Economic (Mis)Education in Europe

[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.

 

[EnumaElish]

"Dicto simpliciter"

Is that Latin for "comparing apples to oranges"?

 

[Anttech]

Is that Latin for "comparing apples to oranges"?

Recte You made my point nicely Gratias!

 

[Smurf]

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.

Okay, either you just made a major self contradiction, saying that we both we do and we don't need institutions to create markets. Or you're trying to suggest that institutions are only needed to initially create them, but afterwards they are self-sustaining. Which is nonsensical because if we suddenly stopped enforcing property rights and rule of law then a breakdown of markets, while that would be the least of our concerns, would indeed happen.

I have no idea what you mean by your statement

free exchanges where both parties agree on the terms without coercion, certainly must spring from you, me, etc acting independently and, well, freely.

It seems rather nonsensical.

I'm not sure what you mean by nomenclature. I'm basically quoting textbooks here.

 

[Smurf]

Is that Latin for "comparing apples to oranges"?

"from a maxim without qualification" it's a logical fallacy. Though I can't quite tell what it has to do with Economist's post. I think Anttech is suggesting that high school students should not be expected to learn economics. Which is reasonable, I didn't learn economics in high school. Having finally looked at the link, it's clearly a total bull**** source. Major bias, oozing rhetoric and completely misleading.

 

[Anttech]

"from a maxim without qualification" it's a logical fallacy. Though I can't quite tell what it has to do with Economist's post. I think Anttech is suggesting that high school students should not be expected to learn economics. Which is reasonable, I didn't learn economics in high school. Having finally looked at the link, it's clearly a total bull**** source. Major bias, oozing rhetoric and completely misleading.

He made a sweeping statement, about europeans using a link to a completely Bias website as his qualification. But I guess you knew that after you went to the link.

 

[EnumaElish]

"Dicto simpliciter"

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

I get it -- good one!

 

[Economist]

He made a sweeping statement, about europeans using a link to a completely Bias website as his qualification. But I guess you knew that after you went to the link.

It might be "biased" but I doubt it is very unusual in Europe. No wonder so many of these countries are moving increasingly towards Socialism (or what F.A. Hayek called, "The Road to Serfdom"). Because you can get away with making the rediculous statements from the book, and I doubt you'll get much resistance.

 

[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'.

Okay, either you just made a major self contradiction, saying that we both we do and we don't need institutions to create markets. Or you're trying to suggest that institutions are only needed to initially create them, but afterwards they are self-sustaining. Which is nonsensical because if we suddenly stopped enforcing property rights and rule of law then a breakdown of markets, while that would be the least of our concerns, would indeed happen.

My problem is with your use of 'created' in the earlier post. Let's try an analogy. Political institutions and the rule of law are the 'soil' in which markets are 'planted' and 'grow'. I agree a tree can't start without the soil, nor can it continue to grow without it. Yet the tree and the soil are not the same thing. The soil, just by being there does not 'create' a tree. Somebody needs to come along plant the seed.

 

[Anttech]

It might be "biased" but I doubt it is very unusual in Europe. No wonder so many of these countries are moving increasingly towards Socialism (or what F.A. Hayek called, "The Road to Serfdom"). Because you can get away with making the rediculous statements from the book, and I doubt you'll get much resistance.

Yeah, I suppose the break up of USSR, all the ex-east block countries embracing Capitalistic market values. London becoming numerou uno for the finance sector in the world, the tearing down of currency barriers, and opening of free trade between ex-waring countries, allowing for the euro-market to expand, Numerous countries voting in right wing governments for reform purposes (hungary for example), the Euro kicking ass, people moving there bonds from Dollars to Euros... is the road to "Socialism". You are obviously talking from a wealth of knowledge.

You seem to be attempting to harden your sweeping statements with even worse logic. You just admitted your website is bias, so the premises of your whole argument just went up in a puff of smoke. I suppose your "gut" is telling you how Socialist Europe is, that is why you seemingly know the content in your bias (you said it) www site is not unusual in Europe, right?

 

[Economist]

Yeah, I suppose the break up of USSR, all the ex-east block countries embracing Capitalistic market values. London becoming numerou uno for the finance sector in the world, the tearing down of currency barriers, and opening of free trade between ex-waring countries, allowing for the euro-market to expand, Numerous countries voting in right wing governments for reform purposes (hungary for example), the Euro kicking ass, people moving there bonds from Dollars to Euros... is the road to "Socialism". You are obviously talking from a wealth of knowledge.

You seem to be attempting to harden your sweeping statements with even worse logic. You just admitted your website is bias, so the premises of your whole argument just went up in a puff of smoke. I suppose your "gut" is telling you how Socialist Europe is, that is why you seemingly know the content in your bias (you said it) www site is not unusual in Europe, right?

My problem was essentially by using the word Europe, because many European countries actually don't have Socialist legislation, and actually do support Capitalism. My understanding is that this is especially true where Socialism had been seriously tried. I apologize for making it seem as though I meant all of Europe, when actually I was just talking about some European countries. For example, I think France is possibly heading towards "The Road to Serfdom," although maybe they'll turn it around (I mean they did elect Sarcozy).

By biased, I meant that they were obviously trying to get a very specific point of view across, and even wrote the article fairly dramatically. I did not mean that the article did not have validity, nor that there wasn't some truth in what they were saying. Just because I used the word "biased" doesn't "prove" anything. Seriously, everyone (and I do mean everyone) is biased, but that doesn't mean that people don't make good and/or truthful points.