logicallypositive:

socialistictendencies:

logicallypositive:

Is Rothbard correct or incorrect in stating that it’s fallacious to assume the continuity of supply/demand curves? If so, how do you reconcile this with his use of the aformentioned charts in his work?

No no no

You have to make a claim that people will disagree with, not give them an option

Let me rephrease that:

SUPPLY/DEMAND CURVES ARE A FORM OF CENTRALLY PLANNED SOCIALISM BECAUSE THE IMPLICIT ASSUMPTION OF CONTINUITY SUGGESTS THAT PRICES BEHAVE IN PREDICTABLE AND QUANTIFIABLE WAYS!!!!!!!

Incorrect. Even though in a free-market supply and demand would not be measurable by the populace, a firm always monitor the demand of its good and its supplies. They will act with their prices and production accordingly.

This, combined with the competition against other firms for lower prices, will have an aggregated effect on the market. Therefore, we will always observe the consequences of overall supply and demand (and might even be able to roughly determine the amounts).

Note: I do not mean we should legalize the selling of information that companies deem as private. This should be punished and treated as a form of theft. Committing that crime is not at all synonymous with buying stocks based on something you personally know.

People who invest based on non-public knowledge (whether it be Senators, corporate directors, or even simple employees of a company) are susceptible to conviction. Insider trading is seen as corrupt and damaging. Under our current circumstances, it most certainly is. But if it were made legal for people to trade securities based on inside information, would we really see such a harsh effect on the economy?

The answer is no. While some may consider insider trading fraud, it, in reality, is neutral to the economy when people have the freedom to do so. If I work in a department like Annuities at Prudential Insurance, I may know a bit more, from hearsay or from my work, than the average-Joe. If I act on that and purchase equity securities, why is it considered a crime? Why is it considered a crime for directors to purchase stock in a company based on deals they’re making for the business? Look, it may line the pockets of employees (which isn’t necessarily bad), but let’s look at the flip side.

Discouraging Speculation:

Right now, our markets are overflowing with credit. As always. This credit is often used to purchase stock. Most people invest with 401ks in companies they know very little about. We call that “speculation”, right? The more we discourage people to invest based on knowledge they have, the more we encourage speculation in the stock market. And time and time again, we have seen speculation lead to harsher downturns in the market.

Impedes Ability to Commit Fraud:

I’m sure very few people forget the fraud Enron committed. Now let’s think about this: Enron was ripping off its investors and clients left and right. Insiders would have sold much more and everyone would have noticed the shock that this selling would have had much sooner. It generally provides for a more transparent company, rather than closed off to the public.

A Concern Regarding Inside Trading:

Senators and Representatives. A number of people in Congress trade their securities based on closed-door meetings they have about regulations. I’m sure Cabinet members are much more guilty of this as well. This is no news, really. I fear that the legalization of insider trading would permit far more personal influence on decisions at committee meetings. In other words, Congressmen and women would legislate and push the markets around to allow for their portfolio to grow.

What would need to happen is the passage of an Executive Order banning Congressmen and women from owning stock of companies. Period. It would remove some corruption I think, and would put public service closer to the top priorities of politicians. It wouldn’t fix the issue of companies buying out our elected officials at all (it could still be done with donations or intermediary parties), but it would definitely help.

Ever since Romney said to an audience, “Corporations are people, my friend,” it seems to have bee a hot topic. All corporations have a right to limited liability. This means that all individuals inside the business, executives and shareholders alike, are exempt from personal liability. They also have a right to free speech, are given due process, enter into contracts, and own property. Corporations are entities, not people, but still have the right to all of this.

Now there are two basic defenses of this: 1) People makeup corporations. Because the Constitution protects all people, it must also protect voluntary organizations of people. 2) Giving shareholders exemption from liability gives incentive for people to invest and build domestic industry; keeping the people who make businesses safe from lawsuits will keep the economy on a full employment path. 

