Economics and free market

[Mike C]

And just where have you seen a free market?

Certainly not in Detroit, or elsewhere in the US.

Government interferes in the attempted free market. Subsidies, tax breaks (from the local level all the way up to the federal), trade restrictions, etc all work to give businesses advantages/penalties they would not face under a true free market.

 

The rising gasoline prices here in the US is an example of a free market.

 

The growth of Walmart where the entire family are billionaires is an example of a free market.

 

The advertising you see everywhere in our country is an example of a free market. You see this plastered all over the baseball parks, TV screens, telephone marketers (invasion of privacy?), street bulletin boards, Internet solicitations and etc.

 

And above all, their corruption of our government officials to serve them rather than the people they are supposed to represent.

This corruption has led to the creation of the 'new world order'. With this type of power now, they can sue any Democratic government that would prevent them from marketing their product within these jurisdictions. This is now a world wide free market.

 

So what happened with this new found power? 9/11, thats what!

So now we are involved in a war that does not have anything to do with the defense of our Democracy but instead, the defense of their 'nwo'?

The World Trade Center was the headquarters of this 'nwo'.

Since this involved many US workers that perished in this attack, we now have to defend this corporate dinosaur organization.

Of course, these Islamic matyrs did attack the US military headquarters too. So we had to respond.

 

Detroit auto companies are a great example of this. They have relied upon government protection to avoid making improvements in their product. As such, other car companies are now narrowing their dominant lead. Marketing can only take them so far;) Instead of being the world leading innovators they are now scrambling to keep up.

 

The problem here is the failure of the management to correct the problems of our autos to promote dependable products.

 

I was checking the Consumer Reports on the quality of the US cars to that of the Japanese competitors. Any problems they had with their cars were corrected within a year or two.

The US cars were not corrected for an extended period of up to six years.

This obviously is a lack of management to produce a car that the consumers could rely on.

So the market share of the US cars started to shrink. This took about close to a decade before the US management did something to improve the reliability of the US product.

 

In a true free market, this would not have happened. Likewise, many of the things you argue against would also not happen to the extent they are now.

 

My above answer to the free market economy is answered above. That is plain enough, IMHO.

 

Mike C

[Michaelangelica]

Yes it is hard to find a"Free Market" Mike C

 

It is even funnier when the USA talks about "Free Trade" agreements with countries like Canada, Australia and Mexico.

[charles brough]

I agree. The Free-Enterprise, free market or simply capitalism is not working well now. But look at the problems and you see a common thread. They all involve people really not concerned with or caring about the long term. They cannot and do not want to afford the cost of building for the future. We are letting our bridges fall from lack of maintence. Our indistries slip behind because of being absorbed with the bottom line for the quarterly earnings report.

 

Also, there is a growing lack of honor, integrity. People do not keep their word. The classes and divisions in our society are also growing to hate each other. Strife is adding more stress to our lives.

 

So, it is not the economic system as such but a change that is occuring in the public itself that is causing the problem. Our religious/secular ideology is failing us. It needs to be replaced.

[LaurieAG]

Interesting! It makes no sense to make a product without knowing if you can get people to buy it.

 

Hi Charles,

 

You said it. Here's a clipping from todays Australian newspaper written by Matt West.

 

Vultures already circling

 

Last week a US Vulture fund, Citadel Investments Group, stumped up US$800 million for Etrade's portfolio of asset backed securities(ABS) which had a book value of US$3 Billion. The deal sheds some light on the sort of pricing beginning to emerge for the likes of ABSs, CDOs, CLOs and other such junky bundles of debt that were the first product victims of the sub-prime crisis.

 

Ken Griffin, the guy who runs Citadel, has already picked up bombed out assets from Sowood Capital and Sentinel Management - Two hedge fund casualties who had been big in CDOs. Etrade was simply short of cash and willing to accept 27 cents in the dollar.

