New Member: Ixtellor

Bribery - To bribe someone means to trade economic power for coercive power.  The goal of libertarianism is to limit force towards attaining justice.  With a solid ground-work of property rights, identifying bribery and corruption would be easy, because the coercive powers used would be indefensible to customers.  No one would bribe a powerful PDA to use emminent domain, for instance, because it potentially risks losing a large portion of their customer base and opening them up to forceful resistance (to attain justice) by competitors, driving up costs, either in penalties or defense, to both the briber and the corrupt PDA.

The bribery you talk about is wildly occurring today at the federal government level.  Violent force is used to prevent the market from operating freely, to the benefit of special interests who lobby government.  Increasing government funding or oversight committees will not solve this problem.  The real problem is that government's authority is not challenged.  If government were not able to make men rich with public funds or regulatory power, no one would be bribing them.  Too often people blame the lobbyists and big business, but they are not the ones using force unjustly.  If such powers were decentralized and reserved to the states, corruption would cause the productive to seek greener pastures.  If geographical monopolies of force were entirely eliminated, the transaction costs of resisting unjust government would be much, much further decreased.

Economies of scale - the best means of creating economy of scale is by increasing capital designed to mass produce.  however, the greater the economy of scale demanded, the more sensative capital investment will be.  there is a longer period before the investment can produce a consumer product.  if there is not enough consumer demand for the product, the investment will be unprofitable. and if the company is vertically-oriented (produces a good through mutliple stages of capital) with specialized capital, there may be no market mechanisms to know which stages are being profitably run and which are not, which means inefficiency.

beyond a certain degree, in a free market, there is no economy of scale.  there is in fact the opposite.

now look at the non-free market of government intervention.  there's regressive regulatory compliance costs, and the legal or lobbyist costs surrounding them.  there's tax structure, which promotes reinvestment, constant growth, and acquisitions, rather than specialization and high dividend payouts.  there's corporate welfare.  there's the vital industries heavily regulated by the government - such as medicine, media, agriculture, and banking that tie into almost all others.  finally there's big labor's legal privileges.  what is the average cost of incorporation?

and once you get to globalism, you find manufacturing processes that span multiple countries, not because this is more efficient in a free market, but because large-scale companies can exploit the various inconsistencies in government policies throughout these nations.

The freest and most technologically intense sector is the information technology sector.  This is the sector with the largest competition, especially in hardware where IP law isn't being abused.

liege:

Yes, many here would most likely consider this a check on unscrupulous market activities.

No we wouldn't. We would consider it an initation of aggression.

eliotn:

1. Wasn't Wal-mart after their time?

Irrelevant. You, or someone here, claimed predatory pricing was a myth. Walmart used, and to my knowledge, still uses predatory pricing. Thus predatory pricing is a FACT not a myth.

eliotn:

2. How is setting a really low price a crime? (Sorry if this sounds unrelated to your question.)

1) It violates a few anti-trust statutes.

2) I don't think it should be a crime. I am ok with some monopolistic powers, provided the market can't totally devolve to a series of olgiopolies.

eliotn:

3. What did Wal-mart really admit?

That they charged prices less than the price of production on a large number of items in a large number of markets. The plantiffs in numerous of these cases tried to demonstrate how Wal-Mart would charge below cost of production costs until such time as local competition went out of business, then they would jack up the prices.

Morty:

I extend my sincerest apologies, dear sir, for burdening you with a scholarly article on the topic

Don't apologize. Make your arguments more succinct. I don't back up all my arguments with "Read Keynes". I give you the on-topic and relevant information, and if it needs a source, I try to provide one.

Did you notice the portion of the article you submitted where he talked about the virtues of the California newly emerging private energy markets? Did you not think this had the exact opposite outcome the author predicted?

Morty:

you Give me a near infinite amount of information to process

Was somewhat comical in relation to the text wall which you posted.

I was wordy, but I made 4 key points and tried to back it up with logic and evidence. Again, I don't rebut all the claims here with "Read Keynes" who has already rebutted all your arguments so convincingly that the Austrian economists are the epitome of "small minority". (must be a leftist conspiracy)

liege:

If they insist on high prices, however, they'll just find themselves with new competition. If Wal Mart engages in a predicable cycle of under-cutting/gouging, then their consumers will catch on quickly and probably just boycott them, to the benefit of smaller competitors.

