TPM Cafe is hosting a roundtable on economist James Galbraith's new book The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. Here's a bit from Galbraith's introductory post:
The judicial coup of December 2000 that installed Bush and Cheney brought back some of Reagan's men and his most extreme policies -- tax cuts for the wealthy, big increases in military spending, aggressive deregulation. But it didn't bring back the ideas. Instead, it became clear that Bush and Cheney had no real ideas, no larger public justification. They cut taxes to enrich their supporters. For the same reason, they outsourced to Blackwater and Halliburton and pursued military pipe dreams like Missile Defense. They were willing to have the government spend like a drunken sailor in 2003/4 to boost the economy before the election. They placed lobbyists in charge of the regulators, representing, in every case, the most extreme anti-regulation perspective. (Not so long ago, Bush's financial regulators showed up at a press conference with a chainsaw.) Under Bush and Cheney, oil and gas, drug companies and defense contractors, insurers and usurers control the government of the United States, and it does what they want. This is the predator state.
...
Of course, we have very different views of where to go from here. Reagan abandoned the free market in practice, and Bush abandoned it in theory. Why? Because it is a useless, romantic concept, with minimal real world application. In the world of arcane technologies, structured financial derivatives and a precarious global atmosphere, decentralized markets and "supply-and-demand" decide very little, and "market discipline" is a contradiction in terms The job of discipline belongs to governments. And they must act not only on behalf of today's citizens but of all those yet to come - of those who need clean food and water, of those who need safe cars, appliances and workplaces, and of those will be around the low countries when the ice caps melt. Dealing with problems means thinking ahead, from an independent, forward-looking point of view. This is called planning. It means providing stable, predictable rules for the private sector. This is called setting standards. And in the present international economic climate, it means giving the rest of the world a reason to finance the continuing prosperity of the United States.
The Predator State criticizes conservative economics, but that's not the big point. My argument is directed largely at liberals. And especially at those liberals who remain transfixed by the "logic" of markets, by the faded political clout of the Reagan rhetoric, and by the idea that respectability requires continuous genuflection at the shrines of the Chicago School. It is these mental habits that we, who are liberals, must break. The Predator State is aimed at the notion that the liberal formula should be "making markets work."
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Comments
View as Flat
Sean Casten Posted 12:54 am
12 Aug 2008
No barriers to entry
No barriers to exit
Price transparency
No individual company can independently affect price.
It is of course impossible to attain this theory in reality. Any capital intensive business has innate barriers to entry since it is so expensive to get into the business. (for example, if you wanted to get into the ethylene business tomorrow, you'd have the small problem of having to build an ethylene plant first.) Prices are never fully transparent, and Nobel prizes have been won by folks who pointed out that technological progress essentially proceeds because businesses know that the first one to own a new technology can earn additional profits before the rest of the market catches up. Some markets are predisposed to a few large producers by the nature of their scale, each of whom have the ability to affect price. But the biggest problem is that no business wants to be in a competitive market and works hard to ensure that their market isn't competitive (at least for their competitors).
So does this mean we throw up our hands and quibble about whether we have to choose between socialism and a kleptocracy? No - although that is essentially the issue as Galbraith has framed it. Much better to demand that government maintain an oversight to ensure that we are always striving for that free-market ideal. So we create the SEC to protect against insider trading, and maintain price transparency. We create anti-trust enforcers to keep an eye out for collusion and make sure that mergers don't consolidate too much market power in any one company. We create and maintain a robust set of bankruptcy courts to ensure that failed businesses can fail (and that those who run failed businesses can get back on their feet thereafter, lest their lack of long-term options create a barrier to exit).
Those paradigms need to be maintained vigorously, for it will always been in the interest of the for-profit business community to control those levers of power. But just because it is in their interest doesn't mean that government cannot maintain control, and for much of the US' history, government has maintained control. Yes, we had our robber barrons in the 20s and we took corrective actions. Many of those corrective actions have since been rolled back (for example, the Glass-Stegall act that ushered in the latest wave of banking consolidations), and a very strong case can be made that those protections ought to be re-established and more put in their place to address the problems raised by the current pendulum swing towards corporate interests and away from competitive market interests.
