What economic approach would actually work?

[Fisherking]

I am told that supply side thinking fails.

I am told that the free market fails.

I have seen directed economies fail.

So what works? Or is it just a matter of who is raping whom at the moment and nothing can be done?

Great questions Seamus.

Supply side economics is simply Neoliberalism. It is corporatism where government pick the winners and losers. Just exactly what we have had for decades, to one degree or another. It is Mercantilism with a new name.

Free market is something that has been in short supply for well over a century. Its chief criticism is over production. This cry comes mainly from large producers being out competed by startups and upstarts. The key opposition to the concept is its lack of government control and regulation. Most people have been convinced that they are too incompetent to decide for themselves what is a good product or service. People today have never had economic liberty to be participants and producers in the economy. They can see no further than consumerism. The modern mind set is of employment by a producer rather than being a fully productive contributor in the economy. Government and Corporate propaganda have taking all confidence from them and they fear what that freedom would bring.

Directed economies all fail eventually. What emerges out of the chaos is always a free market until government moves in to set limits, pick the winners and losers and start the process over again.

None are perfect. There are always winners and losers. But of them all the free market is the most natural way of establishing trade and custom. It should be the one where people are most able to make a living but it does depend on one’s wits.

[Montmorency]

Great questions Seamus.

Supply side economics is simply Neoliberalism. It is corporatism where government pick the winners and losers. Just exactly what we have had for decades, to one degree or another. It is Mercantilism with a new name.

Free market is something that has been in short supply for well over a century. Its chief criticism is over production. This cry comes mainly from large producers being out competed by startups and upstarts. The key opposition to the concept is its lack of government control and regulation. Most people have been convinced that they are too incompetent to decide for themselves what is a good product or service. People today have never had economic liberty to be participants and producers in the economy. They can see no further than consumerism. The modern mind set is of employment by a producer rather than being a fully productive contributor in the economy. Government and Corporate propaganda have taking all confidence from them and they fear what that freedom would bring.

Directed economies all fail eventually. What emerges out of the chaos is always a free market until government moves in to set limits, pick the winners and losers and start the process over again.

None are perfect. There are always winners and losers. But of them all the free market is the most natural way of establishing trade and custom. It should be the one where people are most able to make a living but it does depend on one’s wits.

Neoliberalism is definitely distinct from mercantilism. Mercantilism serves the wealth of the state, but neoliberalism serves the wealth of the market - state and consumer both for the market: "dictatorship of the shareholder". From national economic and political oligarchies to a transnational economic (so by extension political) oligarchy. One has affinity to central control, the other to soup.

Why do you think individual consumers are more competent to evaluate products than the producers who create them or the purveyors who market them?

What's the difference in "freedom" if winners and losers emerge without state backing, as opposed to with state backing? It's all government. That's exactly what a "free market" looks like if you prioritize government (e.g. republican) function from maintaining the public good to effervescing private commerce on the largest possible scale. Large organizations and wealthy individuals (self-aggrandizingly "job creators" and "innovators")will certainly seek to dominate at the expense of the common weal - why is it acceptable for these not even to be nominally accountable to something? Why does Property need a despot?

All economies fail - because societies collapse. Be careful about how you use "directed" economy, as all economies beyond happenstance itinerant exchange rely on some organization.

[Pannonian]

Great questions Seamus.

Supply side economics is simply Neoliberalism. It is corporatism where government pick the winners and losers. Just exactly what we have had for decades, to one degree or another. It is Mercantilism with a new name.

Free market is something that has been in short supply for well over a century. Its chief criticism is over production. This cry comes mainly from large producers being out competed by startups and upstarts. The key opposition to the concept is its lack of government control and regulation. Most people have been convinced that they are too incompetent to decide for themselves what is a good product or service. People today have never had economic liberty to be participants and producers in the economy. They can see no further than consumerism. The modern mind set is of employment by a producer rather than being a fully productive contributor in the economy. Government and Corporate propaganda have taking all confidence from them and they fear what that freedom would bring.

Directed economies all fail eventually. What emerges out of the chaos is always a free market until government moves in to set limits, pick the winners and losers and start the process over again.

None are perfect. There are always winners and losers. But of them all the free market is the most natural way of establishing trade and custom. It should be the one where people are most able to make a living but it does depend on one’s wits.

See Brexit for an example of an unregulated free market. You have two sides competing for consumers (votes). They offer directly competing products in a zero sum contest within a finite period. There is no regulation whatsoever on the products each side offers. Once the consumer has made their choice and paid their money, the winner is under no obligation to provide what they'd advertised, because there is no regulation governing what they'd promised and what they will deliver. And they are free to use whatever advertising they want to say what they want, again without regulation on their accuracy.

