5 Simple Economic Reasons that the Free Market Cannot Work?

Thought I'd share this the community: http://thewaronbullshit.com/2008/06/05/free_market_cant_work/

I've been debating with this guy (I'm "j" in the comments section)--and I'll probably make this into a post on my own blog. Of course, I will have a similarly witty title: "5 Simple Economic Reasons that the Free Market CAN Work."

Thoughts, comments?

What more is there to say.

Socialists are happier.

That's all that really matters in the end, isn't it?

 

Most of that is just pure falsehood and strawman.

Free market economics assumes “perfect competition,”

Not true, Austrian economists have long argued against thinking that model is realistic and still are able to defend the market.

As for the whole argument about cartels and monopolies, that worry has been debunked numerous times. http://mises.org/story/621

The ability of children to bid is seriously limited, and people who haven’t been born yet obviously can’t bid...In a hundred years, when the world’s gone to *** from today’s environmentally destructive actions

This makes a faulty assumption that somehow, for one hundred years, no one cares about the environment. But this is silly, because people don't live every day like it's their last (or, at least, people who do tend to not have much economic influence) so constantly they will be protecting the environment since they are still living. Also, people generally like to make the world livable for their children, so they will protect it for that reason.

Furthermore, I'll note that neither children nor the unborn can vote or have an effect on the political process.

Since everything in the free market works on money, a monetary value must be assigned to all things

False.

the whole concept of price-tagging life is morally reprehensible

I would ask: is it better for life to have a market price or a zero price? Because that's really the option. We can either say, "human life is worth $X" or we can just act as it is worth zero. When you die, is it better that you have life insurance and get some money or for you to not have life insurance and get zero? If you are murdered, should your killer be required to pay compensation, or would you rather your life be considered by the court to be worth zero?

For the whole free market system to work as advertised, nominal costs and real costs must be equal.

Not only is this false, but it is a confusion of what real and nominal even mean in economics. What he's getting at is opportunity cost, which is recognized by basically every free market economist to exist and is not only not an obstacle to advocating the free market, but is actually one of the best reasons to advocate the free market (from a utilitarian standpoint). The free market allows you to always choose the most opportune option, whereas socialist systems choose for you and therefore incorrectly (for if they have to force you, that shows that you think there is a better option).

If free market economics was really the best basis for a national economy, then wouldn’t you expect citizens of free markets to be happier than, say, citizens of highly-regulated socialist economies? You would right? Too bad it’s the other way around.

I'm going to say this probably has a bit to do with wealth too, and in fact the link he provides admits that. "Not surprisingly, the countries that are happiest are those that are healthy, wealthy, and wise. "The most significant factors were health, the level of poverty, and access to basic education," White says."

Considering that the free market would make healthcare better and more available, would reduce poverty, and would lower the costs of education, I think we might have an argument for it there.

I was going to write more, but then I read further into the story he linked to. The writer must be an absolute idiot, considering that the story itself says the following: "Capitalism, meanwhile, fared quite well. Free-market systems are sometimes blamed for producing unhappiness due to insecurity and competition, but the U.S. was No. 23 and all the top-ranking European countries are firmly capitalist."

The freedom to defer the cost of your actions onto society is not good.

Government.

The freedom to have slaves is not good.

Government.

The freedom to start an unjust, hopeless war and thereby murder thousands of your own soldiers is NOT GOOD.

Government.

Yes, I agree, government having freedom is not good at all.

This guy seems to be working with only a rudimentary understanding of free markets. As evidenced by #1 and #4 (where he confuses public roads and lax property rights with free markets...). The rest seem to be emotive garbage. #5 is problematic, as such studies (even if the methodology is correct and honest) are influenced by government propaganda. For example, if North Koreans are told that the rest of the world is worse off than they are, they are likely to say they are happy. Human beings tend to rate their happiness on how others are doing. Which is why earning $2 in a country where the average income is $1 can actually mean you are happy.

Then there is less subtle propaganda. For example, the main brainwashing technique in Finland is repeating over and over again to children that being born in Finland is like winning in the lottery. I think it is clear that in such an environment, making studies where people rate their own happiness, is a flawed approach.

