Saturday, July 28, 2007
Sunday, July 22, 2007
Wednesday, July 11, 2007
On Medical Tourism
Quote:
Do you have any evidence that you'd like to put forward to support these claims? Are you certain that Canadians and Germans and the French and Swedes and Norwegians flock to the United States for every medical procedure?
For every medical procedure? No, of course not. But many Canadians do cross the border for treatment.
It is no secret that the density of medical practitioners and facilities is much higher in US counties within fifty miles of the Canadian border than elsewhere in the US. That's because a significant portion of their revenue is derived from Canadians. This is especially true of diagnostic services (MRI, CAT scanners, PET machines, etc.) Until a few years ago there were more MRI machines in the city of Philadelphia alone than in the entire country of Canada. That may still be the case for all I know... that figure is from 2003 and I haven't seen more recent ones. When I was passing through the small town of Mineral Wells, Texas, in the summer of 2005, I saw three clinics on the main drag alone whose signage stated they did MRI scans. I think it highly unlikely those were the only three MRI machines in the entire town. It's not like I was searching the whole town or anything -- I was just passing through on my way to somewhere else and happened to notice this fact. How many more MRI machines were there in that one small town alone that I don't know about? How many are there in the capital city of Saskatchewan?
Quote:
I, personally, don't know a single person who has ever had to leave Canada for any sort of treatment whatsoever.
I personally know several. But you reject anecdotal evidence, so I won't go into a lot of detail except to say one of them flew not to the US but to Germany to have her procedure done. She says it saved her life.
Then of course there was the widely reported case that ended up in front of the Quebec Supreme Court, where some guy whose name escapes me at the moment tried to recover from the Canadian government the costs of his travel and treatment to England (I think it was) because he would have had to wait some absurd amount of time to have it done in Canada, and it was a condition where time was of the essence. One of the lady judges on the Court wrote in her opinion (paraphrasing now since I don't have the decision in front of me at the moment) "Access to a waiting list is not the same thing as access to health care".
I see a lot of arguing over "efficiency" here. In medicine, "efficiency" is not a cut and dried concept. Are we talking dollars and cents efficiency or timeliness efficiency? Because if it is the latter, the US system wins hands down.
And even if we are talking dollars and cents, don't forget that in Canada, prescription drugs are not covered. So someone waiting a year and a half for an "elective" surgery (a knee operation or hip operation, say) could burn through thousands of dollars of pain medication waiting for the surgery. In the meantime, they might also be disabled to the point they cannot work properly, or even at all, which means extra costs to other government redistribution programs such as workman's compensation or disabilty benefits or unemployment insurance or whatever.
Then of course there is the whole quality of life issue -- how do you assign a dollar value to that? It's no picnic being semi-crippled and suffering chronic pain for months (or in some cases a year or more) on end.
It is this last reason more than any other that leads so many Canadians to cross the border and get themselves treatment immediately. Sure, they could wait and eventually get it done for "free" in Canada. Did you ever stop to think WHY so many prefer to spend the money to get fixed up NOW rather than wait months and save a couple thousand bucks? Do you think it is because these people are stupid or something? Remember, the folks who get this work done outside Canada never get reimbursed for their expenses -- they still pay the same taxes as everyone else. Yet they dig into their own pockets regardless. These people get socked twice -- they are paying US prices for the medical care they actually receive AND they are paying Canadian prices for that same care which was never delivered. But to these folks, it's worth it.
That fact (and yes, Gnote, it is a FACT) speaks volumes about the relative merits of the two systems.
Phred
Do you have any evidence that you'd like to put forward to support these claims? Are you certain that Canadians and Germans and the French and Swedes and Norwegians flock to the United States for every medical procedure?
For every medical procedure? No, of course not. But many Canadians do cross the border for treatment.
It is no secret that the density of medical practitioners and facilities is much higher in US counties within fifty miles of the Canadian border than elsewhere in the US. That's because a significant portion of their revenue is derived from Canadians. This is especially true of diagnostic services (MRI, CAT scanners, PET machines, etc.) Until a few years ago there were more MRI machines in the city of Philadelphia alone than in the entire country of Canada. That may still be the case for all I know... that figure is from 2003 and I haven't seen more recent ones. When I was passing through the small town of Mineral Wells, Texas, in the summer of 2005, I saw three clinics on the main drag alone whose signage stated they did MRI scans. I think it highly unlikely those were the only three MRI machines in the entire town. It's not like I was searching the whole town or anything -- I was just passing through on my way to somewhere else and happened to notice this fact. How many more MRI machines were there in that one small town alone that I don't know about? How many are there in the capital city of Saskatchewan?
Quote:
I, personally, don't know a single person who has ever had to leave Canada for any sort of treatment whatsoever.
I personally know several. But you reject anecdotal evidence, so I won't go into a lot of detail except to say one of them flew not to the US but to Germany to have her procedure done. She says it saved her life.
Then of course there was the widely reported case that ended up in front of the Quebec Supreme Court, where some guy whose name escapes me at the moment tried to recover from the Canadian government the costs of his travel and treatment to England (I think it was) because he would have had to wait some absurd amount of time to have it done in Canada, and it was a condition where time was of the essence. One of the lady judges on the Court wrote in her opinion (paraphrasing now since I don't have the decision in front of me at the moment) "Access to a waiting list is not the same thing as access to health care".
I see a lot of arguing over "efficiency" here. In medicine, "efficiency" is not a cut and dried concept. Are we talking dollars and cents efficiency or timeliness efficiency? Because if it is the latter, the US system wins hands down.
And even if we are talking dollars and cents, don't forget that in Canada, prescription drugs are not covered. So someone waiting a year and a half for an "elective" surgery (a knee operation or hip operation, say) could burn through thousands of dollars of pain medication waiting for the surgery. In the meantime, they might also be disabled to the point they cannot work properly, or even at all, which means extra costs to other government redistribution programs such as workman's compensation or disabilty benefits or unemployment insurance or whatever.
Then of course there is the whole quality of life issue -- how do you assign a dollar value to that? It's no picnic being semi-crippled and suffering chronic pain for months (or in some cases a year or more) on end.
It is this last reason more than any other that leads so many Canadians to cross the border and get themselves treatment immediately. Sure, they could wait and eventually get it done for "free" in Canada. Did you ever stop to think WHY so many prefer to spend the money to get fixed up NOW rather than wait months and save a couple thousand bucks? Do you think it is because these people are stupid or something? Remember, the folks who get this work done outside Canada never get reimbursed for their expenses -- they still pay the same taxes as everyone else. Yet they dig into their own pockets regardless. These people get socked twice -- they are paying US prices for the medical care they actually receive AND they are paying Canadian prices for that same care which was never delivered. But to these folks, it's worth it.
That fact (and yes, Gnote, it is a FACT) speaks volumes about the relative merits of the two systems.
Phred
Confronting The Socialists Halftruths
Quote:
In a profit driven system, there are substantial incentives for administrative build-up. Insurers invest millions in trying to deny their clients insurance. They hire investigation agencies to follow their clients around to see if they're actually hurt. They sue whenever they think they might be able to convince a court not to support their denial of claim. The most important issue, however, is that there are literally thousands of these companies doing the same thing. This is why administration costs are so ridiculously high.
Quite frankly, the issue of "Insurance companies fighting to deny coverage" is a myth. Does it happen? Absolutely, but nowhere near the amount that people reading Grisham novels want to believe. Remember that in a competitive market, quick and fair paying of claims is a huge factor in where agencies and insureds will place coverage.
Now, I can't speak to healthcare coverage, because I am in the P&C business, but I can tell you that what DOES happen a lot of the times is that people will assume they have coverage for things that they do not, and then seek to reclaim those costs. That's more a function of not reading their policy than insurance companies trying to "screw" their customers.
And again, I feel the need to remind you that very rarely will you have lawyers directly under the employ of an insurance company. Insurance companies will generally contract panel councils, and many insurance companies use the same law firms.
Quote:
This seems to be a uniquely American problem. Unless changes are made to your legal system, its unlikely that this would ever be solved under any system.
I absolutely agree with you, which is why I suggest that a big factor in removing these costs is to modify the way that torts are handled.
Quote:
This, however, does not change the fact that administration costs would fall substantially if you switched to a single-payer system.
Of course it does! Same population will, generally, require the same amount of manpower to file claims, determine scope of coverage, underwrite, etc. All you'd be doing is bring it under one umbrella. 10 underwriters doing the same amount of work is going to cost the same whether they are working for 2 companies or 10.
Quote:
You wouldn't have near as many lawyers or near as much administrative redundancy.
The only reason that the number of lawyers would reduce is if the number of suits is reduced. I don't see how nationalizing this will decrease the number of claims in the slightest.
Quote:
I'm not talking about insurance claims, I'm talking about lawsuits.
Um, in liability coverage, lawsuits ARE claims. Lawyers are almost exclusively dealt with through a claims department.
Quote:
Everyone in America with a brain knows that they need some sort of socialized, universal health insurance system
Excuse me? Did you just suggest that I don't have a brain?
In a profit driven system, there are substantial incentives for administrative build-up. Insurers invest millions in trying to deny their clients insurance. They hire investigation agencies to follow their clients around to see if they're actually hurt. They sue whenever they think they might be able to convince a court not to support their denial of claim. The most important issue, however, is that there are literally thousands of these companies doing the same thing. This is why administration costs are so ridiculously high.
Quite frankly, the issue of "Insurance companies fighting to deny coverage" is a myth. Does it happen? Absolutely, but nowhere near the amount that people reading Grisham novels want to believe. Remember that in a competitive market, quick and fair paying of claims is a huge factor in where agencies and insureds will place coverage.
Now, I can't speak to healthcare coverage, because I am in the P&C business, but I can tell you that what DOES happen a lot of the times is that people will assume they have coverage for things that they do not, and then seek to reclaim those costs. That's more a function of not reading their policy than insurance companies trying to "screw" their customers.
And again, I feel the need to remind you that very rarely will you have lawyers directly under the employ of an insurance company. Insurance companies will generally contract panel councils, and many insurance companies use the same law firms.
Quote:
This seems to be a uniquely American problem. Unless changes are made to your legal system, its unlikely that this would ever be solved under any system.
I absolutely agree with you, which is why I suggest that a big factor in removing these costs is to modify the way that torts are handled.
Quote:
This, however, does not change the fact that administration costs would fall substantially if you switched to a single-payer system.
Of course it does! Same population will, generally, require the same amount of manpower to file claims, determine scope of coverage, underwrite, etc. All you'd be doing is bring it under one umbrella. 10 underwriters doing the same amount of work is going to cost the same whether they are working for 2 companies or 10.
Quote:
You wouldn't have near as many lawyers or near as much administrative redundancy.
The only reason that the number of lawyers would reduce is if the number of suits is reduced. I don't see how nationalizing this will decrease the number of claims in the slightest.
Quote:
I'm not talking about insurance claims, I'm talking about lawsuits.
Um, in liability coverage, lawsuits ARE claims. Lawyers are almost exclusively dealt with through a claims department.
Quote:
Everyone in America with a brain knows that they need some sort of socialized, universal health insurance system
Excuse me? Did you just suggest that I don't have a brain?
More Q&A on socialized health care
Anyway:
Gnote wrote:
When there is competition in an insurance system, there will always be lawyers.
There are always going to be lawyers, period. Nationalizing one industry is not going to stop Tort cases, nor will it even begin to lower the costs of lawyer fees (especially if those lawyers continue to work on a contingency). All nationalizing it will do is mask those costs by distributing it over a wider base. I prefer to control the costs in the first place.
Quote:
I'm not trying to demonize lawyers (not that I wouldn't have reason to). I'm simply stating that where competition exists in an insurance market, there will always be someone to sue. Patients suing the insurer, insurers suing patients, doctors suing insurers, insurers suing doctors, insurers suing the government, and the list goes on and on.
You forgot the single biggest market: Patients suing doctors. That's precisely why Doctors carry malpractice and liability insurance (which, to the best of my knowledge, we are not suggesting to nationalize), and a SIGNIFICANT reason that the cost of healthcare has skyrocketed. Are you honestly suggesting these kinds of suits would dissapear by nationalizing it? The only way that would be true is if you blanket the industry with sovereign immunity, which doesn't solve the problem at all, it just makes it impossible to seek retribution.
Quote:
Then you need secretaries for the lawyers - hell, you probably need a warehouse just to store all of the files
There is nothing to suggest that this would change in the slightest just by nationalizing the industry. You'd still have all the above claim scenarios, with equally many lawyers.
Quote:
Every insurance company needs an entire department dedicated to processing the latest lawsuit.
Yes, it's called "Claims". It'd be hard to run an insurance company with no department to determine coverage and claim processing.
Quote:
These are just some of the ways that administration snowballs in a multi-payer system.
These aren't unique to a multi-payer system, they are inherant in any system that attempts to pool risk. It's 100% downright false to assume that malpractice litigation (and, subsequently, lawyers working on a contingency basis) would decrease simply because we nationalize the healthcare industry.
VForVendetta wrote:
Also, these private pharmceutical companies could corrupt the health care system as well by buying off doctors and attempting to establish monopolies while preventing cheaper, more efficient drugs from entering the market.
And what you seem to be unable to grasp is that what you just describe is a function of government intervention. What's the most effective way for a company to prevent drugs from hitting the market? Establishing a patent and limiting the supply through government intervenmtion. That's precisely what I am saying: the pharmaceutical companies have been granted too much power, but that power can only come through subsidies, tax breaks, patents, and the like via the government. You don't see Advil trying to get Tylonol taken off the shelves, do you? Why? Because they are generic ibuprofen drugs that are OTC and without a patent. They are readily available in any corner store in the US, and NOBODY complains that Tylonol or NyQuil is Price Gouging. Without the interference in the market forces that the government inherantly represents, competition drives the price down.
andres wrote:
If the government payed for everyone's bills, then the system would already be socialized and the cost of healthcare in the US would fall.
They wouldn't fall, they would be masked and distributed. Big difference.
exergenic wrote:
One of the reasons that a private health insurance market will consistently fail that has not yet been mentioned in this thread (if I have read it correctly) is the natural propensity toward information asymmetry. People generally know more about their medical history and illness trends within their family than insurers, and may choose not to disclose this information. Firms are at an immediate disadvantage, and over time must increase premiums.
