On the language of assumption
James Hanley in the thread from Freddie’s post writes:
My bottom line is that you and I have a right to collaborate in bargaining, but that does not entail that we have a right to have government force our employer to treat us as a single unit. I mean, we do have that legal right, but it doesn’t follow of logical necessity from the fact that we have a right to collaborate and try to act as one.
I’d like to use this line to illustrate how important it is to pay attention to the way that all these discussions are being framed. It is simply taken for granted that the employer or corporation can ‘act as one’ in any of these scenarios, but a union on the other hand is somehow a coercive unit. I don’t think there’s any logical reason why a corporation, which is comprised of people and capital and wields political influence, should have the legal rights of personhood and should be spoken of as a single unit, whereas labor organizations are not. An employee taking a position with a company is not seen as coercive in any way, despite that company’s many demands of employment, and yet if one of those terms is union membership, suddenly it becomes a coercive act.
I would ask that we begin to dig deeper into all these assumptions we hold. Perhaps inequality in and of itself is not a problem. But perhaps the reasons why we have such extraordinary rates of inequality are. Perhaps the ‘free markets’ that have led to globalization and the explosive rise of the financial industry are actually much more statist in nature than we would like to admit. And perhaps the very wealthy have gained a great deal more from state intervention into the global economy than they even realize – these same factors may help explain why middle class wages have stagnated, and why consumer goods have grown cheap on the backs of foreign labor, whereas necessities have grown more expensive and less certain.
One final note for now as I am pressed for time: I think it should be far more preferable to work out a system of redistribution on the front-end than on the back-end in this society. If middle class wages increased more at the point of employment the need for back-end redistribution vis-a-vis tax-rates would simply not be as necessary or pressing. Perhaps the threat of much higher rates of taxation on the very wealthy could help convince corporate America to revise their front-end distribution of wealth. I’m not sure. In the end, I am more and more in agreement with Kevin Carson that many of the gains for the corporate class in this country are due to artificial scarcities, subsidies, and rents they have captured with the help of the state. Globalization has been little more than a corporate-statist effort using pernicious instituions like the World Bank to plunder the labor and resources of developing nations at the expense of workers everywhere and to the benefit of the powerful.
In the comments, Carson wrote:
For me, the actually existing corporate economy is defined by artificial scarcities, artificial property rights, subsidies, protections, regulatory cartels, mandated levels of artificial overhead and other entry barriers, and the rents on artificial scarcity. Or as R. A. Wilson put it, capitalism is a system that combines elements of the free market with landlordism, usury, and patents. You get a free market by removing all the assorted artificial property rights, etc., and allowing competition to destroy all the rents resulting from them.
Frankly, the hostility of people like Naomi Klein to what they call “free markets” is understandable. If I understood the “free market” to mean what I saw it associated with by its “defenders” on CNBC and the WSJ editorial page, I’d hate it too. One of my central goals is to get the word out to people outside the echo chamber that the “free market” isn’t just a world owned by Wal-Mart, and that genuine market competition is the enemy–not the friend–of big business.
Much of modern libertarianism has fallen into the trap of thinking that privatization and globalization are the free market at work. But slashing taxes for the wealthy and helping to bust unions up, while pushing free trade agreements and railing against government is ultimately self-defeating and leads to exactly the wrong outcomes.
Perhaps this is why I find the leftwing libertarianism of Carson so much more compelling than the ‘vulgar’ libertarianism on display at so many of the libertarian institutions in this country.
In the end, I am more and more in agreement with Kevin Carson that many of the gains for the corporate class in this country are due to artificial scarcities, subsidies, and rents they have captured with the help of the state.
This seems to hit the nail on the head.
Where I knit my brow is how laws that won’t be yet another example of regulatory capture get passed. I don’t see how that is going to happen.Report
Deregulatory capture seems quite likely on the other hand. Let me put it this way: while political and economic inequality remain so vast, I don’t think a truly stateless or nightwatchmen state is possible. I just don’t see it happening. The threat of massive back-end redistribution of resources (i.e. much of progressive politics) should inspire a move toward front-end distribution instead. Let’s repeal all the anti-labor laws and completely tear down the neoliberal artifice masquerading as free trade. Until we can gather the political will to do this, we have to find other ways to ameliorate the suffering of the poor and empower the lower classes.Report
I would not rule out some kinds of back end fixes. I think that if you eliminate corporate taxes, you decrease the need for businesses to rent seek from government. At the very least, it would make it more obvious. Special tax deals, often not well known to the public seem to be the preferred form of rent seeking behavior by much of business.
To replace that revenue, a consumption tax plus a very large death tax should be sufficient. It should also help to lessen the tendency towards plutocracy we have developed.
SteveReport
“I would not rule out some kinds of back end fixes. I think that if you eliminate corporate taxes, you decrease the need for businesses to rent seek from government”
This is yet another reason why liberals don’t like libertarians.
A shorter version would be: ‘if we gave this faction what they wanted, they’ll *never* take it and push for more’.Report
In other words, I am philosophically leaning toward a leftwing libertarianism / mutualism / pro-labor “front-end” schema but I am pragmatically sympathetic to progressive, re-distributive politics because my philosophical preference seems so bloody unlikely.
Or – I am still working things out, as per usual. The current system of fake privatization, crony corporatism, etc. is no good. I’d take a public library over one outsourced to a multinational corporation any day. (just as an example)
PS If I am slightly less coherent than usual it is because I am juggling these responses with a fussy baby.Report
speaking of back end re-distribution of resources…Report
Well, there is a single company. So why wouldn’t we take it for granted that it acts as one?
And, no, if you go back and read my comments, you’ll see that I do no assume the union is a coercive unit. I explicitly said that it is legitimate to organize for the purpose of bargaining, and gave examples of how that could have effect without there being a corresponding duty on the part of the employer to treat them as a unit. But when there is a legal duty imposed on said employer, then, yes, there is coercion.
Privatization and slashing taxes for the wealthy have exactly zero logical connection to each other. Privatization and busting unions up have precious little to do with each other (privatization can be detrimental to public employee unions, but at the same time it provides cheaper services to the public, so it’s not clear where liberals should come down on this). And as to free trade, Adam Smith, David Ricardo, and Paul Krugman all disagree with E.D. Kain. Seriously, even that ferociously libertarian-hating Paul Krugman supports free trade. Does E.D. know something that Krugman doesn’t?
Where have I heard this before? Oh, yeah, it’s precisely what libertarians keep saying! I know damn well I’ve said it repeatedly. I’m pretty sure I’ve seen Jason K. saying it. And I think if you make a habit of perusing Cato policy reports or Reason magazine you’ll see it as a fairly regular theme. It’s precisely one of the reasons we do rail against government–it’s government that makes these subsidies and rents possible! There is no protective regulation for businesses except regulation created by government–should we not then criticize government for that?Report
So you have definitionally imposed a power imbalance between a company and its workers. How does this not present a problem from a free market perspective? How many of the underlying assumptions of rational market theory does such a system contradict?Report
Not only can capital and management organize, they are also considered a “person” once having done so under corporate charter. This hardly strikes me as free market at all – but it is very capitalistic.Report
But this doesn’t get to the question I was trying to ask on the other thread. People keep talking about unionizing like it’s a simple expression of freedom of association. I should be allowed to team up with whomever I want!
Agreed!
