Posts tagged Economics

Re: How Not to Help Somalia

Well, I’m sure it depends on what you mean by “promote business investment.” If you spell out what you mean by that, then we may perhaps agree, but as it stands, that kind of terminology is often used to represent something which has proven wholly toxic throughout the formerly colonized world.

In the political context of international development politics, especially as it is typically applied to sub-Saharan Africa, there are lots and lots of active schemes to “promote business investment.” The problem is that these schemes are typically driven by large inter-state governmental agencies like the IMF and World Bank; in substance, they typically involved large tax-funded government-to-government loans, packaged with stipulations that the local government bring certain key legislation (notably, Intellectual Property monopolies) into line with the requirements of large business interests, that they implement bureaucratic professionalization of local government (in the name of “good government” and rooting out “corruption”), and that they channel the money into big government forced-modernization boondoggles (e.g. large-scale government infrastructure projects), incentives for large projects by a handful of large multinational corporations, and large-scale privateering commissions for government-backed monopolies on natural resource extraction, utilities, etc.

All of which is to say that these kind of schemes “promote business investment” by means of large-scale government privilege and government-to-government transfers — when what is really needed is not that kind of political scheming, but rather for international politicos to back off and leave Somalia the hell alone, so as to allow a genuine, spontaneous forms of development to emerge. These may well involve various sorts of domestic and foreign “business investment,” but if so, they ought to be attracted to the investments by the prospects for peaceful cooperation, not by the prospects for rent-seeking and the efforts of political bodies to “promote” them.

Re: Considering Redistribution of Property

“I have no idea whether this is enough to appease the communists, the mutualists, the uber-left libertarians. I hope it would be, primarily because I’m simply not sold on the idea that individuals shouldn’t have the right to own and acquire productive assets, at least not on any moral grounds.”

Well, sure, but which anarchists are trying to sell that idea? Maybe some of the commies (although, remember, most anarcho-communists do believe in, or at least nod at a principle which declares, the right of individuals to withdraw from communist arrangements if they desire; the idea is usually that they imagine communist arrangements would be so obviously superior that nobody but a few lone weirdos would want to, and that even if those lone weirdos somehow amassed enough resources to build a factory under private proprietorship, that nobody would want to toil in it). But in any case, I certainly don’t know of any mutualists or “uber-left libertarians” who think that individual people shouldn’t have the right to own and acquire productive assets. If you do, I’d like to hear some names and quotations.

Of course, there is a separate question, as to what forms of organization and what levels of centralization of control over machinery and technology, would be most likely to flourish within a market freed from government privileges and increasingly distant from the shadow of past government subsidies. That question is interesting and important, but separate from the moral question of what individual people ought to have the right to do or not to do. For what it’s worth, though, I think it would be absolutely wrong to claim that, on the predictive (as opposed to the normative) question, mutualists ad “uber-left libertarians” somehow imagine that there wouldn’t be any individual ownership of capital in a freed market. Actually, the position is generally that individual ownership of capital would become much more widespread than it currently is, because forms of collective ownership that currently dominate the market (e.g. large centralized corporations) would be undermined by the collapse of state privilege. To take an example, as I understand it, Carson’s view (for example) is that vastly more productive assets would be owned individually in a free society than are today, because he envisions that, absent government intervention in favor of large centralized operations, a much larger portion of production would be carried out within households and small family shops.

Re: Election office: Culinary petitions for city hall ballot effort can proceed

Whatever the virtues or the vices of unions, and whether or not the motives of the Culinary make sense to outside observers, and whether or not Obama would approve, there remains one basic issue that the redevelopment machine and its apologists always dodge: whether or not taking millions out of workers’ pockets, in order to build nicer offices for Oscar Goodman and his cronies, is actually a productive use of our money.

You won’t hear anything about this, because it’s much easier to impugn the motives of your critics, or appeal to a popular politician, than to defend such a ridiculous and self-serving claim.

