Free enterprise vs. government control

[Zeb_Carter]

America's new culture war: Free enterprise vs. government control
By Arthur C. Brooks
Sunday, May 23, 2010
America faces a new culture war.

This is not the culture war of the 1990s. It is not a fight over guns, gays or abortion. Those old battles have been eclipsed by a new struggle between two competing visions of the country's future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise -- limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution. These visions are not reconcilable. We must choose.

 

[JAMESBJOHNSON]

My crystal ball reveals a 3rd scenario. Oligarchy.

Government, elites, and major corporations will conspire to control all industry and commerce such as occurred in Britain during the 1700s and 1800s.

 

[The_Fool]

My crystal ball reveals a 3rd scenario. Oligarchy.

Government, elites, and major corporations will conspire to control all industry and commerce such as occurred in Britain during the 1700s and 1800s.

Potentially. You have political structures drawn along national boundaries, but economic structures that are not. Globalization is the new imperialism. Politics is all about the power, control and reaping the rewards. Commercialism is all about the profits. Commercial imperialism concentrates on maximizing profits and reducing costs. Input of commercial entities into politics is going to center around those two key elements with the inclusion of creating new markets.

 

[trysail]

I didn't write this. I know who did. He wouldn't want to be credited here.

...Over the past month, most of the attention has been focused on Europe whether it be the particular problems of Greece, the decline in the euro or the systemic problems of many debt heavy nations along Europe’s southern tier. On a higher level, what is happening in Europe is that the huge social agenda which Europe as a whole has undertaken since World War II is now becoming economically exposed. It’s wonderful to have a framework that allows relatively early retirement on big fat pensions, fully paid medical care and other comforts but that structure disintegrates as debts pile up and demographics interfere. As with most developed nations, the countries of Europe are growing more slowly and aging. Simply said, the path they have chosen is unsustainable and each nation in its own way is now being forced to redefine its future. Debts have to be repaid, government spending has to be cut, Europeans are going to have to work longer and harder, and many are going to have to contribute in some way to the social services they are used to receiving for free.

If this all sounds familiar to our own argument here about entitlement spending, you are right. Indeed, under President Obama, our own country is making a shift to the left as Europe begins to make a shift out of necessity back to the right. The difference is that while Mr. Obama is trying to make a hard left turn, he isn’t anywhere near where places like France, Italy or the U.K. are today. I am not talking about Greece which is an outlier, a country with a notorious history of economic mismanagement and one destined to face further troubles no matter which direction the rest of Europe heads. Rather, my central point in economic terms is that Europe is going to have to undergo an extended period of realigning economic needs to economic resources. It, in effect, is being forced by the markets to ration its long cherished benefits. Each nation can decide for itself the proper mix of taxes, spending, services and life style. But, except for Germany, most are out of whack.

We are too but we have a bit more time. Nonetheless, our problems won’t fade. In fact, if we continue on the path we are headed, adding more services without the revenue sources to pay for them, our day of reckoning is going to come sooner rather than later. But we will have to adjust. Social Security is going to have to be balanced and we are going to either have to raise more taxes to fund Medicare and Medicaid or we are going to have to make sharp cuts in what gets covered. It is that simple. Markets, not Washington, will ultimately dictate that decision...

 

[xssve]

You do know this is just more right wing sophistry, nobody expresses more outright hostility to free enterprise than republicans, they're only concerned with protecting their own profits - they consider themselves to be the epitome of free enterprise, every body else is just competition trying to get a slice of their pie and needs to be crushed, crippled, imprisoned or medicated if not outright killed.

Not surprisingly, it's why they're always so hot about politics, the ideal situation is when the corporation and the government are the same thing.

Nah, it's the same old thing, management vs. labor, it's never going to change.

"Whenever the legislature attempts to regulate the differences between masters and their workmen, its counsellors are always the masters. When the regulation, therefore, is in favour of the workmen, it is always just and equitable; but it is sometimes otherwise when in favour of the masters."

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations. Book 1, Chapter 10.

Big shock, Brooks is another AEI agitprop flack, he's paid very well to whip the dumb brutes into a frenzy, not much mystery which side his bread is buttered on.

