12
Apr
2012
What’s Worse (Better) Than Sunday Blog Posts?
A whole conference dedicated to bringing free-market ideas to evangelical Christians! (The link is to the main website of The Institute for Faith, Work, and Economics, which is hosting me and a dozen or so other theologians and/or economists at a conference outside of DC.)
They showed us this snazzy video after the opening dinner:
All joking aside, what is the progressive response to something like this? Something like, “Nobody denies the importance of property rights, it’s just that you need a good social safety net and regulation, too.” ?
The first thing they’ll say is that it’s funded by the Koch brothers. Then they’ll press their heads between their palms and go “Lalalalalalala”.
Coming from a progressive background I’m guessing that they would say things along the lines of :
1) Freedom is something you can afford only once you have reached a certain level of economic growth
2) Given the balance of global economic reality its unrealistic to think that property-rights alone can bring prosperity – you need a strong state to promote it.
3) Countries with the right natural endowments get both prosperity and freedom at a low price. Less lucky countries get neither. Unless the rich countries help the poor countries then this global imbalance will never be corrected. Strong “property rights” in the rich countries is just a cover for exploitative (or at best) neglectful behavior.
Interesting to see Chile and Venezuela in opposite lists – I would love to see a more detailed study of how that came about.
1. Exercise is something you can only do once you’re buff.
2. Successful examples? Citing Cuba won’t help your case.
3. Hong Kong vs Jamaica. Who said property rights only for the rich countriies?
Venezuela has a lot of oil per capita. Also, probably more importantly, Venezuela has extreme currency controls that make evaluating its true economic output difficult. The black market rate is at least 3x the official rate for a US dollar. I don’t know exactly what the CIA site did to calculate the GDP, but it was probably just the Venezuelan government’s own figures (based in Bolivares) divided by the distorted “official” exchange rate. You divide that dollarized GDP by 3 and it falls right in line.
For them the point isn’t results, but having the control over the relevant resources. In fact if things are continuously, but not quite catastrophically, bad they can use that as evidence that they need even more money and power.
What a joke. “Economic Freedom” list, my eye. Strong law and order, low corruption and protection of private property does not mean these “list a” nations are “economically free” in the absurd Austrian sense.
In all other circumstances, you’d be screaming that Sweden, Canada or the US are “socialist” hell holes, yet suddenly you’d defending them as “economically free”?
And even to say they might be “comparatively” more economically free than most of these list b and then adduce that as the major reason why list b nations are so poor is laughable: many of the latter have been devastated by civil wars and mass killings for most of the 20th century: about 250,000 people died between 1962 and 1993 in Burundi owing to civil war and two genocides (the 1972 mass killings of Hutus and 1993 genocide of Tutsis).
The Democratic republic of Congo has faced political instability, invasion and civil war for most of its history since the 1990s, and even before that (estimates of the number who have died from the long conflict range from 900,000 to 5,400,000).
The Republic of Congo had a severe civil war in the 1990s, then an invasion by Angola.
Algeria had its terrible civil war between 1992 and June 2002. We are expected to believe that these nations’ poverty doesn’t have a lot to do with political instability and war?
All these countries listed in list A:
(1) have had extensive Keynesian interventions and economic regulation for most of their history in the late 20th century (1945-1970s) when per capita GDP soared. Doesn’t fit your story.
Japan and Taiwan (high on the list a) have had extensive state-planned industrial policies for years, certainly during their period of industrial development and rapid per capita GDP take off. Many Western nations (the US , for example) had a very high degree of protectionism and tariffs during their industrial revolutions. Doesn’t fit your story.
(2) In certain nations like New Zealand neoliberal style economic reforms have gone hand in hand with a disastrous plunge in real per capita GDP:
http://socialdemocracy21stcentury.blogspot.com.au/2009/07/new-zealand-and-think-big-did-it-ruin.html
Doesn’t fit your story.
(3) Take Sweden:
(1) The top income tax rate is 57 percent; overall tax burden amounting to 46.4 percent of total domestic income. Government spending has risen to a level equivalent to 55.2 percent of GDP. Total government debt as a % of GDP is 37%.
Now Angola:
(2) top income tax rate is 17 percent. Overall tax burden amounting to 9 percent of total domestic income! Government spending is about 40 percent of GDP. Budget surpluses are the norm because of oil revenue, and public debt is moderate at 35 percent of GDP.
On this score, Angola is far more economically free than Sweden (overall tax burden amounting to 9% in Angola versus 46.4% in Sweden). Yet Angola is extremely poor.
Of all the counties in the world I think that North Korea follows the most Keynesian policies. I wonder they are not doing better. Oh wait a minute – they do claim 0% unemployment – so the polices are in fact working.
::blink blink::
wow – you’ve really drank the kool-aid, haven’t you?
“The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire.” – The General Theory of Employment, Interest, and Money, Preface to German Edition, 1936, J.M. Keynes.