1) It hasn't happened yet. There is a reason dominates small town America and millions of small business owners have rallied togeather, and filed numerous lawsuits. The people are following the laws of supply and demand and shopping according to price. Walmart = lower prices = more demand.

2) If I were you... I would have gone with the argument of Target. That people are willing to pay more for non-price competition practices. Target made massive gains in Wal-Marts predatory pricing haydays. But now that we are in a recession, Wal-Mart with its insane low - predatory pricing- methods is actually seeing increased profits

liege:

Ixtellor, you have yet to post a single historical instance where a market participant's morally-ambiguous activities threatened to collapse their market and seriously harm society-at-large. The Keynesian line is that markets are inherently unstable and will destory themselves. But where has this happened? The biggest market melt-downs have all occured within the last century, and none of them were in unregulated arenas.

1) I don't know in what context you want to define markets. Does Rome in 500 AD count as a 'market'? If you want to take the liberal approach, I can't speak to the massive historical market failures. If you want to talk about the modern world and only the period where capitalism has thrived as a competing and dominate form to feudalism, commies, dictatorships.. then of course all the melt-downs are going to occur in the last century.

2) I would say the Great Depression. But I don't feel like debating its causes with people whose ideology and existance is dependant to it being a government problem. ( I have a job because I am a thriving capitalist and lack the time commitment)

3) We have never seen a market meltdown because governments have always intervened. Since every government on the planet is following Keynesian economic theory, there have been no market melt downs. So how can I give you an example? Doesnt' the fact that there have been no major market meltdowns, and every government is interventionist kind of... 'proof' to Keynesian economic theories?

 

Ixtellor

 

JonBostwick:

liege:

Yes, many here would most likely consider this a check on unscrupulous market activities.

No we wouldn't. We would consider it an initation of aggression.

Ixtellor:

For example if a water company had a monopoly and decided to charge $600/gallon for water, with the understanding millions would perish, but that profits would rise, would you consider those millions of people taking up arms and 'coercing' the water company to give them water, would that be a free market?

Gouging the market with the understanding that millions would perish is not in itself an initiation of aggression? Are you truly speaking for everyone here, or just yourself?

Note also that the possibility of armed uprising is often enough to keep would-be tyrants at bay. For some people or institutions, an understanding of natural law is not enough. For some, the only thing that keeps them in line is the understanding that they'll be punished if they go too far.

Ixtellor:

Does Rome in 500 AD count as a 'market'?

Yes, Rome counts. And yes, the empire imploded and was overrun by barbarian hordes. However, the Rome of the previous two centuries was certainly no paragon of free markets. The empire was rife coin-clipping, wage-ceilings, setting prices for all manner of goods, etc. This is no meltdown of an unregulated market.

Ixtellor:

We have never seen a market meltdown because governments have always intervened. Since every government on the planet is following Keynesian economic theory, there have been no market melt downs. So how can I give you an example? Doesnt' the fact that there have been no major market meltdowns, and every government is interventionist kind of... 'proof' to Keynesian economic theories?

This can only lend support to the theory that major market meltdowns don't occur under Keynesian interventionism. It does not lend any support to the assetion that markets are inherently unstable and require Keynesian economic principles in order to enjoy stability. if you wish to show that Keynes' system is required to save markets from themselves, your best bet is to find an example of an unregulated market that imploded, damaged society, was patched up with interventionism, and is now a thriving and safe harbor for market activities. Without citing a good example of an actual unregulated market failure, you are only making the case that Keynesianism is a workable alternative, but not that it is necessary to prevent markets from hurting themselves and their patrons.

Ixtellor:

I would say the Great Depression. But I don't feel like debating its causes with people whose ideology and existance is dependant to it being a government problem.

This is certainly a Pandora's box. I am afraid, however, that you have already opened it ...

Ixtellor:

I was wordy, but I made 4 key points and tried to back it up with logic and evidence. Again, I don't rebut all the claims here with "Read Keynes" who has already rebutted all your arguments so convincingly that the Austrian economists are the epitome of "small minority". (must be a leftist conspiracy)

What kind of logic exactly? Also point being, most of us here (lol) understand the Keynesian ideology. You, it is quite evident, do not understand the Austrian School. You yourself admitted you haven't read anything on the subject. It'd be a bit rich for you to start giving out reading assignments, would it not?

"The Failure of the New Economics" by Henry Hazlitt.  This would be a good start. I don't know of any Keynesian responses to it, although I guess they realised they'd be wasting their time. You'd need a lot of 'hot wind' to "refute" that nice piece of writing.

