Alcohol & Welfare Programs: Topics on today's show

[kaufmannphillips]

Peter - I will work on replies to your posts tomorrow. You did give a fairly large reading assignment, remember?

[thrombomodulin]

Thanks, I look forward to reading your reply.

[jriccitelli]

Paidion, Free enterprise 'is' better than Capitalism, they are very similar, but these are not opposites.
Socialism is it's natural opposite (worker vs. owners of capital) and that is what I was arguing against. I understand the point, as most socialists I talk to lump all anti-tax proponents together as Capitalists, it’s the tag of western economies for 200 years.
All forms of Government are controls, there is neither no completely free enterprise, as there is no completely socialistic system. All governments have varying degrees of control and all must, but the 'Capitalist' / less govermentist strives for less control and the socialist strives for more control.

I am not a Capitalist as in definition, I am for freedom from oppressive Govt. and oppressive taxes, and taxes are controls that limit freedom.

[steve7150]

I am not a Capitalist as in definition, I am for freedom from oppressive Govt. and oppressive taxes, and taxes are controls that limit freedom.
jric






Are you against locusts?

[Candlepower]

First, I don't like the word, Capitalist, either. Not because it is used pejoratively, but because it is vague. Here's why. Capital is simply the tools of production, which can include a hammer, or a lathe, or money. Knowing how to perform a skill is capital. Anything used to produce stuff is capital. Capital-ism simply means the use of capital. But it is commonly used as a synonym for free enterprise. Some equate it with monopolies. It also has come to describe the mongrelized socialist/free-enterprise system in America today.

In North Korea, as in the U.S. (or Canada) there are hammers, lathes, and money. Aborigines have blowguns. People all around the world use tools (capital) to produce stuff. Therefore, as long as there are tools (capital) and people using them (capitalism), we live in a capitalistic world.

So what is the difference between American capitalism and North Korean capitalism. The difference lies in who owns the tools, who decides what stuff is to be made, how it is to be made, and to whom it will be distributed, when, and for what price. Under socialism, the state owns the tools and decides how to use them. In a free enterprise system, individuals (or groups) own the tools and decide how to use them. So free enterprise, or free market, are better describers than capitalism.

But a better term, in my opinion, is private enterprise. I am not satisfied with "free," because it can seem to imply "no rules."

The term I like best, and that I just now invented (or have never heard before), is "Theoeconomics." Here we have a term that acknowledges God's sovereignty over capital and its use. All man-devised systems spin off in bizarre and harmful directions.

Second, I really appreciate your brilliant posts on this thread, Thrombomodulin.

Third: Kaufmanphillips, I was hoping your response would rise at least to the level your usual fluff and filler about socialism. But it didn’t. You flailed, and you sank. I shouldn’t have been disappointed, though, because Socialism is bereft of anything worthy or good.

I was shocked that you didn’t distance yourself from the Nazis.

It appears that while you say you are a socialist, some of your comments in this thread indicate you don’t have a good understanding of what the term actually means.

Here’s how Merriam-Webster defines socialism:

“Any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”

I’m aware that the word, socialism, is used in a variety of ways, and that there are shades of meaning. But I think this definition describes the essential wicked root from which the various cancers of socialism metastasize, and is the one that hits at the heart of the discussion on this thread. That is, the use of coercion by the state to direct human action. By the way, Human Action is the title of the monumental work by Ludwig Von Mises. In it, he demolishes socialism. You ought to read it. It will help you understand economics.

Socialism is built on three evil pillars. They are:

1. Man owns the world...

This is not true, of course. The earth belongs to God. He owns everything that He created, and He created everything. One who agrees that God owns the world, should be careful not to endorse economic policies that violates His laws. The principles of sound economics are found in Scripture, not socialist schemes.

2. The elite should rule...

This also is error. Because the earth is the Lord’s, we are all under His law. Socialist elitists consider the unenlightened masses (proletarians) incapable of stewarding themselves or property. Therefore, an enlightened few (oligarchy) must lead the way. All socialists are elitists, whether they wear robes or rags. They have dubbed themselves “the avant-garde”…"the advanced guard” who are able to lead unenlightened humanity to utopia. Plato thought this, and so did his heirs, Marx, and Stalin. Oh yes, so did Hitler, whose economic theory you share, along with his cronies.

