Home > Economics - General > Living in the 70s* (repost from CT)

Living in the 70s* (repost from CT)

September 21st, 2011

A bunch of standard measures of US economic wellbeing (median household income, real wages for workers with high school education, educational attainment by age 25 and so on) show strong improvement from 1945 to the early 1970s, followed by stagnation or very slow growth thereafter. A variety of arguments, have been put forward to suggest that the standard statistical measures understate improvements in wages, incomes and so on since the 1970s. Some of these arguments are valid (for example household size has fallen), some not (for example, the fact that we now have more of goods that have become relatively cheaper). Regardless of validity, the main reason people believe these arguments is that, for anyone who was around at the time, it seems implausible that our parents’ living standards in the 1970s were comparable to our own today (assuming roughly similar class positions)

This reasoning is invalid for a reason that should be familiar to those on the conservative side of debates over inequality. The measures mentioned above compare snapshots of incomes at different times. But (as conservatives regularly point out) standards of living are determined mainly by lifetime incomes, not by income in any particular year. Given the pattern described above, lifetime income for someone who worked, say, from 1940 to 1985 was well below that for someone in a similar class position who started work in 1970, just when the long increase in real wages was slowing for most and stopping for some. For every year of their working life, the 1970 starter gets a wage (adjusted for age, education and so on) that’s as high as the maximum attained by the 1940 starter after 30 years of steady growth. Unsurprisingly, that translates into a bigger house, and more of most items that require savings, whether or not their price has risen relative to the CPI.

You can see a similar effect illustrated for education here. Although the proportion of young people completing high school or gaining bachelors degrees reached a plateau in the 1970s, the proportion of the entire population with these qualifications kept on growing into the early 2000s

The two work together. Real wages for high school educated males haven’t risen since 1970, on the standard measures, but a man born in 1950 would not only earn more lifetime income than his father, assuming both had high school education, but would be much more likely to have gained a college degree. By contrast, a man born in 1980 is no more likely than his father to have completed college**, and, assuming high school education, would have similar lifetime earnings.

* Australians of the right cohort will recognise the allusion, otherwise Google should work
** I haven’t checked college completion by gender. I’d guess that if rates are stable overall, those for men must have fallen.

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  1. TerjeP
    September 21st, 2011 at 23:12 | #1

    Wasn’t there a massive cut in US government spending around 1945?

  2. 2 tanners
    September 21st, 2011 at 23:38 | #2

    Terje,

    Yes, there was a massive cut in 1945-6 in America.

    There was also one in Australia, as in every other country exiting WWII. In Australia, of course, national spending did not decline as much s could be expected because the states did not take back (did not want the opprobrium) of income tax any more, whereas in the Land Of Freedom you could not only pay National and State tax, but also City and Village tax. And still can.

  3. TerjeP
    September 22nd, 2011 at 06:57 | #3

    Also wasn’t there an historic change in US monetary policy around 1970. A shift to something more inflation prone.

  4. Mulga Mumblebrain
    September 22nd, 2011 at 07:55 | #4

    The facts concerning the Rightwing reaction in the US that has spread around the world and is now reaching its end-point as its inherent contradictions turn toxic, are pretty clear-cut. The US elites allowed a good deal of comparative redistribution to the middle-classes after WW2, mostly because the extreme concentration of wealth was seen as dangerous to economic and social stability. Moreover the ruling Western elites were worried by the spectre of Soviet Communism, which had just defeated the Right’s concerted effort, through German fascism, to destroy it.
    Unfortunately, by the 1970s, the global elites no longer were interested in seeing the serfs getting ideas above their station. The reaction was tested in Chile, at the point of a bayonet with Friedmanite Chicago School connivance. The rest is history. The decades of transferring money to the rich led to elite financial speculation that exceeded all restraints, and has imploded, taking us all down. There is no way back this time, because the ecological crises and resource depletion will worsen every tension, and the rise of China and collapse of the West into the quicksand of unpayable debt simply dictate that there will be war between the corrupt and dying West and China. The West knows no other way.

  5. Freelander
    September 22nd, 2011 at 08:16 | #5

    There was a massive explosion in government spending on tertiary education in the US around 1945 due to the GI bill. Maybe it is difficult to ‘graduate’ the last ten percent from high school even at age 29? At least more and more of those ninety percent were still managing to ‘graduate’ by age 25. I suppose the result of no (older) child left behind.

  6. Ikonoclast
    September 22nd, 2011 at 09:32 | #6

    TerjP, I need some clarification. What do you see as the optimal level of government revenue/spending? And what sort of state would you envisage as existing with this level of spending? I’ll give some broad bands with percents of GDP. Warning, country examples are not necessarily indicative or representative of outcomes.

    Zero spending – No government – Anarchy?
    Less than 10% – Miminalist government – Guarantee of contract law and basic social order?
    10% to 20% – Singapore
    20% to 30% – Syria, Turkey
    30% to 40% – US, Australia
    40% to 50% – UK, Germany
    Up to 60% – Swedish model – Democratic Socialism
    At least 80% – Cuba level – Socialism

  7. Mulga Mumblebrain
    September 22nd, 2011 at 09:36 | #7

    Ikonoclast. the Rightist ideal is just enough Government spending to keep the police and prisons going, to keep the rabble in line, to keep the military ‘up to speed’ for the wars of neo-colonial pillage in the poor world, and to ensure that the freeways and airports are maintained in good nick. Of course a good deal of that can be privatised, so the level inexorably falls towards zero, and the neo-feudal Nirvana that is the Right’s idea of Heaven on Earth.

  8. Peter Whiteford
    September 22nd, 2011 at 10:18 | #8

    I posted this over at Crooked timber, but no one seemed to notice, so I’ll put it here as well!

    Have a look at http://dx.doi.org/10.1787/421373283813

    This shows that among 9 OECD countries, the USA was the only country that saw falls in real full-time earnings for males in the bottom half of the earnings distribution between 1980 and 2005.

    (The data for Canada only covers the period from 1997 to 2005, although it seems likely that the Canadian labour market is influenced by proximity to the US labour market. )

    Now you also get this for some periods in Australia – but not over the whole 25 year period as in the USA. In the UK, earnings inequality widened even more than in the USA – but all deciles of workers had rising real earnings – it is just that they were a lot higher at the top than at the bottom.

    Now it is plausible that real wage levels (PPP adjusted) in the USA were higher at the beginning of the period than in other countries.

    More of the the total US compensation bill went to healthcare and private pensions in 2005 than in 1980 – although it seems likely to me that much of this went to workers in the top half of the earnings distribution rather than those in the bottom half. and even if the cost of employer-provided pensions went up, the coverage went down.

    In contrast, in Australia during this period we got the reintroduction of universal health care and the introduction of compulsory superannuation– both of which were more likely to benefit the lower paid than the better paid.

    I think there is also a story in here about joblessness – up until about 2000 the USA kept more people in employment than many other countries. In Australia and the UK and Germany, for example, joblessness is a lot more concentrated among households where no one is in paid work compared to the USA.

    So one possible story is that in response to the recessions of the 1970s and early 1980s the more flexible US labour market kept a higher proportion of people employed but at the cost of falling real wages at the bottom.

    One of the problems with falling real wages at the bottom is that this puts pressure on your welfare system – how do you have adequate welfare benefits for the poor, when real wages for the low paid are falling for 10 or 15 years or longer? Ultimately you end up “ending welfare as we know it”.

    Also of course, this trade-off only works while you maintain high employment among low skilled workers.

    Post 2008 the model looks much less attractive. In fact, I’m not sure how you fix it.

  9. Sam
    September 22nd, 2011 at 10:41 | #9

    New technology gained in WWII had something to do with it. Suddenly everyone could buy vacuum cleaners, washing machines etc. that hadn’t existed before.

  10. stockingrate
    September 22nd, 2011 at 10:42 | #10

    “it seems implausible that our parents’ living standards in the 1970s were comparable to our own today (assuming roughly similar class positions)”. Indeed our parents if of a similar class could aspire to much better housing on a single wage. Now houses are either out of reach so a flat must do or the house is a lot further from central amenities.

  11. TerjeP
    September 22nd, 2011 at 11:28 | #11

    Ikonoclast – tax in Singapore is still a bit too high for me. I think taxes should fund the basics like the military, local roads, police, judiciary and yes prisons too. There are some things that I think the government should not fund but probably should finance such as education and health. However these should be on the basis of income contingent loans along the lines of HECS with care taken not to unreasonably crowd out the private sector. Schools and hospitals should be private. I wouldn’t want drug prohibition or the death penalty or criminalisation of homosexuality or the religious free speech restrictions found in Singapore so it is only a partial model.

  12. Ikonoclast
    September 22nd, 2011 at 11:37 | #12

    @Mulga Mumblebrain

    Yes, this corresponds to the “fisc (or treasury) and coercive apparatus”, a phrase I seem to recall from John Ralston Saul’s writings. The coercive apparatus comprises police, courts and military. JRS used the words with a denigrating turn and asked why the mass of ordinary people would want to limit democratic government to such a rump or minimalist position. JRS’s take on it is that the democratic vote is the only real political power that the mass of average citizens exercise and thus suggests (correctly I think) that the minimalisation of democratic government is equivalent to a reduction in democracy and the democratic freedom of ordinary people to determine the shape of their own society.

    Libertarians like TerjP seem to think that individual freedom is or will be maximised under a libertarian political and lassiz-faire market system. Democracy seems to play little part in libertarian thinking and gets mis-categorised as “mob rule”. Libertarians ignore the fact that lassiz-faire systems have invariably resulted in all empirical history in increasing and massive inequalities, oligrachical rule, mass impoverishment of the lower classes, exploitation of women, child labour and so on.

    TerjeP has never been able to advance any historical evidence that libertarianism and lassiz-faire market systems lead to anything other than what I have characterised above. The Jack Abramoff CNMI scandal was an example of extreme libertarianism and lassiz-faire principles at work. The natural end-point is total corruption and exploitation of the weak by the strong. TerjeP has never been able to refute the mountain of historical evidence which proves the lamentable end-point of lassiz-faire libertarianism or explain why his brand of libertarianism does not and would not equate to that.

    If TerjeP feels I have mis-characterised his form of libertarianism, I would welcome a fully argued essay from TerjeP on this topic as soon as Prof JQ posts a long-post non-nuclear sandpit.

