a rule of law and protecting peoples human rights. I believe we need Government to run police departments, fire departments, the military, etc. However, they are severely limited past many of these things.

I believe that people tend to choose capitalism in order to express their freedom, as well as to greatly improve the quality of their life.

Also, by the way, if capitalism is the economic system that comes naturally, that means that almost all of the failed economies and civilizations in history have been capitalist ones. Not a really great advertisement for your principles, you might not want to hang on to that "capitalism is natural" thing.

How do you think capitalism happens? I'm not saying that we don't need a rule of law and various institutions for capitalism. For example, private property rights are a crucial part of capitalism. My point is that capitalism does happen very naturally, because it arises from large numbers of individuals interacting with one another on terms of voluntary exchange. When I first learned about the way in which capitalism, markets, currency, etc, naturally occur it truly blew my mind.

As I said, this is a matter of defining governments' role in education.

I don't think the government has much role in education. At the most, it should raise taxes, cut everyone a check (really I mean a voucher), and allow parents to choose where to send their children. I firmly believe that the US government does a horrible job at K - 12 education, and I firmly believe that bringing market forces into education would greatly improve our education (especially to poor and disadvantaged children who attend the worst public schools).

Consider that the key social advances we hold so dear all attempt to prevent the accumulation of power, and consider the size of the marketing/advertising industries.

The size and power of the marketing and advertising industry is nothing compared to the size and power of government. What is the worst thing the marketing/advertising industry could probably do to you? At most, they could probably persuade you to buy a few more useless products and spend a little extra money. Contrast that with the worst thing that Governments could probably do to you. Need we remember how many people have been killed by their own Government, both past and present. If you are nervous of the power of marketing/advertising industries, then you should be 10,000 times more nervous regarding the power of the Government.

Second, absolute freedom, like all other absolutes, is impossible. Whatever choices I make will have some sort of effect on others around me. Personal freedom is forever in competition with other rights, and some sort of compromise is always needed. My freedom of movement is restricted as I cannot simply walk into a prison or a military camp; I cannot hold a rally in a public place without the necessary permits; etc. The government decides where to draw the middle ground between all these rights through the laws it enacts. Moreover, just as the government saw fit to outlaw advertising of alcohol and tobacco to youths, and to promote certain health practices through the education systems, it may decide to limit marketing in general and/or promote certain types of social behavior.

I agree that absolute freedom is impossible, however, I still believe freedom is a good thing and we could benefit by having much more of it. Essentially, I think it is optimal to maximize freedom, while preserving the very basic rights of life, liberty, and property. I also agree that what you do can (and will) have effects on others, which is precisely why we need laws. Like I mentioned above, I think these laws should be based on some very basic rights, namely life, liberty, and property.

If you're saying that because one persons actions have effects on other people, then they should have a claim on what you're allowed to do; where exactly do we draw the line? Should I have a claim on who you marry, who you have sex with, whether or not you drink alcohol, how often you drink alcohol, etc, as these things may have some effect on me. For example, when you decide to drive to work in the morning, you increase traffic congestion which makes my trip to work take longer. Should I therefore have a claim on whether you are allowed to drive to work in the morning? Just because individuals actions have effects on others doesn't mean we should be allowed to have much of a say on what they do. Just because individuals actions effects others doesn't mean we should all walk around with a sign on our back that says, "Property of the US Government."

 

[Economist]

When I said slavery in China I meant slalvery, here's an example covering both safety and slavery http://www.chinadaily.com.cn/china/2007-12/20/content_6334547.htm

My understanding of slavery is when people are forced to work. Maybe I didn't read the article carefully enough, but all I saw was a dangerous job, that was called "illegal" at the end. If people chose to do this job, then I would not define this as slavery. If on the other hand I missed something, I hope you will bring it to my attention. Slavery is horrible precisely because individuals do not choose to work, and are therefore forced to work, which is clearly not consistent with individual freedom.

In the UK employers collude through their representative body the CBI. Here's an example of their lobbying efforts to suppress wages http://www.guardian.co.uk/business/2006/sep/28/economicdispatch.politics

Isn't the CBI a Governmental Organization? If not, I bet they have many special powers granted to them by Government, which by the way precisely proves my point about the pitfalls of Government and regulation. It's true that companies use Governmental power in order to increase their power, which is another reason I strongly believe in such a limited Government. Earlier, I was referring to natural cartels and natural collusion, which usually works very poorly (because the parties involved can't trust one another, and have a strong incentive to cheat). On the other hand, when cartels and colluders can use Governmental power to make cheating costly or illegal, then they will do so. Again, another reason I distrust Government, because it grants power to companies that they would not otherwise have.

If you think companies include 'increasing the purchasing power of their employees' as part of their long term strategic planning then I'm afraid you live in cloud cuckoo land.

I never said that companies care about increasing the purchasing power of their employees. What I said is that in order for companies to find employees they must pay a wage that employees are willing to work for. For example, why do such a small percentage of the US work force make minimum wage? Notice, I am not claiming the employers pay above the minimum wage because they are kind or benevolent, but rather that they do so because it is in their own interest because otherwise they will have a hard time finding employees, because employees have a good deal of bargaining power because they choose whether or not to work a job at a given wage.

Not sure why when referring to laws governing max hours worked you cite examples of 20 or 30 hours per week. I know of no country which has legislated for such low levels. In most of the EU there is a 39 hour week with a max permissable average of 8 hours OT per week over a 3 month period, I believe in France their base is the lowest at 35 hours (which is currently being increased).

I did not cite examples of 20 hours or 30 hours, but rather I was making a point and that was a hypothetical illustration (the numbers were arbitrary). If you doubt that this happens in the real world, then I urge you reread my point about "equal pay for equal work" legislation lobbied for by white unions under South Africa's Aparteid (better yet, read the actual book I referenced).

