Patterico's Pontifications

8/30/2015

“Human Action” and Robert Murphy’s “Choice,” Part 9: Defining and Studying the Market Economy

Filed under: Economics,Human Action and Choice — Patterico @ 12:56 am

This is Part 9 of a 17-part series of posts summarizing Bob Murphy’s indispensable book Choice: Cooperation, Enterprise, and Human Action. Murphy’s book is itself is a summary of Ludwig von Mises’s classic treatise “Human Action.” Like previous posts, this post is a summary of a summary.

The purpose of these posts is to popularize and spread the word about Austrian economics and educate the public. Rather than list all the previous parts, I have created a category for all these posts, called “Human Action and Choice,” so that all these posts can be read (in reverse order) with a single click. Note well: any errors in these summaries are mine and not Murphy’s.

Mises describes the market economy as a “process” — as “the social system of the division of labor under private ownership of the means of production.” It is the way individuals coordinate their activities voluntarily, acting on their own behalf, but aiming to satisfy others’ needs as well as their own.

Mises studies what would happen in a pure market economy even though no such economy actually exists. Some criticize this as unrealistic, but any policy proposal requires one to conduct a thought experiment about how things would be, if one’s proposal were accepted. This is no different.

We must now classify different people in the economy and the money they receive for what they provide. Workers provide labor and receive wages. Landowners and capitalists provide similar things as one another, and both receive interest. (While land, or natural resources, is not man-made, it is similar to man-made capital in that it provides entrepreneurs a head-start in time in the production process. More on this later.) Entrepreneurs adjust the factors of production in anticipation of the future, and receive profits when their foresight is accurate.

More definitions: Capital is the market value of assets minus the market value of liabilities. Income is the amount of consumption that can occur without reducing capital. Saving is the difference between income and consumption.

Mises was very clear that in a capitalist economy, the consumer is sovereign. The notion that everything is controlled by guys with white mustaches and top hats carrying around giant sacks with dollar signs on them (thanks to Tom Woods for the image) is a socialist fabrication. According to Mises, a businessman may be at the helm of the ship, but he has to obey the captain’s orders — and: “The captain is the consumer.”

Neither the entrepreneurs nor the farmers nor the capitalists determine what has to be produced. The consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the structure of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.

The steering by consumers is not always explicit, of course — but it happens nonetheless. Murphy gives as an example two entrepreneurs, a jeweler and a house builder. The jeweler makes pretty and affordable jewelry with gold, while the builder makes houses that are lined with gold inside and out, in the manner of European kings, making the prices of his houses astronomical. If people buy the jewelry, but reject the houses as too expensive, this means the consumer has steered the use of gold into jewelry rather than house-building. It’s not that the consumer explicitly told these entrepreneurs to use gold for one purpose, and not to use it for another . . . but in effect the consumer did communicate that message, through his decision to buy jewelry, but not absurdly priced houses.

In this way, price signals allow entrepreneurs to direct the economy’s resources in such a manner that they best satisfy the preferences of the consuming public. Rather than having government make arbitrary decisions, people vote with their dollars. There is, in this process, a deep connection between economic freedom and political liberty. Mises said:

No government and no civil law can guarantee and bring about freedom otherwise than by supporting and defending the fundamental institutions of the market economy.

This is critical, and I believe it with every fiber of my being. There is no political liberty without economic freedom.

Competition is what gives market actors freedom within the market economy. Workers who feel exploited can work elsewhere. Consumers who don’t like the product can buy elsewhere. (Try doing that with government!) But competition is a process, and while a snapshot at any given time may cause one to believe incorrectly that there is no competition, because one firm has a large market share, that is usually shown to be wrong over time. As long as government does not impose barriers to entry, lack of competition is an indication that the current goods and services are being provided at an adequate price. Meanwhile, any industry that appears to be a dominant and overbearing force is either a) a product of government, and/or b) faces extinction when technology finds a new way to accomplish the same goal in a better, cheaper way.

The railroads seemed like a monopoly at one point, Mises noted — and indeed, the lack of competition at one point in time showed that there was really no reason for other firms to invest in more rail lines, when the existing ones were sufficient. But this did not prevent the invention of the automobile or the airplane.

