Free Markets And Democracy?

Discussion in 'Economy' started by PoliticalChic, Jan 25, 2011.

  1. PoliticalChic
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    PoliticalChic Diamond Member

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    I was just reading a thread one of our colleagues posted about the resentment of a lower class American toward one of higher economic status, and thought this summary of Amy Chua's book, "World on Fire" might be pertinent....


    1. The view of the book is that in many parts of the world, free markets and democracy, rather than being synergistic, or mutually reinforcing, can be disruptive. The cause of the instability involves anger, envy, grievances and humiliation, released by the rapid democratization and a newfound power by the less successful majority.

    a. While free markets make the resented minority richer, increased democracy makes it possible for the ‘indigenous’ poor majority to ‘take back’ riches perceived to have been stolen.

    2. In Indonesia in the 1980’s and 1990’s, the ethnic Chinese minority, a mere 3% of the population, controlled over 70% of the private economy. In 1998, the introduction of democracy released the built-up hostility of the 95% ‘pribumi’ majority population, and the Chinese suffered some 5000 shops looted and burned, 2000 killed, and many rapes. The wealthy Chinese fled, taking between $40 and $100 billion, resulting in an economic crisis from which the nation has yet to recover.

    3. In Zimbabwe, the market dominant minority, of course, were the whites, who had come to Rhodesia from the 19th century and beyond. After the country's independence as Zimbabwe in 1980, what followed was political unrest and the illegal seizure of farms.

    4. In West Africa, the Lebanese are the hugely successful, based, largely on control of many businesses, and links to global capitalism. In Sierra Leone, it is the Lebanese who control the diamond industry.

    5. In Russia, the ‘Oligarchs’ are a small group of wealthy and politically powerful individuals. Seven of these oligarchs controlled 50-60% of the natural resources, and 6 of the 7 are Jewish. The fall of communism, and the rush to privitization and capitalism unleashed waves of anti-Semitism, with politicians running on platforms such as ‘take back the wealth from the greedy Jewish oligarchs.’

    6. In Bolivia, globalization and democritization has allowed leaders to appeal to Aymara and Quechua populations on an openly racist basis. “President Evo Morales, who became Bolivia's first indigenous head of state last January, is holding up those values of common ownership and consensus decision-making as a model for this impoverished country -- and angering its white minority, which accuses him of playing racial politics in his self-proclaimed indigenous revolution.”
    LatinAmerican Post - The Latin American news publication - Indigenous influence offends Bolivia's white minority

    7. In Venezuela we see a fine example of what happens when the populace doesn’t see gains in an economy that makes some very wealthy. All the more so, when they can be shown the wealthy to be different ethnically or in some identifiable way. Then, they vote in anti-free market, anti-American extremist leaders such as Hugo Chavez. “Venezuela’s light-skinned elite generally loathes Chávez, who is a pardo—a darker-skinned Venezuelan from a poor family. But his expansion of literacy and health care among the poor, funded in part by intermittent nationalization of companies and expropriation of some opponents’ property, have won him a loyal following.” The anti-American - The Week

    8. It must be noted that market dominance is not always due to entrepreneurial skills or inherent instincts. While hard work and efforts may be factors, so, also may be a) colonialism, b)apartheid, c) corruption, as well as d) favoritism and crony capitalism.

    9. At the global level, there is a similar phenomenon: Americans, who represent a mere 4% of the world population, are hated in may places as the World’s Market Dominant Minority, due to economic, social, cultural, and technological authority.

    a. The following are not noted as having market dominant minorities: not Europe, nor Arab countries, nor the East Asian Tigers, where ethnicity is not a factor.

    b. In the United States, if one considers the 10 wealthiest Americans, we do not see an identifiable ethnicity, nor a general resentment. While Bill Gates’ wealth is equal to the total of the economic wealth of the lowest 40% of Americans, yet there is no hostility or demand to confiscate his wealth. This is explained by the somewhat idiosyncratic United States tradition of upward mobility, where a disproportionate part of the population believes that their son or daughter could be the next Bill Gates.

    c. While not a national phenomenon in America, there are regional market dominant minorities, such as the Koreans in LA, in an area of poor blacks. We saw the Watts riots...