But it SEEMS like the pro-union stance is a good deal more agressive than this. That is, if I do team up with some other employees and call myself a union, then the company MUST negotiate with me.
I am not sure I get the analogy to the corporation. Yes. Ford is a corporation with a lot of rights that are societal constructs. But the fact that Ford exists as a corporation does not mean that union guys can’t go work for someone else. In fact, plenty of guys from the UAW also worked for Chevy. And Chrysler. Etc.
But in the case of a union, the idea appears to be that if I team up with some other guys as a union, I ought to be able to force the corporation to deal with me and me alone. And if another group comes in and offers the company a better deal, even if the previous people aren’t under contract any more, the company should be still FORCED by law to work with the union. Despite the fact that they are not competitive.
I am not sure of any corresponding legal structures with regard to the corporation.
Again, I might be mistaken. But it seems pretty clear to me that casting this as, “we just want freedom of association” is a bit of an understatement. What the unions want is to be declared a monopoly seller of labor, as far as I can tell. Not just the right to “form.”
This is not to say that unions aren’t the solution. It might be a less bad solution than others. Still, there’s more to it than just a couple guys looking for the right to form an association.Report
That’s an interesting thought, Sam. What if the AFL-CIO went to GM and said, “We can give you a better deal than the UAW if you hire our guys.” Should GM be allowed to go with them and replace the UAW employees with AFL-CIO employees?Report
In addition to “should”, what does current law say?Report
I think under current law, the AFL-CIO actually has to bargain with the employees, trying to persuade them to switch unions. I’m not sure if they can do that directly, or if it has to be something initiated by the union members themselves.
If an employer mucks around too much in the process of organizing a union they can run afoul of labor law, so I suspect that a company negotiating with a new union to try to have them come in and take over might cross the line of legitimate employer activity.
But they certainly can’t negotiate directly with another union to bring in its employees. I’m pretty sure of that.Report
Actually, they can, and it works both ways. A smaller union, like the Tentmakers, can go to a bigger union, like the Steelworkers, to represent them; or the bigger of the two might actively court the smaller union.
I remember an instance of this recently with the nurses in California. They were already unionized, but there were two other unions trying to get them chartered in.
Some other unions are trade-specific, and they don’t do that sort of thing.Report
Your examples seem to be union-to-union (or union-to-employee) negotiations. What I’m asking about is business-to-other-union negotiations. Could a business spurn one union for another (if they were willing to deal with the fallout of departing employees), the same way that they could with, say, an employment agency?Report
Or not the UAW. Just a guy. Say, a mexican immigrant. He comes in and says, hey, I hear you are paying your guys $28 an hour. I’ll work for $20.
Now, I can see if the company has a contract giving the union exclusivity, fine. That’s the contract. But when the contract runs out?Report
Them a new contract has to be negotiated; it might or might not include exclusivity. If the UAW insists on yes and the employer insists on no, there’s a strike.Report
There’s talking the talk, and then there’s walking the walk. When push comes to shove libertarians always manage to come to the conclusion that the Republican candidate is less evil than the Democratic one.
Put another way, let’s say I agree with the idea that the government interferes too much with the free market. How, exactly, do you plan to change that? ObamaCare actually reduces crony capitalism by giving alternatives to the linkage between health care and employment. But most libertarians hate ObamaCare. Outsourcing government functions to private contractors has been a tremendous source of cronyism. But libertarians tend to argue in favor of “privatization” (a misnomer if there ever were one).Report
Can you prove that? Libertarians mostly voted against Bush in 2004, and they were split in 2010, with a little over a quarter of them voting for Obama. I certainly dislike the number of libertarians who lean conservative, thinking low taxes and anti-socialism are the most important libertarian issues, but it’s not all libertarians, so you’re painting with far too broad a brush.
By prohibiting corporate subsidies and protective regulations. For example, the California orange cartel requires, as a matter of law, all orange growers to sell their crop to the cartel, which then carefully controls how much goes out on the market, to keep the price up. End this government regulation and the little kiddies will be getting cheaper vitamin D. Back in the ’90s I saw an estimate that the collective government subsidies for businesses cost the average American family several thousand dollars a year. Libertarians argue for ending all that.
Here’s a case where a little careful study is enlightening. Privatization is only as successful as the way it’s implemented. It certainly can lead to cronyism. But in most cases it hasn’t, because requirements for competitive bidding have been put in place and are followed. Examples: The concessions in Yellowstone National Park (lodging, restaurants, gift shops) are run by private companies that have to bid for the multi-year contract. Since serious competitive bidding has been implemented, long-time contract holders (in one case, a single family had held it for decades) have lost out to competitors who made a better bid. The campgrounds used to be operated by the Park Service–when they had budget problems, they shut down campgrounds. Finally, in ’95, they contracted those out, too. They’re much better run now. Or look at Indiana’s toll road. Amid much controversy, the governor leased it out to a private consortium for cash up front. Tolls have gone up, but reasonably, and their have been considerable improvements, both in paving and in the addition of electronic toll collecting. The state used to lose money on the toll road–spending more to maintain it than they took in in tolls–but they’ve used the money they got for it to fund other road projects. They are currently the only state that has a fully funded roads department.
So privatization does work, more often than it doesn’t. But nobody notices because successful outcomes are boring and don’t make the news–there’s no conflict, and conflict sells.Report
When push comes to shove libertarians always manage to come to the conclusion that the Republican candidate is less evil than the Democratic one.
Some of them conclude that the Libertarian candidate is less evil than either of them.
And some of them conclude that the Libertarian candidate is Bob Barr and then they go off and vote for Charles Jay.
Democrats, however, still defend stuff like Obama’s targetted assassinations or signing statements or increased troop presences with arguments like “I didn’t hear you complain when Bush was president!” despite, of course, all of the complaining when Bush was president.
But most libertarians hate ObamaCare.
Some of them see Congress’s Affordable Care Act as regulatory capture given that the bill was written by insurance companies.Report
Some of us see libertarians and conservatives do exactly nothing to correct or improve the problems with have with health care. I’d love a world where i had a choice of parties offering me choices on how to cover everybody, etc.
Who are those D’s who are defending O’s targeted assassinations who didn’t also support Bush’s?Report
I’d love a world where i had a choice of parties offering me choices on how to cover everybody
I support the Toga Party.
And the Logan’s Run health care system.
I believe that Logan’s Run would be far more cost-effective than ObamaCare, while providing service for an even greater number.Report
Some of us see libertarians and conservatives do exactly nothing to correct or improve the problems with have with health care.
Sure. And some of us have written essays explaining what the best way to take care of the most people would be and explained why they think that a bill written by insurance companies would not, in fact, necessarily be the best thing for everybody involved.
“But that’s just writing an essay!!!”, I can hear the counter-argument now.
Yes, sure. Forgive me if I see that on par with “I voted for someone who voted for a bill that was written by insurance companies that was later signed by someone else I voted for!” in the whole “improving the problems we have with health care” spectrum.Report
“Some of them see Congress’s Affordable Care Act as regulatory capture given that the bill was written by insurance companies.”
Count me among those. As a service that everybody demands rather equally (at least in a Rawlsian sense), I see libertarian principles as pointing strongly towards a single-payer system.Report
Yes, libertarians say these things. They then consistently support the status quo or policies that will entrench the corporate class. A class of libertarian that opposes big government AND corporate looting is sorely needed.
