February 6, 2005
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TOPIC: THINKING CRITICALLY ABOUT ECONOMIC FREEDOM
The Times had an article today, “Bush Is Said to Seek Sharp Cuts in Subsidy Payments to Farmers” which wouldn’t have caught my attention 3 months ago. Essentially, the US gov’t spends its budget on two things, public needs, and business needs. It seems to me, that both needs are useful to each other, therefore, we should look to balance the needs of both, rather than to destroy one or the other. The fact that Bush is cutting back on agribusiness is just a fact that the overall budget will show cuts in a wide range of programs. The sacrifices of war, are essentially coming down to budget sacrifices (except military expenditure).
There was an economist quoted in the article from the Heritage Foundation, who supported the move to lower subsidy payments to farmers, because farm subsidies had become “America’s largest corporate welfare program.” I thought that was interesting, so I checked out their website, and it’s becoming pretty easy these days to see what ideology is behind different websites.
There’s a part of their site that has a “2005 Index of Economic Freedom,” This is a code word for libertarian economic policy, meaning as little gov’t taxes, regulation, and programs as possible. I wonder how old the term “economic freedom” is, or if the libertarians have just recently marketed their economic policies with Republican foreign policies of “spreading freedom,” around the world.
Organizations like this are a good place to go and find certain facts, and to observe the spin that comes with it. Any fact can have 1,000 spins, but it’s become so interesting to me how the two dominant ideologies of the left and right are able to either spin facts differently, or find different facts.
For example, here is an excerpt on South Africa:
The ANC holds a commanding majority of parliamentary seats and controls seven of South Africa’s nine provinces. South Africa is Africa’s economic and military powerhouse; it generates some 40 percent of GDP in all of sub-Saharan Africa and is the only country in the region capable of projecting significant military force. The economy faces major obstacles to long-term growth and stability, including unemployment that is estimated to be as high as 40 percent, violent crime, and an HIV/AIDS infection rate of over 11 percent. Liberalization of rigid labor markets and privatization of South Africa’s many state-owned enterprises has been slowed by opposition from powerful unions and lukewarm political support. Regional instability, over-regulation, and relatively high taxation hinder foreign investment. The crisis in Zimbabwe places economic strains on South Africa; an estimated 3 million Zimbabweans have fled to South Africa due to instability and economic disaster in their home country. Regional instability, over-regulation, and relatively high taxation hinder foreign investment.
Which parts are fact, and which parts are spin? I’ll take at face-value South Africa’s economic strength. I’ll take at face-value that the economy has obstacles including high unemployment, violent crime, and a high AIDS rate. The part about “liberalization of rigid labor markets and privatization of South Africa’s many state-owned enterprises…” is the spin. It’s not untrue, but it’s context within a broader summary of the country represents the libertarian ideology. In this context, rigid labor markets and state-owned enterprises are a bad thing. Rigid labor markets I take to mean, strong unions, since those are the groups described as opposing the “liberalizing” of labor markets.
The last line about the factors that hinder foreign investment, is another observation high in spin. South Africa has risen from the ranks to be a pillar of what is possible within South Africa. They’ve obviously created a model for success within their own country, and they’ve done it without a libertarian ideology. Despite (over)regulation, despite (high)taxation, South Africa most likely receives more foreign investment than any African country.
My question for libertarians is, if the system ain’t broke, why fix it? The problem I see here with the libertarian ideology, is that despite South Africa’s decision to not follow the libertarian economic ideology, they still remain the strongest economy in South Africa. I have yet to come across a libertarian site that shows support for either gov’t subsidies of gov’t programs such as regluating certain utilities such as water, or public education, or national health care. They will blame these gov’t expenditures for “hindering foreign investment,” for putting a drag on the economy, and as a result, for creating unemployment. And…I have yet to understand the libertarian ideology behind a free labor market, unfettered by unions. Unions are created for the very reasons that a free labor market does not allow for a decent quality of life for blue-collar workers.