While I do believe these are legitimate arguments, they are flawed in their cause. 

Reasons why this must be changed:

The fact that corporations are the only liable entity is a corruption of the natural state of business. It provides incentive for executives and bankers to be reckless and possibly cause destruction. This recklessness is due to the idea that the corporation is the one that answers to the law, and not the affirmative-voting shareholders or decisive men on a board of directors. This cannot be the case any longer. It leads to atrocities like the BP Oil Spill. 

Also, providing investors with safety nets may not be the best of ideas. It allows simple speculation into markets, and enables people to just throw money anywhere. Making shareholders a liable entity would require people to have some form of knowledge on the industry in which they are invested. Discouraging investors, and executives, from pursuing risky business ventures would be overall beneficial for the consumers. 

What must be changed: 

I discussed this briefly in a response to a comment made by logicallypositive. Justin noted that only some companies have the right to limited liability, and an even more select group have a right to person-hood.

The first thing that must change is one component of limited liability. It must have a practical repeal. 

I say “practical” because we should have a system of dual-liabilities. Meaning executives must be liable to lawsuits. Meaning voting shareholders must be liable to lawsuits. But it also means that the company itself, instead of individuals, may be liable to a lawsuit. We are led to believe that we can only have one or the other, when in fact it is very constitutional and utilitarian to be able to have both the individuals and entities subject to liability.It would give class-action suits and individual suits the ability, more so, to hold responsible parties accountable. 

The next step, after the aforementioned and major flaw in the system is fixed, would be to reform the whole idea of Corporate Personhood. This was the part I discussed in the link above. Right now, only a select group of companies have the rights of people (own property, enter into contracts, etc.) giving them market advantages. But the solution is rather simple. It involves leveling the playing field. Remove the title and chartering of corporations, and make it so ALL organizations of people may own property as a single entity, enter into contracts, sue others, possess freedom of speech, etc.

Organizations will gain person-hood as they are composed of people, but not give the individuals involved immunity. It also does not make it mandatory for a company to turn to a corporate structure for this person-hood or even use this person-hood. Individuals would still be at liberty to own the property of a business or engage in contracts on behalf of a business. Then, instead of the components person-hood being bundled into one title, they would then be independent and interchangeable components of a business. 

This system would be most free, most efficient, and most desirable. Not our current state of “capitalism”. The current system leaves too much leeway for Corporatism, and these are very necessary changes in order to achieve a freer marketplace.

thoseboringpolitics:

In response to this post, I got a few questions claiming that my logic was faulty, because economies of scale wouldn’t exist in a free-market economy. Assuming the first was a troll, I ignored it, but I got 2 more anons with the same question. Maybe it was the same person, but I’m making a post explaining that economies of scale would still exist in a free-market. They would just exist to a smaller degree.

Businesses will obviously still finance and evaluate their assets, output, and expenses frequently in a free-market. In fact, they’ll have to scrutinize more into it since they’ll be completely on their own and without regulation. Economies of scale occur when Average Total Cost declines as more output is occurring. This effect is mandated by supply and demand. That’s simply business.

To make my point that the sizes of businesses would decrease, let me explain something:

We live in a Representative Republic, meaning it’s easier for businesses to get their say in bills and amendments. Lobbyists are paid big money to ensure handouts for their companies. A prime example are liability caps on oil companies. It removes the ability for many to pursue companies in court, allowing businesses to not be held accountable for their actions.

When businesses make decisions in a free market to increase their assets, with increasing revenue as their final goal, they take a risk. Businesses take many risks in markets and if they screw up, they can be held accountable. 

Everytime a firm expands, whether it be hiring a few new workers or building a whole new workplace, it’s taking a large risk. As firms grow and grow, a larger amount of liability is spread over a large amount of workers, consumers, and land. However, the liability is voided when the state is brought in. 

