What free interaction is!

Discussion in 'Business & Economics' started by Norsefire, Apr 8, 2009.

  1. Norsefire Salam Shalom Salom Registered Senior Member

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    It is really amazing how many people don't understand what the free market is. They understand the financial aspect, but not the actual concept of free association and exchange.

    Let's establish some basic truths:

    a) people have needs and wants
    b) people must produce what they consume (i.e, humanity must produce what it needs, it doesn't just fall out of the sky); we have to labor in some way
    c) through the specialization of skills and labor, we are able to voluntarily exchange and mutually benefit

    The free market, simply put, is free interaction. Now, here's the important part, especially for all you statist liberals.


    The concern of liberals is often understandable; they are worried about the poor, worried about the environment, worried about this or that. That is perfectly fine. However, in that they are so keen on government control, they make an assumption:

    They assume that free people freely interacting can't care for the poor, or care for the environment, or solve social issues.

    The idea is that, if we have a free market, people won't care about these issues; this is absolutely absurd.

    Do people only care about the poor and the environment because they are violently forced to? No! People care because they choose to care. Did people care about racism because they were forced by the government? No! They chose to care.


    Charities and environmental/social organizations are emergent; i.e, they exist because people want them to. This proves that people care. I won't say all people, but people in general do care and don't need to be forced.


    The worry is that free people freely interacting are too incompetent (yet government is?) or that they simply don't care and must be forced to care.


    I object! Free people freely interacting will still and can still care about the environment and the poor; free people can still be concerned about racism and discrimination. Free people can still assist the poor and protect the environment.

    Why do liberals think otherwise? They assume that people won't contribute or care unless forced. This is obviously untrue. Or do liberals believe that free people can't co-operate and solve problems on their own unless violently forced?

    The truth is, a free market is free interaction. And people will care. And people will voluntarily provide aid; no coercion and violence necessary. And there is no reason why people won't still be charitable and environmentally concerned and socially progressive in freedom; the government doesn't have to force me to care about the environment. The government doesn't have to force us to care for the poor and ensure quality of life.

    Free people freely caring and voluntarily contributing can and will assist the poor, protect the environment, and construct a peaceful and free society. We don't need a babysitter (not that government even solves the problems it addresses)

    Libertarians and free market advocates aren't opposed to co-operation, sharing, and caring. They are opposed to coercion. And free people can solve problems without coercion or violence. Liberals, in a way, indirectly insinuate that people are somehow incompetent without government to babysit and direct them, and unless forced to care, they won't. How absurd, I say.
     
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  3. nirakar ( i ^ i ) Registered Senior Member

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    What is really amazing is that you are completely oblivious to the negative aspects of human nature.

    Because humans are so selfish and such procrastinators we never have and never will be able be able to experience your free market. Sure we give something to charity once and a while and occasionally recycle our recyclables but that is the exception to normal behavior.

    We find so many ways steal, often without even being aware that we are stealing. The free market has no method for limiting theft as good and efficient as coercive democracy is. Private militias always become bandit armies unless a stronger military is restraining them.

    Have you ever lived in a house with six or seven unrelated young adults? the one or two responsible ones always have to pick up the slack for the others. Where do you see your fantasy people who will behave decently without being coerced?

    We can't have freedom because we are not mature enough. We can't handle the responsibility. I seriously doubt that you are part of the ultra mature one percent who might be able to make a free market work if the other 99% were dead. Part of being mature is seeing and facing reality even when reality is unpleasant. You clearly have not seen humans for what they are.

    I still have hopes that we can work towards creating more mature humans in a future generation but I have no illusions that the people on earth now are mature. Coercive democracy was a brilliant invention. Having us manage our selves is working so much better than being managed by Kings and mafia dons. Libertarian anarchy simply won't work as long as the majority of humans are selfish, immature, and self delusional.
     
    Last edited: Apr 8, 2009
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  5. Pandaemoni Valued Senior Member

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    No, no one assumes that. Of course people "can" care for the poor or the environment, the problem is that, in the real world individual rational actors can be expected (because they are rational) to "cheat" the system by underproducing charity and overproducing pollution. It's not that they "can't" care, they can and do...they just care about themselves and their own happiness more (as we all do).