But, but, Keynes was a liberal, right? LOL
But, but liberal means individuals having liberty, right? Double LOL.
Rob is right.
To clarify: I don’t think Keynes supported totalitarianism but I do think one aspect of his policies – controlling AD by direct government investment in the economy – has the very dangerous consequences of undermining market mechanisms. Once undermined in this way then supporters of a large state are happy to step forward with a prescription of yet more intervention as a cure for the “market failures” caused by the previous round of interventions. I believe that there is a linear route from there all the way to North Korea.
I know that is not really what Keynes meant and it is not what his more sophisticated followers (including Daniel) want either – but nevertheless it remains a fact that his policies have consistently been supported by politicians whose view are anti-market and ultimately anti-freedom.
Hold on a second, are you arguing that economic freedom has little or nothing to do with any of the data they displayed? Showing your true totalitarian colors, aren’t you?
Also, bringing up that these totalitarian countries have been killing themselves in civil wars doesn’t hurt our side. I would expect the less free a country is the more violent it would become.
I’ll pile on a little more. Government Spending is not only a poor proxy for Economic Freedom. Among the 5 categories of EF that Fraser uses, GS is the worst by far in terms of correlation with the overall EF score. For the 2009 index I calculated the following correlation coefficients (with total EF):
Size of Government – 27.4%
Property Rights/Legal System – 77.3%
Sound Money – 81.8%
Free Trade – 78.2%
Regulation – 74.2%
Those are interesting results. Is there any evidence to suggest a similar correlation between those factors and economic success (differentiated from economic freedom? )
LK,
Strong law and order means low corruption which means respect for private property which means capitalism. Countries with better property rights are more economically free, i.e. capitalist than countries that are not.
It’s true that list b nations were often devastated by war. No Austrian economist would deny that peace is essential to economic development; only Keynesians do that. However, I would also argue that nations with capitalism are far less likely to have civil wars because they will actually keep people satisfied with economic growth. Or at least be able to afford the guns to put down rebels quickly.
Most of the developed countries went through their industrial revolutions in the classical liberal, pre-Keynesian era. Nations that tried to develop using Keynesian ideas, such as India, failed miserably. Compare the development of Meiji era Japan, which bought into ideas of free trade to India which gained it’s independence at the height of Keynes’s intellectual influence.
It is true that Asian countries today such as Japan, Taiwan, South Korea, and China have heavily state planned industries. However, Japan basically industrialized during the era of free market ideas. Also, Japan grew from almost nothing after WWII. It isn’t surprising that they grew quickly given their history of industrialization and low starting point. In the case of Taiwan, South Korea, and China, economic growth only happened when the government took dramatic steps to free the economy. You can’t make a better case for economic freedom than China, Taiwan, or South Korea. Why is Taiwan richer than China? Because they started the process sooner. Their Keynesian, corpratist economies are far from ideal but better than what they had before.
As far as your tax rate argument goes, your missing the point. In economics, you have to hold other things equal because there are so many different variables. Other things equal, lower taxes are better than higher taxes. I don’t think you really believe that if Angola started taxing like Sweden and vice versa that Angola would start to become rich and Sweden would start to become poor.
“However, Japan basically industrialized during the era of free market ideas.”
That is utter rubbish. Japan’s period of significant industrialization came after 1911 when the unequal treaties forced on it between 1859 and 1869 lapsed, which had forced it to keep tariffs below 5%.
The result of these treaties was the following:
“In fact, immediately after 1859, a flood of imports, unchecked by tariffs, soon devastated the domestic economy. Japan immediately faced a balance-of-payments problem because it depended heavily on imports of raw materials and capital goods indispensable for early industrialization. While the price of rice soared, the outflow of gold that followed was aggravated by the silver standard which Japan adopted, because the price of silver steadily fell vis-à-vis gold throughout the second half of the nineteenth century. Naturally, trade revision was a continuing issue in the early Meiji years. .”
Yul Sohn, Japanese Industrial Governance: Protectionism and the Licensing State, p. 22
You haven’t got a leg to stand on.
I got two legs to stand on here. If there’s one thing economists can agree on its that free trade is beneficiial overall even if it hurts local producers. The losses to local producers get more than counterbalanced by the gains to consumers. Even left-liberal Keynesians like Krugman can agree with that. The “unequal”treaties that opened Japan’s markets corresponded with a rapid period of industrialization. Without the competition from foreign producers, Japanese industry would have had no incentive or need to modernize.
The people who talk about losses because of trade or balance of payments problems are not economists.
“The “unequal”treaties that opened Japan’s markets corresponded with a rapid period of industrialization.”
No, it didn’t:
“Industrial production almost doubled between 1914 and 1919 and average profit rates for industry increased sharply (Kato 1974: 218). Japan thus emerged as an industrial nation during the Taisho period with a doubling of GNP from 1910 to 1930, and a quadrupling of real output of mining and manufacturing, and of employment in heavy and chemical industries (Yamamura 1974:301-2).