  13. Ikonoclast
    September 22nd, 2011 at 11:42 | #13

    TerjeP, the above might seem like an attack on you. It’s not meant in that way but it is meant as an attack on a certain proportion of your ideas. When I attack ideas I do get vehement but I hope it is clear that it is certain ideas that anathema to me and not the persons who propose them. I hope you agree I am playing the ball (the ideas) and not the man.

  14. Mulga Mumblebrain
    September 22nd, 2011 at 12:00 | #14

    Ikonoclast, the Right’s detestation of ‘gummint’ is a thinly disguised hatred of other people. You see, in our confabulated political ideology, ‘democracy’ produces governments that are, allegedly (I know this is bulldust in real life, but we are talking of our self-serving faery story of ‘Western values’ with which we lecture and hector the rest of humanity)the representatives of the ‘popular will’. Yet the Right despises this popular will and demands that government do nothing but protect the rich and their wealth, keep the rabble quiet and invade and loot any of the Untermenschenlands that possess valuable resources that the Western rich covet. The Right’s notion of democracy is ‘One dollar, one vote’, which is more accurately known as plutocracy, and these days they are so confident in their supremacy that they don’t often bother to lie about it.

  15. Mulga Mumblebrain
    September 22nd, 2011 at 12:02 | #15

    Ikonoclas, PS ‘libertarians’ only believe in absolute liberty for themselves and their ilk. They insist on policies that reduce most of humanity to the position of serfs or debt-peons and are, therefore, truly terrifying hypocrites as well. Just look at Ayn Rand’s febrile detestation of others. There’s your ‘libertarian’.

  16. TerjeP
    September 22nd, 2011 at 13:16 | #16

    Ikonoclast – I’m not phased by you attacking my ideas. That’s what happens on blogs. However don’t expect a long essay here from me. If I write long libertarian essays I tend to publish at the ALS or somewhere similar.

    The historical record is reasonably accessible to all that care to dig but if you have reached alternate conclusions to me then either you have been digging somewhere different or else you frame the world differently to me.

    I’m here for the conversation but I’m not holding out for any conversions. If you genuinely want to understand the intellectual foundation of libertarianism then it is readily available through various websites. If you want to “prove me wrong” then fine but let’s play the game in conversation size chunks.

  17. TerjeP
    September 22nd, 2011 at 13:18 | #17

    Mulga – yes, yes, yes. Libertarians are evil, wicked people. You have made that point. We get it.

  18. Mulga Mumblebrain
    September 22nd, 2011 at 13:32 | #18

    Pertaining to ‘libertarians’ and the Right in general, ‘By their deeds shall you know them’. I resteth my case.

  19. TerjeP
    September 22nd, 2011 at 13:37 | #19

    Blah, blah, blah.

  20. Fran Barlow
    September 22nd, 2011 at 15:12 | #20

    @Mulga Mumblebrain

    Pertaining to ‘libertarians’ and the Right in general, ‘By their deeds shall you know them’. I resteth my case.

    Hmmm … 1st person singular in early modern English? I reste

    In this it somewhat followed the Germanic form. In Old English this was from the infinitive restan

    The -eth suffix was for the third person.

  21. Ikonoclast
    September 22nd, 2011 at 15:42 | #21

    Well, I am going to make a guess and posit that TerjeP is a minarchist libertarian.

    “Minarchism (also known as minimal statism,[1] small government, or limited-government libertarianism[2]) is a libertarian capitalist political philosophy which maintains that the state is necessary and that its only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud, and the only legitimate governmental institutions are the military, police, courts, and legislatures, with some theories also including prisons.” – Wikipedia.

    The libertarian /anti-libertarian debate is hopefully not too off-topic. How we attribute causes and suggest solutions for the post-1970s “stagnation” of key progress indicators must be affected by this debate.

    I for one will be happy to write a short essay rebutting the claimed philosophical and empirical bases for economic libertarianism (like minarchism) when JQ opens a topic for long posts. TerjeP can then “play the game” by replying in conversation sized chunks. :)

  22. Mulga Mumblebrain
    September 22nd, 2011 at 16:26 | #22

    Dear Fran; Sorry. my habitual use of the plural ‘we’, which I suppress for faux egalitarian pretense, has betrayed me. I was saying ‘we resteth..’ inside my head. And, of course, I should include the possessive, so essential in these days of ‘aspirational’ self-obsession. ‘We resteth My Case’.

  23. Julie Thomas
    September 22nd, 2011 at 16:34 | #23

    Terje you wrote ” if you have reached alternate conclusions ………… you frame the world differently to me.”

    Is it the case that libertarianism assumes that if one frames the world differently, one is not ‘good enough’ to be a valuable part of the system. It seems to me that libertarians are a very particular type of person – usually male, confident, articulate and competitive. And yet not all humans are like that; some of us have high levels of the brain chemicals that underly anxiety and depression. Some of us have had lives that ensured we were unable to develop self-confidence and some of us actually find freedom in economic security.

    There is so much evidence from psychology to clearly show that humans are not equally endowed with the characteristics that ensure we will do well in a free-market system. Clearly people like you will always win over someone like me.

    I don’t need an essay, but I’d like to understand a bit how you reconcile the information from neuro-psychology that brain chemistry, which we inherit has a significant effect on our character and our behaviour.

  24. Donald Oats
    September 22nd, 2011 at 17:54 | #24

    Firstly, I’d like to say thank you to Prof Q for this post – I’ve wondered about the lifetime income, as opposed to a point in time measurement, but not seen it before.

  25. September 22nd, 2011 at 20:30 | #25

    Ikonoclast :
    @Mulga Mumblebrain

    .
    .
    .
    Libertarians like TerjP seem to think that individual freedom is or will be maximised under a libertarian political and lassiz-faire market system. Democracy seems to play little part in libertarian thinking and gets mis-categorised as “mob rule”. Libertarians ignore the fact that lassiz-faire systems have invariably resulted in all empirical history in increasing and massive inequalities, oligrachical rule, mass impoverishment of the lower classes, exploitation of women, child labour and so on.
    TerjeP has never been able to advance any historical evidence that libertarianism and lassiz [sic]-faire market systems lead to anything other than what I have characterised above. The Jack Abramoff CNMI scandal was an example of extreme libertarianism and lassiz-faire principles at work. The natural end-point is total corruption and exploitation of the weak by the strong. TerjeP has never been able to refute the mountain of historical evidence which proves the lamentable end-point of lassiz-faire libertarianism or explain why his brand of libertarianism does not and would not equate to that.
    If TerjeP feels I have mis-characterised his form of libertarianism, I would welcome a fully argued essay from TerjeP on this topic as soon as Prof JQ posts a long-post non-nuclear sandpit.

    While I can’t speak for TerjeP, that sounds a lot like what Kevin Carson characterises as vulgar libertarianism (though from someone who is, very reasonably, against it rather than a supporter):-

    Vulgar libertarian apologists for capitalism use the term “free market” in an equivocal sense: they seem to have trouble remembering, from one moment to the next, whether they’re defending actually existing capitalism or free market principles. So we get the standard boilerplate article in The Freeman arguing that the rich can’t get rich at the expense of the poor, because “that’s not how the free market works”–implicitly assuming that this is a free market. When prodded, they’ll grudgingly admit that the present system is not a free market, and that it includes a lot of state intervention on behalf of the rich. But as soon as they think they can get away with it, they go right back to defending the wealth of existing corporations on the basis of “free market principles.”

    I’ve recently seen a more specific counter, but I can’t find it off hand. It went something like this: every time critics (of anarchism) ask for historical evidence, they brush aside historical evidence that everything that was ever tried wasn’t in fact free markets but was within state sponsored frameworks of privilege, and every time you ask them for historical evidence that (say) democracy and social democracy have ever worked, they switch to a theoretical coverage of an idealised, hypothetical version that was never actually tried – even though they won’t allow that sort of approach to anarchism that, at the very least, has never failed to the same extent in practice (and there have been partial attempts, like Lysander Spooner’s postal system). But I’m probably not doing it justice. Me, I know that what was tried didn’t work but wasn’t really free markets etc., but I fear that anything else – true free markets – might not work either, if only from falling prey to those who rig things (like Lysander Spooner’s postal system); and that makes a true dilemma.

  26. Ikonoclast
    September 22nd, 2011 at 20:50 | #26

    @Donald Oats

    There is a further consideration related to the lifetime-income versus point-in-time income comparisons between eras. This relates to the extent of what may be called “in-place” infrastructure and its varying composition with respect to being free public use or user-pays private use infrastructure. The variation in “social wage” (a retrenchment of some aspects since about 1985 in Australia) would play a role in this determination.

    “The term ‘social wage’ is used frequently in a journalistic sense, to mean the provision of an ill-defined set of public services which invariably include education and health care. The term does not have widespread currency in international academic circles… Thus the social wage comes to be seen as a form of collective property income, including ‘royalties’ for the use of natural and intangible ‘sovereign’ resources that are not subject to freehold ownership. As such, the social wage constitutes all public expenditure, including an income support system that pays pensions, benefits, subsidies and tax concessions.” – Abstract for ‘The Social Wage as a Definitive Component of Political Parties’ Philosophies’ – 1996 Keith Rankin, Economics Dept., University of Auckland.

    “In-place” knowledge and technology levels are also of significance. I’ll leave it to others to unpack the meaning of what I am saying here. (I usually write too much.)

  27. TerjeP
    September 22nd, 2011 at 21:12 | #27

    Is it the case that libertarianism assumes that if one frames the world differently, one is not ‘good enough’ to be a valuable part of the system.

    Political philosophy considers the role of government in society. Libertarianism is a particular political philosophy that seeks a minimal role for government. There are different rationale for libertarianism from the natural rights school of thought to utilitarianism. Libertarianism does not assume anything about who should be valuable. The skills of the heart surgeons may be worth more than the skills of the real estate agents or else they may not. This is a matter for individuals to assess. It isn’t something that is defined a priori by libertarianism. Libertarianism does however say how this issue should be decided. It should be decided freely by the individual members of society.

    John Quiggin is confident, articulate and competitive. Most people that stand up for a particular political philosophy have these attributes. So whilst it is flattering that you regard libertarians in these terms it is not particularly relevant to the philosophy. Libertarians value individualism and individuals can be calm or anxious, articulate or muddled, confident or nervus, male or female. If you are anxious, muddled and nervus then perhaps I am less likely to regard your views on political philosophy less favorably however there would be plenty of room for you in a libertarian society. It isn’t an exclusive country club.