Again, why should the EU tell people how much they can work? They are adults, they can make decisions for themselves. When will people realize that Government is not a parental authority there to protect you from making bad decisions. Once again, I believe the legislation you mentioned may be "tyranny of the majority" by decreasing the bargaining power of lower skilled labor, and decreasing the bargaining power of people who are willing to work harder then you.

 

[LydiaAC]

Hello everybody:
I was reading the post by Economist and the diverse replies. I agree with Economist that capitalism have its advantages but I believe that the recommended article can be resumed as "Don´t indoctrinate hate to capitalism. Indoctrinate love to capitalism"
Economic systems must be freely chosen by people, by our best try of democracy. If left movements reach power by elections, let it be. If they are not good for people, time will say it.

 

[Yonoz]

I don't think the government has much role in education. At the most, it should raise taxes, cut everyone a check (really I mean a voucher), and allow parents to choose where to send their children. I firmly believe that the US government does a horrible job at K - 12 education, and I firmly believe that bringing market forces into education would greatly improve our education (especially to poor and disadvantaged children who attend the worst public schools).

This is where we differ. I believe governments should do more than administer society - rather, they should lead it.
One needs to understand capitalism and market forces are not a magic bullet. They require the application of monetary values, and some things are difficult to measure and value in this way. How do you value education? What do you mean by improving education? If the value of education is simply the achievement levels as measured by exams, then it does not, IMO, advance society much. A "smart" society is not necessarily a successful one. IMO good education should produce individuals of strong character, and advance society by promoting awareness of the eternal conflicts between individualism and the common good, pluralism and unity, personal freedom and social order, independence and "the kindness of strangers", etc.
This is all a matter of personal belief though, I am aware that it is a product of the sum of my experiences (I grew up in a socialist community), and you have formed your beliefs likewise.

The size and power of the marketing and advertising industry is nothing compared to the size and power of government. What is the worst thing the marketing/advertising industry could probably do to you? At most, they could probably persuade you to buy a few more useless products and spend a little extra money. Contrast that with the worst thing that Governments could probably do to you. Need we remember how many people have been killed by their own Government, both past and present. If you are nervous of the power of marketing/advertising industries, then you should be 10,000 times more nervous regarding the power of the Government.

I understand your distrust of your government, and that is exactly why I think consumerism should be curbed. The government, large and powerful as it may be, is granted its power from the constituency; its power is limited by what the constituency will allow; and yet most people care more about what the next generation of iPods will feature than about the legality of Camp X-Ray, they know 50 Cent better than they know GWB, and they'd rather feel a little higher than the other drivers on the road than reduce dependence on fossil fuels. They are led by authorities that are socially more powerful than the government - they can't take an individual's personal freedom to the extent a government can (why would they?), but they are powerful enough to affect personal liberties on a wide scale. Ask any parent how much personal freedom they have come the launch of a new generation of gaming consoles.

I agree that absolute freedom is impossible, however, I still believe freedom is a good thing and we could benefit by having much more of it. Essentially, I think it is optimal to maximize freedom, while preserving the very basic rights of life, liberty, and property. I also agree that what you do can (and will) have effects on others, which is precisely why we need laws. Like I mentioned above, I think these laws should be based on some very basic rights, namely life, liberty, and property.

My POV is less individualist, and more social - as was mentioned before, capitalism is another tool to run society. If human nature allowed it, I'd rather live in a socialist utopia; however, we are all egocentric and competitive to varying extents. To me, capitalism is a way of harnessing these traits to produce social order, nothing more. We still need to rise above our nature and control it; otherwise we're slaves to our nature - and that means we have progressed little from the birth of our civilization.

If you're saying that because one persons actions have effects on other people, then they should have a claim on what you're allowed to do; where exactly do we draw the line? Should I have a claim on who you marry, who you have sex with, whether or not you drink alcohol, how often you drink alcohol, etc, as these things may have some effect on me. For example, when you decide to drive to work in the morning, you increase traffic congestion which makes my trip to work take longer. Should I therefore have a claim on whether you are allowed to drive to work in the morning? Just because individuals actions have effects on others doesn't mean we should be allowed to have much of a say on what they do. Just because individuals actions effects others doesn't mean we should all walk around with a sign on our back that says, "Property of the US Government."

It's all a matter of finding some middle ground. Unfortunately, the very processes of democracy that are responsible for this are subverted by consumerism's materialist nature - for too many people, the only concept of "value" is the monetary kind.

Off topic: Freedom carries a slightly different meaning to me, i.e. it has less to do with personal property and more to do with how dependent I am on certain things. Individualism is inherently myopic - society is virtually eternal, whereas individuals are not.

 

[russ_watters]

Ah, I see... so when people value the same things you do, it's just logical, but when people value things like health or leisure and choose those over commerce it's indoctrination? That's not a very humble opinion.

But not inevitably. American culture has chosen to spend the wealth and surplus of its society on chattel and possessions and consumer services. But France and other European countries have chosen to spend their wealth and surplus on fewer material things and more leisure and caps on competition in the labor markets: working from 9 to 4 with a two-hour lunch, laws against working on weekends, a year or two of severance pay so that companies have to take hiring and firing very seriously, the entire month of August as vacation, etc. Both approaches have their advantages and drawbacks, and of course there's a heck of a lot more going on economically here, but to paint one attitude as reasonable and a product of natural human choice and the other as irrational dogma is silly.

The French approach is not so noble. They riot to keep their labor laws because on an individual basis they fear unemployment. But those labor laws are the cause of the high unemployment and economic growth that is consistently lower than the US's.

The France haven't merely chosen an alternate and equal path, they have allowed socialism to be their opiate of the masses.