 

As there was some equity thrown in, the actual figure was more like 17 cents in the dollar. Imagine if all the big Wall Street banks had to revalue their SIVs and so forth at 17 cents to the dollar. Now that's ugly. Even now, though, four months after the meltdown, Ken Griffin is one of the only bottom pickers brave enough to have a real lash.

 

Amid the deluge of comment over this credit market disaster, scarey little facts bob up everywhere. One is the existence of credit default swap contracts outstanding which total some 45.5 Trillion. That figure has balooned 9 fold in the past 3 years alone. That is five times the national debt in an unregulated market, apparently with no prescribed reserves for future losses.

[Michaelangelica]

I agree. The Free-Enterprise, free market or simply capitalism is not working well now. But look at the problems and you see a common thread. They all involve people really not concerned with or caring about the long term. They cannot and do not want to afford the cost of building for the future. We are letting our bridges fall from lack of maintence. Our indistries slip behind because of being absorbed with the bottom line for the quarterly earnings report.

 

Also, there is a growing lack of honor, integrity. People do not keep their word. The classes and divisions in our society are also growing to hate each other. Strife is adding more stress to our lives.

 

So, it is not the economic system as such but a change that is occuring in the public itself that is causing the problem. Our religious/secular ideology is failing us. It needs to be replaced.

 

A very dismal view Chales.

I hope you are wrong; but I fear you may be right.

 

A lot of our institutions are based on the structure of the Roman Legions (EG Catholic Church, most Govt. departments). This enforces mindless conformity.

but it is great way to 'win' whatever that means.

[Mike C]

To All

 

A true 'free market' would not create any millionaires or billionaires. Why?

Because granting patent and copyrights to individuals creates a 'monopoly.

If the government grants rights to property ownerships and the patents and copyroghts that create these monopolies, than why should not the government also place restrictions on these grants that would create some equity amongst the people?

Our Constitution promotes equality in education, workplace opportunity, voting rights, freedom of speech and religious choice.

In the private sector, sporting enterprises try to maintain some degree of equality by allowing the bottom teams have 1st choice for the new talent in the amateur sectors of colleges and other such competing education systems plus controls with salary caps by the teams.

 

So, why is not this freedom not applicable to politics and the economy?

If it were, we could get rid of the political corruption and protect the workers rights to have representative organizations to give these people a much greater share of the 'pie' that they produce in the first place?

 

Mike C

[Zythryn]

In the private sector, sporting enterprises try to maintain some degree of equality by allowing the bottom teams have 1st choice for the new talent in the amateur sectors of colleges and other such competing education systems plus controls with salary caps by the teams.

 

So, why is not this freedom not applicable to politics and the economy?

If it were, we could get rid of the political corruption and protect the workers rights to have representative organizations to give these people a much greater share of the 'pie' that they produce in the first place?

 

Sporting organizations due this to make games more exciting. The idea is if the worse team gets first pick, then they will improve more than the best teams. No one wants to pay to see a game which is so lopsided it can no longer be called a contest.

 

This has no place in innovation. It slows innovation and would lead to just as much corruption as the current system. Companies would jockey for position at the bottom so they could get the advantages that would bring.

 

The idea behind capitalism is that those that do well, get rewarded for it. That is what drives innovation.

 

What the US needs to do is have a 'seperation of government and business' doctrine. Then you would see more of a true free enterprise system.

[charles brough]

As Laurie says, the R.E. debt cycle has a long way to go yet. The government is going to have to pump up the liquidity a lot and force the dollar and interest rates down. That means much higher prices here for everything next year.

 

Zythe and Mike seem to think the problem is that our economic system needs to be reformed. The problems are caused by a growing lack of thought for the future. No one cares. Why else do people eat so much they grow obese, vote for the wrong candidates and then turn on them, and see so much crime and senseless murders?