    People "can" care about fair play too, yet left to their own devices, people cheat at games. People can care about the rule of law, yet left to their own devices, will break the law. People can care about about maintaining their health, yet left to their own devices, become obese, or start smoking, or overconsume red meat, alcohol, drugs, etc. Why do you think that is?

    What you fail to appreciate is that the free market does not produce the results people want in every case. Smith's "invisible hand" does not always and inexorably lead to the optimal output of charity, of environmental protection, nor even the optimal output of goods and services.

    The free market leads to optimality in the absence of "market failures," (in the sense economics uses that term) but you fail to appreciate that there are a number of roads that lead to market failure. First and foremost, you fail to grasp the importance of "free rider" problems, issues of monopoly and monopsony power and market externalities. Then there are also problems of "asymmetric information" and times when people just plain are *not* rational in the sense the rational choice theorists tend to suppose we are.

    You have a faith that free market leads to good things people want, and you ignore all evidence and theory to the contrary. Instead you assert that those who disagree with you deny that individuals want these good things. No one denies that people want these things, what we deny is that, absent some constraining or coordinating mechanism, that markets will produce them in economically efficient amounts.

    Were I given a choice between state control of the economy or a laissez-faire free market of the sort you seem to want, I would go with the laissez-faire economy. That said, I am glad that they choice is *not* limited to those two extremes, because neither leads to efficient results. A largely free market framework with regulations in place to deal with known cognitive biases, externalities, market power and collective action problems is far more likely to get closer to an optimal outcome.
     
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  7. Norsefire Salam Shalom Salom Registered Senior Member

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    I'm not oblivious at all.

    Although you destroy your own argument here; if people are inherently evil, government (a violent monopoly) won't magically be the exception. If people are inherently good, government isn't needed (not that it ever is)

    Either way, government has no place.

    So we must be violently coerced to do these things? I disagree. And furthermore, my point above.



    The government is made up of people; if people are bad, government will be bad.

    Whose we? And government is made up of people.


    "Having us manage ourselves..."

    That would be free market. We don't manage ourselves, we are managed by a violent monopolized institution comprised of greedy and ignorant people that have little or no incentive to actually do their jobs.
    So they must be violently coerced?

    And, if people are inherently irresponsible and evil, then government will not be the exception. What will happen is then, you have a monopolized violent institution with irresponsible and evil people.

    If people are inherently good, government has no place (not that it ever does)

    Statism assumes that the state is the only insitution that can solve this or that problem. Absolutely not. People can; and if people can't because they don't care, then government, made of people, will not care either.

    Where does violent coercion get justified?
    Some do. Including many politicians; and as government is a monopoly, it's even more difficult to address their corruption.

    The same people who care about the rule of law do not break the law; others do.
    Oh, I see. Government should babysit us in what we eat, now, too. Wonderful.

    Who are these "people"? The free market always produces results people want, because occurences in the free market are emergent, i.e, the desire must be there first.

    Therefore, since people are not optimal and very irresponsible, we should place them in control of the largest aggressive monopoly on the planet; and furthermore, they will magically begin to care because of coercion.

    We can't really make any such claim as there has never been a true free market. There have, however, been government after government, and they often share many characteristics in common: violence, intolerance, and the mass murder of people.

    I don't fail to grasp anything. "Free rider" problems are not problems at all. Monopolies cannot exist in a free market (true monopolies, as in, protected from competition). Externalities are addressed privately. No violent coercive force necessary.

    Ah, so you say people are irrational:

    so we should place them in control of violent monopolies! Great idea!

    If people are inherently ignorant and irresponsible, they won't magically become any better just because you have "government".

    Wrong, because I don't even know what it is "people want". I know what I want, and you know what you want.
    Because free people cannot co-operate...

    There's all the incentive in the world for private individuals to do well and no incentive whatsoever for government to do the same. Government, a monopoly, will simply draft you and tax you to pay for its wars; it does no labor on the land it "owns"; it doesn't have to face ostracization. And it can do whatever it wants.

    Free individuals in a free interaction system do have every incentive to do well.

    We're looking for freedom, not efficiency.
     
  8. spidergoat pubic diorama Valued Senior Member

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    54,036
    Some people do want to help the poor, care for the environment, etc, but if their efforts are coordinated and enforced to such a degree that they actually work, what you have is something that closely resembles government.
     