 

[russ_watters]

I think your also missing a key element to why some people love these laws, which is that they protect them from being out competed. Image I am lazy, and I don't want to work more than 20 hours a week. I know that I will never be able to get a job, because everyone else is willing to work 40 hours a week. However, if I can get a law enacted that says 20 hours a week is the maximum, then I'm no longer at a disadvantage (even though I may have made others worse off by limiting their bagaining power). Or imagine if a business owner doesn't want to stay open 24 hours a day, even though his competitors are. The best thing he could do is get a law passed that makes it illegal to be open any more than 14 hours a day.

If you don't think this actually happens, you should read Walter Williams book "South Africa's War Against Capitalism." The racist white unions down there were getting killed because low skilled black labor was bidding their jobs away by working at lower wages. The unions tried forever to stop this, but to no avail. Then they had a brilliant idea, if they could get a minimum wage (actually they called it "equal pay for equal work") enacted, people would no longer hire the blacks (because they were lower skilled). If you have to pay $5 for a low skilled worker and $10 for a high skilled worker, then you'll have to weight the costs and benefits of both, and either may get the job. However, if you are forced to pay $10 an hour, then the white higher skilled worker will win out every time. This is the way in which people sometimes use the political process for their own self interest.

The "theory" (in quotes because it really isn't a theory) for socialists is that through socialist policies, they can prevent exploiting of the lower class. And they are right. But they either ignore the data or never do the analysis that tells them unequivocably that when you take that too far you have to pull everyone else down a lot to bring the lower echelon up a little. Over the short term, you can have a country like the USSR that devoured its population until there was nothing left to take, and the economy collapsed. For France, the decline is much slower, but they are falling behind the rest of the developed world with these policies.

It is tough to know where to draw the line of government intervention. For countries like the USSR and France, it seems obvious that they are on the side of too much. It can be argued that developing countries like those in Africa and China aren't regulated enough, but their governments are so corrupt and unstable it is tough to consider them a fair comparison of the other side of the coin. America before the Sherman Act labor laws is a good example of a stable, developed country with not enough protection of labor. But today, I think our formula is pretty close to correct.

 

[russ_watters]

The Russians overthrew their own Imperial government, contributed a big part to the overthrow of Nazi Germany and Imperial Japan, got a satellite into space before the U.S. did, and came to control nearly half the world. You can call that malaise if you want to but it seems rather vigorous to me.

Oh, it's great for a while, until there is nothing left to take from your people. Then the hosue of cards collapses.

I would say that the USSR's demise was far more attributable to violent dictators, political corruption, and provoking unwise wars. The U.S. certainly isn't as bad as the USSR was on those counts but we've got to stay on top of things, we're certainly prey to them.

The USSR in the 1980s didn't have any more violent dictators. Political corruption yes. Unwise wars - ehh, Afghanistan wasn't that big a deal.

What actually knocked the bottom card out of the stack was the openness of Gorby's government. The government lied to its people about their living conditions in order to help keep that malaise at bay. But when the the country opened up and people saw that their counterparts in the West had things (like an actual house! a car!) they could only dream of, they realized that they'd been kept down all those decades.

 

[LydiaAC]

Hello everybody:
I think that the principal problem with socialism is the believing that you can drive economy "rationally". It is assumed that capitalism waste so much resources and that if you decide how much you must produce and how much people must consume. This does not allow for people wanting things that are not "useful" like Soap Operas, for example.
The mistake is assuming that humans (in the government or not) are rational. That is not true and still if socialists could drive economy more efficiently than capitalist do (which is difficult to believe) this will be at the cost of ignoring a lot of legitimate human desires.
But, the capitalism has problems too. It has been told in this thread that the problem is to set the line of state intervention. "True" capitalist does not want any intervention, while "true" socialist does not want to leave anything with intervention. I think of a other big problem. For capitalism to be a fair system, stealing should not be allowed. How much in the past you put the line before that you can forget stealing? Because history is history of steal.
For example, Indians of Mexico lived here before Spanish came. They owned the land. Spanish steal the land from them. We, mestizos are heirs of both but the origin of mestizo population was people abandoning Indian towns and integrating to Spanish society. This is the reason that we are racially half Indian but culturally almost full Spanish.
This happened five hundred years ago. Are we allowed to forget? Following a capitalist point of view, is it not fair to give any Indian some sort of monetary compensation? I think that such a monetary compensation will not change things anyway. People will spend money in alcohol and drugs and they will be broken in a few years. Instead, we could set schools, not only free, but full-paid boarding schools near Indian towns. This could change things a lot and in a few years, Indians could compete in the free-market or set their own enterprises. But there is no free lunch and these schools must be paid taking money from successfull entrepeneurs and "true" capitalists does not like this. But I would say: do you want the stealing to the Indians get forgotten? If so, you need to pay a fee. This is your fee, giving education to the actual Indians in order to capitalism could be a really fair game.
Free-market theories sounds good, but some capitalists want free-markets for themselves, and restricted markets for everyone else. See the history of Carlos Slim and Telmex.
Lydia

 

[LydiaAC]

Hello everybody:
I read my previous message and I noted that my English was awful. There are so much mistakes that it would not be practical to list them. I hope you can understand what I am trying to say.
Sorry by that.
Lydia

 

[Yonoz]

Lydia, your English is superb, don't worry about it.
About those boarding schools - is there no opposition to such moves from native Indians? Assimilation may bring about financial success, but it also means the slow disappearance of traditional lifestyles and culture.

 

[Economist]

This is where we differ. I believe governments should do more than administer society - rather, they should lead it.
One needs to understand capitalism and market forces are not a magic bullet.

I agree that capitalism and market forces are not a magic bullet (although they do many great things). Notice also that Government (including democracy) is also no magic bullet. I don't trust government to "lead" as government is imperfect (just like markets are imperfect). Governments do not have the knowledge, incentives, nor the compassion to correctly "lead" people, which is precisely why the founding fathers of the US had such a strong distrust of Government. I also believe that many people have a very romanticized view of Government, which is why they have a good deal of trust in the system.

