Jim Said: ... When it comes to such matters, few would dispute that by nature of being advantaged, the advantaged have an advantage. Their advantage can be leveraged to increase their advantage. A free-market governed only by self-interest will lead to advantage concentrated in the hands of fewer and fewer individuals. The greater the advantage of the advantaged becomes, the greater will be their ability to manipulate events to further secure their continued and ever-expanding advantage. However, free-market systems perform valuable administrative and bureaucratic functions. They work towards the greater good in terms of total accumulation, though they have no regard for distribution. Government’s role should be to steer the function of free-markets towards a result that, while not guaranteeing an even distribution of wealth, strives towards an even distribution of opportunity. Governments should mitigate the advantage of advantage while minimizing their impedance of free-market functions. Governments must ask what behaviors are likely to be encouraged by their policies. Policies that encourage decisions contrary to the greater good are policies that must be revised. Policies that are cumbersome to administer are contrary to the greater good. This leaves governments with three guiding principles for economic policies; that policies do not encourage behavior irrational to the greater good; that policies are not cumbersome to administer, and that policies encourage an even distribution of opportunity. ___________________________________________________ Chris said: If government were able to set objective statements outside of the acting persons guiding said government, I’d be very closely aligned with your view. I do completely agree, however, that equality of ..:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />OPPORTUNITY should be the goal of government, not of RESULTS as many on the left aim for. Before I can get too far into it, however, I feel obliged to explain my view on the free market vs. protectionism. In _theory_ (and, it can be argued, almost exclusively therein) protectionism serves to protect the ’less advantaged’ from the more advantaged. We have to understand what this truly means though, and whether there is actually a "greater good" component to protecting the "less advantaged" from competition. There is little doubt that Pittsburgh’s steelworkers are benefitted by protectionist policies aimed at protecting--you guessed it--them. The question ought to arise though, why are we protecting them? Who is more advantaged, relative to, say, US Steel? Well, much of the current policies (as I understnad them) are aimed at protecting the steelworkers from competition from Japan. We place a tariff on Japanese imports of steel, thus raising the price of Japanese steel such that it is at best on par with American steel, which, as we know by now, has a higher price and is thus less competitive. As Steel mills grow ever more bureaucratic and unionized, prices rise which means, naturally, that tariffs rise. The steel mills have operated within a system for a long, long time now where they do not truly ever have to compete, due to anti-competitive tariffs, import quotas, etc etc. So, who wins and who loses? The easy answer is: the steelworkers and their immediate families win. Every other American consumer loses. By "protecting" the inefficiency of the steel mills, we have placed the costs of their inefficiency not on them but on the common person’s wallet. If the free market were in control of things (which it never has been in the United States, including during the "Gilded Age"), US Steel would have gone out of business decades ago. That seems like a bad thing, doesn’t it? I argue that it would be a good thing. It would be unfortunate, in the short-run for the families of those affected by layoffs and certainly for the businessmen who couldn’t efficiently produce their wares, but in the medium and long-runs, we see all those workers re-employed in more productive capacities. How do we know they are more productive? Because they can exist without the crutches of government. There is no shortage of innovation in America, but protectionism can squash it by lowering or eliminating the costs of competition. Do you have any doubt that if US Steel were to go out of business within months there would be another steel company, having likely purchased the bulk of US Steel’s land and equipment, would start another steel company? In reality, there would be a relative blossoming of the steel industry -- three, four, five entrepreneurs see an opening in the market and feel that they can improve on the processes of US Steel, but hey, screw that, we can beat JAPAN too. This goes back one of your issues raised... the advantaged tend to stay advantaged, and when opportunities arise, they are best able to grasp for it. You are correct. But it ignores the single most important strength of the United States populace. Whats that? Income mobility. How many people are in the bottom 20%? What about the top 20%? Sounds like, I dunno... 20%? Thats the point. It sounds like that, but its not true. The "quintile" system of incomes measure precisely that -- income, not people. Less than 10% are in the bottom 20% of incomes, with the bulk being in the 3rd and 4th quintile. The most remarkable thing, however, is the mobility. The measured the income quintile stuff in 1990 and again 2000. What did they find? Of the people in the bottom two quintiles, about 2/3rds rose to the next or higher. About 10% moved into the top quintile. Of those in the top quintile, about 50% dropped out of that quintile into one of the other 80%. Those numbers are intentionally obfuscated, but its quite remarkable when you look at it. In my view, a free market system in which individuals act in their self-interest does not lead inevitably to fewer and fewer people with more and more power. In fact, it is the governmental intervention that leads to that... the regulations, barriers to entry in industry, government work contracts, amongst many other means... that allow the government -- elected _people_ who will act in their _self-interest_ in any system, free market, command or something in the middle--to pick and choose the businesses that rise to power. Self-interest, recall, is not selfishness. It is acting towards what one values. The axiom of human action (Ludwig von Mises) states simply that every action made by a human will be made with the goal being to increase their happiness. For example, Mother Teresa acted in her own self-interest, not because she was forced. It is in the self-interest of the business owner to make her product available to as many people as possible so long as it is profitable. It is in her self-interest to have the best people available working under her, whatever the cost (look at Henry Ford, who paid well above the market wage knowing that he could attract the best and the brightest, which he did). This is not always the case, of course. Sometimes, like in Walmart’s case, it is often wise to attract as many employees as economically feasible, to do relatively unskilled labor, with the possibility of internal training and ascension. This is a social good, just like Henry Ford’s was. If it wasn’t, then 3000-6000 people wouldn’t regularly apply for Wal-Mart jobs open store openings, as they did at recent openings in Chicago and outside NYC. There is no free market "concern" for distribution, but there doesn’t need to be. The free market, like the government, cannot be concerned with anything because it is mindless. The government is made up of free-willed persons, just as the free market it, and they do not necessarily have different objectives in being there... I could go on, but I think I’m rambling. haha. sorry for the long rant. While I tend to disagree with what you wrote, I like it quite a bit. I think the only real disagreements are rooted in our different conceptions of government and market forces, though I imagine if we shared those conceptions, we’d be pretty much in line with eachothers thoughts. ______________________________________________________ Jim Said: By no means do I consider the example of the US Steel Industry to be an example of good government intervention. My inspiration was Hamilton’s encouragement of tariffs in early America to get the American Manufacturing Industries off the ground. Clearly the American Steel industry has not sufferred from a paucity of opportunity or a head-start that was given to the Japanese. I don’t believe Hamilton thought tariffs would or should continue indefinately, rather they would be phased out over time once US industries became competitive. Hamilton’s America is to a poor adult with no connections as today’s America is to a lazy rich kid. The former may warrant a Pell grant (protecionist policy), the latter does not. Again, I think the US is good at providing an even distribution of opportunity. My concern is that we could evolve into a place where this is not the case. I did not mean to imply that the US government is doing a poor job of formulating economic policies; though it is of course imperfect. I merely meant to state what I felt should be guiding principles. I appreciate the distinction you made between self-interest and selfishness. In fact, the oscillation between mercantilism and liberalism (in the classical economic sense) seems to parallel the internal struggles many individuals have between their self interest in the greater good and their self interest in their own power / wealth. I find it interesting that Jesus said, "...no one takes it from me, but I lay it down." In the same way, the powerful and the wealthy have to take interest in an even distribution of opportunity in order to prevent what I consider the risk of an increasingly uneven distribution of wealth. I am happy to live in a country where the income mobility is as you describe it; but I think I think the risk for wealth spiraling into an ever tightening circle of the priviliged few still exists. | 