That's why Underwriters generally re-assess a policy every year, taking in to consideration claim history, health, age, and several other factors. Over time, that premium should adequately reflect the risk that customer represents (actually, it might be significantly lower if the company is operating at an underwriting loss due to competition.) Risk analysis is a big part of the insurance industry, and nationalizing it essentially eliminates that sector, which I find to be more than a bit troubling.
exergenic wrote:
This is why Singapore proves to be such an interesting case study. At birth each Singaporean is issued a health account into which money is deposited each year by the government. The incentives system here is obvious, and there is some flexibility in severe cases where medical costs are necessarily exorbitant.
That's interesting, I had never heard of that.
Gnote wrote:
When there is competition in an insurance system, there will always be lawyers.
There are always going to be lawyers, period. Nationalizing one industry is not going to stop Tort cases, nor will it even begin to lower the costs of lawyer fees (especially if those lawyers continue to work on a contingency). All nationalizing it will do is mask those costs by distributing it over a wider base. I prefer to control the costs in the first place.
Quote:
I'm not trying to demonize lawyers (not that I wouldn't have reason to). I'm simply stating that where competition exists in an insurance market, there will always be someone to sue. Patients suing the insurer, insurers suing patients, doctors suing insurers, insurers suing doctors, insurers suing the government, and the list goes on and on.
You forgot the single biggest market: Patients suing doctors. That's precisely why Doctors carry malpractice and liability insurance (which, to the best of my knowledge, we are not suggesting to nationalize), and a SIGNIFICANT reason that the cost of healthcare has skyrocketed. Are you honestly suggesting these kinds of suits would dissapear by nationalizing it? The only way that would be true is if you blanket the industry with sovereign immunity, which doesn't solve the problem at all, it just makes it impossible to seek retribution.
Quote:
Then you need secretaries for the lawyers - hell, you probably need a warehouse just to store all of the files
There is nothing to suggest that this would change in the slightest just by nationalizing the industry. You'd still have all the above claim scenarios, with equally many lawyers.
Quote:
Every insurance company needs an entire department dedicated to processing the latest lawsuit.
Yes, it's called "Claims". It'd be hard to run an insurance company with no department to determine coverage and claim processing.
Quote:
These are just some of the ways that administration snowballs in a multi-payer system.
These aren't unique to a multi-payer system, they are inherant in any system that attempts to pool risk. It's 100% downright false to assume that malpractice litigation (and, subsequently, lawyers working on a contingency basis) would decrease simply because we nationalize the healthcare industry.
VForVendetta wrote:
Also, these private pharmceutical companies could corrupt the health care system as well by buying off doctors and attempting to establish monopolies while preventing cheaper, more efficient drugs from entering the market.
And what you seem to be unable to grasp is that what you just describe is a function of government intervention. What's the most effective way for a company to prevent drugs from hitting the market? Establishing a patent and limiting the supply through government intervenmtion. That's precisely what I am saying: the pharmaceutical companies have been granted too much power, but that power can only come through subsidies, tax breaks, patents, and the like via the government. You don't see Advil trying to get Tylonol taken off the shelves, do you? Why? Because they are generic ibuprofen drugs that are OTC and without a patent. They are readily available in any corner store in the US, and NOBODY complains that Tylonol or NyQuil is Price Gouging. Without the interference in the market forces that the government inherantly represents, competition drives the price down.
andres wrote:
If the government payed for everyone's bills, then the system would already be socialized and the cost of healthcare in the US would fall.
They wouldn't fall, they would be masked and distributed. Big difference.
exergenic wrote:
One of the reasons that a private health insurance market will consistently fail that has not yet been mentioned in this thread (if I have read it correctly) is the natural propensity toward information asymmetry. People generally know more about their medical history and illness trends within their family than insurers, and may choose not to disclose this information. Firms are at an immediate disadvantage, and over time must increase premiums.
That's why Underwriters generally re-assess a policy every year, taking in to consideration claim history, health, age, and several other factors. Over time, that premium should adequately reflect the risk that customer represents (actually, it might be significantly lower if the company is operating at an underwriting loss due to competition.) Risk analysis is a big part of the insurance industry, and nationalizing it essentially eliminates that sector, which I find to be more than a bit troubling.
exergenic wrote:
This is why Singapore proves to be such an interesting case study. At birth each Singaporean is issued a health account into which money is deposited each year by the government. The incentives system here is obvious, and there is some flexibility in severe cases where medical costs are necessarily exorbitant.
That's interesting, I had never heard of that.
Follow up
Gnote wrote:
And this works in many industries, but it doesn't work in insurance. The further you can spread the cost, the cheaper it will be for each person in your plan.
But without other methods to control those costs (competition, supply, etc.), the net effect would be quite slight. I'm not going to deny that ceteris paribus a larger client pool will decrease overall costs (that is after all the principle of insurance: pooled risk), but you seem to be suggesting that's the only or even the predominant factor, in determinining premium. It's not.
Quote:
Profit really isn't the issue, for the purposes of this comparison.
But it is, since competition is the primary force by which a private company is compelled to control their costs. A combination of underwriting and investment profit is how insurance companies make money. Competition in the market means that underwriting profit is as low as possible, to the point where many if not most insurance companies actually operate with an underwriting LOSS for the sake of keeping business. Without competition, there would be no reason to do that.
Quote:
The issue is really administration of the program. In a multi-payer system, you not only have multi-payers, you have multi-secretaries, multi-lawyers, multi-facilities, multi-everything
Well, lawyers aren't part of an insurance policy. Lawyers operate independently and are part of a panel counsel, with many insurance companies sharing the same law firms. Secretaries, facilities, etc is fair enough, but those are both functions of the size of the client pool as well. I dare say that any single-payer system would require at least as much manpower (and possibly as much physical space) to operate.
Quote:
In the Woolhandler & Himmelstein article I cite (available from one of the links I posted above), they discuss the cost savings that would accrue to the U.S. due to savings on administration alone.
And again appeals to the US system mean little to me, seeing that we both agree that it needs serious work.
Quote:
In a public system, there is no profit motive. Theoretically - I say theoretically because we all know that it doesn't always work this way - any profit in a publicly administered system will go back to the public. This also separates it from a private system, which requires some level of profit to be paid to investors.
I think it is far too idealistic (and that's coming from me!) to suggest that a single-payer system doesn't operate with a profit motive. They must at least cover their costs, and "profit" going back to the public occurs in both a private and public system (through vastly different means, mind you).
And this works in many industries, but it doesn't work in insurance. The further you can spread the cost, the cheaper it will be for each person in your plan.
But without other methods to control those costs (competition, supply, etc.), the net effect would be quite slight. I'm not going to deny that ceteris paribus a larger client pool will decrease overall costs (that is after all the principle of insurance: pooled risk), but you seem to be suggesting that's the only or even the predominant factor, in determinining premium. It's not.
Quote:
Profit really isn't the issue, for the purposes of this comparison.
But it is, since competition is the primary force by which a private company is compelled to control their costs. A combination of underwriting and investment profit is how insurance companies make money. Competition in the market means that underwriting profit is as low as possible, to the point where many if not most insurance companies actually operate with an underwriting LOSS for the sake of keeping business. Without competition, there would be no reason to do that.
Quote:
The issue is really administration of the program. In a multi-payer system, you not only have multi-payers, you have multi-secretaries, multi-lawyers, multi-facilities, multi-everything
Well, lawyers aren't part of an insurance policy. Lawyers operate independently and are part of a panel counsel, with many insurance companies sharing the same law firms. Secretaries, facilities, etc is fair enough, but those are both functions of the size of the client pool as well. I dare say that any single-payer system would require at least as much manpower (and possibly as much physical space) to operate.
Quote:
In the Woolhandler & Himmelstein article I cite (available from one of the links I posted above), they discuss the cost savings that would accrue to the U.S. due to savings on administration alone.
And again appeals to the US system mean little to me, seeing that we both agree that it needs serious work.
Quote:
In a public system, there is no profit motive. Theoretically - I say theoretically because we all know that it doesn't always work this way - any profit in a publicly administered system will go back to the public. This also separates it from a private system, which requires some level of profit to be paid to investors.
I think it is far too idealistic (and that's coming from me!) to suggest that a single-payer system doesn't operate with a profit motive. They must at least cover their costs, and "profit" going back to the public occurs in both a private and public system (through vastly different means, mind you).
Three minor fixes could be made that would greatly reduce costs:
-Reform malpractice litigation / make Plaintiffs liable for the defense costs if their litigation is found to be without merit. Currently most trial attorney's work on a contingency basis (they only collect money if they win), and a doctor (or the doctor's liabiliy insurance company) spends tens of thousands of dollars defending any and all litigation that comes his or her way. Even if he or she is found to be without fault, they are stlll out that money, and their insurance carrier is going to take them on their premium at the next renewal (I know, because I am an underwriter. Loss history is a big part of premium). This means that there's basically no reason NOT to sue a doctor for any little issue that you may have. If you make the plaintiff liable for defense costs when the defendent is found non-liable, then you do create some sort of risk wtih the plaintiff as well, and the "I might as well sue" mentality goes out the window.
-Remove the prescription requirements. I have ADHD, and in order to fill a prescription for Ritalin, I have to see a doctor once every other year to make sure that I'm not just some junkie looking to score poor-man's Coke. This ties in to my view on the drug laws, but if you remove the government's requirement that you need a permission slip to put something in your body, then getting a bottle of Ritalin would be as easy as getting a bottle of Bayer. That eliminates the cost of the visit to the doctor off the top of the drug cost, and by extension a large portion of the doctor's expenses (which get passed back to the consumer) as well.
-Eliminate (or restrict) copyrights on drugs / create incentives for generic drugs. This goes with the previous one as well. Do you know what the difference is between Ritalin and Methylphenidate? The name. That's it. Generic equivilants are available on just about every drug out there, but more often than not people opt for the brand-name because they think it's "better". Since it's their employer (or Medicare / Medicaid) and not themselves that are paying for the drugs, they have no reason to go generic, it's not like it's their money! By eliminating the prescription requirement AND allowing more generic equivilants to enter the marketplace, you increase supply. When you increase supply and keep demand constant, you decrease the price.
-Reform malpractice litigation / make Plaintiffs liable for the defense costs if their litigation is found to be without merit. Currently most trial attorney's work on a contingency basis (they only collect money if they win), and a doctor (or the doctor's liabiliy insurance company) spends tens of thousands of dollars defending any and all litigation that comes his or her way. Even if he or she is found to be without fault, they are stlll out that money, and their insurance carrier is going to take them on their premium at the next renewal (I know, because I am an underwriter. Loss history is a big part of premium). This means that there's basically no reason NOT to sue a doctor for any little issue that you may have. If you make the plaintiff liable for defense costs when the defendent is found non-liable, then you do create some sort of risk wtih the plaintiff as well, and the "I might as well sue" mentality goes out the window.
-Remove the prescription requirements. I have ADHD, and in order to fill a prescription for Ritalin, I have to see a doctor once every other year to make sure that I'm not just some junkie looking to score poor-man's Coke. This ties in to my view on the drug laws, but if you remove the government's requirement that you need a permission slip to put something in your body, then getting a bottle of Ritalin would be as easy as getting a bottle of Bayer. That eliminates the cost of the visit to the doctor off the top of the drug cost, and by extension a large portion of the doctor's expenses (which get passed back to the consumer) as well.
-Eliminate (or restrict) copyrights on drugs / create incentives for generic drugs. This goes with the previous one as well. Do you know what the difference is between Ritalin and Methylphenidate? The name. That's it. Generic equivilants are available on just about every drug out there, but more often than not people opt for the brand-name because they think it's "better". Since it's their employer (or Medicare / Medicaid) and not themselves that are paying for the drugs, they have no reason to go generic, it's not like it's their money! By eliminating the prescription requirement AND allowing more generic equivilants to enter the marketplace, you increase supply. When you increase supply and keep demand constant, you decrease the price.
Health Care
Contrary to what people might like to think, the US does not really have a "private" healthcare system, we just institute the public healthcare different from the full-blown single-payer systems. The result is an odd hybrid that gets the worst of both worlds, the overpriced and inflation-ridden costs of a monopolistic system combined with the terrific inefficiencies and bureaucratic nonsense of a public funded system.
The US government is (obviously) still is very much involved in healthcare, the most obvious being medicaid and medicare, but also including subsidies for research and development, patent and copyright protection for prescription drugs (artificially restraining the supply of generic drugs), the FDA (an entire government institution specifically designed to legislate and limit the amount of drugs on the market), not to mention the obvious costs associated with the way the US handles civil litigation and torts against both doctors and health insurance companies. The simple fact that most doctors are actually restricted from making house calls anymore should be proof enough of how deeply the thumb of the government is in the healthcare industry.
I'm not in the slightest convinced that single-payer system would be more beneficial than a free market system, but calling what the US has a "free market" system is ridiculous.
The US government is (obviously) still is very much involved in healthcare, the most obvious being medicaid and medicare, but also including subsidies for research and development, patent and copyright protection for prescription drugs (artificially restraining the supply of generic drugs), the FDA (an entire government institution specifically designed to legislate and limit the amount of drugs on the market), not to mention the obvious costs associated with the way the US handles civil litigation and torts against both doctors and health insurance companies. The simple fact that most doctors are actually restricted from making house calls anymore should be proof enough of how deeply the thumb of the government is in the healthcare industry.
I'm not in the slightest convinced that single-payer system would be more beneficial than a free market system, but calling what the US has a "free market" system is ridiculous.
Critical Response
Quote:
Poor analogy. First, in your comment, you already have the house. In mine, people do not already have a bunch of pre-tax income; they go out and choose to get it.
This frankly isn't relevant. As long as we are assuming that what you go out and get would be your property, then there is no relevant difference. And if you want to deny this, then taxation would not be theft for a different reason than the one you list--namely, because they were taking something that wasn't your anyways.
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Secondly, in your example, it is an out of the blue letter by one person against one person-yours is about private laws and mine about public. In a capitalistic democracy, it is what everyone knows in advance what will happen if they make a lot of money to everyone. The same applies to everyone in the society.
Perhaps you could explain this better, because as written you are merely assuming exactly what we are debating. The point is that it doesn't matter whether people know they are gonna get robbed or not--if they are being robbed, then giving prior warning, whether in 'private laws' or 'public laws' (a disticntion i don't understand anyways) makes absolutely no difference.
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Third, the letter sender is doing it for his own individual gain. The People (singular) in a democracy are doing it so they can maintain the framework and programs, which are, in part, why one can earn the pre-tax income that they can. Your pre-tax income benefits from the effects of past taxes and transfers, and depends on it.