But to argue that the current crises are a sign of a free market failure is to totally mis-use the term. If it's simply sloppy writing, then Galbraith is being lazy. If it's a conscious choice to manipulate language to further socialist agendas, it's malevolent. But in all cases, it is dangerous.
In other words, the stuff I said here.
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Jon Rynn Posted 1:03 am
12 Aug 2008
The differences will come when it gets down to the brass tacks of what particular policies we're talking about. Galbraith has talked about planning, for instance. I think some planning would be a great idea, and even there we might agree more than you think, "planning" is one of those red flags. But if memory serves, Galbraith's actual "plan" for "plans" was pretty mild. I would like to see 1 trillion dollars annually allocated to a "plan" to transform the American economy, which I think is way beyond what Galbraith is currently talking about. So at this point, I think thou protest too much, or however you conjugate Elizabethan English.
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amazingdrx Posted 1:15 am
12 Aug 2008
It seems he is calling for re-regulation.
Is JKG reading the blog? Hmmm...
Hilarious.
Now watch those deluded by the rhetoric about "free" market efficiency over the Reagan revolution years reaction. Will they turn on the godfather of the "free" market?
Put this in your think tank and zoom around the track oh mighty corportate feudalist boosters and apologists. Vrooom..sputer..cough..choke.. hehehey.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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MAD MAC Posted 1:49 am
12 Aug 2008
I stopped reading. Another intellectual dwarf I don't have time for.
Victory in Pattani
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gmobus Posted 2:31 am
12 Aug 2008
I have been writing recently (see entry from July 20) about a very different framework for understanding the economy and governance issues. The framework is from general systems science, hierarchical control theory for complex adaptive systems. Markets are part of the operations level exchange mechanisms that, in an ideal situation, work through cooperative means. But since the ideal is never found in nature, markets require many different forms of regulatory interventions to keep the whole system working toward the ideal. Such regulation is the job of the coordination level in the hierarchy. In our current model of governance that generally means government agencies.
We have been evolving toward an integrated system over the years since mankind first invented agriculture and communities larger than 500 people. We haven't reached the level of integration that one finds, say, in an organism (metabolism in a cell is a most excellent model of an integrated hierarchical control system). But it seems clear to me that that is where we are heading.
It is a hard concept to get your head around if you are ingrained with the status quo models (i.e. neoclassical economics and representative democracy). But if you can start to accept the idea that we continue to evolve both the systems in which we are embedded and in our understanding of those systems, then there is hope.
Question Everything
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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gmobus Posted 2:48 am
12 Aug 2008
He notes the contrast between Western individualistic society and the Chinese (Eastern) collectivist society and talks about the fact that a booming economy need not be based on the ideology of the former. For me, the kinds of psychological aspects that he mentions is reinforcement for some of the ideas I raise in my blog articles.
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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BILL HANNAHAN Posted 2:53 am
12 Aug 2008
Well said Sean.
The government's job is to promote regulations that keep the playing field as level and free as possible, not pick winners and losers.
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Jon Rynn Posted 3:01 am
12 Aug 2008
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Sean Casten Posted 3:02 am
12 Aug 2008
a useless, romantic concept, with minimal real world application.
or who argues that structured financial products, decentralized markets and supply and demand "decide little" and that some the world would be better if we replaced all that messy market stuff with a central planner, since only governments can take long-term discipline into account because only they can be independent...
Those philosophies are downright Marxist. Which is where the danger doth arise.
The problem is not that government doesn't have a role to look after the public good, and on that point I'm sure we do agree. The problem is that governments are no less fallible than markets, but without the self-correction. A responsible government uses free markets as a tool to meet social ends. An irresponsible one either throws out market principles in the name of corporate profiteering (see: Bush/Cheney) or throws out market principles in the name of enlightened central planners (see: Marx). The former is greedy and the latter is idealistic, but both are irresponsible, and the description of the book posted above sure looks a lot like the latter.
(And yeah, while I'm willing to give him the benefit of the doubt, my own red-flags go up when I see someone using language that is so appealing to the worst of the left and so toxic to the free market crowd. Red meat is clearly being thrown, and I would be surprised if it wasn't being thrown with intent.)
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amazingdrx Posted 3:03 am
12 Aug 2008
Sacrifice for the collective is built into the economy. Right in the cost of products.