 

I have no dismal picture of things because I know that when things get bad enough, people will adopt swing to a new world-view and way of thinking that will reverse all this---just as they always have in the past. That is what started every new civilization. The old religion was abandoned and a new world view adopted.

[Pyrotex]

First of all, supply and demand are highly organic: they interact dynamically as a continuous feedback loop. ...They don't call it the dismal science for nothing.

Economics shares some attributes with the water cycle of Earth. There is "supply"--the evaporation of water into the air (driven by heat from the sun); and there is "demand"--the condensation of water vapor back into a liquid, which typically rains down upon the land, forming rivers and lakes and seas.

 

You cannot understand the complexity of this cycle unless you realize that both sides are always in process simultaneously--and each side continuously affects the other. Neither side is given a "choice" to stop, start, speed up, slow down. The rain may "choose" (metaphor!) to fall in one river rather than another, or to briefly come down as snow and be stored on a mountain top, but the cycle as a whole... is indeed, a WHOLE.

 

We're all Keynesians now. :rant:

[Zythryn]

A true 'free market' would not create any millionaires or billionaires. Why?

Because granting patent and copyrights to individuals creates a 'monopoly.

 

This also stuck me as an odd statement.

Think about it carefully for a minute, do you honestly believe that there would not be a single millionaire or billionaire created without the use of patents or copyrights?

[Pyrotex]

A true 'free market' would not create any millionaires or billionaires. Why?

Because granting patent and copyrights to individuals creates a 'monopoly.

...why should not the government also place restrictions... that would create some equity [equality??] amongst the people?...

Because then you wouldn't have a FREE Market, Mike!! :applause:

 

There have been any manner of free markets over the centuries, and there are always an unequal distribution of wealth. Forget patents. There is always an unequal distribution of natural talent, of opportunity, of education, of passion, of the ability to handle risk and danger, even of physical strength and prowess. That alone is all one needs to explain the unequal distribution of wealth.

[charles brough]

I think Mike C has mistaken an ideal for an economic system. The underlying ideal in capitalism is: provide for your own economic needs in a way that also serves society." To achieve that, there has to be regulations as the system is not instinctive. The capitalistic economic system is the result. It works better than communes for large masses of people. There is no other system. Socialism is also only an ideal. It turns out, when run by Socialists, to be a welfare state version of the capitalistic system. The history of socialism is merely a history of the Socialist Cause.

[Michaelangelica]

I think Mike C has mistaken an ideal for an economic system. The underlying ideal in capitalism is: provide for your own economic needs in a way that also serves society."

An ideal seldom put into practice?

corporations are mostly amoral if not apolitical.

To achieve that, there has to be regulations as the system is not instinctive. The capitalistic economic system is the result.

there are many varitions on the theme of 'capitalistic economic system'

It works better than communes for large masses of people. There is no other system. Socialism is also only an ideal. It turns out, when run by Socialists, to be a welfare state version of the capitalistic system. The history of socialism is merely a history of the Socialist Cause.

Many Americans believe this, but given N. European economies and some middle eastern economies it does not have to be true.

At the slightest hint of "socialism' 'USAans' seem to go running in panic.

Personally I would rather like totally free education as in Venezuela and many other countries.

 

Patents and copyrights are one factor in collecting wealth for the copyright holder (Not necessarily the creator e.g., 'Beatles' music). Bill Gates didn't get where he is just by ripping of the Mac operating system, he had to protect it with patents and attorneys.

One of the nice things about open source software is its charity, generosity and sharing spirit. These are not necessarily the qualities always found in a capitalist "free" market system

[Mike C]

Because then you wouldn't have a FREE Market, Mike!! :)

 

There have been any manner of free markets over the centuries, and there are always an unequal distribution of wealth. Forget patents. There is always an unequal distribution of natural talent, of opportunity, of education, of passion, of the ability to handle risk and danger, even of physical strength and prowess. That alone is all one needs to explain the unequal distribution of wealth.

