Tuesday, June 12, 2012

Free Market Myths

The problem with businesses and corporations is the rent-seeking relationships they've set up with governments at all levels:
(Adam) Smith knew the difference between being sympathetic to the competitive economy—which he called the “system of natural liberty”—and being sympathetic to owners of capital (who might well have acquired it by less-than-kosher means, that is, through political privilege). He knew something about business lobbies.(Sheldon Richman)
Very true, and it's a distinction we have lost. We should not be "pro business," we should be pro-free market, and let the capitalists take care of themselves.

Adam Smith warned us about rent-seeking capitalists who attach themselves to the government:
"The proposal of any new law or regulation of commerce which comes from this order [that is, 'those who live by profit'], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."  (Quoted by Sheldon Richman
Liberal Michael Kazin has written an article I agree with. First, he calls out Republicans for being hypocrites on the issue keeping business and government separate...
So it is ironic, if not hypocritical, that they constantly peddle a notion about the separation of business and government that has no basis in American history.
Conservatives now object to “crony capitalism,” but for much of U.S. history, businessmen have been hungry for it. Since the early nineteenth century, the government has helped fuel economic growth and corporate profit-making, and savvy businessmen and, recently, businesswomen have lobbied hard to keep those benefits coming. (Why Crony Capitalism is as American as Apple Pie)
All true, but is he really arguing that if we see that a policy we supported is wrong we should stick to it to avoid being hypocritical?
We all want progress, but if you're on the wrong road, progress means doing an about-turn and walking back to the right road; in that case, the man who turns back soonest is the most progressive.  -- C.S. Lewis
It’s a good critique that is historically accurate, but then the author ruins it by making a common progressive mistake of conflating genuine government duties of infrastructure-building, with true crony capitalism

But I give him credit for discussing the good and the bad, because life is full of trade-offs. The big bad trusts that TR’s progressive government busted got big and bad through government protection. Big business welcomed government food safety laws knowing people would see the USDA stamp as a stamp of approval, while the onerous regulations would run the small guys out of business and act as a barrier to new entrants.

See also: 
 The Myth of the Free-Market American Health Care System
True Capitalists are Pro-Market, not Pro-Business

24 comments:

Always On Watch said...

THIS, from the first link of the two links at the end of the body of the post:

...In Switzerland, there are no government-run insurance plans, no "public options." Instead, the Swiss get subsidies, much like "premium support" proposals for Medicare reform or the PPACA exchanges, from which Swiss citizens buy health care from private insurers. The subsidies are scaled up or down based on income: poorer people get large subsidies; middle-income earners get small subsidies; upper-income earners get nothing.

The OECD puts Switzerland high on the league tables in terms of government health spending, but that is due to a statistical anomaly. Switzerland has an individual mandate; the OECD defines state health expenditures to include insurance premiums that the government requires individuals to pay, even if that spending is on private insurance. That is a debatable approach from the OECD, because the spending goes directly to the insurers, without the government as a redistributor. If you adjust for this anomaly, Swiss state health spending is $1,281 per person (which accounts for the taxpayer-financed premium support subsidies). I've listed both figures in the chart.

The premium support system allows the Swiss to shop for their own insurance plans, which gives them the opportunity to shop for value--something that almost no Americans do. As a result, about half of the Swiss have consumer-driven health plans, combining high-deductible insurance with health savings accounts for routine expenditures....


It seems to me that something like that would work in America.

Rational Nation USA said...

Sounds quite Randian Silver. Good job.

AOW - I have thought for three years the Swiss plan makes sense. Certainly better than the Obama Plan.

Ducky's here said...

I ask again, AOW. Why would you expect competition in America when insurers have an antitrust exemption.

We saw the results in malpractice tort reform. A couple companies have the malpractice market, can not be regulated as a monopoly and Americans expected tort reform to reduce premiums. Insane.

Silverfiddle brings up a very cogent point. However we have very little chance of reform. Romney is going to support regulation?

Then we have the opposition, Obummer, who has never met a bankster he doesn't like.

So round and round we go and the middle class is going to get one big plank up the butt if they don't wise up. But keep your eye on the homosexual agenda, birth control and the Muslim threat.
Never understanding that they are being used to distract you from the fact that the President (whomever it is) is palming the ace in his little three card monte game.

You lose.

Anonymous said...

Humans are a waste product of capitalism.
Some say to bad, some say we (as a country) should help (social programs) them.
The WW II generation made their decision on that question. This generation has made a different decision.
I'll go along with the WW II generation. They proved their correctness by saving the world from tyrants and then building the greatest society ever known to man.

Z said...

AOW's info re the Swiss is very interesting.

I don't see how being pro-free market can not be 'pro business'...at least it IS for small business.

By the way, I'm hearing a lot lately from liberal talking heads about "Wall Street Republicans..." it's the new mantra but it's not true. My cousin has worked in very high-level headhunting on Wall Street for 25 years and she says most of the bigwigs are liberal Democrats. I suppose the mantra's to misinform for votes, but how do they get away with this?

Always On Watch said...

Duck,
Why would you expect competition in America when insurers have an antitrust exemption.

Actually, I never said that I did expect such competition. The Dems keep yapping about it, though -- or they DID yap about it for a long time.

The problems with healthcare for the aging Boomers and the cost of health-insurance premiums for other are combining to be bigger than the elephant in the room.

FreeThinke said...

Canardo and all the other Commie-Collectivist-Anti-Capitalist types always fail to realize -- or, perhaps I should say, "admit?" -- that government is the largest, meanest, least efficient, most dishonest, least rewarding, most humorless, least understanding MONOPOLY one could ever hope to find.

Once control is turned over to GOVERNMENT the Bully Boys take over completely and there will never be any joy, mirth, peace, prosperity or equity in "Mudville," ever again.