Can you tell me; what's conspiratorial about the State highlighting and supporting a statist ideology that attempts to give it's actions legitimacy? 

By the way, the left / right wing is a false paradigm. Both are socialist. ;)

Why don't you start new topics for discussion instead of piling on your intro thread?

Ixtellor:

I would say the Great Depression. But I don't feel like debating its causes with people whose ideology and existance is dependant to it being a government problem.

You prolly meant "I don't feel like debating its causes because my ideology and existence is dependent on it NOT being a government problem." ?

Again, I don't rebut all the claims here with "Read Keynes" who has already rebutted all your arguments so convincingly that the Austrian economists are the epitome of "small minority".

This must be an attempt at humour.

Sorry, I just don't see anything wrong with charging any price for a good or service that is your legitimate property.  And remember that price cutting to the point where the company looses money by producing is risky because of the losses and the threat that competition can come back when you start rising your prices again.

On the issue of monopoly, monopolies can form for any of the 3 following reasons:

1.  The company uses coercion to defeat all of the competitors. (can also form a quasi-monopoly)

2. The company has accquired legitimate control over all of a certain resource, so that other people cannot produce it.  (ex: gold)

3. The company is an astonishingly good producer.

1 is pretty common,  with legit government intervention.  2 is highly unlikely, but in theory not an impossibility.  3 is actually a good thing, since people are getting the good from the best company.  With 3, there is always a risk that competition will dethrone them if they do something stupid, like raise their prices too much.

Juan:

You prolly meant "I don't feel like debating its causes because my ideology and existence is dependent on it NOT being a government problem." ?

I think the government did play a role. Clearly the government had no clue what it was doing and did the exact opposite of what a Keynesian would prescribe today.

So while I still don't feel like debating here, I don't post in the History section for a reason, I do believe the government had negative impact and helped turn a recession into a depression. I probably differ from some in here, in that I think most recessions begin in the capital goods markets, and thus its a market phenom that can not be avoided.

I realize it is VERY popular predict what I think on these forums, but being that the posters here are almost always wrong, you might consider stopping and asking instead of inferring. (sp?)

I dont like minimum wage, I dont like tariffs, I dont like protectionism in all its forms including quotas anti-dumping, etc. I have a large degree of agreement with free market ideology.

Ixtellor

P.S. I have asked numerous time about the etiquette here and if this post is too long and convulted tell me to stop replying to questions, stop asking questions, or have some Mod move it to the appropriate place. Provided most posters don't see this as my perpetuating my intro thread and merely me answering questions YOU are asking me, I am happy to answer questions as time permits.

 

Ixtellor:

P.S. I have asked numerous time about the etiquette here and if this post is too long and convulted tell me to stop replying to questions, stop asking questions, or have some Mod move it to the appropriate place. Provided most posters don't see this as my perpetuating my intro thread and merely me answering questions YOU are asking me, I am happy to answer questions as time permits.

I think you're doing fine.

Ixtellor:

I dont like minimum wage, I dont like tariffs, I dont like protectionism in all its forms including quotas anti-dumping, etc. I have a large degree of agreement with free market ideology.

You don't sound like much of a Keynesian. Which principles from that school of thought do you agree with? Knowing what flavor of Keynesian you are might help a lot of us out.

Ixtellor:

I dont like minimum wage, I dont like tariffs, I dont like protectionism in all its forms including quotas anti-dumping, etc. I have a large degree of agreement with free market ideology.

I am just curious, if you could shape the government of a country, what would be your ideal government?  I wanna know.

Ixtellor,

There's one philosophical problem which might have been overlooked (I didn't read all the posts so I apologize if it's been already brought up). The thing is, maybe you should take a closer look at the relationship between empirical data and a-priori knowledge. One can't rely on empiricism alone because empirical data needs to be interpreted within some theoretical framework. Using empirical data to make a point is tricky, because when you do it you're also making some a-priori assumptions whether you realize it or not. So empiricists who complain about the Austrians being a-priorists fail to grasp that they[empiricists] are using a-priori concepts too.

I probably differ from some in here, in that I think most recessions begin in the capital goods markets, and thus its a market phenom that can not be avoided.

As a side note, economists have been arguing that the business cycle is caused by fractional reserve banking before the Austrian School and keynesianism existed.

I realize it is VERY popular to predict what I think on these forums, but being that the posters here are almost always wrong, you might consider stopping and asking instead of inferring.