How about we reign in "free" market corruption and go on good old FDR style rationing? A wartime economy demands sacrifice. So build it in to the system. Only so many hours/kwhs of power per day. Only so many gallons of gas per week. Energy price inflation would quickly be stabilized with lower demand.
What would JKG say to that, semi-socialist economic controls. Rationing. Setting prices is going too far. And stopping others from price fixing ought to proceed through treaty.
Cooperate on saving energy in wartime, that's patriotic sacrifice that most people would not mind. As they did during WW2. Keep that sacrifice fair with rationing.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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gmobus Posted 3:56 am
12 Aug 2008
In metabolism we see a model of high degree of cooperation and coordination regulation. Homeostasis and autopoiesis are very good models of a sustainable steady-state system. I suspect that is what the human system needs to move toward.
The ecosystem is much more complex than the human social system, even with our cultures and technologies. This is because we are already a part of the ecosystem (an aggressive part!) Also, the Earth taken as a whole involves many different living and non-living systems components that are inherently in competition. Evolution on the scale of the world as a whole is still operating on competition as a main factor in selection.
The human system is in competition with all the other natural systems but we have transcended the natural feedbacks that would ensure the kinds of balanced competition that operates among all other species. In order for humanity to achieve a self-management (self-imposed constraints on growth, flow through, etc.), so as to achieve our own balance with the rest of nature, we need to develop subsystems that are more cooperative or regulated so as to maintain coordination. We are going to have to fit into the Ecos, not subjugate it.
So, just as proto-cells evolved toward internal cooperative processes and regulation by autopoietic structures so as to become self-sustaining even while cells competed with one another, our human social system needs to find this kind of steady-state internal functioning.
Right now, under the beliefs in competition (as a means for improving the products and services) and markets and capitalism are compelling us to continue to do things that are ultimately unsustainable. This model has served its evolutionary purpose. We got wealth. But now that we do we need new models of operations. And that is going to be tough on so many people who are deeply invested in the old models. We've seen that kind of response in these comments!
George
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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Jason D Scorse Posted 4:17 am
12 Aug 2008
In the Obama administration (with adults back in charge) I'm sure we will see a return to sensible regulation, coupled with greater transparency, and markets will once again do what they do best-- produce wealth and innovation, while the government sets parameters that reflect the public good.
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Jon Rynn Posted 4:55 am
12 Aug 2008
Now, as to whether the whole market system should be thrown out, first of all, it's possible (but impossible to predict with confidence) that if we don't do some form of national planning now -- at least in my trillion dollar range -- and we bend over backwards not to pick winners, then I'm afraid those strategies might fail, and if it becomes a real awful emergency, then you're looking at a real World War II governmental intervention, in which the governmental budget was about 1/3 of GDP.
As nice as it would be if we could "design" the market to achieve a switch to carbon-free electricity and oil-free transportation, we could certainly plan such a switch, and as bad as it would turn out, it would turn out, that is, we'd get the job done. So in a way, the burden of proof is on market advocates, it seems to me. The governmental alternative is there -- although frankly, I don't know that anyone's really taken a shot at it (I took a small shot at it here)
As for governments getting it just as bad as markets, here's the big difference (something Chomsky has pointed out, you'll be thrilled to know): governmental planning in a democracy is, well, democratic, that is, the public participates, and no plan would be implemented unless there was a solid majority behind it. In a market system, we have to hope that our "betters", that is, for the most part the CEO's of the top 200 corporations or so, make the right decisions because market forces (however "desgined") force them, against their will, to make the right decisions. I'm not saying it can't be done, but it needs to be compared to the alternative. And that's were you have me (Galbraith), really, because the planning alternative really needs to be fleshed out.
And just to repeat because it often needs to be repeated: I'm not talking about repealing the market, far from it, I'm talking about constructing a system that encourages the long-term flourishing of the market. Let the market do what the market does best, and let the government do what the market screws up. Obviously, we have to debate the dividing line.
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amazingdrx Posted 5:15 am
12 Aug 2008
Couple this with a release of oil from the reserve only for domestic consum,ption, at a reduced price. Maybe the pre-emergency price, or some price between the rising "free" market price and the reserve price.
That would tend to stave off the effects of speculation on citizens dependent on oil who can't hedge their risk. the government would hedge it for us. With the rationing/reserve plan.