  9. pjdude1219 The biscuit has risen Valued Senior Member

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    16,479
    Norse you have no real understanding of some of the harsher realities of life and economics plus you have no real understanding of what freedom truly entails.
     
  10. Pandaemoni Valued Senior Member

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    3,634
    First, I said nothing about violence and second, nothing whatsoever about people being "irresponsible and evil." People have self interested motives (and are rational), that is the only claim I make (and I am willing to relax the rationality assumption, but that doesn't help your case much).

    People do in general have a few seemingly "altruistic" motives in the great list of what makes them personally happy and so they recognize there is some value in those things, that does not mean an individual is happy to personally pay the full amount such goods are worth, especially when the benefit must be shared with others. No one is (or rationally should) be expected to pay more for a thing than the personal benefit they derive from that thing. If society as a whole benefits more from a thing than its cost, they it generally makes sense for society to seek that thing as a goal, but it is entirely possible that the relevant taxpayers paying for it do not get as much benefit as society as a whole, so left to their own devices they would want to not pay for that benefit if choosing freely on an individual level.

    So why have the government police these things? Efficiency. I have a job and I cannot take time from my day to heap scorn on polluters and make sure they clean up their mess. I do not have time to look over the shoulders of local businesses and decide whether they are being unfair to employees or are properly inspecting their products...so I need someone else to do it for me.

    The "government," as you note, "is" the people. You suggested that we the people police bad acts taking place in society. I agree, save that I say that includes the government, acting on my behalf. Who watches the watchers? The watchers watch each other. Government is part of an elaborate system of checks and balances that includes people choosing where to shop, but by no means ends with consumers voting with their feet.

    People are neither inherently good nor inherently evil. There are more than two choices. What people are is problems with cognitive biases, subject to limited information, burdened and benefited by externalities, etc. These are not traits that suggest "evil," they simply suggest that free markets have flaws because markets are also made up of people.

    The government has the same flaws and so we the people need to watch the government too, and we have set things up in the U.S. so that different branches of the government watch each other. The reason we do this is because we need an error correction system to catch and rectify these sorts of biases and flaws before they cause significant damage.

    Then I am not a statist, as I asserted no such thing. People are, at the end of the day, what makes up all of society. Sometimes people do set up private organizations to help in the process of rooting out and correcting flaws (the FINRA, is a private organization, for example, as is the NYSE). The state is a common source of correction because it's mechanisms have existed for such a long time and are well accepted. If I have a new rule that I would like to see made the societal norm, it is usually cheaper and faster to try to have the government enact it as a law than to set up my own private organization designed to promote the new norm. The people will still have their say about whether the proposed norm "should" be the law of the land, and the legislative process gives me a platform on which to call the question in the first place.

    That said, some norms are spread through the market. If I try to buy a Big Mac in Tulsa and pay in Euros, they will turn me away. not because there is a law against their taking Euros, but because the cashier is likely to stick with "custom" which in Tulsa includes paying in U.S. dollars.

    If the legislature (aka "the people") oversteps its bounds then I expect either the executive branch (aka "the people") or the judicial branch (aka "the people") to let them know so. If the government fails to self correct, then I expect voters (aka "the people") will send that message or, barring that, that market participants (aka "the people") will write their legislators (aka "the people") and let them know why the business community hates the new law.

    At the end of the day, it's all "the people" (or some subset thereof) talking to "the people" (or some other subset thereof). Your anti-Statist objection seems to be that the people should only speak when they act as market participants and in any other capacity, they should STFU, especially if they elected to pass laws. WHO BETTER TO CHIME IN, THOUGH, THAN THE PEOPLE ELECTED TO CHIME IN?

    You are the only one mentioning violence.

    But it's not, we have checks and balances on governmental power, just as we have checks and balances on market power. Your solution is that the market should have no checks and no balances, only the free-form voice of market participants, whom you trust to do the right thing even without regulation of any sort? You know who thought that people could be trusted to regulate their lives fairly free of government oversight? Karl Marx.

    Optimism is not a economic plan. Why not take the time to learn the economics and then if you can show that the economists worry about market failure is overblown, have at it. If you win that arguments there is a Nobel Prize in your future.