Oh, OK - I apologize. On the other hand I was assuming that by being a keynesian you shared some interventionist views, especially on monetary matters. Maybe you're an unorthodox keynesian ? =]

liege:

Which principles from that school of thought do you agree with?

1) 100% unregulated markets are doomed to fail. It is not 'proveable' because there are no unregulated markets, but I believe it for a variety of factors, mostly the practices of monopolies, and mans desire to rule other men.

2) The government should play a role regulating the boom bust cycle. With the primary prescriptions being raise taxes and cut spending in booms and lower taxes and raise spending in busts.

3) I don't know if you want to classify it as Keynesian, but I strongly believe in the role of the Fed. I have frequent dealings with Fed officials and email a number of HIGH ranking members including chief regional economists a few times a year. ( On a side note, the conspiracy flavor of posters here have wild misconceptions about Fed employees including the 'big dogs'. Mostly they are a lot of geeky science guys who like solving problems and analyzing data all day long - the exact reason I gave up a job in economics - I hate compiling data all day and doing nothing but spreadsheets)

4) Fiat Currency. I love it! The Gold standard is horrible and fails to satisfy a few macro economy problems. I like a lot about Ron Paul, but hate that he is committed to this ideology. I don't feel like debating it here for two reasons. I think the 'liberty' argument against fiat currency holds some validity. Yes you are less free because of it, but I strongly believe in social contract theory, so I think its a net gain. More stable currencey in exchange for .000001% freedom. (If you don't like currency dont use it there are elaborate barter systems alive and well in America - very elaborate) Secondly, I feel it would be tantamount to convincing Christians there is no God. (Hey pandora check this out --> Money supply (based on gold) increases by 3%, economy is growing at 5%)

5) Government serves a positive function in society and a primary goal of the Government is to: Provide public services and goods, without hurting the economy. Keynes offers good guidelines for this. (The founding fathers based the constitution on this principle that they believed deeply in)[By founding father I means "mostly Madison"]

6) I am unconvinced by the velocity of money equations. I have mostly forgot all of these, but I recall being unconvinced so am trusting my younger my knowledgable self. I Did however hear a great monatarist presentations 4 years ago, and have had a more open mind since then.

7) Deflation is far more harmful than Inflation and a goal of around 1% inflation is something to be strived for.

8) Politicans SUCK at following Keynesian principles, mostly the political costs associated with raising taxes and cutting spending. And it gives the economics a bad rap from the layman.

9) The lag affect of economic efforts is hard to gauge, and admittedly it frequently comes to late. I blame this more on politicians than economists. Several big names have been calling for stimulus and warning of recession far prior to any gov action.

10) Keynesian economic models have accuratly predicted changes in GDP between .75-3%. I am not aware, and feel free to point me to other economic theorist models that have better consistant success rates. (Is 3% error = good? Many would say "NO", and love to bash Keynesian predictions during this bad years, while ignoring the error margins of .75%[to my knowledge they have not beat the .75% threshold yet]) ( I saw another poster saying the math skills are NOT important in economics, and I strongly disagree, you don't get within .7% GDP accuracy with poor or elementary math skills)

11) I think for political and societal reasons, it is ok for the Federal government to take actions to try and achieve full employment. I think the real debate should be on the natural rate of unemployment. Classically it has been defined as 4.5% unemployment, while Bernake - I am told by Fed insiders - did PhD work calculating it as higher. (6%?) This has the affect of stable consumption and is very Keynesian.

Sorry for the mass of data, but you did ask...

Ixtellor

Jon Irenicus:

This must be an attempt at humour.

I have reasons to believe it is not, but I'm taking a positivistic approach to this question, so I may be mistaken. In any case, I should now make good on my promise to retreat.

 

eliotn:

I am just curious, if you could shape the government of a country, what would be your ideal government?  I wanna know.

Sadly I want to know as well.

Part of me wants rule by elitists because I think most people are ignorant sheep easily swayed by rhetoric, but then I am reminded of the paradox of US government. The fact that government seems to function well despite the fact its citizens are uninformed morons, so my faith in the masses is restored.

I have done far far to much political reading in my life and you get to the point, or I did at least, where they are ALL valid. Communism is a morally superior system, Libertarianism provides the most liberty/freedom. So some government near the middle that holds civil liberties to be good and desired while simultaneously acting when the majority of its citizens wish it to act.

If you had to pin me down I would follow the following preconceptions, taken directly from the founding fathers.

