News Stability of anarchy.

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Townsend said:
Common sense perhaps?
the problem with your "common sense" townsend, is that it's too common and not enough sense. :biggrin:
 
It relies on the central planning body to predict trends in supply and demand which historically has been shown to not work out so well. They fix their numbers and put their plan into action but something goes wrong and the plan barely limps along or they have to go back to the drawing board and rework the plan while the economy and the people wait for them patiently, or perhaps not so patiently.
 
Smurf said:
the problem with your "common sense" townsend, is that it's too common and not enough sense. :biggrin:
Ok, then how about years upon years of empirical evidence? Any kind of government control on price or supply creates either a surplus of inventory which leads to a loss by producers or an excess of supply which also leads to a loss by producers. Now I realize you don't care about the well being of the suppliers and only the well being of consumers but those consumers are also the suppliers so they need to be successful to be able to be consumers.

If you don't believe me just look at examples where price ceilings or floors or government subsides have thrown markets all out of whack. It happens every time Smurf....this should be common sense since it is pretty much common knowledge.
 
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TheStatutoryApe said:
It relies on the central planning body to predict trends in supply and demand which historically has been shown to not work out so well. They fix their numbers and put their plan into action but something goes wrong and the plan barely limps along or they have to go back to the drawing board and rework the plan while the economy and the people wait for them patiently, or perhaps not so patiently.
This is the common exageration of inflexible "command economies".
Multinational corporations do it all the time; they allocate resources to their stations in New York and Hong Kong directly from various producers and storehouses in, say, LA and Sydney. They calculate what is needed by sales records and blah blah blah - various other records. This whole bogus that no one but capitalist corporations could do that is totally unfounded.
 
Smurf said:
This whole bogus that the government can't do it equally well is completely unfounded.
Reality doesn't mean much to you does it Smurf?
 
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Townsend said:
Reality doesn't mean much to you does it Smurf?
If it's as obvious as you imply it is then why don't you show me these mountains of "Empirical evidence" you have. Where's the problem?
 
Smurf said:
If it's as obvious as you imply it is then why don't you show me these mountains of "Empirical evidence" you have. Where's the problem?
The mountians of empirial evidence are everywhere...the only problem is your refusal to see it....

For price floors go here
The second hit is a word document that I would recommend you read..

For price ceilings go here

Any case where the government sets or controls prices you create supply and demand problems.....very inefficient and it only serves to make everyone's lives worse.

A command economy has the government controlling factors of production....in a capitalist economy the consumer is god...what he buys or doesn't at any given price determine equilibrium. With a command economy, the government has to determine what the consumers want and what it is worth to them. How could this be done efficiently? Government is nothing more than a massive bureaucracy...it is the epitome of inefficiency. Most people in the know seem to blame the bureaucrats in Washington for ruining the space program. In fact, Dr. Gibbs just talked at our school and directly blamed bureaucrats for many of the problems with space program.

Therefore, we have system that requires flexibility or everyone loses and you want to put the government in charge of it. I think it is a very safe assumption to say that there will major issues and everyone, especially the poor and weak, would be worse off.
 
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Townsend said:
The mountians of empirial evidence are everywhere...the only problem is your refusal to see it....
Maybe you should point me towards it then. Give an explanation - try to make a case, instead of just pointing me towards generic google searches. All you've said is "I don't trust the government" which doesn't mean a whole lot to me.
 
Smurf said:
Maybe you should point me towards it then. Give an explanation - try to make a case, instead of just pointing me towards generic google searches. All you've said is "I don't trust the government" which doesn't mean a whole lot to me.
Do you know what price floors are Smurf? Do you know how they affect supply and demand?

Answer me these basic questions Smurf. What puts supply in demand in equilibrium? What happens if the government sets the minimum price above that equilibrium? What happens if the government set the maximum price blow that equilibrium? How can the government be expected to know where to set prices? They have none of the indicators available to do so....what happens when a business has a excess of inventory they cannot sell? How is anyone expected to make profits in your command economy?

It's like your asking me to teach macroeconomics 101 to you....I don't feel the need to teach some socialist teenager economics. There is more than enough information out there for you to look through. Get off your duff and defend your position. You have been shown a hole the size of the grand canyon and your response is to ask someone to prove basic economics before you will believe that the hole exist.

Why don't you explain how this command economy is suppose to know where to set prices and how much of a certain good it should produce. It is not correct to present a theory with NO evidence supporting it and then demand I prove it false and then when I show a counter example that you don't agree with you ask me to prove it and so on.....pathetic Smurf.
 