SteveReport
Check with Jason Kuznicki on this, but I believe that class of libertarian is called the Cato Institute.
I think this is a classic case of someone assuming libertarians are all X, without bothering to find out where most libertarians stand on these issues. It’s much easier to imagine the enemy than to actually learn about them.Report
Surely you jest? The Cato Institute is an opponent of corporate power?Report
I don’t think he’s jesting. If Cato issues its philippics about Big Gummint, seldom does it sing the praises of corporatism. Consider William Poole on the failures of the private sector:
want to make clear that my perspective on the source of the financial crisis is that the crisis was fundamentally caused by mistakes in the private sector –mistakes in private financial firms—and not by mistakes of the federal government. I know that is not a view, as we have heard, that is necessarily universally shared. I’ll proceed by first outlining the case for that view. Then, I’ll discuss the role of the federal and state governments in creating the crisis, a secondary role as I have already argued.
I don’t agree with much said by Cato Institute, but let’s be fair here, if only for the sake of the argument against them. When I confine myself to the facts, I must pare down the argument to its provable essentials. Cato Institute stands for the free market and the freedom of all participants in the free market. If we’re honest, we all agree such principles ought to be defended, even when we espouse other, arguably more important principles contra or supra Cato’s straightforward principles.Report
Just a quick perusal of the Cato website shows me frontpage articles on too many lawyers, advocating lower corporate taxes, cheerleading the decline of public and private sector unions, downplaying the amount of liquid assets held by US corporations during the “jobless recovery” as well as some boilerplate “stay the course” rhetoric on the pending government shut down.
They do seem to oppose the continued expansion of military spending, so that’s one thing, but not a lot of overt anti-corporate sentiment on display.
They may well be anti-corporatist in belief, but it’s certainly not a point of emphasis it would seem to me, and the practical effect of many of these libertarian principles being emphasised is overwhelmingly pro-corporate, so you’ll forgive my disbelieving noises in response to claims regarding Cato’s opposition to corporate power.Report
Oh, sure. No doubt. Corporations are the lifeblood of taxation. Nobody is well-served by government bleeding them dry. Cato has not proposed a complete elimination of taxation: if a Cato manifesto ever said such a thing, they’d lose cred in every important venue worth considering.
Corporations are sorta like players in a Dungeons and Dragons game, with everyone in the game agreeing to certain operational parameters, however bizarre to the outsider, for that character. This is called a corporate charter. I hide behind a corporation. Anyone in business ought to have one: only a moron exposes his own home and possessions to the vagaries of the economy or goobers up his own draw or investment in his corporation. A corporation can be closed, go through Chapter 11, oh it’s a perfection of capitalism and the rule of law, is a corporation. Corporate law applies and corporate taxation, too. Specialists are immediately available and best handled on retainer: think of them as the watch guards and assault troops required to let me sleep of nights. Though they bill me a ton, they’re worth every penny.
I like Cato’s thinking in very many respects. I’m a Liberal who thinks they’re out there beating down the intellectual and political opposition to taxing my corporation into extinction. Call me Hypocrite Pascal if you want: I am not my corporation.Report
I’m not saying Cato isn’t legitimate or valuable so far as it goes, but as if that’s the best example you can find of institutionalized Libertarian opposition to corporate power, it seems you’ve basically admitted the charges as leveled.Report
No doubt! I am, after all, a Liberal, who believes Regulation ought to push back against the Paradise of Free Markets. Markets are always regulated: unregulated markets are no markets at all. The scales of the lowliest cabbage vendor must meet the standards of the market. If a customer complains, the market will intervene and reweigh the produce on another set of scales.
Even Cato won’t oppose such a reweigh.
Pooh. My heart melts. I have a deep and abiding soft spot in my soul for the Forty Acre Wood, and anyone who takes on the name of the Bear of Very Little Brain who famously said when you Think of Things, you find sometimes that a Thing which seemed very Thingish inside you is quite different when it gets out into the open and has other people looking at it…
hey, it’s all good.Report
Because the theory of free markets does not, and never has, assumed perfect equality and a total lack of power imbalances. Since that assumption has never been a part of free market theory, why should it pose a problem for it?
In fact free market theory explicitly assumes there will often be such imbalances, and that those imbalances are represented in market prices. Assume I have a bottle of cold clean water. In scenario A, you have just drunk deep from nice safe well on a cool day. How much would you pay for my water? Not much. In scenario B, it’s a hot day in the desert and you’ve been stumbling for miles in search of an oasis. How much would you pay for my water then? In the first situation you are sated, so I have no market power. In the second situation you are desperate, so my market power is increased dramatically, and that is reflected in the price I am able to command.
See, free market theory assumes the existence of power differentials. That being the case, power differentials cannot be a problem for market theory.
The problem for most laborers is they don’t have much power because they don’t have skills that the employer demands. They are trying to sell water to a sated person. But sometimes employees do have power. It depends on them having the water when the employer is thirsty. I once negotiated a higher wage than initially offered for a one-year academic position because they really wanted me (crazy, I know) and they really didn’t want to have to continue their search. I also had another one-year offer in hand, so all-in-all I had power over them. It was a rare moment in my life, to be sure, and more often I’ve been on the weaker end of the negotiation.Report
You leave out power inequalities of all other shades and hues.
Copyrighting everything from pictures to configurations of musical notes and DNA can lead to vast power imbalances, all based around the principle of, “I filed my patent first.”
Again their are problems of information imbalance as well. You admitted in the last thread that there are just going to be lapses in information, i.e. there is no perfect information, or even mutual accessibility to information. Some will have more information, others will have the right information, and in the end arbitrary power imbalances will arise based on who knows what, having relatively little to do with the “efficient” allocation of capital to satiate consumer needs.
People are both rational and irrational, they act in their self interest, but are also often confused about what their self interest is and what the best means are to achieve it. And of course there is capture, externalities, and the inefficiencies of localized monopolies.
Perhaps in scenario A, I’m not thirsty but also don’t realize there is a town some miles away, and instead think I may not have another chance to buy water for quite some time, so you sell me a bottle, without telling me there is a town nearby that is selling it for half the price. OOOOPS!
From now on if you could recuse yourself from lecturing on “free markets 101,” it might benefit us all as we could do away with these arcane economic models first conceived of during the enlightenment, hundreds of years ago.Report
“See, free market theory assumes the existence of power differentials. That being the case, power differentials cannot be a problem for market theory.”
All of which is to say, because market theory itself is flawed…. “It’s not my problem!!!”
(really, libertarians are so wedded to their theories they ignore the real world problems that arise from them)Report
For pete’s sake, is there anyone here who’s studied any economics?
First, the free market theory is not a libertarian theory. It’s an economic theory. Paul Krugman, who hates libertarians, will tell you the same thing.
Second, how does a theory that simply explains the market effects of the very power differentials you all insist are real constitute a flawed theory? It’s much easier to just attack those dreaded libertarians than to actually construct a logical argument isn’t it?Report
First of all, I have in fact studied economics (with the degree to prove it!). Second, free market theory implies lack of market power and perfect information, two things which the “unitary capital but not labor” theory you seem to be espousing make basically impossible. Third, you’re conflating the positive statement that “market theory explains this situation” with the normative “and so it is good.” I think I heard somewhere that market economics only tells us about efficiency, not about distribution, and since we’re discussing distributive arguments, you’re basically arguing from first principles rather than reality. Fourth, Krugman, for example does NOT take the the step of turning the positive argument into the normative. As in he’s taken the next step and thought about “what does hewing to a pure version of this theory mean in practice?” And rather than simply shrugging his shoulders and saying “hey, it’s the market, man,” he thinks of ways to soften the hard edges of the market.