Should be renamed "five simple reasons that socialists are hopelessly stupid".

-Jon

For the market to efficiently distribute wealth and resources, everyone has to be able to “bid,” that is, offer money for goods and services, or offer their good and services (including their labour) for money. If everyone can bid as they choose, environmentally-concerned individuals can offer to pay more for environmentally friendly goods. In this way, the market will reflect the concerns of all people. The only problem is, this is bullshit. The ability of children to bid is seriously limited, and people who haven’t been born yet obviously can’t bid. Thus, future generations are subject to the despotic hegemony of the present.

That made me laugh.

What an amateur! I swear, socialists are getting dumber by the day.

-Jon

This guy can't even spell his own name correctly. It's "Kevin."

Jon Irenicus:

I swear, socialists are getting dumber by the day.

I have to agree, even though I on principle try not to put anyone down without hearing their case. I've been suspecting that I am becoming less open to other views, but the more I study Austrian economics and the more I look at depth at the issues, the more silly the vast majority of statist arguments seem. I use to entertain and even hold to some of the biggest statist arguments, mainly due to the overwhelming cultural weight behind them. But these days I can't even fathom how one arrives at most of these conclusions. I'd like to be able to keep an open mind, but when most arguments against free markets are outright fallacies or normative nonsense, it is getting difficult.

This sort of makes me think about a recent term I came across, whose definition was defined by Kevin Carson: vulgar libertarianism.

The idea, to quote Per Bylund, is that of libertarians "who mistakenly identify the current state regulated market as a “free market” and that therefore apply free market logic in defending e.g. sweatshops in Southeast Asia."

I am not saying that I have seen that on this forum, but it sounds like the contacts or discussions that this writer has encountered are a result of libertarians attempting to defend the current unfree market using free market logic. It makes sense why one would be opposed to this, as I surely am.

It could be that or the guy is just making strawmen arguments and has no idea what he is talking about.

dreamingoffreedominma:

vulgar libertarianism

I understand and appreciate the intent of the concept. But I can't say I'm a fan of the methods by which it is often applied. It is turning into a logical fallacy, where people assume they can just throw the concept at a problem and not have to deal with current day economics. While I agree with the intent of it, we obviously can't isolate ourselves intellectually and keep repeating "it is not a 100% free market situation, therefore I won't touch it". That will see libertarianism go the way of Marxism.

1 simple reason the free market can work: it does.

Libertas est Veritas:

dreamingoffreedominma:

vulgar libertarianism

I understand and appreciate the intent of the concept. But I can't say I'm a fan of the methods by which it is often applied. It is turning into a logical fallacy, where people assume they can just throw the concept at a problem and not have to deal with current day economics. While I agree with the intent of it, we obviously can't isolate ourselves intellectually and keep repeating "it is not a 100% free market situation, therefore I won't touch it". That will see libertarianism go the way of Marxism.

Libertarianism won't go the way of Marxism because Marxism is fiction. Libertarianism will eventually win because the market is the natural state of things, even if it happens by no other means than good ol' natural selection and takes a long, long time. Unless the statists kill everyone, which I don't see as (very) likely.

Libertas est Veritas:

dreamingoffreedominma:

vulgar libertarianism

While I agree with the intent of it, we obviously can't isolate ourselves intellectually and keep repeating "it is not a 100% free market situation, therefore I won't touch it". That will see libertarianism go the way of Marxism.

Good point. But if current day economics were distorted by government (and I believe that is very much the case), wouldn't it make sense to want to show individuals that a truly free market would not replace government with big business because that would be just as "unfair" as the present situation?

I guess I have a soft spot for "social justice" and want to provide people who share similar views a theory on how that would be applied in a free market. IDK, maybe my reasoning is incorrect.

Would you mind elaborating a little more on that position so that I get a better understanding of the meaning of your quote?

dreamingoffreedominma:

Would you mind elaborating a little more on that position so that I get a better understanding of the meaning of your quote?

For example, you mentioned sweatshops. Now, if we are talking about slave labor, that is another matter all together, but I see nothing wrong with sweatshops themselves. Or child labor, as another example. I remember being called a vulgar libertarian at one point due to my defense of child labor (not here), which I think is absolutely asinine.