André Sorensen, The Making Of Urban Japan, p. 92
Even the foundation of the industrial revolution in the Meiji era involved significant state intervention: subsidies to key industries (often connected with the military) through state controlled banks (Marcus Noland and Howard Pack, Industrial Policy in an Era of Globalization: Lessons from Asia, p. 23.)
“If there’s one thing economists can agree on its that free trade is beneficiial overall even if it hurts local producers.”
That is B.S.
Economists don’t agree. They never have. Ever since the time of Alexander Hamilton or Friedrich List, economists have disagreed over whether free trade is always beneficial.
http://socialdemocracy21stcentury.blogspot.com/2011/01/mises-on-ricardian-law-of-association.html
I also like how that weak Japanese argument was the only answer you could muster to my sustained take down of each of your main points.
Ha! I thought the same thing too.
I didn’t bother because your points are laughable
“It’s true that list b nations were often devastated by war. No Austrian economist would deny that peace is essential to economic development; only Keynesians do that. “
The first statement agrees with me. The last is idiocy. I have just said above that peace and stability is related to and necessary for economic development.
“However, I would also argue that nations with capitalism are far less likely to have civil wars because they will actually keep people satisfied with economic growth.”
What is you definition of capitalism? Rothbardian anarcho-capitalism? It has never even existed in the real world. Therefore you have zero empirical evidence of how it would work.
If you mean simply a system where the majority of production is done by private enterprise, Keynesianism IS a type of capitalism.
“Most of the developed countries went through their industrial revolutions in the classical liberal, pre-Keynesian era.
Most developed nations did so with infant industry protectionism and other state interventions:
http://socialdemocracy21stcentury.blogspot.com/2010/06/industrial-policy-brief-comment.html
Even Britain did:
http://socialdemocracy21stcentury.blogspot.com/2010/06/early-british-industrial-revolution-and.html
Nations that tried to develop using Keynesian ideas, such as India, failed miserably. “
A statement that shows your utter ignorance: Keynesianism is both a macroeconomic theory and practice; it is development economics, a separate discipline, that studies how to industrialize your nation.
And nobody said that you can’t have failed industrial policy. The reasons why India’s industrial policy failed, but why, say, South Korea’s was enormously successful, are fully explained in Vivek Chibber, 2003. Locked in Place: State-Building and Late Industrialization in India, Princeton University Press, Princeton, N.J. and Oxford.
Pointing to some failed industrial policies and saying it can never work is like pointing to an incompetent doctor who misdiagnoses a patient and administers the wrong drug, and then claiming that all scientifically-based medicine must be wrong, just because of such failures through error.
“Also, Japan grew from almost nothing after WWII.”
When it had a VERY extensive system of government industrial policy: in fact a whole government department called MITI devoted to planning its industrial development.
See Chalmers Johnson, MITI and the Japanese Miracle (1982).
“In the case of Taiwan, South Korea, and China, economic growth only happened when the government took dramatic steps to free the economy. You can’t make a better case for economic freedom than China, Taiwan, or South Korea. Why is Taiwan richer than China? Because they started the process sooner. “
Rubbish: Taiwan, South Korea and Japan started industrial policy long before China did, under Japan imperialism, in fact. They continued that state-led model after 1945, achieving enormous success.
China by contrast was run by some of most incompetent central planning communists ever seen. Great leap forward and cultural revolution, and so on.
I can agree with your definition of capitalism as a system of private property including Keynesianism. So the point I’m trying to make is that a private-property based system will work better than one with nationalized property like Maoist China or post-colonial India. Can we at least agree that far?
“Japan’s period of significant industrialization came after 1911 ”
That nicely explains how Japan built, paid for, and trained a modern navy that crushed the Russian navy in 1904. I had been confused about that, until I noticed 1904 came some years after 1911.
(1) the Japanese navy was created by government intervention.
(2) the Japanese had the British help build their navy: Japan was allied with Britain from 1903; British naval officers helped train the new Japanese navy; British shipyards built warships for Japan.
#1 The ability to create a capable navy depends on the ability to use advanced technology for the time period which depends on an advanced economy.
#2 was probably part of those “uneven” trade treaties you decry
“The ability to create a capable navy depends on the ability to use advanced technology for the time period which depends on an advanced economy.”
Didn’t you read what I wrote? The Japanese state bought its warship from the UK. like talking to a brick wall.
“#2 was probably part of those “uneven” trade treaties you decry”
Even if true, irrelevant.
John, you are getting your azz whipped!
Japan’s heavy capital ships were foreign-made until 1908 (including by the French), but many of the smaller ships, destroyer sized craft, were made domestically. They were made to specifications from the Japanese navy as were most of the large ships.
Japan started making steel steamships, rather a serious business, by 1890.
As others have noted, training, designing, partially building, paying for, and running a Navy requires a level of industrialization considerably above that of 1868.