Next, we consider what Murphy calls “the vexing issue of (in)equality.” Murphy explains that “inequality of income and wealth is an unavoidable feature of a market economy.” If there are 100 people, and two are singers, and 98 are fans, the 98 may be willing to work a little harder to give money to one of the singers. The 98 fans may be willing to work a lot harder to give a lot more money to the other singer. This will result in the singer who makes the most people happy gaining a greater income and having more wealth — but if you changed this system, it would prevent or negate voluntary transfers, and might have an effect on the satisfaction of the consumers.

Once the critical role of monetary calculation in allocating resources is understood, it becomes clear that governmental redistribution of income impairs economic calculation and the proper distribution of scarce resources. Price signals are distorted and the consumer is less satisfied.

Another implication of monetary calculation is that the most efficient allocation of resources (satisfying the most people) can happen only in the pure market economy. Government cannot allocate resources efficiently, because the profit motive is alien to government bureaucracy. Bureaucratic management is different from profit management, not just in incentives. Bureaucracy need not convince consumers to voluntarily part with their money, and can (unlike businesses) prevent competition. Thus, the forces that make resource allocation efficient in the market economy are utterly absent in bureaucracy.

Enough for today. We’re over halfway done with the book! I hope this made sense. These are central concepts that show why the market is better than governments in allocating resources. Tomorrow, we’ll discuss how prices are formed on the market.

58 Responses to ““Human Action” and Robert Murphy’s “Choice,” Part 9: Defining and Studying the Market Economy”

  1. Great waking up Sunday morning to some common cents.

    Timothy Cataldo (2182b6)

  2. Another implication of monetary calculation is that the most efficient allocation of resources (satisfying the most people) can happen only in the pure market economy. …

    I don’t understand what “satisfying the most people” means here. Nobody will be completely satisfied as no one will have infinite resources so everyone will have to decide which of their desires are most important and satisfy those. So everyone will just be partially satisfied which will be the case in any system.

    James B. Shearer (667387)

  3. Is there any way your link to all these posts can show them starting with the first post at the top, instead of the most recent post at the top?

    WarEagle82 (44dbd0)

  4. Do you think there is any need for government to regulate against predatory acts by monopolies or near monopolies?
    I guess the deeper question is if there is any role for government in speeding up the process of competition.

    For example if the railroad monopoly used its financial clout to buy up automobile companies for their patents, then shelved them and also then litigated against the companies they could not acquire in order to suppress competition
    Or a biotech giant that buys into (partners) promising technology from small competitors to delay it from competing with their cash flow from existing technology even though lives will be lost.

    Of the two choices I gave, I can see the people wanting the drug company regulated because of the issue of mortality. Governments should care about the death of their citizens. In the other example, I could see the railroad smart people urging that trucks be built for short hauls, cars be built because there is money there etc. Also the technology was so immature that it was competition to horse and buggy (short haul only) not to long haul Railroad.
    So they are imperfect examples.

    From a purist point of view, I’d say wait. Pent up demand, and bottled up tech inevitably explode. Monopolies and predatory practices are eventually overcome and then buried by the market.
    But people are impatient and want Uncle Sam to do something.

    I was reading about how Microsoft was sued by Apple over the GUI interface and how acrimonious the competition was. Apple was nearly buried when Microsoft invested $150M in Apple at $8.50 or so per share (that would be worth 21.5 or so Billion today but they sold in 2003) Microsoft made this investment as a defense against any anti monopoly suit, not as a pure investment… so was the government right to have a fearsome bully pulpit that intimidated Microsoft into a defensive posture?
    I’d say yes… in the way we live within the system we have built today, but no in the way that Apple was mismanaged, overpriced etc. and others would have risen up and blown Apple away and we’d probably have something better than iphones etc.

    steveg (fed1c9)

  5. For example if the railroad monopoly used its financial clout to buy up automobile companies for their patents …

    Well copyright and patents are government enforced monopolies so you have to start by asking if they should exist and if so under what conditions.

    I think things like railroads require something like eminent domain for reasonable efficiency. Otherwise people can acquire blocking positions and charge exorbitant tolls.

    James B. Shearer (667387)

  6. The railroads seemed like a monopoly at one point, Mises noted — and indeed, the lack of competition at one point in time showed that there was really no reason for other firms to invest in more rail lines, when the existing ones were sufficient. But this did not prevent the invention of the automobile or the airplane.