  28. TerjeP
    September 22nd, 2011 at 21:26 | #28

    I don’t need an essay, but I’d like to understand a bit how you reconcile the information from neuro-psychology that brain chemistry, which we inherit has a significant effect on our character and our behaviour.

    I don’t see the problem to be honest. We are all different. We have different talents. Some have a lot more talent than others. Some are born with handicaps. Some are born rich and some are born poor. Libertarianism simply says everybody should make choices free from coersion. It does not say they should make choices free from consequences or free from limitations. The fact that our brain chemistry effects our abilities and our state of mind is obvious.

    I think you are asking me to rationalise libertarianism on the assumption that it will lead to an awful world were the weak are neglected, the poor starve and sick die. Well that is already the nature of the world but libertarianism is the system most likely to mitigate those issues. So it isn’t hard to rationalise being libertarian. If I believed a libertarian world would be an even more miserable place then naturally I’d stop being a libertarian. However all the evidence suggests to me that the opposite is the case. Libertarianism leads to an uplifting of the human state.

  29. Gipsyland
    September 22nd, 2011 at 21:27 | #29

    @TerjeP

    Why, that’s very nice of you to include everyone else, with a minor caveat on us nervus types. However, you have totally avoided the argument that unfortunately the people do not decide (being all too nervus), and that the inevitable result is an oligarchy or tyranny by the strong. It sounds so wonderful on paper; we can all be free, until one looks in a mirror and remembers what type of being we are.

    I’m with the side says collectively let’s build a more just society. Not spending too much of available resource doing that is probably a good idea, but the central theme is collective, not individual.

  30. Ikonoclast
    September 22nd, 2011 at 21:42 | #30

    @Julie Thomas

    I think Julie T raises a very important point. The physical, intellectual and psychological make-up of the individual (including general whole-of-person features like robustness, adaptability and endurance plus the specifics of physical, intellectual and emotional range and skills) can and do have an impact on political positioning. Then we can add upbringing and formative experiences (nurture) to genotype and phenotype (nature).

    We could argue (and indeed I would argue) that since Australia is a democracy, the current general accomodation between competitive economy aspects and welfare or social wage and social insurance aspects is broadly what the majority of Australian citizens want. They do not want the super-competitive and “pitiless” (my interpretation) society implied by minarchist libertarianism.

    I will tell a modern parable about competition if I may. I recall it from watching the Olympics some time ago, maybe about 8 or 12 years ago. A row of hulking male swimmers were lined up for the 50m sprint final . A start ensured where it was clear that several swimmers accurately anticipated the gun and a few did not. One the few was the American favourite (more hulking than the rest) who subsequently failed to place. Some time after the event he complained of not getting a fair start. I guffawed long and loud. Eventually, after getting off the floor, I opined to my wife, “What, he didn’t get a fair start? He was clearly born with the some of the best genes, in the richest country with the best nutrition and the best universities, best technology, best coaching expertise, best competition and he suggests he didn’t get a fair start! He ought to try being born in sub-Saharan Africa.” You see, any proper notion of a fair start begins a long way before the starting blocks, a long way before the ostensible competitive moment.

    To return to Julie T’s point, few people are endowed by nature and nurture to be outright winners in any highly competitive enterprise, including economic endeavours in a lassiz faire system. The bulk of average people and even a proportion of above-average people with perhaps above-average compassion, recognise this and rationally seek security through co-operation and a sense of well-being and happiness through socially shared well-being and happiness. One slip on the starting block (one car accident, one death in the family, one bad gene expressed in the phenotype) can blow away all other advantages and put the excelling or potential-to-excel individual right back with (or behind) all the other “mugs” who never win anything major in life’s race. It is more rational to back a balanced cooperative society with some moderate extra reward for hard work and innovation than an excessively competitive society with poverty and misery for most and the riches of Croesus for a very few.

  31. Ikonoclast
    September 22nd, 2011 at 22:15 | #31

    @TerjeP

    TerjeP says, “I think you are asking me to rationalise libertarianism on the assumption that it will lead to an awful world were the weak are neglected, the poor starve and sick die. Well that is already the nature of the world but libertarianism is the system most likely to mitigate those issues.”

    This goes to the nub of the issue I think. First, you correctly characterise why people like me (left “small-l” liberals or social democrats) oppose liberterianism. We not only assume, we know from examination of the empirical historical record of human societies that this is exactly what does and will happen under the conditions of laissez-faire, especially laissez-faire capitalism.

    Second you state that “this” (were the weak are neglected, the poor starve and sick die) is already the nature of the world. This is true in many parts but it is “least true” in wealthy social democracies with a welfare system.

    Perhaps you could explain how the impoverished and seriously sick could get any treatment in a minarchist libertarian society which would have a fully private health system, no welfare and clearly no insurance for poor people (whether paid by them or for them).

  32. TerjeP
    September 22nd, 2011 at 22:19 | #32

    The bulk of average people and even a proportion of above-average people with perhaps above-average compassion, recognise this and rationally seek security through co-operation and a sense of well-being and happiness through socially shared well-being and happiness.

    Yes. That is why libertarianism is a good idea. If most people are good it is folly to hinder most people. And most people are good. Most people are sociable. Most people care about their friends and neighbours. To replace or displace mutalism and community with government and compulsion is destructive. Not only does it rob people of community it destroys the sence of purpose and meaning people get from voluntary community engagement.

  33. TerjeP
    September 22nd, 2011 at 22:25 | #33

    Perhaps you could explain how the impoverished and seriously sick could get any treatment in a minarchist libertarian society which would have a fully private health system, no welfare and clearly no insurance for poor people (whether paid by them or for them).

    Firstly we should acknowledge that a impoverished society can’t solve these problems. So first we need some modest measure of prosperity. This is true even if you regards government programs as the means to solve this problem.

    Secondly we should look to working examples from history. John Humphreys has written a good piece on this issue:-

    http://johnhumphreys.com.au/2010/07/28/the-rise-fall-of-community-welfare-societies/

  34. paul walter
    September 23rd, 2011 at 01:35 | #34

    Yes, that comment of Terje’s about 1970 got me back to the costs of Vietnam and ways of countries adjusting currencies, standards etc to meet the uncomfortable reality that money was being suctioned off to the ‘States… Actually am a boomer so it has me in mind of an era I’ve lived through, rather like my oldies living through ww2.
    I have not the slightest doubt that my betters and their betters saw exponentially harder times with two major world wars and two major depressions in fifty years and it built their characters. In affluent times the landscape has changed. Starvation and disease have not been the problem but the problems of rapid adjustment, as civilisation, “goes where no people before it have gone”.
    As to the rest, “civilisation” had better start reflecting a little more carefully on what’s “wise”; for my part , I’m glad I’m getting older. It’s embarrassing to watch the impending train wreck, as politicians, mega resoucers capitalists, press barons and the like, fiercely pull, in daft Gadarene harmony, toward a precipice we catch a glimpse of which we see emerging in North East Africa.
    Wake up world!

  35. TerjeP
    September 23rd, 2011 at 06:16 | #35

    Yes, that comment of Terje’s about 1970 got me back to the costs of Vietnam and ways of countries adjusting currencies

    There is a long tradition of expensive wars leading to a decay of the monetary system. WWI probably worse than most but also the Vietnam war.

  36. Julie Thomas
    September 23rd, 2011 at 07:13 | #36

    TerjeP You say that it isn’t hard for you to rationalise being libertarian and that’s is exactly my point. You, having a certain type of brain, may simply not be able to understandpeople like me. Whereas with my type of brain chemistry, I think I can understand the rationalisation process that you use to be a ‘good’ person and yet be able to ignore all the evidence that a great many human beings will not do well in your system.

    Hayek says in Road to Serfdom, p123 “Independence of mind or strength of character are rarely found among those who cannot be confident that they will make their way by their own efforts”. So it seems to me that in this sentence, I am relegated to a non-entity, not worthy of participation or a real explanation of what would happen to people like me who can’t live up to your idea of human nature.

    Perhaps the idea of empathy is relevant here. How important do you think it is for humans to be able to understand the ‘other’?

  37. TerjeP
    September 23rd, 2011 at 07:29 | #37

    Julie – in your first paragraph you bluntly claim to have more capability than me. So it is odd that you then go on to suggest that my philosophy won’t work for people like you because you have less capability than me. There is an inherent problem with your logic.

    As to empathy. I think it is probably one of the key determinants for success in many of the main human endeavors. In business, politics, employment, family life and community work. If your brain state means that you lack this capability then you have my sympathy. Working with other people is pretty much the stuff of life.

  38. Mulga Mumblebrain
    September 23rd, 2011 at 07:45 | #38

    It seems like there are two ‘libertarianisms’. One, the Randian type, where the individuals liberated by libertarianism from the deadly coils of government, are free to express their individuality and superiority by piling up loot and power. The rabble, the ‘moochers’ in Rand’s terms, are seen as lesser beings, and, if not up to the task of defending themselves from the self-interested predations of the liberated elect, well, stiff cheese.
    Nowl, of course, this sort of libertarianism already exists. The rich, more or less, do as they wish. They crash entire economies through gigantic financial crime and incompetence, and they get their political employees to bale them out, courtesy of the moochers. When the debt thereby incurred comes due to be paid back, the austerity falls on the heads of the poor and the middle-classes, while the tax cuts, obscene, larcenous, wages and kleptomaniacal ‘bonuses’ grow ever more gigantic..
    And then there is the ‘nice libertarianism’ where individuals freed from (the actually these days very minimal for the rich) restraints of Government, act all philanthropic and nice, and help one another, and private charity looks after the burgeoning ranks of the poor. It sounds very lovely, rather like a throw-back to Victorian England, or one of Rick Perry’s wet-dreams. It is, of course, cobblers. The only type of libertarianism we are ever likely to see is the one where it is, in fact, money that is liberated, and the wonderful ‘freedom’ enjoyed by human beings as a result will depend, as now, on how much wealth one controls. Your libertarian won’t agree to redistribute wealth to the ‘moochers’-you can bet on that. So, in action, libertarianism amounts to a formula for exacerbated inequality and a descent into neo-feudalism.

  39. Mulga Mumblebrain
    September 23rd, 2011 at 07:47 | #39

    It is not empathy that is essential for success in business. It is sincerity, as Groucho Marx observed, ‘In Hollywood sincerity is the key to success-once you can fake that, you’ve got it made’.