From what I've read on the development of regulatory standards for food and medicine, I wouldn't want any kind of rollback on regulations. China is the result when you have lax regulatory standards.

[a completely inoffensive name]

Building on Pannonian's point, regulation is part of a series of checks and balances between capital and labor. Like with government itself, to maintain it requires eternal vigilance. I don't see how unregulated markets are a solution to our imperfect life just as I don't see how anarchy is a solution to our imperfect politics.

[Fisherking]

Neoliberalism is definitely distinct from mercantilism. Mercantilism serves the wealth of the state, but neoliberalism serves the wealth of the market - state and consumer both for the market: "dictatorship of the shareholder". From national economic and political oligarchies to a transnational economic (so by extension political) oligarchy. One has affinity to central control, the other to soup.

Why do you think individual consumers are more competent to evaluate products than the producers who create them or the purveyors who market them?

What's the difference in "freedom" if winners and losers emerge without state backing, as opposed to with state backing? It's all government. That's exactly what a "free market" looks like if you prioritize government (e.g. republican) function from maintaining the public good to effervescing private commerce on the largest possible scale. Large organizations and wealthy individuals (self-aggrandizingly "job creators" and "innovators")will certainly seek to dominate at the expense of the common weal - why is it acceptable for these not even to be nominally accountable to something? Why does Property need a despot?

All economies fail - because societies collapse. Be careful about how you use "directed" economy, as all economies beyond happenstance itinerant exchange rely on some organization.

Sorry for the wall of text.

As far as I can determine the difference between Neoliberalism and Mercantilism in practice is that Mercantilism regulates businesses for the benefit of the state while Neoliberalism regulates business for the benefit of the politicians and their friends.

The Oligarchy exists because government decides economic winners and losers. The business interests write the laws and regulations and pass them off to their friends in government.

Government intervention in the economy has never worked. It has distorted the market, again selected winners and losers and robbed those at the lower end of the economic scale through inflation. Keynesianism is at the heart of this. Its goal is gradual inflation and the elimination of deflation. This assures those higher up the economic scale keep what they have and can build upon it while eliminating the benefits of saving or storing wealth.

A free market is not consumer vs. producer. A free market is the free exchange of goods and services. Both parties are participants. Each offer something the other wants and they arrive at a contractual agreement to make an exchange. If either party is dissatisfied then no exchange occurs. If one uses sharp practices or their item fails to live up to expectations they will eventually suffer the consequences.

What you fail to see is economic liberty. When government decides who may be a producer and who must remain a consumer it is not freedom. Each person participating has something to offer. Be that goods, services, or labour. Under the current system most of us are limited by government control of the the market place. There are many hoops to jump through if you want to offer goods or services so you are primarily left with labour. This creates a situation where your contribution is of limited. Rather than the market deciding whether your contribution is worthwhile the government has made exclusions.

You have limited your self to the current paradigm. You don’t see your self outside the current set of controls place upon you.

What makes it the business of government how an economy works? Their picking of winners and losers is cronyism. Governments have different mandates. Few if any are actually concerned with the wellbeing of the population. More so what they can extract without causing rebellion. Government’s stated purpose in the U.S. was the protection of the rights of the citizenry. That is not their wellbeing or happiness.

Government can claim a mandate for regulating corporations as they are a creation of the state. There is no such mandate for individuals. Regulations skew and retard competition which assures that those with the most means retain their positions regardless of the quality of their work. In the U.S. regulation began at the request of large corporations who were being out competed and such regulatory practices continue to this day.

Regulated Economies collapse, unregulated ones re-aline to meet conditions. If there were a glut in one sector you would have to adjust your product or move into another.

See Brexit for an example of an unregulated free market. You have two sides competing for consumers (votes). They offer directly competing products in a zero sum contest within a finite period. There is no regulation whatsoever on the products each side offers. Once the consumer has made their choice and paid their money, the winner is under no obligation to provide what they'd advertised, because there is no regulation governing what they'd promised and what they will deliver. And they are free to use whatever advertising they want to say what they want, again without regulation on their accuracy.

From what I've read on the development of regulatory standards for food and medicine, I wouldn't want any kind of rollback on regulations. China is the result when you have lax regulatory standards.

Brexit is not an example of unregulated free market. It is an example of buying a pig in a poke. Had you bought a defective product you would have recourse in court. Buying the word of politicians leaves you with little recourse short of open rebellion, which is about the only thing that would get their attention.