Irrelevant. If the I wrote such a letter, then donated all the stolen money to charity, it wouldn't make it not robbery. It might be better for other moral reasons, but it is still [censored] robbery.
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Fourth, tax laws are created by what the majority thinks should be the case; it is a majority deciding what should happen to the majority. They can be voted out of existensce by the majority In your example, it is based on what one person wants you in specific to do for his own benefit.
Your example is one of a private, unequal, retroactive law, decided by a procedure made by one person for his own gain. Taxation is a public, equal and known in advance law decided by majority rule; it is what most people think the law should be.
Wait, what? The very issue under discussion is whether or not such laws are legitimate in the first place. Obviously if we are already assuming that laws put in place by the majority are just, and can only be repealed by majority action, there is nothing to discuss. But even if what you said was true (not that any argument has been presented, and not that it was relevant to the current debate), then taxation would not be theft because of precisely this reason--and not because of anything to do with 'knowing beforehand'.
Which is why I don't understand most of these points--I explicitly said that taxation might not be theft for other reasons (though I think it is), and that the 'knowledge argument' was fallacious. But all of your arguments are basically reasons why taxation is not theft for other reasons, which I already admitted might be the case.
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But, you haven't shown that world-ownership follows from self-ownership.
Well, I did, in the same sense that you've 'shown' why we aren't entitled to our post-market incomes. I presented an argument in some other thread. You disagreed and were not convinced. What else is there to discuss?
Poor analogy. First, in your comment, you already have the house. In mine, people do not already have a bunch of pre-tax income; they go out and choose to get it.
This frankly isn't relevant. As long as we are assuming that what you go out and get would be your property, then there is no relevant difference. And if you want to deny this, then taxation would not be theft for a different reason than the one you list--namely, because they were taking something that wasn't your anyways.
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Secondly, in your example, it is an out of the blue letter by one person against one person-yours is about private laws and mine about public. In a capitalistic democracy, it is what everyone knows in advance what will happen if they make a lot of money to everyone. The same applies to everyone in the society.
Perhaps you could explain this better, because as written you are merely assuming exactly what we are debating. The point is that it doesn't matter whether people know they are gonna get robbed or not--if they are being robbed, then giving prior warning, whether in 'private laws' or 'public laws' (a disticntion i don't understand anyways) makes absolutely no difference.
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Third, the letter sender is doing it for his own individual gain. The People (singular) in a democracy are doing it so they can maintain the framework and programs, which are, in part, why one can earn the pre-tax income that they can. Your pre-tax income benefits from the effects of past taxes and transfers, and depends on it.
Irrelevant. If the I wrote such a letter, then donated all the stolen money to charity, it wouldn't make it not robbery. It might be better for other moral reasons, but it is still [censored] robbery.
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Fourth, tax laws are created by what the majority thinks should be the case; it is a majority deciding what should happen to the majority. They can be voted out of existensce by the majority In your example, it is based on what one person wants you in specific to do for his own benefit.
Your example is one of a private, unequal, retroactive law, decided by a procedure made by one person for his own gain. Taxation is a public, equal and known in advance law decided by majority rule; it is what most people think the law should be.
Wait, what? The very issue under discussion is whether or not such laws are legitimate in the first place. Obviously if we are already assuming that laws put in place by the majority are just, and can only be repealed by majority action, there is nothing to discuss. But even if what you said was true (not that any argument has been presented, and not that it was relevant to the current debate), then taxation would not be theft because of precisely this reason--and not because of anything to do with 'knowing beforehand'.
Which is why I don't understand most of these points--I explicitly said that taxation might not be theft for other reasons (though I think it is), and that the 'knowledge argument' was fallacious. But all of your arguments are basically reasons why taxation is not theft for other reasons, which I already admitted might be the case.
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But, you haven't shown that world-ownership follows from self-ownership.
Well, I did, in the same sense that you've 'shown' why we aren't entitled to our post-market incomes. I presented an argument in some other thread. You disagreed and were not convinced. What else is there to discuss?
Economics
Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine-the special pleading of selfish interests. While every group has certain economic interests identical with those of all groups, every group has also, as we shall see, interests antagonistic to those of all other groups. While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.
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In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.
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In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.
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The distinction may seem obvious. The precaution of looking for all the consequences of a given policy to everyone may seem elementary. Doesn't everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn't every little boy know that if he eats enough candy he will get sick? Doesn't the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn't the dipsomaniac know that he is ruining his liver and shortening his life? Doesn't the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?
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Yet when we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
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But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.
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From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. -- Economics In One Lesson, Henry Hazlitt
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In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day. This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.
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In this lies the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.
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The distinction may seem obvious. The precaution of looking for all the consequences of a given policy to everyone may seem elementary. Doesn't everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn't every little boy know that if he eats enough candy he will get sick? Doesn't the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn't the dipsomaniac know that he is ruining his liver and shortening his life? Doesn't the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?
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Yet when we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: “In the long run we are all dead.” And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
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But the tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.
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From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups. -- Economics In One Lesson, Henry Hazlitt
Capitalism
First, what is capitalism? Capitalism is an economic system that is based on at least two fundamental principles (which are two sides of the same coin), and supported by a third (that arises because of the first two). First capitalism is based on a social norm of respect of private property in all orders of goods. This includes consumers' goods like hamburgers and gasoline, as well as producers' goods like land (including natural resources) and machinery.
The human concept of private property is simply an extension of human nature. First, property "rights" (in my opinion rights are but human constructs; the systems of "rights" that come to predominate in a human society are social norms) can only arise when conflict is possible, and conflict is only possible when there is scarcity. Whenever goods (things that are capable of satisfying human wants, needs, and desires) are scarce, conflict can arise. If I eat an apple, you can not. My satisfaction must come at the exclusion of the satisfaction of others. Obviously, conflicts can arise. Who gets to eat the apple?
We can imagine an infinte number of different "rules" for resolving who gets to eat the apple. Animals in the wild have such rules; the largest, the fastest, the most vicious, etc., gets to eat, while others do not (if they do not get eaten themselves). To be sure, people can use these kinds of rules as well, but in general, they do not. Through evolution, nature constructs all animals to minimize costs, since costs come at the expense of copies of genes, and the name of the game is producing the highest number of copies of one's genes as possible. Human beings are capable of minimizing their costs through the application of their reason; i.e. a man can formulate plans that operate in the distant future, and can rationalize the likely outcomes of these plans, and choose from amongst them the plan that he believes will be the least costly, the most profitable, the least risky, etc.
Because of this ability, a man can readily see that constantly fighting over resources is not a very smart thing to do. It is costly and risky, and the potential benefits are small (you only gain your next meal before you must begin your struggle again). In order to reduce these costs and risks, the concept of property arises (property I believe is actually much more ancient than humanity; dogs understand property; it is simply that man uses his reason to formalize property and make the concept infinitely more useful). Property serves to prevent conflicts over scarce resources in the first place, and resolve them when they arise.
So what property rights are the "best"? Well, it seems clear that property rights are more likely to be universally adopted and respected if they are symmetric, i.e. a different set of rules cannot apply to you than applies to me; otherwise there will be resentment. So property rights are more likely to be accepted by a larger number of individuals if they are "homogeneous and isotropic" to borrow a phrase from my physics background. I.e. everyone has the same "rights" and all interactions regarding property are symmetric; if the roles in a dispute were reversed, the settlement of the dispute would not change.
Property rights are also much more likely to be accepted if property claims based on these rights can be objectively defended. My claim is that there is only one objective system of property rights that can be identified, that of first appropriation and voluntary exchange. All other systems of title assignation are arbitrary and can only be subjectively, rather than objectively defended. Hence all other systems will lead to perpetual conflict, which means that they ultimately will not serve as property systems at all, since the entire point of property is to prevent and resolve conflicts, rather than foment them.
First appropriation and voluntary exchange is objective. *I* was the first person to appropriate this previously un-owned nature given resource, and no one else can truthfully make that claim. I labored to create this good from that resource, and no one else can truthfully make that claim. I voluntarily gave my good in exchange for that good, and no one else can truthfully make that claim. Of course, since human beings are not omniscient, false claims of first appropriation and voluntary exchange can be and are made. Man develops ways of vetting real claims to proof against this. The more valuable the good, the more elaborate the measures that are created to establish legitimate title.
Any intervention in this system of first appropriation and voluntary exchange represents a weakening of the system that acts to prevent and resolve conflicts and a tendency toward fomenting and increasing conflicts instead, since all other types of property systems must be subjective, and are essentially arbitrary; i.e. they rely on nothing more than subjective verbal claims upon property and the ability of one individual or group to persuade others (whose subjective opinions are subject to change, leading to future conflicts), or to simply violently overcome them (clearly not a very good system of avoiding costs and risks!).
Empirically we see this system of private property in operation all over the world. When new resources are opened up to small groups, social norms quickly arise to establish claims, and prevent and resolve disputes. However this system is of course by no means universal; there are many tribes and societies where certain goods are subject to the rules of private property, but other resources are not. There are many tribes that operate with private property in consumers' goods but not the factors of production. The property rules are assymetric and heterogeneous, and title is established not through first appropriation and voluntary exchange but rather through the verbal declarations of some special priveleged individual or group, such as a chief or a council of tribal elders. Indeed all modern societies operate in this fashion to a large extent, resulting in a proprty system that foments conflicts and engenders uncertainty in preoprty owners, reducing their time horizon and their ability to plan, which incentivizes consumption at the expense of production. But I'm getting ahead of myself. ;-)
The second principle that capitalism is based on (which I said was the other side of the coin of private property, i.e. first appropriation and voluntary exchange) is freedom of exchange. I.e., not only can legitimate title be maintained through voluntary exchange, but voluntary exchanges should not be interfered with by third parties. This is part and parcel of the homogeneity of property; if I don't want my voluntary transactions interfered with, I probably should not set the precedent that interfering with voluntary transactions is allowable myself. It is clear that any systemization of interference in private exchanges is actually an attack on the integrity of private property itself, since how can you claim that you "own" something in a meaningful (i.e. economic) way if you are prevented from utilizing it (and hence cannot gain satisfaction from it)? This also clearly acts to foment conflicts and increase uncertainty, incentivise consumption at the expense of production.
Voluntary exchange also has the interesting property that all participants in voluntary exchanges must believe that the exchange will benefit them, or else the exchange simply will not take place. Now, after the fact their judgement may prove wrong, but this simply means that the likelihood of all future exchanges of the same class is now affected by previous results. For example, if you believe you got swindled before, you are much less likely to be swindled a second time, because you will not do business with the swindler.
I should probably explicitly mention the division of labor, which is implicit in the idea of capitalism. Reason allows man to undertake in the division of labor, to specialize, which increases his productivity, and then trade, which increases his access to more and more varied consumers' goods. Bill Gates might not only be a magnificent software mogul, he might be able to clean office space faster and more thoroughly than anyone alive. But since the market values his skills as a mogul vastly more than it does his janitorial skills, he becomes wealthier by hiring a janitor who is wholly inferior in his ability to clean. The janitor easily outcompetes Bill Gates . . . for the job of janitor. Meanwhile the janitor is able to afford a computer and software he would have no hope of being able to produce. The division of labor and freedom of exchange makes both parties wealthier.
So private property based on first appropriation and voluntary exchange in all orders of goods (consumers' and producers') and resources, as well as complete freedom of exchange of the same, are the fundamental principles of capitalism. I said there was a third, but I hesitate to actually call it a principle, so much as a requirement for capitalism to operate to its fullest capacity. That requirement is the existence of a money. Societies that do not have a money, i.e. that operate entirely on barter, can have both private property in all orders of goods and complete freedom of exchange, but will still be chained economically. They are restricted by so-called double coincidences of wants, i.e. I must have what you want, and you must have what I want. Furthermore, there is absolutely no way to judge whether or not goods and resources are going to the most highly valued uses or whether they are going to lower valued uses (i.e. they are being wasted), since all goods have different units, and are therefor incomensurable. As society becomes more populous and more complex, and the number of alternative uses of all goods and resources skyrockets, there is no way to judge whether or not one use is "better" than another.
A money is a market commodity who some smart fellow realizes is more easily exchanged than what he has produced. If he can exchange his goods for this more readily exchanged good, the value of his own goods and his ability to get what he wants have both gone up. There is a snowball effect in the market, and a few commodities will rapidly become moneys, and will become value as a medium of exchange (in addition to whatever uses they already served in the market). Market moneys compete against each other, and ultimately there are usually only one or two. Historically there have been many moneys, including salt, sugar, seashells, tin, etc. but ultimately gold won out (with a few places still using silver) in the 19th century. The reasons that gold makes a good money is that it is durable, easily divisible, hard to counterfeit, and has a high value to weight ratio.
A money elliminates the problem of double coincidences of wants. It also elliminates the problem of incomensurable units, almost magically. Potential consumers of goods will bid against each other in units of the money (ounces of gold, for example) and will generate market prices for all goods and resources. This creates a single unit that all goods can be measured in to establish the costs of production, as well as the revenues that can be earned from sales. This allows the entrepreneur to engage in cost accounting. Cost accounting is a miracle of the market. It allows producers to determine, in a single unit, exactly how much production will cost them, exactly how much they can generate in sales. The latter minus the former will either be a profit or a loss.
A profit is a signal to the entrepreneur, it tells him that he has taken a bundle of inputs that the market only valued at X and has produced something that the market values at X+Y. I.e. he has raised the value of scarce resources for the market, and the market is of course, consumers.
Meanwhile, a loss is also a signal. It tells the entrepreneur that he has taken a bundle of inputs that the market valued at X and has produced something that the market only values at X-Z. I.e. he has reduced the value of scarce resources. He has wasted them. But it gets even better. Not only are his losses a signal that he had better shape up, either raise the value for the market or reduce his costs of production, losses act as a feedback mechanism that forces the entrepreneur to stop wasting resources, for if he continues, he will go broke, and the waste will be halted!
So losses act toterminate waste. Meanwhile, profits act to concentrate resources into the hands of those producers who best satisfy the market. This is a tremendously good thing for consumers.
Consider this. Society may only become wealthier in the long term through increases in productivity (one society may become wealthier in the short term by conquering another society). Increases in productivity comes with the formation of capital goods (well, productivity can also increase as labor becomes more skilled, and as production recipes improve; but you can have the most skilled laborers and the best technical recipes possible, and if you have no capital, you will have little production). Capital goods can only be created after savings at the expense of consumption. Profits act to channel resources into the hands of the best entrepreneurs (i.e. those that provide the most for consumers at the lowest cost). Those entrepreneurs will invest those profits into accumulating capital goods that increase productivity, which of course, benefits consumers. Those that do not will be outcompeted, and will either have to shape up, or again, suffer losses and go out of business.