You should read this interview with Nobel Prize winning Economist James Buchanan, who's work on Public Choice theory is all about politics and government. http://www.minneapolisfed.org/pubs/region/95-09/int959.cfm

Here are some interesting quotes from the interview:

Region: It appears at first glance that many Public Choice economists are politically conservative and free-market oriented. Would that be an accurate description of those academics in the Public Choice movement?

Buchanan: I think it's an accurate description—but it's an accurate description for a reason. If you take the story I've given you, if you recognize that the traditional way we looked at politics had a lot of romance in it, then Public Choice comes along and removes the romance. I think the natural outcome of that is you're going to be more skeptical about government than you would have been otherwise.

Mancur Olson, a good friend of mine, has been influential in Public Choice and objects very strongly to this argument that there is this conservative bias. There is no bias in it as such. But Mancur himself has necessarily had to look at politics differently because of that, despite the fact that his natural proclivity would be more left than mine. There's nothing inherently biased about it. It's just that the fact that if you start looking at the political sector or politics from a non-romantic view, you come to a different view on what has been traditional.

Economists traditionally have been much more pro-market and anti- politics, anti-government than the other parts of the Academy in general. But throughout the decades economists have been frustrated by the fact that they put their ideas out there and nobody pays any attention. Economists have found you can't go out there and sell the idea of a market economy very readily. You have to be sophisticated to understand it. It's difficult to sell the idea of a market economy, so economists haven't been very effective. Potentially, Public Choice, it seems to me, has been effective in a different way altogether. Public Choice does not say that the market is perfect or the market works at all. That's not part of it. But it says that politics fails. There are a lot of people out there who will recognize that politics fails and, therefore, will be in support of a market, who would never have come around to support the market in terms of the pro side. They'll see the anti-politics side, so that's how Public Choice comes in.

Region: It seems that many people now see your emphasis in Public Choice as common sense, that is, applying economics to government. Please describe your journey in making Public Choice commonplace in both the practical world of politics and in the academic world.

Buchanan: It is nothing more than common sense, as opposed to romance. To some extent, people then and now think about politics romantically. Our systematic way of looking at politics is nothing more than common sense.

Buchanan: I was influenced by the Swedish economist Wicksell, who said if you want to improve politics, improve the rules, improve the structure. Don't expect politicians to behave differently. They behave according to their interests.

Buchanan: I picked up some of the Italians who had paid much more attention to the model of the state, the model of politics. I spent a year in Italy (1955-56). It changed my perspective on politics because I think a lot of Americans, of my generation anyway, still had a romantic view of politics. Italians, for me at least, served the function of introducing a lot of skepticism, a lot more questions. Had I not spent that year in Italy, I might not have ever really been able to come to the critical realistic view of politics as I did. All that was by way of background.

 

[EnumaElish]

You are concentrating on a static partial equilibrium (in the labor market) while ignoring the dynamic general equilibrium (in the economy). If the equilibrium wage cannot provide for maintenance/reproduction of the labor force, then in the latter sense the system is not working "properly" (read: "to my liking").

Can you explain this in a little more detail, because I'm confused as to exactly what you are saying.

Sure. Not to put too fine a point on it, if the equilibrium wage isn't sufficient for survival then we all die, which is an inefficient outcome, not the least from a personal utilitarian perspective.

Since this is a subforum of GD, I thought that I shouldn't bore the viewer with a scholastic argument. But I've posted such a simple model under Social Sciences; anyone who'd like to see that formal model can view it and comment on it under Soc. Sci.: https://www.physicsforums.com/showthread.php?t=208622

The neoclassical, marginalist market equilibrium approach rests on a set of very specific assumptions that are (or should be) taught in any grad-level micro course (under the topic General Equilibrium, or "GE" for short). It was a Frenchman (Gerard Debreau) who first proved the existence of a GE in the 2nd half of the last century; he also realized that the set of minimum assumptions necessary to prove the existence of a GE includes very specific assumptions, even in a static (one-period) model of the economy, as was his. In a dynamic context (e.g. multiple periods), the model (and the assumptions to sustain it) become even messier and even more prone to be violated.

The French education is peculiar in that respect. Elite French colleges are populated with professors and grad students who understand the concept of a general equilibrium in a capitalist (decentralized market) economy probably better than anyone else. They also understand the assumptions that underlie that model very well, and can give 10 different examples in less than 10 minutes which demonstrate that a general equilibrium either does not exist, or is not efficient, and for a different reason in each case. Simply stated, they have written the book on the formal mechanics of a market economy. For this reason, they also understand very well exactly the limits of these models as a realistic description of the economy.

 

[CaptainQuasar]

The French approach is not so noble. They riot to keep their labor laws because on an individual basis they fear unemployment.

What, like, people in the rest of the world don't fear unemployment and protest things like that? I think the fact that you don't see to many political protests in the U.S. about economic political issues any more makes my point down below that capitalism can just as easily be an opiate.

But those labor laws are the cause of the high unemployment and economic growth that is consistently lower than the US's.

That's my point. They aren't trying to maximize economic growth at the cost of all else. They accept that the restraints they're putting on commerce to achieve other kinds of prosperity will have those kind of costs. It's intentional, they weren't expecting to have the best economy in the world.

The France haven't merely chosen an alternate and equal path, they have allowed socialism to be their opiate of the masses.

Well, they're trying to have some of the products of socialism be the source of happiness and contentment of the masses, yes. Opiate seems a bit pejorative - if socialism is the opiate of the French masses then capitalism is the opiate of the American masses.

(You realize that quote from Marx refers to religion, not economics, right? And refers to something given to the masses to quell their political activism? The various sorts of stuff given to the American populace by commerce certainly qualifies.)

Oh, it's great for a while, until there is nothing left to take from your people. Then the hosue of cards collapses.