This is not to say firms can’t and won’t grow to international sizes in free markets; they will. But they won’t have nearly as much of a market-share nor will the have as little competition. Firms will be held liable for many disputes: from small claims to employee-benefits. The expenses of liability will force many businesses that would otherwise potentially hold a large market-share to drawback. 

Anti-trust laws, while they seem to be regulating firms, actually help keep monopolies around. Barriers to entry also prevent new competition. In other words, competition is kept out by government. 

Competition would be frequent as firms compete for size without becoming too large in liabilities. The only way a firm could become progressively large is if the way they treat employees is so positive and its output is so productive that claims against the firm won’t be filed. That type of innovation would be imitated and firms would prosper and compete to be better.

Monopolies are preserved by government.  AT&T was upheld by government and after deregulation, more competition entered the market and dominated. A more recent example involves statewide monopolies on electricity. Many states were recently deregulated, allowing companies to provide electricity for more people rather than go through an organization such as PECO (Philadelphia Electric and Gas Company). 

These monopolies directly correspond with large economies and diseconomies of scale; monopolies wouldn’t be around without a corporatist state. Economies of scale simply would be much smaller without the state. And that’s all because of the second most favorite word of libertarians (liberty is the first): liability.

Decided to reblog one of my older posts since I had to visit it anyway to provide the link for a friend. I think it’s a nice little post, and the post it links to at the beginning is nice as well. So for all new followers since this post, enjoy some reading material!

atomicsocialist:

kategrice:

thoseboringpolitics:

Bernanke says employment was significantly improved by the recent round of quantitative easing which injected another $600 billion dollars into the financial system, which could have added about 30,000 new jobs per month, or about 700,000 over two years.

But the Fed seems to be having it both ways in terms of growth, saying that their growth projections for 2011 and 2012 are half of a percentage point lower than what they assumed just three months ago, in April.

The Fed says that “temporary” factors like prices of energy, especially gasoline, have limited the impact of the payroll tax reductions and other items passed by Congress to accelerate growth. But Bernanke insisted that the “apparent stabilization in the prices of oil and other commodities should ease the pressure on household budgets.”

Except he’s wrong. Unemployment seems to have been at a stable level for quite a while; it hasn’t been decreasing. It’s not going anywhere. And the Fed at once held a little over $2 trillion in T-Bonds and T-Notes. That literally means $2 trillion of new money has been injected into the economy. That’s monstrous. 

I’m sorry Ben, but inflation =/= low unemployment. We’re going to be seeing a great deal of inflation soon as well. Local businesses aren’t hiring, and even larger businesses are being force to outsource or lay off workers. Prudential Insurance, for example, just outsourced a whole heap of jobs. It’s not cheap here, and it’s not safe here. The Dollar is going nowhere good.

These brilliant ass libertarian free market guys and their economics. Man they can’t be right… the economy can’t be that simple… can it? :O lol Bernanke, time to step down, thoseboringpolitics shall take your place and then abolish the fed. 

It’s actually not, inflation actually does encourage employment because since the value of a dollar is lessened, it makes it easier to rationalize the hiring of an additional worker. Now if you want to talk in terms of economic unemployment, it is very much up to debate whether it is desirable to live in an economy with chronic unemployment issues or to live in a highly inflationary economy. 

Personally as someone who sees industry as vital to the interests of the United States and de-industrialization as the ultimate tragedy for the working class, I would much prefer to see an economy with high inflation than our current situation because a weak dollar is not all bad. It means more people will purchase goods from our nation, leading to an increase in jobs in the manufacturing sector, which is imperative to our nations long term success. 

Of course, these are only normative statements. They’re based in theory sure but only so much can be drawn from abstract theory. And I think that’s where all sides need to find some improvement. They need to recognize the fact that most of what we say is only based in theory, well learned principles based on the ideal situation every time. 