Is that too much interference in "free' markets? In a world where most oil consuming nations like china set internal prices no. It is economic insurance.
Control demand to stabilize price.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Jon Rynn Posted 5:25 am
12 Aug 2008
You could extend that to other things too, I suppose, although rationing goes against the free market in incomes and consumption preferences, I believe, because rationing gives everyone an equal income in something (egad!), and also is basically making somebody consume something they might not really be interested in. It would probably lead to secondary markets because of that.
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amazingdrx Posted 5:34 am
12 Aug 2008
People would go to bikes and mass transit and plugin hybrids. That would get around rationing.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Sean Casten Posted 5:40 am
12 Aug 2008
Markets work where there is an economic incentives. Arguing that big change isn't possible without government oversight & direction is only true if it is also true that one cannot put a market incentive in place. In some instances, this is clearly true. In other cases, it clearly isn't. (Indeed, the whole conversation about carbon pricing is fundamentally about putting this incentive in place.) And make no mistake - when those incentives come in, markets respond way, way faster than gov'ts. The opening up of wholesale power access in the 1992 EPACT led immediately to the construction of 200 GW of independent power plants, or about 20% of the US fleet, in just 5 years. There was no precedent anywhere in the prior regulated history of the US power industry for deployment that quickly. (I'm not suggesting that these generators were ideal, or that the market signal was complete - simply pointing it out as an example of how quick markets can react given a signal, even in areas that were previously "known" to be far too big to enable rapid change independent of gov't oversight.)
I don't see how the burden of proof is on market advocates. Notwithstanding this post and current complaints about Bush, the vast majority of the US economy is subject to competitive free market principles. Absent those markets, not only do we not have iPhones, internets and Whole Foods, but we also don't have GM shareholders in a panic over their collapsing investment. Moreover, those economies who have favored top-down control are universally shi**y places to live. I put a much higher burden of proof on anyone who claims that a top-down model doesn't end up repeating the mistakes of the pre-Perestroika eastern Europe than on one who claims that markets can respond quickly to meet market needs provided there are competitive pressures and economic rewards.
200 corporate CEOs make decisions about how markets work? Huh? In what universe? Which of your purchasing choices are made by those CEOs? And which one of them is advocating the kind of innovation that consistently renders their companies obsolete? I get the argument that a powerful enough company will work hard to stay in power, using all tools at its disposal including influencing the regulatory process. But even Rex Tillerson doesn't get to write energy policy, nor decide what the price of oil is going to be next month.
Chomsky's point strikes me as a bit naive - and not just because it's coming from Chomsky! There's a great article in this week's New Yorker (here) making the point that democracy is much better understood as a waxing and waning of the power of various interest groups than it is as the collective will of the people. It's an interesting idea - and admittedly, somewhat vaguely distasteful - but it jibes a lot closer to my experiences on Capitol Hill than the Frank Capra version where all little voices are equivalently weighted. The most effective lobbying groups - from NRA to AIPAC - are those who's influence exceeds their pro-rata share of the electorate. (Conversely, much of what's so frustrating about intelligent energy policy is that it would benefit huge majorities of the electorate but has no organized, effective lobbyist, and therefore punches well below its weight.) Markets are in that sense much more egalitarian, since all dollars really are equivalent, in a way that voters are not. A business that doesn't sell stuff people want faces hard, immediate choices. A government that doesn't give the people what they want - but does find a way to give the most powerful interest groups what they want - doesn't face nearly the same consequences. I suspect you can think of a few examples... To believe that democratic governments will always perfectly reflect the will of the people and are therefore better suited to give people what they want than the market is terribly naive, no?
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Jason D Scorse Posted 5:44 am
12 Aug 2008
I also think that a huge Manhattan Project for alternative energy is a good idea. Even better perhaps, a national electricity grid.
All I'm opposing is the government micro-managing and getting into really stupid things like ethanol subsidies and all subsidies for specific types of technologies- fund the basic R&D, give prizes, grants, even support the infrastructure, put a price on carbon and other greenhouse gases, but DO NOT pour tons of money into one type of specific technology over the other- that's all.
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Wolverine Posted 6:23 am
12 Aug 2008
No, the environmental point of view, which is what we're supposed to be talking about here, is that environmentally harmful behaviors and products should be prohibited, or at least greatly restricted by government regulation. If you guys want to advocate your free market garbage in a vacuum that excludes the natural environment, why don't you go to some other website?