I think perhaps you're misunderstanding the word "malaise". I wasn't saying that nothing bad happened in the USSR, I was saying that "malaise" doesn't describe their behavior very well. They even fended off the post-WWI Allied invasion that tried to prevent the country from even being created. You can bet that little action didn't stem from noble freedom-loving capitalist principles.

The USSR in the 1980s didn't have any more violent dictators. Political corruption yes. Unwise wars - ehh, Afghanistan wasn't that big a deal.

If you don't consider the Communist Party's control over Russia to have been dictatorial, even in the 80's, I must respectfully assert that you don't know what you're talking about.

And Soviet Afghanistan "not a big deal"? You know it's referred to as the "Soviet Vietnam", don't you, that it lasted a decade, and that it was a proxy war of the Cold War period? And that it immediately preceded the collapse of the Soviet Union? Calling it "not a big deal" is either another case of limited information on your part, or is an intentional mischaracterization.

But when the the country opened up and people saw that their counterparts in the West had things (like an actual house! a car!) they could only dream of, they realized that they'd been kept down all those decades.

Nothing to do with an arms race that bankrupted their entire economy, eh? The average Westerner in the 1980's was considerably better off than the average Soviet, for sure. But to compare 1910 Imperial Russia (which was already way behind the 1910 United States, by the way, it was basically the third world) to the 1980's USSR and say that the communist system failed to create substantial wealth - when it created much more than many capitalist nations of the world did during that period - is absurd.

Casting the outcome of the Cold War as some kind of allegory about the superiority of American values is equally silly nationalism. Yeah, Stalinism and other political events over there were horrible wrongs. But the United States and the USSR were basically two sumo wrestlers slapping each other in the face for fifty years. The US just managed to slap hardest.

This is quite relevant contemporaneously because the same sort of attempt is being made right now to reduce our political and military conflicts with our supposedly terrorism-loving opponents like Iran and Syria to a pure and noble clash of values, with no underhandedness or self-interest involved on our part, to cloak the fact that we're jockeying for all sorts of political and economic gains. Not that they aren't too, but the frequent reduction you see of rather complex and multifaceted conflicts to a biased comparison of societal values is cynical and deceptive.

"They just hate us. America and freedom and what we stand for, they just hate it all. That's what this is all about." Sound familiar?

 

[Economist]

I understand your distrust of your government, and that is exactly why I think consumerism should be curbed.

? If individuals are choosing to be consumerists, than why do you think you should have the right to "curb" their choice? This is what I don't understand, and to put it bluntly, I think this is a very arrogant and elitist point of view. I really get pissed of when I hear people talk this way. There's all sorts of things individuals do that I personally disagree with, however, I don't in anyway think I have the right to stop them (unless they are directly harming my freedom, in that case I have a right to protect my freedom). What you're saying is nothing new, as individuals always want to "curb" the choices of others (which is directly opposite of freedom and liberty). Throughout history people have often wanted to "curb" one's ability to read what they want, say what they want, take part in a certain religion, associate with certain people, own a gun, etc.

The government, large and powerful as it may be, is granted its power from the constituency; its power is limited by what the constituency will allow;

I wish this were true, and if it were I'd have much more faith in Government. Even in a Democracy, you will not see this level of consensus because it is a zero sum game. For one thing, you're choosing a bundle of ideas, since you are going to have to choose a person who does not share all of your ideals. Second, if you are in the minority, you lose and do not get your way. This sets up a very interesting structure. Have you ever read John Stuart Mill's book "On Liberty?" If not, you should give it a read as it is a very insightful and well known book. Mill talks about this, and labels it the "tyranny of the majority." Not to mention that Democracies are mainly concerned with the short run, so they will choose policies that have short term benefits but potentially cause great harm to future generations (Social Security is a good example). If you have a little more time and want to know why Democracy has so many problems and inefficiencies that make it so that "power is not limited by what the constituency will allow," then I urge you to read Bryan Caplan's book "The Myth of the Rational Voter: Why Democracies Choose Bad Policies."

Ask any parent how much personal freedom they have come the launch of a new generation of gaming consoles.

What are you talking about? I knew plenty of kids growing up, who's parents wouldn't buy them the latest video games and consoles. If the parent doesn't want the kid to have the gaming console, how in the hell is the kid going to get one? Not to mention, even the kids who have gaming consoles, TVs, computers, etc, many parents limit the number of hours they will allow their child to use these things. Or many times, parents take these things away when their children misbehave.

If human nature allowed it, I'd rather live in a socialist utopia; however, we are all egocentric and competitive to varying extents.

Well, then that makes you a typical socialist; living in a fantasy world hoping for an unrealistic utopia. I care about the real world, I want to know which policies and systems will be the best given human nature and reality.

for too many people, the only concept of "value" is the monetary kind.

Again, what a gross exageration. Yes, people value money and material wealth, but to claim that is their "only concept of value" is simply not true. You are claiming that people don't care about family, friends, job satisfaction, education, knowledge, morals, religion, art, hobbies, sports, nature, etc.

Off topic: Freedom carries a slightly different meaning to me, i.e. it has less to do with personal property and more to do with how dependent I am on certain things. Individualism is inherently myopic - society is virtually eternal, whereas individuals are not.

Who chooses how dependent you are on certain things? As far as I can tell, you are the main decision maker when it comes to that. Plus, the degree to which you depend on something is on a continuum. You obviously have access to a computer and the internet. Are you dependent on that? How do you feel about it? How much water do you drink? How much do you need to survive? It's pointless to talk about necessitie and dependence, as these are personal choices.

 

[Economist]

The France haven't merely chosen an alternate and equal path, they have allowed socialism to be their opiate of the masses.

Well, put!

The "theory" (in quotes because it really isn't a theory) for socialists is that through socialist policies, they can prevent exploiting of the lower class. And they are right. But they either ignore the data or never do the analysis that tells them unequivocably that when you take that too far you have to pull everyone else down a lot to bring the lower echelon up a little.