While I can see value in certain libertarian policies, I think the real world does not match a universal libertarian ideology. Interferance with free-markets is a response to free-markets failing. Most libertarian sites would have you believe that ALL of societies failing are a result in interferances with the free-market, and only by interfering with those interferances, and having an interferance-free free-market, and we address the failings of society. But, although failures exists, America is the world’s economic superpower, and it didn’t get that way by prescribing itself with a libertarian ideology. South Africa is the strongest country in Africa, and again, it wasn’t libertarian, but mostly a rejection of libertarian ideology that got it there.
This isn’t to disregard in anyway the belief that the libertarian ideology is a strong ideology. Just because history hasn’t followed its path, does not make it irrelevant. Just because we don’t live in a libertarian world today, doesn’t mean people can’t dream of a libertarian world. It might be utopian, but it might not be pragmatic.
It’s like me with education. I have my ideal views of education, and they don’t come close to existing in society today. If communists can’t stand a world with capitalism, I’m an education person who can’t stand a world with grades. The difference is, I don’t believe violence is the best means to achieve my ends. I’m not going to blow-up existing schools because they run counter to all I believe in in schools, because the schools do have some existing value, and because my use of violence instead of peaceful means would stand to justify violence in many other instances. However, through a mixture of idealism and pragmatism, I can hope to shift education, even if its on a small scale, towards the ideals I believe in. The ideals of Outward Bound, of experiential education, of “educational freedom.” Because you can’t out-market something with the word freedom.
So…where do I go from here? I think the Cold War fear that an economic system based on a Communist ideology would spread like falling dominoes is apparent today, with the fear that an economic system based on libertarian ideology will spread. What distrubs me the most, is that violence has become a means of spreading an economic ideology. I know many liberatarians are not Republicans, but Republicans (and the Dems have done the same), are using hte libertarian ideology as an excuse for war.
To show a bit of my pro-libertarian ideology…I think Amtrak, the national railroad that receives $900million in gov’t subsidies, is an example of a failing gov’t program. The free-market has created bus services, (mostly Chines owned) that can get me from Washington D.C. to New York for $30 round trip. Amtrak costs about $80…ONE WAY!!! Plus, you always here about them crashing. Point being, I don’t think we should be paying tax-payers money to fund Amtrak. Amtrak now needs more tax-payer money since they’re not profiting, and a bad cycle develops.
There is a difference, however, between trains and schools. The purpose of public schooling is to ensure even the poorest student can get a quality education. Trains are not a public good. When I was in Denver, they have a free train that runs up and down the main street. At that point, it becomes a public good, since it can be used by anyone. Public schools should not be constrained by libertarian ideologies, they should not be viewed as businesses. Students should not be viewed as customers. Just as a publicly subsidized train system is a drain on the free-market of train transportation, free-market views of education are a drain on public schools. It’s amazing how much effort is going on right now by educators to fight for public schools, to fight for funding, to fight against high-stakes standardized testing. Unlike Amtrak, free public schooling should be here to stay, because, as even libertarians will admit, it is the bedrock of all strong economies. Now…while my utopia has no schools that resemble those of today, I believe it is more practical to reform schools than to do away with them and expect the community or private schools alone to do the job.
Comments (12)
There are so many different definitions of “democracy” and “freedom” and “human rights” that, of course, if people don’t headline what they are “reporting” with how they define these key words, you have no idea what they are saying. For instance, am I wrong if I imply that to George W. Bush and friends “perfect freedom” means you and your child can starve to death in a country where abortion, birth control, homosexuality, and flag burning are outlawed? If I say that to me, no one is free unless they have a basic right to economic and medical survival as well as the fair opportunity to get an education which makes success possible?
When you define “freedom” and “democracy” as I do, as most Europeans do, as perhaps most in South Africa would, then nothing the Heritage Foundation says makes sense. Especially since they are happy to define specific forms of corporate/rich people welfare (government air traffic control, airport security, protection from negligence lawsuits) as essential to their idea of “freedom.”
So I’d say that trains, like schools, are essential functions. If you can’t get an education you have no opportunity. If you can’t get to jobs you have no opportunity. If you have no health care you have no opportunity. If you don’t have housing you have no opportunity. And if you don’t have equality of opportunity, you don’t have anything like what I’d define as “democracy.”
