Tag Archives: free market

Exploding TV sets and government regulation

Many people today consider government regulation to be a necessary evil. Without government overseeing greedy corporations, the thinking goes, attention to quality, and especially safety, will degrade.

It is assumed that government is the only entity with the ability and motivation to look out for the interests of everyone.

To help illustrate how faulty the notion of government regulation being our saving grace is, let’s take a look at how the Soviet Union regulated the production of its most effective propaganda outlet, the common TV set. Keep in mind that the USSR had an interest in producing quality TVs in order to govern more effectively.

Soviet television sets tended to explode, because of faulty manufacturing. The surprising and alarming propensity of Russian receivers to blow up, and by extension the apprehension it causes in Soviet viewers, was one of the stranger features of Soviet life. By one estimate, sixty percent of all apartment fires in Moscow are caused by mass-produced Soviet television sets, which hada tendency to explode. Of the 715 apartment fires in Moscow in November 1987, 90 were blamed on exploding television sets, a statistic the Soviet press viewed as an alarming commentary on Soviet technology. Police said three television models notorious for defective wiring are being removed from the market, and millions of warning leaflets have been mailed to television owners.

Its true that markets aren’t efficient (in terms of the efficient market hypothesis ), but as inefficient as they are, governments are worse. It is a fallacy to think that a small subset of the market can do a better job than the whole market in ferreting out bad products.

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Pining for a perfect world

Everyone wants to live in a perfect world.

That’s not a really surprising statement. What separates us, however, is whether we think a perfect world is attainable given the current state of affairs and whether we think it is possible  to bring about a perfect world.

How we answer these crucial questions is what defines our political outlook.

Big government advocates, for instance, think a perfect world is obtainable through the right policies. In the past these policies were based purely on theory (a la Karl Marx) but in more recent times these policies are being based on statistical averages. Modern proponents of big government are fond of making the case based on scientific research and strong appeals to game theory as a solution to the tragedy of the commons. In short, a perfect world is possible if we limit the non-optimal decisions of others.

This view sells. Its a sound theory. It is possible to bring about the most optimal set of circumstances through the application of something like the Nash equilibrium. However it fails to account for one crucial fact. The fact that complete and flawless knowledge of all the relevant facts is required in order to make the calculations accurate. Big government proponents either fail to factor in the uniqueness of individuals or else they boldly assert that individuals are obligated to conform to the community’s desires. The recipe for a perfect plan calls for perfection.

This inconvenient truth is where big government advocates often find their lofty ideals being dashed on the shores of reality.

There are no individual humans or group of humans who have acquired the omniscience required in order to concoct such a perfect plan in order to bring about a perfect world.

And its this reality that leads people to advocate for a realistic system designed not to bring about a perfect world, but a just one.

Small government supporters rightly recognize the problem inherent in designing a perfect society. So rather than try they prefer to uphold the individuals right to chart their own course through the ocean of life. Small government advocates believe in the principle that more people come up with better solutions to problems than a small group of people do. Small government supporters also believe that it is wrong for others to try and force their view of what constitutes a perfect world on others.

Book Review: The Virtues of Capitalism

The Virtues of Capitalism: A Moral Case for Free Markets was written to combat the popular notion, especially following recent economic events, that capitalism has failed and/or that it is somehow inherently immoral.

From the book’s Facebook fan page:

Capitalism brings out the best in people. It stabilizes society, fosters creativity, rewards initiative, promotes cooperation, engenders civility, and encourages personal responsibility. People who possess those virtues also make better neighbors and a better society.

In this timely and balanced book, Austin Hill and Scott Rae agree with capitalism’s critics that the economy is essentially a moral issue, but they argue that free markets are the solution to financial disasters rather than the cause. Sure there are legitimate criticisms of the market system — and real limits to what it can and should accomplish — but, in the end, capitalism both depends upon and sustains classic Judeo-Christian virtues better than any of its rival systems. Thoughtful and engaging, The Virtues of Capitalism pushes against the tide of current public opinion and some of the administration’s proposed economic policies with a principled defense of capitalism.

The virtues outlined in the book are:

  • Creativity
  • Initiative
  • Cooperation
  • Civility
  • Responsibility

Additionally, I greatly appreciate how the authors address a common refrain from the Christian community wherein economic issues are said to be periphery and not something most Christians think they should be involved with. The authors rightly point out that the furtherance of moral issues requires money. And how our economics are structured determines how much or little we will be able to do about any particular issue.

The authors also have a helpful Youtube channel with video shorts designed to elucidate some of the points made in the book. I’ll likely post them later.

And finally, here is an interview with one of the authors, Scott Rae (part 1, part 2, part 3).

Do we really still need social assistance programs?

A while ago I Tweeted:

Are tax cuts for “millionaires” a good idea? Sure they are. I’ve never gotten a job from someone on welfare.