The God of the Old Testament may seem arbitrary, harsh and vituperative, [Oh yes, Virginia, indeed He does!] but it would be far better to follow Him than any government empowered to play Him in human affairs.

God is Principle among other things. God is the BEDROCK of all Existence. Governments are made up of fallible, sinful, jealous, greedy, capricious, short-sighted people -- most of them no better qualified to manage your business than you are.

An almighty State would be the very last entity to which I would wish to entrust my fate.

~ FreeThinke

Ducky's here said...

Well AOW, it's either competition or the insurers set the rates and keep you paying through the nose one way or another.

You have an industry skimming of an very large percentage of the health dollar and doing nothing but lobbying for the status quo.

No progress till that changes. As we have seen, either party will bend to the insurers.
There's a problem all right and for profit insurers are going to milk you for every dime until you are on the curb with a begging bowl. Enjoy.

"Humans are a waste product of capitalism."
Our very own Freethinker tipped you off. Don't be a sucker.

Ducky's here said...

Humans are a waste product of capitalism.

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

I'm only assuming that Freethinker was the pathetic demented fuck who posted that, if not I apologize.

But later we get he's screed against the state and state inefficiency.
I can only imagine that he's dumb enough to buy the story of the great private entrepreneurs who built this magnificent system that treats humans as byproducts.

It's a system that recognizes Bill Gates, who did nothing, but not others as diverse as Alan Turing or Dan Bricklin who laid the foundations but didn't collect profit.

You probably admire the Facebook asshole for stealing billions in the IPO as an entrepreneur but forget Tim Berners-Lee who laid the foundation for the web while in public employ.

You probably hail Craing Venter who looked to copyright the human genome after using government money from the NIH and forget that Watson and Crick never tried to cash in on their discovery.

This has all been well documented even if you ignore it. The state has been critical to many of the important discoveries of our time and the private sector has been good at generating profit.

Your O.T. God like your vulgar Calvinism is right there hand in hand with capitalism making humans a by product. And you don't have the fucking balls to rebel. Pathetic.

Anonymous said...

Humans are a waste product of any (Communism, Socialism, Capitalism, etc., etc.) system.
What separates, is how a system treats those who are left out,

TAO said...

RN,
Took me a while to convince you the Swiss had it right. I guess you can absorb new ideas.

Silverfiddle said...

Ducky: Every ill you mention... A government river runs through it...

Rational Nation USA said...

Hm, a hard one to argue against. Call it rational self interest.

Rational Nation USA said...

TAO, good to see you recognize that. Actually though it was a no brainer after I analyzed it.

By the way, rational self interest is not in opposition to doing the proper thing. I learned that from a boss who understood this.

Okay, I'll say it, yoi were a worthy opponent.

conservativesonfire said...

Excellent! What you are describing as crony capitalism is really merchantilism. We essentially faught a revolution to get away from merchantilism; but the powerful elites immediately began moving us back to the system from which we came. The free market system is about pure capitalism with unbouded competition. Merchantilism or cronyism is about business using government to restrict copmpetition.

Rational Nation USA said...

Excellent summary!

Will "take no prisoners" Hart said...

The Obama administration has been exceedingly "pro-business". The stimulus and health-care bills alone have been a veritable bonanza for corporate America. Not that either side will necessarily admit to this relationship, mind you.

Finntann said...

So, Ducky, you acknowledge we don't have free market medical insurance (anti-trust exemptions, interstate commerce restrictions, etc.), but then use that to argue that free market medical insurance won't work and needs to be handed over to the government that implemented the free market restrictions in the first place.

Go figger!

A more apt description of what is being termed mercantilism here is neo-corporatism since the focus is on internal control of the market rather than the external control of trade.

Cheers!

Ducky's here said...

That is correct. The medical insurance racket is rigged but the suckers are still being scammed into believing the system can work. Fringe right idiots will start on the tort reform meme but all they are doing is pimping for the insurers.

Okay, got that? it's pretty simple.

No industrialized nation has a purely private system (we certainly don't) and others limit the amount of the medical dollar that goes to insurer profits. In German for instance insurers are non profit.

The goal is to get the insurance company overhead out of the system. Single payer is one way to do it. Until we get a progressive movement in the country, government will still be nothing but the corporate enforcement arm.

Ducky's here said...

... and surely you realize that the overhead for the government administered program is much less than private insurers. Government despite what the Libertarians say in this case is more efficient.

Silverfiddle said...

Single payer is one way to do it.

So you can't read? Did you read about Switzerland?

and surely you realize that the overhead for the government administered program is much less than private insurers

Using true accounting, probably not. The only advantage government has is that they have no competition.

Tired, lefty memes, no thought, just regurgitated propaganda...

FreeThinke said...

Canardo and all the other Commie-Collectivist-Anti-Capitalist types always fail to realize -- or, perhaps I should say, "admit?" -- that government is the largest, meanest, least efficient, most dishonest, least rewarding, most humorless, least understanding, most ruthless MONOPOLY one could ever hope to find.

Once control is turned over to GOVERNMENT the Bully Boys take over completely and there will never be any joy, mirth, peace, prosperity or equity in "Mudville," ever again. ...

An almighty State would be the very last entity to which I would wish to entrust my fate.


~ FreeThinke

Finntann said...

@Until we get a progressive movement in the country, government will still be nothing but the corporate enforcement arm.

Silly Wabbit.... the progressive movement is part of the corporate enforcement arm.

The only way to weaken the arm is to cut the muscle.

FreeThinke said...

"The only way to weaken the arm is to cut the muscle."

I'd go much farther than that. I say CUT OFF THE ARM -- and feed it to the jackals.


~ FT