“Japan’s heavy capital ships were foreign-made until 1908 (including by the French),”
Proving what I said.
“but many of the smaller ships, destroyer sized craft, were made domestically”
Even cursory look at history here:
http://en.wikipedia.org/wiki/Naval_history_of_Japan#Modernization:_Bakumatsu_period_.281853-1868.29
shows they were copying Western technology and receiving massive help from foreign engineers and experts, and it was all directed by the government.
And none of this refutes that view that Japan only emerged as an industrial nation during the Taisho period from 1910 to 1930. The existence of proto-industries in the late 19th century does not refute this
In response to number one, the ability to trade for something advanced and expensive like a warship requires the ability to produce things valued more highly by the British who made the trade. That’s why backward nations cannot afford to buy advanced weapons systems.
Point 2 was highly relevant as it shows the Japanese benefiting from the “unfair” trade practices you criticized.
And even to say they might be “comparatively” more economically free than most of these list b and then adduce that as the major reason why list b nations are so poor is laughable: many of the latter have been devastated by civil wars and mass killings for most of the 20th century: about 250,000 people died between 1962 and 1993 in Burundi owing to civil war and two genocides (the 1972 mass killings of Hutus and 1993 genocide of Tutsis).
You moron. You’re completely overlooking the fact that comparatively freer economies tend to engage in less civil war precisely because they are freer economies. With more individual freedom and more wealth being created, there is less of a reason for people to go to war.
All these countries listed in list A:
(1) have had extensive Keynesian interventions and economic regulation for most of their history in the late 20th century (1945-1970s) when per capita GDP soared. Doesn’t fit your story.
You’re looking at history from a flawed and distorted lens. The GDP per capita soared DESPITE the destructive Keynesian interventions, not because of them. Any positive correlation you observe between “soaring” GDP and Keynesian destruction is not proof of causation.
Japan and Taiwan (high on the list a) have had extensive state-planned industrial policies for years, certainly during their period of industrial development and rapid per capita GDP take off. Many Western nations (the US , for example) had a very high degree of protectionism and tariffs during their industrial revolutions. Doesn’t fit your story.
Again, they grew DESPITE the state intervention.
In certain nations like New Zealand neoliberal style economic reforms have gone hand in hand with a disastrous plunge in real per capita GDP:
http://socialdemocracy21stcentury.blogspot.com.au/2009/07/new-zealand-and-think-big-did-it-ruin.html
You’re myopically focusing on the short run, when the market is making corrections to past state destruction. Of course real productivity will decline for a time while the garbage is cleaned up.
This is expected. It’s the same as expecting real productivity to decline after a tornado wrecks a city. Sure, while the tornado is destroying everything, there’s all kinds of people and resources “moving” around, but once the tornado finally ceases, it’s time to rebuild.
Take Sweden:
(1) The top income tax rate is 57 percent; overall tax burden amounting to 46.4 percent of total domestic income. Government spending has risen to a level equivalent to 55.2 percent of GDP. Total government debt as a % of GDP is 37%.
The Swedes were on this same destructive path, but they reversed course over the last couple of decades and made their tax system far less progressive, even though their tax rates at all levels are above most of those in the United States. The result has been a tempering of demand for new government services as people at all income levels realize they will be the ones paying for those services and not some mythical “rich” person. The side benefit is that Sweden, as a result of tax and other reforms, now has one of the highest economic growth rates in the world, says Rahn.
Source: Richard W. Rahn, “Tax Inequity,” Washington Times, April 11,2011.
Now Angola:
(2) top income tax rate is 17 percent. Overall tax burden amounting to 9 percent of total domestic income! Government spending is about 40 percent of GDP. Budget surpluses are the norm because of oil revenue, and public debt is moderate at 35 percent of GDP.
Taxes aren’t the ONLY issue that determines economic freedom.
“Strong law and order, low corruption and protection of private property does not mean these “list a” nations are “economically free” in the absurd Austrian sense.
“In all other circumstances, you’d be screaming that Sweden, Canada or the US are “socialist” hell holes, yet suddenly you’d defending them as “economically free”?”
Lord Keynes, FTW.
Except the first sentence is false.
Respect and protection of private property rights are integral to the absurd stupid idiotic Austrian sense of free markets.
Reading fail, anonymous.
Just ignore Gene Callahan. He’s an antagonistic moron that needs to get a job.
True, but who the hell would hire him?
Let’s take your last claim first, Sweden vs. Angola.
While Angola does have much lower tax *rates*, the overall size of government is roughly similar. The Economic Freedom video is based on this underlying data:
http://www.freetheworld.com/2011/reports/world/EFW2011_chap1.pdf
http://www.freetheworld.com/2011/reports/world/EFWdataset2011.xls
You’ll notice that Sweden ranks 141 and Angola 139 in government size. But on the other 4 measures of EF, Sweden demolishes Angola, making up for Sweden’s shortcoming in the “government size category.” Sweden ranks an amazing 5th overall in property rights (the US is 24th). Angola is 130th in PR. Angola’s *best* ranking is 85 in free trade. Sweden is 17th in FT (once again besting the US at 48th). Sweden’s *worst* score other than government size is regulation, where they rank 47th. Angola is 133rd.
