The 1929 crash was no different than previous panics, but government intervention made it worse. Hoover's tight-fisted monetary policy, tax hikes, and import tariffs turned a temporary dip into a full-blown depression. FDR's centrally-planned government interventions scared away private money and intimidated investors, prolonging the depression.
Perhaps our government should indeed be spending more money right now in a Keynesian effort to prime the pump. But that only goes so far, and the danger is that government money is stupid money: How does a bureaucrat spend a dollar so it best benefits the economy? How does government avoid competing with the private sector? Or favoring one company over another?
A well-regulated free market is much more efficient. And no, our current economy is neither well-regulated nor efficient: It is a rotten swiss cheese shot though with government intervention, and greedy rats slink through dark warrens carved out by politicians who use our constitution as a doormat. Government should set rules of fair play and then butt out, but there's too much money to be made engaging in mutual backscratching with unions and big business.
Another ignored lesson from 1929 is that raising taxes is a bad idea because it depresses private sector hiring. And government intervention in the free-market creates uncertainty that kills economic growth. Roosevelt didn't pull us out of the Great Depression; the private sector gearing up for World War II did. Roosevelt's policies can be rightly credited with keeping people from starving, but private enterprise rebuilt our economic engine.
George Santayana famously observed that those who do not remember history are doomed to repeat it.
A witty unattributed riposte is: Those who do remember history are doomed to make new, more interesting mistakes.
Well, President-elect Obama's braintrust is all atwitter at the prospect of reliving the good old days, while relishing the opportunity to outdo FDR's ambitious projects.
Providing some economic incentives for the private sector is a good thing, even in the environmental area. But watch out for pointy-headed bureaucrats who want to perform social experiments using our tax dollars:The big ticket will be the public works spending. “We will create millions of jobs by making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s,” Mr. Obama said.
He did not give any estimate of how much he would devote to that purpose, but when he met with the nation’s governors this week, they said the states had $136 billion worth of already-approved road, bridge and other projects ready to go as soon as funding became available. They estimated each billion dollars spent would create 40,000 jobs.
“We won’t do it the old Washington way,” Mr. Obama said. “We won’t just throw money at the problem. We’ll measure progress by the reforms we make and the results we achieve — by the jobs we create, by the energy we save, by whether America is more competitive in the world.”This is reassuring to a liberal or moderate ear, but to the conservative, free-market ear it is a clanging alarm bell. The new administration needs to promote job growth and stimulate the economy, but it must not repeat the interventionist, central-planning mistakes of the past.
It's up to us conservatives to know our history and get involved in this discussion. We can't just throw rocks. People are out of work and the economy is on the skids; extraordinary times call for extraordinary measures. Conservatives won't control this debate, but they need to stay in it to fight for free-market solutions. To do otherwise would be to helplessly watch nostalgic old-line Democrats usher in the 1930's all over again.
43 comments:
I first became acquainted with Ms. Shlaes' writing with The Greedy Hand. The Forgotten Man is on my list...looking forward to reading it.
It's a little slow, but very informative. One of the most interesting things I found was how Soviet Communism and Italian Fascism were considered viable economic models of study back then.
"import tariffs turned a temporary dip into a full-blown depression"
This is an always tiring comment. International trade was almost totally irrelevant to the economy in 1929. Exports and Imports each were worth about 4-5% of Real Gross Domestic Product, and their "collapse" took them down 55-60% of the 1929 level - i.e. they went from $35 billion (2000 $'s) to $19 billion in value.
Meanwhile, the overall economy shrank from $865 billion to $635 billion (2000 $'s). The drivers of that collapse were reduced personal consumption (down 16%) and private investment (down 88%).
It seems far more likely that the braod economic crisis drove international trade downwards rather than the other way around.
But all those factors are tied together. Did job loss due to retaliation against tariffs cause the decrease in personal consumption? You may be tired of hearing tariffs tied to economic downturn, but it's still a relevant point.
Also, it is a historic fact the Europe retaliated by imposing their own barriers. Decrease in global trade contributed to the worldwide depression.