  40. Chris Warren
    September 23rd, 2011 at 08:09 | #40

    @TerjeP

    Governments, churches, trade unions and volunteers can provide needed services in any society included so-called impoverished societies. Governments need to ensure that, for example, Catholics do not provide services only to Catholics, or that trade unions are not just open to white workers etc. Government funding of volunteers can do wonders eg the volunteer fire brigades in the 1950′s and today’s volunteer search and rescue teams.

    But the real issue is how can the impoverished within a capitalist society, get services. The most efficient way is to tax the rich given the understanding that they have obtained their riches not through their own efforts, but through the power of Capital in society.

    The existence of a impoverished strata in society is a result of high accumulated wealth elsewhere, or at least the process this wealth was produced. Even in an impoverished society there is a rich strata of overlords holding onto the missing wealth.

  41. Julie Thomas
    September 23rd, 2011 at 08:25 | #41

    TerjeP are you sure that I ‘bluntly’ claimed to have more capacity than you. I thought I had phrased it as a question about the obvious differences between humans and their capacities in different areas. But there you go; this misunderstanding clearly shows that we all lack insight into our motives and the probability of misunderstanding the other types of human beings is very high. And it’s a great debating technique to miss the point.

    Would it have been better if I had ‘cringingly’ claimed that I might be able to see your point of view, while you couldn’t see mine? Did you not take into account my earlier – equally blunt? – claim that you are superior to me in all those qualities that are required for success, in your system.

    So it is as Mulga says that it’s just stiff cheese for me if I can’t make it in the system that you understand and love. It’s okay to say that you know. I’m not a fan of politically correctness. But I am interested in the type of brain that is attracted to libertarianism and it seems you are not and as usual in any conversation I have had with libertarians, your interest is only in protecting your system from any criticism.

    But to move on to another question I have about libertarianism Perhaps you could comment on this quote from

    http://www.salon.com/news/politics/war_room/2011/08/30/lind_libertariansim

    A quote from the article claims that “Cato Unbound recently hosted a debate over whether libertarianism is compatible with democracy. Milton Friedman’s grandson Patri concluded that it is not” and that “Democracy is not the answer”.

  42. Julie Thomas
    September 23rd, 2011 at 08:30 | #42

    Sorry about the lack of comma’s. I also am less able in that area.

  43. Ikonoclast
    September 23rd, 2011 at 08:54 | #43

    @TerjeP

    This is a reply to points in TerjeP’s last three posts. Overall, I hope this debate (social democracy versus libertarianism) is not considered off-topic. I think it does have a bearing on the topic of the progress or failure to progress living standards since the 1970s according to certain indices.

    TerjeP adduced my point (about the enlightened self interest of most people leading them to cooperation rather than raw competition) as evidence for his argument for libertarianism rather than as evidence for my argument for social democratic and secular government. This is an interesting and even audacious manoeuvre on TerjeP’s part. His argument here has an initial appeal but it does not stand up to a fuller scrutiny.

    In the first place he says “To replace or displace mutalism and community with government and compulsion is destructive. Not only does it rob people of community it destroys the sence of purpose and meaning people get from voluntary community engagement.”

    The wording “government and compulsion” is revealing. The two are placed together with a clear implication that both are not good in any manner or degree. “Compulsion” is clearly bad and by association government (all types and without any qualifier) is assumed to be bad. Indeed government is assumed to be all about compulsion. Yet by his own descriptions and prescriptions, TerjeP is essentially a minarchist libertarian. “Minarchism (also known as minimal statism, small government, or limited-government libertarianism is a libertarian capitalist political philosophy which maintains that the state is necessary and that its only legitimate function is the protection of individuals from aggression, theft, breach of contract, and fraud, and the only legitimate governmental institutions are the military, police, courts, and legislatures, with some theories also including prisons.” – Wikipedia.

    TerjeP has specifically included the need for prisons in his posts so TerjeP is essentially a “Full Minarchist Libertarian”. We note that TerjeP essentially rates all government as bad and being about compulsion and then we note he wants to a keep as rump or minimalist government ONLY the “compulsion” that is only the coercive aspects of government namely the military, police and courts (along with the treasury and management by legislature obviously). Am I the only who sees this glaring discrepancy of somehow being against bad, coercive government and then wanting to keep ONLY the coercive apparatus of government?

    What TerjeP’s arguments about mutualism leave out are the following truths about democracy and the capitalist system.

    1. In a democracy, the denial of a social and economic role for democratic government, beyond the minimalist state, is a denial of the validity of the democratic legitimation of government and its full roles. To repeat an argument I made above, since Australia is a democracy, the current general accomodation between competitive economy aspects and welfare or social wage and social insurance aspects is broadly what the majority of Australian citizens want. This is mutualism expressed as all-inclusive secular democracy.

    2. Within a capitalist and corporatist system (the main modern countervailing forces against democracy, equality and liberty), where democratic power is so minimised (by minarchism, neoliberlaism etc.), further power transfers to the elite owners and managers of coporations and corporate capital. This transfer of power is undemocratic and results in a reduction in equality and liberty for the bulk of the population.

    3. Most ominously, those resources which a government does not put into the welfare of its citizens (in the broadest sense of the term “welfare”) seem almost inevitably to be put into warfare against its own citizens or the citizens of other nations. Rather than seeing any real shrinkage of the state under minarchist prescriptions, the resources which come out of health, education and welfare will go into the coercive apparatus, into expanding courts, prisons and the military. That which does not go into welfare will go into warfare.

    TereP’s link to John Humphrey’s blog about community welfare socieities is essentially a link to a pseudo-history or revisionist history. This glowing description of private, friendly and church charity does not match the historical reality.

    If one studies a little Australian social welfare history one sees the true colours of the private and religious charity operaters of the 19th C. Some of these institutions were state subsidised so state money was still involved. These institutions became so blatantly corrupt, tainted by nepotism and abuses that public outcry and newspaper exposes lead to Royal Comissions in the states of Victoria and New South Wales. Thes Royal Comissions lead to reforms which involved the return of the funding to state administration to implement the proper supervision and provision of these services in a non-sectarian and non-paternalistic manner relative to the former gross abuses.*

    * Victoria 1862-63 Sturt – The Royal Comission appointed to enquire into the municipalities and chartiable institutions in Victoria.

    * Victoria 1870-71 Harker – The Royal Comission appointed to enquire into and report upon the condition and management of the charitable institutions of the colony, and generally into all matters therewith.

    * Victoria 1875-76 Langridge – Royal Commission appointed to enquire into the woking of the Friendly Societies statute.

    * Victoria 1890 – 91 Zox – Royal Commission on Charitable Institutions

    I have lost many of my notes on this research which I undertook privately for a large self-initiated report to my union about Howard’s welfare “reform” circa 1999). Hence I can only give a list of the relevant Victorian Commissions. This list is not to imply that all of these Commissions made adverse or only adverse determinations. However, my point stands that state intervention was required to remove the gross abuses, sectarianism and paternalism of private, church and (possibly**) friendly society charity.

    ** I am not sure on this point as my memory is hazy about lost research on an old crashed computer.

  44. Ikonoclast
    September 23rd, 2011 at 09:28 | #44

    @Julie Thomas

    Great link to a great article! I particularly liked the conclusion;

    “The dread of democracy by libertarians and classical liberals is justified. Libertarianism really is incompatible with democracy. Most libertarians have made it clear which of the two they prefer. The only question that remains to be settled is why anyone should pay attention to libertarians.”

    The more benign of libertarians are well-meaning but totally impractical and misguided. They have no idea of the severe dangers and tendencies of their philosophies.

  45. Chris Warren
    September 23rd, 2011 at 10:07 | #45

    TerjeP :
    Blah, blah, blah.

    Is this the most honest thing Terje has posted?

    When logic fails him, …. is this the final resort?

    On his tombstone we should place his final epitaph;

    “Twas all just blah, blah, blah”

  46. Julie Thomas
    September 23rd, 2011 at 10:42 | #46

    Ikonoclast it was a cute and dismissive ending and I appreciated it, but, there are two reasons I pay attention to libertarians. First because there are people in the coalition like Peter Reith who support ‘work choices’. Some of the comments after the article are great.

    http://www.abc.net.au/unleashed/2910768.html

    And the second reason is that I think, and this is totally off topic, that they are a fascinating group of people; and as you and Mulga have noticed there are two sub-groups. A friend of mine, doing her PhD on Aspergers’ Syndrome, suggested that they seem to exhibit many of the features of this type of human functioning.

    But this is a forum for economics. I just very rudely dropped in when I saw a libertarian acting nice. Sorry TerjeP, but I’m terrified by all the testosterone at Catallxy; it sometimes smells like a teenage boy’s bedroom; all the wanking you know.

  47. may
    September 23rd, 2011 at 11:54 | #47

    libertarian?

    the break up of the soviet union was pure libertarianism in action.

    everything was “liberated”

    and the nomenklatura won.

    Julie?

    just a thought.

    falling into the trap of responding in to the sexualised imagery is easy to do,especially when the innuendos are flying thick and fast

    but

    the inevitable result can be seen in the labelling of our prime minister as “catmeat”.
    (shriek!how dare i.
    “if you don’t like it don’t watch it” says the prefect from hell)
    and falling standards at the ABC call for a decrease in funding,killing two birds with one stone.(pure morlochian?)

    off topic?
    thats the point.

    turgid(who i’m coming to suspect is eiither a commitee or a artificial (very fox)intelligence program )

    specialises in double double unthink.

  48. John Brookes
    September 23rd, 2011 at 12:35 | #48

    It seems to me that the aftermath of the 2nd world war produced governments that were a bit egalitarian in nature – in recognition if you like, of the common effort and sacrifice to defeat Germany & Japan. The feeling was perhaps one of cooperation. Returned soldiers were also likely to demand and receive good treatment.

    As WW2 recedes into the dim past, the time when we all fought together against a common foe is forgotten, and we’re moving towards “every man for himself” style of thinking. Thinking which will inevitably result in losses to the least able.

    What do we do about it?

  49. Jarrah
    September 23rd, 2011 at 13:00 | #49

    “the break up of the soviet union was pure libertarianism in action.”

