I cannot see how it changes the structure of the game significantly should we allow this chip creation to be based on transactions, though I’m open to suggestions. But remember that you and I have already disagreed on what exactly constitutes the creation of wealth. You feel it happens during every (“fair”) transaction. I don’t. 
Really? I’ll have to (provisionally) take your word for it…I’ve never heard that Iceland was a free market capitalist society.
-XT
Well, I think it happens as a consequence of the transaction, yes. And I recognize that you don’t agree.
I would modify the model so be somewhat different. Propose some transactions which are less competitive and you might have a more stable foundation to model economic transactions. I know capitalism is all about competition, but not necessarily between customer and supplier. That relationship has more of a win win character.
There used to be an old card game called “Pit”. It involved trading limited numbers of cards during an all out shout session. The game itself was definately a competition. But it might be alterable in some way to provide more of a cooperative model for economic transactions.
I’m not sure poker really is. Perhaps the version you proposed which includes a portion of the pot distributed to everyone who stayed in to the end comes closer. But then, perhaps you were intending to model the competition between suppliers rather than the economic interactions between customers and suppliers.
Now now, let’s not go too far. I don’t know the details of this particular union negotiation. But let’s not leave the impression that all collective bargaining is in and of itself evil. Notice in your first paragraph that you suggested that UPS workers were free to offer their services to other shippers. Well, I would say that they should also be free to threaten to do so to their current employer. As long as that is all that the workers did, threaten to walk out, then they simply negotiated for higher wages. A perfect example of the market at work. As with the workers, UPS executives were free to refuse the workers request and hire DHL to ship their packages.
Now, if the union used threats of legal action, or threats of illegal actions then there might be a different story. But I don’t think we should automatically assume that the negotiations were improper just because unions were involved.
I don’t know them either pervert…I was really just talking retoric (which I explicitedly said I DIDN’T want in this thread).
And you are correct about the unions collective position, and their role in a free market system…IF they didn’t cross the line by preventing other workers from coming in and replacing the striking workers. As you correctly summized, I don’t know the details about this and was simply babbling.
-XT
You do know that UL is part of rather than imposed on this unrestrained market, don’t you?
Here is its early hsitory. Please note the conspicuous lack of “New law passed” type of bullet items. Especially note the lack of New laws require industry…" sorts of bullet items.
pervert: You do know that UL is part of rather than imposed on this unrestrained market, don’t you?
Well, although it’s a non-governmental agency, it’s definitely entwined with government regulation. City authorities in Chicago, concerned about electrical safety, gave UL its start. And federal agencies establishing and maintaining product safety standards have always been some of UL’s biggest clients. So just because UL isn’t itself a part of government regulatory systems doesn’t mean that regulation hasn’t been crucial to its success.
It is precisely that which I intended to model. Poker has a win-win character in some circumstances, and every player has the same hand odds before any play to win the free money. But I think it also serves as an interesting model (though still not a very good one) between employee and employer after loans are made or players are “hired”.
For a better mapping, you’d need multiple tables with different rules, buy-in amounts, and so on, so that losing players can change tables to better suit their position. In all cases, the casino should never be a player, it should be the government.
For a good supplier/supplier model you’d need multiple tables, and at each table the top two or three chip leaders could determine table rules (i.e. voting on casino behavior or winner behavior or both). Then chip leaders would be competing for the most players. Of course, this also allows for the creation of an oligopoly of table leaders seeking to consolidate their power, and it also sets the stage for a monopoly through judicious selection of “hired” players. Outside betting could act like a stock market.
A point of the model is that it does strongly resemble a meritocracy since the most skilled players will be most likely selected in the long run so long as the rules are fair. In the short run, of course, skilled players could drop out (unless we chose a game that allowed the casino to help, etc) through no real fault of their own. I feel it is simply a good example of how free money doesn’t help everyone just by virtue of its existence. Allowing player mobility by having multiple tables doesn’t create that helping factor, either. Even in a transactional system, for instance where free money matches some percentage of betting, an advantage remains an advantage, and the best player with the deepest pockets will keep ahead… and if it can help determine the rules of interaction from its position of power, it can consolidate the advantage and change fairness without ever altering the probability of getting a single winning hand.
