Economic power

[dblack]

I'm hoping to launch a discussion of our contrasting understandings of economic power, particularly in relation to state power. A large bulk of current political disagreement seems to center around economic power and its place in society. Should it be under control of individual property owners, or should the state play an active role in making society's economic decisions?

 

[Bombur]

I'm hoping to launch a discussion of our contrasting understandings of economic power, particularly in relation to state power. A large bulk of current political disagreement seems to center around economic power and its place in society. Should it be under control of individual property owners, or should the state play an active role in making society's economic decisions?

If left to their own devices how have corporations treated the environment in the past? How have they treated workers? How have they treated their customers? How have they treated their investors?

Even with regulations and the rule of law corporations have been caught colluding with one another to manipulate markets. They have been caught lying to customers about their product. They have been caught selling dangerous goods to children. They have been caught polluting the environment.

We also live in a world where it is not only our government we have to worry about. Other nations can and will make decisions that will impact our markets. Any nation taking part in global commerce has to make decisions not only with theoretical economies in mind but how their economies are being impacted by other nations making decisions.

As a nation we can also recognize that there are certain things a nation can invest in that will see economic benefits. For example our massive investments in infrastructure and education have both been critical to our economic prosperity.

Lastly, not all decisions are about economics. Some are simply moral. The health care debate is both an economic debate as well as one about our moral obligation to one another. Some people may not agree about the morality of health care but there is a clear majority of people that don't want to see poor people go without healthcare.

There is also a debate about how much the US should try and foster economic growth. This is probably one of the most difficult issues we face in the age of globalization.

 

[DGS49]

One of the many Constants in life is human greed.

A wise government takes that constant and exploits it to benefit the greatest number of people. Hong Kong, for example, is a tiny country with essentially no exploitable natural resources. But it has very few restrictions on economic activity, minimal regulations, low income tax rates, and it actually celebrates economic success (referred to by some as "economic inequality").

A stupid government characterizes "greed" as an evil and tries to confiscate the products of successful greed, then distribute them among the population, thus minimizing "economic inequality." Cuba is a counter-example to Hong Kong. It is a tiny country with tremendous natural and human resources. It has embarked on a 60+ year crusade to eliminate "inequality" by confiscating wealth and assets and distributing them "equally" among the population, thus bringing about a "workers' paradise."

And it is an economic shit-hole, kept alive only by the generosity of other similarly-stupid but not YET bankrupt countries.

It is ironic that the "stupid" philosophy is very attractive to the masses, who can be induced easily to ponder how wretched their own lives are in comparison to the wealthiest people, and to imagine how much better life could be if only they could get their "fair share" of the wealth of the most successful people.

Does any of this seem relevant to the current political climate in the U.S.?

 

[Bombur]

One of the many Constants in life is human greed.

A wise government takes that constant and exploits it to benefit the greatest number of people. Hong Kong, for example, is a tiny country with essentially no exploitable natural resources. But it has very few restrictions on economic activity, minimal regulations, low income tax rates, and it actually celebrates economic success (referred to by some as "economic inequality").

A stupid government characterizes "greed" as an evil and tries to confiscate the products of successful greed, then distribute them among the population, thus minimizing "economic inequality." Cuba is a counter-example to Hong Kong. It is a tiny country with tremendous natural and human resources. It has embarked on a 60+ year crusade to eliminate "inequality" by confiscating wealth and assets and distributing them "equally" among the population, thus bringing about a "workers' paradise."

And it is an economic shit-hole, kept alive only by the generosity of other similarly-stupid but not YET bankrupt countries.

It is ironic that the "stupid" philosophy is very attractive to the masses, who can be induced easily to ponder how wretched their own lives are in comparison to the wealthiest people, and to imagine how much better life could be if only they could get their "fair share" of the wealth of the most successful people.

Does any of this seem relevant to the current political climate in the U.S.?