Consumers have total power under capitalism. A billionaire may invest his billions into producing cars, but if consumers do not want them, he will go broke. Profits reward businessmen for satisfying consumers. To be sure, the businessman probably does this out of self-interest, but he still must satisfy consumers. It is not through the goodness of their hearts that the butcher, the baker, and the candlestick maker provide their wares to me, but I still end up with beef, bread, and candlesticks--if I want them.
Consider how profits work as signals in a market economy. First, in the absence of systematic coercion, the only way to achieve sustained profits is to elevate the value of scarce resources and have consumers voluntarily pay you for the things you produce. The price system together with profits and losses, act as signals to investors and entrepreneurs. A business that is seeing above average profits will attract competitors, which expands the market supply. Those above-average profits will also be re-invested by the business itself in expanding supply (to do otherwise is a loss of potential profit). This expanded supply will lower the market price of the commodity, and lower the general level of profit. Meanwhile, the investment in that line must come at the expense of other lines (since the factors of production are at any one time finite). Entrepreneurs obviously choose to shift investment from businesses that are experiencing losses or below-average profits. This reduces the supply in those lines, and brings the general level of profit in that line back up. Hence, profit levels across the entire economy tend toward an equilibrium level. This serves to keep the entire economy in balance. As demand for certain lines wanes, profits fall, and investment is shifted away from those lines. As demand for certain lines waxes, profits rise, and investment is shifted toward those lines.
Also, in the absence of systematic coercion, the only way to achieve sustained above-averageprofits is to continually innovate, either in providing newer and better products, or in lowering costs of production. This is how vast fortunes are accumulated under capialism. It is the only way vast fortunes can be accumulated under capitalism. By satisfying more and more consumers at ever lowers prices, the standard of living of consumers is continuously improved. As his reward for his self-motivated humanitarianism, the capitalist is rewarded with extraordinary levels of profit, which he reinvests, accumulating capital which allows him to become still more productive, making consumers still more wealthy. This is the feedback mechanism that is responsible for the incredible standards of living of the industrialized world, and that allows for the support of 6 billion people and counting.
But where do consumers get the money to purchase these goods? From the capitalists. Because capital produces the market demand for labor. By accumulating capital, the capitalist increases the market demand for labor. He needs workers for his lines of production. There are always many, many times more potential jobs than there are workers to fill them. Capitalists must compete with each other for the workers they need to sustain their high level of productivity. They compete by bidding up the price of labor, just like any other factor of production, on the market. This comes both in the phenomenon of wages, and also non-monetary compensations (which of course still have monetary costs to the capitalists) such as shorter work weeks and work days, longer vacations, safer work environments, training and education, nicer offices, company cars, flexible hours, etc.
As an aside, many times on this board I have seen people blame the "horrible" working conditions of the early industrial revolution and the Third World, as well as child labor, on capitalist "exploitation" of workers. Nothing could be further from the truth. There are always far more potential jobs than there are workers, and capitalists must always compete for workers. Capitalists pay the maximum amount possible for labor, otherwise some other capitalist will outbid them, their production will suffer, as will their profits. The difference between the modern west and the early industrial revolution and the third world is, of course, the amount of accumulated capital. When the accumulated capital is low, so is productivity, and so are wages, and so are standards of living. Nothing can magically change this. The only thing that imrpove standards of living is higher real wages, and higher real wages can only come with increased productivity, and increased productivity necessitates accumulated capital, and it has taken the west centuries to accumulate the capital stock it has. It could never have accumulated that capital stock under the system of property rights operative in the third world. In fact, the west could never have accumulated that capital stock under the system of property rights operative in the first world today. Real wages have been stagnant or begun to fall in the west, reflective of a reversal in the trend toward higher productivity. This is the result of interventions in the private property system and freedom of exchange that lower productivity and act to incentivize consumption and deter investment. This slows and halts capital formation and eventually leads to capital consumption. "Harsh" working conditions associated with low productivity are still better than the alternatives, short, nasty, brutal lives of subsistence farming, crime, and prostitution.
Labor laws do not improve working conditions. Capitalists improve working conditions to increase productivity and compete for labor. Labor laws have a clear history. They exist to protect certain laborers, mostly union laborers, from competition, from the lower priced labor of women, immigrants, blacks, and yes, even children. These people are throw out of work and into poverty, while consumers are made poorer because they have fewer goods and services of poorer quality but higher price to choose from. Minimum wage laws do not help the poor, they throw them out of work. Mandating a minimum wage of $7 per hour, for example, means that all workers providing less than $7 per hour of value will simply be fired. Period.
Anyway, back to the capitalists, labor, and wages. Marxists believe that because a laborer produces a widget that sells on the market for $100, yet only gets paid $80 for his labor, he has been "exploited" by the evil capitalist to the tune of $20. They believe that capitalists "deduct" their dirty evil profit from what should rightfully all be wages. They are incorrect.
What Marxists and their ilk never seem to understand is time and risk. Workers, like all human beings, are constrained by time preference. They prefer goods sooner rather than later. They prefer the certainty of $80 at the end of the week to the uncertainty of $100 in several months. If they did not, theywould not voluntarily exchange their labor for the $80. It is just that simple. The capitalist, on the other hand, has accumulated a large capital stock. His time preference is lower. His most immediate needs are satisfied, and his time horizon is more distant. He can more readily engage in savings and investment. He can more readily tolerate the risks of an uncertain future. He values the risky $100 in several months made possible by the labor more than he values the certain $80 now. Because the value scales of the two parties are reversed, an exchange takes place. It is the capitalist who takes the risk. If he guesses wrong, he suffers loses, while the laborer does not.
Imagine a man who makes wooden shoes from trees on his own property. He suffers no money costs of production (his costs still include his time and effort, of course), so when he sells his shoes in the market, all of his sales revenues are profit. Now imagine that his shoes are so highly demanded that he desires to expand his production. He hires a laborer to make shoes for him. He is the capitalist (his capital stock is his land and tools, and his savings from which he must pay his laborer). The wages he pays his laborer are deducted from his sales revenue, i.e. his profits. Capitalists are not responsible for the creation of the phenomenon of profits and their deduction from wages, but rather they are responsible for the creation of wages and their deduction from profits!
In fact, the more numerous are the capitalists, and the wealthier they become (i.e. the more accumulated capital each has to employ), the higher is the demand for labor, the stiffer is the competition for labor, and the higher must wages become as a fraction of profits. As the capitalists become more numerous and prosperous, the lower the general level of profit goes.
The general level of profit is, in fact, the interest rate. It is the objective market realization of the subjective time preferences of society. The higher the general time preference in society, the more immediate consumption is preferred to savings and future consumption, the higher a premium must be paid to an individual to induce him into defering consumption for savings. This is the interest rate (there is actually a spectrum of interest rates of differing maturities, but you get the point). By the end of the 19th century, the real interest rate (and the general level of profit) had fallen to just over 2%. Think about that; it's really quite astounding. Would you invest a dollar on the promise of receiving 2 cents in juice after a year? I wouldn't. Yet it was the norm 100 years ago. What happened? I'll bet you can guess.
Furthermore, as productivity increases, the costs of non-labor inputs must fall, meaning that almost the total sales revenue ends up becoming wages. Currently in most industries labor costs run about 80% of all costs, with profit levels averaging somewhere in the neighborhood of ~7%. In a free market, as capital is created and accumulated, as productivity increases, the non-labor costs and the general level of profit tend to zero and wages as a fraction of sales revenues tend toward 100%!
This is what the Marxists want out of their Utopia, isn't it? Consumers have total power: check! There are no profits: check! Laborers receive 100% of sales revenues as wages: Check! Of course in a real economy non-labor costs will never be truly zero, nor will profits. But that's the direction that the economy tends to.
Let's look at competition. What is capitalist competition? Is it like Darwinian competition? Is it a competition of all against all for scarce resources, where one individual's consumption must come at the expense of all others? Our original analysis of scarcity and property would lead us to think yes, but in fact, the answer is an emphatic no. Rather than a competition between consumers to consume scarce resources, capitalism is a competition amongst producers to increase the supply of scarce goods and resources! That is how capitalists make profits, they increase the supply of what others want to consume. The ones who are the best at it make the most profits.
It is man's reason that allows him to do this, to produce, to increase the supply of scarce goods. It has allowed our species to become more and more successful while becoming more and more physically weak and defenseless. We have no fangs, no claws, no fur, our senses are poor, we are slow, and weak. We are all of these things because our reason (and dexterity) has allowed us to increase the supply of scarce goods that life depends on without strength, speed, fangs, claws, sharp senses, etc.
The spontaneous order of the market is created by the competition of capitalists, not to consume limited resources, but to increase the supply of scarce goods and resources to consumers in an effort to get them to voluntarily hand over scarce dollars. Those with poor sight can read because of self-interested optometrists and eyeglass makers. Those with poor hearing can hear because of self-interested hearing aid manufacturers. Those who are paralyzed can move around because of self-interested wheel chair manufacturers. Those who are sick can live because of self-interested doctors. Capitlism leads not to the survival of the fittest but to the survival of all, or at least of more and more for longer and longer at ever higher standards of living.
The only sense in which capitalist competition is survival of the fittest, is the survival of the fittest producers. And even when producers fail and don't "survive", no one dies; scarce factors of production that were previously wasted are freed by bankruptcy to be acquired by other producers that consumers find more favorable.
How about monopoly? Can a monopoly exist in a free market? In short, no, at least not in a modern free market. There is some contention amongst those in the know about whether even so-called "natural monopolies" can exist at all, but it is certainly the case that they cannot exist in a modern free market.
A monopoly can only exist under a system of institutionalized coercion that acts as a barrier to entry into markets. In a free market, any firm that achieves above average levels of profit invites competition. It's that simple. The objection that entering the car market, for example, requires an enormous investment of capital, while true, is no objection at all. The enormous capital investment is of course only required to achieve the level of productivity and low enough unit costs to compete in the first place. All that capital is required to serve consumers. You could start building cars by hand tomorrow in your back yard, but neither your quality nor your unit cost will be able to compete with established automakers.
As another aside, why then do we have antitrust laws? Doesn't the existence of antitrust laws demonstrate that we need protection ffrom monopolies? No, of course not. The history of antitrust law is clear. Producers in various industries who were being outcompeted lobbied politicians, claiming that the practices of their competitors (making superior products at lower costs and prices) were "uncompetitive" and "monopolistic", and had antitrust laws created to break up these competitors (so that they lost economies of scale), fix prices, and increase the regulatory burden on them (and hence raise their prices), so that they (those seaking protection from competition) could again "compete".
Anyway, a capitalist society is a contractual society, i.e. there is no institutionalized coercion. There of course will always be crime (aggression against property), but it is not legitimized and institutionalized. Rather, private property and contractual voluntary exchange is institutionalized in social norms and the institutions that arise to secure them. Any society with an economic system based on institutionalized coercion is not capitalist, exactly to the extent of the institutionalized coercion. It may be many things, socialist or mercantilist or what have you, but it is not capitalist. Hence there are no capitalist societies, at least not purely capitalist, which would commonly be called "anarchocapitalist", i.e. capitalist in all things rather than some incomplete subset of goods, services, individuals, etc.
Statists argue that the institutions upon which capitalism is based, private property, freedom of exchange, and money, require a coercive monopolist to secure them. That for example, property must be expropriated to secure property, that coercion must be undertaken to secure freedom, and that fraudulent money must be created to secure the monetary system. Needless to say, I find these Orwellian justifications of the state to be nonsense. Monopoly is in all cases bad for the consumer. A monopolist of justice, who can unilaterally redefine justice and assign its cost, will inflate the cost of justice while its quality falls. Those who can tax, will. Those who can write arbitrary and artificial law, will. These taxes and laws will always favor those writing the laws. Those who can print money and spend it, will. Duh.
Contrary to what statists would have you believe, private property, the law (social norms), money, and social order all predate the state and its interventions in each. They are all emergent phenomena of the market. History is rife with examples of the market producing new property rights, methods of securing those rights, and resolving conflicts, all in the absence of a coercive monopolist. After the fact in many cases these systems have been coercively monopolized by the state, but that is exatly the point when they cease to be tested by and vetted by the market, and becomes tools of exploitation of consumers by the state.
For example, just as state monopolization of the money supply has led to monetary inflation and uncertainty, so has state intervention in the law led to legal inflation and perpetual legal uncertainty and hazard. Both of these incentivize consumption and deter savings and investment, leading to a relative lowering of productivity, prosperity, and peace.
What about so-called "public goods"? We are told that the state must coercively monopolize the provision of certain goods because of "market failures", i.e. the market cannot provide for certain things. But . . . how can you tell when the market has "failed"? There is no objective metric other than the market itself to determine what should be produced, i.e. what consumers demand. What is clear is that consumers will demand fair judgments; fair judgments are valuable on the market, unfair ones are worthless. Consumers will demand security; security is more valuable on the market than insecurity. Consumers will demand roads. Roads are more valuable than the absence of roads. Consumers will demand health care. Health is more valuable than sickness. Private market suppliers of all these things exist, wherever they are allowed to.
Private competitive firms must provide all of these efficiently and in ever higher quality and supply, or else they will suffer losses and go out of business. The state cannot suffer losses nor go out of business. The state has no incentive to provide more efficient or just justice. The state has no incentive to provide better roads, better education, better anything. In fact, the worse the state makes a problem, the more money it can justify taking to spend on "fixing" it!
There is nothing magic about judgments, security, health care, roads, or any other good that prevents competitive firms from providing them and requires a coercive monopoly supplier. There is no way other than the market to determine how much of a good should be produced, or at what price.
States can never do anything "good", since to do any "good" a state must begin by coercively doing something bad to someone else; it must prevent people from freely exchanging, it must expropriate their property, etc. Since utility is subjective, there is no way to intersubjectively ascertain that the "good" outweighs the bad. Objectively though, we can say with absolute certainty that all state interventions must take the form of property violations and restrictions on the freedom of exchange. Both of these things act to deter savings and capital accumulation and increase uncertainty, which incentivizes consumption, further at the expense of savings. State redistributions of wealth from producers, savers, and contractors to non-producers, non-savers, and non-contractors deters production, savings, and contractual interactions and incentivizes non-production, consumption, and non-contractual interactions (aggression). All of this objectively makes society poorer and lowers standards of living.