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selfAdjoint

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Townsend, I don't believe Smurf would deny that when the govenment intervenes in the market to set prices (a lefty strategy) or limit supply (protectionism -favored by some right wingers) that the resulting perturbed market in the given quantities will not be optimal. However there are so many sources of suboptimal behavior in the real marketplace as distinguished from the idealized one in econ 101 that this is a pretty weak argument. What is the actual loss to the economy from government intervention, versus other sources of inefficiency? Does it really make that much of a difference? What is your evidence for that?
 
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Townsend said:
Why don't you explain how this command economy is suppose to know where to set prices and how much of a certain good it should produce. It is not correct to present a theory with NO evidence supporting it and then demand I prove it false and then when I show a counter example that you don't agree with you ask me to prove it and so on.....pathetic Smurf.
Townsend, a command economy is NOT a free market. It is not subject to the same rules.

Above you talked about price floors and ceilings. The reason these lead to surplus and deficits is because a free market predicts that, as price is raised, the demand will go down and supply will go up.

If the government is already regulating demand and supply then this does not happen. The problems come when the government interferes with an already existing free market economy. A command economy is not a free market economy - therefore they will not be subject to the same problems.
 
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alexandra

Townsend said:
Price controls are terrible business practices and every government is inefficent. Combine the two and you get conditions exactly like in Cuba's hospitals....hell!
I don't suppose you'd countenance the argument that US sanctions against Cuba would have anything to do with the 'economic mismanagement' you are quoting, you true-blue lovers of lovely, lovely capitalism and 'democracy'?
Thursday, 19 March, 1998, 21:22 GMT
US sanctions against Cuba explained

The United States imposed sanctions against Cuba in 1962 shortly after Fidel Castro seized power in a revolution on the island.

The embargo was a response to Castro's nationalisation of American-owned enterprises; it sought to deprive Cuba of foreign exchange and hasten the end of communism.

Before 1962, more than two-thirds of Cuba's foreign trade had been with the United States -- so when the embargo came into effect Cuba had to find alternative markets, and itbecame highly dependent on the Soviet Union.

The embargo has since been strengthened, most recently by a 1996 bill -- the Helms-Burton bill -- which punishes foreign companies dealing with Cuba. http://news.bbc.co.uk/1/hi/world/americas/67554.stm
Go to the US Treasury's website if you don't trust the above information: http://www.treas.gov/offices/enforcement/ofac/sanctions/ [Broken]

You know, this wilfull blindness is quite tiresome. If all you ardent defenders of 'democracy' and capitalism are going to defend your so great 'democratic' capitalist system, I think you should do some serious research so you all know what you're talking about. Listening to propaganda you hear here and there and on Fox News is just not scientific, you know :smile:
 
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alexandra

loseyourname said:
I don't think there is anybody here that is pro-corporate monopoly. The difference seems to be that you think these things are inevitable given capitalism. Russ and Townsend and I do not. We see that, historically speaking, corporations have only been able to grow to their ridiculous sizes and market shares with help from governments. Corporations are legal entities that would not even exist in a pure capitalist state. Essentially, you are arguing with a strawman, something that pure capitalism does not either sanction or result in (at least theoretically - in practice, we have never experienced pure capitalism and so cannot know for certain).
This point you make (that pure capitalism does not sanction or result in monopoly corporatism) is arguable. Extending on Marxist theory, Lenin clearly foresaw that capitalism would have to result in monopoly corporatism. If you look at capitalism from a critical point of view, it *must* develop the way it has - there is no other option. How exactly do you propose that monopolies be tamed? Legally? Ha! Who makes the laws? Who can afford to 'buy' the laws that suit themselves? Honestly, I just cannot understand what part of this very clear picture you cannot see?
 
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alexandra

TheStatutoryApe said:
Remember that the creators of Linux hadthe benefit of a capitalist system where they could own means of production and use them as they saw fit. Just because they don't make a profit doesn't mean it isn't a capitalist endevour. If you look up capitalism you will find that profit is not required for a system to be capitalist.
This is an intriguing statement, TSA - what defines capitalism then, if not profit? I am really interested in seeing an alternative definition of capitalism that does not include profit in it; I've never, myself, come across such a definition (not a technical one, in any case).
 