    This is taken from a Mises quote in Murray’s book, and I think Mises missed the mark. The absence of competition was (an is) due to the difficulty of laying new track, both from the standpoint of purchasing land, but also due to the difficulty of getting the necessary permits. The American railroads charged monopoly prices, and they were an impediment to development along free market principles. They may have been “sufficient”, and they would have made life difficult for a new railroad by cutting prices and eliminating the profits a new entrant might have expected, but the country would have benefitted from a scheme where the railroads didn’t have such an iron grip on this revolutionary technology. Their pricing was based on what the good could bear, and not on what it cost the railroad to convey it. I think they had a price list that included hundreds of kinds water, each variant priced according to what the railroad thought it could extort from their customer.

    The railroads suffered from union featherbedding, but their workers were just gouging the railroads in keeping with railroads gouging their customers. All in all, a real waste of economic resources.

    Airplanes and trucks are not directly competitive with railroad for many things, but we have benefitted from the interstate highway system and the enormous growth of commercial aviation in our transportation costs.

    We see something similar today with cell phones and cable. I was delighted to see a competitor stringing new fiber optic cable into my neighborhood. Having two choices of a high speed connection should save us some buck$ in the years to come.

    bobathome (6f310e)

  7. #5: James, controlling the abuse of eminent domain is also important. As it is, the politicians can play games with it, as in the Keystone Pipeline.

    bobathome (6f310e)

  8. play games with it … as in blocking the needed permits … as in the Keystone Pipeline.

    bobathome (6f310e)

  9. Mises was very clear that in a capitalist economy, the consumer is sovereign. The notion that everything is controlled by guys with white mustaches and top hats carrying around giant sacks with dollar signs on them (thanks to Tom Woods for the image) is a socialist fabrication.

    It irritates me to no end when various people cite “big business” as the boogeyman, but say little to nothing about how the public sector — how government at the local, state and federal levels — FORCES the consumer to support it, via taxes, to help keep its employees, managers, pencil pushers, John Q Bureaucrat surfing online porn at the local government building, cushy pension plans, cushy healthcare plans, and nicely indexed salaries in the thick of things—competency, efficiency and value be damned.

    In places like wonderful, fabulous France, etc, surveys indicate that growing percentages of younger people are setting their lifetime goals to be hired by and work for the government.

    Coming to a theater near you, America.

    Mark (dc566c)

  10. Is there any way your link to all these posts can show them starting with the first post at the top, instead of the most recent post at the top?

    Not that I know of. Sorry.

    Patterico (3cc0c1)

  11. I don’t understand what “satisfying the most people” means here. Nobody will be completely satisfied as no one will have infinite resources so everyone will have to decide which of their desires are most important and satisfy those. So everyone will just be partially satisfied which will be the case in any system.

    “I don’t understand the thing you said, so I will proceed to demolish another claim that you never made . . .”

    Patterico (3cc0c1)

  12. bobathome,

    Whether a firm that achieved a large market share without government interference or help is a monopoly is something that has divided even the great Austrian economists. Rothbard believed that without government coercion there is no monopoly. Mises and Hayek were not as doctrinaire, I believe.

    To me, this is kind of like what Ted Cruz says about deporting 11 million illegals: let’s have the discussion about the harder things, that people disagree on the most, after we agree to act on the things we agree on. If we can reduce regulation, cut taxes and spending, and reduce the size of government, I can wait to have the argument about natural monopolies.

    I will say that the history I have read shows that the commonly accepted notion that monopolies ran rampant in the late 1800s — establishing a domineering market share and then jacking up prices to squeeze every last penny out of the poor — is mythical. There are no examples of a company actually doing that.

    In fact, Tom Woods says (with much justice) that John D. Rockefeller was one of the greatest whale-savers who ever lived. By making kerosene widely available for light, rather than whale oil, Rockefeller not only made reading at night easier and cheaper, he also reduced the demand for dead whales.

    Patterico (3cc0c1)

  13. “I don’t understand the thing you said, so I will proceed to demolish another claim that you never made . . .”

    So what claim are you making?

    James B. Shearer (667387)

  14. The one I made in the post.

    Patterico (3cc0c1)

  15. 14. For someone who claims that it is important that people understand this stuff you don’t seem very interested in explaining it to the 99% who don’t already agree with you.

    James B. Shearer (667387)

  16. 14. For someone who claims that it is important that people understand this stuff you don’t seem very interested in explaining it to the 99% who don’t already agree with you.