Products that are unsatisfactory don't get bought or re-bought. Those which cause real harm have legal recourse, and always have.

Building on Pannonian's point, regulation is part of a series of checks and balances between capital and labor. Like with government itself, to maintain it requires eternal vigilance. I don't see how unregulated markets are a solution to our imperfect life just as I don't see how anarchy is a solution to our imperfect politics.

The division between Capital and Labour is part of the regulatory construct. Think of what you might produce or what service you could provide to earn a living if there were no limitations placed on you. It is a question of skills and knowledge to provide what others would exchange for. In the last 60 years or so we have moved from a country where most people were self employed to one where most people are employed by a corporation or government. Intellectual property has shifted from individuals who created it to the corporations who employe them via government regulation.

[Husar]

What exactly is the advantage of deflation over inflation?
You appear to be saying that if Johnny Doe saves 200 bucks in his trailer and they increase in value over time, it somehow advantages him compared to Sir John Doe who has stashed away 20 million in the cellar of his mansion that increase in value at the same percentage every year and also owns shares in several corporations that increase in value even more. Why?

Regarding the need for legislation, how does the market account for environmental problems for example? Most peoples' economic (and other) interests are short-term and do not take into account mid-term or long-term planning. We're not too different from Dodos who like the excitement of the jump but do not take into consideration the end result of the fall. Regulation is a means to force us onto a more sustainable path.

[rory_20_uk]

Legislation is not one thing: tariffs are generally "bad" but ensuring quality of goods is "good" - we might not even think about the quality of the food we eat in the West since it is all in global, historic perspectives so high. This is equally thanks to legislation, not the free market which unchecked tends towards massive conglomerates with sufficient power to distort the entire economy.

Hell, even educating the masses beyond the need to work in the factories is evidence of the good side of regulation.

[Fisherking]

Legislation is not one thing: tariffs are generally "bad" but ensuring quality of goods is "good" - we might not even think about the quality of the food we eat in the West since it is all in global, historic perspectives so high. This is equally thanks to legislation, not the free market which unchecked tends towards massive conglomerates with sufficient power to distort the entire economy.

Hell, even educating the masses beyond the need to work in the factories is evidence of the good side of regulation.

Actually regulation is what leads to conglomerates. There positions are protected by regulation by not allowing others into the market place. If someone can provide higher quality at a better price they win. Only government can provide the security for the large firms to exist without smaller competitors taking away part of their market. Simply look at history. The more government has regulated the fewer the people providing the products or services. If people found their product the best they could be on top for a while but someone else is always going to try. The conglomerates are the ones who scream about over production. If it is not limited then how are we to profit. John D. Rockefeller said it all when he said "Competition is a Sin".

It makes little difference whether it is food or any other product. Regulation bars entry to the market from the lower end. No one is going to by rotten produce. People will always seek the best value for the money. If a product is harmful there has always been legal recourse (except where government regulation forbids it). Isn't there something like an ugly vegetable movement in the UK? Where the produce is not up to visual standards but perfectly usable all the same.

[Fisherking]

What exactly is the advantage of deflation over inflation?
You appear to be saying that if Johnny Doe saves 200 bucks in his trailer and they increase in value over time, it somehow advantages him compared to Sir John Doe who has stashed away 20 million in the cellar of his mansion that increase in value at the same percentage every year and also owns shares in several corporations that increase in value even more. Why?

Regarding the need for legislation, how does the market account for environmental problems for example? Most peoples' economic (and other) interests are short-term and do not take into account mid-term or long-term planning. We're not too different from Dodos who like the excitement of the jump but do not take into consideration the end result of the fall. Regulation is a means to force us onto a more sustainable path.

Over time economies fluctuate. Deflation is falling prices on goods and services brought on by over supply. Inflation means the medium of exchange is lessening in value and takes more to buy the same item. If you had money put away it’s value steady decreases in buying power and that discourages savings.

If Johnny Doe has his savings in a box or even a bank the value of it falls over time because of central banks management of the money supply. Sir John on the other hand may own the bank or get a loan from his bank (which created the money by lending it) His money is at full value when he gets it but worth less as he pays it back. If he has other investments, that cushions his wealth or makes him more. Johnny on the other hand has to spend more for what he needs while his money has lost in value.

As to regulation: If it is a good idea, why must people be forced into it? Wouldn’t they naturally take it upon themselves to do like wise and protect what they have? Farmers don’t put salt on their fields to make them unusable. If people can agree that something needs preserved or looked after can they not care for it? Does it have to be government which intervenes and prohibits anyone from doing anything?