I notice you're quick to criticize the guy who's not yet the president for his plans that he cannot yet bring into action, but the current economic fiasco cannot be blamed completely on him. Wasn't there another, whiter, dumber, more conservative, Texan... what was him name?
http://reaching-oblivion.blogspot.com/
OK, if you're going to criticize, you need to read past posts first. I have been quite charitable in my treatment of the President-elect. I think his economic team is excellent.
I have also been very critical of the Bush administration's handling of the economy. Hank Paulson is a Wall Street investment banker: Who did he take care of first?
I'm not so worried about the Obama administration as I am with congress.
I have not blamed this fiasco on Mr. Obama, I've blamed it on a meddling congress that told banks to lend money to people who can't pay it back.
In fact, if President Obama can thread the needle, he may just pull this economy out of the dumper. I pray he does.
When you write about the economy it seems that you want it to get better for people who are already doing well for themselves.
Right now oil prices are low, house prices are low (bad for me personally because I'm trying to sell a house), but in general the economy is not as bad as it could be in North America.
The fact that the gov't is helping create jobs seems to be the best thing they can do.
How do you feel about them raising the minimum wage being as that's what many are going to be making?
I don't know what I've written that implies I only want the economy to get better for those who are already well off...
I am against government bailing out the stupid, the ignorant and the greedy. Doing so just encourages more stupidity, ignorance and greed. We've missed a golden opportunity to relearn some timeless lessons. People are living in a fantasy land and will continue to do so.
I am against government establishing wage rates. Jail business owners for hiring illegal aliens and the wage problem will take care of itself.
The Forgotten Man is a great book. Had certain dems not stood up against FDR packing the court we would have had socialism. Especially interesting is the episode regarding the chicken merchant who fought FDR all the way to the SC ("the chickens coming home to roost").
How do you know that? Wage rates are not going to break the economies back (and if they do, that's an argument against the free market, not for lowering wages). Why can't they be established at a reasonable (just) level?
As Adam Smith puts it "The labourer is rich or poor, is well or ill rewarded in proportion to the real, not the nominal price of his labour", so the rate of pay should not go up or down as the market/economy goes up and down, but should be at a rate that will pay back the labourer for his labour, independent of nominal market conditions since labour has a real and not just a nominal value.
This seems like the only fair way to do it (that is fair for the labourer). The free market is great (praise laissez faire), but even Smtih would agree that workers should be treated fairly. You don't mention workers half as often as Smith does when he writes about economics, and when you do, you just ridicule them for complaining too much, or not taking construction jobs, etc... It's just dispicable. Your attitude is deplorable.
The same people who argue against upping the minimum wage today argued against freeing the slaves 150 years ago. It's just dispicable. You should be ashamed of that sort of talk.
I am a builder, and the people who work for me get payed the same wage rate (depending on their skill level) now as they did during the boom here in Vancouver. The only difference is that I can't afford to give them bonuses, or buy them beer on fridays as often.
Free markets are okay so long as workers don't suffer under them. When they do, that's when they don't work anymore.
http://reaching-oblivion.blogspot.com/
John: I just got done with the chapter about how the chicken slaughterers beat the NRA. It was inspirational. And yes, the Supreme Court was all that stood in FDR's way. I found myself wondering if things would turn out the same today if push comes to shove...
Relentless: You relentlessly read me in the worst light possible. When have I ever said anything against "The worker?" I performed manual labor outside most of my life so I know what it's like to work hard for little pay.
Please don't accuse me of ridiculing working people and for heaven's sake don't accuse me of being a supporter of slavery.
I don't have a lot but what I have I got through honest work and the sweat of my brow. It upsets me to see laziness and willful ignorance rewarded.
That criticism is not directed at the working class: It is directed mostly at politicians, ignorant citizens who believe in something for nothing, and the finance geniuses who constructed the monstrosity that is now collapsing upon us.
It is not the government's job to determine prices. Adam Smith also said that capitalism would be a jungle without a moral code. We have lost that code; it is government's job to set and enforce that code but otherwise stay out of the way.
Go check out this post from awhile back about a Canadian's perspective on the role of government and a Texan's response. It's funny.
http://warskill.blogspot.com/2008/07/dumb-news-funny-comment.html
Minimum wage. That is the gov'ts responsibility, that you don't think so leaves you in a minority.
If you have worked, then why don't you want future workers getting paid decently?
There is no willful ignorance or laziness being rewarded when you pay workers a decent wage.