Educate yourself on theory of course because there are many lessons to be made. But do not ignore history and do not ignore the bottom line (Particularly for the people who have trouble putting a roof over their heads)

When the value of the dollar is lessened, it costs more to hire workers. Businesses don’t want to do it. It’s costly then, when they could go elsewhere to hire these workers for cheaper. Money supply goes up, balance sheets grow, debt grows, prices go up, it’s a mess.

As the dollar becomes worth less and less, people can’t buy goods. It all starts from the bottom. When people can’t buy, people can’t sell. Businesses take that hit unless they start operating everywhere else. The only hope we’d have for getting our goods and meeting the demand is to buy cheaper goods from elsewhere.

Welcome huge trade deficits. Very little exporting, huge amounts of imports? That’s not very good. We’re a country of consumers then at this point. And poor ones at that. Let’s examine the current trade deficit:

The trade deficit has certainly grown a lot. Relative to inflation as well. If inflation rises and rises, it will lead to unemployment. Let’s remember the massive depression in the German economy from their inflationary times. High unemployment as well. 

Best case scenario, businesses will work people to death to create the cheapest goods around because of crappy exchange rates and we would have the potential to be large exports. But we would have relatively zero imports; we’d all be poverty-stricken while everyone else becomes consumers. But we are by far the largest consumers. Without our consumption, many other countries take huge hits. Even China would take a hit. Not enough people would be consuming to keep the country employed. So, relative to imports, high exports, high unemployment, near worthless currency. Inflation is detrimental to consumers, and every economy relies of consumers (unless consumption is compulsory).

kategrice:

progressivelyminded:

kategrice:

Friedman believes if we removed the minimum wage this would allow businesses to be able to hire more poor, thus decreasing the unemployment rate, and these employees could increase skills to rise to a higher paying job, and the businesses could sell more products because they would be cheaper from decreased labor costs. Wouldn’t this be the making of a massive corporatocracy? If they we’re able to hire laborers for cheap costs then they could employ large amounts of people and start creating more products via buying more machines and hiring more people and thus become a super power bigger than Wal Mart. Not to mention it’s ability to put smaller businesses out of competition by cheaper prices on all objects which would also increase desire to work for the company. Seems like it could become a world power relatively quickly. Or do I have this completely wrong and it’s actually going to create some Capitalist utopia?

I’m sorry but this does not sound like libertarianism is going to “increase the living standard of all”. 

I wish more an-caps and libertarians followed me so they could explain the theory a little bit better lol

In classical economics, technically speaking he’s not wrong in that abolishing the minimum wage would lower unemployment, but in real life, this means I think that most wages would drop (at least below what is set as our legal minimum wage), and so people would actually have to work longer hours than they’re already working to make what they did before. (And here, I’m talking about working class people and not whiny hedge fund managers.)

Perhaps it would create some kind of capitalist utopia, but it’s one that gives the employer the upper hand, for sure.

Thanks! 

That’s what I was thinking, that doing away with the minimum wage would be horrendous for the economy and humans quality of life that we have worked for. Hahaha yeah it would be Utopian for those making major profits xD   

My issue with this: where do businesses make profits from? Where does all the money come from? Investors and consumers. How do investors and consumers make money? From being employed. Now what employees are paid by businesses really is the beginning of the process of where demand comes from. If people only have so much money, then they will only buy so many goods. Meaning demand will drop. 

Workers being paid lower wages would mean yes, cheaper means of production and cheaper labor, but in turn, this means a change in the price of goods. The prices would fall relative to wages, and demand would spike. These low-paid workers would be able to afford the cheaper goods. Now this is great for businesses because the spike in demand is met! 

Note: Indirectly, this would affect the value of the currency positively, as the demand for the given amount of money would slowly drop to a lower point.

Workers would be paid less, but the end result benefits all consumers, including the low-paid workers. The businesses would need to thrive off of the consumers, as they sort of do now. 