We are told that this will provide “construction jobs.” Of course it would; so would building a 40-foot golden statue of Oscar Goodman in downtown; so would digging a giant hole out in the desert and then filling it back up. But every dollar Oscar Goodman forces you or I to spend on his new office is a dollar that won’t be spent on providing for our own lives, or patronizing businesses that provide us with genuinely useful goods or services. Meaning a few more jobs in construction come at the expense of fewer jobs and a worse living for everyone else.

City government has no power to wish wealth into existence; they can only take wealth from taxpayers and apply it to some particular project. If they didn’t take it, it wouldn’t disappear; it would be applied to different projects. The question to ask is whether this project actually improves my life or yours in any way. If this project has any benefits worth mentioning for anyone other than city politicians, they ought to be able to persuade me those benefits are worth paying for. Not force me to pay for it by means of taxation and lawsuits.

On Anarchy and Big Business

You write: The other problem I have with the Libertarian Free Market is this. I loathe Wal-Mart, Target, Best Buys, MacDonald’s and even Piggly Wiggly. The problem there is corporations result when the market is totally free. With corporations we enjoy… offshore outsourcing of manufacturing. . . . I guess I have trouble with the totally free market, not that I have a better solution. But I’m none too thrilled by the strip malls all looking the same and owned by nameless faceless corporations.

What makes you think that the success of big-box retailers like Wal-Mart, Target or Best Buy is the result of the free market? Certainly they’re prosperous in the market that we have, but as you know, the market that we have is not free.

In particular, big-box retailers like Wal-Mart, Target, and Best Buy benefit massively from — in fact, they probably depend on — government hand-outs for big, centralized corporations in the name of “development” and “economic growth.” For example, in order to build those giant big box stores, they need large, contiguous blocks of land near an interstate highway exit. They often get those large blocks of well-positioned land at artificially low prices because the city government uses eminent domain to seize it, either in the process of building the highway or else as an independent project for “development” purposes. In a freed market, they wouldn’t have that.

Big chains like Wal-Mart, Target, and Best Buy also need big systems of warehouses, cross-country trucking, etc., and for all of that, they need big interstate highways. Which happen to be built, maintained, and subsidized by the government. In a freed market, there would be no government-subsidized highway system, and they’d actually have to pay the full cost of their shipping and distribution networks.

They also typically depend on being able to get very low-cost goods exported from textile mills, plastic factories, etc. overseas, in places like Communist China, Indonesia, Malaysia, and so on. Those goods are often cheap because labor is extremely cheap. But labor is extremely cheap because labor markets in those countries are unfree, because those governments happen to be comfortable with extreme brutality in order to keep small-time farmers and industrial workers poor, subservient, and desperate for any way to get cash. In a freed market, workers overseas would be much better off, much less desperate for cash, much more free to leave abusive or exploitative bosses to find new livelihoods, and generally able to command much higher prices for their labor. As a result, Wal-Mart’s comparative advantage in importing from developing countries would make for much less of a comparative advantage in competing with smaller, local shops — because goods from developing countries would no larger be made artificially cheap by the intervention of violently anti-worker governments.

As Roderick Long has argued (http://www.cato-unbound.org/2008/11/10/roderick-long/corporations-versus-the-market-or-whip-conflation-now/): “In a free market, firms would be smaller and less hierarchical, more local and more numerous (and many would probably be employee-owned); prices would be lower and wages higher; and corporate power would be in shambles. Small wonder that big business, despite often paying lip service to free market ideals, tends to systematically oppose them in practice.”

You write: As an old punk I should be all gung-ho for anarchy but anarchy is what “governs” Iraq.