[rory_20_uk]

As to regulation: If it is a good idea, why must people be forced into it? Wouldn’t they naturally take it upon themselves to do like wise and protect what they have? Farmers don’t put salt on their fields to make them unusable. If people can agree that something needs preserved or looked after can they not care for it? Does it have to be government which intervenes and prohibits anyone from doing anything?

Because as a rule, people have limited intelligence, limited insight and place their own gain over that of others - including their future selves. Hence why there is a regulation to drive a car to reduce bystanders getting killed and car insurance for a system of recompense should a collision occur.

Everyone might think that the environment should be protected. But clearly there was not the interest in doing so that the living hell of the 1800s didn't occur; in many parts of the world where there are few regulations we would have to take people choose to live in a war torn wasteland since otherwise they'd all spontaneously become Switzerland... except for the mass exodus of people to countries that are massively regulated when surely the opposite should be true.

[Montmorency]

Government intervention in the economy has never worked. It has distorted the market, again selected winners and losers and robbed those at the lower end of the economic scale through inflation. Keynesianism is at the heart of this. Its goal is gradual inflation and the elimination of deflation. This assures those higher up the economic scale keep what they have and can build upon it while eliminating the benefits of saving or storing wealth.

A free market is not consumer vs. producer. A free market is the free exchange of goods and services. Both parties are participants. Each offer something the other wants and they arrive at a contractual agreement to make an exchange. If either party is dissatisfied then no exchange occurs. If one uses sharp practices or their item fails to live up to expectations they will eventually suffer the consequences.

What you fail to see is economic liberty. When government decides who may be a producer and who must remain a consumer it is not freedom. Each person participating has something to offer. Be that goods, services, or labour. Under the current system most of us are limited by government control of the the market place. There are many hoops to jump through if you want to offer goods or services so you are primarily left with labour. This creates a situation where your contribution is of limited. Rather than the market deciding whether your contribution is worthwhile the government has made exclusions.

You have limited your self to the current paradigm. You don’t see your self outside the current set of controls place upon you.

This seems to me a totally wrong picture of reality. We are not just a bunch of individuals on equal terms, and every economic actor tries to impose their own government and their own power. Concentrated capital has the advantage regardless. While it's true that concentrated capital could not maintain itself without state enforcement of property rights, most economic activity we know today would not be possible in the first place without extensive and continuous state intervention. Your picture of economy could only even theoretically apply to one actor finding some root vegetables and trading them to another actor who found some berries, while wandering the virgin landscape.

Why should I submit to the controls of plutocrats? What makes them more virtuous than the public virtue of institutions?

Government can claim a mandate for regulating corporations as they are a creation of the state. There is no such mandate for individuals. Regulations skew and retard competition which assures that those with the most means retain their positions regardless of the quality of their work. In the U.S. regulation began at the request of large corporations who were being out competed and such regulatory practices continue to this day.

You see it as good if as many people as possible can have access to competition against one another (though I disagree that this would even be a consequence of your economy, or that the quality of work is a strong segregating factor). Others don't see the value in competition as a social principle.

Regulated Economies collapse, unregulated ones re-aline to meet conditions. If there were a glut in one sector you would have to adjust your product or move into another.

What reason is there to believe that collapse of economies is anything like a function of regulation? Isn't it equivocation to define one thing as "collapse" and the other as "realignment" if in practice they look the same?

Products that are unsatisfactory don't get bought or re-bought. Those which cause real harm have legal recourse, and always have.

Any product can be unsatisfactory in one way or another, we may still buy them. Consumers only superficially optimize purchases. Legal recourse is a function of the state, a function that unsurprisingly companies are unsatisfied with. As far as winners or losers, there are very rarely any losers among big players in this aspect.

The division between Capital and Labour is part of the regulatory construct. Think of what you might produce or what service you could provide to earn a living if there were no limitations placed on you. It is a question of skills and knowledge to provide what others would exchange for. In the last 60 years or so we have moved from a country where most people were self employed to one where most people are employed by a corporation or government. Intellectual property has shifted from individuals who created it to the corporations who employe them via government regulation.

What's the real difference now? That some services are credentialed and more difficult to access than on a whim? And most people were not self-employed, they were not employed in this sense at all - they were subsistence farmers. Intellectual property has always been a part of the regulatory construct, by the way.

What makes it the business of government how an economy works? Their picking of winners and losers is cronyism. Governments have different mandates. Few if any are actually concerned with the wellbeing of the population. More so what they can extract without causing rebellion. Government’s stated purpose in the U.S. was the protection of the rights of the citizenry. That is not their wellbeing or happiness.