This is simply not true, as poor people in capitalistic socities live much better than poor people of socialistic societies. Socialism does not improve the lot of even the poor people.

It can be argued that developing countries like those in Africa and China aren't regulated enough, but their governments are so corrupt and unstable it is tough to consider them a fair comparison of the other side of the coin.

Well, China has had much economic growth under economic freedom, however they will still need more political freedom. As far as Africa goes, I don't think it is correct to say they don't have enough regulation. As you pointed out above, currupt and powerful Governments make it nearly impossible for people to succeed. Second, I've read some reports recently and listened to some podcasts regarding some progress in Africa, that was made by establishing property rights and deregulation of economic policies. If you don't believe me, then listen to this: http://www.econtalk.org/archives/2007/12/karol_boudreaux.html

 

[CaptainQuasar]

I want to note that I definitely see many practical and costly problems with the implementation of communism in the Soviet Union. But I think that many of those problems were caused because the Soviet economy was essentially built on an 1870's understanding of capitalism - if they'd had the French economics scholars that EnumaElish mentions the overall operation of the economy would probably have been more effective and less centrally-planned. Still perhaps not as wealth-generative as the U.S. economy but materially better.

I also think that capitalism is much more self-correcting and thereby easier for a government to shore up or maintain than communism. Capitalism has many beneficial aspects. But my main point is that identification of economic success, particularly econometric markers, with freedom and liberty is foolish.

 

[Economist]

Sure. Not to put too fine a point on it, if the equilibrium wage isn't sufficient for survival then we all die, which is an inefficient outcome, not the least from a personal utilitarian perspective..

You realize how unlikely it is for the equilibrium wage to be at a level so low, that people can't even survive off it. Furthermore, I don't see anyway that this could be improved considering that the real issue is that people are so low skilled. Lastly, even if this was the case, efficiency wages that allow one to live are potentially possible. More likely though, people will just quit their job, and make their job fending for themself and surviving.

The neoclassical, marginalist market equilibrium approach rests on a set of very specific assumptions that are (or should be) taught in any grad-level micro course (under the topic General Equilibrium, or "GE" for short).

As you probably know, a model is a very simplified version of the real world. The question is not so much how realistic the assumptions are, but rather how well do they predict events in the real world. If you haven't already done so, you should read Milton Friedman's paper on Positive Economics. Lastly, all economists realize that things are almost never in equilibrium, however, the models still do a remarkable job at predicting real world issues.

They also understand the assumptions that underlie that model very well, and can give 10 different examples in less than 10 minutes which demonstrate that a general equilibrium either does not exist, or is not efficient, and for a different reason in each case.

I think you are underestimating American professors and grad students as they also seem to have a deep grasp on assumptions and models. But from a policy stand point, I don't know whether it matters that a "general equilibrium" does not exist, as the real questions are: What can we politically do about it? What is the cost of doing something about it? And what are the secondary effects and unintended consequences of such a policy (if you've taken much econ, which I imagine you have, you'll immediately see that this would probably be included under the "costs of the policy")?

 

[Economist]

Don't worry about your English as it is fairly good, and will improve as you continue to practice.

This happened five hundred years ago. Are we allowed to forget? Following a capitalist point of view, is it not fair to give any Indian some sort of monetary compensation? I think that such a monetary compensation will not change things anyway. People will spend money in alcohol and drugs and they will be broken in a few years. Instead, we could set schools, not only free, but full-paid boarding schools near Indian towns. This could change things a lot and in a few years, Indians could compete in the free-market or set their own enterprises. But there is no free lunch and these schools must be paid taking money from successfull entrepeneurs and "true" capitalists does not like this. But I would say: do you want the stealing to the Indians get forgotten? If so, you need to pay a fee. This is your fee, giving education to the actual Indians in order to capitalism could be a really fair game.
Free-market theories sounds good, but some capitalists want free-markets for themselves, and restricted markets for everyone else. See the history of Carlos Slim and Telmex.
Lydia

No, I don't think we should forget. However, there will be a lot of disagreement about how exactly to handle it. Don't forget that many laws have been set up that apply differently to Native American's, precisely as a means of doing something about it.

Yes, education could be a very powerful tool. As I have mentioned before though, you'd still have to figure out how to provide it. In my view, public schools do a pretty horrible job, so I'd be much more in favor of giving Native American's tuition vouchers which allow them to send their children to which ever schools they please. I think this would be much more effective at reaching the objectives you mentioned above.

I totally agree with you that many times people want capitalism for themselves, but not for others. Generally, the only realistic way of limiting another person's "capitalism" is through legislation and the force of Government. Yet another reason I don't trust Government. One example is Companies asking for specific laws/regulation such as tax cuts, or restrictions on entry (Anti-trust Laws, FDA regulation, etc). Another example is unions lobbying for legislation that makes it illegal to hire people below a certain wage, as well as limits on trade.

 

[Yonoz]

? If individuals are choosing to be consumerists, than why do you think you should have the right to "curb" their choice? This is what I don't understand, and to put it bluntly, I think this is a very arrogant and elitist point of view. I really get pissed of when I hear people talk this way. There's all sorts of things individuals do that I personally disagree with, however, I don't in anyway think I have the right to stop them (unless they are directly harming my freedom, in that case I have a right to protect my freedom). What you're saying is nothing new, as individuals always want to "curb" the choices of others (which is directly opposite of freedom and liberty). Throughout history people have often wanted to "curb" one's ability to read what they want, say what they want, take part in a certain religion, associate with certain people, own a gun, etc.

I don't think consumer's choice should be curbed, rather the spread of consumerism. For examples, I'd like to see caps on advertising near schools, on media channels directed at children, etc. I'd like to curb the influence of those who have too much of it, just like the government does to monopolies and cartels.
We've already covered the fact individual freedoms are "curbed" for the well-running of society, let's not regress back into absolutism.
BTW, I don't think owning a gun is a basic freedom. Again, we all come from different backgrounds.