    This exemplifies a major part of the perception problem libertarianism has – people ascribe qualities to it that it doesn’t actually possess. Libertarianism is a very particular kind of economic and social philosophy, not any and all permutations of capitalism or ruling class excesses.

    The break-up of the USSR was a crony capitalist mafioso takeover in the absence of the rule of law. Not libertarianism.

  50. Ikonoclast
    September 23rd, 2011 at 13:19 | #50

    I think there are now two very real forces at work; one reducing the labour share of the economy from about 1985 to the present and another reducing the total economy’s further potential for growth.

    The first force may be called variously capitalism, corporate capitalism, neoliberalism, neoclassical economics, economic rationalism or even minarchist libertarianism as these are various aspects of the total force of owner and managerial elites against workers.

    The second force (or lack of force in the case of energy) is constituted by the limits to growth in the form of energetic, material, climate, general biosphere and ecological limits. As these limits to growth begin to bite (and they have begun to bite since 2005 when peak oil occured), problems and conflicts in the political economy will be exacerbated. For example, corporate capital will continue to seek an ever increasing profits share at the expense of the labour share of the economy at the same time as the whole economy is squeezed by absolute energy and material shortages (at worst) or renewable transition costs and higher energy and material costs at best. We are in for a very tough time and it might precipitate the final confrontation of labour and capital.

  51. TerjeP
    September 23rd, 2011 at 13:23 | #51

    Lot’s of questions however I’m not going to entertain them all at once though. The question about democracy seems interesting. So here goes.

    As an institution I favour is constitutionally limited democratic government. This does not mean that I agree with all the democratic decisions that might get made within such a system but then nor do I agree with all the free choices that individuals make in their own lives. I can believe in democracy and freedom without agreeing with all democratic decisions or all free decisions.

    Believing in constitutional limits is not that radical. It is simply the notion that governments should be bound by the rule of law. I doubt that there is any democrat in the room that thinks government should be above the rule of law. Unless I’m wrong the debate then is really about what limits to government power should be in the constitution. To what extent is the power of collective government checked. Personally, and perhaps unlike some libertarians, I think many of the ills of our democratic system can be ameliorated by some overlay of direct democracy. One of my favorite ideas is the notion of the Citizens Veto where the people can initiate a referendum to strike down legislation they don’t like. Another is sunset clauses on all laws except perhaps those that have a supermajority of support. We could use TABOR to put decisions about the level of taxation more directly into the hands of the people. There are lots of ways to increase democracy which also facilitate a more libertarian society. So I don’t accept that democracy and libertarianism are automatically in conflict. The design of the democracy is integral to the question.

  52. Ikonoclast
    September 23rd, 2011 at 13:44 | #52

    @Jarrah

    Libertarianism suffers from a perception problem precisely because many of its schools are functionally indistinguishable from laissez-faire capitalism and oligarchic rule. Where Libertarians claim this is not so, they fail to elucidate how Libertarianism is different in theory and how this difference would be enforced (almost no escaping this word) or ensured in practice. Libertarian prescriptions are short on practical and realistic detail on these matters.

    Capitalism and corporate capitalism have arisen naturally or organically (as it were) from the inner logic of the instrumental power and efficacy of markets on the one hand and the competitive advantage (tending to monopoly) of large (and ultimately corporatised) accretions of capital on the other hand. Democracy has also arisen and burgeoned naturally and organically as a reaction firstly to absolutism and subsequently to the excess power of capital over labour (a new form of absolutism). Social democracy and the welfare state in turn arose naturally and organically as a reaction to the inhuman excesses and exploitation of labour (humans) by capital.

    Libertarianism cannot demonstrate how the full social-democratic state should, could and would wither away (as mythical an idea as Lenin’s claim that the state would wither away under true communism) under true libertarianism. Libertarianism cannot demonstrate what would replace that state and its functions nor how it would not devolve into elite authoritarianism of an oligachic nature essentially indistinguishable form oligarchic capitalism.

    Libertarianism (where theoretically distinguishable from oligarchy) is an artificial idea imposed from outside of all real historical forces and developments; a fanciful and idealised moral philosophy lacking all contact with empirical political economy.

  53. Ikonoclast
    September 23rd, 2011 at 14:20 | #53

    @TerjeP

    I accept (constitutional) democracy as “the worst system of government, except for every other system” as Churchill said. There are specific things I disagree with in our Australian constitional democracy but I accept the form overall. Australia’s constitution, government and political economy has evolved into a kind of social democracy and mixed economy, albeit one now under seige, since about 1985, from corporate capitalism, suborned and pro-capital major parties and British-American style neoliberalism.

    The US on other hand is a quasi-democracy at best with severe constitutional shortcomings and a system largely set up by and for right libertarians and oligarchic capitalists. Modern Libertarianism in all its forms I see as the “American Disease” just as other have pejoratively called Socialism the “British Disease”. I suspect US style Libertarianism is largely incomprehensible and nonsensical to most Australians (and I mean this at a very fundamental level) as we see politics through quite a different prism compared to Americans. The claims of Libertarianism simply make no sense to Australians who do not viscerally hate “the government” or government per se and all it stands for and see it as opposed to “the country” the way so many Americans (red-necks and rightists) do.

  54. TerjeP
    September 23rd, 2011 at 14:52 | #54

    Libertarianism suffers from a perception problem

    Perhaps but I don’t think it is such a problem. It isn’t libertarianism that is up for sale. Rather it is policies and parties, laws and regulations. Libertarianism may inform some participants regarding such matters but at the end of the day it is policies and laws and institutions that matter. A lot of libertarian reforms have been sold successfully in Australia. Laws against prostitution have been repealed, tariffs have been reduced, government enterprises sold off. It is these reforms that matter at the end of the day not the libertarian banner.

  55. Chris Warren
    September 23rd, 2011 at 15:01 | #55

    @Ikonoclast

    Terje should listen more and talk less. Ikonoclast is right – real libertarian principles and society can only exist after capitalism and after socialism, when the state has naturally “withered away”. Civilisation must reach a level where exploitation of some by others becomes as anathema as slavery is today.

    Everyone wants freedom and liberty, but to exploit this by opportunist jumping all over the place, and assuming everyone can get freedom and liberty under capitalism, is nothing but vulgar. P M Lawrence is right about this (above).

    If libertarians are allowed to run riot under capitalism, many will start to “game-the-system” accumulate wealth and blame the poor for not taking the opportunities that they, the newly-rich libertarians, jumped at.

    The end result is a social wilderness of civil strife, ballooning inequality and financial insecurity.

  56. Ikonoclast
    September 23rd, 2011 at 15:23 | #56

    @TerjeP

    Hmm, sounds like neoliberalism to me, on the economy side that is. Some libertarian social reforms seem reasonable and even very reasonable to me. However, as you may guess, I am against natural monopoly government enterprises being sold off or further privatised (communications, rail, roads, power, water, education, health to name the main ones.) I am not against mixed economy provision of education and health but I am against total privatisation in those areas.

    What you call “reform” on the economic side, I would call regression. These changes regress conditions, social equity and opportunities for the poor and under-priviliged. These changes actually reduce economic efficiency where state owned natural monopolies are broken up and opened to artificially induced “competition” by sets of parallel and duplicating providers. Commercial overheads in the form of duplication, advertising, gold-plating at corporate management level, executive bonuses and excess profits at the expense of worker wages and price rises for consumers, all function to increase costs to the economy and merely transfer wealth from labour to capital. Don’t try and sell me that bogus privatisation efficency line, TerjeP. All empirical outcomes have shown prices to consumers rising faster than ever in all categories after these privatisation regressions.

    The real neolibs and libertarians know this and engineered the whole project (eg the Omega Project) specifically to increase the profit component of the economy and reduce the wages component. It’s a wealth tranfer strategy, not a wealth creation strategy. Indeed it has white-anted our whole economy by reducing investment in and maintenance of key infrastructure and reducing the productiveness of our economy relative to where it would have been without these policy progressions.

    Australia has “survived” the damage thus far with an appearance of solid prosperity because of the mining boom, increased household debt fuelling growth, an asset bubble and (effective) deficit spending in the GFC. New Zealand’s economy fell into a total hole much earlier because of the privatisations and neoliberal “economic rationalist” program. Australia has skirted the hole thus far but is about to fall into it in the next few years. Then we will have to start re-nationalising and deficit spending to fix the mess the neoliberal wreckers have made.

  57. Jarrah
    September 23rd, 2011 at 15:33 | #57

    Ikonoclast, forgive me if I dispute your professed in-depth knowledge of libertarianism. I genuinely believe many of your questions have been answered in the very large body of work by several generations of libertarians, classical liberals, and anarchists. That you don’t know the answers are not the fault of libertarians, but your own ignorance.

    “many of its schools are functionally indistinguishable from laissez-faire capitalism and oligarchic rule”

    Laissez-faire capitalism is the logical result of the application of libertarian principles. When people are not coerced into centralised economic systems, the natural propensity of humankind in large social groups is to specialise and trade and accumulate capital.

    Regarding your second paragraph in your 13:44 comment, I find myself agreeing almost totally. But it’s largely a non sequitur and adds nothing to your argument.

    “Libertarianism cannot demonstrate how the full social-democratic state should, could and would wither away…under true libertarianism.”

    A difficult sentence to unravel. Being ‘under’ libertarianism would mean the state has already ‘withered’ away. But I don’t know any libertarians who are so naive as to think the state won’t go down without a fight! As for your “should, could, would” – I’ll have a go.

    As Terje has mentioned earlier, this is at heart an argument about what government is for. As a liberal democrat myself, I think government is party to a social contract with its citizens, and should fulfil that social contract in the most efficient way possible. It exists to enforce a sufficiency of rights to allow a society to be peaceful and prosperous. In this I’m sure we agree.

    To do that it needs to be the monopoliser of force, but also needs strict limits to keep it from degenerating into just another bunch of warlords (that have plagued humankind since we stopped being scattered tribes). Those limits can be cultural, constitutional, legislative, monetary, etc. It has a number of other, subsidiary functions, and it is only at this point that I think we diverge, as social democrats and socialists think the list of those functions is quite large. However, the rationale for a large number is quite weak, particularly when we acknowledge that socially desirable functions don’t have to be conducted by government alone.

  58. Ikonoclast
    September 23rd, 2011 at 16:14 | #58

    @Jarrah

    In my perception, libertarianism pays too little attention to the existing accomodation of democracy with social welfare provision. As I said earlier (twice), since Australia is a democracy, the current general accomodation between competitive economy aspects and welfare or social wage and social insurance aspects must be broadly what the majority of Australian citizens want. They do not want the society implied by minarchist libertarianism.