Hong Kong is an interesting topic and probably worth an entire thread.

Hong Kong may not have natural resources but it has a good location for international trade. It also benefited greatly from the stability the British occupation created relative to the rest of the region which was experience significant problems in the wake of WW2. The government also used monetary manipulation to ensure their currency was stable relative to the USD. So before we even start talking about laissez faire it is important to understand that Hong Kong has location and stability going for it.

Hong Kong then grew through a combination of industrialization, trade, and as a center for finance. They had significant competitive advantages in the region to excel in all of those areas in large part due to their combination of location, stability, and laissez faire practices.

Hong Kong did experience income inequality but that inequality compared favorably to the alternatives in the region so there was still a large amount of demand to move into the region. The region was also develop industry that served a far greater region then just Hong Kong. The consumers and producers that Hong Kong relied on didn't just exist in Hong Kong. This means that one of the major draw backs of income inequality wouldn't be felt as much. ie slow growth in demand for what Hong Kong produces.

There is no doubt that Hong Kong benefited greatly from their laissez faire policies as well as their market manipulations. It is far less known whether or not the approach Hong Kong took can be applied to significantly different scenarios.

 

[dblack]

I'm hoping to launch a discussion of our contrasting understandings of economic power, particularly in relation to state power. A large bulk of current political disagreement seems to center around economic power and its place in society. Should it be under control of individual property owners, or should the state play an active role in making society's economic decisions?

If left to their own devices how have corporations treated the environment in the past? How have they treated workers? How have they treated their customers? How have they treated their investors?

Even with regulations and the rule of law corporations have been caught colluding with one another to manipulate markets. They have been caught lying to customers about their product. They have been caught selling dangerous goods to children. They have been caught polluting the environment.

I'm familiar sigh this perspective but I don't understand it. Economic power is, essentially, control over property. It doesn't entail the "right" to lie, cheat or steal.

As a nation we can also recognize that there are certain things a nation can invest in that will see economic benefits. For example our massive investments in infrastructure and education have both been critical to our economic prosperity.

This gets more to the point. How much should government decide how we, as a society, invest our labor and resources? And how much of those decisions should be delegated to individuals?

I think economic power and state power should be kept separate. I think it's at least as important as segregating state power from religious power. And for many of the same reasons.

Lastly, not all decisions are about economics. Some are simply moral.
... ...
There is also a debate about how much the US should try and foster economic growth. This is probably one of the most difficult issues we face in the age of globalization.

This is an excellent point that, if you'll forgive me, I'd like to take slightly of the context you mentioned. We hear a lot of people saying that government should be run like a business, that we should even elect proven business leaders to run it. I couldn't disagree more. Government is not about running society for maximum profit. It's about protecting our rights and maintaining just rules for social interaction. We should never indulge the desire to use state power to maximize economic output.

 

[Bombur]

I'm hoping to launch a discussion of our contrasting understandings of economic power, particularly in relation to state power. A large bulk of current political disagreement seems to center around economic power and its place in society. Should it be under control of individual property owners, or should the state play an active role in making society's economic decisions?

If left to their own devices how have corporations treated the environment in the past? How have they treated workers? How have they treated their customers? How have they treated their investors?

Even with regulations and the rule of law corporations have been caught colluding with one another to manipulate markets. They have been caught lying to customers about their product. They have been caught selling dangerous goods to children. They have been caught polluting the environment.

I'm familiar sigh this perspective but I don't understand it. Economic power is, essentially, control over property. It doesn't entail the "right" to lie, cheat or steal.

As a nation we can also recognize that there are certain things a nation can invest in that will see economic benefits. For example our massive investments in infrastructure and education have both been critical to our economic prosperity.

This gets more to the point. How much should government decide how we, as a society, invest our labor and resources? And how much of those decisions should be delegated to individuals?

I think economic power and state power should be kept separate. I think it's at least as important as segregating state power from religious power. And for many of the same reasons.