State interventions in the price system are not only coercions that interfere with the freedom of exchange, they create perversions in the market that have far reaching effects. Artificially capping the price of a good below the market clearing price will produce lasting shortages and ensure that scarce resources are wasted (since people will be consuming resources that have higher valued uses elsewhere--for example health care; when visits to the doctor are "free" lonely people with no one to talk to them will visit the doctor and waste valuable time and resources that could be used on sick people). Artificially fixing prices above the market clearing prices will produce lasting surplusses and also ensure that scarce resources are wasted (since scarce resources were used to produce things no one is using and are piling up or rotting in warehouses--for example minimum wage laws; labor is used up in people waiting in unemployment lines that could be used stocking shelves or sweeping floors).
What about planning? Is a capitalist economy "unplanned"? On the contrary, it is as totally rationally planned as possible. Since the information required to make rational decisions about the allocation of scarce resources is decentralized and distributed throughout the economy, with each actor knowing only a tiny, infinitesimal fraction, he makes his plans with the information he has with regards to only those resources that are under his control. The price system acts to harmonize the plans of all market participants. Consumers of eggs do not need to know there was a blight that struck the chicken population in order to cut back on their consumption, the increase in price leads them to the correct action automatically. When high profits signal that there is a demand for an increased supply of X, investors appear. When I plan to move to the beach, the price of beachfront property induces me to adjust my plan.
On the contrary, it is central planning and socialism that is unplanned and chaotic. The central planner can never have access to all of the information relavent to the allocation of resources. Asking that the brains of so few make the decisions for so many will work about as well as asking the legs of so few to carry the weight of so many. Resources will be wasted and allocated politically, rather than according to consumers' demands. Under total socialism (communism) there is no private property in the factors of production, no freedom of exchange in those factors, which means there can be no market prices, no profits and losses, no way to do cost accounting, no way to determine whether scarce resources are being wasted, no way to tell what uses are highest or what production processes the least costly. Massive waste must result. Far from being "planned", socialism and central planning result in irrational chaos.
This has been somewhat rambling and is necessarily incomplete, being a tiny fraction of the theoretical foundations of private property, money, the law, the market, social order, the state and its interventions, etc. For more detail, see the work of Murray Rothbard and Hans-Hermann Hoppe. Hopefully you've gotten some idea of why I'm a capitalist. In short, under capitalism all individuals become as wealthy and secure as their reason and labor, and the reason and labor of their suppliers, allows. Through the logic of self-interest through mutual accomodation, the market creates spectacular spontaneous order and complexity. I love capitalism for the same reasons that I love physics and evolution.
Capitalism is beautiful.
The human concept of private property is simply an extension of human nature. First, property "rights" (in my opinion rights are but human constructs; the systems of "rights" that come to predominate in a human society are social norms) can only arise when conflict is possible, and conflict is only possible when there is scarcity. Whenever goods (things that are capable of satisfying human wants, needs, and desires) are scarce, conflict can arise. If I eat an apple, you can not. My satisfaction must come at the exclusion of the satisfaction of others. Obviously, conflicts can arise. Who gets to eat the apple?
We can imagine an infinte number of different "rules" for resolving who gets to eat the apple. Animals in the wild have such rules; the largest, the fastest, the most vicious, etc., gets to eat, while others do not (if they do not get eaten themselves). To be sure, people can use these kinds of rules as well, but in general, they do not. Through evolution, nature constructs all animals to minimize costs, since costs come at the expense of copies of genes, and the name of the game is producing the highest number of copies of one's genes as possible. Human beings are capable of minimizing their costs through the application of their reason; i.e. a man can formulate plans that operate in the distant future, and can rationalize the likely outcomes of these plans, and choose from amongst them the plan that he believes will be the least costly, the most profitable, the least risky, etc.
Because of this ability, a man can readily see that constantly fighting over resources is not a very smart thing to do. It is costly and risky, and the potential benefits are small (you only gain your next meal before you must begin your struggle again). In order to reduce these costs and risks, the concept of property arises (property I believe is actually much more ancient than humanity; dogs understand property; it is simply that man uses his reason to formalize property and make the concept infinitely more useful). Property serves to prevent conflicts over scarce resources in the first place, and resolve them when they arise.
So what property rights are the "best"? Well, it seems clear that property rights are more likely to be universally adopted and respected if they are symmetric, i.e. a different set of rules cannot apply to you than applies to me; otherwise there will be resentment. So property rights are more likely to be accepted by a larger number of individuals if they are "homogeneous and isotropic" to borrow a phrase from my physics background. I.e. everyone has the same "rights" and all interactions regarding property are symmetric; if the roles in a dispute were reversed, the settlement of the dispute would not change.
Property rights are also much more likely to be accepted if property claims based on these rights can be objectively defended. My claim is that there is only one objective system of property rights that can be identified, that of first appropriation and voluntary exchange. All other systems of title assignation are arbitrary and can only be subjectively, rather than objectively defended. Hence all other systems will lead to perpetual conflict, which means that they ultimately will not serve as property systems at all, since the entire point of property is to prevent and resolve conflicts, rather than foment them.
First appropriation and voluntary exchange is objective. *I* was the first person to appropriate this previously un-owned nature given resource, and no one else can truthfully make that claim. I labored to create this good from that resource, and no one else can truthfully make that claim. I voluntarily gave my good in exchange for that good, and no one else can truthfully make that claim. Of course, since human beings are not omniscient, false claims of first appropriation and voluntary exchange can be and are made. Man develops ways of vetting real claims to proof against this. The more valuable the good, the more elaborate the measures that are created to establish legitimate title.
Any intervention in this system of first appropriation and voluntary exchange represents a weakening of the system that acts to prevent and resolve conflicts and a tendency toward fomenting and increasing conflicts instead, since all other types of property systems must be subjective, and are essentially arbitrary; i.e. they rely on nothing more than subjective verbal claims upon property and the ability of one individual or group to persuade others (whose subjective opinions are subject to change, leading to future conflicts), or to simply violently overcome them (clearly not a very good system of avoiding costs and risks!).
Empirically we see this system of private property in operation all over the world. When new resources are opened up to small groups, social norms quickly arise to establish claims, and prevent and resolve disputes. However this system is of course by no means universal; there are many tribes and societies where certain goods are subject to the rules of private property, but other resources are not. There are many tribes that operate with private property in consumers' goods but not the factors of production. The property rules are assymetric and heterogeneous, and title is established not through first appropriation and voluntary exchange but rather through the verbal declarations of some special priveleged individual or group, such as a chief or a council of tribal elders. Indeed all modern societies operate in this fashion to a large extent, resulting in a proprty system that foments conflicts and engenders uncertainty in preoprty owners, reducing their time horizon and their ability to plan, which incentivizes consumption at the expense of production. But I'm getting ahead of myself. ;-)
The second principle that capitalism is based on (which I said was the other side of the coin of private property, i.e. first appropriation and voluntary exchange) is freedom of exchange. I.e., not only can legitimate title be maintained through voluntary exchange, but voluntary exchanges should not be interfered with by third parties. This is part and parcel of the homogeneity of property; if I don't want my voluntary transactions interfered with, I probably should not set the precedent that interfering with voluntary transactions is allowable myself. It is clear that any systemization of interference in private exchanges is actually an attack on the integrity of private property itself, since how can you claim that you "own" something in a meaningful (i.e. economic) way if you are prevented from utilizing it (and hence cannot gain satisfaction from it)? This also clearly acts to foment conflicts and increase uncertainty, incentivise consumption at the expense of production.
Voluntary exchange also has the interesting property that all participants in voluntary exchanges must believe that the exchange will benefit them, or else the exchange simply will not take place. Now, after the fact their judgement may prove wrong, but this simply means that the likelihood of all future exchanges of the same class is now affected by previous results. For example, if you believe you got swindled before, you are much less likely to be swindled a second time, because you will not do business with the swindler.
I should probably explicitly mention the division of labor, which is implicit in the idea of capitalism. Reason allows man to undertake in the division of labor, to specialize, which increases his productivity, and then trade, which increases his access to more and more varied consumers' goods. Bill Gates might not only be a magnificent software mogul, he might be able to clean office space faster and more thoroughly than anyone alive. But since the market values his skills as a mogul vastly more than it does his janitorial skills, he becomes wealthier by hiring a janitor who is wholly inferior in his ability to clean. The janitor easily outcompetes Bill Gates . . . for the job of janitor. Meanwhile the janitor is able to afford a computer and software he would have no hope of being able to produce. The division of labor and freedom of exchange makes both parties wealthier.
So private property based on first appropriation and voluntary exchange in all orders of goods (consumers' and producers') and resources, as well as complete freedom of exchange of the same, are the fundamental principles of capitalism. I said there was a third, but I hesitate to actually call it a principle, so much as a requirement for capitalism to operate to its fullest capacity. That requirement is the existence of a money. Societies that do not have a money, i.e. that operate entirely on barter, can have both private property in all orders of goods and complete freedom of exchange, but will still be chained economically. They are restricted by so-called double coincidences of wants, i.e. I must have what you want, and you must have what I want. Furthermore, there is absolutely no way to judge whether or not goods and resources are going to the most highly valued uses or whether they are going to lower valued uses (i.e. they are being wasted), since all goods have different units, and are therefor incomensurable. As society becomes more populous and more complex, and the number of alternative uses of all goods and resources skyrockets, there is no way to judge whether or not one use is "better" than another.
A money is a market commodity who some smart fellow realizes is more easily exchanged than what he has produced. If he can exchange his goods for this more readily exchanged good, the value of his own goods and his ability to get what he wants have both gone up. There is a snowball effect in the market, and a few commodities will rapidly become moneys, and will become value as a medium of exchange (in addition to whatever uses they already served in the market). Market moneys compete against each other, and ultimately there are usually only one or two. Historically there have been many moneys, including salt, sugar, seashells, tin, etc. but ultimately gold won out (with a few places still using silver) in the 19th century. The reasons that gold makes a good money is that it is durable, easily divisible, hard to counterfeit, and has a high value to weight ratio.
A money elliminates the problem of double coincidences of wants. It also elliminates the problem of incomensurable units, almost magically. Potential consumers of goods will bid against each other in units of the money (ounces of gold, for example) and will generate market prices for all goods and resources. This creates a single unit that all goods can be measured in to establish the costs of production, as well as the revenues that can be earned from sales. This allows the entrepreneur to engage in cost accounting. Cost accounting is a miracle of the market. It allows producers to determine, in a single unit, exactly how much production will cost them, exactly how much they can generate in sales. The latter minus the former will either be a profit or a loss.
A profit is a signal to the entrepreneur, it tells him that he has taken a bundle of inputs that the market only valued at X and has produced something that the market values at X+Y. I.e. he has raised the value of scarce resources for the market, and the market is of course, consumers.
Meanwhile, a loss is also a signal. It tells the entrepreneur that he has taken a bundle of inputs that the market valued at X and has produced something that the market only values at X-Z. I.e. he has reduced the value of scarce resources. He has wasted them. But it gets even better. Not only are his losses a signal that he had better shape up, either raise the value for the market or reduce his costs of production, losses act as a feedback mechanism that forces the entrepreneur to stop wasting resources, for if he continues, he will go broke, and the waste will be halted!
So losses act toterminate waste. Meanwhile, profits act to concentrate resources into the hands of those producers who best satisfy the market. This is a tremendously good thing for consumers.
Consider this. Society may only become wealthier in the long term through increases in productivity (one society may become wealthier in the short term by conquering another society). Increases in productivity comes with the formation of capital goods (well, productivity can also increase as labor becomes more skilled, and as production recipes improve; but you can have the most skilled laborers and the best technical recipes possible, and if you have no capital, you will have little production). Capital goods can only be created after savings at the expense of consumption. Profits act to channel resources into the hands of the best entrepreneurs (i.e. those that provide the most for consumers at the lowest cost). Those entrepreneurs will invest those profits into accumulating capital goods that increase productivity, which of course, benefits consumers. Those that do not will be outcompeted, and will either have to shape up, or again, suffer losses and go out of business.
Consumers have total power under capitalism. A billionaire may invest his billions into producing cars, but if consumers do not want them, he will go broke. Profits reward businessmen for satisfying consumers. To be sure, the businessman probably does this out of self-interest, but he still must satisfy consumers. It is not through the goodness of their hearts that the butcher, the baker, and the candlestick maker provide their wares to me, but I still end up with beef, bread, and candlesticks--if I want them.
Consider how profits work as signals in a market economy. First, in the absence of systematic coercion, the only way to achieve sustained profits is to elevate the value of scarce resources and have consumers voluntarily pay you for the things you produce. The price system together with profits and losses, act as signals to investors and entrepreneurs. A business that is seeing above average profits will attract competitors, which expands the market supply. Those above-average profits will also be re-invested by the business itself in expanding supply (to do otherwise is a loss of potential profit). This expanded supply will lower the market price of the commodity, and lower the general level of profit. Meanwhile, the investment in that line must come at the expense of other lines (since the factors of production are at any one time finite). Entrepreneurs obviously choose to shift investment from businesses that are experiencing losses or below-average profits. This reduces the supply in those lines, and brings the general level of profit in that line back up. Hence, profit levels across the entire economy tend toward an equilibrium level. This serves to keep the entire economy in balance. As demand for certain lines wanes, profits fall, and investment is shifted away from those lines. As demand for certain lines waxes, profits rise, and investment is shifted toward those lines.
Also, in the absence of systematic coercion, the only way to achieve sustained above-averageprofits is to continually innovate, either in providing newer and better products, or in lowering costs of production. This is how vast fortunes are accumulated under capialism. It is the only way vast fortunes can be accumulated under capitalism. By satisfying more and more consumers at ever lowers prices, the standard of living of consumers is continuously improved. As his reward for his self-motivated humanitarianism, the capitalist is rewarded with extraordinary levels of profit, which he reinvests, accumulating capital which allows him to become still more productive, making consumers still more wealthy. This is the feedback mechanism that is responsible for the incredible standards of living of the industrialized world, and that allows for the support of 6 billion people and counting.