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alexandra

TheStatutoryApe said:
It relies on the central planning body to predict trends in supply and demand which historically has been shown to not work out so well. They fix their numbers and put their plan into action but something goes wrong and the plan barely limps along or they have to go back to the drawing board and rework the plan while the economy and the people wait for them patiently, or perhaps not so patiently.
But all command economies of the past were in less industrialised countries. One of the main reasons the USSR 'failed' is that it did not have a well-enough developed industrial base to meet the needs of the population. 'Socialism' was first achieved, contrary to Marx's prediction of how societies would progress, in a 'backward' country (Russia was barely emerging from feudalism at the time and had not developed anywhere near full capitalism). So they tried to make up for the backwardness by instituting these 'plans'. But the world is very different today - you wouldn't have to rely on central planning bodies predicting trends. For starters, the Internet provides a great tool for facilitating planning for meeting global needs. The very integration of the world economy and of production sets up a perfect system for global socialism. As I've said before (in other threads), I have never discounted the value of capitalism - it is a necessary stage of social development and results in many technological innovations. Capitalism was progressive, but it's not the best we can do...
 

loseyourname

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alexandra said:
This point you make (that pure capitalism does not sanction or result in monopoly corporatism) is arguable. Extending on Marxist theory, Lenin clearly foresaw that capitalism would have to result in monopoly corporatism. If you look at capitalism from a critical point of view, it *must* develop the way it has - there is no other option.
And what? Lenin had a problem with this? Had a problem and then went on to create state monopolies that created consistent shortages and oversupply dilemmas and produced crappy products that were not current with consumer demands (unless that product had military utility, then it was good)?

Alex, the answer to everything is not "(insert Marxist theorist here) said this must happen, therefore it must happen." For one thing, we don't have a corporate monopolist economy. There are certain industries that are very capital-intensive that naturally support oligopolies, such as the airline industry, energy industry, large munitions contractors (pharmaceuticals are getting to be that way and software/ISP is moving away from it). The only true monopolies we see are the government-run monopolies, like trains, buses, postal service, space travel, and security (there is private security, but most people are protected by the police). Even some of the industries that naturally support oligarchies have companies propped up with government assistance, such as subsidies, bailouts, and protection laws, which are hardly "pure capitalism." Then there are industries like clothing retail, electronics, food production, food service, housing, and film production, that are pretty close to pure competition.

How exactly do you propose that monopolies be tamed? Legally? Ha! Who makes the laws? Who can afford to 'buy' the laws that suit themselves? Honestly, I just cannot understand what part of this very clear picture you cannot see?
Who bought the Sherman Antitrust Act and all the trust busting that ensued? Who bought all of the collusion busts that have occured since and the recent rulings against Microsoft and AT&T (was it AT&T?)?

Of course Marxist theorists thought that capitalism would have to result in monopolies. Look at the time they lived in! Industry was extremely expensive then and just about every market was capital-intensive and resistant to new entries. If they predicted that we would move in the direction of further concentration of industry power, they were wrong. Almost every market, even the few that naturally support oligopolies, has greatly expanded since to include more competitors now than then. Look at the major industries then: oil, steel, railroads. Emerging industries: telecommunications, automobile, electricity. Every one had one or two major providers of service. Every last one of those industries (except railroads, which are now a government monopoly) has more companies operating today than then. Honestly, I just cannot understand how you can look at markets moving in the direction opposite of what the Marxists predicted and still think they are correct.

I take it that you, and all the others who ridiculously argued this, have simply conceded the wealth creation point, as no one has responded to what was posted on it more than a week ago now?
 

loseyourname

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alexandra said:
This is an intriguing statement, TSA - what defines capitalism then, if not profit? I am really interested in seeing an alternative definition of capitalism that does not include profit in it; I've never, myself, come across such a definition (not a technical one, in any case).
How about exactly what he just said? Private ownership of the means of production. Capitalism, as a system, exists in such a way that it takes advantage of the profit-motive, but that doesn't mean that any and all providers of goods and services need to make a profit to be capitalistic. Profit can even be non-monetary. There are plenty of businesses out there (especially small shops and restaurants and such) that simply break even monetarily, but the owners keep going because they make enough to provide for themselves and enjoy what they do. Many self-employed people simply enjoy the freedom it gives them, even though, in practice, they end up with less free time. Very few artists ever turn any kind of profit from their work, but their industry is still capitalistic. Capitalism is predicated on one feature primarily: competition. A given industry is capitalistic when multiple providers of goods/services compete for consumers. Generally (not exclusively), they compete because they hope to profit, but profit itself is not the defining characteristic of capitalism.
 

loseyourname

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alexandra said:
But all command economies of the past were in less industrialised countries.
The USSR is not the only example of central planners failing to fly with the dynamics of a fluctuating marketplace. Even in the US, when bureaucrats mess with the market, they generally create shortages or surpluses. Examples abound from California alone. Rent controls in Santa Monica create bad housing shortages. Price floors on dairy products have resulted in surpluses. Government-provided subways and trains in Los Angeles are empty half the time. Government-employed civil servants either have no work to do half the time (Parks and Rec maintenance) or way too much (constant long-lines at the DMV). Private industry does not make these mistakes because it cannot afford to make these mistakes. When a company does, they go out of business and a better company takes their place. The government just raises taxes or cuts spending in other areas that probably supported more important programs.
 