The right tends to define “democracy” as the ability to vote, forgetting that people got to vote in both Nazi Germany and Stalin’s Russia. “Voting,” in and of itself, means nothing. The right tends to define “freedom” as the ability of the rich to hold onto their wealth. They’ll use other phrases, but its my belief that those are their working definitions. Of course, since I define those things differently, I’m saying what I’m saying.
The heritage foundation is a republican think tank I will be posting about them tomorrow. The current administration has gone out of its ways to change the definition of words they use in the language to pervert for their own purposes. No one is holding them accountable though and that is the troubling part…
“Which parts are fact, and which parts are spin? I’ll take at face-value South Africa’s economic strength. I’ll take at face-value that the economy has obstacles including high unemployment, violent crime, and a high AIDS rate. The part about “liberalization of rigid labor markets and privatization of South Africa’s many state-owned enterprises…” is the spin. It’s not untrue, but it’s context within a broader summary of the country represents the libertarian ideology. In this context, rigid labor markets and state-owned enterprises are a bad thing. Rigid labor markets I take to mean, strong unions, since those are the groups described as opposing the “liberalizing” of labor markets.
The last line about the factors that hinder foreign investment, is another observation high in spin. South Africa has risen from the ranks to be a pillar of what is possible within South Africa. They’ve obviously created a model for success within their own country, and they’ve done it without a libertarian ideology. Despite (over)regulation, despite (high)taxation, South Africa most likely receives more foreign investment than any African country. ”
I admit, my background in South Africa’s economy only comes from my in depth study of Ghana’s gold exporting industry. South Africa has privitized its Gold, Diamonds, and mineral exploitation trades, and they are the only African based mining corporations that actually have a huge chunk of market share. Newmont and Ashanti, foreign mining companies, own most of countries like Ghana, who only started privitizing in the mid 80s. Economically, I assure you privitization does lead to better economic outcomes. The question is whether or not those outcomes are distributed “properly” and if other expenses, such as those on environment and public health, are incurred.
I wrote an entire essay on the issue, if you want to read it, no problem.
My personal conclusion is something I already wrote about. Economically, free trade is definitely beneficial. It has been proven statistically. However, the ramifications of pure economic gain can be great, but are not statistically discernable and more objective. I tend to think that political corruption is by far the largest problem. However, this corruption is paid by corrupt businesses and corrupt trade practices, which libertarians do no support. However, being that the world is not a perfect place, you have to make tough decisions. Personally, I fail to see how the harsh result of mineral exploitation would be any different if state owned corporations did the work. It is just a perpetually sad situation. (of course, the conclusion of my essay was different to appease my professor.)
“My question for libertarians is, if the system ain’t broke, why fix it?”
It is broken. Example: The Russian monarchy under the romanov dynasty worked great for 300 years! Why change it? Who cares they smashed the libertarian cossacks and enslaved the russian population. It worked! Government taxation literally forces one to work directly for the state in proportion of their taxes (30% income tax is equivalent to working 4 months for the government.) The system is broken, when we have 5.2% unemployment while about 14% of our economy is eaten away by social programs, I see an obvious inefficiency that in part enslaves us. Therefore, it is broken and it should be fixed. I should be free to choose my own destiny, I am a human with free will.
“The problem I see here with the libertarian ideology, is that despite South Africa’s decision to not follow the libertarian economic ideology, they still remain the strongest economy in South Africa.”
To my knowledge, when it comes to mineral exploitation, that is not true. Furthermore, South Africa has a lot of land, investment, and was hit by the AIDs unslaught much later. It has all the makings of a sub sahharan economic powerhouse.
“I have yet to come across a libertarian site that shows support for either gov’t subsidies of gov’t programs such as regluating certain utilities such as water, or public education, or national health care. They will blame these gov’t expenditures for “hindering foreign investment,” for putting a drag on the economy, and as a result, for creating unemployment. And…I have yet to understand the libertarian ideology behind a free labor market, unfettered by unions. Unions are created for the very reasons that a free labor market does not allow for a decent quality of life for blue-collar workers.”