Oh, come on, really? Iraq is in a state of civil war, not a state of anarchy. Civil war is what you have when a strip of land has too many governments (or would-be governments) fighting with each other over which one gets to do the governing. Anarchy is what you have when the have no governments at all. Iraq, which is currently being contested by the armed forces of the most powerful government in the world, a nominally independent puppet government propped up by those occupying armed forces, fractious provincial governments (especially in Kurdistan), occasional incursions from Turkey and Iran, roving sectarian death squads closely associated with various armed factions like SCIRI, the Sadrist movement, various tribally-based Sunni warlord-gangsters, Al-Qaeda, etc., all instituting police-state measures wherever they have strong enough control to do so, and all of them fighting with each other over who will be able to come out on top as rulers of Iraq, or–failing that–how they will be able to carve up Iraq into fiefs under their military control. That’s not anarchy; it’s just a bunch of warring states trying to get their hands on parts of the same country. No surprise: the situation there was created by a war between feuding governments and a military occupation.

Anarchy means no governments and no rulers — a consensual society based on free association, without wars, taxes, occupations, government prohibitions, government police, government curfews, or any of the rest. Maybe that’s achievable in this world, and maybe it’s not, but possible or impossible, it’s important to keep in mind what it is we’re talking about. Anarchy means lawlessness, not disorder; and it certainly doesn’t mean having so many would-be law-makers in one place that they end up fighting over who gets to make the laws!

Re: Should Vegas let 18 year-olds gamble?

You write: “That may surprise you, but it is hard for me to be totally comfortable with dropping the age to 18. You see too much of the dark side of gambling when you live here to want teenagers exercising those judgments, new credit cards in pocket. I would not have made good choices at that age.”

It doesn’t surprise me at all. That sort of discomfort is perfectly natural. It’s also unfortunately common for people to try to use their own personal discomfort with someone else’s decisions as a justification for coercing other people into acting in ways that make you feel less personally uncomfortable.

It’s good that you have the self-insight to know that you personally would not have made good choices when you were 18; and you certainly have a right to be concerned for other people’s financial well-being. You should of course feel free to express these concerns to any 18-20 year old who asks for your advice. But 18-20 year olds are, after all, young adults, who are legally and morally responsible for their own financial decisions. What do you think would give you the right to make a decision on the matter for all 18-20 year olds everywhere, and then impose that decision on them with or without their consent, rather than allowing them to make their own decisions — and their own mistakes?

Re: Four Quick Answers

Roads and other infrastructure should be provided by voluntary means, with some combo of user fees/advertising, etc. paying for them–and they would be in a free market, just as innovation would still get done without the monopoly formerly known as intellectual property paying off politically-connected rent seekers. Roads would also be better maintained in a free market, so the transportation costs incurred by Wal-Mart would fall in a free market.

Re: Worth reading

You write:

The Constitution gives the federal government ultimate authority over immigration, for good reason, in my view.

Well, but this just relocates the question. If the Constitution delegates authority in such-and-such a way, what gives authority to the United States Constitution to decide the question? (I can write “Open borders and amnesty for all” on a napkin, and then write “THIS IS A CONSTITUTION FOR THE UNITED STATES” on the top of it; but obviously just writing it down isn’t sufficient to actually delegate the authority.)

If the answer is the authorization of a handful of long-dead men, who were a tiny minority of the population even at the time, then I certainly don’t see where they get the right to impose positive obligations on hundreds of millions of people today as to who should properly make decisions about whether or not to forcibly exclude immigrants from homes or workplaces.

If the answer is unanimous consent by the people currently held subject to the Constitution’s provisions, well, clearly, it doesn’t have that, any more than the particular immigration policies have unanimous consent.

If the answer is the authorization of some subset of the people currently held subject to the Constitution’s provisions (say, the majority of eligible voters or somesuch), then, again, the question is what right one group has to dictate terms to the other group, who does not authorize or consent to the terms.

Both here and in my next point, a question for you is whether a federal compact like the Constitution represents a contract, obligation, and statement of purpose that carries significant weight for you, and if so (as I provisionally assume it does), how much.