Basically, it's a non-issue: the banks put themselves in a position where they had to be bailed out - much of it the result of republican policy - had they been engaged in sound business practices, none of this would have occurred - but their like the secretary with her own filing system: you can't fire her or you'll never find anything.

Universal health care is simply an attempt to correct the usual gentrification that markets inevitably tend towards - if anything it preserves free enterprise in what has already become a de facto corporate socialist institution - hospitals get all sorts of public assistance on the theory that they provide a social good, and then turn around and whine that they're engaged in "free enterprise".

Same thing for every fucking corporation in the country pretty much, including the oil and gas industry - without the government, how are they going to defray their costs to increase their profit margins?

For them, the government is handy for cleaning up their messes.

 

[LaRocha]

We live in a centralized, planned economy. We live in a communitarian welfare state. Get over it.

 

[Liar]

This is not the culture war of the 1990s. It is not a fight over guns, gays or abortion. Those old battles have been eclipsed by a new struggle between two competing visions of the country's future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise -- limited government, a reliance on entrepreneurship and rewards determined by market forces. In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution. These visions are not reconcilable. We must choose.

This is a false dichotomy. It's the Great Libertarian Fallacy, that everything left to it's own devices will yield optimal result.

Left un-controlled, a market MAY flourish and breed innovation and excellence. Or it may consolidate and stagnate.

Left un-controlled, companies MAY compete freely and fairly with higher quality and/or lower price, or they may segment the markets and price gouge their selective market niche.

Left un-controlled, a market MAY grow so diverse that it encompasses all people, or it may create exclusion and externalitites that are not acceptable in a humane society.

Good "government control" is a system where the government provides positive incentive for the market outcome that pie-in-the-sky libertarians believe will happen magically, and negative incentive to prevent the other scenario (that gloom-and-doom commuinists believe is inevitable).

As much as is needed. But not more. How much is too much and how much is just enough? That's what the discussion is really about. Not a childishly simplified either-or.

 

[xssve]

We live in a centralized, planned economy. We live in a communitarian welfare state. Get over it.

The question is, who is doing the planning, the public state or the Corporate state.

 

[oggbashan]

In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution.

There is no such thing as a European-style statism. European governments differ. All are mixed economies.

The new UK government is going to contract the previous Labour government's expanded bureaucracy and reduce the role of government.

President Obama's administration is further to the right than most European administrations and will remain so.

The problem with the quote in the first post is that it suggests that there are only two mutually-exclusive alternatives. The reality of politics is that there are multiple gradations from one unacceptable extreme to the other. No government that moved too far away from the middle ground would survive the next election.

The differences between the two parties in the US are fewer than their mutual differences from most European administrations. Neither is likely to accept any European-style solution because their own supporters, and the undecided voters who really decide who is in power, wouldn't follow them that far.

Og

 

[JamesSD]

In the other, America will move toward European-style statism grounded in expanding bureaucracies, a managed economy and large-scale income redistribution. These visions are not reconcilable. We must choose.

I don't buy for a minute there isn't a middle ground between the dysfunction that is Greece and total Laissez-faire capitalism, where industry is free to squash the worker and the environment at will.

The fiscal crisis of 2007 taught us that the free market can often make some very, very bad mistakes. It also taught us that regulators can fall asleep at the switch, especially when they are declawed. Obviously you can regulate business out of existence. But business, especially large multinational corporations, often act primarily with their short term profits as their number one concern. Things that are good for everyone in the long term (including our economy) take a back seat to short term profit taking. There's nothing wrong with corporations having this desire. But there's also nothing wrong with having a state system to provide as a check and balance, to ensure a level playing field between the good companies and those who would cheat the system.

 

[trysail]

Otherwise bright people have not yet figured out that it wasn't regulation ( either its existence or a lack thereof ) or government that caused the excesses of 2005-2007 ( and 1997-1999 ).

As is always the case, a bunch of people and bankers went nuts and did really, really stupid things. People and bankers do this periodically. In 1997-1999, it was the "Internet." In 2004-2007, it was residential real estate.