I agree. But I would qualify it: it was capitalism with many socialistic practices. Things went way too far down this route, IMO, in the first four post-war decades, but I would suggest that without some of them, the country would have been less likely to remain an economic powerhouse had they not been there during the years of terrible deprivation.
Again I agree, but again with qualifications. Hong Kong is very capitalistic with respect to free trade and low tarrifs, and this works brilliantly. Income tax is only 15% with a huge tax-free allowance, and corporation tax is only 17%. The Mass Transit Railway is unbelievably efficient, and was built and is run entirely privately, turning a profit every year since it was built. A perfect example of an infrastructural project being entirely built on a capitalist model.
However, Hong Kong is not a great example of unbridled capitalism, since firstly for many decades it enjoyed fiscal success because it was in the unique position of being the only conduit to the west for trade from China - indeed, its economy is suffering now, primarily because of Shanghai. Secondly, because it has one of the highest population densities in the world, which facilitates competition way better than, say, in Ireland. But thirdly, and most importantly, because it has some amazingly socialistic policies left behind by the British. For example, despite having no governmental welfare or pensions, there is a socialized healthcare system. There is a huge civil service sector. Gambling may only be performed through a government-affiliated body. There are also massive Hong Kong Government housing schemes, and the buses and even the taxis are owned by the government.
Hong Kong is a great place. Except, of course, if you’re one of the cage people - senior citizens who are so poor they can only afford to rent a cage in which to live.
My thought is as always, why not pick and choose between two systems? Why does everything have to be 100% one system or the other? It is possible to have a bit of one and a bit of the other. In preference, a hell of a lot of the free market, with a bit of socialism thrown in to protect society.
erislover said:
Others have said this, but I think it needs saying again: Too many opponents of Capitalism equate it with anarchy. It isn’t. Capitalism needs courts. It needs rule of law. It needs a police force. It needs a military to protect the infrastructure. In short, it needs civil society.
If you look around the world at the poorest countries, a few things stand out - unstable governments, civil war, communism, kleptocracy. Investment in unstable countries is risky. Companies will still invest there, but they will require a risk premium in order to do so. This inhibits investment. I’m not going to sink 1 million into a factory that may be confiscated by the government tomorrow, or overrun by soldiers in a civil war. I’m not going to try to build an infrastructure if I know tha the dictator-for-life will allow it only until I create a certain amount of wealth, after which he will start confiscating the worker’s salaries or outright taking control of the operation.
Absolutely. Who said taxes were wrong?
Again, what holds people back is the belief that their investment won’t pay off. But where they believe it will, they have no problem investing in infrastructure. Private toll roads are not uncommon in either Canada or the U.S. My old neighborhood of about 500 houses was completely developed by a private company.
But I’m not going to argue for privatized everything. I would argue that we don’t want to have individual transactions for every little thing we consume, because the frictional cost of handling the payments is either greater than or a significant proportion of the actual cost, making it very inefficient. So I have no problem with public roads, sewers, etc. Of course, I have nothing against private ones either, where they make sense.
But before we start a discussion around dismantling the infrastructure and sowing the seeds of anarchy by eliminating the state, how about we keep the discussion to more incremental changes? Like, do we need an FDA? How about an OSHA? A DOT? A Rural Electrification Administration? Tax breaks for selected businesses? Farm subsidies? Minimum wages? Closed shop laws? “Right to work” laws? Affirmative action? The Americans with Disabilities Act? Anti-smoking statutes? There are thousands of pages of businesses regulations on the books. Why must we start with extreme examples? Let’s work our way backwards and see how much we can do away with before we run into diminishing returns?
rjung said:
I already mentioned UL labs as an example of what I’m talking about. Perhaps ISO 9001 certification is a better example - a free market regulatory solution.