And for all your talk across several threads about lack of comity, you sure do pepper all of your posts with a lot of what might be termed dickishness.Report
Um, no, pooh, I never said it was good. I just said it is. You have no basis for assuming I was implying it was good. It’s astonishing how many times on this blog someone has jumped from my claim of “is” to the inference that I said “ought.” I may be a dick, but at least I’m not fundamentally dishonest in my presentation of other people’s views.
And you’re wrong about the theory of markets. You’re referring to perfect competition theory, not the more general theory of how unregulated markets work.Report
The problem is that you didn’t explicitly say “I THINK THIS IS BAD”. Therefore, according to some people, you obviously think that it’s good.Report
I am still working these things out in my mind, but I think Hanley’s point, as well as Sam McDonald’s point in a previous thread, holds.
A company, or an employer, is a single entity because it is run by singular management. The employees are not. Except where RTW laws apply, they can choose to be. But it requires government action to prevent the employer from refusing to recognize the union and solidify its (the union’s) existence as a singular.
The government recognizes corporations as a singular, of course. Maybe it shouldn’t. But even if it didn’t, it would still be a bunch of people in a management pyramid leading up to singular leadership. Commercial entities exist with or without government support. The only way that labor exists as a singular entity is if there is such cohesiveness that they can credibly threaten to walk out all at once (and only becomes significant if the threat is so great that employers cannot replace them).
None of this is to say that the government shouldn’t come down on the side of labor to add balance to an inherent inequity. But I think that inequity is there, to some extent, with or without the government’s explicit support (of the powerful).
To use RTW as an example, you can get rid of that (and thus get rid of the government thumbing it in favor of employers). But without active government support, the end result is employers refusing to recognize the union leadership and simply allowing everyone that finds that unacceptable to just leave. Optimistically, a union wouldn’t even have to get 50% in order to force the employer to take them seriously. Realistically, though, employers saying “we don’t care if we have to replace 3/4 of you” is enough to prevent even 40% from joining the proposed union (and probably keeps the number of people quitting to a relative minimum).Report
I think in the real world this is far more complex. How do boards of directors operate? What is the power dynamic between share-holders and management? How much of the basic premise of a corporation is rooted in the state to begin with?Report
Not all companies are corporations, in that sense. Only one company I have ever worked for has been. Maybe that’s why I don’t think of things in those terms.
It seems to me that you can get rid of the rules defining corporations and you still have a power imbalance. The modern corporation, whether it should exist or not, is an extension of the singular. Perhaps made too powerful by the sheer size. Don’t know.
Out of curiosity, would you propose a different set of rules for corporations and private companies? The cost of being publicly traded is that you have to recognize unions (among other things)? But that as long as you’re private, the government will not intervene in your labor issues?
As with the notion of doing away with corporations as a whole, I have a hard time fully comprehending what the ramifications of such a move would be.Report
E.D.,
Those questions can be studied, rather than the answers assumed.
I don’t know all of them, but I can start with this one:
The basic premise is the right to contract, and have contracts enforced. I doubt anyone here would argue that’s a bad thing.
Corporations began with businessmen commissioning ships to go around the world to trade for exotic goods. It was an expensive proposition, beyond the means of most individuals, so multiple businessmen would go in together, with their corporations essentially being for a one-time venture. Contract enforcement was vital, because everyone contributed a particular share and so of right got back a proportionate share.
Over time, some of these corporations became more permanent. Some received government charters, not always a good thing (the East India Company in India demonstrated that corporations as government is a really really bad idea).
The bigger corporations got, and the more diffuse their ownership, the more difficulty ownership had in ensuring firms were managed to their benefit. The owners still operated on a contract basis (and still do today), but could no longer directly manage the firm and hired managers to do it. But managers who weren’t watched closely could pursue their own interests over those of the owners (a classic principal-agent problem). The origin of Boards of Directors was an effort to better supervise management.
None of this is nefarious (except, perhaps, the managers who pursued their own interests over those of the owners), just an on-going evolution of practical problem solving, with each new solution creating new problems to be solved (how do you ensure the board of directors is pursuing the owners’ interests in its oversight of the managers?).
The more diffuse ownership gets, the more the power dynamic shifts in favor of management. That’s why boards of directors are created. But also, it just means that those interested in becoming stockholders need to take that into account when buying stock. That’s just another free market transaction. Most stockholders don’t care to try to oversee the managers–they just want a steady trickle of dividend checks or to see the stock price go up so they can resell. Sometimes people buy shares so they can get into the stockholder meetings and exert influence. “Good corporate citizen” folks (for lack of a better term) sometimes do this, but they usually can’t afford enough stock to have real influence. A Warren Buffet can afford enough, if he wants to. But even a guy like him usually doesn’t want to control management–instead he makes his choices of stock purchases in part by looking at whether the management is good or not, selecting those who are, then leaving them alone to do their job.
Looked at from outside, this can seem like a big forbidding and secretive edifice. Looked at in detail, it’s just a functional structure. Well, functional to differing degrees in different times and places. It’s not perfect, and as with any human enterprise, clever people find the ways in which they can exploit it to their advantage, and there’s on-going efforts to discipline them (stock options were originally an effort to tie managers’ interests more closely to owners’ interests).
If one begins with the assumption that it’s about exploitation, I’m sure it easily appears that way. If one looks at it in a more historically accurate light of problem-solving, it’s more fascinating and less evil-looking. Not necessarily less problematic, but the types of problems that appear are different.Report
Regardless of the original purposes of social institutions, those institutions always take on the character of the people that they serve, and their functions evolve to better serve that group.
Or the more functional level:
A corporation is a simply a manner of organizing a business, and deals mostly with liability and tax treatment.
Basically, a corporation removes the general partner from a limited partnership, sort of.Report
A corporation is an entity in which group A (the shareholders) provide capital to be managed by for group B (corporate management). People being people, group B will also use some of the capital for their own benefit (corporate jets, golden handshakes, and other such perks), but no one minds that much so long as they also generate significant return. Some people believe that group B should also be able to use that capital to pursue their own political interests, and even call this “freedom”. They are either dishonest or deluded.Report
Some people believe that group B should also be able to use that capital to pursue their own political interests, and even call this “freedom”.
What if some of those some people are also members of group A?
Might it not be seen as analogous to unions donating to or using their own resources to advocate for political causes? Or is that so different that only someone who is dishonest or deluded would think that they’d be related?Report
Shareholders who want to make political donations can simply do so directly, rather than coerce other shareholders into joining them.Report
The corporation that I work for has a handful of folks on the board and an employee stock purchase program. You can sign up and have 1% of your paycheck buy stock in the company at 85% of the lowest price from the last quarter or something like that. The most recent update letter I got pointed out to me that my stock holdings were in the double digits! I am well on my way to owning 100 shares of my company’s stock!
A recent meeting mentioned a guy from a few years back who was on the board. He’s generally referred to as “the hedge fund guy”. He bought a million shares and was on the board. (Being a hedge fund guy, instead of being pleased with having a golden egg every day, he wanted to eat the goose.)