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Jason D Scorse Posted 6:31 am
12 Aug 2008
Seems like your anti-democratic rhteoric perfectly suits your authoritarian prescriptions.
These threads are supposed to be for serious discussion so if you can't handle that don't contribute. Nuff said.
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Sean Casten Posted 6:33 am
12 Aug 2008
Don't confuse a difference of opinion with respect to tactics with any disagreement about goals. I think if you review the things that Jason and I have posted here, you'll find we're both quite passionate about environmental responsibility. The question at hand is whether markets are a useful tool towards environmental ends, and more directly whether that is better or worse than top-down governmental oversight.
And bear in mind that top-down government models have a pretty lousy track record when it comes to environmental protection. (Check out the air in Beijing, or the soil quality around Chernobyl if you disagree.)
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Jon Rynn Posted 6:54 am
12 Aug 2008
So another important political scientists, Theodore Lowi, in 1964 came up with this categorization, quoting from Wikipedia: from "American Business, Public Policy, Case-Studies, and Political Theory" (1964), World Politics :
In this journal article, which reviews a book by Raymond A. Bauer, Ithiel de Sola Pool, and Lewis A. Dexter, Lowi lays out his classic typology of public policy in the U.S.: distribution, regulation, and redistribution. This typology was meant to help political scientists and policy scholars build theories of policy making that could be generalized beyond particular issue areas. Distributive policies, aka "pork barrel" programs, distribute resources from the government to particular recipients; the winners are concentrated but the losers (those who ultimately pay for the distribution) are diffuse. Regulatory policies are aimed at groups or classes of targets, rather than individuals, and they typically raise costs for the targets (in which case the costs are concentrated). Redistributive policies transfer resources from one class or group to another.
So of course, everyone fulminates against "pork barrel politics", but as the New Yorker article points out, that's politics. But there are other kinds of politics, as Lowi pointed out. In fact, I will still hang tenaciously to a fourth, which I would call "government investment". Now, usually it's partly "pork barrel", since someone gains from investment, but I'm thinking of the Interstate Highway System, which involved lots of interests (and was marketed as needed for national security to boot). And somehow, one of the most corrupt political machines in history, the New York City government around the turn of the 19th to 20 centuries, built the NYC subway system.
So "vision" is possible, even within "corrupt" governmental systems. And by the way, if pluralism is OK, then ethanol is perfectly understandable -- and might even be seen as necessary, in order to log roll ethanol-pushers into backing wind and solar.
The big critique of pluralism, it seems to me, if I remember correctly, was that it often was presented as if people were never oppressed or exploited, that power could not be gathered in great force and be used for great damage -- in the "pluralist" world, lots of competitive forces were working against each other, sort of canceling each other out.
Markets certainly aren't more democratic than a democratic political system -- money talks, and there are great concentrations of economic power, which translate into concentrations of political power, another problem that pluralism had trouble explaining. Thus, the idea of anti-trust, and of tearing down the power, say, of big multinational corporations, because that would decrease their political power.
To get back to George's points a little, I think we can, as a country and as a species, try to figure out how to construct a better society, and that discussion should include which technologies to use, because humans are technological creatures. That may ocassionally lead to conclusions about which technologies are better than others -- wind and solar are better than coal, for instance. What that means is a "collective", in the good sense, conscious understanding of how the society works and how to make it better. And that can coexist very nicely with all of the other forms of politics and economics.
I don't know that that's "micro-managing", as Jason says, I think it's more setting a direction, and letting the market decide how to go in that direction -- but it could easily be picking technologies, such as the feed-in tariffs in Europe. I think you'd have to be against all of the "winner picking" that has occurred in the last 100 years -- mortgage exemptions, the interstate highway system, tax breaks, etc -- I don't know how you put Humpty-dumpty back together again, now that whole sets of technology have had a 100 year advantage, it's sort of unfair to say that the new ones, that by the way we need in order to save the biosphere, have to all of a sudden make do with a competitive marketplace. Is it too late for that?
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Jon Rynn Posted 6:57 am
12 Aug 2008
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Sean Casten Posted 7:11 am
12 Aug 2008
(But thanks for the poli sci digressions!)
