How does government help the economy?

[dblack]

Despite all the rhetoric, I don't see how government can ever do anything to help the economy except by simply getting out of the way.

Government does have a few legitimate roles with respect to the economy...

a.) Contract enforcement and the protection of property rights
b.) Preventing fraud
c.) Compensating for market failures (externalities)

Beyond that Government is just an inhibitor of real economic growth and a parasite on the productive sectors of the economy.

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective. What some people see as a market failure might be, from another perspective, the market working exactly as it should (pruning failed businesses and unviable strategies).

 

[Contumacious]

During political campaigns, a huge focus is the economy. But how does government help the economy?

All economy, no matter how complex, breaks down to simply trades between individuals. Employees trade their labor for pay, consumers trade their pay for products and services, etc. What can government do to assist in this process?

The only thing it can ever do is exert force on someone. This is its only power. Typically this comes in the form of interfering with the voluntary exchange between individuals. The mandatory minimum wage, for example, says that two people willing to make an exchange of labor for pay is not permitted if it does not meet the minimum standard. Many people see this as an increase in pay for low-level employees, but in reality, if I can only afford to pay you 8 dollars an hour, and the government uses coercion to make me pay you 10, I'm just not going to hire you. You were perfectly willing, even happy, to get 8, and I was willing to pay it because I could use the help, but by their interference you get 0 dollars, and I get no help. How could it ever be beneficial to step between consenting adults who are both willing to engage in a particular transaction?

Even when the government subsidizes a particular industry, they are not bringing new money into the economy, they are simply taking it from somewhere else. Government produces nothing, so its action can never cause a net gain. All it can do is take money from some people and give it to others. And it behooves them to do this in a way that creates a greater number of voters to look upon them favorably, not necessarily in a way that would help the economy overall. Like all governmental action outside the scope of basic protection of human rights, it's a matter of hurting one person to help someone else. And their solution to all problems always benefits them more than anyone else, either by generating greater revenue, gaining greater control, or assuring the maintenance of their own position.

Despite all the rhetoric, I don't see how government can ever do anything to help the economy except by simply getting out of the way.

By limiting or avoiding theft, ie, taxation and regulations and staying the fuck out of the way.


.

 

[NightFox]

Despite all the rhetoric, I don't see how government can ever do anything to help the economy except by simply getting out of the way.

Government does have a few legitimate roles with respect to the economy...

a.) Contract enforcement and the protection of property rights
b.) Preventing fraud
c.) Compensating for market failures (externalities)

Beyond that Government is just an inhibitor of real economic growth and a parasite on the productive sectors of the economy.

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective.

Sorry but No, market failures aka EXTERNALITIES are not subjective, the quantification of externalized cost (negative externalities) or benefit (positive externalities) may (in some cases) involve subjective evaluation but as any competent economist will tell you, imposing costs on individuals not involved in a transaction or bestowing benefits upon individuals not involved in a transaction is a market failure (because the market equilibrium price doesn't reflect the actual cost (aka social cost)) and government has a legitimate role to play in compensating for them.

 

[dblack]

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective.

Sorry but No, market failures aka EXTERNALITIES are not subjective, the quantification of externalized cost (negative externalities) or benefit (positive externalities) may....

Yeah. I figured you'd wonk out on that. That's why I stipulated "as a political evaluation", because that's what matters when it comes to policy. The fact you're steering around is that, politically, "market failure" is used to justify pretty much any manipulation the government wants to engage in. It's an excuse for social engineers. No sale.

 

[alang1216]

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective. What some people see as a market failure might be, from another perspective, the market working exactly as it should (pruning failed businesses and unviable strategies).

I'm a believer in capitalism but I'm also concerned with innocent bystanders, like the workers in a factory that closes and for them and their families the gov't has a role to play to ensure their lives are not ruined forever.

 

[NightFox]

Despite all the rhetoric, I don't see how government can ever do anything to help the economy except by simply getting out of the way.

Government does have a few legitimate roles with respect to the economy...

a.) Contract enforcement and the protection of property rights
b.) Preventing fraud
c.) Compensating for market failures (externalities)

Beyond that Government is just an inhibitor of real economic growth and a parasite on the productive sectors of the economy.