3. Envy (disguised as philanthropy)...

All socialists claim they are humanitarians, but what drives their hearts is resentment that they are not as rich as they “ought” to be… or not as famous as they “deserve”…or not as appreciated as they “should” be. They feel they were born into an unfair world that does not deserve them. They imagine a world run by them. And then, to retaliate, they become socialists. Because socialists deem people too stupid, or too greedy, or too rich, or too powerful, or too whatever, they push for a system that will force people to "be good" according to their standards. “Do-gooders” as they are sometimes called, think they inherently know what is good for the rest of us, and they are determined to enforce their will. Only when they are in charge, they think, will the world be a fair place.

Frederick Bastiat, a French economist and legislator in the 1800’s, had some incisive things to say about socialists and their ungodly economic theory:

I do not dispute their right to invent social combinations, to advertise them, to advocate them, and to try them upon themselves, at their own expense and risk. But I do dispute their right to impose these plans upon us by law—by force—and to compel us to pay for them with our taxes.

Human nature impels man to satisfy his desires with the least possible expenditure of effort, which often requires his satisfaction at the expense of others. Law makers often shape law to plunder the people and benefit themselves. The rebelling plundered classes then attempt either to stop legal plunder or to share in it. Legal plunder forces citizens to choose between their moral sense and their respect for the law and eliminates the correlation between justice and law.

False philanthropy: Under the pretexts of organization, regulation, protection, and encouragement, law takes property from one person and gives it to another. Socialists do not consider the law sufficient that it should guarantee to every citizen the free and inoffensive use of his faculties for physical, intellectual, and moral self-improvement. Instead, they demand the law directly to extend welfare, education, and morality throughout the nation.

To socialist intellectuals, the relationship between the people and the legislator is the same relationship between the clay and the potter. Socialists envision a utopian society of which they would be the wise leaders. They find ideological support among legislators whom, for the most part, assume themselves to be better than the people and the peoples' saviors from their own stupidity

The proposition that law should extend wealth and happiness to everyone is the road to serfdom that will inevitably result in legislation being the battlefield of the utopias and greed of everyone. Socialism and communism are the same plant in different stages of growth

When a portion of wealth is transferred from the person who owns it — without his consent and without compensation, and whether by force or by fraud — to anyone who does not own it, then I say that property is violated; that an act of plunder is committed.

I say that this act is exactly what the law is supposed to suppress, always and everywhere. When the law itself commits this act that it is supposed to suppress, I say that plunder is still committed, and I add that from the point of view of society and welfare, this aggression against rights is even worse. In this case of legal plunder, however, the person who receives the benefits is not responsible for the act of plundering. The responsibility for this legal plunder rests with the law, the legislator, and society itself. Therein lies the political danger.

[kaufmannphillips]

thrombomodulin wrote:
There is a very interesting argument against socialism known as the "economic calculation problem", which was first proposed in 1922 by Mises - Link: [url=http://mises.org/pdf/econcalc.pdf]. Have you considered it before? What criticisms of this view do you know about?

In large part, Mises' concerns may be defrayed by the advent of vastly superior technology than he knew of in 1920. Our technology affords much more complex systems analysis than he would have planned for. It also affords greater acquisition of data, including polling of popular opinion. Accordingly, a socialist management agency would have tremendous resources for gauging production options in terms of practicality and popularity. Mises is scarcely to be faulted for not anticipating this. But a 21st-century reader should have an inkling that the ground has changed since 1920.

Mises also considers free market pricing to be a necessary tool for economic calculation. Of course, this is not so. If one has reliable data about the production resources available (raw materials and skilled labor) and the desirablity of the product (estimated usefulness and reported popularity [as dervied from polling and/or demonstrated demand]), these can be quantified for calculation.

thrombomodulin wrote:
It is simply not possible to discern cause and effect of particulars from the observation of a series of historical events where there are multitudes of influences. After all, who can prove that the influence of one particular factor was dominate over all others (e.g. that labor unions did more or less for workers than any other factor?). Rather, whether one recognizes it or not, each person has various aprori assumptions about cause and effect and interprets historical events accordingly - as you have done here.

Since historical events are not subject to controlled experiments***, and since human beings make choices, it is prudent to take a deductive, praxeological approach rather than inductive approach to discerning cause and effect in the realm of human action in general and economics in particular.

In other words, history is just too complicated to learn from. I guess I'm just naive for thinking that when unions struck, and employers made concessions, that the unions had something to do with it. Likewise for thinking that when legislation was passed, and employers changed practices, that the legislation had something to do with it. And I suppose it is only coincidence that the concessions and changes in practice did not transpire before the pressures applied by unions and legislation.

thrombomodulin wrote:
It strikes me as being ad-hoc to attribute the working conditions in China relative to the USA to lack of unions and labor laws. It seems that one could just as well attribute it to the socialist system their country has been subjected to, the size of the population relative to the abundance of natural resources, or one of any other of the thousands of differences between the USA and China.