So while Sweden has a large government compared to the size of their economy, they do extremely well in other areas of Economic Freedom. In fact, “government size” may actually be a very poor measure of economic freedom generally, even though the American right and left both like to focus on this one measure (in fairness, perhaps it is because data is the most straightforward). On this point see Sumner’s paper “The Great Danes”: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1629940
Nevermind. LK does not agree with the study’s conclusion, therefore the study must be flawed in some way.
This is silly, African governments aren’t run on income taxes. Don’t stoop their level, seriously, sweden vs africa, its obvious which has more freedom.
LK is just fkn with everyone again.
“Of all the counties in the world I think that North Korea follows the most Keynesian policies.”
Command economy communism is not Keynesianism. Period.
By contrast, certain libertarians claim Somalia as an approximation of anarcho-capitalism. How’s that doing?
It is 6th poorest country in the world, virtually the same as Zimbabwe:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita
It’s on the verge of mass starvation:
http://www.nytimes.com/2011/08/12/opinion/starving-in-somalia.html
Why would your “civil wars and mass killings” reason not also apply to Somalia?
“civil wars and mass killings”
Yes, the near-inevitable result of anarchy!
So, you’re essentially saying that without a power center, that groups will fight with each other in order to get control of the reins of power? And that this is supposed to be the fault of anarchy, and not that of power lust?
Come on, Gene….
Governments are already at war and they are already killing “their” people.
The only difference between governments around the world is the extent. Some governments do it more, some do it less. But government war and killings against “their” people are the exact inevitable result of governments.
Hmmm, inevitability of war and killings or “near” inevitability of war and killings. The choice is so hard to make, isn’t it.
Huh?
By contrast, certain libertarians claim Somalia as an approximation of anarcho-capitalism. How’s that doing?
1. One always has to take into account the history of a country when judging the current circumstances of that country. If a poor communist country suddenly turned capitalist, and you took a peek at it right after, then it would be a fallacy to say “This is what capitalism looks like!” It takes time for any political revolution to noticeably change a country, because people aren’t omniscient Gods who can instantly fix economic problems accumulated over decades.
2. The people of Somalia have in fact IMPROVED since the government collapsed: http://www.peterleeson.com/better_off_stateless.pdf Yes, they are still dirt poor in absolute terms compared to our standards, but going back to 1., that is because they inherited a country wrecked by hundreds of years of state rule. It’s unfair to judge their society relative to our way of life. One should compare their way of life now, to what it was under the Somali state. Doing that, one can then see that they are doing better, and so we must conclude that the collapse of the state has made the people of Somalia better off.
3. You’re a moron.
Command economy communism is not Keynesianism. Period.
There is nothing in Keynesianism that prevents a continued march towards command economies. Period. There is zero economic calculation in Keynesianism.
3. You’re a moron.
3. You’re an ignoramus.
Gene Callahan is the intellectual equivalent of a bloody stool sample.
You’re being too kind.
I see that you’re making new friends, Gene. LOL
“Brought to you by the Charles Koch Foundation.”
Score one for Gee.
Sound Money – 81.8%
Size of Government – 27.4%
You’re saying you could have a small government but tax burden of 60%, and it would make no difference in your “economic freedom” criteria? LOL
Property Rights/Legal System”
The legal system has no necessary connection with free market economics: you can be a social democratic system like Sweden with an efficient legal system and little corruption, but with a high level of government macro intervention.
Sound Money – 81.8%
Sound money? This is a joke. What nation has “sound money ” by the criterionofAustrian economics?
All nations on list A have fiat money and central banks and fractional reserve banking. How is that “sound banking” from the Austrian perspective?
No nation since the 1930s has had a gold standard.
You can’t have a small government and a tax burden of 60% unless the government is trying to run a huge budget surplus; something voters wouldn’t stand for. In any case, the burden of the government on the economy is whichever is higher between spending and taxation.
The DEFINITION of capitalism is a division of labor system based on private ownership of the means of production. Capitalism = Pirvate Property. Sweden still qualifies as a market economy because production is in the hand of individuals. The better a legal system protects private property, the less corrupt it will be and the freer the economy will be. Keynesians have absolutely no ability to understand the importance of property rights.
Property rights leads me right into sound money. This is a relative term meaning that one measure of economic freedom is the degree to which your money, which is part of your property, holds value. This is significant because the government has the power to create money and steal value away from owners of money. Governments that are better at resisting this temptation are granting their citizens a measure of economic freedom. Again, it’s very relative as 3% inflation or so seems to qualify as sound. Whatever, it’s better than the 30% inflation in Venezuela.