Also, I don't want to read what Texans think about politics. Canada has a higher standard of living than the States. Free market or not.
Ridicule of workers:
You wrote that the millions of construction jobs wouldn't be filled implying that people don't want to perform manual labour, and would rather stay on welfare, or work a less arduous job.
You wrote that the millions of construction jobs wouldn't be filled implying that people don't want to perform manual labour, and would rather stay on welfare, or work a less arduous job.
We have a whole class of people who will not roll up their sleeves and perform manual labor, and that is to our national discredit and disgrace. I criticize these people harshly. By definition, these are not working people, therefore I am not criticizing the working class.
Our government has been hijacked by the weak to chain the strong (those who work), rewarding the weak by giving them something for nothing on the backs of the strong. Any echoes of Nietzsche in there?
Giving money to weaker people is a demonstration of strength. The actions says, "I have so much strength (in the form of money) that I can give you some of it without being weakened."
The weak have to be able to survive don't they? I agree that welfare is not a permanent solution, but Sweden seems to be doing better than America, and welfare over there is about the equivalent of 20$ an hour.
It's not a good principle to reward lack of work with a cheque (I agree), but it's better than having people living on the streets, or robbing liquor stores.
Why do you think crime is such a problem is America, and not as much of a problem in a place like Canada?
I agree with charity, but it's not government's role to take from me to give to thee. If Sweden does it that way it's none of my business. It's their country, not mine.
Don't even get me started on crime in America. We have a culture that celebrates "getting over" and laughing at people who work hard.
How is it we have third generation welfare recipients while new immigrants quickly climb the ladder?
We have the richest, fattest poor people in the world. Immigrants who come here appreciate the opportunity and come from parts of the world where the iron law is, you don't work you don't eat. This is why I am a strong proponent of legal immigration.
"Virtue begat prosperity and the daughter killed the mother"
-- Cotton Mather
I'll never understand the mindset of those who think raising the minimum wage is somehow different than a dog chasing its tail.
Is it the symbology of the increased numbers that just FEELS good to them? Maybe i'm just not nuanced enough to grasp the self esteem advantages to those who merely THINK they are getting somewhere.
Anon: It takes a lot of nuance to understand neo-liberalism. We caveman conservatives just don't get it.
relentless said "Why can't they [wage rates] be established at a reasonable (just) level?"
this is the exact mindset that causes all sorts of problems. why cant wages just set to a reasonable level? because nobody, and i mean NOBODY, has the knowledge to determine what is a reasonable wage for all the various jobs in our country. the myth that someone, or some group of govt workers, can figure this out is ludicrous. the govt cant do anything well, yet you think they can figure out the correct (just) wage for every job in the country? why in the world would you think they can do that?
Minimum wage is what I had in mind, not all wages, I agree that that would be more than the gov't could handle. And it doesn't just make me feel good to increase a number (minimum wage), it decreases the suffering of people living on the minimum wage for it to be set higher.
This can be testified to in every country, (which is almost, literally EVERY country) where the minimum wage is higher than in the States.
This is not a "social construct" or "symbology" (whatever those mean) this is about social justice. Anyone against raising the wages of the poorest earners amongst us should be ashamed of themselves (as Nazis and slavery advocates should be).
It's not that gov't can or can't do anything or even one thing right, it's that people need to make enough to live in relative comfort; in scenarios where turning to crime, etc... aren't (economically) reasonable alternative. Living with the hourly minimum wage in the states, working 60 hours a week would make the alternative of buying a cheap gun at the corner store and robbing your or my house a reasonable alternative (speaking economically and not morally).
It's not about principles, small vs. big gov't or anything else. It's purely a matter of social justice and common decency to raise the minimum wage.
It's not me, the supposed sophisticated neo-liberal that is turning this into a more complicated matter than it is. It's you slack jawed hick conservatives that are making this into a matter of principles, or ideology clashes, when really it is not.
http://reaching-oblivion.blogspot.com/
This is economics, not ideology.
You invoke nazism and slavery way too much. These were evil institution and you trivialize them by overuse. Give it a rest, along with the name-calling. It's getting stale.