    I’m happy to explain it to anyone who I believe has an open mind.

    Patterico (3cc0c1)

  17. That’s an interesting ratio. 99 percent. Show me the data you collected to support that ratio. And tell me what set that 99 percent represents as a subset. 99 percent of whom? All people? All people who read Patterico? All people who use First MI Last as monikers? All puppies with two different color eyes? What is the whole set that has your 99 percent subset?

    John Hitchcock (22b283)

  18. In actuality, if the set is All People, you will not find 99 percent who disagree. You won’t even find 80 percent who disagree.

    John Hitchcock (22b283)

  19. Even if you go so far as to say your set is All People Living On Welfare, you can’t find 99 percent who disagree.

    John Hitchcock (22b283)

  20. Regarding the railroads, that monopoly was created and maintained by the government, much like utilities frequently are today. Any history of rail in the US will explain how and why.

    Regarding James B. Shearer

    I don’t understand what “satisfying the most people” means here. Nobody will be completely satisfied as no one will have infinite resources so everyone will have to decide which of their desires are most important and satisfy those. So everyone will just be partially satisfied which will be the case in any system.

    he is ignoring that there are degrees of satisfaction. We could use prices and money to apportion goods, some will be more satisfied than others. We could use hereditary titles and soldiers to apportion goods, some will be more satisfied than others. We could use Party membership and soldiers, etc etc. It’s ridiculous to say that, because no system makes everyone completely happy, there’s no reason to prefer one over the other.

    A market economy is the only method yet devised of people satisfying their wants and needs without having to flatter people in power to give it to them as a gift.

    Gabriel Hanna (13a147)

  21. Gabriel: agree on all counts.

    Patterico (3cc0c1)

  22. The “satisfying the most people” question could be interesting, since it makes a natural combination between cardinals (quantities of people) and ordinals (levels of satisfaction). If both were cardinal, the measure I’d assume he meant would be the sum over the population of each person’s amount of satisfaction. However, comparing two different individuals’ satisfied-ness is somewhere between difficult and impossible (inclusive).
    It’s a difficult problem, especially since people’s satisfaction is also limited by what is possible logically, physically, etc., which is if anything even harder to determine.
    The only other way to measure a population’s satisfaction with their economy that I’m aware of is to declare that every member of the population is either

    A. Satisfied only with communism

    B. Possessed of “false consciousness”, without which they’d only be satisfied with communism

    C. A capitalist pig

    I don’t believe this answer captures the reality it purports to model, but I guess it is, technically, an answer.

    CayleyGraph (dfcefe)

  23. 17.That’s an interesting ratio. 99 percent. Show me the data you collected to support that ratio. …

    I didn’t collect any data, that was what is known as a SWAG. However I think it is pretty conservative as I doubt 1% have even heard of Mises (I hadn’t before seeing Patterico’s first post).

    James B. Shearer (667387)

  24. 19.Even if you go so far as to say your set is All People Living On Welfare, you can’t find 99 percent who disagree.

    My claim was about the number who agree not the number who disagree. Most people will have never heard of Mises and therefore won’t agree or disagree. If you ask about positions rather than about Mises most people will take the Mises position some of the time. Few people (even among other conservative economists) will agree on everything.

    As for what population I am referring to let’s say the US electorate.

    James B. Shearer (667387)

  25. I’m happy to explain it to anyone who I believe has an open mind.

    So what fraction of the electorate do you think as an open mind?

    James B. Shearer (667387)

  26. I know of no way to “measure” satisfaction. The one thing we can do, however, is conclude that, in an unhampered market economy, at the moment of a transaction, each side believes itself to be better off. That’s why they are doing the transaction.

    Patterico (3cc0c1)

  27. Whoops. Just got my months mixed up and published (for about three seconds) a post saying it is Thomas Sowell’s birthday.

    But it was two months ago.

    He’s 85.

    Patterico (3cc0c1)

  28. 26.I know of no way to “measure” satisfaction.

    Sure there is Patterico and you just pointed it out right here: ...”in an unhampered market economy, at the moment of a transaction, each side believes itself to be better off.”The operative phrase being “unhampered market economy”, because that is the only economy which allows the personal freedom to say no.

    Rev. Barack Hussein Hoagie (f4eb27)

  29. Reverend,

    I just don’t see that as a “measurement.” You can tell each side is benefiting but I don’t think you can “measure” it.