From what I understand, everybody on the board is like that. Shares and shares and shares and shares. They have much more of their finger on the pulse of the company than I do, and I am there every day.
There is an argument to say that the guy(s) with 1,000,000 shares shouldn’t push around the guys who are working on having 100 when it comes to spending money on lobbyists. Sure. There are arguments for allowing the 1,000,000 share guys more of a vote than the 100 guys votes as well and not every single one of these arguments is either ignorant or misguided.Report
A corporation can be only two people, or could even be wholly owned by a holding company, ie no people.
Material participation is a different matter entirely from issuance of notes.Report
This is a good conversation. But it’s way more complex than it needs to be for the question I was trying to answer initially. So I guesss I will ask it directly:
ED: In your mind, and given the union friendly world you are envisioning… what does that look like in real terms? What I mean is, let’s say I am working on a factory floor with 99 other people. If 51 of us decide we want to be a union… what then? What powers should the 51 of us have? What powers whould the government give us? Should the government force the company to “recognize” us? And what does that specifically mean? Does it mean that the company should ONLY be able to negotiate with us? Should the union we form represent ALL of the workers? Even the other 49 who did not want to join? Should it be a legal REQUIREMENT for those 49 to join with the 51? When the company decided to expand and hire five new guys, should they HAVE to join the union? What happens if those 51 guys decide to strike? Should the company be free to hire new guys? To work with another union?
Seems to me that the union has no power whatsoever unless you are willing to have the government support these things. Which is fine. I am just saying that this is a great deal more than “free association.” It is giving the union a monopoly on the sale of labor.Report
Sam – I think removing anti-labor laws like Taft-Hartley and right-to-work laws would be enough. I don’t think the government needs to write new laws. The only intervention the government needs to take (and this may be less pertinent today) is against anti-worker violence and other actions taken by employers. Then again, the days of the Pinkertons may be past us.Report
I am doing all I can to educte myself about what laws exist and what repealing them would mean. But in the meantime, I ask again–at the risk of being a pest–what people have in mind as a preferred end-game. I am not asking about specific laws. I am going WAY back to the basics to figure out what people really want. To define terms. Specifically:
1. If I own a factory and 51 percent of people unionize, in your idela society, would the government FORCE me to negotiate with that union and not negotiate with workers that were not part of that union/
2. Once that contract is complete, should I, as the factory owner, be permitted to seek workers from outsid that union?
I think this is THE crucial question with regard to where unionism “fits” within a libertarian worldview. People keep talking about “libertarians” who are against freedom of association. I am trying to figure out why libertarians would be against freedom of association. So I am trying to find out what this all means.
Again, i think most libertarians would be fine with you and your coworkers geting together and forming a Dungeons and Dragons Club, a singles club, a Gay Workers of America Club, a Straight Workers of America Club, a Gay and Straight Workers of America for Smokers Rights Alliance, etc. The “libertarian” position would be to not give a crap.
Now… if you were to move from THAT argument and add ‘and this is how group B should be forced, by government fiat, to interact with that group…” that’s where the red flags go up.
I am just trying to see where you stand. I am not talking about which laws to repeal or which to add. I am just wondering what you think this should look like.
In my mind, the union has no power whatsoever unless you dictate how people interact with the unions. And it would then seem OBVIOUS why libertarians would object.Report
Trumwill’s right. Even if the Supreme Court had never declared corporations a person for legal purposes, they would still function as a singularity.
This is basically the lesson of Ronald Coase’s theory of the firm. Firms develop when the benefits of hierarchy outweigh the benefits of contracting. It’s not a nefarious scheme, it’s just a functional business arrangement. Curiously, it also seems to be unraveling lately, to some extent. Modern technology has made contracting more advantageous and diminished the competitive advantages of vertical integration. I only learned that recently, in a fascinating short book called The Company: A Short History of a Big Idea.
As to the common objection to treating firms as a person for legal purposes, one of the consequences of eliminating that, as I understand it, could be an end to limited liability. That means average Americans like my middle class mom, a holder of General Electric stock, could become legally liable, as an owner, for GE’s actions. If there’s a lawyer in the house, I hope they’ll correct me if I’m wrong.Report
A limited partnership requires only one general partner.
An LLC can limit the liability of that general partner even more.Report
“See, free market theory assumes the existence of power differentials.”
I think it also assumes those power differences come from market conditions, if you follow my drift.
SteveReport
I’m going to exit now. I’ve clearly worn out my welcome. I thank all those who argued with honesty.
E.D., I’m truly sorry to sound nasty, but I honestly don’t think it’s wrong to say that if you want to argue seriously about the economic situation in the U.S., that it behooves you to actually know basic economics. And I repeat that learning basic economics does not mean you will end up agreeing with me–it means you won’t make basic errors.
This is no different than if I started arguing geology, and someone more well versed than I pointed out that I don’t know a syncline from an anticline. Or if I started arguing about evolutionary theory and someone pointed out that I didn’t know the basics of the modern synthesis.
Listen closely to James K and Simon K. Both know more about economics than I, and they are much nicer than I. Ask them questions. Hesitate to make bold pronouncements if you haven’t learned the basic facts and concepts underlying them.
If I come across as a teacher talking down to you, well, that’s what I am in my day job, and I’m perpetually frustrated by students who want to tell me why the liberals are all socialists before they’ve even learned what socialism is, or who assume Islam is about terrorism without ever having studied it. The entire point of my career is to teach people to put some study in before they say what they “know” is true. Just yesterday I was reviewing outlines for papers on campaign finance laws. One student’s thesis statement was “campaign finance laws are unconstitutional,” and the first bullet point of his outline was “find an argument that supports this.” My note on his paper was, “learn the arguments, then determine your position.” No, after all these years I haven’t found a nice way to tell people that. Almost everyone takes great offense at being told they don’t know their ass from their elbow, and the more true it is, the more they seem to take offense. I’m not immune to that response myself, as I’m as human as everyone else.
But ultimately, anyone who’s serious about being a thoughtful, well-educated person takes the hit, swallows hard, and then goes out and puts the effort into learning at least the basics. However much of an ass I may be, your choice is to either take offense and refuse to learn or to actually go learn. My degree of rudeness may be a personal failing, but ultimately it’s just not relevant to the choice you face.Report
“Flounce” — “to go with impatient or impetuous, exaggerated movement”. Flounces are available here.
The problem is not that many people don’t understand you; they do. They just disagree. There are enormous value argument buried not so deeply in your claims about basic economics. Indeed, there’s a legitimate argument to be made that economics is not and should not be considered a ‘science’ so much as a subset of the study of government and politics.
Without going into great detail, here are some counters to what you’ve said:
1. There’s no such thing as a free market; all markets exist within the societal and political structures that surround them.
2. Free markets are good for allocating certain kinds of goods, but terrible at others. Potable water, for one. Societal level health care, for another.
3. The liberty to participate in a ‘free’ market for one’s employment is one value that many people hold. Many other people hold other values — like preservation of dignity and elimination of poverty.
4. Economic growth, without asking about allocation of the benefits of that growth, is the logic of the cancer cell. And it’s served our society just about as well for the last 30 years. 80+% of the society is doing no better than they were 10 or even 30 years ago in terms of their net income. Yes, food prices have dropped and goods are available now that were not even conceived of a few years ago (like my Kindle). That’s nice. Now can we talk about why it is that virtually no one except the top 1% or less of income earners are actually seeing net real wages rise?Report
This is a great point – he’s trying to pretend he’s not making value judgments by cloaking his arguments in EconSpeak. It’s not that these value judgments aren’t legitimate, but acting as if you aren’t making these judgments is basically making the conversation impossible to conduct in good faith.Report
Francis – huzzah. Very well said.