A contract between whom? If it’s a contract among individual citizens of the United States, or between each individual citizen and the government, then it is certainly nothing of the sort: I never signed it, was never asked to sign it, and have never been expected to sign it before its terms would be inflicted upon me. I expect the same is true for you. Personally, if I had been asked to sign it, I certainly would have refused, if that meant I would not be held to its terms.

If the compact is understood as a contract among something other than individual citizens — say, among the governments of the several states — then it might very well count as a contract, but then it’s entirely unclear how it gains any authority to settle political questions for either individual citizen, or would-be immigrants, unless some other compact, contract, or other relationship independently establishes an obligation by those individual people to the governments of the several states. I for one never authorized any of the several states to act as my agent, or to contract obligations on my behalf, so if they have a binding contract amongst themselves or with the federal government, then I still don’t see, as yet, how that has anything to say about who I may or may not welcome onto my own property.

Taking care not to imply that immigrants are a “bad”, there’s still the possibility that one locality’s decision will affect its neighbors willy-nilly in ways they perhaps should not have to accept.

I’m not clear on what you have in mind here. Could you be more specific what kind of effects you have in mind that people should not have to accept?

I mean, after all, suppose that all the people in my neighborhood (E. Rochelle Ave.) want to have a very welcoming policy towards would-be immigrants, while all the people the next neighborhood over (University Ave.) wants to keep them all out. If we voluntarily choose to invite immigrant guests into our homes and apartments, to rent or sell land to them, to invite them to work in our shops, etc., while the people on University choose to turn them away, refuse to rent or sell to them, refuse them employent, etc., and if the different policies in each neighborhood are consistently respected, then how exactly does our welcoming policy on Rochelle “affect … willy-nilly” the exclusionists over on University? The immigrants won’t be in their homes or workplaces or renting neighboring property. The only effect is that if people from University want to come over to Rochelle, then they will encounter the immigrants that we have invited to live and work with us. But while I sympathize a great deal with people having to deal with unwanted effects on their own property or in their own communities, I have very little idea why I should care about whether or not people in one neighborhood get their way about how other people should use their own property or what communities other than their own community ought to look like. If the question is properly devolved, then I can’t imagine how it is any of a University resident’s business how we live over here on Rochelle; let alone any business of somebody in New York or Washington, D.C. who I choose to live or work with here in Las Vegas.

Call me crazy, but “states rights” and “local polity trumps all” seem to me to often be a smokescreen for “let us mistreat people the way we want to, come hell or high water.”

I’m not defending a “states’ rights” position.

While I think that, when there are disagreements between states over immigration policy, different states should be able to enact different policies, I also think that, when there are disagreements within a state over immigration policy, different communities should be able to enact different policies, and different neighborhoods within a community should be able to enact different policies, and, ultimately, different individual people should each be able to enact different policies about the use of their own homes and workplaces. I agree that many people who have defended “states’ rights” position use it as a smokescreen for shitty treatment of other, less powerful people within their state. But that’s precisely because they stop devolving the question once they get to the level of the state. Thus, for example, defending the right of states to peacefully secede from the jurisdiction of the federal government, but then turning around and insisting on the supposed right of state governments to brutally crush any efforts by enslaved Southern blacks to peacefully secede from the jurisdiction of state governments or their local taskmasters. The problem there was too little devolution and secession, not too much.

My whole point, on the other hand, is not to fetishize the claims of any particular level of centralized political authority (such as state or even municipal governments), but rather that the question should be devolved downward until you reach genuine consensus on the localized question — if necessary down to the neighborhood; if necessary down to the individual property-owner.