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loseyourname said:
Of course Marxist theorists thought that capitalism would have to result in monopolies. Look at the time they lived in! Industry was extremely expensive then and just about every market was capital-intensive and resistant to new entries. If they predicted that we would move in the direction of further concentration of industry power, they were wrong.
Actually Marxist economics has been developed for some time after Marx's original writings. It's been developed quite a bit by many other people over the years.
 

vanesch

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loseyourname said:
Price floors on dairy products have resulted in surpluses. Government-provided subways and trains in Los Angeles are empty half the time. Government-employed civil servants either have no work to do half the time (Parks and Rec maintenance) or way too much (constant long-lines at the DMV). Private industry does not make these mistakes because it cannot afford to make these mistakes. When a company does, they go out of business and a better company takes their place. The government just raises taxes or cuts spending in other areas that probably supported more important programs.
Even accepting the capitalist "dogma" that it leads to the best possible overall use of resources, as you point out which often happens when one intervenes (in a naive way) in the market, one will be less efficient with resources.
The question is, however: do we have to maximize the efficiency of resources at all cost ? You mention half-empty trains. Yes, this is slightly more costly than an optimized scheme where you only have crowded trains and yes, people will pay some more taxes for it etc... But if this increases the measure of happiness (even though it lowers the measure of wealth), then to me, that's a good thing.
A more controversial example: minimum wage. The idea is that people should only work for a certain minimum of revenue, otherwise this is considered unworthy. Now, typical market mechanisms will then create, as you point out, some surplus (small underpaid jobs that would find takers if it weren't forbidden) and shortage (unemployment). The question is: is that necessarily a bad thing ? If unemployed people are considered not able to provide a minimum of wealth for themselves by working (their value on the work market is worth less than the minimum wage), why not just let them have some human living conditions without them having to work for it ? This will of course diminish overall wealth, but that is honestly no problem, there is more than wealth enough, on average. Of course, the proportion of people living off others should be kept to a reasonable level (say, less than 10-15 %) - something which defines in fact the level of the minimum wage.

So although I agree with you that intervening in the market usually leads to a less efficient use of resources, I do not think that we should, at all cost, optimize that efficiency. What should be optimized is "reasonable happiness for most" and not the use of resources. We do not necessarily want more total wealth, if that leads to such unequal distribution that it leads to less happiness. We're focussing on the wrong parameter to optimize if we do that.

In fact, do you think that people were so much less happy 20 years ago ? Now when you look at the overall economic growth per capita, we have now more than 20 years ago. But we didn't get that much more happy. So economic growth is not what is increasing happiness, apparently.
 

loseyourname

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Smurf said:
Actually Marxist economics has been developed for some time after Marx's original writings. It's been developed quite a bit by many other people over the years.
And if they predicted that markets would move in the direction of more concentration, they were wrong as well. Even the traditional oligopolies, like car manufacturing, airlines, and package delivery, have seen greatly increased competition in recent decades, to the good of each market. Heck, even space travel may soon see a competitive market! The only notable industry I can think of that has become more concentrated recently is mass media. The large parent companies around today aren't so dissimilar from holding companies of the 20s which I believe were eventually found to be illegal. We'll see what happens with these.
 

loseyourname

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vanesch said:
The question is, however: do we have to maximize the efficiency of resources at all cost ? You mention half-empty trains. Yes, this is slightly more costly than an optimized scheme where you only have crowded trains and yes, people will pay some more taxes for it etc... But if this increases the measure of happiness (even though it lowers the measure of wealth), then to me, that's a good thing.
It's hard to see how a virtually unused subway and train system in Los Angeles is making anyone happy, although the trains are quite nice if that's what you mean. I do see your point, but I don't think that building a public transit system far in excess of the demand for one is a good example.