    Libertarian commentators on this blog gloss over this existent and persistent* accomodation approved by democratic consensus. Libertarians place so-called individual liberty (really individual selfishness) above democratic mutualism and democratic community and yet they claim to be enamoured of all other forms of mutualism and community. There is a striking discrepancy here. One wonders why they have a specific problem with democratic mutualism. Though some libertarians deny it (while just as many openly admit it) , it seems to me that all libertarians are essentially anti-democratic in their instincts, thinking and formulations. The right libertarian or minarchist program is essentially and fundamentally anti-democratic, clearly prefering an elitist, faux-meritocratic and oligarchic absolutism.

    * Attempts to privatise welfare and welfare delivery in this country have had only minor “sucesses”, like the destruction of the effective CES and the introduction of the privatised, deeply flawed, more expensive and less efficient “Job Network” solution.

  59. Julie Thomas
    September 23rd, 2011 at 16:18 | #59

    TerjeP You say that “Libertarianism does not assume anything about who should be valuable.” But Hayek does assume this. Are you saying that Hayek is not what I should be reading to understand libertarianism? Surely you can see that in the original quote I provided, that he is making a value judgement about a certain type of human behaviour. He also says that those who seek security over freedom are not worthy of either. I think that is accurate.

    So is this just a throwaway line? I shouldn’t worry about it being an integral part of the system?

    You also say that most people are good. I’m not aware that this is an accepted ‘truth’ about human behaviour. The way I see it, there is still a lot of research and discussion to be done before anyone can claim that ‘humans are good. What does it mean to be good?

    The debate about whether ‘altruism’ is really self-interest, is still not settled. So I am surprised that you are comfortable with your simple and/or naive assumption that people are good.

    How do you explain the lack of ‘goodness’ from the capitalists during the industrial revolution?

  60. Julie Thomas
    September 23rd, 2011 at 16:35 | #60

    Ikonclast you wrote ” Libertarians place so-called individual liberty (really individual selfishness) above democratic mutualism and democratic community and yet they claim to be enamoured of all other forms of mutualism and community. There is a striking discrepancy here.”

    There are many striking inconsistences in their arguments and their system, and this is what interests me. I wonder about the cognitive gymnastics or perhaps it is cognitive blind spots that allow them to gloss over their blatant hypocrisy and maintain that they are ‘rational’ thinkers.

  61. Ikonoclast
    September 23rd, 2011 at 17:05 | #61

    @Julie Thomas

    Yes, I wonder too. Of course, we are all susceptible to cognitive blind spots and hypocrisy. However, in any serious empirical, philosophical or political economy research program we should attempt to unearth those mistakes in our own as well as others’ thinking. Libertarianism, being an ideology without empirical foundation, derived I think from an essentialist philosophy*, lacks this self-critical capacity or indeed any objective parameters for assessment of its own method.

    * The treatment of “liberty” as having an essential immutable nature (an underlying and unchanging ‘essence’) smacks of esentialism.

  62. sam
    September 23rd, 2011 at 17:15 | #62

    @Ikonoclast
    Totally agree with you on the CES Ikonoklast.

  63. Julie Thomas
    September 23rd, 2011 at 17:44 | #63

    Ikonclast My idea is that it is ‘easier’ for some people to do self-insight. Abilities are distributed differentially in human beings. If one ‘blames’ brain chemistry and evolution for the differences in capacity, there is no basis for making pejorative value judgements about people and their behaviour. I am not criticising libertarians at all.

    The libertarian system is a great idea and seductive in its simplicity. But it is based on the idea of the abstract individual but this rational self-supporting individual does not exist. We evolved in groups where the members were mutually reliant and the currency of survival was reciprocity. There seems to be no evolutionary or psychological basis for a ‘rational individual’ who can make choices for their own benefit on the basis of objective knowledge.

    I wonder what people think of this article:

    http://www.psych.ucsb.edu/research/cep/papers/aer94.pdf

  64. TerjeP
    September 23rd, 2011 at 17:57 | #64

    Libertarianism is a philosophy but there is a large body of empiracle evidence supporting much of what libertarians advocate. Obviously though the full outcome of a libertarian society simply isn’t knowable without first hand experience of such a society so there is a lot of inference on the part of both advocates and critics. I also think there are real transition issues in moving from a social democrat style society to a libertarian one. The rate of growth for community and market alternatives may not always be as quick as is desirable. Pouring government all over society may be a bit like pouring boiling water on the skin, things are never quite the same again and there needs to be a lot of healing. There is a place for libertarians who can design artful policy responses to such transition issues.

  65. TerjeP
    September 23rd, 2011 at 18:00 | #65

    If one ‘blames’ brain chemistry and evolution for the differences in capacity, there is no basis for making pejorative value judgements about people and their behaviour.

    Perhaps he is wired to make pejorative value judgements. ;-)

  66. TerjeP
    September 23rd, 2011 at 18:03 | #66

    p.s. I must say I do find this suggestion that libertarianism is a product of a mental deficiency somewhat tiresome. Is it that different from a pejorative value judgements?

  67. NickR
    September 23rd, 2011 at 18:31 | #67

    Julie – I agree that libertarians have the appearance of being people that are confident of their own financial success, as they strongly oppose any coerced income redistribution.
    This seems callous and self serving to me.

    It is of interest to note that almost all the variation in income can be explained by factors determined prior birth. Branko Milanovic from the World Bank estimates that 80% of variation in earnings can be predicted by the country of birth and the income of the parents. Similarly I recall seeing studies in the U.S. where they estimate that about 50% of national income variation is explained by the father’s income and education (I think). Obviously much higher results could be obtained if other logical determinants of income variability such as mother income, mother education, household wealth, health etc could be included.

    This tells us that the differentials we see in wages are almost surely not due to large differences in effort or merit, rather they are differences in luck. If you are born into a rich, stable, well educated household you will probably do very well.

    My view is that libertarians are people who have benefited from more than their fair share of luck and are trying to protect these benefits, while simultaneously trying to suggest that their success is an indication of their own superiority.

  68. Chris Warren
    September 23rd, 2011 at 18:52 | #68

    @TerjeP

    Now this is getting silly. No-one proposes this sort of stuff:

    Pouring government all over society may be a bit like pouring boiling water on the skin, things are never quite the same again and there needs to be a lot of healing.

    Pouring capitalist libertarian dogma is a bit like pouring acid into ones eyes, and does irreparable damage to all.

  69. critical tinkerer
    September 23rd, 2011 at 18:55 | #69

    I must say I do find this suggestion that libertarianism is a product of a mental deficiency somewhat tiresome.

    Then what do you call ignoring the history or giving the preference to insignificant factors over significant ones that contributed to prosperity pre1970s given that those that implemented such policies clearly gave their reasoning? Are you arguing that FDR implemented social-democratic policies gave no result and the prosperity was just an accident?
    Ignoring the history or preferential treatment of the facts from it i contribute to overheated brain due to lacking knowledge or stopping the investigation when it matched the emotional state.

  70. Jarrah
    September 23rd, 2011 at 19:00 | #70

    “since Australia is a democracy, the current general accomodation between competitive economy aspects and welfare or social wage and social insurance aspects must be broadly what the majority of Australian citizens want.”

    This is an extraordinary claim. People raised in a social-democratic culture with no chance of experiencing other formats have a preference for social democracy – who knew! Apparently they also want mass consumerism and to hell with resource restraints, but that doesn’t stop you arguing against that.

    “They do not want the society implied by minarchist libertarianism.”

    Poll your family and friends – how many even know what that is? Now try it, bypassing the big words – do they think you should be able to basically do what you want if you’re not hurting anyone? Do they think people should decide what is right for their own body, for their own family, for their own community? Do they think taxation is necessary, but is too high? You might be surprised at how many are unknowingly aligned with basic minarchist principles such as those.

    “Libertarians place so-called individual liberty (really individual selfishness) above democratic mutualism and democratic community and yet they claim to be enamoured of all other forms of mutualism and community.”

    Enforced community is no community at all. This is especially true at the scale of nation-states, as if imaginary lines on a map denote who we should and do care about.

    “it seems to me that all libertarians are essentially anti-democratic in their instincts, thinking and formulations. ”

    It depends on what you mean by ‘democratic’. If you mean 50% + 1 deciding how the rest must live, then they are anti-democratic. If you mean power is vested in the citizenry, then Terje has outlined several libertarian reforms that enhance democracy. Libertarians are essentially de-centralisers, moving power from the few to the many. That’s very democratic.

  71. TerjeP
    September 23rd, 2011 at 19:19 | #71

    Are you arguing that FDR implemented social-democratic policies gave no result and the prosperity was just an accident?

    If you think the virtues of the New Deal are uncontested then you need to get out more.

  72. Chris Warren
    September 23rd, 2011 at 19:30 | #72

    TerjeP :

    Are you arguing that FDR implemented social-democratic policies gave no result and the prosperity was just an accident?

    If you think the virtues of the New Deal are uncontested then you need to get out more.

    It would be better if you answered the question.

    Re-writing it as “New Deal … uncontested” was a falsification.

  73. critical tinkerer
    September 24th, 2011 at 00:30 | #73

    If you think the virtues of the New Deal are uncontested then you need to get out more.

    Being “contested” i addressed by:
    blockquote> or giving the preference to insignificant factors over significant ones that contributed to prosperity pre1970s given that those that implemented such policies clearly gave their reasoning?
    Which i called an accident since by your reasoning it was the destruction of productive capacity of the rest of the world that gave the prosperity. Another argument is development of cheap energy and new technology. Since by liberaterian arguments that had nothing to do with policies then it was an accident.
    You avoided to answer my question and used add hominem attack to pretend like you did.
    Rise and decline of prosperity fatefully follows the implementation and dismantling of the social-democratic policies. The main ones, in my opinion, are power of the unions and high marginal tax rates.