As for pointing out the fact that some products have defects, this is a straw man. No one here is claiming that Capitalism is perfect. There will always be defective products, and there will be people who are hurt by them. That’s why there are torts. In fact, Dell didn’t recall their laptop batteries because of government regulation - they recalled them to limit their liability exposure. A free market control on that business.
There are several problems that arise in dealing with an uncontrolled market. First off, without social programs wealth recirculation (i.e. money goes from rich guy to poor guy who gives it back by buying things) occurs at a much lower rate. That lowers demand, lower demand breeds decrease in production infrastructure, and eventually you’re back into the feudal system. A small buyer class with a lot of money buying a small amount of luxury goods.
Second, for a true free market you would have to assume little to no control over market lending rates by a central agency. This removes the ability to ameliorate the boom-collapse cycle. To put it into system dynamics terms, the uncontrolled human economy tends to have a large overshoot.
Third, I think we’d see widespread use of company shops and the like. In the absence of government intervention to protext the rights of the populace, businesses will seek to control people as much as possible because it stabilizes their profit flow. All the things we normally attribute to totalitarian governments would just kick over to the private sector. Corporations have no goal other than to achieve profit, and in that respect they are much the same as a dictatorship. They seek to concentrate wealth as much as possible with no thought given to the public except as chattel.
I agree with this assessment of your model. The problem, of course, is that wealth creation is not really the sort of random out of the sky event your model depicts.
If, for instance, wealth were created by manna falling from heaven, and said manna fell more heavily on businesses or something, then your model would be closer to reality. My point is that the winner of a “pot” (more customers if I understand your model correctly) is a winner by virtue of far more decisions than holding, betting, or folding. And while I agree that your model adds some additional variables, it still lacks the essential character that the trade be voluntary for the wealth to be created. That is, competing for a “pot” (again, most of the customers) is not simply competing against other suppliers who are also competing for the same pot. By its very nature, the pot is made up of money put into it by those same suppliers.
Perhaps if we modified it this way:
Give the “pot” some more discretion. Make the amount which is not derived from the suppliers themselves much greater than that invested. Perhaps, even make the “bets” (investments) opperate on a totally different principle than bets. For instance, the each dollar you spend on a pot could increase your chance to win the pot in one of several ways. Either by strengthening your hand (adding good cards to it for instance) , influencing the hand order (makeing a weak hand beat a strong hand, perhaps) or in some other way. But any money you “bet” would not be added to the pot. The pot then, would be distributed based on the strengths of each hand. Some formula could be concocted to base the distribution so that stronger hand could take virtually all of the pot, but only if they were very much stronger than the weakest hand.
Let me try to explain that a little more clearly. You participate in a pot by “investing”. Each investment gets you some cards. You can invest in more or less cards than your opponents. The size of each pot is not known before all bets are in. Or, as a modification, the size becomes known with increasing accuraccy as each round of betting proceeds. In any case, the investments do not become part of the pot, they are “spent”. Additionally, the relative strengths of various hands shifts somewhat. That is, a pot will have particular preferences which may not be known to the participants.
Now, when you invest, you can do so by buying cards, buying forknowledge of the size of the pot or the pot’s prefferences for various hands. Investing in cards is straight forward. Investing in knowledge would require some sort of “fog of war” effect, so that the more you invested the more accurately you could know the information, but never quite reach total accuracy until the hands are revealed and the pot is split.
To make this accurate, you’d have to devise some way to prevent an investor from simply buying several decks of 52 cards and presenting the best possible hand. Perhaps by the creation of many more types of hands, many more types of cards, or some other method like making more cards increasingly expensive.