A more controversial example: minimum wage. The idea is that people should only work for a certain minimum of revenue, otherwise this is considered unworthy. Now, typical market mechanisms will then create, as you point out, some surplus (small underpaid jobs that would find takers if it weren't forbidden) and shortage (unemployment). The question is: is that necessarily a bad thing ?
Actually, this isn't necessarily the worst thing for other reasons, too, the most obvious of which is the inflation dilemma for an economy with no unemployment. Unemployment is a pretty healthy thing just so long as it isn't the same people who are always unemployed.

Again, I see your point, and it's a pretty good one. I'd like to iterate, though (which I suppose I haven't done thus far), that I'm not advocating no market intervention whatsoever. There are markets out there that almost have to be controlled in certain ways. I'm just arguing against the feasability of a fully fledged command economy. It's interesting to me that the same people who are so distrustful of government and bureaucrats as it is also want to put our economy in their hands.

Actually, the best example of market interventions that I personally advocate are activity regulations more than price controls, which, outside of possibly minimum wage, are almost always a bad idea. The licensing of medical doctors and environmental standards, for instance, are market interventions that I think are great ideas.

In fact, do you think that people were so much less happy 20 years ago ? Now when you look at the overall economic growth per capita, we have now more than 20 years ago. But we didn't get that much more happy. So economic growth is not what is increasing happiness, apparently.
Hey, I was four years old in 1985. I have no clue how happy people were then, but people do generally seem to have more peace of mind when the economy is doing well than when it is doing poorly. I'm not sure what statistics exist to either confirm or falsify that hypothesis.
 
Smurf said:
This is the common exageration of inflexible "command economies".
Multinational corporations do it all the time; they allocate resources to their stations in New York and Hong Kong directly from various producers and storehouses in, say, LA and Sydney. They calculate what is needed by sales records and blah blah blah - various other records. This whole bogus that no one but capitalist corporations could do that is totally unfounded.
Multinational corporations, while large, are still vastly smaller than the entire economic resource managment of any large country, let alone the world as a whole. Also corporations are not exactly democratic in their undertakings. An equitable and democratic managment plan for an entire nation would be quite a long arduous undertaking and every problem that arises along the way will require an equitable and democratic reworking of the original plan. In a capitalist society all of the various nodes in the system are free agents. They can do what ever they wish with their resources and it is not required that they wait for the entire system to decide what the best course of action is. You could create an economic planning body that parallels this where the various nodes in the system have a level of autonomy to do as they see fit when a situation arises. The issue here though is, as LYN pointed out, that any failing node in a capitalist model will sink and cease to absorb resources automatically but when these operations are sponsored by the state they will continue to aborb resources, even if mismanaging them, until the state decides to pull the plug. This could take place long after a capitalist node would have collapsed of it's own accord and politics could easily extend the life of a node that is greatly wasting resources (just as the corporatist environment does here in the US).

Alexandra said:
How exactly do you propose that monopolies be tamed? Legally? Ha! Who makes the laws? Who can afford to 'buy' the laws that suit themselves? Honestly, I just cannot understand what part of this very clear picture you cannot see?
This is a flaw in human beings not the capitalist system. Flaws in humans will still exist in other economic models. In a democratic capitalist society the consumers/voters can greatly influence these things. They do have quite a bit more power than the "elite few" but again due to flaws in humans most of them don't care enough to excersize their power meaningfully. Regardless of the system being utilized there will always be an "elite few" until you eliminate the flaws in the people themselves that allow this to happen.

Alexandra said:
This is an intriguing statement, TSA - what defines capitalism then, if not profit?
As already pointed out by LYN the vast majority of business owners don't make much more than enough to live comfortably, if even that. Almost every person who works in any capacity, whether it be a labourer or a business owner and regardless of the economic system, seeks to get something in return for the investment of their time, energy, and resources. At the very least they wish to have enough to pay rent and bills and feed themselves and their family. This, more or less, is profit. Profit is not an attribute specific to capitalism and a business can be run without ever making a profit and still be a capitalist endevour.

Be back later...
 
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TheStatutoryApe said:
At the very least they wish to have enough to pay rent and bills and feed themselves and their family. This, more or less, is profit. Profit is not an attribute specific to capitalism and a business can be run without ever making a profit and still be a capitalist endevour.
:confused: No, profit is gain after expenses. If you're only making enough to survive, you're not making a profit, are you?
 

loseyourname

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Smurf said:
:confused: No, profit is gain after expenses. If you're only making enough to survive, you're not making a profit, are you?
Technically, monetary profit is just defined as the revenue a business makes in excess of its operating expenses. A small business owner can turn a profit, but if that profit is say, $40k a year, he isn't making any more than the average Gap manager.
 

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