In 1637, it was tulip bulbs.
In 1719, it was shares of companies based in French Louisiana.
In 1873, it was American railroad stocks.


In 2019(?), it will be something else.


Laws, regulators, governments and regulation never have and never will stop these periodic episodes of mass delusion.

 

[Katyusha]

I don't buy for a minute there isn't a middle ground between the dysfunction that is Greece and total Laissez-faire capitalism, where industry is free to squash the worker and the environment at will.

Don't forget the consumer.

The fiscal crisis of 2007 taught us that the free market can often make some very, very bad mistakes. It also taught us that regulators can fall asleep at the switch, especially when they are declawed. Obviously you can regulate business out of existence. But business, especially large multinational corporations, often act primarily with their short term profits as their number one concern. Things that are good for everyone in the long term (including our economy) take a back seat to short term profit taking. There's nothing wrong with corporations having this desire. But there's also nothing wrong with having a state system to provide as a check and balance, to ensure a level playing field between the good companies and those who would cheat the system.

Very well put.

 

[JAMESBJOHNSON]

The system will work great if we hang all the thieves we catch. But we dont hang them. We bail out their companies and hire them to run our regulatory agencies.

 

[LaRocha]

The system will work great if we hang all the thieves we catch. But we dont hang them. We bail out their companies and hire them to run our regulatory agencies.

The homeowners who walked away from the homes they couldn't afford got off scot-free too. They lived in homes they weren't paying a mortgage on for months until they defaulted and the bank took possession. In 19th Century Dickensian England they would've been thrown in prison with the folks at Countrywide Financial.

 

[xssve]

Otherwise bright people have not yet figured out that it wasn't regulation ( either its existence or a lack thereof ) or government that caused the excesses of 2005-2007 ( and 1997-1999 ).

As is always the case, a bunch of people and bankers went nuts and did really, really stupid things. People and bankers do this periodically. In 1997-1999, it was the "Internet." In 2004-2007, it was residential real estate.

In 1637, it was tulip bulbs.
In 1719, it was shares of companies based in French Louisiana.
In 1873, it was American railroad stocks.


In 2019(?), it will be something else.


Laws, regulators, governments and regulation never have and never will stop these periodic episodes of mass delusion.

Don't forget the great Beanie Baby Bubble of the 90's.

The real deception the right wing think tanks are pulling is to convince everyone that government is to blame for everything, even while they turn it into a corporate slush fund - "moral hazard" has become SOP since the S&L scam, the only question now is from which quarter the next one will emerge.

Ironically for you however, I believe a lot of it has to do with how value is assigned - I stumbled on this diatribe about Adam Smith's obsession with the concept of "long run normal price" rather than supply and demand - market price - but in fact, I believe Smith was anticipating the current situation in which supply is infinitely flexible, and there are few barriers to production - in this case, the commodification effect will work to drive market prices down to cost-of-production plus whatever marginal utility can be leveraged to make a profit, and that's your "long run natural price".

In essence, I think Smith is arguing that over the long term, price will tend to to reflect long term natural price, regardless of whatever supply and demand fluctuations might be affecting it's current market price - it's harder to justify supply and demand as a value determinant when supply is infinitely flexible.

Another way of looking at it is that the long run natural price reflects potential value, i.e., the greatest value a given thing can possibly attain, and this is essentially the principle behind investment, i.e., if current market value is less than what you think the hypothetical long run natural value might be, buy.

It is more or less a pure abstraction, everyone is going to calculate it differently, and there are some things that are probably impossible to quantify - a work of art for example - but from an investment standpoint, either way you look at it, it means that if the current market price is above the hypothetical long run natural price, then you're in a bubble market.

This whole fiasco was in many ways a direct result of a complete inability to calculate what a long run natural price on housing might be, in favor of an obsession with supply and demand, current market price, but the the very nature of a bubble is that speculators generate artificial demand at levels above any natural level of demand and that situation cannot last, as production increases conspire to knock the bottom out of the current market price.

This seems particularly stupid when you're talking about a long term investment like housing - about the only way you can explain it is that they knew full well Uncle Bernanke and uncle Paulson would be there to clean up the mess.