James – cheerio.Report
Again, we see that the way to “win” an internet argument is to be enough of a screaming shit-throwing ape that your opponent quits in disgust.Report
That’s not exactly the dynamic that exists in this particular case, Duck.
One of the things that makes this website a nice place is the relative absence of debris in the air for the most part.
It is a pity that the atmosphere is somewhat more turdy in recent months, however… but that’s neither here nor there. I don’t think that the dynamic you describe accurately reflects this particular matter.Report
I haven’t detected any shit-throwing. I think it’s been a thoroughly engrossing, yet poorly organized discussion thus far. But, this is a public blog, so we can’t honestly expect organization in the comment threads.
Now, to get a bit Bert Cooper: the Japanese have a wonderful way of refusing to look at things of which they disapprove. I saw a drunk American stumbling down the street singing the Star-Spangled Banner at one o’clock in the morning a few years ago, and everyone just walked past him without comment. I imagined if he were in the U.K. or France or Russia or some other “more aggressive” culture, he’d get the shit beat out of him.
In short, I think it’s a good policy to ignore purposely antagonistic comments and instead respond to those who are here for knowledge.Report
DensityDuck – you are under no obligation to continue reading or commenting here.Report
And if that was shit-throwing Density then it was not I who began flinging it. If people want to come to this site and muddy up the comments with condescending drivel – or heckle authors with comments like the ones you’ve left me – then I see no added value in their continued presence. Fortunately cooler heads than my own prevail and nobody (or very few people anyways) is banned from this site.
But I do expect that when people comment here they abide by our commenting policy and stick to the subject at hand – not fling ad hominem attacks at the writers or other commenters, not create a climate where people are shamed for their own comments, and not complain about the ‘other side’. And I’ve had just about enough of people pushing these boundaries and making this community a hell of a lot less welcoming for people with differing points of view.
You can contribute to the problem or to the solution as the old saying goes.Report
The problem is not that many people don’t understand you; they do. They just disagree.
Well, that and the lack of any persuasive argument to make them change their minds. But I’m sure he’s even now saying that those who disagree with him do so because of their own value bias.Report
The successful missionaries are the ones who try to convert the heathen.
The successful templars are the ones who best hit the heathen over the head.Report
“Without going into great detail…”
I think what Hanley’s saying here is that you need to go into great detail, because otherwise you’re just spouting platitudes and fashionably-cynical catchphrases.Report
Francis, there are some value-neutral errors in economic thinking in your post.
1) This point is true in a trivial sense, the question is how interfering in the mechanisms of a market alters the action of that market. More often than not fooling about with a market’s mechanisms impedes its function. The times where this isn’t true are called market failures and there’s a whole literature on them.
2) I see no reason why markets can’t do either of those things. There are some market failures involved in healthcare, but they are manageable and I’ve never heard of a government system that seriously attempts to address them. And potable water doesn’t have any particular market failures associated with it.
3) A fair point, but there are many ways to address other values. When it comes to things like poverty reduction transfer payments (i.e. welfare) are a much better bet than regulating market activity, you can do more for the poor without distorting the underlying operation of the market too much.
4) Again, this is a reasonable point (and I made a few comments on the “Middle Class isn’t dying” thread discussing my thoughts on wage stagnation in the US), but if income distribution is a problem then redistribute income, don’t go messing about with market mechanism unless you’re very sure of how they work.Report
James – I don’t think government regulation is necessary to a revival of the middle class. Really, quite the contrary. The current legal regime is quite hostile to organized labor – repeal anti-labor laws and you’re bound to revive it at least to some degree. Long story short, I think it’s possible to A) take serious issue with how income is distributed in this country and B) at the same time look for ways that policy has created this inequality. The trick is doing it right. So often ‘deregulation’ and ‘privatization’ are just code words for new regulations or state-protectionism of specific interests. I think one reason this happens is that libertarian thought has strayed so far away from issues of class and inequality and toward a right-wing winners vs losers mentality.Report
I agree with this, I’m a government policy analyst in my day job so I’m personally and professionally committed to the notion that how you do policy matters. And the winners-losers thing bugs me too. What I care about is getting the machine running well. If the distribution doesn’t look too flash afterward, well there’s a pretty simple solution to that.
What gets to me is when people try to make markets do things they cannot do. Markets as a system are basically value neutral, they can’t conform to your notions of fairness. So, if people are left in an unacceptable situation once the market has done its work, the thing to do is use welfare, its simpler, cleaner and less likely to cause a horrific cock-up than wading into one of the most complex systems in existence without a clear picture of what one is doing.
I don’t think we’re in fundamental disagreement here, and I think somewhere in here is a potential point of liberaltarian consensus, at least between your kind of liberal and my kind of libertarian.Report
“(T)he thing to do is use welfare, its simpler, cleaner and less likely to cause a horrific cock-up than wading into one of the most complex systems in existence without a clear picture of what one is doing.”
Yes but welfare tends to create an immobile underclass of dependents. How do we prevent that without distorting the market’s capacity as arbiter of economic information?Report
What would happen if you used a genuinely universal benefit system that paid everyone enough their situation is not unacceptable and then claimed back the whole of that in tax from the richest x percent? I know I’ve seen this idea around though I can’t remember the details. I assume there must be better arguments against than a vague claim that it would encourage laziness but I don’t know them.Report
Matty:
There’s a system I endorse call Negative Income Taxation whereby everyone pays x% of their income less $y. So let’s say everyone paid 33% of their income minus $10,000. If you earn $60,000 you pay $60,000 * 0.33 – 10,000 = $10,000 in tax. If you earn $30,000 you pay $30,000 * 0.33 – 10,000 = no tax. If you earn less than $30,000 you get money back from the government. This is less likely to produce long-term dependency because everyone has an incentive to seek work, even if it’s very part time.
Christopher Carr:
If your job only exists because the government interfered in the market to make it happen then you’re just a dependant on the governing as if you were getting a welfare check, it just doesn’t look like it. This is the basis of the argument Thatcher had with the coal miners.Report
I strongly agree with both of those points. Tax reform is crucial. How do you think your negative income tax stacks up to a consumption tax like a VAT or Robert Frank’s consumption tax? Personally, I can’t think of any downside to switching to a consumption-based tax code, and imagining the upside of an economy more focused on long term, manageable, growth based is pretty spine-tingling.Report
Thank you, I think that was the very idea I was trying to remember.
Is this system actually used anywhere?Report
I agree with this sentiment. The goal, it seems to me, ought to be achieving a situation where the lowest class is in fact earning wage income sufficient to pay their way (ideal, I know). To achieve that (IMO) requires increasing the number of available jobs (and stabilizing them). That, in turn, requires government intervention of one form or the other. Personally, i think a tax on repatriating profits, as well as other taxes to encourage domestic capital investment (like an increased tax on income derived from non-productive (in some narrow meaning of that term) investments, like currency speculation), would go along ways to reducing the allure of outsourcing, as well as encouraging domestic insourcing.