I do tolerate and find it accurate sometimes, but rather rarely. I mean, if you are going to defend modern oil corporations without referencing the problems of government subsidies and regulations - at least if they affect whatever aspect you are defending - then your analysis is simply wrong. There is need for a term like 'vulgar libertarianism' at this point, as merely pointing out the mistake is sufficient. Calling it vulgar libertarian just makes it sound more of a value decision than a logical fallacy, at least in my mind.

Libertas est Veritas:

dreamingoffreedominma:

Would you mind elaborating a little more on that position so that I get a better understanding of the meaning of your quote?

For example, you mentioned sweatshops. Now, if we are talking about slave labor, that is another matter all together, but I see nothing wrong with sweatshops themselves. Or child labor, as another example. I remember being called a vulgar libertarian at one point due to my defense of child labor (not here), which I think is absolutely asinine.

I do tolerate and find it accurate sometimes, but rather rarely. I mean, if you are going to defend modern oil corporations without referencing the problems of government subsidies and regulations - at least if they affect whatever aspect you are defending - then your analysis is simply wrong. There is need for a term like 'vulgar libertarianism' at this point, as merely pointing out the mistake is sufficient. Calling it vulgar libertarian just makes it sound more of a value decision than a logical fallacy, at least in my mind.

I understand what you are saying.

It seems to me like it depends on the political stripes of the person you are talking to. If I mention sweath shops are okay to a "liberal" that's the end of the converstation because they are going to have no more, even if I show them that people would have a choice to work their (ie they wouldn't be slaves), they could save up money and "move up the ladder" of society.

Their argument (and I am just saying it because I have heard it before) would be why wouldn't everyone engage in that type of labor. And what would prevent big businesses with no morals from using this type of labor that makes having any smaller business worthwhile if you can't have prices to undercut that large firm and compete with them?

That is the argument I have heard so its tough because it makes me (and therefore libertarianism in general) look like an eltist position. What are your thoughts.

Thanks for the answer by the way.

 

dreamingoffreedominma:

That is the argument I have heard so its tough because it makes me (and therefore libertarianism in general) look like an eltist position.

Approving of sweatshops (the voluntary kind) isn't exclusive to libertarianism. Unless I'm mistaken, even Krugman approves.

Also, I think it is important to understand that the vast majority of opposition to sweatshops comes from westerners. I'm not sure why most people don't find it odd that the people who actually work in sweatshops, don't oppose them neither actively or passively by not working in one. Could it be because they gain more from working there than somewhere else?

The whole sweatshop thing is silly. I saw an ad once on it. It had some kid stitching together a soccer ball, while other kids were playing soccer outside. A less than subtle false dichotomy to tuck at a few heartstrings, which is all that any argument against voluntary sweatshops is.

Libertas est Veritas:

dreamingoffreedominma:

That is the argument I have heard so its tough because it makes me (and therefore libertarianism in general) look like an eltist position.

Approving of sweatshops (the voluntary kind) isn't exclusive to libertarianism. Unless I'm mistaken, even Krugman approves.

Also, I think it is important to understand that the vast majority of opposition to sweatshops comes from westerners. I'm not sure why most people don't find it odd that the people who actually work in sweatshops, don't oppose them neither actively or passively by not working in one. Could it be because they gain more from working there than somewhere else?

The whole sweatshop thing is silly. I saw an ad once on it. It had some kid stitching together a soccer ball, while other kids were playing soccer outside. A less than subtle false dichotomy to tuck at a few heartstrings, which is all that any argument against voluntary sweatshops is.

It makes sense to me, but I am usually not the one probing the question too much. On top of it being voluntary and the fact that one may gain more from working there over some place else still doesn't seem to do it for the emotional liberal type. I wish there was some other thing I could say to them.

It's funny how they only understand force.

 

 

dreamingoffreedominma:

. . .

On top of it being voluntary and the fact that one may gain more from working there over some place else still doesn't seem to do it for the emotional liberal type. I wish there was some other thing I could say to them.

It's funny how they only understand force.

Yeah, hilarious.

 

What an absurd, illogical piece of drivel this article is, I had to comment on the page myself.