Are you suggesting that working conditions would remain the same if there were unionization and decent pro-worker legislation in China? The question is not whether these are the only factors in a scenario; the question is whether they are transformative factors.

thrombomodulin wrote:
*** From what I have read, even those cases which come closest to a controlled experiment - namely, the division of east and west Germany, or North and South Korea are replete with differences between the countries despite the similarity of language, culture, geography, etc,. If you wish affirm the appropriateness of an inductive methodology, then I expect you would be able to find reasons why the more socialistic of these pairs of nations had not performed as well economically, lest one otherwise reach the conclusion that a more socialist State is economical worse than a less socialistic State.

West Germany and South Korea were heavily subsidized by the Western world, which enjoyed tremendous resources thanks in part to colonialism and a United States that had been spared major structural damage from the war. East Germany and North Korea basically had support from the USSR - and in the case of NK, the PRC. Of course both the USSR and the PRC were relatively new states, and both had inherited backward, underdeveloped, and largely isolated societies. It is hardly surprising that the pets of well-established imperialism should have fared better than the satellites of a couple of disadvantaged start-ups.

kaufmannphillips wrote:
...we have a capitalist society where 95+% of the citizenry lacks the resources to influence or seriously challenge exploitation by the wealthy elite.

thrombomodulin wrote:
I don't see why this would be true under laissez-faire conditions, can you please explain how you could reach this conclusion in a laissez-faire system?

Under laissez-faire conditions, people who are good at acquiring and utilizing money will naturally accumulate more of it, while people who are not good at acquiring and utilizing money will naturally accumulate less of it. And the gap between these persons will increase near-geometrically, as the accumulators acquire more and more money to utilize.

Eventually, persons with more wealth can leverage their resources in ways that cannot be matched by persons with lesser wealth. For example, a wealthy industrialist can afford to go offline for a longer period than his hand-to-mouth laborers can afford to strike; and thus, the industrialist perennially gets his way, and by getting his way, he can keep his laborers in a position where they cannot challenge him. And the situation gets even uglier once monopolies have been attained and/or collusions have formed between industrialists.

thrombomodulin wrote:
How do you define what are or are not "needs" of the poor? One might observe that most everyone considered "poor" today would be vastly wealthy compared to those who lived anything more than 100 years ago.

The needs of the poor have not changed in thousands of years. Both long ago and today, people have needed adequate nutrition, decent clothing and shelter, competent health care, functional education. Having a television or an iPod does not adequately compensate for lacking any of these.

thrombomodulin wrote:
Your former posts, however, give me the impression you would define "needs" in a strictly relative sense. If one person is able to produce vastly more than another, this does not diminish the ability of another with lesser abilities to also engage in production and enjoy the fruits of his own labor. But, if one judges on a merely relative basis, is this not a simple case of envy and covetousness - which is forbidden in the ten commandments?

Questions of need are distinct from questions of fairness, and I am concerned for both. Fairness involves margins of equitability and reciprocity. When persons cooperate to yield a product or fulfill a service or build a society, then it is fair for them to share in the benefits of that cooperation, equitably and reciprocally.

And so, when one party acquires an excessive share of the benefit, then that party is actually the covetous one – not those who dare to object when they somehow have ended up with skimpy shares. The ability or opportunity to acquire does not necessarily translate to a fair right of possession.

So how does one determine appropriate margins of fairness? To begin with, a basic level of fairness requires a living wage for a life’s work. Once that manner of compensation has been satisfied for all cooperative parties, then the remainder of benefit may be divided with an eye to equitability and reciprocity. Basic rubrics for safeguarding equitability and reciprocity should be developed by society as a whole, but finer points could be determined by each specific cooperative. For example, society as a whole might determine that the greatest share of remaining benefit should not exceed the least share by a factor of more than 20x; but a particular cooperative could agree on a margin of 7x or 14x.

thrombomodulin wrote:
For example, the late Steve Jobs may have been very wealthy, but he attained his wealth by providing electronic devices which benefit the lives of millions of people (also a great value). In fact, these people judged the money they gave to Mr. Jobs less valuable than that which they obtained from him. One cannot conclude Mr. Job's wealth came at the expense of society or anyone in particular. He benefited society more than most others owing to being vastly more productive. On what basis then could one say that he should not be permitted to keep all of what he earned?