Re: markets and democratic systems, my point wasn't that more $ don't have more market power than few $, but rather that - if you accept pluralism as a better description of reality - then one necessarily concludes that all votes are not truly equal. By contrast in a market system, all dollars are equal. That's not to say that $100 isn't worth 100 times as much as $1 - simply that all dollars are equal. When people decide not to buy the crap GM is putting on the road, GM loses. By contrast, if candidate X is pursuing policies under which the majority is worse off but candidate X has garnered the support of key interest groups, the public good of the majority can be trampled and candidate X still wins.
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GreyFlcn Posted 7:43 am
12 Aug 2008
i.e. Low trade barrier, and general barriers to market entry.
Or "Competitive Markets" with "Level Playing Fields". Since that incorporates both "Unsubsidized Markets" and "Equally Subsidized Markets".
But in general:
Markets are for determining:
* Prices
* Methods
Governments are for determining:
* Penalties/Incentives
Regulations/Restrictions
Oversight
Ensuring that Damages are paid for
_
Bottom Line
_____
Markets are simply highly efficient means of finding the Path of Least Resistance, and dealing with Scarcity.
Just like a PowerSaw, Markets are a wonderful and powerful tool. However when you have no control over it, a lot of damage can be done.
-David Ahlport
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Jon Rynn Posted 7:44 am
12 Aug 2008
In practice, I think that there is a mixture of all of these threads, depending on the country or region. For instance, in Sweden the big business, big labor, and government leaders all sit down together and reach a consensus on things like wage levels. Unfortunately, the "correction" to a political system often comes when the society has been so weakened that it is vulnerable to takeover by another power. In other words, it is more like a classic ecosystem correction, the species, or political system, dies. On the other hand, an economic system that only corrects when a bubble bursts can also go down the tubes.
Unfortunately, the level of discourse on the best political/economic model is pretty low. There hasn't been a lot of fleshing out of what different political/economic models would look like. The "left" hasn't been good about this, preferring to simply critique the right, and the right has gotten more and more detached from reality in pursuit of a mythical "pure market". Galbraith's father, John Kenneth Galbraith, famously put forward the idea of "countervailing power", that is, government (and unions) would serve to counteract the negative effects of large corporations. That is pretty much were we are -- unless his son advocates more planning, which I am doing. But this also should include a local aspect, in order to decentralize power -- but then, politics at a local level can be pretty bad too.
So my answer right now is, I don't have an answer. But I'm glad Galbraith is bringing up the issue, so that we can look at all of the possibilities.
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Jon Rynn Posted 7:47 am
12 Aug 2008
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Jason D Scorse Posted 7:50 am
12 Aug 2008
How about simply a market-based economy? I don't think that is too controversial. Then we can argue about the limitations and parameters but the essential character of markets allocating resources is maintained.
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Jon Rynn Posted 8:03 am
12 Aug 2008
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GreyFlcn Posted 8:04 am
12 Aug 2008
Or where the risk of a Return on Investment, and the Rate of Return may be too slow, risky, and large for private business to provide that good/service.
Flu vaccines, Education, Infrastructure, and R&D are good examples.
Where the benefit to the private individual is significantly smaller than the benefit to society as a whole. And as such, it makes sense to subsidize and lower the price of that good/service to match it's public benefit.
_
Another category is for ares which cannot be privatized, such as deep sea fishing, or air quality.
_
If anything, another argument might be made about Deficit Spending not necessarily being "evil", however when it is used, it should be used on things that will achieve a return on investment.
(i.e. Not Entitlements, or Wars)
_____
What I was mainly referring to is that I think that competitive bidding to private contractors for Government projects is a good idea.
Even in the area of R&D, Government could still act as if they were a Venture Capital fund.
(Although I would agree, University research, and Endowments are where you get a lot of R&D from)
-David Ahlport
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GreyFlcn Posted 8:12 am
12 Aug 2008
Nah I think you'd need to add a clarifier.
Otherwise the default assumption would be "Free" Markets. Since as Lakoff mentions, Republicans have been very effective at getting their concept-models out into society. And not-so-much for the Dems.
What we need to emphasize is that markets NEED regulation. Since markets are "Path of Least Resistance" machines.