  74. critical tinkerer
    September 24th, 2011 at 01:09 | #74

    But more important is “why did liberaterians stop crying wolf about incoming hyper-inflation even tough the deficit spending in US did not subside?” Where is that inflation and subsequent interest rates you guys used to cry about for past 3 years? Isn’t the opposite going on of what you claim? Is that proof enough of how wrong liberaterian policy logic is?
    I have not heard yet the explanations for opposite outcomes. 10y US T are at 1.77%. If you try to give QE1, 2 such incredible powers as to the cause of low interest rates even tough starts of QEs would initially raise the rate and end up with lower rates then at the starts of QE. Which just prove that without QEs rates would be even lower, opposite of what liberaterians claim. But that does not explain very low inflation when the claims were hyper-inflation. where is it?

  75. TerjeP
    September 24th, 2011 at 04:43 | #75

    by your reasoning it was the destruction of productive capacity of the rest of the world that gave the prosperity

    No. I have not said anywhere that the war caused prosperity. Nor would I. War is destructive. It is best avoided unless it can’t be avoided.

  76. critical tinkerer
    September 24th, 2011 at 05:11 | #76

    Since you going purely literal without substance, neither did i say what you contribute to me. Where did i claim that you said: “war caused prosperity”?
    Pretending to misunderstand my statements will not give the answer. Hoping to win arguments by changing the topic will not give the answer.
    Are you arguing that FDR implemented social-democratic policies gave no result and the prosperity was just an accident?

  77. rog
    September 24th, 2011 at 06:32 | #77

    All the financial forecasting by so called libertarians has been wrong, conservative economic policies have resulted in stalling demand and halting recovery. Even Friedman advocated for greater government spending (expanded domestic policy) during hard times.

    http://www.bankofcanada.ca/wp-content/uploads/2010/08/keynote.pdf

    Populism has thwarted considered policy, now everybody is a national expert based on their personal experience.

  78. Julie Thomas
    September 24th, 2011 at 07:30 | #78

    TerjeP I totally agree that some of us are ‘hard wired’ to make pejorative value judgements. But we have free will and in his book “The Brain That Changes Itself” Norman Doidge argues that we can make significant changes to our brain chemistry. However, these changes can only be made in a social context. The individual has no reason and no prospect of change toward a more objective view of the world and it’s people.

    Try these links for a couple of simplistic takes on the way that ‘normal’ brain functioning can lead us to make faulty choices.

    http://www.msnbc.msn.com/id/11009379/

    http://www.abc.net.au/science/articles/2011/04/08/3186006.htm?topic=

    It is in your nature perhaps, that you mistakenly characterise my arguments about the variability of human capacities, and the distinct nature of ‘the libertarian type person’, as meaning you are mentally deficient. A bit of paranoia, overly defensive perhaps? But it does support your idea that you are prone to making pejorative value judgements. So what are you going to do about that?

    I do note that you are avoiding conceding the point that Hayek’s entire ‘philosophy’ is a value judgement against people who prefer security over freedom. But I am not surprised that you won’t admit this, it is not in your nature to be able to concede a point like that easily, despite the fact that it would be the ‘decent’ thing to do and because the rational response to an admission like that would be for you to reassess your whole worldview. Not very flexible are you?

    I am sure that I sound judgemental, but try and see that you may not be as objective as you think you are. Feel free to make some assessments of my failings and I’ll try hard not to feel criticised.

    But the important argument against Hayek’s unilateral disdain for those who value security over freedom is that any woman (or man?) with children to raise, will choose security over freedom or we would have died out as a species.

    The point is that it takes all kinds of humans to make up a real society and economy.

  79. Julie Thomas
    September 24th, 2011 at 07:31 | #79

    sorry line 5 should read ‘no reason to change’

  80. Julie Thomas
    September 24th, 2011 at 07:45 | #80

    NickR Have you read “Outliers: The Story of Success” by Malcolm Gladwell. He provides a convincing argument for the important role of good luck, in the success of a large number of people, including Bill Gates and he points out that Gates himself recognises that ‘he was lucky’.

  81. Mulga Mumblebrain
    September 24th, 2011 at 08:06 | #81

    Libertarianism is not necessarily a sign of mental deficiency, but, in my experience, it is almost invariably a sign of moral deficiency and psychopathological malevolence. The Rightwing libertarian takes inequality as a given, indeed it is rarely even mentioned, perhaps because a too candid and contemptuous dismissal of the concept would give the game away. Rightwing libertarianism is really a recipe for ‘the rule of the jungle’, for the ‘bellum omnium contra omnes’ that the libertarian imagines he or she is better equipped to win. It is a recipe for a predatory society, a society where force determines social outcomes, whether the force of money power in our quasi-libertarian ‘market absolutist capitalism’ or the force of violence as in ‘liberated’ Iraq where Bremer (illegally) introduced a ‘libertarian’ economic system where the multinational corporations were liberated to loot the country, and the mere Iraqi untermenschen were enslaved and remain impoverished (save the usual compradore element.) Israel is another good example of really existing libertarianism. A state based on great personal and economic ‘liberty’ for the Jewish Israelis, financed by hundreds of billions in tribute delivered by its puppet hyperpower, the USA, and imprisonment, terror, torture, dispossession and death for the everlastingly unliberated Palestinians. And, even inside Israel, amongst the Israeli Jews,and even more so the third-class Arab Israelis, liberty is distributed radically unjustly, with a tiny, crony, elite dominating the economy and the wealth distribution.
    I can imagine a just libertarianism, but it would be the polar opposite of Rightwing libertarianism. It would be based not on individual greed and egomania, and contempt for others and predation upon them, but on that familiar dictum ‘From each according to his abilities, to each according to his needs’. A society based on that simple formula would be automatically libertarian, and be just, rational, humane and ecological sustainable, all categories that Rightwing libertarianism most certainly is not, nor ever will be.

  82. Chris Warren
    September 24th, 2011 at 08:46 | #82

    @Mulga Mumblebrain

    Libertarianism under capitalism means liberty from democracy for those with capital.

    It therefore destroys the social contract, the welfare state, and the Rights of Man while pretending to extol them.

    Libertarians make statement like:

    We believe in freedom except when it is not applicable.

    We believe in liberty except when it does not apply.

    etc. etc.

    You can see an example of this trickery from Terje above, where yet again he rolls out the ploy:

    It is best avoided unless it can’t be avoided.

  83. Ikonoclast
    September 24th, 2011 at 09:38 | #83

    Of course, we can all keep arguing until the cows come home. It is clear that not one libertarian nor one social democrat is going to change her or his views on this blog due to arguments from the other point of view. The pro- anti- libertarian argument probably needs its own quarantined sandpit like the pro- anti- nuclear debate.

    However, my final contribution here may well earn the ire of Marxists as well as libertarians. I see no prospect for the state part of the modern industrial-technological nation-state “withering away” other than via its concomittant collapse with the collapse of global civilization itself (if that happens). The industrial and technological revolutions have changed the game. The modern nation-state’s requirement for extensive and dense infrastructure (and the power of this system to impact on the individual) mandates a central planning and management role at the nation-state level ie. a central government of some kind. I mean a role beyond the minimal or minarchist state.

    Even leaving aside the issue of state enterprises, natural monopolies etc., the need for central (and regional) strategic planning for large infrastructure remains. In addition, the need for some kind of constitutional, democratic and legally mediated process to determine land use decisons remains. Infrastructure (public or corporation owned), business, commerce and residential needs make competing claims on land use. The issue of the creation and maintainance of standards for public safety also remains. There are long term issues related to the environment and negative externalities which need to be dealt with in a strategic and planned manner.

    The unregulated market’s ability to “plan” unaided at this strategic level is very limited. Other vague suggestions for patchwork “community mutualism” style planning beg the question of whether this mutualism takes an oligarchic form, a democratic form or something in between? It also begs the question of when does this form of local re-centralising (mutualism implies some form of centralising) become a neighbourhood government, a local government and so on? It suggests to me that breaking up decision making into small, local patchwork “mutualisms”, whilst dealing with the modern situation of dense and extensive infrastructure, will lead to a set an extensive set of problems (wider disputes, lack of coordination etc) which will simply induce a repeat of the evolution of central government.

    With respect to the above, we need to remember that material structure (infrastructure in this case) determines superstructure (mode of government in this case) just as superstructure decisions then further determine material structure. In an existing functioning system of long standing (or rather super-system or system of systems), each (material structure and political structure) continually re-determines and re-conditions the other.

  84. Julie Thomas
    September 24th, 2011 at 09:43 | #84

    Mulga It was Terje who introduced the term mental deficiencies. This is another tricky way of negating a point that can’t be refuted logically. I think the evidence from psychology is clear that humans have different areas of strengths, and that this is essential for us to have been able to colonise such a diversity of environments. That wonderful dictum you quote ‘from each according to his abilities, to each according to his needs’ recognises that we all do have different abilities.

    I think some people do find it more difficult to put themselves in another person’s shoes because of their brain chemistry. So they do not easily see that those of us who don’t find pleasure or self-esteem in accumulating wealth are just as valuable as they are. It is judgemental to see this tendency as a deficiency. As a psychologist I have to train my brain to see behaviour in non-judgemental terms. I am sure it is more difficult for them to see the problem from the point of view of those they despise; more difficult for them to acknowledge that their system is cruel, unethical and devalues the meaning of human life.

  85. Ikonoclast
    September 24th, 2011 at 09:46 | #85

    @Chris Warren

    Chris, I have to agree. That is the best formulation I have seen yet; succinct and 100% accurate.

    “Libertarianism under capitalism means liberty from democracy for those with capital.”

  86. Julie Thomas
    September 24th, 2011 at 09:46 | #86

    Point taken Ikonoclast. Thanks for the opportunity to test my assumptions on a tame libertarian.