But where do consumers get the money to purchase these goods? From the capitalists. Because capital produces the market demand for labor. By accumulating capital, the capitalist increases the market demand for labor. He needs workers for his lines of production. There are always many, many times more potential jobs than there are workers to fill them. Capitalists must compete with each other for the workers they need to sustain their high level of productivity. They compete by bidding up the price of labor, just like any other factor of production, on the market. This comes both in the phenomenon of wages, and also non-monetary compensations (which of course still have monetary costs to the capitalists) such as shorter work weeks and work days, longer vacations, safer work environments, training and education, nicer offices, company cars, flexible hours, etc.
As an aside, many times on this board I have seen people blame the "horrible" working conditions of the early industrial revolution and the Third World, as well as child labor, on capitalist "exploitation" of workers. Nothing could be further from the truth. There are always far more potential jobs than there are workers, and capitalists must always compete for workers. Capitalists pay the maximum amount possible for labor, otherwise some other capitalist will outbid them, their production will suffer, as will their profits. The difference between the modern west and the early industrial revolution and the third world is, of course, the amount of accumulated capital. When the accumulated capital is low, so is productivity, and so are wages, and so are standards of living. Nothing can magically change this. The only thing that imrpove standards of living is higher real wages, and higher real wages can only come with increased productivity, and increased productivity necessitates accumulated capital, and it has taken the west centuries to accumulate the capital stock it has. It could never have accumulated that capital stock under the system of property rights operative in the third world. In fact, the west could never have accumulated that capital stock under the system of property rights operative in the first world today. Real wages have been stagnant or begun to fall in the west, reflective of a reversal in the trend toward higher productivity. This is the result of interventions in the private property system and freedom of exchange that lower productivity and act to incentivize consumption and deter investment. This slows and halts capital formation and eventually leads to capital consumption. "Harsh" working conditions associated with low productivity are still better than the alternatives, short, nasty, brutal lives of subsistence farming, crime, and prostitution.
Labor laws do not improve working conditions. Capitalists improve working conditions to increase productivity and compete for labor. Labor laws have a clear history. They exist to protect certain laborers, mostly union laborers, from competition, from the lower priced labor of women, immigrants, blacks, and yes, even children. These people are throw out of work and into poverty, while consumers are made poorer because they have fewer goods and services of poorer quality but higher price to choose from. Minimum wage laws do not help the poor, they throw them out of work. Mandating a minimum wage of $7 per hour, for example, means that all workers providing less than $7 per hour of value will simply be fired. Period.
Anyway, back to the capitalists, labor, and wages. Marxists believe that because a laborer produces a widget that sells on the market for $100, yet only gets paid $80 for his labor, he has been "exploited" by the evil capitalist to the tune of $20. They believe that capitalists "deduct" their dirty evil profit from what should rightfully all be wages. They are incorrect.
What Marxists and their ilk never seem to understand is time and risk. Workers, like all human beings, are constrained by time preference. They prefer goods sooner rather than later. They prefer the certainty of $80 at the end of the week to the uncertainty of $100 in several months. If they did not, theywould not voluntarily exchange their labor for the $80. It is just that simple. The capitalist, on the other hand, has accumulated a large capital stock. His time preference is lower. His most immediate needs are satisfied, and his time horizon is more distant. He can more readily engage in savings and investment. He can more readily tolerate the risks of an uncertain future. He values the risky $100 in several months made possible by the labor more than he values the certain $80 now. Because the value scales of the two parties are reversed, an exchange takes place. It is the capitalist who takes the risk. If he guesses wrong, he suffers loses, while the laborer does not.
Imagine a man who makes wooden shoes from trees on his own property. He suffers no money costs of production (his costs still include his time and effort, of course), so when he sells his shoes in the market, all of his sales revenues are profit. Now imagine that his shoes are so highly demanded that he desires to expand his production. He hires a laborer to make shoes for him. He is the capitalist (his capital stock is his land and tools, and his savings from which he must pay his laborer). The wages he pays his laborer are deducted from his sales revenue, i.e. his profits. Capitalists are not responsible for the creation of the phenomenon of profits and their deduction from wages, but rather they are responsible for the creation of wages and their deduction from profits!
In fact, the more numerous are the capitalists, and the wealthier they become (i.e. the more accumulated capital each has to employ), the higher is the demand for labor, the stiffer is the competition for labor, and the higher must wages become as a fraction of profits. As the capitalists become more numerous and prosperous, the lower the general level of profit goes.
The general level of profit is, in fact, the interest rate. It is the objective market realization of the subjective time preferences of society. The higher the general time preference in society, the more immediate consumption is preferred to savings and future consumption, the higher a premium must be paid to an individual to induce him into defering consumption for savings. This is the interest rate (there is actually a spectrum of interest rates of differing maturities, but you get the point). By the end of the 19th century, the real interest rate (and the general level of profit) had fallen to just over 2%. Think about that; it's really quite astounding. Would you invest a dollar on the promise of receiving 2 cents in juice after a year? I wouldn't. Yet it was the norm 100 years ago. What happened? I'll bet you can guess.
Furthermore, as productivity increases, the costs of non-labor inputs must fall, meaning that almost the total sales revenue ends up becoming wages. Currently in most industries labor costs run about 80% of all costs, with profit levels averaging somewhere in the neighborhood of ~7%. In a free market, as capital is created and accumulated, as productivity increases, the non-labor costs and the general level of profit tend to zero and wages as a fraction of sales revenues tend toward 100%!
This is what the Marxists want out of their Utopia, isn't it? Consumers have total power: check! There are no profits: check! Laborers receive 100% of sales revenues as wages: Check! Of course in a real economy non-labor costs will never be truly zero, nor will profits. But that's the direction that the economy tends to.
Let's look at competition. What is capitalist competition? Is it like Darwinian competition? Is it a competition of all against all for scarce resources, where one individual's consumption must come at the expense of all others? Our original analysis of scarcity and property would lead us to think yes, but in fact, the answer is an emphatic no. Rather than a competition between consumers to consume scarce resources, capitalism is a competition amongst producers to increase the supply of scarce goods and resources! That is how capitalists make profits, they increase the supply of what others want to consume. The ones who are the best at it make the most profits.
It is man's reason that allows him to do this, to produce, to increase the supply of scarce goods. It has allowed our species to become more and more successful while becoming more and more physically weak and defenseless. We have no fangs, no claws, no fur, our senses are poor, we are slow, and weak. We are all of these things because our reason (and dexterity) has allowed us to increase the supply of scarce goods that life depends on without strength, speed, fangs, claws, sharp senses, etc.
The spontaneous order of the market is created by the competition of capitalists, not to consume limited resources, but to increase the supply of scarce goods and resources to consumers in an effort to get them to voluntarily hand over scarce dollars. Those with poor sight can read because of self-interested optometrists and eyeglass makers. Those with poor hearing can hear because of self-interested hearing aid manufacturers. Those who are paralyzed can move around because of self-interested wheel chair manufacturers. Those who are sick can live because of self-interested doctors. Capitlism leads not to the survival of the fittest but to the survival of all, or at least of more and more for longer and longer at ever higher standards of living.
The only sense in which capitalist competition is survival of the fittest, is the survival of the fittest producers. And even when producers fail and don't "survive", no one dies; scarce factors of production that were previously wasted are freed by bankruptcy to be acquired by other producers that consumers find more favorable.
How about monopoly? Can a monopoly exist in a free market? In short, no, at least not in a modern free market. There is some contention amongst those in the know about whether even so-called "natural monopolies" can exist at all, but it is certainly the case that they cannot exist in a modern free market.
A monopoly can only exist under a system of institutionalized coercion that acts as a barrier to entry into markets. In a free market, any firm that achieves above average levels of profit invites competition. It's that simple. The objection that entering the car market, for example, requires an enormous investment of capital, while true, is no objection at all. The enormous capital investment is of course only required to achieve the level of productivity and low enough unit costs to compete in the first place. All that capital is required to serve consumers. You could start building cars by hand tomorrow in your back yard, but neither your quality nor your unit cost will be able to compete with established automakers.
As another aside, why then do we have antitrust laws? Doesn't the existence of antitrust laws demonstrate that we need protection ffrom monopolies? No, of course not. The history of antitrust law is clear. Producers in various industries who were being outcompeted lobbied politicians, claiming that the practices of their competitors (making superior products at lower costs and prices) were "uncompetitive" and "monopolistic", and had antitrust laws created to break up these competitors (so that they lost economies of scale), fix prices, and increase the regulatory burden on them (and hence raise their prices), so that they (those seaking protection from competition) could again "compete".
Anyway, a capitalist society is a contractual society, i.e. there is no institutionalized coercion. There of course will always be crime (aggression against property), but it is not legitimized and institutionalized. Rather, private property and contractual voluntary exchange is institutionalized in social norms and the institutions that arise to secure them. Any society with an economic system based on institutionalized coercion is not capitalist, exactly to the extent of the institutionalized coercion. It may be many things, socialist or mercantilist or what have you, but it is not capitalist. Hence there are no capitalist societies, at least not purely capitalist, which would commonly be called "anarchocapitalist", i.e. capitalist in all things rather than some incomplete subset of goods, services, individuals, etc.
Statists argue that the institutions upon which capitalism is based, private property, freedom of exchange, and money, require a coercive monopolist to secure them. That for example, property must be expropriated to secure property, that coercion must be undertaken to secure freedom, and that fraudulent money must be created to secure the monetary system. Needless to say, I find these Orwellian justifications of the state to be nonsense. Monopoly is in all cases bad for the consumer. A monopolist of justice, who can unilaterally redefine justice and assign its cost, will inflate the cost of justice while its quality falls. Those who can tax, will. Those who can write arbitrary and artificial law, will. These taxes and laws will always favor those writing the laws. Those who can print money and spend it, will. Duh.
Contrary to what statists would have you believe, private property, the law (social norms), money, and social order all predate the state and its interventions in each. They are all emergent phenomena of the market. History is rife with examples of the market producing new property rights, methods of securing those rights, and resolving conflicts, all in the absence of a coercive monopolist. After the fact in many cases these systems have been coercively monopolized by the state, but that is exatly the point when they cease to be tested by and vetted by the market, and becomes tools of exploitation of consumers by the state.
For example, just as state monopolization of the money supply has led to monetary inflation and uncertainty, so has state intervention in the law led to legal inflation and perpetual legal uncertainty and hazard. Both of these incentivize consumption and deter savings and investment, leading to a relative lowering of productivity, prosperity, and peace.
What about so-called "public goods"? We are told that the state must coercively monopolize the provision of certain goods because of "market failures", i.e. the market cannot provide for certain things. But . . . how can you tell when the market has "failed"? There is no objective metric other than the market itself to determine what should be produced, i.e. what consumers demand. What is clear is that consumers will demand fair judgments; fair judgments are valuable on the market, unfair ones are worthless. Consumers will demand security; security is more valuable on the market than insecurity. Consumers will demand roads. Roads are more valuable than the absence of roads. Consumers will demand health care. Health is more valuable than sickness. Private market suppliers of all these things exist, wherever they are allowed to.
Private competitive firms must provide all of these efficiently and in ever higher quality and supply, or else they will suffer losses and go out of business. The state cannot suffer losses nor go out of business. The state has no incentive to provide more efficient or just justice. The state has no incentive to provide better roads, better education, better anything. In fact, the worse the state makes a problem, the more money it can justify taking to spend on "fixing" it!
There is nothing magic about judgments, security, health care, roads, or any other good that prevents competitive firms from providing them and requires a coercive monopoly supplier. There is no way other than the market to determine how much of a good should be produced, or at what price.
States can never do anything "good", since to do any "good" a state must begin by coercively doing something bad to someone else; it must prevent people from freely exchanging, it must expropriate their property, etc. Since utility is subjective, there is no way to intersubjectively ascertain that the "good" outweighs the bad. Objectively though, we can say with absolute certainty that all state interventions must take the form of property violations and restrictions on the freedom of exchange. Both of these things act to deter savings and capital accumulation and increase uncertainty, which incentivizes consumption, further at the expense of savings. State redistributions of wealth from producers, savers, and contractors to non-producers, non-savers, and non-contractors deters production, savings, and contractual interactions and incentivizes non-production, consumption, and non-contractual interactions (aggression). All of this objectively makes society poorer and lowers standards of living.
State interventions in the price system are not only coercions that interfere with the freedom of exchange, they create perversions in the market that have far reaching effects. Artificially capping the price of a good below the market clearing price will produce lasting shortages and ensure that scarce resources are wasted (since people will be consuming resources that have higher valued uses elsewhere--for example health care; when visits to the doctor are "free" lonely people with no one to talk to them will visit the doctor and waste valuable time and resources that could be used on sick people). Artificially fixing prices above the market clearing prices will produce lasting surplusses and also ensure that scarce resources are wasted (since scarce resources were used to produce things no one is using and are piling up or rotting in warehouses--for example minimum wage laws; labor is used up in people waiting in unemployment lines that could be used stocking shelves or sweeping floors).
What about planning? Is a capitalist economy "unplanned"? On the contrary, it is as totally rationally planned as possible. Since the information required to make rational decisions about the allocation of scarce resources is decentralized and distributed throughout the economy, with each actor knowing only a tiny, infinitesimal fraction, he makes his plans with the information he has with regards to only those resources that are under his control. The price system acts to harmonize the plans of all market participants. Consumers of eggs do not need to know there was a blight that struck the chicken population in order to cut back on their consumption, the increase in price leads them to the correct action automatically. When high profits signal that there is a demand for an increased supply of X, investors appear. When I plan to move to the beach, the price of beachfront property induces me to adjust my plan.
On the contrary, it is central planning and socialism that is unplanned and chaotic. The central planner can never have access to all of the information relavent to the allocation of resources. Asking that the brains of so few make the decisions for so many will work about as well as asking the legs of so few to carry the weight of so many. Resources will be wasted and allocated politically, rather than according to consumers' demands. Under total socialism (communism) there is no private property in the factors of production, no freedom of exchange in those factors, which means there can be no market prices, no profits and losses, no way to do cost accounting, no way to determine whether scarce resources are being wasted, no way to tell what uses are highest or what production processes the least costly. Massive waste must result. Far from being "planned", socialism and central planning result in irrational chaos.
This has been somewhat rambling and is necessarily incomplete, being a tiny fraction of the theoretical foundations of private property, money, the law, the market, social order, the state and its interventions, etc. For more detail, see the work of Murray Rothbard and Hans-Hermann Hoppe. Hopefully you've gotten some idea of why I'm a capitalist. In short, under capitalism all individuals become as wealthy and secure as their reason and labor, and the reason and labor of their suppliers, allows. Through the logic of self-interest through mutual accomodation, the market creates spectacular spontaneous order and complexity. I love capitalism for the same reasons that I love physics and evolution.