1) Gov should serve to contain Man's inherant self interest, when it serves to harm society.

2) Societies will always divide into conflicting groups, usually haves and have nots, and Government should prevent both factions from tyrannizing one another.

3) Government goal: Protect the right of people to acquire and keep wealth.

4) Government should be broken up so that tyrannical actions are kept in check.

5) The government can act on behalf of its population and represent majorities provided they don't squash the rights of minorities. This could include inaction if thats the will of the people. (example: If the vast majority of people want  laws against prostitution, that is OK)

 

Ixtellor

P.S. Sorry for the response that I admit is less than ideal and less direct then you were probably asking.

 

Ixtellor:

The fact that government seems to function well despite the fact its citizens are uninformed morons, so my faith in the masses is restored.

The government runs well?  In what regards?

Ixtellor:

Communism is a morally superior system,

In what way?

Ixtellor:

So some government near the middle that holds civil liberties to be good and desired while simultaneously acting when the majority of its citizens wish it to act.

How is majority rule desirable?

Ixtellor:

1) Gov should serve to contain Man's inherant self interest, when it serves to harm society.

Government without consent harms society immediately.

Ixtellor:

2) Societies will always divide into conflicting groups, usually haves and have nots, and Government should prevent both factions from tyrannizing one another.

Government officials usually end up becoming the "haves", if it does not have the consent of the governed.

Ixtellor:

3) Government goal: Protect the right of people to acquire and keep wealth.

The goal of law should simply be justice.  In other words, protecting our right to property and enforcing contractual agreements.

Ixtellor:

4) Government should be broken up so that tyrannical actions are kept in check.

What do you mean, like checks and balances?  That just confuses the governed.  Better to keep it simple.

Ixtellor:

5) The government can act on behalf of its population and represent majorities provided they don't squash the rights of minorities.

How can the government act in the interest of the majority without squashing the rights of the minority?

"Predatory pricing" is in fact a myth.

The first reason we know it is not true is that new competitors can enter the market any time unless forcefully constrained. If a WalMart franchise drives down its prices below cost, it has to take a short term loss to gain localized market share. When it attempts to bring up prices above the market level, a new competitor will take out a loan and set up shop. The WalMart franchise needs to take another short run loss to drive this competitor out of business. This process can not go on indefinitely, as all of these short term losses will add up to a long term loss which will bankrupt the company.

Instead what happens is that the company which has the market share has lower costs than other competitors, and it prices right around the market level. When a competitor enters they may try to take a loss to drive them out of business, but they never price far above the competitive market price to gain a monopoly profit. This is called "pseudocompetition" or "pseudomonopoly" in market terms, where a limited number of firms have large market share even though they price their goods like firms in a competitive market. Good examples of this are WalMart, Standard Oil, and Dow Chemicals.

The other reason we know that "predatory pricing" is false is that it is inconsistent with other Keynesian ideas. For instance, the government, and pseudoprivate companies that are forcefully given monopolies (whether it be to "prevent free riders", to "reward innovation", or to "reduce redundancy") should not need those forceful monopolies when they can just become monopolies through predatory pricing.

Ixtellor:

The fact that government seems to function well

By what standards?

Ixtellor:

Communism is a morally superior system

But doesn't communism imply that coercion can be used to ban private properity for the "common good"?  How is this moral?

Ixtellor:

1) Gov should serve to contain Man's inherant self interest, when it serves to harm society.

For this statement, how will your ideal government restrain men inside the government when they seek to harm society?  Aren't these people "Man"?

Ixtellor:

2) Societies will always divide into conflicting groups, usually haves and have nots, and Government should prevent both factions from tyrannizing one another.

How would your "haves" and "have-nots" tyrannize one another?  How would Government prevent itself from becoming on one side of the conflict?

Ixtellor:

3) Government goal: Protect the right of people to acquire and keep wealth.

What about the means?  Surely, your government would not protect the rights of a mugger to acquire and keep wealth.

Ixtellor:

4) Government should be broken up so that tyrannical actions are kept in check.

How would you break it up?  Several governments, several branches (like the US), many territories with a single government?

Ixtellor:

5) The government can act on behalf of its population and represent majorities provided they don't squash the rights of minorities. This could include inaction if thats the will of the people. (example: If the vast majority of people want  laws against prostitution, that is OK)

What if this involves breaking any of the rules you have established so far?

Ixtellor:

P.S. Sorry for the response that I admit is less than ideal and less direct then you were probably asking.

Correct.