No, a 60% tax burden would certainly give you a poor score for “size of government.” Sweden ranks dead last in SoG on the Fraser EF scale (But Government Size is only 1/5 of the overall EF score — you could have a Zero in SoG and perfect 10’s elsewhere and score higher than the US overall).
But the major point is not that this fact “makes no difference” for EF, but that a country can do quite well in other areas of EF while still have a large government. And Sweden proves this theoretical possibility (as does Denmark, the Netherlands, Belgium, Luxembourg, Botswana, and others).
Sound Money has to do with the level and variance of inflation, not the underlying monetary regime. Having fiat money does not harm you on this scale, only actual inflation.
The legal system has no necessary connection with free market economics: you can be a social democratic system like Sweden with an efficient legal system and little corruption, but with a high level of government macro intervention.
False. The free market is based on and requires respect for and enforcement of the protection of individual property rights. Without this, there is no free market.
Sound money? This is a joke. What nation has “sound money ” by the criterionofAustrian economics?
Sound money means money closest to gold standard, i.e. low fiat inflation.
Lord Keynes is a liar. always has been and always will be, and yet he accuses everyone else of being liars, because they didn’t quote him 100%. even if they did, he still claims a straw man.
In all LK’s talk about civil wars and political instability, he conveniently leaves out Angola’s history–you know the Portuguese occupation, the civil war, the fleeing of businesses and bankruptcy, the communist regime that took over up until the 90s— in order to blame Angola’s poverty on “economic freedom.” So who’s the liar, LK?
Plus, Angola’s history confirms more to what Dan said. The entire history of Africa is one of occupation, revolution, communism, revolution, civil war… the same story as Somalia.
Hmm. You seem to think that Africa’s history started with European colonialism.
Yes, people often like to use a particular reference point, because they realize on a long enough regression that there position is fucked.
“in order to blame Angola’s poverty on “economic freedom.”
That would be you, SDG, since LK did no such thing.
Go get a real job… [truncated by RPM.]
No way that’s going to happen. That would require him to be productive.
I had a very progressive teacher at UCLA teaching a statistical class on economic development. For her, the correlation between nations having child labor laws, minimum wages, large social safety nets, universal or widely available education, etc. and the nations being wealthy was her primary evidence. My guess is that to counter that chart she would have found a variable to go with GDP per capita that fit the data more closely. Possibly corruption could do that.
I’d argue with her that measurements of corruption were really measurements of private property rights and therefore a measurement of capitalism. She didn’t like that argument.
As LK constantly demonstrates, it is pointless “debating” a leftist. There are no real human beings in the mythical leftist universe. The “economy” is mechanical and responds mechanically to “stimuli” provided by the omniscient and benevolent bureaucracy and enforced by their SWAT teams. That’s why none these “progressive” cement-heads can grasp the concepts of economic calculation or human exchange.
Similarly, because there are no human beings in the mythical leftist universe, there is no human diversity or culture either. Scandinavia isn’t nice because Scandinavians live there. It’s nice because of the exogenous (an LK fave) imposition of social democratic rules. The Afghans could be just like the Swedes if only the US could establish a democratic government there which passed Swedish style social democratic laws. We should try that, right? Oh wait, we have tried that.
Bob Roddis says it all: he has created a “mythical leftist universe,” and places whatever views he can most easily knock down in the heads of the mythical creatures that inhabit it.
If you don’t believe in those mythical creatures, you’re going to hell.
I’d be far more impressed if you could teach these evangelicals that the modern Zionist state of Israel is NOT the Israel of the Bible. (The Catholic Church understands this, Rick Santorum notwithstanding.) Out of curiosity, you understand this, don’t you Bob?
1. Since the US Constitution does not provide for welfare payments to citizens, where does it provide for federal welfare payments to the foreign Socialist Sparta?
http://www.antiwar.com/justin/j042902.html
2. A message from god? In 2010, I took the Texas Bar exam in a tacky Shriner’s hall right next door to John Hagee’s Cornerstone Church. That was such a charming freeway service drive.
I’d be far more impressed if you could teach these evangelicals that the modern idea of Jesus is NOT the Jesus of the Bible. (The Catholic Church fails to understand this, Rick Santorum included .) Out of curiosity, you understand this, don’t you Bob?
Butt-plug say what?
LK weighs in on Bob Murphy’s Graeber piece:
(3) Robert P. Murphy, “Origin of the Specie. Debt: The First 5,000 Years, David Graeber,” The American Conservative, April 11, 2012.
Robert P. Murphy’s review of Graeber’s Debt: The First 5,000 Years (Brooklyn, N.Y., 2011) for The American Conservative. Unfortunately, Murphy’s review seems little more than a rehash of his discredited and ignorant critiques of Graeber written last year.
http://socialdemocracy21stcentury.blogspot.com/2012/04/assorted-links.html
When and where were Bob’s critiques from last year discredited as ignorant? Graeber and LK haven’t the slightest understanding of even basic Austrian School concepts.