Capitalism is beautiful.
Q & A with a socialist
Also, When I asked a hypothetical question for the sake of argument/understanding presuppositions, you didn't answer but instead said it might not be a realistic scenario, of course it might not be: that's why I used the terms 'suppose' 'assume' 'hypothetical etc., to avoid that kind of massive confusion and time wasting sidequest.
OK, here's a hypothetical. A government is formed on the premise that everyone should be equal. They then proceed to take everything that everyone produces, and redistribute it as their planners see fit. Productivity plummets, and everyone starves. To punish the slackers, they begin purges, shooting everyone that doesn't meet arbitrary production quotas in the head. Ethical?
You can construct hypotheticals to support whatever argument you're making all day long. That doesn't make them good, or interesting.
Quote:
Anyway, one thing I do want to point out that this reply:
snipped...
Is wrong.
First, I said people should have a legal right to choose their own job; I never said anybody has a right to the 'fruits' of their labor. I started a thread which showed libertarians cannot completely counter the marxian charge that capitalism is exploitative,
The charge can't be countered? First of all, that's patently false. Further, it doesn't *need* to be countered, because it can't be substantiated on it's own!
Can you "counter" the charge that aliens living in a parallel dimension are coming to conquer the earth in six months? Completely? Must it therefore be true?
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given this premise, but I also stated I do not agree with it. A person's ability to make money in the market is based upon luck and privilege, and nobody has a right to either of those things. Once they have choosen their job they can legitmately be taxed.
Not having a right to something doesn't give anyone else to deprive one of possession (or use of it. My neighbor has no inalienable right to own omaha steaks, but he has a freezer full of them. Is his possession of them illegitimate? Should I just go an help myself whenever I'm hungry?
Quote:
Secondly, I've explained in a whole thread, and have been explaining for much of this thread in an additional way, why inequality is wrong. That is why what you call 'the mob' has a right to what is produced by all.
Oh. You explained it, therefore you must be correct? Maybe you should take your own advice:
Quote:
recognize, very briefly at least, that there is more than a 0% chance you are wrong sometimes and possibly even there is more than a 0% chance I might be right about at least one thing.
Because, hey, I explained why aggregate collections of people have no rights over individuals, therefore *I* must be correct. At least, by your "I explained it, therefore it's proven" argument.
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Your assumption that nobody owns things initially begs the question in the part where you say "get claim to that production after I've mixed labor with it that they didn't have before". Why assume they don't have a claim to those matierals before you grabbed them?
I don't assume that. I said "If I mix my labor with materials that nobody else has claim to" - that doesn't "assume" that everything is unowned, but it does presume that things are not owned if no one claims ownership of them (and therefore it is possible for some things to be unowned at a given time).
Of course, this is a petty point for you to attack, anyway, since you believe that everything is taxable, and therefore people don't have true ownership of anything.
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Your 'labor' example is ridiculous; labor is almost always traded for goods (in a barter system) or for money which itself is a thing which can also be traded for other things by law and/or custom.
Exactly!
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hence the person buying your labor is transfering his right over things to you in exchange for your labor: it still involves the trade of rights to things and not just self-owned powers.
Yes.
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When you go to work for someone else you are going to work in exchange for the legal right to something. Even the building or area in which you would be working in is a thing, which is either owned by somebody
No disputes.
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or owned by the government/all of us in common.
Governments cannot legitimately own property.
Quote:
Let us think next time before assuming a point is realistically debatable.
I'm not sure why pointing out a bunch of stuff I don't dispute (and adding one minor point that I disagree with, but one that is only tangentally related to the others) somehow makes this "undebatable".
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Nor have you refuted my analysis which clearly illustrated the fact that should be obvious to everyone, namely, that everything you have, and everything you will ever have, is based on the work of lots and lots of people, and not just your self owned power.
Again, I don't dispute that at all. Cooperation is great.
Quote:
If it was true that it was your "self-owned" powers which allowed you to accumulate wealth, than you would be able to become wealthy on a five foot desserted island entirely lacking in any kind of natural resources nearby with absolutely no contact with any other people. Not only would you not become wealthy in this situation, since any food or water you could attain without humans creating it would be a natural resource, and by hypothesis you do not have any natural resources, you would be dead within a matter of days. Our own talents and powers are worthless without the help of others and natural resources. It is not fundementally your own ability which gets you wealth
Never said otherwise. Again, take your own advice.
Quote:
reread the post slowly and attentively
Your argument is basically: "The sky is blue. If you can't refute this, everything else I say must be 100% correct."
OK, here's a hypothetical. A government is formed on the premise that everyone should be equal. They then proceed to take everything that everyone produces, and redistribute it as their planners see fit. Productivity plummets, and everyone starves. To punish the slackers, they begin purges, shooting everyone that doesn't meet arbitrary production quotas in the head. Ethical?
You can construct hypotheticals to support whatever argument you're making all day long. That doesn't make them good, or interesting.
Quote:
Anyway, one thing I do want to point out that this reply:
snipped...
Is wrong.
First, I said people should have a legal right to choose their own job; I never said anybody has a right to the 'fruits' of their labor. I started a thread which showed libertarians cannot completely counter the marxian charge that capitalism is exploitative,
The charge can't be countered? First of all, that's patently false. Further, it doesn't *need* to be countered, because it can't be substantiated on it's own!
Can you "counter" the charge that aliens living in a parallel dimension are coming to conquer the earth in six months? Completely? Must it therefore be true?
Quote:
given this premise, but I also stated I do not agree with it. A person's ability to make money in the market is based upon luck and privilege, and nobody has a right to either of those things. Once they have choosen their job they can legitmately be taxed.
Not having a right to something doesn't give anyone else to deprive one of possession (or use of it. My neighbor has no inalienable right to own omaha steaks, but he has a freezer full of them. Is his possession of them illegitimate? Should I just go an help myself whenever I'm hungry?
Quote:
Secondly, I've explained in a whole thread, and have been explaining for much of this thread in an additional way, why inequality is wrong. That is why what you call 'the mob' has a right to what is produced by all.
Oh. You explained it, therefore you must be correct? Maybe you should take your own advice:
Quote:
recognize, very briefly at least, that there is more than a 0% chance you are wrong sometimes and possibly even there is more than a 0% chance I might be right about at least one thing.
Because, hey, I explained why aggregate collections of people have no rights over individuals, therefore *I* must be correct. At least, by your "I explained it, therefore it's proven" argument.
Quote:
Your assumption that nobody owns things initially begs the question in the part where you say "get claim to that production after I've mixed labor with it that they didn't have before". Why assume they don't have a claim to those matierals before you grabbed them?
I don't assume that. I said "If I mix my labor with materials that nobody else has claim to" - that doesn't "assume" that everything is unowned, but it does presume that things are not owned if no one claims ownership of them (and therefore it is possible for some things to be unowned at a given time).
Of course, this is a petty point for you to attack, anyway, since you believe that everything is taxable, and therefore people don't have true ownership of anything.
Quote:
Your 'labor' example is ridiculous; labor is almost always traded for goods (in a barter system) or for money which itself is a thing which can also be traded for other things by law and/or custom.
Exactly!
Quote:
hence the person buying your labor is transfering his right over things to you in exchange for your labor: it still involves the trade of rights to things and not just self-owned powers.
Yes.
Quote:
When you go to work for someone else you are going to work in exchange for the legal right to something. Even the building or area in which you would be working in is a thing, which is either owned by somebody
No disputes.
Quote:
or owned by the government/all of us in common.
Governments cannot legitimately own property.
Quote:
Let us think next time before assuming a point is realistically debatable.
I'm not sure why pointing out a bunch of stuff I don't dispute (and adding one minor point that I disagree with, but one that is only tangentally related to the others) somehow makes this "undebatable".
Quote:
Nor have you refuted my analysis which clearly illustrated the fact that should be obvious to everyone, namely, that everything you have, and everything you will ever have, is based on the work of lots and lots of people, and not just your self owned power.
Again, I don't dispute that at all. Cooperation is great.
Quote:
If it was true that it was your "self-owned" powers which allowed you to accumulate wealth, than you would be able to become wealthy on a five foot desserted island entirely lacking in any kind of natural resources nearby with absolutely no contact with any other people. Not only would you not become wealthy in this situation, since any food or water you could attain without humans creating it would be a natural resource, and by hypothesis you do not have any natural resources, you would be dead within a matter of days. Our own talents and powers are worthless without the help of others and natural resources. It is not fundementally your own ability which gets you wealth
Never said otherwise. Again, take your own advice.
Quote:
reread the post slowly and attentively
Your argument is basically: "The sky is blue. If you can't refute this, everything else I say must be 100% correct."
Tuesday, July 10, 2007
Selective Liberty
"
We have always accepted in America that certain restrictions on behaviors were needed to perpetuate our society so that we could truly live in liberty. I just dont think a society where unabashed drug use is allowed is one that any of us would truly want to live in."
No. We have always been FORCED to accept this.
I agree that some drugs are relatively dangerous, but keep in mind that there are also people in this country who are legally allowed to build death rays, operate nuclear reactors, perform surgery, drive cars (seriously, think of how many deaths we could prevent if we got rid of personal transportation), operate pyrotechnics, teach people how to ski down triple black diamonds, perform Hollywood stunts and get launched out of a cannon.
Why do we allow these people to do such horrifically dangerous things?
BECAUSE THEY HAVE A LICENSE TO DO THEM!!!!!
For most dangerous activities, it is the responsibility of the government to provide a reasonable means of allowing the priviledge only to those who demonstrate that they can do it safely. This protects the safety of others, and the freedom of those who want to do it. Want to drive? Prove you can, we'll give you a license, and you can take to the highway.
The same should be true with drugs. Marijuana, I feel, should not require anything more than being 18 years old, and maybe having watched a film or two about the risks. Some drugs, however, should require a little bit more. I feel that LSD should only be sold to someone after a psychological analysis by a competant practitioner. Strong uppers should go to people who have minimal or no violent criminal history. Heroin...well...damn, I don't know how to go about this one. Addictive drugs should have a selling limit; you can only sell x amount per week to a licensed consumer to regulate the possibility that they sell it to unlicensed people, given its high demand.
Some people CAN handle their drugs better than others. I've done a lot of acid, but I've never had a bad trip, and it hasn't affected me, or anyone else indirectly, negatively in any way. Other people I know have gone insane, gotten in their car, and wrapped it around a telephone pole. I should be allowed to drop acid, and they shouldn't.
I want my freedom protected.
Legalize and regulate.
We have always accepted in America that certain restrictions on behaviors were needed to perpetuate our society so that we could truly live in liberty. I just dont think a society where unabashed drug use is allowed is one that any of us would truly want to live in."
No. We have always been FORCED to accept this.
I agree that some drugs are relatively dangerous, but keep in mind that there are also people in this country who are legally allowed to build death rays, operate nuclear reactors, perform surgery, drive cars (seriously, think of how many deaths we could prevent if we got rid of personal transportation), operate pyrotechnics, teach people how to ski down triple black diamonds, perform Hollywood stunts and get launched out of a cannon.
Why do we allow these people to do such horrifically dangerous things?
BECAUSE THEY HAVE A LICENSE TO DO THEM!!!!!
For most dangerous activities, it is the responsibility of the government to provide a reasonable means of allowing the priviledge only to those who demonstrate that they can do it safely. This protects the safety of others, and the freedom of those who want to do it. Want to drive? Prove you can, we'll give you a license, and you can take to the highway.
The same should be true with drugs. Marijuana, I feel, should not require anything more than being 18 years old, and maybe having watched a film or two about the risks. Some drugs, however, should require a little bit more. I feel that LSD should only be sold to someone after a psychological analysis by a competant practitioner. Strong uppers should go to people who have minimal or no violent criminal history. Heroin...well...damn, I don't know how to go about this one. Addictive drugs should have a selling limit; you can only sell x amount per week to a licensed consumer to regulate the possibility that they sell it to unlicensed people, given its high demand.
Some people CAN handle their drugs better than others. I've done a lot of acid, but I've never had a bad trip, and it hasn't affected me, or anyone else indirectly, negatively in any way. Other people I know have gone insane, gotten in their car, and wrapped it around a telephone pole. I should be allowed to drop acid, and they shouldn't.
I want my freedom protected.
Legalize and regulate.
To the claims of minarchists
Unfortunately there never has been a minimalist/federalist interpretation of the U.S. Constitution by it's government. Some factions tried valiantly for a while, but the tireless efforts of ealry American Mercantilists, beginning with Alexander Hamilton and culminating with Abraham Lincoln, saw too it that minimalism and federalism were dead by 1865.
The whole idea of "strict constructionism" came about after the constitution was (illegaly) adopted, when Madison had a change of heart, realizing that he had written a document that gave essentially cart blanch to the Federal Government. Strict constructionism and "ennumerated powers" doctrines were an attempt to put the genie back in the bottle. But of course it was too late.
Personally, if the Constitution had not granted certain powers to the Federal Government, which were immediately (and by design) exploited to make certain men rich and powerful (e.g. Hamilton), things might have gone better for longer. But government would have continued its inexorable trend in the several States in any event, so it's hard to say.
There is absolutely no reason at all that the federal government should have the power to regulate foreign trade any more than it has the power to regulate interstate trade. And the interstate commerce clause was so poorly worded that it has come to be used for exactly the opposite of it's original intent, it is now cart blanch to regulate any and all domestic industry, when the original intent was simply to prevent interstate trade barriers and protectionism. There is no reason at all the the Federal government needs to run a postal system. There is no reason at all that the Federal government needs to "promote the general welfare," (i.e. engage in mercantilism and socialism, both demonstrable economic disasters). There was no reason for the Federal government to monopolize the coining of money (except to make Alexander Hamilton rich).
The whole idea of "strict constructionism" came about after the constitution was (illegaly) adopted, when Madison had a change of heart, realizing that he had written a document that gave essentially cart blanch to the Federal Government. Strict constructionism and "ennumerated powers" doctrines were an attempt to put the genie back in the bottle. But of course it was too late.
Personally, if the Constitution had not granted certain powers to the Federal Government, which were immediately (and by design) exploited to make certain men rich and powerful (e.g. Hamilton), things might have gone better for longer. But government would have continued its inexorable trend in the several States in any event, so it's hard to say.