Lastly, not all decisions are about economics. Some are simply moral.
... ...
There is also a debate about how much the US should try and foster economic growth. This is probably one of the most difficult issues we face in the age of globalization.

This is an excellent point that, if you'll forgive me, I'd like to take slightly of the context you mentioned. We hear a lot of people saying that government should be run like a business, that we should even elect proven business leaders to run it. I couldn't disagree more. Government is not about running society for maximum profit. It's about protecting our rights and maintaining just rules for social interaction. We should never indulge the desire to use state power to maximize economic output.

Economic power doesn't give you the right to lie cheat and steal but it increases the chances you have of getting away with it. It also costs money and laws to stop them and clearly define what is lying, cheating, and stealing. This is a big role of government and a role that is often argued over with regards to how far the government can and should go.

I am not sure what your answer was with regards to education.

I am not sure what your position on moral choices were either.

As for maximizing economic output, I agree for the most part. I think government really doesn't want to be in this business at all but it is also hard to stay out of it many times. For example, when the NFL threatens to leave a city if the city doesn't build a stadium. This type of leverage can be seen with other types of businesses that try and manipulate the government to cut a better deal. States will compete for factories, nations will compete for them as well. Japan's investments into their steel industry for example.

I am against all of this type of behavior but I can see why it is hard for any state to decide to become the martyr for the cause.

 

[evince]

an entirely free market turns into something else very quickly



Capitalism is needed for there to be true freedom.

BUT


It has to be WELL fettered or it kills its self

 

[g5000]

Every economic system has its strengths and weakness. Some are stronger than others. Churchill, paraphrasing someone lost to history, "Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…"

One expression of economic power is currency. I believe it is a crucial function of the state to provide a common currency. The US had thousands of currencies at one point, and it was total chaos.

It is also incumbent upon the state to maintain the stability of the currency. We can argue for a hundred pages over how well or poorly the Federal Reserve has done so, but in the end I believe the Fed does a far better job than 535 demagogues with their hand on the printing press would.

The perfect is the enemy of the good.

Another expression of economic power is innovation. The state can have tremendous influence on innovation, both good and bad, with most government intervention causing a suppression of innovation. Innovation flourishes when it is allowed to go wherever the entrepreneurial spirit leads.

That isn't to say that government funding of research and development in the sciences is a bad thing. I don't think it is. But anything government funded will invariably become politicized, and so even R&D funding should have a minimum of government funding.

And then there is regulation. Unchecked economic activity invariably leads to abuses: Child labor, toxins in our drinking water and the air we breathe, horrific workplace accidents and deaths, financial fraud, snake oil, and an infinite variety of hooliganism.

Regulation is a necessary evil, but it, too, frequently overreaches and actually becomes an instrument of the entities it is trying to control. When a business becomes large enough, it can influence government to write prohibitively expensive regulations to prevent new players from breaking into the industry, thus keeping the necessary fresh blood flowing through our economic system's veins. These kind of regulations aimed at killing competition do nothing to improve safety or quality of life.

Another way the legislative field is tilted unnaturally is by paying politicians to put carve outs in the tax code for favored special interests. This has been abused to the point of $1.2 trillion of annual tax expenditures lost from our revenues every year, resulting in higher than necessary tax rates and a massive federal debt.

 

[evince]

the death knell for capitalism is no perameters


Human history is replete with examples.

Capitalism MUST be well fettered or it kills its self

 

[dblack]

Economic power doesn't give you the right to lie cheat and steal but it increases the chances you have of getting away with it. It also costs money and laws to stop them and clearly define what is lying, cheating, and stealing. This is a big role of government and a role that is often argued over with regards to how far the government can and should go.

I certainly can't disagree with any of that.

I suppose the implied question is whether government should act to limit economic power irrespective of whether it's used for malice. I'd say no. The fact that some people are more likely to "get away" with something doesn't make them guilty.