Unless I am mistaken, the late Steve Jobs had two eyes, two arms, and twenty-four hours in his day, so he almost certainly did not provide millions of electronic devices to people. Rather, he cooperated with other persons to provide these devices.

The question, then – were the proceeds from the cooperative effort divided in a way that was fair? When Steve Jobs received a share amounting to millions of dollars, but a third-world laborer who made devices received a share amounting to hundreds of dollars, then one may reasonably question the fairness of the division.

kaufmannphillips wrote:
If you think that our society would meet these needs under a laissez-faire paradigm, then try to mount a convincing argument for why that is plausible.

thrombomodulin wrote:
In addition to the already discussed incentive/diminished production problem under socialism (awaiting your reply on the usury thread), there is an also argument made by Ludwig Von Mises in 1922 pertaining to economic calculation in the socialist commonwealth (link in former post). The latter may well be a stronger argument than the former. Thus, one can conclude the structure of production is much better aligned to meeting human needs under capitalism than socialism. One can deduce that "real wages" (wages relative to costs of living) are more favorable under capitalism and the number of those in poverty in an absolute sense will be less. Also, the number of those with ability to give will be increased as well as their capacity for doing so. Consequently, ceretis paribus, it is better to be a poor person under capitalism than under socialism.

Socialism does not necessarily vacate incentive or diminish production; and Mises I have engaged above. Since your premises don't stand, your deduction does not follow.

I will note that increased productivity and increased capacity to give do not necessarily translate into increased giving, under a laissez-faire system - particularly at the rate necessary to replace compulsory contributions.

kaufmannphillips wrote:
Indeed, a decent socialistic system will insist on fair compensation for productivity...

thrombomodulin wrote:
What is fair but retaining ownership of the full measure of what one produces? Above you appear to be affirming that there is no number one can specify that is objectively "not fair". Would it be a correct representation of your position to say that there is no lower bound whatsoever to the fraction one is compensated for his labor that can constitute a "fair" wage?

All production in a society is done in cooperation with society; thus, there is no such thing as "what one produces" - or at least, very nearly so.

Fair compensation cannot be reduced to a defined percentage of what one has obtained. Fair compensation is arrived at by calculating a decent cost-of-living and prorating according to one's labor (e.g., half-time decent labor = half of decent cost-of-living) as a base rate, and then seeking equitable and reciprocal division of cooperative benefit.

kaufmannphillips wrote:
On the other hand - anybody with open eyes can see that meritocracy is frequently betrayed in capitalism.

thrombomodulin wrote:
Not so. The error here is substituting your values as a third party in place of those involved in the transaction. In capitalism the consumer retains the liberty to dispose of his income as he sees fit. "A" can only attain additional money by providing a good or service that "B" values more highly than the money he gives to "A" for it.

============

kaufmannphillips wrote:
And so the society should make the best use of those resources that it can, prioritizing the legitimate needs of all constitutents over the privileges of constituents who are relatively skilled at acquiring money.

thrombomodulin wrote:
Rather, society should not do so as advised. Aside from the receiving of charity, one only obtains money, goods and services from others in so far as one has also provided valued money, goods or services to others. Any interference of the State deviates from fairness, rather than improves upon it.

You are in error here. When I finish my response in the "Usury" thread, the light of dawn will break forth upon you, and you will weep with joy and with regret.

[Homer]

Kaufmanphillips wrote:

It's a good thing there haven't been hundreds of Christian rulers, going back through the centuries, who were murderous thugs on a grand scale. If there were, I'm sure you wouldn't admit to being a Christian, since that would mean you're associating with such "scum."

There never was a "Christian ruler" who was a murderous thug. He might have taken the Lord's name in vain; that did not make him (or her) a Christian. "My sheep hear my voice, they follow me". Those and only those are Christians.

As for government policy - "establishing a healthy economic environment" involves legislation that mandates certain business practices: e.g., profit-sharing; employee participation in corporate governance; minimum compensation tied to the Consumer Price Index.

I worked for many years for a major corporation. It was decided that "employee involvement" would be an advantageous management style. The idea was to involve all employees in decision making but a great number wanted no part of any decision making. One of our very best millwrights, in both ability and attitude, informed me he did not want any part in decision making. He said "just tell me what you want done". The company even went so far as to have no management personel in some groups - the decisions would be made by the group. This proved to be a failure. As one wise person, a consultant from Sweden (surprise), told me before the new management style was put in place, if you put a group of dogs in a room in two minutes thay will have a leader. With a group of people ot takes a looooong time and many bad things will happen along the way. Mandated employee participation can bring all sorts of trouble. It needs to be voluntary.