To which a friend of mine responded:

Ebenezer Scrooge: Why are these people out here? Wearing rags, eating scraps! Why aren’t they in poorhouses…?

Ghost of Christmas Present: Have you VISITED any of these poorhouses you speak of?

Ebenezer Scrooge: No, but I’m taxed for them; isn’t that enough?

Ghost of Christmas Present: YOU tell ME.

It is not the government’s job to provide for the poor. That is our job, as individuals. I’ll take a private-run charity over a government-run one any day.

Further, I would argue that government hand outs hurt far more than they help.

how?

Because it pays people to fail.

Most poor are only trying to survive. Not too many poor live the good life off the public dole. There are many wealthy who DO live off the public dole though. The poor get a few $$ and some food stamps.

I will NEVER be against helping poor people, especially in these tough times. I have NO problem with my tax dollars helping them either.

Most poor…. in America?

I am against hurting the poor, and programs that do not encourage people to work and earn a living hurt both the poor as well as those that think they are doing them good by enabling their present state rather than incentively them to change their stars.

We should be about hand-ups, not hand-outs.

And since the government can not create jobs, because it can not produce goods and services in a free market, I do not see how government can be a meaningful part of the solution outside of fostering an environment wherein the poor have a shot at bettering their station in life. But then again, that is exactly why so many people have fled their own countries to come over here to begin with.

People immigrate here from poor countries, not for our government handouts but for a chance to participate in our free markets.

Yes, it hurts the poor to help subsidize their below poverty line lifestyle …….. better to let then starve and be homeless.

A “hand up” only works when there are steps to climb. You can’t tell people to climb the ladder of sucess while there is a big gulf in between. Whether we like it or not, we ALL have made it by someone helping us. call it tax breaks, bank loans, wealthy parents, none of us truly make it on our own. You also have those who rail against government handouts who had no problem being on unemployment, medicare, food stamps, disability or welfare when they were struggling. Now they have made it, they forget where they came from.

I don’t think we live in a society where everyone doesn’t have a reasonable shot at success. Now those factors of success may still be outside of a person’s control due to a host of other uncontrollable factors, but again, we don’t live in a utopia or a world in danger of becoming one any time soon so I don’t think the inability of everyone to one day become the president of the US is necessarily an indication that we live in a society plagued with unequal opportunities.

As for the unfairness of individuals. What makes you think the same exact unfairness, or depravity of mankind, doesn’t also plague a state-run system? If anything, I think a free market mitigates unfairness. You are more likely to find a fair shot when you have a choice between 10 organizations providing the opportunities in response to a free market as opposed to 1 monolithic organization that does not have to bow to market demands.

As for the disparity of income. How is that an indication of unfairness? It is a price set by the free market. In your Kuwait example, the worker there is likely making more because of the risks and involved and opportunities forfeited than the person doing the same job over here. Is that disparity robbing either person? I see how. I also don’t see how taxpayers are subsidizing what is, in the end, a determination made by market forces.

As for income disparity; That would only be an indication of unfairness if we imported the hidden premise that the market is a zero-sum game. I would argue that wealth can be created and destroyed and is therefore not static. So the person making $100 an hour is in no way shape or form robbing the guy making $100 a week. In fact, in a free market system we should want to give the guy making less every opportunity to make more since, by making more, he is able to contribute to the betterment of us all by expanding the market and accumulated wealth of mankind even further.

Compare that to the government subsidizing laziness, which produces no wealth and hurts rather than benefits everyone.

If you look at God’s word, everything doesn’t hinge on “producing wealth”. The poor were to be cared for by community taxes (the tithe). Even Paul said pay taxes to who they are due. The OT Israel was a religious state, and one of the three tithes was for the poor. It wasn’t asked how they got in that state, because we would always have the poor with us.

God will judge societies on how they treat the poor.

The Bible does tell us that we should pay our taxes. However the Bible does not tell us that we are obligated to vote for our government to institute taxes designed to give men handouts.

Men were designed to work. Men who don’t work rightly feel as though they are not fulfilling their God-given purpose. So to prevent a man from working, either through unfair and oppressive policies, or through policies that encourage laziness and discourage an honest day’s work are inherently immoral and damaging to a man’s soul.

Is it more noble to feed a man’s stomach, or his soul?

The Bible also tells us that if we don’t work, we shouldn’t expect to be fed. In fact, Proverbs tells us that it is precisely the hunger that gnaws at a man’s bones that drives him to work to acquire the resources to not live in want.

Sure we should seek to provide for those in need. However you of all people know the provision for giving in the NT is that it be done “with a glad heart” and “not under compulsion”. Neither of those are possible if the money given to the poor is extracted from us by force through taxes.

And finally; God will indeed judge societies on how they treat the poor. And in that respect I think America will be commended as a nation that provided a way for millions to prosper. Instead of famine, we face the problem of our children consuming too much food. Instead of boredom, we face the problem of an abundance of entertainment choices. Instead of a dirth of education, we face a deluge of information thrust on us from all sides by a myriad of sources.