There are some justifications for regulating water or providing education. Providing water, paving roads, and ect give a nation and its economy stability. Education is an investment into a nation’s intellectual capital. National health care serves neither purpose, so no libertarian would ever support it. Concerning unions, they are during periods of history a necessary evil, to check corporate power. However, unions have become their own massive corporations with shady ”owners,” and their abuse is now much greater than what they can provide for their customers. People can organize without the economic entity of the union…that’s why the union in this day and age is unnecessary.
“While I can see value in certain libertarian policies, I think the real world does not match a universal libertarian ideology. Interferance with free-markets is a response to free-markets failing. Most libertarian sites would have you believe that ALL of societies failing are a result in interferances with the free-market, and only by interfering with those interferances, and having an interferance-free free-market, and we address the failings of society.”
A simple rule of economics is that government can interfere to improve market outcome. All libertarians support this role of government and apparently so did our founding fathers when they allowed the national bank to be created. However, non-libertarians support the government taking roles in which it HINDERS the free market. This is against the government’s sole role of protecting property and the government starts becoming a tyranny.
“But, although failures exists, America is the world’s economic superpower, and it didn’t get that way by prescribing itself with a libertarian ideology.”
America’s economic might began with the industrial revolution and it did not cease. Though America had protective tariffs, its massive economic might overcame this and created a powerhouse, but at the cost of people’s welfare. Theodroe Roosevelt would support lowering tariffs so the common man can buy more with his money. Usually, no country rises to prominence with libertarian philosophy, because ruling classes and nation states usually rise to global proiminence through force and tyranny. After all, America became the world’s greatest power by trading away its citizen’s rights and that of others throughout the world.
“South Africa is the strongest country in Africa, and again, it wasn’t libertarian, but mostly a rejection of libertarian ideology that got it there.”
Again, I am not too sure about that.
I think you’re mistaken about the ideology of the Heritage Foundation. They lean towards libertarianism, but their real position is conservatism. Their job as a think tank is to listen to the people who write their checks, and then come up with a position paper that justifies it.
For instance: If you’re an American corporation, you want to trade freely with South Africa. You give a donation to the Heritage Foundation, and suddenly they’re writing about the evils of trade restriction and closed markets. Heritage doesn’t so much come up with positions as repackage what’s already ‘in the air’ in the conservative world, but which no one has yet stated plainly.
There are a lot of these think tanks out there. They’ve been shaping policy for the last three or four decades, maybe longer. Their functions are synthesis and justification for policy, not innovation. And most of them are conservative.
Craig, you said: “A simple rule of economics is that government can interfere to improve market outcome. All libertarians support this role of government and apparently so did our founding fathers when they allowed the national bank to be created. However, non-libertarians support the government taking roles in which it HINDERS the free market. This is against the government’s sole role of protecting property and the government starts becoming a tyranny.”
Here’s a question for you: If it’s true that some economic activity results in very, very bad things for a lot of people (and it is), then wouldn’t limiting that economic activity be the same as protecting property and life and welfare of people? For instance, businesses could make a lot more money without child labor laws. Should child labor laws be revoked in the name of freeing the market to pursue this economic activity?
So Craig…I understand that being a libertarian does not make you a Republican, but most Republicans will take libertarian viewpoints and contaminate them, such as what has occured with free trade. Do you find yourself siding w/ Republicans over Dems because they do that, or are you a harsh critic of Republicans. Also…given that Republicans have corrupted many libertarian views, and recognizing that money and power have the ability to marginalize the poor, does this affect you thinking about gov’t programs? You wrote:
“The system is broken, when we have 5.2% unemployment while about 14% of our economy is eaten away by social programs, I see an obvious inefficiency that in part enslaves us. Therefore, it is broken and it should be fixed. I should be free to choose my own destiny, I am a human with free will.”
Given that our 2 party system has limited our choices, not between libertarians and democrats, but between democrats and republicans, why do you still believe so stronly against social programs? As you said, libertarians may have the best policies statistically for our economy, but that’s not what we’re dealing with. Again…while FDR may have gone crazy with his social programs, what was the reality he was dealing with? The closest thing we will have to the hand of the free-market shaping society, is not likely to keep unemployment low. Statistics might say one thing, but the benefits from spending 14% of GDP on social programs does not just disappear, even if it’s not measured.
craigrambling, and most libertarians, believe that money which goes to the rich is a good, and money that goes to the poor “is eaten away.” They believe that things they need government to do for them (education, air traffic control) are good, but things the poor need (the ability to survive medically, mass transit) are bad.