As for the argument that it promotes corporatism and creates huge enterprises, I have an explanation for why this wouldn’t happen here. It also explains how firms would need to treat their employees with an alright wage. Set aside the fact that without paying workers a decent wage that consumerism would stop. The only way a company can even have output is with lots of employees. The best way to have employees is to be appealing to employees. Firms competing in a market would want more employees to create economies of scale (as explained in that post), meaning they would have to compete for workers.

And a company simply cannot get too large. As you can see by the graphs in the link, a firm will eventually reach diseconomies of scale, when employing people becomes inefficient and profits are lost. Meaning every time they want to employ more, they need to create new working spaces and make sure they have the demand for it. Though you could say now “But if all they have to do is create more working areas and employ more people, they can create a monopoly!” 

This post explains briefly how in the free-market, a business would be consumer-employee-regulated to a certain size. With this post on liabilities plus the post explaining how a firm can only employ so many people relative to its size, you can see no such monopolies or corporations would be created. It would be very competitive in all markets while also throwing down the overall unemployment rate.

Talks about the Debt Ceiling have found its way to talks of tax hikes as a remedy to possibly defaulting on the U.S. debt. Republicans have a huge problem with this, however. And rightly so. Other than the fact that it simply won’t pass (because who likes raising taxes that much?), the damages to the economy, as well as other sources of revenue for the government, would be pretty bad.

Let’s take, for instance, taxes on business. It’s common knowledge that businesses are taxed based on profit. So suppose we give tax hikes to some people based on their income. People now have less money to buy whatever goods they would otherwise buy. Businesses are having less and less profit as a result to a lack in demand. Not only does this not allow the business to reinvest in themselves by expanding, it diminishes the taxes given to government by these businesses. 

In addition to less government revenue and less breathing room for businesses, the lack of aggregate demand for goods reduces huge revenues from sales taxes. It also would force businesses to lay off workers as a result of the lack of demand. As unemployment rises, less people are paying any income tax, let alone paying sales taxes. What is a result of less government revenue? Higher deficits. The fact is that raising taxes is really only going to hurt the economy as a whole, and it won’t at all help fund the monster debt we’ve accumulated. 

letterstomycountry:

militaristlibertarian:

fuck yeah!!!

now Canadian dope junkies can get their fix while you, the taxpayer, front the bill!!!

You are surely aware that Hayek and Friedman supported this policy, right?

Here’s Hayek:

I have always said that I am in favor of a minimum income for every person in the country.” 

-from Hayek on Hayek: An Autobiographical Dialogue by F. A. Hayek, edited by Stephen Kresge and Leif Wenar (Chicago: University of Chicago Press, 1994)

And here’s the wikipedia summary of Chapter 11 of Friedman’s Capitalism and Freedom:

[Friedman] advocates a negative income tax to fix the issue, giving everyone a guaranteed minimum income, rather than current measures, which he sees as misguided and inefficient.

This being the case, do you feel that this is something Hayek and Friedman got wrong? If so, I’m interested to hear your analysis of why you think they might’ve felt these policies were compatible with their otherwise free-market approach to economics, and more importantly, why they were wrong to do so.

Yes. I never liked Friedman much. Monetarism maims the free market and corrupts the banks. But I’ve always liked Hayek. 

However, seeing that he said this, I do indeed believe he was wrong. Setting a minimum income for people requires a bureaucracy to regulate the practice of thereof. It costs money to employ the people working there and to pay for the buildings, etc. It’s an extremely small part of a deficit but it’s a deficit nonetheless. It requires taxes.

It also raises unemployment. Employers will not hire workers to do a job for $7.50 an hour if the job is really only worth $6.00 an hour. Likewise, I will not pay a worker $30,000 a year if I think the job is really only worth $20,000 a year. It’s simply too expensive for businesses to employ as many people as they could.

Since they need employees, they’ll have to hire some workers to do the job. But the amount of workers they hire will be limited. Which means output will be limited as a consequence. This creates a lack of supply to demand, meaning for expensive goods for consumers. Output will always be limited and anchored the by the expenses of creating products. Always.