"Minimum wage is what I had in mind, not all wages, I agree that that would be more than the gov't could handle."
if you agree they can't handle them all, then why would you think they can handle a few? what special knowledge of the labor markets do govt employees have that allows them to determine the minimum wage that must be paid for every single job that could be done?
no matter the rate you choose, you are pricing at least some labor out of jobs. the higher the minimum wage, the more labor you are keeping our of work.
why are you willing to trust the market for all wages above the minimum? do you think that the market works higher up the wage latter, but not at the bottom? why do those greedy, heartless business owners pay high wages to some workers? there's no law that says they have to? what's in it for them to pay anyone $25 or $50 or even $100 per hour?
do you think that all labor, every single job you could ever imagine, no matter the skill level of the worker...no matter the ease of the job...is worth what some govt bureaucrat decides is the proper minimum amount to be paid per hour?
if you really think a minimum wage is so great, what would you think of a $25/hr minimum? talk about social justice. a huge portion of the workforce would get a huge raise. that would be fantastic, right?
are you completely numb to business realities? you just increased the labor costs for businesses. they have to react in some way. some will hire fewer people. some will raise prices. some will lay off workers. but they must react to this forced & contrived intervention.
you seem so sure that govt always has the answers to our problems. but think about this...what does govt do well? name one thing. i contend that everywhere govt sticks its nose, they screw things up. i contend that govt does nothing well.
when private entities perform so poorly, they go out of business. it happens all the time. every day some business enterprise fails and people lose their jobs. but govt never goes out of business. ever. despite causing problems that are way beyond the scale of any private entitity.
if facinates me greatly that so many have so much confidence in a group (govt) that has never done anything to deserve any confidence whatsoever.
The post office, nationalized helath care (in Canada), issuing drivers licenses, etc...
The gov't shouldn't set the minimum wage at a level that it would force small businesses to shut down because they can't afford to pay the cashiers 25$ an hour, but I think that 10$ an hour, for even the most menial job would be feasible (fit into reality).
If businesses are forced to shrink their workforce, increase prices, etc... so much the worse for them (although I don't think these are real problems). It is a matter of decency to pay people a respectable wage, no matter what job they perform (especially the most menial that give little satisfaction, but someone has to do).
The minimum wage is higher in other places, so the economic realities argument doesn't hold. America could handle a big hike in the minimum wage, and the sectors that couldn't handle it deserve to be no more (although I don't know what those sectors would be). Financial and Automotives that seem to be having the most trouble are also fairly high paying industries.
If I couldn't handle paying people $7 dollars an hour, or about 1100 dollars a month, I don't deserve to be doing business. It's just not ethical to pay people such a low wage.
The mimimum wage is Canada is $8.50; are you telling me that Canada can handle it, but the USA can't?
Comparably, Canada's economy is doing splendidly. We still have a surplus and all of this while giving people free health care who couldn't afford it, and giving people a more respectable wage when they first enter the workforce.
I know that no one should stay at the minimum wage for too long, but for people who do, they deserve to be able to eat after working 40 hours a week. Again, it's just common decency, and I don't buy your arguments about raising the minimum wage not fitting into economic reality. That's a demonstrable things to argue. Why not at least try it and see if you're actually right?
the post office??? seriously? the post office is a joke and exists only b/c it is a govt protected monopoly.
driver's licenses??? surely you jest. have you ever spent time in a DMV?
health care? hmmm...how come so many canadians need to cross the border for surgery? what the wait in canada for an MRI? how many canadians die every year waiting to see a specialist?
is that the best you can do? govt controls almost everything. surely you can think of something they do well.
do you think either of the post office or DMV could exist as private enterprises? there is not a chance in hell either of them could last more than 2 years in a competitive environment. they exist only by the force of law. and the citizens suffer from their existence every single day.
here's what you said about the minimum wage: "...but I think..."
you THINK? why would you think YOU know more than a business owner? they're actually out there, employing people, helping people by providing jobs. and you "think." you never answered why a business owner pays some people more than the minimum, but can't be trusted at the low end of the pay scale.
you're ok with a business shutting down b/c they can't afford to pay what you "think" is a fair minimum wage? you're ok with those workers making $0/hr instead of $9.50/hr, because you "think" $10/hr is the fair minimum??? that's your definition of decency?
what's the unemployment rate in canada? hint: more than the US.
do you think people stagnate in minimum wage jobs their entire lives? people START working in minimum wage jobs...then move up the career ladder. when you raise the minimum you keep more people from getting that first job.
we have tried raising the minimum wage. many times. and every single time unemployment in that segment increases. but you're ok with that b/c that's decency in your eyes.
what nerve you have preaching to business owners about decency. you're as bad as the burearocrats that "think" they know all they answers to all the world's problems. it's so easy to "think" with other people's money.
