Living in the 70s* (repost from CT)

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.

114 thoughts on “Living in the 70s* (repost from CT)

  1. 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.

  2. @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.

  3. @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.

  4. 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.

  5. @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.

  6. @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.

  7. 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.

  8. @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.

  9. 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?

  10. 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.

  11. @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.

  12. 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:

    Click to access aer94.pdf

  13. 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.

  14. 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. 😉

  15. 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?

  16. 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.

  17. @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.

  18. 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.

  19. “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.

  20. 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.

  21. 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.

  22. 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.

  23. 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?

  24. 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.

  25. 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?

  26. 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.

    Click to access keynote.pdf

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

  27. 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.

    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.

  28. 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’.

  29. 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.

  30. @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.

  31. 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.

  32. 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.

  33. @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.”

  34. 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.

  35. 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.

  36. @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.

  37. @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.

  38. 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.

  39. @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.

  40. 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.

  41. “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.

  42. 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.

  43. @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.

  44. 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 …

  45. @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.

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