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective.

Sorry but No, market failures aka EXTERNALITIES are not subjective ....

Yeah. I figured you'd wonk out on that. That's why I stipulated "as a political evaluation", because that's what matters when it comes to policy. The fact you're steering around is that "market failure" is used to justify pretty much any manipulation the government wants to engage in. It's wedge for social engineers. No sale.

Er... umm.. you obviously don't understand externalities and the fact that they're neither a myth nor a "wedge", they are a reality in any market economy of scale. If you have a better way of compensating for them than government intervention, I'm all ears but at this point nobody has figured out how to do it in a credible way that results in market equilibrium that reflects actual social costs/benefits.

Here's a basic example for you to chew on:
Company A produces widgets at it's factory in SomeTown USA, in the course of production company A dumps a whole bunch of pollution into the air. This air pollution imposes costs on the local populace, like for example health problems & private property degradation... if we calculate a cost of say $0.10 per unit for these costs and add them to the market equilibrium price of say $1.00 then our demand curve is shifted to the left of where it is without those costs added in, how do you compensate for the extra dime that is being imposed upon individuals that don't buy Company A widgets? Do you just say fuck 'em and force those people to subsidize the actual buyers of the widgets and Company A's bottom line? Or do you acknowledge that the market has failed to account for those costs in the equilibrium price and act to impose controls that correct the supply-demand curve accordingly?

My advice, take a basic economics course and you'll understand what I'm talking about.

 

[dudmuck]

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective.

Sorry but No, market failures aka EXTERNALITIES are not subjective, the quantification of externalized cost (negative externalities) or benefit (positive externalities) may....

Yeah. I figured you'd wonk out on that. That's why I stipulated "as a political evaluation", because that's what matters when it comes to policy. The fact you're steering around is that, politically, "market failure" is used to justify pretty much any manipulation the government wants to engage in. It's an excuse for social engineers. No sale.

The harsh truth is: capitalism is inherently self destructive.
Proven by how FDR saved capitalism.

For example, In the case of GM bailout 10 years ago. This was caused by the combination of global financial downturn (= credit crunch), combined with rising fuel costs during the auto industry's focus on producing gas-guzzlers.

We're doomed to another cycle of deregulation followed by market crashes. The cycle will end when the dollar loses is global value.

 

[dblack]

My advice, take a basic economics course and you'll understand what I'm talking about.

Stow the pomposity. I understand the technical definition of "market failure". But, like many technical definitions, it is badly mutilated by the time it gets to voters, and ends up being used as justification for broad government encroachment on our economic liberty.

 

[bendog]

I realize your question is not really a question, but an expression of your own selective libertarian philosophy. But if you were really curious as you portray yourself, you might want to peruse: A Brief History of Neoliberalism by David Harvey. It's brief and leaves out a lot, but it is brief. LOL

https://www.amazon.com/Brief-Histor...+brief+history+of+neoliberalism&tag=ff0d01-20

I garnered what I could from the Amazon page, but I'm not going to buy this book because I'm not interested in exploring any particular economic prescription. My question is intended to evaluate the assumption that its possible for government to help the economy overall, considering the fact that the only powers at government's command is the power to steal and the power to punish. This thread is primarily about denying a claim, not offering a new one to take its place.

I'm interested in denying your claim. The premise of Reganonmics and Thatcherism is the neoliberal central tenant that the only moral justification for government is promoting free economic markets.

 

[bendog]

Despite all the rhetoric, I don't see how government can ever do anything to help the economy except by simply getting out of the way.

Government does have a few legitimate roles with respect to the economy...

a.) Contract enforcement and the protection of property rights
b.) Preventing fraud
c.) Compensating for market failures (externalities)

Beyond that Government is just an inhibitor of real economic growth and a parasite on the productive sectors of the economy.

c) is a wedge that lets nearly anything through. "Market failure", at least as a political evaluation, is entirely subjective. What some people see as a market failure might be, from another perspective, the market working exactly as it should (pruning failed businesses and unviable strategies).