Thus, on the Civil War and the abolition of slavery, I think that the right approach for Northern whites to take would have been, first, the Garrisonian strategy of cutting all political ties with the slaveholding states — thus allowing for the repeal of all Fugitive Slave Laws in the North, removing Northern bayonets from the Southern slavers’ arsenal, and moving the line of freedom from Canada south to Ohio. And then, second, the Harriet Tubman and John Brown strategies of aiding slaves in their efforts to escape slavery, instigating and providing aid to slave uprisings, and aiding efforts to create autonomous Maroon communities within the South. That is to say, strategies that focused on solidarity with black people struggling for their own freedom, rather than strategies which focused on white political prerogatives, or on “saving” black people from slavery through the outside intervention of a white-led, white-manned, white-controlled military engaged in a conventional war of invasion and conquest. Solidarity-based strategies like those proposed by the radical abolitionists could, I think, have ended slavery with substantially less bloodshed (and especially less collateral damage against non-slaveholding Southern whites), and with substantially more empowering results for Southern blacks who had been empowered to fight for and win their own freedom, rather than having to depend on the goodwill, ongoing concern, and military campaigns of Northern whites for it. Indeed, I think that those strategies probably could have averted the dreadful century of immiseration, dispossession, lynch law, and American apartheid that ended up following the formal emancipation, precisely because the Northern white political and military apparatus ended up dropping that goodwill and that concern, and selling out Southern blacks, in the name of “reconciliation” with Southern whites.

To return to open immigration and “undercutting legal labor markets,” I think there’s a basic problem in the way you’re framing the issue. It’s true that, under certain circumstances, when large numbers of poor immigrants move to a particular community, the average wage for existing native-born workers will tend to go down as a result of competition. But the average wage for the immigrant workers goes up from what they could have expected had they not moved; after all, that’s generally why poor immigrants move long distances to begin with. But the status of the native-born workers as “legal” residents can’t be used as part of the justification for making a legal distinction between native-born and immigrant workers, without simply making the argument circular and thus begging the question. And if we are discussing some other difference between the two — like a difference in nationality, or language, or ethnicity, I don’t see how any of those could make the standard of living among the relatively more privileged native-born workers somehow more important than the standard of living among the relatively less privileged immigrant workers. Certainly U.S. workers deserve a decent standard of living, but so do Mexican workers, and it’s not at all clear to me why the former should be able to force the latter out of the country in order to support their own standards of living at the expense of Mexican workers’ standards of living. I think there is no way to treat this sort of market dynamic as a reason for excluding Mexican workers (say) except by tacitly or explicitly accepting the nativist premise that the lives an livelihoods of U.S. workers somehow matter more than the lives and livelihoods of Mexican workers, just because the one group are from the U.S. and the other group are from Mexico. Which claim I find morally and politically indefensible.

(For myself, I’d say that the best solution is to empower all workers, regardless of race, nationality, language, ethnicity, or any of the other lines which are used to divide us. But that’s best accomplished by means of fighting unions that organize the entire working class, and by transnational labor solidarity, not by means of political gamesmanship and immigration policies which protect the wages of one group of workers only by means of screwing other, even more vulnerable and exploited groups of workers out of homes and jobs that they’d otherwise be able to get.)

Does that help clarify?

Re: Socioeconomic Creationism

Micha:

Lots of intelligent redistributionist socialists argue along the same lines; it’s not that they don’t understand how markets and spontaneous orders work; they simply don’t care ….

Right, which is why they don’t provide a good example of someone who falls back on government causes of poverty by explanatory default, either. Their position is wrong, but not because they (like biological creationists) fail to understand the concept of spontaneous self-organizing systems.

Serious Marxist theory, for example, actually involves quite sophisticated use of the concept of spontaneous order in explaining the emergence, sustenance, internal conflicts, and ultimate collapse of the capitalist class structure. (The idea is certainly not that all the evil capitalists got together in a big meeting and made a big plan for taking over the world and exploiting the workers. Any serious Marxist theorist would very quickly trash a theory like that as a form of “utopian socialism” and a case study in “bourgeois individualism.”) Of course, most of serious Marxist theory (as well as Cohen’s egalitarianism) is wrong, but it’s wrong for reasons other than being somehow “creationist.”