 

I am not talking about 'absolute' equality.

What I am saying is that capitalism is 'skimming' practically all the wealth for itself and reducing the workers to just a 'commodity'.

 

As I said before, capitalism does NOT create any 'real tangible wealth'. Only workers do that.

In other words, brains do not create anything 'real'.

 

So why are governments allowing these people to help themselves to all this wealth that IMO, they do not deserve. Especially after they corrupt governments with bribes and other such methods?

 

Capitalists are today, the kings and dictators of the past that are/were

self serving.

So with this new found power (new world order), they will eventually destroy themselves because the low level wages they pay plus the elimination of workers with these computerized robots will eliminate the workers to buy the goods they actually produce.

Since the cheapest laborers and the robots will not be able to buy these

higher priced goods. Result? Bankrupcies!

 

Mike C

[charles brough]

Michael, I agree. There are many variations on capitalism---depending upon the level of honesty in a nation and society (I note it changes over time). It also varies according to such things as how much power the poor have to gain the so-called "welfare state" beneifits. It is the same with historical communism (the economic system of comunes). In some communes, it is possible to own a tree but other people have the right to pick the fruit. In others, there are classes. The Sumerian communes early on were "owned by the gods."

[Zythryn]

As I said before, capitalism does NOT create any 'real tangible wealth'. Only workers do that.

In other words, brains do not create anything 'real'.

 

So why are governments allowing these people to help themselves to all this wealth that IMO, they do not deserve.

 

Who says they don't deserve it?

All right, lets look and Bob.

Bob makes widgets and sells them out in front of his factory.

He sells 20 a day.

Bob hires a marketing genious. With advertising and shipping he now sells 2000 a day.

 

So although the shippers didn't 'make' anything and the marketer didn't 'make' anything both allowed the company to sell more and make more money. So why don't the people who didn't make anything but helped sell deserve money for their efforts?

[HydrogenBond]

Money is made by supplying goods and services. The goods are more tangilble, like widgets, but the services connected to getting the widgets to the consume, although not physically creating anything tangible, are equally valuable. As odd as it sounds, even corrupt politians supply a legislative service, helping to the increase revenue for certain interests. They are sort of middlemen who provide a service that allows more money to be made. They get their commission up front.

 

One interesting bunch of service middlemen are those who deal with speculation. For example, if they think the supply of oil will change, even if it hasn't changed, they can cause the market to react. This creates nothing tangible and can even take stuff away, subjectivity. They act as service middlemen that allow money to be made betting on the point spread. One can't allows tell cause and affect, since these middle men could be working for the people who need them to help make money.

 

Demand side economics, is not based on the needs of the money makers, but on the needs of the money spenders. The money makers have a large toolbox of tricks to get people to spend their money. The money spender has two options, buy or not buy. The spender does not have the same range of free market angles that would allow them to manipulate the money makers, except by haggling. They don't have clever middlemen that can manipulate supply so the price drops for all the money spenders.

 

The idea of buying groups offers a free market tool for the money spenders. Businesses use this all the time, either using economies of scale or buying group,s that allow them to get raw materials and services at lower price. This allows them to make more money.

 

The average money spender is not organized and is not able to enjoy the benfits of spending less for goods and services. It is sort of a dirty little secret. One can't allow the spenders to organize or the money makers would have to give money back to the money spenders. Labor unions are sort of based on demand side concept, using collective bargaining to get more than they would otherwise.

 

In terms of money spender buying groups, these get the same economies of scale as a large business. That means that the buyer has more money to spend. This will create jobs. The way this side of the free market works can be seem with an example. Say a family earns enough to buy food and clothing and other basic living expenses. If the prices dropped, due to collective buying, they have more money left over to be able to buy TV's, cell phones, etc. The same amount of money will go into the economy but it is able to fan out and touch more of the economy. What that means, it creates jobs that would not be supported if the buying fan is limited to only a few industries.