    Other than a statistically insignificant percentage of us, we all break some law at some point or another. There is a large number of incidents when it's the fear of getting caught that keeps many people in line with the rules. Take away the government oversight and leave it to "the market" and you'd see more breaches of those rules.

    Great. You don't understand government either. Government need not "babysit" anyone as there is more than one way to achieve a market correction. Government need not ban cigarettes or tell you what to eat. They could (shock! Just like they have in the real world!!) simply require that vendors or manufacturers give you information about the product you are buying letting you know that it is bad for you. Cigarette companies maintained for years that cigarettes were "not" dangerous. They funded "scientific" research that "proved" cigarettes are safe, and pretended that the research was conducted by fair-minded independent labs. Why? Because they (rationally) wanted to keep selling cigarettes and were afraid of losing customers. The government regulation requires labeling them as potentially dangerous. The cigarette companies didn't even get in trouble for the lies they told. How can anyone be against the "tell the truth" regulation? Notice how it was government intervention that made them tell the truth, and not market pressure.

    Here is where you need to go back to school and learn economics. Microeconomics is built on the notion that individuals consuming a given good or service have preferences and that, aggregating the preferences of everyone in a market you can develop the "demand curve" for that market.

    Those are "the people" of whom I speak. If you think the market gives consumers exactly what they want because the market defines what they want, then you have too little a grasp of economics to hold a useful opinion. You should just admit that economics is something you don't understand and note that you kind of dislike regulation, but you do not know why.

    At the very least, read the link I gave you on "externalities" or find a simpler explanation you like more, or read about collective action problems in game theory, or read about asymmetrical information in markets. In each case you will see that the market is doing something inefficient in the economic sense (which you should also look up if my earlier link does not explain it for you).

    First, I don't care if, in their heart of hearts, they care. I only care that they act in efficient ways so as not to needlessly waste resources.

    As for the government being a monopoly, firstly, it isn't. in America we all have the right to emigrate. Secondly, if one were to liken it to a monopoly, then we, the people, are the shareholders who own that monopoly. It is up to us to curb its market power (and we do through the checks and balances of the constitution and through the power of the ballot box. I have *NO* control over what my local meat rendering plant does, but I do over the federal government. So which one do I want to have more power? I am thinking the one I know how to control and with respect to which I have the right to vote.

    That is a silly argument. There's never been a state where one man literally controlled everything all by himself either making all the decisions on behalf of everyone, but I am pretty sure that does not make it an experiment worth trying. Explain why the "freer" markets of the past have been replete with the problems economists suggest. Explain why "black markets" which are in fact free of government regulation, are also nightmares. In short, Again, read some economics and tell me why both conservative and liberal economists have it all wrong. Win your Nobel Prize. I dare you.

    Given that you have clearly never taken a single econ course, I'm flabbergasted that you believe this.

    Yeah, in the real world they are. There are studies. Better there are proposals for market-based solutions in many cases (though all of them require the government to legislatively intervene in some way. See for example the libertarian Cato Institutes proposal to create private property rights in wildlife (which would require a law to be passed): http://www.cato.org/pubs/journal/cj1n2-1.html

    Again you need to read more. Microsoft has a degree of monopoly power and it is *not* protected from competition. Ma Bell attained monopoly status without such protection. There are a variety of ways in which one can gain monopoly power that do not involve regulations that limit your competition. I haven't the time to give you a complete breakdown on how monopolies arise, but consider the "natural monopoly":

    http://en.wikipedia.org/wiki/Natural_monopoly

    These are monopolies that arise without legislation or protectionism and without anyone coercing the competition to quit the business. They arise solely because economies of scale let one company supply the whole market at a lower cost per unit than any competitor could manage if it tried to enter that market. The firm that attains the largest size the fastest "wins" monopoly status and competitors are driven out of business.

    Okay so lets give a concrete example. You own a plastics factory and spew contaminants from your production into the river. Not that you want to, but it would cost a lot to dispose of it any other way. I live in the property just downstream from you and my land is now worthless because its contaminated by your stuff, and now I have cancer.