Well, yes, but one can be fatally true to an absolute ideal. Perhaps Obama should not have bailed out the banking houses, but most of us with retirement accounts and pensions were tied up in those. So what to do? It's not an easy question. And more basically, we have various forms of social insurance to prevent starvation during recessions, and starvation during recessions was not unusual before 1932

 

[dblack]

Perhaps Obama should not have bailed out the banking houses, but most of us with retirement accounts and pensions were tied up in those. So what to do? It's not an easy question. And more basically, we have various forms of social insurance to prevent starvation during recessions, and starvation during recessions was not unusual before 1932

The bankster bailout is a great example. Obama - government in general - could have alleviated the difficulties of people who lost retirement funds without bailing out the banks who caused the problem in the first place. Just like we could help people who can't afford health car without funneling money through the insurance industry. But Congress will always tilt toward alternatives that enhance their power and further collude with business.

 

[bendog]

Perhaps Obama should not have bailed out the banking houses, but most of us with retirement accounts and pensions were tied up in those. So what to do? It's not an easy question. And more basically, we have various forms of social insurance to prevent starvation during recessions, and starvation during recessions was not unusual before 1932

The bankster bailout is a great example. Obama - government in general - could have alleviated the difficulties of people who lost retirement funds without bailing out the banks who caused the problem in the first place. Just like we could help people who can't afford health car without funneling money through the insurance industry. But Congress will always tilt toward alternatives that enhance their power and further collude with business.

I don't necessarily disagree. FDR had an easier time of it in a way because he literally could wipe out all bank shareholders by federalizing a bank, then resell it to new owners ... for a profit to the treasury. We did sort of the same thing in the late 1980s under BushI in the savings and loan debacle.

I'm just not sure the facts were similar enough in 2008 to do the same. The Chinese owned a lot of mortgage backed securities. Those of us with retirements had at least 20% in banking.

But the notion that the gummit created that by making it easier for poor people to buy markets is absurd, because that was literally a drop in the bucket. But the gummit did affect the real estate market. It was the safest place to put money, and the gummit did not regulate lenders basically making unsecured loans, and then selling them as if they were loans really secured by collateral.

Markets will be markets with or without gummit ... unless govt owns everything. But in unfettered markets people will literally starve.

 

[Brian Blackwell]

I realize your question is not really a question, but an expression of your own selective libertarian philosophy. But if you were really curious as you portray yourself, you might want to peruse: A Brief History of Neoliberalism by David Harvey. It's brief and leaves out a lot, but it is brief. LOL

https://www.amazon.com/Brief-Histor...+brief+history+of+neoliberalism&tag=ff0d01-20

I garnered what I could from the Amazon page, but I'm not going to buy this book because I'm not interested in exploring any particular economic prescription. My question is intended to evaluate the assumption that its possible for government to help the economy overall, considering the fact that the only powers at government's command is the power to steal and the power to punish. This thread is primarily about denying a claim, not offering a new one to take its place.

I'm interested in denying your claim. The premise of Reganonmics and Thatcherism is the neoliberal central tenant that the only moral justification for government is promoting free economic markets.

I'm not sure what claim you're talking about. And how can government "promote free economic markets"? Free economic markets are a naturally-occurring phenomenon amongst human beings. The only thing people (including government) can do is participate in them, or interfere with them.

 

[dblack]

But in unfettered markets people will literally starve.

Whether or not people starve has nothing to do with whether or not markets are 'fettered'.

 

[bendog]

But in unfettered markets people will literally starve.

Whether or not people starve has nothing to do with whether or not markets are 'fettered'.

You assume free markets have greater social value that human life?

 

[dblack]

But in unfettered markets people will literally starve.

Whether or not people starve has nothing to do with whether or not markets are 'fettered'.

You assume free markets have greater social value that human life?

No.

 

[bendog]

I realize your question is not really a question, but an expression of your own selective libertarian philosophy. But if you were really curious as you portray yourself, you might want to peruse: A Brief History of Neoliberalism by David Harvey. It's brief and leaves out a lot, but it is brief. LOL

https://www.amazon.com/Brief-Histor...+brief+history+of+neoliberalism&tag=ff0d01-20

I garnered what I could from the Amazon page, but I'm not going to buy this book because I'm not interested in exploring any particular economic prescription. My question is intended to evaluate the assumption that its possible for government to help the economy overall, considering the fact that the only powers at government's command is the power to steal and the power to punish. This thread is primarily about denying a claim, not offering a new one to take its place.