I am not sure what your answer was with regards to education.

Education is tricky. A nation can't really function without a clear and common understanding of the social contract. But beyond that, I don't think state control over how we educate ourselves or our children is a good idea. In any case, I don't see it as directly relevant to the distinction between state power and economic power.

I am not sure what your position on moral choices were either.

I'm saying government should only ever make moral choices. The 'bottom line' should never be the primary criteria for state policy.

As for maximizing economic output, I agree for the most part. I think government really doesn't want to be in this business at all but it is also hard to stay out of it many times. For example, when the NFL threatens to leave a city if the city doesn't build a stadium. This type of leverage can be seen with other types of businesses that try and manipulate the government to cut a better deal. States will compete for factories, nations will compete for them as well. Japan's investments into their steel industry for example.
I am against all of this type of behavior but I can see why it is hard for any state to decide to become the martyr for the cause.

I think these kinds of policies violate the principle of equal protection. I'd like to see a federal constitutional amendment banning government at all levels from offering special privileges it anyone (businesses, special interest groups or individuals), regardless of the presumed social benefit. This is a prime example of government exerting economic power that it should have no access to.

 

[Bombur]

Economic power doesn't give you the right to lie cheat and steal but it increases the chances you have of getting away with it. It also costs money and laws to stop them and clearly define what is lying, cheating, and stealing. This is a big role of government and a role that is often argued over with regards to how far the government can and should go.

I certainly can't disagree with any of that.

I supposed the implied question is whether government should act to limit economic power irrespective of whether its used for malice. I'd say no. The fact that some people are more likely to "get away" with something doesn't make them guilty.

I am not sure what your answer was with regards to education.

Education is tricky. A nation can't really function with a clear and common understanding of the social contract. But beyond that, I don't think state control over how we educate ourselves or our children is a good idea. In any case, I don't see it as directly relevant to the distinction between state power and economic power.

I am not sure what your position on moral choices were either.

I'm saying government should only ever make moral choices. The 'bottom line' should never be the primary criteria for state policy.

As for maximizing economic output, I agree for the most part. I think government really doesn't want to be in this business at all but it is also hard to stay out of it many times. For example, when the NFL threatens to leave a city if the city doesn't build a stadium. This type of leverage can be seen with other types of businesses that try and manipulate the government to cut a better deal. States will compete for factories, nations will compete for them as well. Japan's investments into their steel industry for example.
I am against all of this type of behavior but I can see why it is hard for any state to decide to become the martyr for the cause.

I think these kinds of policies violate the principle of equal protection. I'd like to see a federal constitutional amendment banning government at all levels from offering special privileges it anyone (businesses, special interest groups or individuals), regardless of the presumed social benefit. This is a prime example of government exerting economic power that it should have no access to.

I agree with most of what you say or I am close enough.

I don't think any modern nation can get away with not funding education and trying to ensure certain quality standards. After that I agree that people should be more free to choose the education they want. This is one area in the US where money is power with regards to choosing how your child is educated. For example in CT people with money choose to move to towns with good schools. This pushes up the cost of living in areas with good schools to the point that the poor can't afford them so they are stuck in areas where their only choice is a bad school.

I think it is a state power issue because the education of a child isn't dependent on the economic power of the parent.

I would be ok with that constitutional amendment if it included something in there with regards to dealing with economic shocks and foreign trade.

 

[dblack]

If it wasn't obvious, my previous post had a typo - meant to say that a nation can't really function withOUT a clear and common understanding of the social contract.

 

[evince]

when humans live in groups there has to be rules


the more people the more rules.


well fettered capitalism run by a democratic process is the best for mankind

 

[dblack]

evince - got it. Fetters for the win.

 

[evince]

what he right in this country is doing is making the word hate capitalism.

 

[dblack]

what he right in this country is doing is making the word hate capitalism.

Hmm.... interesting.

What would you say are your favorite kind of fetters?