I should add that lean production, JIT manufacturing to reduce inventories, etc., were designed precisely to address the value problem - and it also addressees the inventory problem, i.e., that there is little incentive to innovate when any innovation on your part threatens to render your current inventory obsolete - that why the government successfully forced innovation in automobiles with CAFE standards after Detroit spent 20 years making the same car.

Cell phones by contrast, are an excellent example of lean production in action: the manufacturers fully anticipate obsolescence, and introduce the new model as soon as their current inventory is cleared out - throw in cradle to cradle technology and a lot of the problem is solved, you have a relatively stable price point based on cost-of-production plus whatever value added marginal utility you can leverage.

 

[LaRocha]

Laws, regulators, governments and regulation never have and never will stop these periodic episodes of mass delusion.

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No shit. The point of regulators and a centrally planned economy is to mitigate cataclysmic events. ATMs continued to work through the fall of 08, and the recession ended this year because of the successes of our federal government's macro-economic governance.

 

[LaRocha]

The question is, who is doing the planning, the public state or the Corporate state.

Haha. It's too easy saying the public state is the corporate state.

There is a conflict between the federal government and the multi-national corporation, no matter how many congressman are in the pocket of corporatism. "We'll take our business, send these jobs elsewhere, my dear."

And there's always the fear that congress will become irrelevant in the backs of these guys minds when they're letting the Banking/Finance Lobby write Fin Reg legislation. Congress, to me, is already irrelevant. Their decisions don't affect me, legislation is a sideshow to the decisions made in corporate world.

Corporatism and Statism are just two sides to one coin.

 

[Pure]

zeb quoting brooks

Those old battles have been eclipsed by a new struggle between two competing visions of the country's future. In one, America will continue to be an exceptional nation organized around the principles of free enterprise -- limited government, a reliance on entrepreneurship and rewards determined by market forces.

the market decrees that there are jobs for illegals. it requires a large and continuing supply of them.

the limited gov't should do what it does now--little-- or maybe nothing. "market forces" will decide.

when there's no profit to be made with illegal labor, it will not be available. until then. in the name of the market, we must welcome it.

 

[xssve]

That is a very salient point: Smith anticipated Nationalism as a predictable force and encouraged it:

....by preferring the support of domestic to that of foreign industry, he intends only his own security, and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

Book 4, Chapter 2

I don't think he fully anticipated the rise of the multinational, essentially a corporate city state that exists outside the nationalist model, effectively rendering it a quaint relic of a bygone era.

If we have a globalist economy, we need global regulations or you'll jsut get a race to the bottom to find the most readily exploitable labor markets in the eternal quest to reduce variable costs.

Once again, you're back to management vs. labor, and the real "culture war" here is, who is it the state is mandated to protect?

More of a class war, really. Nothing ever really changes.

 

[xssve]

Haha. It's too easy saying the public state is the corporate state.

There is a conflict between the federal government and the multi-national corporation, no matter how many congressman are in the pocket of corporatism. "We'll take our business, send these jobs elsewhere, my dear."

And there's always the fear that congress will become irrelevant in the backs of these guys minds when they're letting the Banking/Finance Lobby write Fin Reg legislation. Congress, to me, is already irrelevant. Their decisions don't affect me, legislation is a sideshow to the decisions made in corporate world.

Corporatism and Statism are just two sides to one coin.

Pretty much my point - the whole fear of "government control" is a strawman, another way for multinationals to advance their quest to become a law unto themselves.

Who do you think pays Arthur Brooks?

 

[Huckleman2000]

Another article:

The Lesson of Rand Paul: Libertarianism is Juvenile

[...]Ironically, the best way into this point comes from another brilliant libertarian, legal scholar Richard Epstein. Says Epstein, "To be against Title II in 1964 would be to be brain-dead to the underlying realities of how this world works."

There’s the key -- "the underlying realities of how the world works." Because never, and I mean never, has there been capitalist enterprise that wasn't ultimately underwritten by the state. This is true at an obvious level that even most libertarians would concede (though maybe not some of the Austrian economists whom Rand Paul adores): for the system to work, you need some kind of bare bones apparatus for enforcing contracts and protecting property. But it's also true in a more profound, historical sense. To summarize very briefly a long and complicated process, we got capitalism in the first place through a long process of flirtation between governments on the one hand, and bankers and merchants on the other, culminating in the Industrial Revolution. What libertarians revere as an eternal, holy truth is in fact, in the grand scheme of human history, quite young. And if they'd just stop worshiping for a minute, they'd notice the parents hovering in the background.