I wish this were true, and if it were I'd have much more faith in Government.

Are you saying the government's power does not come from the constituency? Or that its power is not limited by what the constituency will allow?

Even in a Democracy, you will not see this level of consensus because it is a zero sum game. For one thing, you're choosing a bundle of ideas, since you are going to have to choose a person who does not share all of your ideals. Second, if you are in the minority, you lose and do not get your way.

It's not just a matter of what "your way" means, it's also how willing you are to exercise your rights to have it. Lobbyism is one way a minority can have its way against the wishes of a silent majority within the democratic framework.

This sets up a very interesting structure. Have you ever read John Stuart Mill's book "On Liberty?" If not, you should give it a read as it is a very insightful and well known book. Mill talks about this, and labels it the "tyranny of the majority." Not to mention that Democracies are mainly concerned with the short run, so they will choose policies that have short term benefits but potentially cause great harm to future generations (Social Security is a good example). If you have a little more time and want to know why Democracy has so many problems and inefficiencies that make it so that "power is not limited by what the constituency will allow," then I urge you to read Bryan Caplan's book "The Myth of the Rational Voter: Why Democracies Choose Bad Policies."

I have not read these books, I will look them up.
The rights of minorities and future generations are the justification for a constitution.

What are you talking about? I knew plenty of kids growing up, who's parents wouldn't buy them the latest video games and consoles. If the parent doesn't want the kid to have the gaming console, how in the hell is the kid going to get one? Not to mention, even the kids who have gaming consoles, TVs, computers, etc, many parents limit the number of hours they will allow their child to use these things. Or many times, parents take these things away when their children misbehave.

Bad example - but I believe you got the point.

Well, then that makes you a typical socialist; living in a fantasy world hoping for an unrealistic utopia. I care about the real world, I want to know which policies and systems will be the best given human nature and reality.

I believe you misunderstood me, I'm very much a realist. However, I'm not passive about reality; I'd like us to take charge of education and not leave it to market forces or human nature.

Again, what a gross exageration. Yes, people value money and material wealth, but to claim that is their "only concept of value" is simply not true. You are claiming that people don't care about family, friends, job satisfaction, education, knowledge, morals, religion, art, hobbies, sports, nature, etc.

You may disagree, but it cannot be an exaggeration: "too many people" is clearly a subjective statement.

Who chooses how dependent you are on certain things? As far as I can tell, you are the main decision maker when it comes to that. Plus, the degree to which you depend on something is on a continuum. You obviously have access to a computer and the internet. Are you dependent on that? How do you feel about it? How much water do you drink? How much do you need to survive? It's pointless to talk about necessitie and dependence, as these are personal choices.

As I said, humans are social beings. There is no such thing as a "personal choice". We are open to many influences. The reason I'm on the net so much is because it's pretty much the only thing I can do at work to pass the time - my freedom is limited :)

 

[EnumaElish]

If you haven't already done so, you should read Milton Friedman's paper on Positive Economics.

I read it some years ago the first time and re-read it at numerous times after that and I agree with its premise. One thing that I don't remember the paper saying is that the two fundamental theorems of welfare economics (FTOWE) hold "in the real world," even as an approximation, which is my main contention here.

The two FTOWE are:

I. In a competitive market economy, the general structure of prices & wages is efficient.

II. In a competitive market economy, every efficient allocation (read: distribution) of resources can be supported by some set of competitive market prices and wages.

Evidence of low-wage competitive market equilibrium can be seen in even in today's poor economies. Even the "best" available job does not pay for a living, and "fending for oneself (informally)" is hardly a superior alternative.

I think you are underestimating American professors and grad students as they also seem to have a deep grasp on assumptions and models.

Thank you, we try.

the real questions are: What can we politically do about it? What is the cost of doing something about it? And what are the secondary effects and unintended consequences of such a policy (if you've taken much econ, which I imagine you have, you'll immediately see that this would probably be included under the "costs of the policy")?

I am with you on that point; which you'll realize if you go back and re-read my previous posts. BTW, you are welcome to comment on my formal GE model under the Soc. Sci. thread (see the link in my previous post).

Yet another reason I don't trust Government. One example is Companies asking for specific laws/regulation such as tax cuts, or restrictions on entry (Anti-trust Laws

Antitrust laws do not restrict entry; quite the opposite -- anyone can realize this when they think about the antitrust action brought specifically against incumbent monopolists who try to exclude competitors with lower costs.

 

[LydiaAC]