    Patterico (3cc0c1)

  30. Government cannot allocate resources efficiently, because the profit motive is alien to government bureaucracy. Bureaucratic management is different from profit management, not just in incentives. Bureaucracy need not convince consumers to voluntarily part with their money, and can (unlike businesses) prevent competition. Thus, the forces that make resource allocation efficient in the market economy are utterly absent in bureaucracy.

    Oh, there are profit motives in the bureaucratic sector. Bribes. Votes. Power. Doubtless there are others. They’re supposedly criminal and don’t happen, but they do, and they can influence.

    htom (4ca1fa)

  31. I wouldn’t call it “profit.” But I get what you mean.

    Patterico (3cc0c1)

  32. 26.I know of no way to “measure” satisfaction. The one thing we can do, however, is conclude that, in an unhampered market economy, at the moment of a transaction, each side believes itself to be better off. That’s why they are doing the transaction.

    This would seem to be true in any type of economy in which both sides are free to transact or not. They might have better options in a different economy but as long as they have a choice they think they are making themselves better off by exercising it. There are still issues however. For example

    1. People may be defrauded.

    2. People may be tricked.

    3. People may be mistaken.

    4. People may agree to things that make them happy in the short run but unhappy in the long run.

    5. People may not be competent to manage their affairs (in whole or in part).

    6. People may make agreements at the expense of others.

    Most people support some restrictions by the government on voluntary transactions to try to reduce the incidence of some or all of the above.

    James B. Shearer (667387)

  33. Correct, I am talking about voluntary transactions free of coercion or fraud.

    Patterico (3cc0c1)

  34. I like to think the market changes things in the favor of those who offer cash.
    Civil rights laws tried (try) to speed up that process by making the old “we refuse the right not to serve anyone” outside legality.
    I’m of the opinion that over time, the money blacks had to pay for goods and services would have induced most businesses to sell to them, but also of the opinion that the “market” for the service got tired of waiting and turned to the government (or the government turned to the “market)
    It’s kind of like slavery as labor… the market to change slavery as labor will be exceedingly slow due to the cost benefits. The price of labor cannot be truly set because the labor cannot move elsewhere unless sold.
    (By the way proponents of minimum wage use the slave argument… speciously I’d say)
    Slavery could be mitigated (and was) by an act of government that did not say “you must give slaves 10 days vacation, health benefits and 1yr maternity leave” it just said free them and released them into the paid labor market.
    Poor whites resented the idea of blacks being released into the labor market because they undercut the price of poor white labor. Someone who used to not be able to charge anything quickly realizes that entry wage is X-DAY and immediately charges X-20%DAY and then tries to outwork the other worker and then ask for an equivalent wage.

    Obviously there is something more to come that will flesh this out, and thanks for stimulating my thoughts

    steveg (fed1c9)

  35. 33.Correct, I am talking about voluntary transactions free of coercion or fraud.

    Fraud seems fairly easy to define (basically getting people to give you their money by telling them lies) but coercion appears trickier if extended much past unlawful threats of violence (sign this contract or I will shoot you). Is unreasonable time pressure coercion (sign this prenup now or the ceremony is off, accept this job offer immediately or it will be withdrawn)? How about taking advantage of someone’s lack of foresight or misfortune to raise the normal price (rooms are usually $50 but because I know your car has broken down and this is the only motel in town for you the price is $100 take it or leave it). Is this coercion?

    And there is the question of competence. Many people aren’t capable of properly managing their affairs. To what extent should the government attempt to protect them from predators?

    James B. Shearer (667387)

  36. Is there any way your link to all these posts can show them starting with the first post at the top, instead of the most recent post at the top?

    Not that I know of. Sorry.

    Patterico (3cc0c1) — 8/30/2015 @ 11:06 am

    Well, I tried standing on my head when I read the posts but that didn’t really help. I guess I can kill a few trees and print the stuff out and read it on my way to work.

    I will also give a copy to my daughter for her econ class and see if she can get her Keynesian teacher to pop a circuit as he reads something that actually makes sense.

    WarEagle82 (44dbd0)

  37. @James B. Shearer: Many people aren’t capable of properly managing their affairs. To what extent should the government attempt to protect them from predators?

    So who is going to set themselves up as the arbiters of whether people are “properly” managing their own affairs? I imagine a blue-ribbon panel of Top Men.