There are lots of people who do fail to get the concept, but they’re mostly concentrated among the most vulgar of vulgar Marxists, and the usual lot of nativist pseudo-populists, economic conservatives, and Social Democrats who take up most of the space in mainstream American political debate. None of whom, as far as I can recall, have ever leaned much on the government as a supposed cause of poverty or socioeconomic inequality. (Conservatives who make the typical conservative arguments against AFDC/TANF and other forms of government welfare may be an exception; but they don’t claim that urban poverty is being caused by deliberate government efforts to create it. And they rarely say that poverty as such is caused by government action. They take urban poverty as we know it more or less for granted and then claim that government welfare programs make it worse.)

Re: Socioeconomic Creationism

For example, if some have much more wealth than others, the socioeconomic creationist believes that this is the product of government policies specifically designed to transfer wealth from the many to the few, rather than the natural result of market transactions between people of disparate abilities and preferences.

Well. Isn’t it empirically true that there are specific government policies which, either through design or through unintended consequences, tend to profit the rich, hinder and impoverish the poor, or do both at the same time? If you doubt it, I can name some examples.

Can you think of any actual examples of people who fall back on the claim that poverty is substantially caused by government policies, rather than by voluntary market forces, who do so because they’re simply unable to understand how spontaneous orders work? Every proponent of such a claim that I can think of (Kevin Carson, Roderick Long, Brad Spangler, Benjamin Tucker, Lysander Spooner, Gabriel Kolko…) is relatively clear on the notion of spontaneous order; they get to the conclusion that government policies cause poverty not by explanatory default, but rather because they can point to a bunch of concrete examples of government policies that really do this.

In my experience, most of the real “socioeconomic creationists” with regard to wealth, tend to attribute poverty to tightly coordinated conspiracies (“international bankers” and the like), or else to the personal greed and vices of individual business people, not to structural factors like government policy.

If the average man makes more than the average woman, the socioeconomic creationist concludes that this must be due to the misogynistic oppression of women, rather than the natural outcome of men and women having different preferences, opportunity costs, and/or abilities.

You seem to be presupposing that “misogynistic oppression of women” and “spontaneous order” are two mutually exclusive explanations of the situation. But why make that claim? There’s nothing in the concept of a spontaneous order that requires that all spontaneous orders be benign. It may be that if certain kinds of ignorance, folly, or vice are widely distributed throughout the population, then lots of little individual acts of stupidity or evil will, without the design of the participants, add up to a large-scale, malign spontaneous order that goes beyond the intentions of the participants.

“Preferences, opportunity costs, and/or abilities” aren’t the only factors that can contribute to the individual decisions from which a spontaneous order emerges. And not all “preferences, opportunity costs, and/or abilities” are independent of prevalent prejudices and traditions, either.

Re: Prepare Two Envelopes

jackson:

The standard Keynesian line is that stimulus is bad when an economy is at full employment, because any stimulus at that point must lead to inflation or asset bubbles, rather than additional output. But stimulus during a crash is sort of the textbook answer for what the government should try to do.

The “standard Keynsian line” is generally taken to have been either decisively refuted, or else shown to be in need of substantial revision, by the plain fact that a recession and massive monetary inflation coexisted for several years during the 1970s. There are cases where government monetary manipulation can create short-term bubbles in certain assets or industries, but it always comes at the expense (realized either sooner or later) of everyone else outside of those beneficiaries, and there’s no real guarantee that you won’t just end up pushing on a string, anyway.

I realize you’re not a Keynesian, but I’m not clear on what you think the appropriate (short-term) course forward is.

Repeal the government money monopoly, instead of trying to find yet another government scheme to make the world safe for finance capital. That may seem drastic to you, but the fact is that it’s quite easy to do on the margins (just stop prosecuting people who, on their own, decide to establish alternative forms of currency and who set up alternative forms of banking), and in any case anything else is just going to produce more of the same old shit.