There is absolutely no reason at all that the federal government should have the power to regulate foreign trade any more than it has the power to regulate interstate trade. And the interstate commerce clause was so poorly worded that it has come to be used for exactly the opposite of it's original intent, it is now cart blanch to regulate any and all domestic industry, when the original intent was simply to prevent interstate trade barriers and protectionism. There is no reason at all the the Federal government needs to run a postal system. There is no reason at all that the Federal government needs to "promote the general welfare," (i.e. engage in mercantilism and socialism, both demonstrable economic disasters). There was no reason for the Federal government to monopolize the coining of money (except to make Alexander Hamilton rich).
Monday, July 9, 2007
Is John Edwards Stupid? Yes!
Democratic U.S. presidential candidate John Edwards on Sunday said that he would raise taxes, chiefly on the wealthy, to pay for expanded healthcare coverage under a plan costing $90 billion to $120 billion a year to be unveiled on Monday.
"We'll have to raise taxes. The only way you can pay for a healthcare plan that cost anywhere from $90 to $120 billion is there has to be a revenue source," Edwards said on NBC's Meet the Press news program.
The 2004 vice presidential nominee and former North Carolina senator said his plan would "get rid of George Bush's tax cuts for people who make over $200,000 a year."
He said the plan would also reduce healthcare costs.
"Finally we need to do a much better job of collecting the taxes that are already owed," he said, specifically targeting what he said are large amounts of unpaid capital gains taxes.
"We should have brokerage houses report the capital gains that people are incurring because we're losing billions and billions of dollars in tax revenue," Edwards said.
Offering a preview of his plan, Edwards said it aims to bring healthcare coverage to 47 million uninsured Americans, lower costs for the middle class and foster competition.
It would expand Medicaid, the state-federal health insurance plan for the needy, and offer subsidies for the uninsured. He said, "We ask employers to play a bigger role, which means they either have to have coverage or they have to buy into what we're calling health markets."
Without providing details, Edwards said his plan would create "health markets" nationwide. One choice available in the markets would be "the government plan, so people who like the idea of a single-payer health insurance plan, that is actually one of the alternatives," he said.
Edwards declared his candidacy in December calling for fewer U.S. troops in Iraq, a restoration of U.S. world leadership and an end to poverty.
"We'll have to raise taxes. The only way you can pay for a healthcare plan that cost anywhere from $90 to $120 billion is there has to be a revenue source," Edwards said on NBC's Meet the Press news program.
The 2004 vice presidential nominee and former North Carolina senator said his plan would "get rid of George Bush's tax cuts for people who make over $200,000 a year."
He said the plan would also reduce healthcare costs.
"Finally we need to do a much better job of collecting the taxes that are already owed," he said, specifically targeting what he said are large amounts of unpaid capital gains taxes.
"We should have brokerage houses report the capital gains that people are incurring because we're losing billions and billions of dollars in tax revenue," Edwards said.
Offering a preview of his plan, Edwards said it aims to bring healthcare coverage to 47 million uninsured Americans, lower costs for the middle class and foster competition.
It would expand Medicaid, the state-federal health insurance plan for the needy, and offer subsidies for the uninsured. He said, "We ask employers to play a bigger role, which means they either have to have coverage or they have to buy into what we're calling health markets."
Without providing details, Edwards said his plan would create "health markets" nationwide. One choice available in the markets would be "the government plan, so people who like the idea of a single-payer health insurance plan, that is actually one of the alternatives," he said.
Edwards declared his candidacy in December calling for fewer U.S. troops in Iraq, a restoration of U.S. world leadership and an end to poverty.
Sunday, July 8, 2007
The Idiocy of The Welfare State
It is immoral to steal; it is also immoral to steal if 51% of the population (or more commonly 20-40%) tells you it's ok to steal. The goals of the welfare state appear to rooted in the ideals of Robin Hood : to steal from the rich and to give to the poor. Perhaps if the system wasn't so obviously a perversion of this basic principle I would support it; probably not but it's poissible.
If the goal of government is not to protect the life and liberty of our citizens and to protect our privacy but instead to provide "good governance" and to redistribute wealth from the rich to the poor while EVEN THEN the welfare state is stupid. Real stupid.
The argument behind government provided health care and education is either one of two things : either the argument is that socialism works, and that a better education can be provided by the government than the free market... this repudiating the truism that Centra Economic Planning does not work. If this were the case (and I assure it is not) why should we stop with just a little bit of socialism? Why not go all the way? Perhaps the government should give out bread, in order to prevent starvation? Perhaps we should ban people getting fired or quitting so no one is out of work? The same questions apply to Health Care.
Now then you can say, well ok socialism might not work very well... BUT WHAT ABOUT THE POOR PEOPLE? I would like to explain to you that socialism has never and will never 'take care' of the poor people. What about nations like Kenya? They certainly have lots of government... it's not helping out. The Soviet Union had more government than anyone but that didn't help the people in the gulags. Poverty has been BEATEN in Canada so even if there were no transfer payments, even if we didn't steal from the rich (WHICH IS WRONG) to give to the poor, this would not be a problem. Canadians are both rich and charitable enough to ensure that everyone had access to an education... and if we stopped stealing 50% of people's income in order to be "charitable" (funny, government officials are always being charitable with YOUR MONEY) there would be a lot more money going to charity.
BUT EVEN STILL
even if we NEEDED to steal from the rich and give to the poor, the welfare state is the STUPIDEST way of doing so. A negative income tax could take care of the issue of the very poor while still allowing competetive market forces to keep the cost of education and health care down and the quality up.
So the next time you're enjoying your "free" health care or your kid is enjoying a fine "free" secular education where he is indoctrinated into the values of modern secular socialism and taught that the free market just doesn't work... the next time you see a bunch of homeless people downtown, ask yourself "why don't we have the government controlling our food distribution? why don't we have the government making cars? why do we have the government involved in the means of production anywhere?"
Socialism is government ownership of the means of production; in our society government owns around 50% of the means of production. What do I mean? What happens when you control the means of production? You are entitled to the proceeds... is that not tax?
Say no to socialism.
Say yes to capitalism.
Say no to the welfare state.
Say no to corporate welfare.
Say yes to insane tax cuts at any opportunity.
Vote Libertarian
If the goal of government is not to protect the life and liberty of our citizens and to protect our privacy but instead to provide "good governance" and to redistribute wealth from the rich to the poor while EVEN THEN the welfare state is stupid. Real stupid.
The argument behind government provided health care and education is either one of two things : either the argument is that socialism works, and that a better education can be provided by the government than the free market... this repudiating the truism that Centra Economic Planning does not work. If this were the case (and I assure it is not) why should we stop with just a little bit of socialism? Why not go all the way? Perhaps the government should give out bread, in order to prevent starvation? Perhaps we should ban people getting fired or quitting so no one is out of work? The same questions apply to Health Care.
Now then you can say, well ok socialism might not work very well... BUT WHAT ABOUT THE POOR PEOPLE? I would like to explain to you that socialism has never and will never 'take care' of the poor people. What about nations like Kenya? They certainly have lots of government... it's not helping out. The Soviet Union had more government than anyone but that didn't help the people in the gulags. Poverty has been BEATEN in Canada so even if there were no transfer payments, even if we didn't steal from the rich (WHICH IS WRONG) to give to the poor, this would not be a problem. Canadians are both rich and charitable enough to ensure that everyone had access to an education... and if we stopped stealing 50% of people's income in order to be "charitable" (funny, government officials are always being charitable with YOUR MONEY) there would be a lot more money going to charity.
BUT EVEN STILL
even if we NEEDED to steal from the rich and give to the poor, the welfare state is the STUPIDEST way of doing so. A negative income tax could take care of the issue of the very poor while still allowing competetive market forces to keep the cost of education and health care down and the quality up.
So the next time you're enjoying your "free" health care or your kid is enjoying a fine "free" secular education where he is indoctrinated into the values of modern secular socialism and taught that the free market just doesn't work... the next time you see a bunch of homeless people downtown, ask yourself "why don't we have the government controlling our food distribution? why don't we have the government making cars? why do we have the government involved in the means of production anywhere?"
Socialism is government ownership of the means of production; in our society government owns around 50% of the means of production. What do I mean? What happens when you control the means of production? You are entitled to the proceeds... is that not tax?
Say no to socialism.
Say yes to capitalism.
Say no to the welfare state.
Say no to corporate welfare.
Say yes to insane tax cuts at any opportunity.
Vote Libertarian
Public Schools
"Public education is the biggest problem I have with libertarianism. "
Cool, that's the biggest problem I have with the welfare state. The public, secular schools are unable to teach values because religion has been banned. As an atheist, I'm somewhat happy I wasn't forced to hear about Jesus all day but at the same time I think it would have been a lot better if most of the people I went to school with had spiritual instruction; I think religious schools "work" a lot better as far as raising people who are not immoral is concerned.
We want to think that our public schools help people : but what proof do we have? Surprisingly, I think you will find it all comes down to the government and the schools telling us that schools help people. You need an education to get a job, need university to get a good job, etc. I do not believe this to be true. I think people need to be able to WORK to get a job; you might have to start somewhere low but if you're hard working, talented and ambitious you will always succeed. If you are lazy and untalented, you will probably fail no matter what you do.
Some people are helped by school. This is not because school exists, but because there exists within them a great will to learn, a will not our authoritarian school system cannot beat out of them. It should be obvious the structure of the school system is very authoritarian : 30 or more students sit in silence, while a teacher explains dogmatically what is true and what is false. Where, I ask you, did they think this would teach people how to learn?
What's my solution? I can't tell you exactly what form it would take... if I could, well that would be a pretty good argument for central economic planning, or socialism... which is the current system. I've got some ideas... schools over the internet would probably be the preferred market form, because what is learning but communication and what is the internet but the cheapest way to communicate... ever. But the current solution, that is socialism... it just doesn't work and that's obvious in my opinion by the billions we waste on it.
Politicians want you to believe that all we need to fix these problems is a few more billion, a little more tax... what we actually need to do is get more efficient.
Cool, that's the biggest problem I have with the welfare state. The public, secular schools are unable to teach values because religion has been banned. As an atheist, I'm somewhat happy I wasn't forced to hear about Jesus all day but at the same time I think it would have been a lot better if most of the people I went to school with had spiritual instruction; I think religious schools "work" a lot better as far as raising people who are not immoral is concerned.
We want to think that our public schools help people : but what proof do we have? Surprisingly, I think you will find it all comes down to the government and the schools telling us that schools help people. You need an education to get a job, need university to get a good job, etc. I do not believe this to be true. I think people need to be able to WORK to get a job; you might have to start somewhere low but if you're hard working, talented and ambitious you will always succeed. If you are lazy and untalented, you will probably fail no matter what you do.
Some people are helped by school. This is not because school exists, but because there exists within them a great will to learn, a will not our authoritarian school system cannot beat out of them. It should be obvious the structure of the school system is very authoritarian : 30 or more students sit in silence, while a teacher explains dogmatically what is true and what is false. Where, I ask you, did they think this would teach people how to learn?
What's my solution? I can't tell you exactly what form it would take... if I could, well that would be a pretty good argument for central economic planning, or socialism... which is the current system. I've got some ideas... schools over the internet would probably be the preferred market form, because what is learning but communication and what is the internet but the cheapest way to communicate... ever. But the current solution, that is socialism... it just doesn't work and that's obvious in my opinion by the billions we waste on it.
Politicians want you to believe that all we need to fix these problems is a few more billion, a little more tax... what we actually need to do is get more efficient.
London Libertarian Party
Facebook group :
http://www.facebook.com/group.php?gid=2389448908
Party website :
http://llp.zakyoung.com
http://www.facebook.com/group.php?gid=2389448908
Party website :
http://llp.zakyoung.com
Taxes
Hello friends! Are you sick of the wasteful welfare state? Do you not buy the myth, sold by the government and our school system that putting the government in charge of health care makes it magically awesome? Are you tired of having hire taxes than basically ANY OTHER COUNTRY ON THE PLANET THAT ISN'T OUT RIGHT COMMUNIST?
Our state is too large. It's time to fight back. I'm running in this election as a Libertarian and YOU SHOULD TOO; but at the very least, vote for us. The libertarian party is the only party opposed to socialized health care and public schools. We understand capitalism; we know it can provide higher quality and less expensive health care and education for EVERYONE. We don't need the government stealing from us to take care of the poor... if we didn't work half time for the government, we'd all be donating enough to charity to make sure EVERYONE got health care and EVERYONE got education. We are one of the richest societies in the world... but all the money seems to wind up in Ottawa?
WHY?
BECAUSE OF TAXES.
They TAKE YOUR MONEY and they give it to their friends. Neither the conservatives, the liberals nor the NDP are willing to reverse this trend! THEY ALL ENDORSE THE WELFARE STATE, MOST WANT TO INCREASE IT! Only the Libertarian party wants to shrink the size of government and to CUT YOUR TAXES. We want to get RID of taxes! Not over night mind you... we're realistic. We know people have been taught to depend on the government and they have to be weened off. So we start by just getting rid of the income tax... then we work on the rest!
If you keep voting for the same bastards who keep raising your taxes, don't come crying to me when your taxes go up. Make a difference, vote Libertarian.
Our state is too large. It's time to fight back. I'm running in this election as a Libertarian and YOU SHOULD TOO; but at the very least, vote for us. The libertarian party is the only party opposed to socialized health care and public schools. We understand capitalism; we know it can provide higher quality and less expensive health care and education for EVERYONE. We don't need the government stealing from us to take care of the poor... if we didn't work half time for the government, we'd all be donating enough to charity to make sure EVERYONE got health care and EVERYONE got education. We are one of the richest societies in the world... but all the money seems to wind up in Ottawa?
WHY?
BECAUSE OF TAXES.
They TAKE YOUR MONEY and they give it to their friends. Neither the conservatives, the liberals nor the NDP are willing to reverse this trend! THEY ALL ENDORSE THE WELFARE STATE, MOST WANT TO INCREASE IT! Only the Libertarian party wants to shrink the size of government and to CUT YOUR TAXES. We want to get RID of taxes! Not over night mind you... we're realistic. We know people have been taught to depend on the government and they have to be weened off. So we start by just getting rid of the income tax... then we work on the rest!
If you keep voting for the same bastards who keep raising your taxes, don't come crying to me when your taxes go up. Make a difference, vote Libertarian.
Saturday, July 7, 2007
Wednesday, July 4, 2007
Libertarian Candidate in London-West
Zachary Young is running as the Libertarian Candidate in London West in the upcoming election. Let's all wish him the best.
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