If the expense of creating products goes down, then the prices of goods will fall. Making it easier for consumers to purchase goods and making it easier for workers to find jobs. Not only this, but in a free-market, the demand for money will go down, restoring value to the currency.

letterstomycountry:

thoseboringpolitics:

A reply to a post I made regarding seat-belt laws and how it helps insurance companies. They said: 

oh my god… welp, all i can say is it’s probably better for all of us that these people don’t use their seat belts….. or vote….

Right. Because there is no legitimate thought process behind other people’s views. They’re all mindless. Even I realize respect should be given to every viewpoint not aimed at harming people because there is a rationale behind it. 

And good way to think of us: we shouldn’t wear seat-belts. We should die. It’s what this person is implying. They also imply we shouldn’t be able to vote. Good thoughts on freedoms of the people, sir! Very open of you…

Also: Never said wearing seatbelts was stupid. Let me quote myself.

Obviously wearing your seatbelt is a very smart thing to do and I endorse that entirely, but having a law stating that you should benefits the insurance companies.

Having a law enforcing it really only imposes fines on people and helps the businesses. No need to say hateful things toward an ideology you either a) don’t understand or b) don’t agree with.

Allow us then to shed these highwaymen and mountebanks, and move on to a more civil critique of your theory.

First, Something doesn’t have to be illegal for insurance companies to justify “sticking it” to the consumer.  Consider the universe you propose: what prevents insurance companies from contracting privately with the consumer that liability payouts are conditional on them wearing their seatbelt?  Why would they need a law to do that?  Such an option would surely exist in a Lochneresque Minarchist regime that places property and contract rights above all else.

Secondly, even if insurance companies opted not to implement such contractual agreements, they would respond to “being forced to pay out” by simply raising premiums to reflect the increase in operating costs resulting from graver, and more frequent injuries sustained in car crashes.  You could in fact, argue, that the seatbelt law actually lowers peoples’ premiums and reduces healthcare costs by heavily incentivizing people to make the responsible decision.  It may make a person of Libertarian disposition uncomfortable that this result is arrived at coercively, but the benefits cannot be denied.  It’s a textbook Utilitarianism vs. Natural Liberty disposition.

With all that being said, there are certainly other principled bases on which to oppose seatbelt laws; one might appeal to the first principle of individual liberty combined with aspersions to the logic of laws which are passed “for your own good.”  However, the argument that these laws exist merely for the profit of insurance companies doesn’t seem to make sense when they could easily contract for the same result privately with their policy holders.

What you say regarding the contracts including the seat-belt provision is absolutely true. And I’m fine with that. But my goal is in voluntary contract as opposed to state-enforced rules and regulations. Let’s suppose though that all insurers did include a need for seat-belts in their contracts; this does indeed make them not have to pay out as it says so in the voluntary contract. But the laws still impose fines of upwards a hundred dollar on people who simply choose not to wear a seatbelt. That is a considerable amount of money for not clicking a belt around one’s own body. It’s money that could have been used to buy a good or service.

Secondly, even if insurance companies opted not to implement such contractual agreements, they would respond to “being forced to pay out” by simply raising premiums to reflect the increase in operating costs resulting from graver, and more frequent injuries sustained in car crashes. 

I do not believe seat-belts prevent accidents but rather prevent harm to the body in the event of an accident. Now if accident rates do accelerate after a repeal of seat-belt laws (hypothetically) then yes, this would naturally show up in the underwriting process. Premiums could go up, but if an insurance company raises its premium too high, it will lose clients to other insurers. Undoing the laws requiring all drivers to be insured would help the competition for lower premiums. 

Lastly, I agree. It doesn’t make sense and I don’t believe it is fully for the purpose of corporate gain. I didn’t agree with the quote entirely; the state, I think, did have a “best interest” mentality with these laws to some extent. But as a Libertarian, the use of force to have someone wear a seat-belt when it comes to their own body doesn’t make too much sense to me.