[Paidion]

Would I be correct to say that captialism and free enterprise as you are defining them differ only or mainly because the State does or does not take upon itself the role of enforcing "equality of opportunity"?

I suppose you could put it that way. If there are no restrictions on monopolies, then big business will naturally take control and small business won't stand a chance, and thus capitalism will result. Not being an economist, I am unable to propose fair strategies for imposing these restrictions; yet such are necessary in order to bring about equality of opportunity and thus maintain free enterprise.

Are you affirming or denying that the State under a capitialist system, as you have defined it, does nothing more than enforce property rights?

No. The main flaw in a capitalist state is failure to control monopoly.

If property rights are honored, would it not be the case that the poor and rich are both able to accumulate wealth?

It monopoly is not controlled, it would be very difficult, if not impossible, for the poor to become wealthy.

...one in which money comes into existence as a credit, rather than as a debt.

Do you think of the concept of "private coinage" is the solution to this problem?

No, I don't. I think private coinage could mitigate the problem, but it wouldn't solve it.
What we need is government control of the money system. Presently, for example, when you go to a chartered bank to borrow ten grand, the bank doesn't "have" ten grand to loan you. It can't loan the depositor's money. It creates the ten grand on the spot, depositing it into your account. That money is then available to purchase goods and services. When you repay the loan, the money goes out of existence. If there were not massive borrowing of money in our society, there would be insufficient money to buy the goods and services we need, and so a depression would be created. So our money system is based on debt. And that debt keeps the country going fiscally, but it can also result in economic collapse. For as debt increases and money increases, interest must be paid, and that finds its way into the coffers of the money lenders and investors of the world. This is another way in which the super rich get richer and the poor and middle class (who must borrow money) get poorer.

If the Government through the Bank of Canada or the Bank of America were to control the system and create money (I don't necessarily mean physical money) to equalize the country's real wealth, the sum of the goods and services available which the money represents, inflation and depression would not occur. The only socialism involved in this would be social credit. All else would be equal opportunity and free enterprise.

This system was tried in only one place in the world, the island of Guernsey, a possession of Britain. The island was very poor economically, and when the social credit system was set in place, Guernsey became rich. There were no income taxes, and many British people wanted to move there to live.

You can read more about social credit on this site:

http://globalresearch.ca/index.php?context=va&aid=6870

And you can read the political history of the movement at this site:

http://social-credit.blogspot.ca/2008/0 ... redit.html

If you are a scholar, and wish to read about Social Credit in depth, you can download free, a pdf file of C.H.Douglas's famous book Social Credit.
This is the "bible" of social credit economic theory:

http://douglassocialcredit.com/resource ... ouglas.pdf

[Paidion]

If you haven't time to pursue social credit theory in depth, and you want a quick, light, explanation, click on the following site to look at a pictorial "tract" which illustrates on a small scale, the problem with money being created as a debt with interest charged, versus money being created as a credit:

http://www.michaeljournal.org/myth.htm

[Candlepower]

Paidion,

I always look forward to your posts. This forum is a richer place because of you.

I agree with much (perhaps all) of what you are saying on this thread. I still need to look into that social credit theory deal you spoke of.

About monopolies, I have three comments:

1). Strictly speaking about the word monopoly, it (like mono-theism) contains the idea of "one." I cannot, off hand, think of a true monopoly, such as one single bank with no competition in the nation. Or, one single car manufacturer, with no competition. Perhaps you know of such an entity that would qualify as a pure monopoly. I do know that there is often collusion between big corporations that results in what is essentially the same as a monopoly. I suppose they would qualify, in essence, as monopolies, of a sort. But can you think of a true, pure monopoly, strictly speaking?

2). Can you think of a monopoly (or something essentially the same) that does not enjoy (or has not enjoyed) some sort of special favors from the government in order to gain or maintain dominance in the market? It has been my observation that "monopolies" are, to some degree, creatures of the state, and would not as easily exist without special favors from the state. If that is so, then perhaps the first step in breaking up monopolies is to get the government out of the business of providing special protections to any particular business. Who is to blame for monopolies, businessmen or the statesmen? I say both. Greed is a powerful motivator. We can easily blame the greedy businessman. But if there weren't the corresponding greedy legislators to vote subsidies and protections for their special friends in business, then those friends would not be so powerful and rich. I think we often overlook the State's role in the creation and maintenance of monopolies.

3) Is monopoly inherently evil? Can a monopoly never be allowed even if it enjoys no special governmental favors and complies with all the laws? Is there Scripture that confirms that the kind of monopoly I have just described violates God's law?