    10. One percent of the world’s 6 billion control wealth equal to the total of 57% of the rest. And one billion of the world’s population earn less than $1 per day. And almost half of the six billion on the planet earn less than $2 a day. http://books.google.com/books?id=luzfw0Ea2PAC&pg=PA115&lpg=PA115&dq=half+of+the+six+billion+on+the+planet+earn+less+than+$2+a+day.&source=bl&ots=MZvc4h_Lnx&sig=-HMpiw4JLdUvZKxKU3ZkgnhUC3w&hl=en&ei=ZuE9TfnXGtHpgAfT6Yz4CA&sa=X&oi=book_result&ct=result&resnum=2&sqi=2&ved=0CBkQ6AEwAQ#v=onepage&q&f=false

    11. The mistake we make is the belief that we in America have a system of laissez faire capitalism: no, we have a progressive method of taxation, anti-trust laws, social security, etc. yet we urge poor countries to adopt a ‘bare knuckles’ form of capitalism that we abandoned long ago. That, along with the immediate imposition of elections and universal suffrage and unrestricted majority rule without the kind of constitutionalism and experience that we had is an explosive mix.

    We forget that democritization needs an instruction manual...and time to develop.
    Globalization and democracy and free markets, yes, but always beware of the unintended consequences.
     
  2. Mr. Sauerkraut
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    Mr. Sauerkraut Active Member

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    Another great question from the political Lady.

    I need a while for a qualified answer.
     
  3. MaggieMae
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    MaggieMae Reality bits

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    Very interesting, but you have no opinion? I think it clearly points out that while other countries envy the rich, especially rich America, Americans don't as a general rule. Am I correct or did I miss something? Because I see that allegation a lot: That people at the poverty level are "jealous" of the more affluent which is why they'll always vote for Democrats, or some such similar nonsense. I don't think that's the reason why.
     
  4. PoliticalChic
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    PoliticalChic Diamond Member

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    You know, I also found it interesting, and made me reconsider the idea that democracy, as we mean it, i.e., general elections and universal surrrage, and respect for the wishes of the majority of citizens, as universally desirable.

    Based on the profs data, free markets- another of my touchstones, unleashed some undesirable results.

    But I was proud to see that it is not the case in America...even though 'envy' has come to be an acceptble trait in some circles:

    Sociologist Helmut Schoeck’s observation: “Since the end of the Second World War, however, a new ‘ethic’ has come into being, according to which the envious man is perfectly acceptable. Progressively fewer individuals and groups are ashamed of their envy, but instead make out that its existence in their temperaments axiomatically proves the existence of ‘social injustice,’ which must be eliminated for their benefit.” Helmut Schoeck, “Envy: A Theory of Social Behavior,” p. 179

    With the following result:
    “Rising egalitarianism will lower our standard of living, decrease our health, debase public discourse, lower the quality of public officials, weaken democracy, make people more suspicious of one another, and (if it be possible) worse. Worse is the constant denigration of American life- our polity, economy, and society- with no viable alternative to take its place.” Aaron Wildavsky, “The Rise of Radical Egalitarianism,” p. xxx

    So, at least in America, there is a bright spot. And, if knowledge is power, perhaps it will change our policy toward the third world.
     
  5. Mr. Peepers
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    Mr. Peepers Senior Member

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    How so? If the wealth gap gets any bigger and the middle class continues to shrink, we will BE a third world country - that is what you are neglecting to see and admit. Democracy can not survive in free market capitalism, as the proletariat will be so monetarily brutalized, and will eventually riot when they are squeezed too hard by the plutocrats controlling everything.

    Haven't you noticed that upward mobility for 99% of workers is pretty much a pipe dream in this country now? There is no more "work hard and get ahead, get stability" anymore. All workers are stressed and scared and usually doing the work of 3 people while getting no raises, no bonuses and are too scared of losing their jobs to complain. Meanwhile the cost of living goes up and up. Get a clue.
     
  6. PoliticalChic
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    PoliticalChic Diamond Member

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    You poor sad thing.

    1. So steeped are you to the benefits of our society that you will not allow yourself to see that almost all millionaires are self made, as opposed to inheriting their wealth.