First off, some people get paid more because they have special skills or talents (is that a big secret?).
The post office gets me my packages and mail on time. I don't see how they're not doing a good job. I have a license. Also, people are on waiting lists here in Canada, as opposed to not getting any treatment in the States.
If there wouldn't work in the private sector, I'm glad they're gov't institutions. How about public schools to add to the list of gov't institutions that work well. They work well here. I don't know about the States, but I assume it's much the same.
As far as unemployment goes, Canada is a smaller country than the US. That should be expected.
The fact that minimum wage is what people make to start off and move up is just not always true. Anyways, for that period people can't live off of the current minimum.
Welfare is for those who can't get employment, and in countries like sweden it's high enough to live off of. And I do think not working is better than working for 6.50 an hour.
What you say about the DMV and post office is propaganda. They're working institutions. If your post gets caught up in the mail, or you can't get your drivers test, then you can say they don't work. That they wouldn't survive in the private sector is just another argument for gov't intervention since they are institution we need.
you "think" and "assume" way too much. you need to start dealing in facts and realities. it's fine for you and everyone else to have their own opinions, but yours are not based on any kind of research. you just propose what seems "right" and "fair" and "just." in almost every case, what you propose would have a negative on the very people you think you're helping.
you "think" it's decent to pay a "fair" wage. but you ignore the reality that forcing that on businesses always causes them to hire fewer people at the margins...the very poor people you're proposing to help.
you "assume" our schools work just fine. how about investigating the issue instead??? what you find may shock you.
our public schools are horrible in many cases. did you notice that obama won't be using the dc public schools for his kids? hmmm, i wonder why that is??????
why in the world would one "expect" to see higher unemployment in a smaller country? it has absolutely nothing to do with the size of the country. it has everything to do with policies and their effects on markets. if the US changed the minimum wage to $20/hr, i guarantee you our unemployment would quickly rise above canada's.
you should stick to arguing nietzsche, b/c you clearly know nothing about economics or markets.
You're arguments are just as out of the air as mine, if not more so. I have seen people hire workers for 8$ an hour (Canadian minimum wage) and make so much more off of them, and take that as their profit. In reality they could afford to pay them 12 or 15 dollars, but since they don't have to they pay them the minimum.
I haven't seen you present any figure to me either. You're just assuming that your positions are right like any free-market nut-case. I can't imagine 2 dollars an hour forcing businesses to hire less staff. Every business I know of hires the minimum amount of staff it can afford. How could they possibly hire less? You're arguing cruelty and inhumanity. I'm arguing fairness and social justice. It's not like you have a crystal ball anymore than I do.
I am a builder here in Canada. Even while the markets are cooling off, I can afford to pay general labourers (unskilled) over $10.
I can't imagine any industry that is not able to do that. Small businesses make profit. Paying their workers more cuts into their profit. They won't close down, or hire less staff (which is non-sensical. I have exactly the number of people working for me that I need, no more no less).
Also, Canada has a smaller economy. That's why unemployment is higher. We don't have many of the industries, or in the same extent as in the States. Our auto bailout will be about 7 billion if if gets through. Also what counts as unemployed in different here as compared to their. But I don't know of an economist that's saying it's because the minimum wage is two dollars an hour higher.
spoken like a true socialist...
You say that as if it's some sort of a slur. Look at the socialist (not communist) countries of the world. Sweden, Finland, Germany, France, etc... What aside from social-democractic policies do these countries have in common? I would swim across the Atlantic Ocean, away from the States to live in any of them if the only other alternative was God's country, USA.
The fact that you think social-democracy is evil, or for dumb people shows just how indoctrinated in America juice and hamburgers you really are.
I gave you two alternatives in the course of this discussion. Keep the status quo e.g. unlivably low minimum wage; or it could be boosted up a bit. You rebuted with every reason in the book to think that that would be a bad thing to do.