@Bob Roddis: You aren’t getting the jargon. For arguments LK doesn’t understand ‘articulated’ and ‘discredited’ are synonymous.
“When and where were Bob’s critiques from last year discredited as ignorant?”
In a debate in which even Murphy made a massive concession to Graeber:
“This is an excellent point, and Graeber is right: In the standard exposition of a barter economy, economists typically think in terms of spot transactions. But in principle, there’s no reason to restrict ourselves in this way. If we can imagine a farmer trading a pig for an axe, we can also imagine a farmer trading a pig for a promise to deliver an axe in two weeks.
Graeber is also right that the possibility of credit transactions expands the scope of a moneyless economy, and mitigates the problem of finding a double coincidence of wants.”
Robert Murphy, “Murphy Replies to David Graeber on Menger and Money,” Mises.org, September 8, 2011.
http://socialdemocracy21stcentury.blogspot.com.au/2012/01/david-graeber-versus-robert-murphy.html
That slipped down the memory hole, didn’t it Roddis.
You didn’t bold the crucial part of the passage:
“This is an excellent point, and Graeber is right: In the standard exposition of a barter economy, economists typically think in terms of spot transactions. But in principle, there’s no reason to restrict ourselves in this way. If we can imagine a farmer trading a pig for an axe, we can also imagine a farmer trading a pig for a promise to deliver an axe in two weeks.”
In other words, the barter theory of money is not refuted by the existence of barter transactions on credit. Barter trades can take 1 second to complete or 1 year to complete, or more to complete. The barter trades don’t have to be spot, even though spot trades were typically considered.
+1. I wish more defenders of the Mengerian theory would stress this simple point.
Frankly, I really don’t give a rat’s ass if primitive societies engaged in barter/credit transactions or spot transactions. I would expect the former. Graeber’s claims are interesting and re-verify the ubiquitous nature of catallactics, human exchange and economic calculation, concepts that you will not or cannot seem to grasp.
However, each of your little attacks on Austrian theory do allow us to tighten up our theories which then demonstrate that real life is even more complicated and incomprehensible to bureaucrats and totalitarians like yourself than we originally might have claimed.
LK is the intellectual equivalent of a hairy milk-dud:
http://www.urbandictionary.com/define.php?term=hairy+milk+dud
This is a great graph showing that in order for a country to have a high income per person, it must be English speaking.
All joking aside, what is the free-market response to this?
Really? I see the correlation referring to how much of the population is black. I’m guessing you missed that part.
The English were the first country to grant individual liberty (Magna Carta) and pioneer the idea of private property (John Locke). Due to this they were the first country to industrialize and their colonies benefited from this.
Private property rights long predate anything like the Industrial Revolution, indeed, such rights were probably far more secure back then than they are now, in our high-tech age. Better look for some other causative factor. This might provide a good start:
http://mises.org/media/4691/Necessary-and-Sufficient-Causes-of-the-Industrial-Revolution-Some-Critical-Remarks-on-Mises-and-His-Explanation
1. I agree that the current “big government vs small government” nomenclature is misleading. Rothbardian “anarcho-capitalism” calls for the strengthening of the enforcement of property and contract rights and remedies against fraud. Isn’t that arguably “bigger government” in some sense than what exists now in Detroit where you have little physical safety for yourself or your property from criminals or the police?
2. I’ve been saying since 1974 that the way to explain libertarianism to religious types is to emphasize that they could live in exclusive religious neighborhoods (with private streets) that could vet every resident in advance for proper religious piety and that they would never have to send their children to a public secular school or pay a cent to support such schools. In fact, when Ron Paul was running for president in 1988, I went up to him in person and suggested that he explain libertarianism to religious types in just that way. He scowled and gruffly stated that he knew how to explain the drug war already. This year he said that he didn’t think “social issues” were very important in the campaign. How did you come out against Santorum this year, Dr. Paul?
Ex-corporate progressive techie types could also have their own neighborhoods called “Graebervilles”.
Lord Keynes,
The ability to buy or produce weapons systems that are advanced for the day depend on having a modernized economy. You’re arguing that the Japaneses economy had not really begun modernizing until the turn of the century yet somehow they were able to afford to trade for advanced warships. North Korea and Cuba have weak, old weapons systems despite highly prioritizing military spending.
You’re in a very small minority here by saying that Japanese modernization did not begin with the Meiji period. The biggest change in the Meiji period was abolishing class restrictions on employment (Five Charter Oath). This was an expansion of economic freedom that helped to create a more meritocratic society in contrast to a rigid feudal society.
Basically I challenge you to dispute these two quotes from wikipedia
The Industrial Revolution in Japan occurred during the Meiji period” (1868-1912).
“From the onset, the Meiji rulers embraced the concept of a market economy and adopted British and North American forms of free enterprise capitalism. The private sector—in a nation with an abundance of aggressive entrepreneurs—welcomed such change.