This sort of game might model some aspects of the supplier vs supplier competition. I don’t think competitions are of much use in modelling supplier and customer. If I am not mistaken, you are still thinking about fairly small modifications to poker.
The “canard” was brought up initially by SentientMeat. So, it’s one of your side that you should be aiming this at, not at the defenders of free trade.
And frankly, your posts so far have been nothing but strawman arguments.
liagle said:
Do you have some evidence that this is true, or is this just a bogeyman? I note that the U.S. government today doesn’t do a lot of redistributing of wealth to the poor (what, 30 billion dollars in a 10 trillion economy? For the operation of the entire welfare system?), and yet, there doesn’t seem to be this vast ghetto of desperately poor people.
In fact, the people who benefit from Capitalism most are the masses, because their aggregate demand is far greater than the demand of the relatively few rich. The biggest corporations in America all cater to the middle class or the lower middle class.
Also, the vast pool of labor comes from the middle and lower classes, so businesses have to cater to their demands there as well.
Again, we have plenty of examples that Capitalism does not create the kind of race-to-the-bottom you speak of. For example, we have the fact that only a very small percentage of workers are paid minimum wage. The rest earn wages that are higher than the government mandates. And for only one reason - because that’s what businesses have to pay to attract the labor they need.
In fact, the rise of the middle class in the first place is entirely attributable to capitalism.
This is a decent argument, and I happen to think the Fed is necessary. However, let’s consider that in a true capitalist system there would be other checks and balances. For example, without a government looking after your retirement, you will have a greater incentive to save in the good times, helping to check the boom cycle. Anti-statists like myself would point to the little-discussed problems created by huge government entitlements like social security, one of the primary ones in my mind is that it has destroyed the incentive to save. I believe our economy-on-credit mentality can be traced back to the fact that deep down, people know that no matter how big a hole they dig themselves into, the government will bail them out.
Seriously, are you just guessing here? Do you have any evidence for this? It just doesn’t make sense. Slavery is inefficient. Capitalists don’t want to control people. They want to hire them. Controlling your workers leads to poor workmanship, lack of initiative, lack of incentive to innovate, etc. You wind up with the kind of worker quality the Soviet Union had.
Company towns existed out of necessity. Find a mine out in the boonies, and you have to truck the people in. Bringing the people in means you have to house them. Housing people away from the rest of the population means you have to provide services. Companies do this out of necessity, not because they want to. The company town has almost vanished now - it vanished as soon as the technology and distribution infrastructure made it unnecessary.
Big difference between companies and government - governments have the right to use force to compel people into doing what they want. Businesses don’t. That means they have to negotiate. And since the labor pool is limited, they have other companies outbidding them. Employees have a choice, which limits the power of companies.
Hell, my company gives me perks up the wazoo. A good salary, a stock plan, supplemental health care, eyeglass coverage, full dental, company picnics and barbecues, a Christmas party with presents for the kids, even a counselling service for employees having trouble with their families, or managing their money, or whatever. And the government mandates NONE of it. The company does it for one reason only - because it recognizes that a happy work force is a productive one, and because other companies do the same thing to attract the best employees.
I think a fundamental disconnect here is that the statists have this belief that companies are robber barons, and the masses are serfs who have no power unless the government looks after them. In fact, the relationship is much more collaborative than that. The middle class wields tremendous power. Workers are not poor waifs who need to be protected - they are partners in a system where people are free to change labor and goods with each other.
How do you figure this? Why do rich guys have to give to poor guys for the economy to function? Wouldn’t people buy things with, well, wages? You know, from those job things? Or are you speculating that with a free market economy and wage scales based on the market there would be less people working…or no people working??
Or would, as soon as a totally free market economy kicked off, all the wealth in the country suddenly flow to ‘the rich’…and everyone else would be some vast huddled masses yearning to have bread??? Afaik (at least in the US) there isn’t some vast re-distribution to the poor system NOW…yet we don’t have that situation. Why would this change substantially just because of a free market?