If I agreed with you that raising the minimum wage didn't make sense (economically), I would follow that up expressions like, "unfortunately" and "too bad, eh." You converse as if, having peopple earning less than 15thousand dollars a year is a good thing, and "don't you take that away from 'em." I know hard working people who have been earning at or around the minimum wage for over a year now, so don't make it seem like it's for teenagers, and incompotent adults.
So, you either don't care about the weakest people amongst you, or you're just so swept up in Adam Smith that you can't get past his "dream... of a free... market (said while looking into the sky, and tearing up)."
And don't make it seem like I'm some sort of a bitch for thinking this way. I'm an unapologetic Nietzschean. He's the guy who said "To get the most fruitfulness out of life one must live dangerously," "In life's game of war; what does not kill me can only make me stronger," "What is good?--All that increases the feeling of power, will to power, power itself, in man. What is bad?--All that proceeds from weakness," "Christianity has taken the part of all the weak, the low, the ill-constituted, it has made an ideal out of the antagonism to the preservative instincts of strong life..."
I'll explain how Christianity has done that if you'd like, or you could just read this:http://www.fns.org.uk/ac.htm (translated by H.L. Mencken, you problably know who he is)
http://reaching-oblivion.blogspot.com/
Relentless: The fundamental flaw in your argument is that someone has to intervene in the market to make happen what you want to happen. Who is that? A bureaucrat?
In a fair, level playing field the laws of supply and demand apply also to buying and selling labor. If an employer offers too little, workers will find a job elsewhere. Setting employment costs too high can discourage employment. Look at your socialist paradise of France. It costs too much to employ someone and you can't fire them, so businesses just do without and unemployment is chronically high.
Here in the states, Republicrats and Demicans conspire with business owners to abuse those who've come here illegally looking for work. They pay the illegals below market prices for labor, distorting the market and cutting out the American worker.
Another case in point is car manufacturing in liberal, business-unfriendly Michigan and Illinois, versus car manufacturing in the conservative, business frinedly south. The south prospers and sells cars while Michigan is bankrupt. Look at California, by itself once the 10th richest economy in the world. Socialism has broken it and brought it to bankrupt, third-world status.
i think you're a pig for only paying your laborer's $10/hr. surely you can afford to pay them more. will you really go out of business if you pay them $14/hr?
hopefully you recognize that logic as your own, and not mine.
When the alternative to working for minimum wage is to receive unemployment insruance workers take that until they get better prospects for emplyment that suit their skills, and abilities, instead of settling on jobs that are below their skill level.
The people who do work (maybe a few percent less than in the sotuhern US) are employed at their skill level and not underemployed.
The quality of life is better in France (as compared in USA), California (as compared to the south), and all of these other places that employ social-democratic policies.
It's not a matter of taste either. Having health care, unemployment insurance when you're between jobs, child care, less crime, etc... these all come in the social democratic package.
By the time they ask for a raise from 10$ an hour to anything more, they've already picked up a skill, and are capable of making much more than 10$ an hour. The point is that they could live on 10$ an hour until they had time to pick up that skill, and we're not forced to live well below the poverty line earning 6.50$ an hour.
Relentless: You still haven't answered why you don't pay your workers more. Exploitation?
You've obviously never lived in France or the US. There is no comparison in the quality of living. The US is much better. Just look a European plumbing, for pete's sake. Gas is $10/gallon and you pay over 70% of your salary to taxes. Crime is about the same.
And don't get me started on the rigid class structure. I had Friends from Congo when I lived in Germany and they lived in Paris. They had some interesting stories about what it's like to walk around wearing dark skin.
