Tuesday, February 9, 2010

Free Markets : Advocated Mostly By People Who Do Not Know What They Are

This is an example of someone who actually understands the way market systems work.

Without the government enforcing contracts and the rule of law, you don't have free market systems. You have anarchy.

I have always felt that 99% of the people I have ever known who have spoken adamantly for/against free markets are all alike in that none of them has any idea whatsoever about free market systems. Kind of like globowarmthinkery. Everybody is an expert on climate with globowarmthinkery and all of them know nothing whatsoever about climate, physics or the environment. What little they think they know is all wrong, leaving them worse off than if they knew nothing at all.


Anonymous said...

Texas Arcane, you need to look at this statement.

"If jobs offshoring is a benefit to America, as the hired pimps of the transnational corporations claim, why is more than one-fifth of the U.S. work force unemployed? Why does the U.S. have the largest trade deficits in world history? Why is the U.S. dollar losing value over time to other tradable currencies?"

The man does not realize that unemployment in the United States is caused by the massive issuing of bonds by the US government in order to keep up its spending, which siphons away money from capital markets that could have created jobs in the private sector.

He also does not realize that Britain in its pre-industrial days had the highest net imports in Europe, and this is what helped build its domestic economy by providing most goods from abroad cheaply, and leaving whatever was saved by British citizens on spending on cheaper goods to be allocated towards the few domestic industries they had (like wool and timber), and create jobs there. All nations today with high standards of living, such as Australia, Italy, and Spain are importer nations with "trade deficits".

Lastly, I think it is pretty obvious that a falling currency allows exporters to make their goods more competitive abroad and earn more. The last time when the American dollar was appreciating was during the recession period of 2000.

Anyway, rule of law and contracts provide a good environment for free market to exist, but they don't create free market. A free market is still nothing but an absence of restraints. Somalia in anarchy has electrified its villages, built low cost private hospitals and private schools, and made a highly well connected air travel system, which is so economical that people simply travel within their country by air rather than by road. Not that I make an argument for anarchy, but if the argument for controlling people's actions is based on the idea that they are fallible, then one must denounce even government's enforcement of law for the exact same reason; consider, Texas Arcane, that even the once limited governments like US and UK didn't end up keeping their own hands tied up forever.

A small and honest government is good, but very difficult to have. A rare moment of utopia, that.

Anonymous said...

Market Watch: ITZ Edition

Anonymous said...

Hartmann is a globalwartmthinker, but he is right about the economy and globalization.

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