    2. Outside of the deleterious effects of the this recession, whose provenance is arguably the philosophy and policies of the Democrat Party, the reason that you cannot find the "the middle class [that] continues to shrink" is because said group is constantly moving to higher economic positions.

    a." The new Obama poverty measure fails. It flunks the test of political neutrality and is based on misleading statistics that not one American in 100,000 could possibly understand, says columnist Robert J. Samuelson.
    That's because the new calculation would measure poverty on a sliding scale. Thus, if the average income of families in the United States increases so too does the poverty threshold. Talk about keeping up with the Jones. This new measure provides the perfect climate for left-leaning politicians to promote equalization of wealth through redistribution. The measure would bump poverty up 30 percent: more poverty equals more political fodder to argue for increased welfare.

    Today, 43 percent of the poor own their own homes (80 percent have air conditioning and only 6 percent say they are overcrowded), approximately 75 percent own a car, 97 percent own a television, and nearly 80 percent have a VCR or DVD player.
    This definition of poverty, as Samuelson notes, referencing the late Daniel Patrick Moynihan, is scaled up.
    On the other hand, only about 2 percent of Americans report that they often do not have enough food to eat."
    Robert J. Samuelson - Why Obama's poverty rate measure misleads

    b. In 1949, someone who worked minimum wage over the summer would have enough money to buy the following items from that year’s Sears’ catalogue: A Smith-Corona typewriter, Argus 21 35mm camera, Silvertone AM-FM table radio, and Silvertone 3-speed phonograph.
    In 2009, the same person, working the same number of hours at minimum wage, would now be able to purchase: A Dell laptop computer, HP color ink printer, scanner, copier, Canon 8 megapixel digital camera, GPS system, 32” LCD HDTV television, 8GB iPod Nano, GE microwave, Haier refrigerator/freezer, Toshiba DVD/VCR combo, RCA home theater system, Uniden cordless phone, RCA AM/FM radio, Camcorder, Sony PlayStation 2, as well as several other things.
    Mark J. Perry, “Young Americans: Luckiest Generation in History,” CARPE DIEM: Young Americans: Luckiest Generation in History


    3. While your dispeptic and jaundiced outlook will never allow you to see the true situation, one could make an argument that there was a better time for the less educated American, but this was based on the confluence of historic effects that we will not see again. Here, from "American Colossus," by H.W.Brands, :
    "An interesting historical anomaly is the period 1945 through 1965, a golden age in many ways. This was the period after the war, when any of our potential competitors were rebuilding from the devastation, making it impossible for the United States economy not to thrive. Beneficiaries included the unions and blue collar high school graduates…who were assured of high paying jobs. That is no longer true, and probably won’t be again, short of a third World War."

    4. I choose the use the "gates test" for nations. When the gates are opened, do people rush in, or rush out?

    I like the way Pegg Noonan said it: : "We are the oldest continuing democracy in the world. . . . We don't make refugees, we admit them. When the rich of the world get sick, they come here to be treated, and when their children come of age, they send them here to our universities. We have a supple political system open to reform, and a wildly diverse culture that has moments of stress but plenty of give. . . . The point is that while terrible challenges face us -- improving a sick public education system, ending the easy-money culture, rebuilding the economy -- we are building from an extraordinary, brilliant, and enduring base."

    You are a sad, whiny specimen: it must be horrid to be you.
     
  7. Mr. Peepers
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    Peggy Noonan is a partisan moron and so are you. You are so spoon-fed righty lies defending the fleecing of the true producers of wealth in this country, there is no hope for you. The middle class is NOT rising, they are sinking into poverty.

    Narrow the U.S. Income Gap to Stave Off Another Financial Crisis - BusinessWeek

    Hard work is not what got the majority of new millionaires and billionaires to where they are. Many of them gambled with our retirement savings. Guess who won that crap shoot?
     
  8. PoliticalChic
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    PoliticalChic Diamond Member

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    Peeps, I can see that explaining the realilty of the situation to you was as useful as putting an elevator in an out house.

    But I do appreciate you putting me in any category with Ms. Noonan.
     
  9. Toro
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    There is a correlation between freer economies and democracies, albeit a weak one. Milton Friedman argued that democracy made free markets more likely and vice versa.
     
  10. MaggieMae
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    I remain extremely optimistic myself, and Peggy Noonan says it perfectly. I think I agree with her more than any other conservative journalist because we're closer in age and actually lived through some of the most controversial and trying times and managed to survive it all in spite of negative predictions. Americans are the most resilient of all people.
     

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