Just because a Path is Efficient doesn't mean it's Ideal.
For instance, the most Efficient way for a Tank to drive to a location is to plow straight through a row of houses.
Although it's not that sexy, I think the argument is that we need "Regulated Markets".
_
I think we still need some concept-modeling and word smithing to come up with something that correctly expresses that sentiment.
-David Ahlport
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Sean Casten Posted 8:48 am
12 Aug 2008
It is this self-correction that governments lack. Eisenhower pursues an atoms-for-peace program and 50 years later we are still massively subsidizing the nuclear power industry with no easy way to change paths. Laws are passed to fund mass-transit from gasoline taxes and we end up with the goofy story last week where we might have to raid the mass-transit fund to pay for highway maintenance that is falling with VMT. And of course, there are plenty of humorous examples of laws that never get repealed from the books, like Washington state's $10,000 fine on anyone who shoots a bigfoot.
The last one is just silly, but the broader ones are much more problematic. Even when government does a perfect job at picking winners, they do a terrible job at responding to changes that would otherwise turn past-declared winners into losers. It's like taking a vote in 1969 and then finding 30 years later that - circumstances, health and participating teams notwithstanding - Joe Namath keeps winning the Superbowl MVP.
And note that this is true even in the idealistic, non-pluralistic version of democracy, because you only get to vote on things that are on the ballot and - for the most part - voters are much more attuned to losses than gains. If I'm the beneficiary of government largesse, no matter how out-dated it may be, I know exactly what I have to lose if it is eliminated. On the other hand, if I am a potential beneficiary of a market that reallocates capital in my favor once government largesse X is eliminated, how would I even know? This creates an innate conservative bias (in the sense of preserving the status quo) in electoral processes that market forces are immune from.
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Wolverine Posted 9:00 am
12 Aug 2008
Your point of view smacks of libertarianism, which is nothing but immature demands to do whatever one pleases, the environment and others be damned. People are only entitled to freedoms for which they take full responsibility. This American crap about "freedom" is ludicrous, immature, and selfish.
Sean,
There's nothing in this thread about the environment, it's all about economics. I totally disagree that the subject is "whether markets are a useful tool towards environmental ends, and more directly whether that is better or worse than top-down governmental oversight." Perhaps that was what it was intended to be, but it's just a boring economic discussion.
And come on, using China and the Soviet Union as examples of top down environmental regulation? Since when did anyone ever running those countries care about the environment?
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gmobus Posted 9:12 am
12 Aug 2008
But in the latter case it is still in process of evolving, so to speak.
Societies need two things; energy flow through to maintain life and governance of that flow through (including material flows) to maintain humanist values (ethics, etc.) The flow through, work that gets done to maintain humanist values, and distribution of the wealth gained is mediated by market mechanisms, but this is not the only mechanism for governance. Governments have existed and evolved to act like the autopoietic structures in a living system, to coordinate larger scale processes when the market alone cannot suffice. Simple time lags and complex, obscure work processes that obfuscate information (needed for any market to work well) are a substantial part of why modern markets can never be adequate mechanisms.
Finally, mankind has to learn to get along with the rest of the Ecos. We aren't doing a great job now. That implies that we need to strategically manage ourselves in ways that current governments and markets can never do.
It's a whole different way of looking at political economy in some ways, but actually not if you see the patterns of hierarchical governance that have evolved in fits and starts over man's history.
For what it is worth:
Question Everything
George Mobus,
Associate Professor, Institute of Technology,
University of Washington Tacoma,
and Professional Student for Life
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GreyFlcn Posted 10:08 am
12 Aug 2008
Or to quote everyone's favorite sociopath :P
It must be considered that there is nothing more difficult to carry out nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit by the old order, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly for fear of their adversaries, who have the laws in their favor; and partly from the doubt of men, who do not truly believe in anything new until they have had actual experience of it.
(Niccolè Machiavelli, 1469-1527)
-David Ahlport
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Jason D Scorse Posted 11:03 am
12 Aug 2008
As to socio-economic policy, if you think I'm a libertarian you haven't paid attention to anything that I've written on Grist for the past 2+ years.
We need to focus on the root causes of problems. http://www.voicesofreason.info.