The goal of any change in policy ought to be the creation of healthier labor markets, and ought not to be simply distribution of tax revenue from the upper to the lower classes.Report
I strongly disagree that we should be using tax-dollars to offset the lower wages accepted by foreign workers. What we should be doing is converging to the middle by slow, steady activism in favor of ethical consumption, a general consumption tax, and a trade regime that is increasingly liberal for not only the upper class, but for all.
We shouldn’t be encouraging unrealistic expectations by centrally propping up labor in its current form. We should make sure first and foremost that government is not distorting the economic information that people use to make financial decisions.Report
I agree. I’ve thought for a long time that liberals and leftists could team up with libertarians in a number of important ways.Report
E.D. writes:
“I agree. I’ve thought for a long time that liberals and leftists could team up with libertarians in a number of important ways.”
Good Lord, do you really think that’s a good idea? Talk about an axis of evil. I guess libertarians can be let off the hook though, because they never know what the hell they stand for anyway. It sounds more like a good recipe for political suicide. Imagine what your “teaming” up would look like–can’t forget those Fourierists, Maoists, Oneidans, Raelians, Twin Oaks, Drum Major Institute, The Onionists, MoveOn, New Black Panther Party, and on and on and on.Report
As I am learning, the Libertarian doesn’t fit neatly into any one definition: your enumeration of Leftists has its corresponding set on the Libertarian side of the equation. I contend both sets have more in common than they realize: both have common enemies in the Corporatists / Big Gummint Types who walk through the revolving door separating Regulators and Regulated with unseemly frequency.Report
You touch on one of the persistent myths of the liberal: that they favor big gubmint as an end in itself. Well, maybe some do, but most liberals share the view that the least amount of government intervention into markets and daily life would be, all other things being equal, a good thing. It’s just that the other things are not equal.
The big divide, it seems to me, is that liberals advocate government as the counterweight to centralized private power as the best way to promote and protect freedom. Libertarians (for reasons that still escape me) disagree, and hold that private power poses less of a threat to freedom than big gubmint (despite the accumulated historical evidence contradicting this).
I don’t see how that bridge ever gets crossed. For a libertarian to concede that centralized private power is in fact the primary threat to liberty – all other things being equal! – would simply make them into a liberal.Report
There’s the whole “regulatory capture” dynamic that Libertarians put a great deal of emphasis on.
The choice, for many of them, is not one between private power being balanced by government and private power not being balanced by government, but one of private power colluding with government and one where it doesn’t.Report
Many/most “liberals” confess to being “progressives.” Progressives believe in the perfectibility of systems.
Systems, of course, are by nature antithetical to individual liberty, the artificial over the organic, designed to “correct” the human condition if not human nature itself.
This isn’t to say say systems are unnecessary; if men were angels [or even reasonable devils], we would need no governments. However, as we see here, a progressive’s work is never done.Report
Many/most “liberals” confess to being “progressives.” Progressives believe in the perfectibility of systems.
You realize that’s purely a word game. “Progressive” is mostly an attempt to find a word that, unlike “liberal”, hasn’t been poisoned by the right-wing noise machine.Report
There’s the whole “regulatory capture” dynamic that Libertarians put a great deal of emphasis on.
Yeah, this is a big deal for libertarians, and it receives, in my view, an unwarranted amount of attention. For example, libertarians complain that regulatory capture contributed to the gulf oil spill, or contributed to the lack of prosecutions or real investigations by the SEC into the financial crisis, or etc.
Here’s the thing about that: blaming these states-of-affairs on the failure of regulatory agencies presupposes that big business will in the absence of regulation act illegally or recklessly in the pursuit of its bottom line. That such behavior is constitutive of corporate decision-making.
Surely regulatory agencies could be more effective, but resolving those problems seems to me like a political issue: expose the collusion and corruption, get better CCers to oversee those agencies and departments, etc.Report
Tom,
Progressives believe in the perfectibility of systems.
I don’t know where you got this idea. But if there was ever an ideology that adheres to an unrealistic and altogether anti-empirical conception of the perfectibility of political-economic systems, it’s libertarianism.Report
Mr. Schilling, since “liberal” and “libertarian” share the same etymology, something’s got to give. Further, Burke-type conservatives occasionally attempt to claim “classical liberal” for themselves.
“Progressive,” then is an attempt at clarity, not mere “word games,” and it comports perfectly with the modern project, “the relief of man’s estate” as well as the current crisis, of “fairness,” income inequality and the like which are presented as inherently problematic.
The liberal wants to help the poor; the progressive aspires to cure poverty. Such a cure can only come about by perfecting “the system,” not by fostering greater individual liberty, for as is self-evident, life is unfair. [Hence, the irresolvable conundrum.]Report
Mr. Stillwater, I agree with your view of libertarianism as an untenable politics. However, as a sentiment, where progressivism sees regulation as good [for it is the only avenue to “fairness”], the libertarian in his better moments acknowledges it as bad but necessary, that one’s eye should always be toward keeping regulation—as with all necessary evils—to a minimum.Report
Mr. Schilling, since “liberal” and “libertarian” share the same etymology, something’s got to give.
So do “conservative” and “conservationist ” .Or “communist” and “communion”.
I enjoy talking to you when you’re being serious.Report
And even if you’re not being serious, “progress” implies movement, not an end point.Report
Tom: The liberal wants to help the poor; the progressive aspires to cure poverty.
I would like to think – out of a principle of charity, I suppose – that libertarians and conservatives would also like to help the poor and cure poverty. But maybe that’s not the case.Report
I use “progressive” nonpejoratively here and state quite clearly what I mean by it [and how it’s generally understood].
It is you, sir, who seem stuck back in sophistry, semantics, word games. Clearly “liberal” and “libertarian” are not synonymous, and “classical liberal” further complicates matters. Since they are all used in the context of the political spectrum, a useful delineation between them is necessary. Use whatever words you want to get down to the underlying concepts and get back to me if you have a response to what I wrote. Otherwise, I’d appreciate if you don’t bury my argument under semantic quibbles.Report
Mr. Stillwater, we just saw a libertarian commenter get buried under charges being unfeeling toward the poor, although what he wrote had zero zip nada doodah with that.
Still, I confess I don’t know the libertarian position on what I think is a quite precise and useful term, “pity charity.” [In the olden days it was called “Christian charity,” but we’re all post-Christian now.]
As for conservatives, the current narrative is they wanna throw granny in the street, which is of course a slander. The “classical liberal” is quite good with Edmund Burke and Adam Smith, that the poor be provided for, if only as a remnant of “Christian charity,” Christianity still surviving here and there among conservatives.Report
Tom,
Not to be too heavy handed about this, but relying on Christian charity, or public charity would be a sufficient model to ameliorate poverty if it were conjoined with actual policy proposals – something with more content than merely bootstrapping your way up the economic ladder- to correct what ought to be viewed as a fundamental and (insofar as we rely on charity) a structural problem.
I would dearly love to here the libertarian solution to poverty in the US (the third world is already being generously helped by sweatshops and free-labor camps).Report
Ecch, as a Liberal who used to be a Conservative, maybe I’m squaring the circle in saying the solution to many of these problems arise from a better definition of the problem.
Every bad law and regulation was proposed by a [Charles Barkley] turrible knucklehead. These laws begin with some jamoke sitting up in his bed, pokin’ his fat finger in the air and yelling “aha! Society needs a new law!” So he goes off to his Turrible Knucklehead party leadership with a bill, gets a few cosigners and gets it passed.