Libertarians like Paul are walking around with the idea that the world could just snap back to a naturally-occurring benign order if the government stopped interfering. As Paul implied, good people wouldn't shop at the racist stores, so there wouldn't be any.

This is the belief system of people who have been the unwitting recipients of massive government backing for their entire lives. To borrow a phrase, they were born on third base, and think they hit a triple. [...]

And that's why the best rap on libertarians isn't that they're racist, or selfish. (Though some of them are those things, and their beliefs encourage both bad behaviors, even if accidentally.) It's that they're thoroughly out of touch with reality. It's a worldview that prospers only so long as nobody tries it, and is too unreflective and self-absorbed to realize this. In other words, it's bratty. And that's bad enough.

 

[WRJames]

The article itself is pure propaganda. Seveny percent of Americans believe in "enterprise". What is that supposed to mean? How many Americans would recognize free enterprise if they saw it?

And, wouldn't a bit of a safety net -- things like universal education for your children, health care, assurance that you are not going to starve to death if your free enterprise attempts don't work out -- wouldn't that make our pursuit of free enterprise, whatever that is, less risky? We have a choice, after all, whether economic activity is going to be a life or death struggle. Do we really need to ratchet things up that high?

As for the evil thrity percent -- read people who would dare to raise the marginal income tax rate back up to reasonable levels -- if the same poll had asked people how they felt about the concentration of wealth in this country -- if those people were even AWARE of how totally they have been screwed over the last thirty years -- you probably would get a very different answer. Why are we suffering from such massive shortfalls in tax revenue, such a huge burden of government debt? Hint -- it's not spending. It's because the conservative Republicans lowered taxes for their core constituency -- the ultra rich -- to such an extent. All this talk about Obama being a radical leftist is just a cover for an attempt to keep these taxes low. That is what the real debate is about. The rest is just a smoke screen.

 

[LaRocha]

Pretty much my point - the whole fear of "government control" is a strawman, another way for multinationals to advance their quest to become a law unto themselves.

Who do you think pays Arthur Brooks?

American Enterprise Institute. But that's just cuz I looked it up. Most people know what American Enterprise Institute is.

But say I didn't look up old Artie B on wikipedia. The article was printed by the Washington Post, so I'd assume he was some sort of intellectual. Definitely not someone in any position of power. Someone who might make a living going on 24 hour Newz orgs and arguing with the 'liberals' 'socialists' 'marxists'...

 

[xssve]

American Enterprise Institute. But that's just cuz I looked it up. Most people know what American Enterprise Institute is.

But say I didn't look up old Artie B on wikipedia. The article was printed by the Washington Post, so I'd assume he was some sort of intellectual. Definitely not someone in any position of power. Someone who might make a living going on 24 hour Newz orgs and arguing with the 'liberals' 'socialists' 'marxists'...

Click on the link in my first post if you want to know where AEI get's their money.

Here's more.

 

[xssve]

Our leaders in Washington, aided by the unprecedented economic crisis of recent years and the panic it induced, have seized the moment to introduce breathtaking expansions of state power in huge swaths of the economy, from the health-care takeover to the financial regulatory bill that the Senate approved Thursday. If these forces continue to prevail, America will cease to be a free enterprise nation.

Lol, Brooks is attacking the financial reform bill for AEI on behalf of their corporate sponsors - in fact the bill essentially ends the bailout culture, and makes it practically impossible for the government to bail out any more firms - it's the legislative solution to the whole "too big to fail" culture of entitlement - the banks are on their own from here on out.

Seems like the thought of actually being forced to engage in free enterprise without a safety net scares the beejebus out of Brooks, and he knows dim bulbs like our Zeb here lap up every word and never check their facts.

Seems like an aversion to due diligence is trait conservatives have in common with investment bankers.