I'm interested in denying your claim. The premise of Reganonmics and Thatcherism is the neoliberal central tenant that the only moral justification for government is promoting free economic markets.

I'm not sure what claim you're talking about. And how can government "promote free economic markets"? Free economic markets are a naturally-occurring phenomenon amongst human beings. The only thing people (including government) can do is participate in them, or interfere with them.

It is a fallacy that markets self regulate to reach an equilibrium of lowest cost for greatest benefit. First, no market ever exists when all participants have full and equal information. That was the subject of the 2001 noble prize. And it's been proven time and again.
Joseph E. Stiglitz: The Concise Encyclopedia of Economics | Library of Economics and Liberty

That was the crux of the credit melt down. Buyers of mortgages didn't have the same information and the lenders (or creators of mortgages) nor did the buyers of mortgages have the same information as the people packaging mortgages and selling mortgage backed securities. Buyers assumed the mortgages were based on risk allocation that simply wasn't there.

But govt regulation is no panacea. The notion of markets self-regulating isn't about just letting markets go. Someone is going to gain more knowledge about a market and game their profits based on asymmetrical information. Most basically, think of a horse race. All betters want the "inside dope." In theory, a market can appoint a self-regulating body in which all investments must provide the same information to all investors.

 

[bendog]

But in unfettered markets people will literally starve.

Whether or not people starve has nothing to do with whether or not markets are 'fettered'.

You assume free markets have greater social value that human life?

No.

Good! (-:

 

[Brian Blackwell]

I realize your question is not really a question, but an expression of your own selective libertarian philosophy. But if you were really curious as you portray yourself, you might want to peruse: A Brief History of Neoliberalism by David Harvey. It's brief and leaves out a lot, but it is brief. LOL

https://www.amazon.com/Brief-Histor...+brief+history+of+neoliberalism&tag=ff0d01-20

I garnered what I could from the Amazon page, but I'm not going to buy this book because I'm not interested in exploring any particular economic prescription. My question is intended to evaluate the assumption that its possible for government to help the economy overall, considering the fact that the only powers at government's command is the power to steal and the power to punish. This thread is primarily about denying a claim, not offering a new one to take its place.

I'm interested in denying your claim. The premise of Reganonmics and Thatcherism is the neoliberal central tenant that the only moral justification for government is promoting free economic markets.

I'm not sure what claim you're talking about. And how can government "promote free economic markets"? Free economic markets are a naturally-occurring phenomenon amongst human beings. The only thing people (including government) can do is participate in them, or interfere with them.

It is a fallacy that markets self regulate to reach an equilibrium of lowest cost for greatest benefit. First, no market ever exists when all participants have full and equal information. That was the subject of the 2001 noble prize. And it's been proven time and again.
Joseph E. Stiglitz: The Concise Encyclopedia of Economics | Library of Economics and Liberty

That was the crux of the credit melt down. Buyers of mortgages didn't have the same information and the lenders (or creators of mortgages) nor did the buyers of mortgages have the same information as the people packaging mortgages and selling mortgage backed securities. Buyers assumed the mortgages were based on risk allocation that simply wasn't there.

But govt regulation is no panacea. The notion of markets self-regulating isn't about just letting markets go. Someone is going to gain more knowledge about a market and game their profits based on asymmetrical information. Most basically, think of a horse race. All betters want the "inside dope." In theory, a market can appoint a self-regulating body in which all investments must provide the same information to all investors.

Ok, so governments aren’t promoting free economic markets, they’re intefering in them, which means they’re not free. If you want to say that interference can be good, then we would need to do some risk assessment and allocation of our own. I don’t believe that government intervention is worth the risk considering its inherently immoral nature (its invalid claim to authority, and all that results from that). In any case, a self-regulating body could be a solution that would provide that balance in a free society (i.e. a society without government).

 

[eagle1462010]

Apocalypse soon - Ponzi Schemes, the investment craze and the End of Days