  87. critical tinkerer
    September 24th, 2011 at 10:00 | #87

    I keep trying but i keep failing to find a connection for education graduate levels with prosperity. Where is the connection of individual prosperity to prosperity of a country overall? If a person graduates from a college and leaves a low paying job for a better paying one, did that cause the old job position to disappear and to create new one that this person took, or someone else had to occupy that old job? You can move from bad to good job, but someone else has to replace you on the old one just as you replaced someone at the new (for you only) job. Lifting yourself by the bootstraps will not change the prosperity overall, not at all.
    There is some effect on prosperity by legal immigrants occupying well payed jobs that save the money and send it to their country of origin and leave with the cash when the work visa expires. Even tough the number of work visas are raising but not in significant numbers and only recently.
    Even tough Quiggin matched the end of the prosperity with education levels, the beginning of the prosperity 1948 does not match with beginning of increased education levels 1953. Especially considering that many jobs today require college education that previously did not. For example teachers, nurses.
    Prosperity increase perfectly matches the radical switch from government supporting the wealthy to government supporting the disfranchised and population overall and switch back to supporting the wealthy.
    I am quite disappointed that most of the economists on the left are giving only moral case for high marginal tax rates and almost nobody giving the economic case for it, at least not that i can find.
    Lowering marginal tax rates gives clear incentives to management to be more vigilant against unions so that they can take more cash out of the company for their bonuses and profits. With high marginal rates, the management was not interested to fight for huge bonuses since the tax would take it away anyway. Having natural powers over workers, management was taking the productivity gains for themselves only and every recession would be a good excuse to keep the workers wages low until recovery. When recovery comes they claim it was due to management great effort that company increased the profit and take it for themselves.
    this dynamic emptied the company cash reserves and forced them to fund operating expenses trough loans exclusively. Even IPOs are wasted for operating expenses and management salaries instead for development and enlarging market share. Next recession hits and the companies had to resort to leveraging the stocks in their possession for loans needed for operating expenses. Over time this dynamic created the condition where the fall of stock prices can collapse the company due to demand from banks to cover the leverage.
    High marginal tax rates kept companies lean and strong without loosing the income on interest for necessary loans. And also kept non-management employees well payed, happy and prosper/good consumer. Good consumer to buy other companies products and services.

  88. Mulga Mumblebrain
    September 24th, 2011 at 10:16 | #88

    Julie Thomas. I think it impossible, and not necessarily beneficent, to be ‘non-judgmental’. I can imagine that it would be counter-productive for a psychologist to suddenly yell ‘You evil bastard” and kick the patient out, but surely the thought must cross your mind from time to time. I believe in forgiveness, and every evil Rightwing shit ought to be forgiven, if they recant and change. There’s been no point in millennia of philosophical effort if we cannot discern between that which is good and bad, particularly in regard to ideologies that impoverish billions, destroy the ecosystem and endanger human life on this planet.

  89. Ernestine Gross
    September 24th, 2011 at 23:22 | #89

    @P.M.Lawrence

    “Me, I know that what was tried didn’t work but wasn’t really free markets etc., but I fear that anything else – true free markets – might not work either, if only from falling prey to those who rig things (like Lysander Spooner’s postal system); and that makes a true dilemma.”

    A true dilemma except, possibly, for the special case of Robinson Crusoe and his mate .. Friday, both with a finite life.

  90. Chris Warren
    September 25th, 2011 at 10:26 | #90

    @Ernestine Gross

    A few sour individuals will always “game” true free markets, and the result is usually mafia-phenonema.

    Like God, free markets are a religious concept, and it is a pity so many right-wing academics get sucked in.

  91. Chris Warren
    September 25th, 2011 at 10:28 | #91

    phenonema; phenomena

  92. Mulga Mumblebrain
    September 25th, 2011 at 12:13 | #92

    Free markets don’t result in situations other than those of utter inequality and exploitation. The Free Market is a dishonest euphemism for plutocracy, the dictatorship of the money power. Everywhere and always that ‘free markets’ have been imposed, inequality, poverty, ecological destruction and concentration of wealth in the hands of a tiny elite all worsen. A true ‘free market’ would have to be based on as great a degree of equality as possible, but the Right categorically reject that. So, the true enthusiasm for ‘free markets’ must simply be the desire for greater inequality and poverty, which is what we see in reality.

  93. Ernestine Gross
    September 25th, 2011 at 13:41 | #93

    @Chris Warren

    The ‘gaming’ possibilities for Robinson Crusoe and … Friday on an island come down to the sharing of one orange problem; one of the simplest examples of strategic games without repetition.

  94. Chris Warren
    September 25th, 2011 at 13:56 | #94

    Yes the Robinson Crusoe case is interesting.

    But if I was Robinson Crusoe I would get Friday to build me a house – working every Monday, and paying him with many bits of paper, saying they are exchangeable for 1 orange.

    The rest of the week I will have him working in my orchard, paying him my surplus fish, but he works producing oranges which I own.

    Even though there is no link between the amount of oranges and the debt I expect it will all balance out – but poor old Friday then has a problem of ‘housing affordability’ himself.

    If it doesn’t, I just declare that one bit of paper now exchanges for 1/2 and have enough force at hand to prevent a revolution.

  95. Jarrah
    September 25th, 2011 at 15:02 | #95

    “Everywhere and always that ‘free markets’ have been imposed, inequality, poverty, ecological destruction and concentration of wealth in the hands of a tiny elite all worsen.”

    Evidence, please.

  96. Chris Warren
    September 25th, 2011 at 17:17 | #96

    Jarrah

    Mulga Mumblebrain maybe overstating the case, but in general the world is awash with increasing inequality and poverty, and it is all going to get dramatically worse.

    One source….

    Is world income inequality increasing?

    At the 2011 World Economic Forum in Davos, income inequality and corruption were singled out as the two most serious challenges facing the world.1 Zhu Min, a special adviser at the International Monetary Fund, told delegates that “the increase in inequality is the most serious challenge for the world. . . . I don’t think the world is paying enough attention.”2

    And in a recent keynote address to an OECD policy forum on income inequality, Richard Freeman, professor of economics at Harvard University, noted that “the triumph of globalization and market capitalism has improved living standards for billions while concentrating billions among the few. It has lowered inequality worldwide but raised inequality within most countries.”3

    Is Freeman correct? Is income becoming more concentrated among a relatively small group of people? And if so, what are the consequences for the starndard of living of the many, today and in the years ahead?

    Current headlines certainly seem to support Freeman’s remarks. Forbes magazine’s 2011 list of billionaires—the Forbes Rich List—revealed that the world’s 1,210 billionaires set a record for combined wealth of $4.5 trillion. While the U.S. has more billionaires on the list than any other country, middle- and low-income countries have their share as well.

    Freeman’s forum remarks also make an important distinction between income gaps among countries, such as the income gap between Canada and China, and the income gap among individuals within a single country. In other words, are you examining whether the gap is increasing between rich and poor countries or whether the gap has increased between rich and poor people within one country? It is entirely possible that the income inequality within one country, like China for example, may be increasing while at the same time the gap between the average income in China and the average income in richer countries is shrinking. Freeman’s comments suggest that inequality worldwide has decreased, but inequality within each country has increased.

    However it is not clear that this is a pure trend originating in ‘free markets’ but the fact that capitalist, feudal strata, and priests in some traditional societies, use the market to extract ill gotten gains.

    If you really want to contest ecological destruction then just try Googling deforestation.

  97. Dan
    September 26th, 2011 at 00:41 | #97

    @Julie – when interacting with libertarians, I have definitely experienced the sensation that even smart ones are just missing something basic and crucial about human nature – while I can’t put my finger on it, it’s like they’re so lost in the abstract, often utopian detail of transactionalism or voluntaryism or what have you that they can’t see the big picture of how people actually behave and how power operates (I’m not making a moral judgement here, just observing).

    As for the focus on “freedom” – well, given the limited possibilities (and often drastically curtailed freedom) meaningfully available to anyone at a particular time and place (including in the most legislatively/economically free societies), this seems like rather a sideshow to me. Surely building a decent society is, from an ethical perspective, a higher priority and, in practice, a great guarantor of freedom in the sense of having the aforementioned range of possibilities expanded for the bulk of the people. I’m not going to claim the rich aren’t often financially worse off, or rather less well-off, under such an arrangement (though in practice even that’s not cut-and-dried, as well as which they too often appreciate the social benefits of living in a just, forward-thinking society); but wealth, and the economic freedom it confers, is, like anything else, subject to diminishing marginal returns.

  98. Fran Barlow
    September 26th, 2011 at 08:31 | #98

    As there is currently no open thread …

    Andrew Robb, talking to Marius Benson:

    “The world has been living beyond its means”. As most know, there can be no debt without credit, so who is the world’s creditor, in Robb’s opinion? Aliens?

    Robb wasn’t finished there either. He gleefully took up economic analyst Eddie Maguire’s suggestion that pre-commitment technology amounted to a “footy tax”. Clearly, as I noted here the other day in response to JohnD, anything that constrains any business in any way can now be described as a tax. Reporters are either not allowed to cross-examine anyone using the word in this way, or are too brainless to do so.

    Andrew Wilkie described Maguire’s terminology {footy tax} as “inflammatory” and immediately challenged it. Hmmm …

  99. Chris Warren
    September 26th, 2011 at 09:27 | #99

    @Dan

    I think it is worse than that.

    If any group wants to advance their own commercial interests in society, they tend to lie to create change or oppose change. The anti-slavery, anti-nicotine, anti-suffrage, and anti-vaccination campaigns all exhibit this mode of ideology projection. In Ireland the Orange and the Green spread such mischief as did the Catholics, Protestants and Jews elsewhere in Europe.

    Some elements in society think they will have better opportunities if there was less government. So they claim that government and taxes are harmful and theft etc etc. As other people seem to be able to find great opportunities with government and taxation, these people are probably of lower capabilities or relatively antisocial elements. Nonetheless it is an artificial cult or bunyip-philosophy, in their own interests, against the interests of the whole. It is also uninformed by the lessons of history, and by the facts of modern day capitalism.

    Where once they would have been relegated to just a few leaflets around universities and letters in student newspapers, the Internet has given them further fields to try their luck and advertise their wares.

    They wave, “freedom”, “equality” and “liberty”, but this is only the Menzies, Thatcher, Reagan versions also seen in some religious-maniacal, gun-toting, gas-guzzling, Hicksville towns in the US.

    They are capitalist ideologues wanting to give Capital the rights and freedoms it does not now have because of the welfare state, occupational health and safety, arbitration, and anti-loan sharking provisions etc.

    You cannot base freedom on a distribution of wealth derived from slavery and corruption. Whenever Australian workers exercised their rights to free choice of how to make a living they were denied by the Colonial political system, either by setting land prices deliberately too high for working class people, or taxing their activity – such as gold-digging. If they resisted effectively they were shot down by the army as at Eureka.

    So if you want freedom, liberty, and equality, you need another approach – one just a little bit more informed about the nature of capitalism, corrupt business people, and lying politicians.

  100. Sam
    September 26th, 2011 at 09:45 | #100

    @Fran Barlow
    A partial answer to your question “who is the world’s creditor?” I’d suggest the biosphere. Of course, that’s probably not what Andrew Robb meant.

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