Hold on now. This is our Republican ideal.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Notably, however, when the Confederate States of America made their own Constitution almost word-for-word a copy of the original, they chose to excise the Common Welfare clause. Of course the Mises Institute finds this praiseworthy.

In an attempt to prevent the Confederate Congress from protecting industry the framers add to Article I Section 8(1).
The Congress shall have power – To lay and collect taxes, duties, imposts, and excises for revenue, necessary to pay the debts, provide for the common defense, and carry on the Government of the Confederate States; but no bounties shall be granted from the Treasury; nor shall any duties or taxes on importations from foreign nations be laid to promote or foster any branch of industry; and all duties, imposts, and excises shall be uniform throughout the Confederate States.[12]
The phrase "general Welfare" was dropped from the Confederate Clause as well.

As to regulation: If it is a good idea, why must people be forced into it? Wouldn’t they naturally take it upon themselves to do like wise and protect what they have? Farmers don’t put salt on their fields to make them unusable. If people can agree that something needs preserved or looked after can they not care for it? Does it have to be government which intervenes and prohibits anyone from doing anything?

That's misguided. People don't have the knowledge or discipline to protect what they have. Farmers across civilizations have routinely driven themselves into starvation through lack of understanding of the interaction of ecological and agricultural processes. They died, some lived, those multiplied, back to step one. The only complaint against government regulation here is, particularly with democratic governments, a lack of discipline to be maximally effective. But it's still more effective than in absence of intervention. Regulation for public safety and wellbeing has routinely achieved its goals and reduced externalities for the general population. The alternative is a reversion to carrying capacity dynamics.

If someone can provide higher quality at a better price they win. Only government can provide the security for the large firms to exist without smaller competitors taking away part of their market.

Certainly not true. If the state does not provide the government, large firms would provide it for themselves. Why would it matter to me how quickly one large firm is replaced by another?

'By force of arms and the honor of the duel ritual, any valiant knight may seize the throne for himself!' Truly a worthy system.



Altogether we differ in preference over the massive encumbrances of real markets governed by shifting oligarchies versus the minor encumbrances and massive securities of even a bureaucratic oligarchy (at worst). I consider laissez faire economics to be more or less analogous to a warlord-centric consolidation of aristocratic power in another time, just with suits and ledgers rather than mail and sword.

[Husar]

Over time economies fluctuate. Deflation is falling prices on goods and services brought on by over supply. Inflation means the medium of exchange is lessening in value and takes more to buy the same item. If you had money put away it’s value steady decreases in buying power and that discourages savings.

If Johnny Doe has his savings in a box or even a bank the value of it falls over time because of central banks management of the money supply. Sir John on the other hand may own the bank or get a loan from his bank (which created the money by lending it) His money is at full value when he gets it but worth less as he pays it back. If he has other investments, that cushions his wealth or makes him more. Johnny on the other hand has to spend more for what he needs while his money has lost in value.

As to regulation: If it is a good idea, why must people be forced into it? Wouldn’t they naturally take it upon themselves to do like wise and protect what they have? Farmers don’t put salt on their fields to make them unusable. If people can agree that something needs preserved or looked after can they not care for it? Does it have to be government which intervenes and prohibits anyone from doing anything?

Sometimes I just want to despair. Do I sound stupid or are you just not capable of answering a simple question?

I asked you about the benefit of deflation for the small man and you explain to me what inflation and deflation are. That's not what I asked because I already know what they are.
The rich man benefits from falling prices as much or more than the poor man does, so that is surely not an answer to my question.

I know I sound angry but that's because this happens relatively often, don't take it personal.


As for regulation, no, they don't, and yes, they have to be forced. We have soil degradation all over the world, so farmers are actually making their soil unusable in the long term right now. Why do they do it? Because they don't notice it yet and they have plenty of short-term benefits that incentivize this behavior. The incentives aren't changed because those who could do that also benefit from it right now and may just think the next generation can deal with it once it becomes an unavoidable problem. The people who think the soil needs to be preserved and looked after right now before people start to actually starve from the effects of the misuse cannot do that because it's not their soil and they aren't allowed to.

Humanity as a whole is not very good at cooperating for long-term benefits if and when this runs counter to advantages that can be gained in the context of short-term competition. Using regulation to force the behavior that is beneficial in the long term is sometimes the only option. See all the regulation to make the air cleaner, the markets didn't do jack about that, just look at China. The government in China let the markets handle it for a long time and the result was smog and sickness everywhere and now they're introducing legislation...

VW and others cheated with the diesel cars because the market incentivized this instead of actually making them cleaner.