Europe has some serious race and class issues that thankfully we've put behind us here in North America. We became the New World because the old one leaves a lot to be desired.
gee....that sure sounds a lot like "to each according to his needs, from each according to his ability."
you suffer from the exact same malady as many other collectivists/socialists/communists. and that is, you think you know more than the market. and your thought processes are grounded in what you feel is the right thing to do. i have no doubt that you really do care about the little guy, and you really do think you're helping. the problem is you're wrong. collectivist policies hurt the little guy (and the big guy). i'm not rich...i dont advocate on my own behalf. i advocate for freedom...b/c hundreds of years of experience shows that freedom is the best policy...for everyone, rich and poor alike.
history shows us that people often respond in predictable ways. i don't care what the intention of a law is. what matters is how people respond to it. the intentions of many who advocate for minimum wage laws are beyond reproach (others, on the other hand, advocate for minimum wage laws as a protection scheme for certain parts of the labor market). but history shows time and again that people respond to minimum wage laws in a predictable fashion. these laws always cause increased unemployment among the very people that are intended to benefit from the higher wage. the minimum wage is basically a tax on labor. and an iron law of economics is that if you tax something you will get less of it. nothing will ever change that. no amount of good intentions will change it.
slap a tax on tennis shoes, and you will get less of them.
tax canadian lumber, and you'll get less canadian lumber.
tax luxury boats, and you'll get fewer luxury boats.
tax labor, and you'll get end up with less labor (more unemployed).
those are immutable facts. i dont care how caring you are, or how heartless/uncaring/stupid you think i am, it cannot and will not change the fact that if you tax labor, you're going to get less labor (and minimum wage laws are a tax on labor).
i dont want to sound preachy and condescending to you (b/c years ago i thought the same way you do...i thought that policies should be based on what feels right, not what actually is right). i suggest you try to educate yourself in economics with the same intensity with which you've taken on nietzsche. if you can understand nietzsche, economics should be easy for you.
here's a good starting point:
henry hazlitt's economics in one lesson.
you can find a free pdf version here: http://www.hacer.org/pdf/Hazlitt00.pdf
Okay, I'll try ot respond to both of you.
Russell, perhaps my strong feelings of social justice are clogging my thinking and keeping my economic views out of line with reality.
I'm not really the type of person that likes math, economics, etc... I've read a little bit of economics, but I just don't think that economic matters are important (or interesting for that matter) unless you're poor. So, naturally I'd advocate economic policies that would help poor people to whom economics 'really' does matters. If the free market keeps people off the streets and out of poverty, so much the better for the free market.
Also, your idea of freedom seems quite shallow. After a certain point (as long as one family doesn't own/run everything indefinately because no one has a chance to overtake them economically) economic freedom seems almost completely superfluous; while I couldn't imagine anyone suggesting the same thing about freedom of speech, religion, etc... which seem much more significant freedoms that really need protecting. For that reason it seems odd to me for someone to care so much for economic freedom.
Silverfiddle, I think I answered the question about the wages of my own workers. My workers, like all other have a chance to prosper, by picking up a trade, learning how to contract out work, getting hired by a bigger company, etc... (which I think you think is enough for them). I think that that's great, but what if the worker is incompotent? What if he gets hurt on the job site? What if his wife gets pregnant unexpectadly? What if... any other number of lifes contingencies befall him? In a social democratic country he would have unemployment insurance, worker compensation, health care, child care, etc... and a wage that keeps him above the poverty line, even if he's not able to get further than it ($10/hour).
The idea of freedom seems to be a key here. While I'm for the freedom for someone to make billions of dollars a year, I'd also like people who are not as skilled/fortunate to have a parachute for themselves in case they aren't able to prosper for any reason.
I think you guys may be caught up on lazy people who just don't want to work. Although there may be no way to avoid them taking advantage of these policies as well, I really don't think it's as big a deal as you guys do. If some or even most of my salary goes to a combo of needy people who are willing to work, unwilling to work, unable to work, too lazy to work, etc... it's not a big deal to me as long as I can eat chinese food, read books, travel a little, and not be worried about my financial situation all the time.
The salaries that are taxed 70% are usually large enough to allow for all of the things that make life enjoyable. Also, the more you make the better your credit, so it's not like a doctor paying 70% of his annual salary in taves can't take out a mortgage on a big house a yacht, etc... (and evne if he can't, is that such a big deal?)
you admit that you know little about economics, yet you think nothing of arguing for policies that you THINK will help the poor.
that would be akin to me arguing nietzsche with you. i know i don't understand him well enough to argue with anyone about him, let alone an expert.
caring about the poor is not a sufficient qualification to make economic arguments on their behalf. many of the things you think will help the poor have been tried over and over...and they've never worked, and never will. the standard of living of the poor in the US is high not because of govt intervention, it's high IN SPITE OF those interventions. it would be even higher if govt stopped trying to help the poor.
it's a shame you care so little about your the freedom of others...it's a tragedy that you care so little about your own.