    No doubt you, and possibly your friends and neighbors, think you are managing your affairs quite capably. No doubt you would resent another person saying that you are obviously making wrong choices, especially if they are not different from what similarly situated people in your community would do. You might think that you and your neighbors are doing what’s appropriate to your circumstances.

    You might be slow to wish on others what you’d not tolerate for yourself. You might hope that the Federal Bureau of Wise Life Decisions will be staffed by people who share your values, but there’s no guarantee of that.

    Gabriel Hanna (13a147)

  38. Gabriel Hanna (13a147) — 8/30/2015 @ 6:21 pm

    Well said, Gabriel.

    felipe (56556d)

  39. R.I.P. Wes Craven, horror writer/director/producer

    Icy (e1ed80)

  40. R.I.P. Dr. Wayne Dyer, self-help motivational speaker

    Icy (e1ed80)

  41. So who is going to set themselves up as the arbiters of whether people are “properly” managing their own affairs? I imagine a blue-ribbon panel of Top Men.

    It is a difficult problem. We set an arbitrary age limit (currently 18) for children but no similar limit for the elderly. But many old people do become incompetent and are vulnerable to predators. I do not think it obvious that an unfettered free market serves them best.

    James B. Shearer (667387)

  42. 37

    No doubt you, and possibly your friends and neighbors, think you are managing your affairs quite capably. No doubt you would resent another person saying that you are obviously making wrong choices, especially if they are not different from what similarly situated people in your community would do. You might think that you and your neighbors are doing what’s appropriate to your circumstances.

    Of course I would resent it. I resent not being allowed to drive at whatever speeds I see fit. But I recognize some rules are needed for society to function. And since no one is going to make me dictator I won’t agree with all of them.

    James B. Shearer (667387)

  43. @James B Shearer:And since no one is going to make me dictator I won’t agree with all of them.

    This is more of the same, “a system that doesn’t work equally well for everyone is indistinguishable from any other that doesn’t.” And that’s simply not true.

    Your specific example about old people is bogus. Fraud is already illegal, so what are you complaining about? Are you saying that an old person shouldn’t be allow to buy things without a government-appointed minder? Fine, figure out how to address that issue without screwing up the entire economy for everyone else.

    Gabriel Hanna (13a147)

  44. Mr Shearer, how many cars do you own? How many computers? How much do you spend on alcohol on a month? What’s in your 401K? What level of withholding did you select and why? How close do you live to your job? What job do you have?

    I guarantee that there are any number of choices that you made in those areas that someone else would say was not in your best interest to do, that different choices would have served you, or the greater good, better than those you did make.

    How many of the decisions you make every day as an autonomous adult, are you willing to surrender to the scrutiny, review and approval of people who don’t live your life and don’t know your business as well as you know it?

    You can start with us. If you can’t or won’t submit your economic decisions to our review, maybe don’t be so quick to propose it for other adults.

    Gabriel Hanna (13a147)

  45. Gabriel, I’m pretty sure Team Obama, with IRS and NSA assistance, supplemented by public record searches, already has most of the items on your first list plus access to all the phone numbers of those who call you, and whom you call, and transcripts of the conversations, if them deem it necessary. And if Team Obama has it, you can be pretty sure the Chinese and Russians have found a way to get whatever they want as well.

    And as much as I agree with your point of view, our elder citizens, particularly those who live alone with infrequent family visits, are preyed upon by some of the vilest humans you can imagine. And those who live in managed care are subject to other indignities. These are real problems. But I don’t have any solutions.

    bobathome (6f310e)

  46. 43

    Your specific example about old people is bogus. Fraud is already illegal, so what are you complaining about? …

    I have an elderly relative who recently has become incapable of doing their own tax returns. I think it reasonable to worry that they will be taken advantage of in ways that don’t legally qualify as fraud.

    James B. Shearer (667387)

  47. How many of the decisions you make every day as an autonomous adult, are you willing to surrender to the scrutiny, review and approval of people who don’t live your life and don’t know your business as well as you know it?

    I don’t have a big problem with many of the current restrictions on my decisions. For example that I can’t buy stocks on over 50% margin. Or that alcohol and cigarette sales are punitively taxed. Do you guys really oppose all such restrictions? Meaning for example no regulation of prostitution or drug sales at all? Which is not to say I agree with all current restrictions, I personally would not make prostitution illegal. But favoring generally loose regulation isn’t the same thing as opposing all regulation.