    How so we privately solve the problem of the costs of your production that I am being forced to bear? What about all my other neighbors, extending for miles and miles downriver, who likely also have beefs with your polluting the river? Are we going to never buy anything made of plastic just in case some of that plastic was made by you? And you are seriously going to feel economically threatened by that boycott? Are you going to give us a list of products that do use your plastics (so our boycott can be more targeted and therefore more effective) if we ask for it?

    It's more complicated than that, and frankly beyond what you would be able to fully comprehend, but in a nutshell people tend to act as if they are rational expect in some cases when it is well understood that people are subject to certain cognitive biases that are irrational.

    There is an area of study called "rational choice theory" that looks at what it means to be economically rational in a strict sense. Early on, staring at around the time of Kenneth Arrow's Impossibility Theorem it was shown that it was entirely possible for an otherwise "rational" person to prefer, in a two way choice between A and B, B and C and A and C:

    Option A over Option B,
    Option B over Option C, and
    Option C over Option A.

    That is the way the real world turns out. If people are voting for Candidate A or B and choose A, and then vote between A and C and choose C, that does not in fact mean they prefer C over B even if it is the same population voting each time.

    In fact wikipedia has a whole entry that just lists cognitive biases that cause us to deviate from strict rationality:

    http://en.wikipedia.org/wiki/List_of_cognitive_biases

    And that list is no where near exhaustive.

    "irrational" as I use the term does not mean either crazy or incompetent, and I live in the U.S., where the government is not violent. I believe you grew up in Syria, so I can understand why you confuse violent crazies with government officials, but here we are the good guys.

    Magically? No. What the government can do is set up a system whereby we all look out for one another. They have inspectors who inspect meat to make sure it isn't tainted, and inspectors who double check the first inspection. That say, despite the biases of any individual errors are less likely to be made.

    Great. And I know I want regulation. And most of the people here posting do too, so...oh magical free market...please provide us some regulation!

    The real answer is that we can say something about what over people want. If you study the econ or rational choice theory you will see that this is so. Spouting off in ignorance of these theories despite touching on the very same topics just makes you look foolish. It's one thing to read the theories and reject them on reasoned grounds, but your argument is very simplistic and clearly not informed by study. It's a wonder you can be this passionate about it given that you seem to have no interest in learning anything on the subject.

    Free people can cooperate, when it provides them some benefit to do so. The problem is the case the a plastics factory above. You, as the owner may feel bad that you are poisoning the river and your neighbors, but not nearly as bad as your neighbors do. You have started a business that foists costs on them against their will and without their consent and short of their paying you money to stop poisoning them, you have less incentive to come out of pocket to save their lives and property values than they would want you to have.

    So you have less of an incentive to cooperate than is socially optimal. What "violent monopoly government" does is that it requires you to consider and to mitigate the environmental risks (including those to your neighbors) before you build the plant. (It sickens me the level of violence the government must use to cause this, much blood can easily be spilled if you get a paper cut opening the letters you get from the EPA). It also gives your neighbors the right to stop you from killing them and pricing them off their land if environmental issues later arise.

    You are again speaking from ignorance, I'm afraid. I have a number of beefs with modern economics, but it's been well demonstrated by them in the real world that markets are not the engine of perfect interaction you want them to be. Your argument flies in face of well documented reality.

    That is not to say that the government should go overboard on regulation (and often it does), but the conclusion is neither that the free market is the devil nor, given that markets are good, that all regulation is the Devil. Reasoned and reasonable regulation designed to correct demonstrable market failures makes perfect sense. I would grant you that between the free market solution and totalitarian controls, that the free market would be better. That,. however, is like being given the choice of living in Death Valley or at the North Pole. Death Valley is hot all the time and dry. The North Pole has water and is far too cold. Given the choices, I'd live in Death Valley, but I'd much rather live in New York, which hits none of those extremes.

    There you would have more of an argument. Alas, you have not suggested that you have regulation because you want more freedom, you have only suggested that the free market would somehow (unexplained) solve the efficiency problems I have raised.

    That said, if you want freedom and not efficiency, then I have a solution: move to the hinterlands where no one else lives. There you will be free as a bird with no government intrusion, though the economics of living in such places tend to suck ass. My guess is that you are in fact concerned to some degree about the economics as well, you just want both the benefits of the modern economy and freedom to do anything you want without any government oversight. Sadly, anarchy and economics don't mix that well.
     
    Last edited: Apr 9, 2009

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