In short, America is a land of plenty. A land of promise. A land of hope. And a land of opportunity. Sure, it wasn’t so for all peoples in the past, but I sincerely doubt that any man or woman who comes to America (or is borne here) will not find an opportunity to improve their station in life provided they work hard to produce something of value “with their own hands”.

The great liberal prank

After talking with several liberals I have come to the conclusion that most of them are playing an elaborate hoax.

For example, most liberals also claim to be atheists and philosophical naturalists. However they seem eager most of the time to employ reason and logic in an effort to prove their position is the most cogent. Why is that? It is only if we posit the existence of a soul, a mind that is not a slave to physical forces, that this behavior makes sense.

Secularists are also inconsistent when they deride the free market. From their arguments and attempts at persuasion, they at least act like we operate in a market place of ideas and that the best ideas (ideas which, cobbled together constitute a complete world-view) ought to prevail. When their views are not widely accepted they appear to operate with the curious notion that public opinion is merely a measure of whether their efforts are meeting with success or not. Not whether their ideas are true or not based on market demands.

So I’ve concluded that liberals, particularly those who like to espouse philosophical naturalism and those who feel the need to deride the free market are simply playing an elaborate hoax on the rest of us.

Another defense of capitalism

A friend of mine recently commented on Facebook:

Capitalism looks at developing countries in the same way that Britian looked at colonized countries. They were places to steal resources from. The bible tells us “not to show favoritism” and to consider the least as equal with the greatest. Here in America we waste so much we have to take other’s portion.

Since conservatives believe in not spending more than we have capital for, I wonder if they will submit that same ideology to natural resources? Only use what you can produce.

My reply:

Capitalism does not look anywhere and the reality is that while some companies have unfortunately decided to exploit the resources (which includes human capital) of other nations such a practice is not in accord with traditional capitalism because it is not sustainable in the long term.

Conversely, it is remarkable that if given the choice nations unilaterally turn to capitalism as the exclusive economic system for pulling themselves out of poverty. Take India, China, Russia, etc. as examples and contrast this with the corrupt practices found in many African nations where it is not capitalism that is at fault but the corrupt governments that do not allow free trade.

Further, conservatives who believe in spending more than we have capital for are, by definition not conservatives.

And finally, the whole concept of “use only what you can produce” is a red herring simply because in an economic system. Particularly a free-market economic system demand regulates and drives supply and supply is determined by degree of scarcity of resources. All that to say that the whole concept of “raping the environment” by taking more than we need is, by definition, false.

Simply put, supply and demand subjugates no one. Economic forces in a free-market capitalistic system harm no one.

Faulty businesses can and do harm people but markets and governments are responsible for keeping them in check. Likewise markets (consumers, aka us) and governments also play a big role in the whole free market system.

However, at the end of the day we are not dealing with a zero-sum game where if i make a dollar you loose a dollar. One of the beauties of a free market system is that everyone wins because everyone is getting something they desire.

Law of supply and demand does wonders. If the price of water/gas were to rise in proportion to the degree of scarcity that people claim then demand would necessarily be diminished in direct proportion to the corresponding rise in price.

To me:

I don’t think we are against PROPER use of resources, but in America, we want to drive gas guzzlers as long as we can pay for them, not understanding the excess consumption of gas bleeds the overall resource pool down for everyone. We want to water our lawns and wash our cars as long as we “pay the bill” not thinking that the water pool for our neighbors shrinks also. So we over consume and have to buy from the middle east. We almost run out of water here in the ATL, but we cry about our dirty cars and whine about our brown lawns.

It is a mindset that we our superior, and as long as we have the money, we make the rules. It is an anti-Christ mindset. We use more than we produce.

How can you square over cumsumption with a conservative philosphy?

My response:

As for the supposed anti-Christ mindset of “we have the money, we make the rules” I would like to point out that the Bible clearly states that A.) the borrower is a slave to the lender B.) economic systems that are based more on money simply changing hands (usury, interest, etc.) are heavily discouraged in Scripture C.) a hallmark of a free market system is the freedom of both parties such that neither party is forced to do business with the other.

As to your question of how I would square “over consumption” with my view on conservatism I would simply say that I do not believe there is such a thing as “over consumption” in the sense that we produce/consume too much in terms of raw economic output or input. Now individually you might be able to make that case in certain circumstances but I fear a big problem that comes into play when discussing an economic system is that too often people fall into the trap of defining the system (universal) by it’s individual parts/players (particulars).

For anyone who is wondering, I consider capitalism to be the best economic system we’ve come up with simply because it does the best job of accounting for human depravity and is the most fair when it comes to the unequal distribution of scare resources. In sum, it is built and based on freedom which is a principle that finds it’s root in God’s own character.