Economic freedom? Yes, I could give a shit about it, so long as... you know whatever. It's the other types of freedom that seem essential to a democracy (of course a certain amount of economic freedom is important too).
You seem like a free market ideologue. I just don't think poor people in the USA are better off than those in Sweden. If you can convince me of that, you've converted me.
i don't want to convert you. i want you to convert yourself. i want people like you, those that advocate for particular policies with no evidence to support it whatsoever, to investigate econmics. i want you to discover that you're wrong, not just parrot what someone else tells you.
think about this: what has informed your economic thinking up to this point in your life? what makes you advocate for minimum wage laws? who has told you that such laws are good for poor people? is it conceivable to you that you might be wrong?
if you're like i used to be, you get such beliefs and ideas and ideals from the mainstream media outlets. before i'd ever read an economics book i "knew" that minimum wage laws were good. only heartless people opposed them. i "knew" the rich didn't pay enough taxes. i "knew" the rich needed to be taxed more to help the poor. how did i know those things? b/c thats what i heard on the news day in and day out as i grew up.
nobody forced me to change what i "knew." it just seemed strange to me that we all "knew" what to do, yet our problems were never solved. no matter how much money the govt spent trying to eliminate poverty, they couldn't do it. i started to wonder how that could be, since we "knew" how to cure it. i started reading...old stuff at first...how/why our country was founded. how we veered from the path our founders provided. why did we fight the british? for our freedom. people like you, those happy to pay their taxes as long as the king provided chinese food now and again...they stayed home, while others risked their lives and their fortunes for freedom.
[watch this: http://www.youtube.com/watch?v=4MC37aIRX5c ]
so yes, i'm an idealogue. but not just for free markets...for FREEDOM in general.
the freedom to make an agreement with someone to pay him $5/hr to wash my car or rake my leaves. why should that agreement be the business of anyone in washington dc?
freedom to buy a toilet that flushes doenst clog all the time b/c of govt.
freedom to buy a high-flow shower head.
freedom to buy more than 1 gun a month if i so choose.
freedom to carry a gun for protection since the govt cant protect me.
freedom to opt out of the govts crazy social security ponzi scheme.
freedom to develop a drug without intervention from the FDA.
freedom to keep more of the money i earn.
yeah, i'm an idealogue on behalf of freedom. those who don't agree out of ignorance i can understand. i've been there. those who don't agree out of principle i pity.
So, am I to assume you'd also advocate the freedom for women to have abortions, gays to marry eachother, and nut jobs to burn the American flag?
Sounds good as long as you're consistent. It just seems reasonable to suspend some of those freedoms and liberties if they prove to be extremely detrimental to the common good, for instance the freedom to take extremely addictive drugs, or buy/build nuclear bombs (do I have to explain how these might out-weight the freedom principle?).
Also, you haven't explained to me how if a poor person is so much better off in the USA... why it seems like Sweden is so much better for them? Surely the free market system is not only good for America, and yet Sweden seems to be doing, well, better than America in so many ways (especially economically)? They're unemployed make more than most Americans last time I checked.
The mainstream media has never compared Sweden to America as far as I am aware.
Also it doesn't seem as cut and clear as you've explained it. Freedom from cruelty, torture, and along those lines, poverty could also be listed off the way you've arranged it. You've listed both positive and negative freedoms (e.g. -freedoms from, and +freedoms to...)
If freedom is your fundamental principle, I could take that and run almost anywhere with it. Surely you have some qualifiers you've failed to mention?
The reason the agreement between you and the leaf raker should be Washington, D.C.'s business is because you could potentially not pay him/her at all, have them slip on your dogs chew toy and crack their head open on the driveway, etc... or just generally abuse them with no reprecussions.
All of the freedoms you list have many potential harmful consequences. That freedom is worth all those consequences seems like a question that is up for discussion. I'm not sure that if I study economics I would reach your conclusions, afterall there are plenty of social-democratic economists.
Economics seems as up in the air as nutrition, literary criticism, etc... it doesn't seem like everyone has agreed one way or another, and that each side has some legitiamte points.
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