Off it goes to annoy the vast majority of the people who have to deal with that law. Finally, the law enforcement agencies quietly refuse to arrest people for violating it anymore.Report
Hey Blaise, my Main Man, how are ya? Hope, great, and thanks for the reply. And yes, I could not agree more with you more-the Libertarians and Left are far, far more ideologically connected than Libertarians and Conservatives. The Libertarians are a Quantum Party–they are on two sides of every social and political issue and it’s really just a matter of who is observing.
Hey, a GREAT piece of Bach for you–and I do mean GREAT!
http://www.youtube.com/watch?v=Xgyz0XqDEEA&playnext=1&list=PL632C438D5963561FReport
That is lovely. Thanks.Report
don’t go messing about with market mechanism unless you’re very sure of how they work.
But this is merely an argument for the status quo, independently of how it was arrived at, or what virtues/vices may inherently exist in it. As you have conceded, ecnonomists have very little understanding (beyond pure description) of how macro-economics works. Economics is also, as you have conceded, very poor at prediction (based on modeling, or etc.). So, according to the principle you’re advocating here, maintaining any economic system is justified because we don’t understand the system well enough to predict the consequences of any changes designed to improve it.
But surely current market practices, codified by regulation or law, come about through the intentions of people with the power to shape them as they see fit. They don’t simply spontaneously emerge, independently from the purposeful effort of market players as well as policy makers.Report
“80+% of the society is doing no better than they were 10 or even 30 years ago in terms of their net income.”
Income is just one metric we use to measure wealth. The problem here seems to be that you are treating money as a tangible asset, when you should be seeing money as what it can be exchanged for. Consumer goods across the board have gotten cheaper in that time, and some sort of healthcare plan is usually included now in the benefits packages that workers receive. In this sense, income is an inappropriate metric to measure overall wealth.
The reason why the income of the top 1% has risen dramatically in that time is because they own (increasingly global) stuff that has been profitable. As E.D. points out in the above post: “Globalization has been little more than a corporate-statist effort using pernicious institutions like the World Bank to plunder the labor and resources of developing nations at the expense of workers everywhere and to the benefit of the powerful.”
You and I and the rest of the middle class is excluded from that cartel, and the real question is what to do about it. Here is where libertarians and everyone else start talking past each other.Report
It’s not entirely true that we’re excluded from that cartel. We benefit from the cheap consumer goods and relative material comfort. What I’m suggesting is that the middle class is excluded from the real wealth and given bread and circuses to distract them, while the developing world is exploited heavily to the benefit of the capitalist class and, by extension, those of us at the circuses.Report
I will absolutely agree with that, but I have far more sympathy for the exploited workers in the developing world than I do for American unions.Report
Also, don’t you think this explains away the Mother Jones numbers without explaining away the underlying problem?Report
Remember the “check out these WASPs” thread?
It was a while back.
If you treat people like peers, you can quickly figure out who is and who is not treating you like one.
If you treat people like subordinates, you’ll rarely figure out who is and who is not a peer.
This is America. Indeed, this is the internet!
Acting like the superior of others requires a buttload more showing and a crapload less telling, these days. Certainly in this corner of it.Report
Inequality in and of itself is not the issue. WHY there’s inequality and how much there actually is the bigger question. That’s why I HATE when liberals simply talk about “rising inequality” in and of itself as if that AUTOMATICALLY means the middle and lower-classes are somehow poorer. Not necessarily, although in many, if not most, cases that’s true. In the 1990s, though, ALL classes had significant gains with a booming economy (including a decreasing crime rate).The fact that the rich got proportionally MORE than the middle and lower classes doesn’t necessarily mean those other 2 got nothing or were somehow worse off.
I mean, let’s face it: That’s how our system works! The wealthy control access to capital, pay structures, executive compensation, etc. The lower classes have little say on that matter, and that’s a sad fact of American capitalist life. Let me give you an example. For instance, if the rich get $100 million more in compensation, but you get $20,000 more next year compared to last year in annual pay, BOTH of you are better off. The fact that he made a lot more does not necessarily mean you are worse off. It just means he did better. Too many liberals seem to associate income disparity with “Worse outcomes for the nonrich” in general, but that doesn’t necessarily have to be the case.
And besides, if it takes widening income inequality for liberals to rally their base and stand up for workers, they’re kind of a shameful lot, no? You should ALWAYS be willing to stand up for the little guy, regardless of whether income inequality is rising or not. What if the situation was in REVERSE, where the rich made a lot less AND the average workers made less, too? You’d still have an inequality gap, but everyone would lose out, so inequality is not to blame. Other circumstances are.Report
Income inequality and the statistics used to claim it are very vague and ambiguous. The assumptions depend on who’s talking about it or bringing it up. There’s no economic, empirical law saying that inequality MUST mean something bad is happening.Report
There are much more useful measures of prosperity for the average worker than income inequality.Report
Unfortunately, the free-market utopia that libertarians of all stripes seem to assume will likely NEVER happen. There are just too many interests who want rents, and they’ll take advantage of those however they can. They won’t just accept the idea that they should just, “Leave it all to the market.” Therefore, when we talk about the market or “free market”, this is what we’re referring to. Our market is still fairly close to a free market or at least a LOT closer than, say, Cuba and Venezuela or North Korea.Report
That’s not saying much. Your economy is as free as Canada’s, and is nothing compared to Denmark, Hong Kong and singapore. And for a small bit of benchmarking, singapore is far from a laissez faire paradise. 80% of housing is public housing.Report
Comparing the current market with some fictional “free market” which likely has never been around in any large fashion in history is just wild guessing, at best. “Well, this isn’t really a free market, but if it WERE, we know that things would be much better with competition.” Well, that sounds good on the surface, but how do you KNOW for sure if your scenarios have never been tried? You’re just playing rhetorical games.Report
The issue is not about the ideal state, but what can be done at the margins. At the margins you can still free up your market to realise a number of gains to the worst off.
I put this link up in another thread, and I hope this doesnt count as spamming but here goes:
http://www.eastwestcenter.org/fileadmin/stored/pdfs/ECONwp060.pdfReport
“Second, the debt acquired to build that infrastructure is used to blackmail the local government into adopting neoliberal structural adjustment ‘reforms’ that include selling the same infrastructure, to the same politically connected international investors, for pennies on the dollar. ”
Forgive me if this question was answered because I haven’t had time to read all the comments. “Neo-liberalism” seems to have won the debate in terms of the consensus of history. It’s what “ended History” in a Hegelian sense, in all places other than the Islamic world. Markets produce the majority of means of production, distribution and exchange. But governments role is to tax, regulate and provide a safety net to people AND, apparently corporations more so than laissez faire finds acceptable. The anti-globalist Left and Right are excluded under this paradigm. And I’m admittedly more sympathetic to laissez faire. But at least the Lew Rockwell types or Cato types want to replace the current corporatist system with something that is market based. Markets are the only thing that have been proven to work, to put food on the table. We aren’t going to replace the current global system with international socialism. That died in 11/09/89.Report
Yeah, but I think market socialists and social democrats and more traditional libertarians have largely arrived at the same conclusion from two different paths: the current system allows for a dangerous concentration of economic power in the hands of an unentitled few.Report
I agree with this. On economics, I like decentralization. And I see today’s high tech capitalism that transcends global boundaries as a big decentralizing check not only on governments (public national actors) but also on the private elites.Report