Economic reforms included a unified modern currency based on the yen, banking, commercial and tax laws, stock exchanges, and a communications network. Establishment of a modern institutional framework conducive to an advanced capitalist economy took time, but was completed by the 1890s. By this time, the government had largely relinquished direct control of the modernization process, primarily for budgetary reasons.”
You really have no argument to here. Economic development in Japan did not begin after 1910 or whatever you claimed. I don’t know how much worse facts could get in your way.
More refutation of you here:
http://socialdemocracy21stcentury.blogspot.com/2012/04/industrial-policy-in-meiji-japan.html
“You’re arguing that the Japaneses economy had not really begun modernizing until the turn of the century yet somehow they were able to afford to trade for advanced warships.”
Rubbish: I said above (check it for yourself):
(1) Japan’s period of SIGNIFICANT industrialization came after 1911 when the unequal treaties forced on it
between 1859 and 1869 lapsed,
(2) pointed out that the historians say “In fact, immediately after 1859, a flood of imports, unchecked by tariffs, soon devastated the domestic economy. Japan immediately faced a balance-of-payments problem because it depended heavily on imports of raw materials and capital goods indispensable for early industrialization”. The Meiji dealt with this by non-tariff protectionism (see below).
(3) quoted historians who say “Japan thus emerged as an industrial nation during the Taisho period with a doubling of GNP from 1910 to 1930, and a quadrupling of real output of mining and manufacturing, and of employment in heavy and chemical industries.”
—–
You have not disproved any of the original 3 statements and retreat to the stupid straw man of saying I assert that the “Japaneses economy had not really begun modernizing ”
Yes, it began modernizing, some industries started to develop (often related to government military programs, government subsidies) but its industrial take-of came after 1911.
“Basically I challenge you to dispute these two quotes from wikipeda”
Jeez. Did you even bother to read your Wikipedia article?:
“Hand in hand, the zaibatsu and government guided the nation, borrowing technology from the West. Japan gradually took control of much of Asia’s market for manufactured goods, beginning with textiles. The economic structure became very mercantilistic, importing raw materials and exporting finished products—a reflection of Japan’s relative poverty in raw materials ….
The government initially was involved in economic modernization, providing a number of “model factories” to facilitate the transition to the modern period. After the first twenty years of the Meiji period, the industrial economy expanded rapidly until about 1920 with inputs of advanced Western technology and large private investments. Stimulated by wars and through cautious economic planning, Japan emerged from World War I as a major industrial nation.”
http://en.wikipedia.org/wiki/Meiji_period#Economy
Further points not mentioned on Wikipedia:
(1) The Meiji rulers had and created nationalised industries in the most successful areas of industry: iron foundries, arsenals, and some shipbuilding. By 1880, government enterprises included 3 shipyards, 5 munitions works, 10 mines, 52 factories.
See David Flath, The Japanese Economy, p. 190.
For example, modern cotton spinning mills were set by the government in 1881 when the state acquired the latest English technology (E. Herbert Norman, Lawrence Timothy Woods, Japan’s Emergence As a Modern State, p. 129).
(2) The government initiated the development of chemical, glass and cement industries, which were then sold off to the private sector when they became profitable.
E. Herbert Norman, Lawrence Timothy Woods, Japan’s Emergence As a Modern State, p. 127.
(3) The government used subsidies to other key industries:
“One of the tools used by government to promote businesses was subsidy. Government’s support to seisho (merchants by the grace of political connections), for example, laid the foundations of zaibatsu. Given the lack of tariff protection, purchasing power of small markets, and the technological gap with the West, the Meiji government supported the creation of large-scale enterprises with monopolistic positions.”
http://www.mediatimesreview.com/february05/meiji.php
(4) The government created and built the fundamental public infrastructure underlying a modern economy at the time: railroads and telegraph (David Flath, The Japanese Economy, p. 190.)
(5) The government created 3 state controlled banks by the end of 19th century to direct credit to industrial development (David Flath, The Japanese Economy, p. 192).
Even more than that: between 1885 and 1915 government spending accounted for 35% of capital investment, mainly in the crucial areas of steel, ships and railways (David Flath, The Japanese Economy, p. 192)
The evidence shows an important role of private enterprise as directed and supported by government policy – exactly the same as in the post-1945 East Asian industrial policy.
These industrial policies set the foundation for Japan’s take-off after 1911.
“You really have no argument to here. Economic development in Japan did not begin after 1910 or whatever you claimed.”
Straw man: I did NOT say above “Economic development in Japan did not begin after 1910”.
I said “Japan’s period of SIGNIFICANT industrialization came after 1911 when the unequal treaties forced on it between 1859 and 1869 lapsed.” That is correct.
In other words, Japan improved in a context of a more liberalized market.
Thanks for passing along such awesome facts about the data center. N
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