Good point. Of course, the current Fed is only a quasi-government agency today, and there is no reason to junk it just because you go to a free market economy…at least as far as I know anyway. It works and works well…it would probably be kept pretty much intact…and still not really answerable to the government.
:rolleyes: Total scare mongering BS here. WHY would you think that company’s would go to such a thing? HOW would, say, Microsoft, enforce such a thing? Require workers to live in ‘company towns’…in California??? And what would prevent said workers from going elsewhere for work? Do you envision a free market system suddenly making all ‘working people’ into some kind of serfs or something? I agree that corporations have no goal other than to achieve profits…just like TODAY! However, I don’t see how a private company could enforce this kind of program…not in the real world at least, and not without government HELPING them to do so.
You seem to think that labor is just something to be exploited…just a natural resource thats just sitting there and has no will of its own. That people are slaves or something that HAVE to take any kind of crap thats dished out. In a true free market system, labor is valued based on the market. Workers can do or be whatever they want to be…and they can basically go to some other company if they don’t like what this one is doing for them.
-XT
Damn, I should have waited and just let Sam answer that…he did a better job of it than I did.
-XT
Just so I don’t have to justify this again the next time I am arguing with liberals about the size of govenrment, I need to make a small nitpick. The 30 billion you mention is only the direct payments portion of the welfare system. Social Security is not exactly the same thing as a retirment investment plan. It is far closer to a welfare program for the elderly. Medicare and Medicaid are also much closer to welfare systems than anything else. Taken together, this is far more than 30 billion in a 10 trillion economy. Even just considering the federal portions of these programs it is more like1 or 1.5 trillion out of 10 trillion.
Having said that, I think your main point (That governmental welfare is not necessary to guarantee a healthy middle class) is entirely valid. If anything, it is MHO that these welfare programs do quite a bit to keep the middle and lower classes from rising.
Sorry, John, pervert and I have been around this tree before. And as I read the thread, Sentient compared it to a “near” zero sum game, and you corrected him that it wasn’t a zero sum game at all. And then stressed it again in another post. But anyway, if you want it to be Sentient’s point, he probably doesn’t mind.
Um? Disregarding the silly but fun poker diversion… um?
Oh, you mean where Sam interpreted “almost no government” with “anarchy”? That’s where I made the strawman? Or where our own OP said, “Really I’m asking about a complete free market system without (or with very limited) government controls,” and I respond with that in mind?
And then I get the response that that wasn’t what was in question from you and the OP.
Some other thread, then. Don’t let me get in your way.
I think the fundamental assumption that has remained unstated all through this thread is that influence scales linearly with wealth. That is, a million people with $1 can exert exactly the same influence as 1 person with $1 million. If we take this assumption as a given, then all the free market arguments fall quite nicely into place, markets become self-regulating, cheaters are caught, good behaviour is rewarded. However, if we take it as fudamentally flawed, then the big fish just get bigger and all the anti-free market predictions fall neatly into place.
As it stands right now and based on historical evidence, it seems quite clear that this is a rather weak assumption at best, corruption and lobbying pays, its more profitable to destroy other companies with dirty tricks than it is to improve your own product and monopolies aren’t broken naturally. So, the question is, how far can we push this assumption and can we cobble together a system that conforms as much as possible to this idealized model so that we can cobble together some semblance of a true free market system.
My answer is a tentative yes at the moment and the reason why is the internet. It’s still gradually coming to me how revolutionary the internet really is as a communications medium and how drastically it’s shifted the power from producers and mega-corps to consumers. I’m envisioning some sort of ebay feedback/amazon review/google pagerank technology on crack. Basically, a quick, efficient and moreover accurate way of disseminating true information about the state of the market. Any action a company makes will have to be done with the full knowledge that it and a concise, intelligent and accurate anaylsis of it will be posted read and acted upon by a great majority of the consumers. I feel THAT is where the salvation of the free market will come from.