    James B. Shearer (667387)

  48. Punitive taxes on cigarettes and alcohol should go with the 17th Amendment into the garbage can.

    John Hitchcock (46bb63)

  49. But competition is a process, and while a snapshot at any given time may cause one to believe incorrectly that there is no competition, because one firm has a large market share, that is usually shown to be wrong over time.

    As my professors told us in college, thermodynamics tells you what happens; kinetics tells you when it will happen.

    bridget (37b281)

  50. For example that I can’t buy stocks on over 50% margin.

    That’s to protect the market and other investors in the market, not you.

    Or that alcohol and cigarette sales are punitively taxed. Do you guys really oppose all such restrictions?

    Absolutely. Why should they be “punitively” taxed? Who the hell are you or anyone else in this republic to punish me for indulging in a legal act? Why, cause you don’t like it? Why isn’t Coke and pizza punitively taxed also, they’re bad for you?

    Rev. Barack Hussein Hoagie (f4eb27)

  51. Somebody has to pay for that road the police, fire trucks and ambulances will drive on when you dial 911. Personally, I think taxes on luxury goods are a half-assed way to do things. If you’re serious about taxes, tax food, clothes, housing, gas and electricity, medicines, and water. Those are things everybody needs.

    nk (dbc370)

  52. And there is absolutely no reason for prostitution, drugs and gambling to be illegal. I understand the need to regulate these businesses closely but there is no reason they should be jail-worthy. As a freedom loving conservative member of our Republic it really pisses me off when some holier-than-thou ass tries to decide for everyone else what they can and can not do. Again, the first coin minted in the US had on it: “Mind Your Business”.

    Rev. Barack Hussein Hoagie (f4eb27)

  53. Sorry nk, “somebody” does not have to pay for those roads, everybody does because they benefit everybody not just smokers and drinkers. And I thought they were paid for with gas taxes and road & use taxes from trucks. Or have the pols figured out how to make that money land in their off-shore accounts next to bridge and road tolls and parking meter revenue? (all of which are “supposed” to benefit roads.)

    Rev. Barack Hussein Hoagie (f4eb27)

  54. If you have government, you have taxes. Unless there’s a strong enough constituency to oppose them. It all comes down to whose ox is being gored. Bet you a dollar, Warren Buffet would have no problem with Kelo takings — using eminent domain to take private property for private development. That’s what made his railroads possible. Bet you another dollar, he’d holler if you imposed a fast food tax (there is such a thing) on his Dairy Queens. And so on, and so forth.

    nk (dbc370)

  55. Reverend, in the Seattle area the vehicle tax money is spent building elevated choo-choo-trains, bike trails, a tunnel well below sea level through unconsolidated sediments adjacent to the city’s sky-scrappers, and other wonders of the liberal imagination. Meanwhile, the area is about 20 years overdue for the Richter 9 continental plate adjustment that occurs every 250 years, plus or minus.

    bobathome (c93b3f)

  56. 50 That’s to protect the market and other investors in the market, not you.

    Mostly but it is still a restriction on the free market. And a free market absolutist would deny that such regulations to protect the market are necessary. But it is destructive to society as a whole to allow large bubbles to form and restricting lending against assets discourages bubbles (and limits the bad effects if they form anyway and burst). I think there should similarly be a minimum required down payment when buying a house.

    James B. Shearer (667387)

  57. James, the only reason that people can buy houses with “zero down” is that the government has provided insurance to the lender. And for most of those loans, the borrower is stuck with mortgage insurance that is quite pricey. The auto industry also advertises “zero down”, but if you have cash you will find that it is possible to buy the car for a substantial discount (15% or better.)

    I have no problem with people borrowing to buy stocks provided the lender acts promptly to cover any deficiency in the collateral. This, of course, amplifies panic sales, but who is to say that the stock market should not have wild swings. It’s already flushed pretty much all of the QE “cash” down the drain. There is the small matter that our grand kids will still have to pay off the government borrowing that created all those bonds that the Fed bought “on the open market.” But our masters in DC assure us that we will grow our way out of this debt. Further QEs enabling the next round of extraordinary deficit spending are no doubt being planned, perhaps on a Krugman-like scale.

    bobathome (279337)


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