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Sean Casten Posted 11:09 am
12 Aug 2008
"Losers cry louder than winners cheer"
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Jon Rynn Posted 11:22 am
12 Aug 2008
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Sean Casten Posted 11:37 am
12 Aug 2008
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Jon Rynn Posted 11:48 am
12 Aug 2008
Or look at national health care, or lack of national health insurance. That's something the government should be doing, but isn't because first, the American Medical association successfully killed it, and second, the huge private health insurance industry stands in the way of what is clearly a more efficient system.
Oligopolies, even without government support, can be horribly difficult to dislodge. Just look at the U.S. auto industry, which got stuck on big cars in the 1960s and still can't give up -- and there was also the case of the highway lobby, another example of sclerosis, killing a very efficient public transit system.
Of course, oil/coal/utilities are standing in the way of good global warming legislation. We've dealt with Big Ag over and over. All of these oligopolies do what they are "supposed to do", they look after the profits of the shareholders. As long as that's their overriding (seemingl only) goal, then the only argument for not interfering for the benefit of society, is that the market is able to constrain oligopolists, and the oligopolists are more productive and innovative without interference. But because profit is the be all and end all -- and I'm not,repeat, not saying that that is bad -- the government must be a steward, and intervene where the public "good" is being made bad.
This to some extent gets to George's point, which is to ask, How much conscious planning must be done to steer (cybernetic is from the verb "to steer") society in the "right" direction? And how do we figure out what is the "right" direction? now we get back to pluralism vs. a larger conception of the public good.
We have a quandary now (and if Wolverine is still reading, I hope this gets more interesting) because, whereas before we could simply watch the market and the interest groups fight it out and see what happens, now we have a deal killer -- the entire ecological basis for economic wealth is in trouble. Governments and markets are both to blame, it doesn't really matter which is worse. Sure, picking winners, or categories of winners, could lead us down a less efficient path,could build up constituencies and eventual sclerosis, but I think we should consider the idea that because we are in such big trouble, we will have to take some chances.
Wolverine -- part of the problem we're having here is that so many progressives and environmentalists consider economics discussions to be boring. So now we're stuck -- speaking of sclerosis -- with one dominant, overpowering economic framework, neoclassical economics. I was a friend to a person who I think was one of the best economists of the post WWII period, Seymour Melman, but he and the people he came up with did not offer an alternative to neoclassical economics. So now Galbraith is doing his best to start the process. George is giving it a try, so am I, join on in!
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Jon Rynn Posted 11:50 am
12 Aug 2008
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Sean Casten Posted 12:01 pm
12 Aug 2008
To the extent that sclerosis exists then, it is largely because the government has failed in it's role. Don't blame the business for seeking profits - but do blame the government that confuses profits for markets.
As I put it here, if you're sitting at a poker table and find that your opponent is holding 5 aces and the dealer keeps winking at him... don't waste your time yelling at the guy with the aces. He's playing to win just like you are. The problem is the dealer. So too with regulators who throw pork at businesses. The business isn't the problem.
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Jon Rynn Posted 12:35 pm
12 Aug 2008
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Colin Wright Posted 4:47 pm
12 Aug 2008
And while a rich country can survive a fair amount of this, it cannot withstand the complete control of government by predators. For what happens then, is a population crash of the prey. This, as a result of the sub-prime mortgage crisis and the systematic deregulation of securities and futures markets, we now confront in the financial crisis and the speculative commodities bubble. And if we do not reclaim and rebuild the capacity of our government to act, with purpose and on a large scale, we will eventually see far worse as the climate crisis unfolds
I know. Probably not how you use the metaphor! ;)
In any case, I hope everyone gets to read Galbraith's take on what the "market" actually is, as well as the comments and book reviews at TPM. I may have to consider buying it!
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amazingdrx Posted 5:01 pm
12 Aug 2008
Just change the name from "free" markets, to a "market based economy".
No problem, someone tell JKG to shut his cake hole. He's over the top. Hehey.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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amazingdrx Posted 5:25 pm
12 Aug 2008
Real free and fair markets need protection from insider manipulation and monopoly. Without that markets do not respond to the fundamental law of supply and demand. It's just that simple.
Just what Teddy Roosevelt knew and just what many have been trying hard to explain, against the arguments of "experts" in the field who have insisted that hardly anything is wrong at all with the present state of deregulation.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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