Sorry, but “greed” is still not really an economic theory.
“So Craig…I understand that being a libertarian does not make you a Republican, but most Republicans will take libertarian viewpoints and contaminate them, such as what has occured with free trade. Do you find yourself siding w/ Republicans over Dems because they do that, or are you a harsh critic of Republicans. Also…given that Republicans have corrupted many libertarian views, and recognizing that money and power have the ability to marginalize the poor, does this affect you thinking about gov’t programs?”
I was pulling for Kerry in the previous election, however both parties are economically moronic (with their tariffs and spending). Both support social programs (though bush does not support project head start) and one supports increase corporate welfare and tax cuts, though corporate welfare has become a virus to both parties. I think government works best with a republican congress and a democrat as president. That way, conservative morality can be vetoed, but they control the ability to make the budget and politically they are forced the make cuts in spending. both parties suck unbelievably. I voted for Badnarik last november.
“ You wrote:
‘The system is broken, when we have 5.2% unemployment while about 14% of our economy is eaten away by social programs, I see an obvious inefficiency that in part enslaves us. Therefore, it is broken and it should be fixed. I should be free to choose my own destiny, I am a human with free will.’
Given that our 2 party system has limited our choices, not between libertarians and democrats, but between democrats and republicans, why do you still believe so stronly against social programs? ”
That is a moral decision. Most of my complaining relates to my opinions of a perfect world and I maintain such a world will not come to be, because I do not have faith in people to not act selfishly (consider their future over immediate gratification). Social programs are part of the social cancer of entitlement and feed into the extreme moral laziness we see today. We feel that everyone else will take care of someone’s problems. People have to do something on their own, that is their own moral choice. A vote does not count as an act of charity.
“As you said, libertarians may have the best policies statistically for our economy, but that’s not what we’re dealing with. Again…while FDR may have gone crazy with his social programs, what was the reality he was dealing with? The closest thing we will have to the hand of the free-market shaping society, is not likely to keep unemployment low. Statistics might say one thing, but the benefits from spending 14% of GDP on social programs does not just disappear, even if it’s not measured.”
There are benefits, but we all know the benefits are inhibited. Bureaucrats and such make the programs inefficient and will hurt the people they supposedly help, by hurting the economy. The jobs lost in a weakened economy generally are always the ones on the “bottom”. This is exactly the result of FDR’s policies. Even as his spending increased, unemployment practically hit 32-33 levels again in 1938 if my memory serves me right.
It comes to this. Are we to immediately gratify ourselves with social programs and give ourselves a pat on the back for “helping people out” while those same programs are the reason people NEED to be helped or should we concern ourselves with the long term, and leave a more prosperous nation and world for ourselves down the road and our children? I choose the long term. PEople will never choose long term gains over short term gratification. However, that does not mean I should not support the better choice of the two.
“craigrambling, and most libertarians, believe that money which goes to the rich is a good, and money that goes to the poor “is eaten away.”"
Listen to yourself. You make a baseless claim (followed by an assertion that asserts I have motives) and think you are correct. I am a very moral person and that is extremely insulting to me. I do not plan on making a lot of money and I most probably will not. I have nothing to gain personally by supporting what I support. It is a moral decision.
“They believe that things they need government to do for them (education, air traffic control) are good, but things the poor need (the ability to survive medically, mass transit) are bad.”
I know what your motives are if you supposedly know mine. You are incapable of morality and you think all others are the same as you. PEople are too stupid to make their own decisions, so the government should control ever aspect of life so that people can make mistakes and make bad decisions, but always have something to pick them up. You believe in no accountability of individuals or individual freedom. People should not be free to shape out their own destiny, it should be shaped by the state. Sorry to burst your bubble, but humans are mentally capable of things greater than to what you have become. If we all lived in a society that believed in humanity’s ability to use their own free will to determine their own destuny, we would all be better off. Things that you support rob us from our very humanity. The more we support what you support, the more we become part of the machinery of the state, and non-existant entity, and idea that exists at the expense of our work. An entity that benefits from our work, but as an entity can never feel joy or feel thankful for all the work that goes into it. It is one giant waste.