Thanks to Yonoz and Economist about my English. You are so nice.
About Indians losing their culture:
I regret that many good traditions are lost, but I do not think that conserving them is of higher importance than happiness of people. I was in a socialist party (in fact, we were of the kind who called themselves communist, what shocked other leftists). I began to feel far from them because I noted that for they it was more important to make people communist than make people happy. If socialism attracted me since I was eight it was because offered happiness for everybody.
Returning to the topic. Mexican Indians have already lost a lot of their traditions without gaining anything. I think that the decision to integrate must be left to them. When Spain conquered Mexico, some monks began instructing Indians on a variety of activities with a lot of success. This was prohibited very quick and Indians were forbidden to wear occidental clothes, ride on horses and set business. They were not allowed to put a bakery, a shoe shop, a clock shop and so on. They were only allowed to work in communal lands in their towns. Although this laws does not exist anymore, the situation is not very different. In Mexico City a restaurant can reject an Indian as a costumer because they "does not attend servants" (any Indian is assumed to be a servant).
I want for them to have options and chose, as any human being. If their culture is lost (what I do not believe will happen) it up to them.
From 1994 there was a debate because Ejercito Zapatista de Liberacion Nacional (EZLN) began demanding that government let Indian towns govern themselves. Mexican government has been ambiguous about this. I think that this will have more bad sides than good sides but I always has been supporting of this demand, because I think you cannot oblige Indians to integrate if they do not want. (I researched a little and I found that this kind of arrangements are not strange in African countries where ethnic groups are organized in tribes and sometimes they receive chairs in Congress). Resuming: for Indians, more options not less and freedom to choice.
About the public schools and vouchers:
I am open to options to do this, but my point is that give a sort of affirmative action to Indians is the fair thing to do before we can "forget" the past. For uneducated people capitalism is hell and most Indians now are not free to choose because still with public schools (that charge a "voluntary" fee) they cannot afford to use their time studying, not even when they are six years old.
Other thing that I want to comment is about the rise of left in Latin America. Some people is worry about this but I am not. Why?
Left in Latin America was always very popular, although people were very afraid of said it publicly they admired guerrillas and other kind of activists. I grown up in seventies and eighties and I was taught in school that socialism was "stupid". I thought: if they say it is stupid, it must be a good thing. Teachers in high school got hysterical when you say URSS, Cuba or Partido Accion Nacional (who is a right-wing party, by the way). The repression was very hard. You could be killed for giving your opinion in a public place.
Now, Latin America is more democratic, and what you are seeing is the consequence of people openly expressing themselves. Although PRI sustained a strange kind of selective welfare state, people identify capitalism with the bad guys and socialist with good guys. I am glad that we are more free now, and I think that both socialist and capitalist must be allowed to try to gain adepts. Nobody is hurt by reading Marx or Milton Friedman. What hurts is repression and indoctrination. I used to be impatient but now, I want to wait to people find its own path, without pressure of any kind.
But it is difficult that capitalism could be more popular in Mexico.
1)They does not know much about Milton Friedman or Ayn Rand, they only says that capitalism is good because God said so.
2)They identify themselves with repression, firing teachers for asking students to read Carlos Fuentes, and closing picture expositions which use religious elements.
3)They switch from legitimate business to unethical business so frequently that people are unable to see any difference.
4)There is a guy called Santos Mercado who send capitalist e-mails to all academics in the country. He has interesting points but when he said that Pinochet was a hero by killing Allende, taking the government without elections and killing all people with socialist ideas, because he did so for the sake of capitalism and then for the sake of liberty, I could not take him seriously anymore. Is it not the same that Fidel Castro says? "I cannot allow any activity which could lead to capitalism because If we lose our socialism we lose our liberty"
I think that liberty and happiness are the standards to be used to judge any political system. The formula capitalism=liberty or socialism=liberty must not be assumed as true.
Lydia

 

[Yonoz]

Mexican Indians have already lost a lot of their traditions without gaining anything. I think that the decision to integrate must be left to them.

That was the purpose of my question - to learn what Mexican Indians are thinking about it.

From 1994 there was a debate because Ejercito Zapatista de Liberacion Nacional (EZLN) began demanding that government let Indian towns govern themselves. Mexican government has been ambiguous about this.

So who governs them now?

 

[LydiaAC]

If the Indians towns belong to some Municipio, the Presidente Municipal have authority on them. This Presidente Municipal is chosen by elections but the Indians (or their representants) say that they does not have confidence in these elections. They want to have a leader in the town who is elected by the means they believe convenient (by raising hands or something like this). They do not want that police have authority over them, (except sometimes, in case of violent crimes). For example, in stealing, they want the traditional authorities could take care. If think that sometimes returning the stolen item is enough and to send an Indian to a Mexican Jail is an excessive punishment. If force is needed they have Ejercito Zapatista.
Those were some of the arguments used in 1994 were this topic was very hot. Mexican government signed Agreements of San Andres Larrainzar, which confer much of these rights to Indian communities, but later they said that they cannot be enforced because it was no possible. Ejercito Zapatista did not give away arms because they say their demands were not fullfilled. Now, PRD is in favor of honoring the agreements and PAN opposed to it. In that time, the Constitution was ammended to include that Mexico is a pluricultural country and to talk about Indian rights.
The debate is about the measure in which these are demands from Indians or from Zapatistas. Zapatistas boast that in the "liberated lands" alcohol is absolute prohibited and men and women have exactly the same rights. I am skeptical about this. You know how difficult was to forbid alcohol in United States and to enforce women rights. It is known that some Indians sell their daughters and Indian women complain about drunken men fighting with machetes. I do not think that Indians are bad, only that they are human as everybody and when someone try to talk about a Utopian Land, I cannot believe in it.
I understand what government does not like those things about not obeying police and keeping Ejercito Zapatista. But sometimes, there are things that must be easy and nobody do them anyway. For example, I know that in USA parents have a voice about the teachers of their kids. When Indians parents does not like a teacher, they don´t have any power to change him and many times opt for boycotting school. Right wing people say: we spend money in schools but "these people" does not want to be educated, so we cannot do anything for them. Why not to send them more respectful teachers, who teach math and science or even free-market economics without trying to preach to them?
I understand your question. If supposedly Mexico is a democracy and Indians have right to vote, why they say that they are not governing themselves? The truth is that they do not feel like regular Mexicans. In fact, they use the word Mexican to talk about non-Indian people.

 

[CaptainQuasar]

The formula capitalism=liberty or socialism=liberty must not be assumed as true.

Definitely!

LydiaAC, I have read that in some places in Mexico Indians do not know how to speak Spanish, only the old Indian languages. Is this true? In the Indian towns do they speak Spanish or an Indian language?

 

[Anttech]

Wow! I guess I didn't know how economically illiterate they are in Europe, until I read this article: http://www.foreignpolicy.com/story/cms.php?story_id=4095




I guess I can't blame them, when the public schools are teaching this unsubstantiated garbage.

"Dicto simpliciter"

Wow I can't believe how crappy American schools are considering nobody can speak Latin.