“Sorry, but “greed” is still not really an economic theory.”
You are greedy and so is everyone like you. You are too lazy to think (or want to) think about how to live your life on your own and so you want the state to make sure that you would not have to. That is greed.
Thenarrator:
I think Craig has made several claims for you to respond to. I ask that you either dispute the facts, or that you dispute the interpretation of those facts. I would agree that while some on the right may be full of greed, we are dealing with the issue of libertarianism, and more specifically, we are dealing with one specific person. If you wish, you may give other examples of how libertarians or conservatives who use libertarian policies have demonstrated greed, but I don’t believe Craig has said anything to imply he, as a person is greedy. If you believe his views benefit the rich at the expense of the poor, that is a fair argument you may make.
thenarrator: these are 2 claims I’d like you to address…
There are some justifications for regulating water or providing education. Providing water, paving roads, and ect give a nation and its economy stability. Education is an investment into a nation’s intellectual capital. National health care serves neither purpose, so no libertarian would ever support it. Concerning unions, they are during periods of history a necessary evil, to check corporate power. However, unions have become their own massive corporations with shady ”owners,” and their abuse is now much greater than what they can provide for their customers. People can organize without the economic entity of the union…that’s why the union in this day and age is unnecessary.
There are benefits [to social programs], but we all know the benefits are inhibited. Bureaucrats and such make the programs inefficient and will hurt the people they supposedly help, by hurting the economy. The jobs lost in a weakened economy generally are always the ones on the “bottom”. This is exactly the result of FDR’s policies. Even as his spending increased, unemployment practically hit 32-33 levels again in 1938 if my memory serves me right.
thank you. I do not blame the narrator for being a cynic. I am guilty of that too. However, I believe in what I believe in (not to be repetitive) because of moral reasons very dear to myself. Greed is not part of the equaiton. Perhaps, if you (thenarrator) read more of what i write on my blog, you would see that I am well meaning.
To Homer (who I glossed over):
“Craig, you said: ‘A simple rule of economics is that government can interfere to improve market outcome. All libertarians support this role of government and apparently so did our founding fathers when they allowed the national bank to be created. However, non-libertarians support the government taking roles in which it HINDERS the free market. This is against the government’s sole role of protecting property and the government starts becoming a tyranny.’
Here’s a question for you: If it’s true that some economic activity results in very, very bad things for a lot of people (and it is), then wouldn’t limiting that economic activity be the same as protecting property and life and welfare of people? For instance, businesses could make a lot more money without child labor laws. Should child labor laws be revoked in the name of freeing the market to pursue this economic activity?”
That is a very good question. Should America chop down all of its forests to make money? After all, the ocean makes most of our oxygen, the trees just look nice. I believe that there is a psychic utility (a percieved price but not an actual one) to having trees, one that is much greater than any measurable economic benefits. However, this is my opinion, nothing more.
Concerning child labor, if children are at work even in good conditions, we relegate them as adults to being nothing more than non-skilled laborers. A nation economically benefits more so if it invests in its national genius.
If the world would educate its children (poor countries can do this too, look at Mongolia), instead of look for the short term economic gains of exploiting its citizenry, everyone is better off. Corporations often do not care about the long term and if this means taking ever advantage they can to develop a cheap product, they will do it. However, that’s the role of government, to improve market outcome. If it outlaws child labor, it frees jobs for its unemployed adult workforce and it invests in its national genius. In a single generation, labor that was commonly accepted would become outmoded and unprofitable.
That’s why I like sticking to the enviornment example. Once you destroy or exploits parts of the environment for finite economic gain, the thing you ruined is gone forever. To me, that’s a negative market outcome. Then again, this is merely an opinion, but at least one that most in our society pretend to agree with (as long as it does not prevent them from buying their cheap crap at wal-mart).