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Michael Shermer - The Mind of The Market
Posted: 29 April 2008 05:29 AM   [ Ignore ]   [ # 46 ]
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brightfut - 28 April 2008 01:39 PM
Trajan117 - 28 April 2008 11:47 AM

it was basically a political ideology masquerading as science.

You’ve decided that your point of view is correct and it’s time for the discussion to stop.  Why stop the discussion?  This would be a great opportunity for you and people who share your belief to convince who knows how many people of your point of view.  Economics is too important an issue to not discuss.

In my view, economics is as much a science as gazing into a crystal ball is a science. There are as many economic opinions as there are economists to hold them.

As to the discussion, I don’t think it’s appropriate for this forum. Read this thread. It’s politics. It’s basically left vs. right. There are endless venues on the web for left and right to battle it out. PoI, in my humble view, ought not to be one of them. It risks losing its unique—and uniquely valuable—identity as a place where issues of rationalism and science are freely discussed. I don’t include politics in either of those categories and think it a bad idea for PoI to start down that road.

This, of course, is just my opinion.

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Posted: 29 April 2008 06:13 AM   [ Ignore ]   [ # 47 ]
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[ Edited: 30 July 2008 06:50 PM by jholt ]
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Posted: 29 April 2008 11:35 AM   [ Ignore ]   [ # 48 ]
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rsonin - 28 April 2008 09:09 PM

It is a simple task to look at situations where deregulation has occurred and then see what happened afterwards.  In most cases, deregulation leads to economic disaster for the poor, economic suffering for the middle class, and the rich and corrupt getting richer.

There are very few examples of the opposite happening.

Here is a good example of where scientific methods could clear up some of the “Crystal Ball” (Trajan117 quote)  aspects of economics.  Study real world examples of where the same culture and people are split up into two different economic systems.  One system is regulated and the other system is an unregulated, free market.  Maybe the unregulated free market would lead to most of the profit going to the rich, but at the same time maybe the regulated economy would be even worse for the poor.  Examples would be North vs South Korea, China vs Hong Kong & Taiwan, and West Germany vs East Germany.  See which system worked better for the most people.  If any conclusions could be drawn then they could be used to advise and guide other countries in their economic policies.

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Posted: 30 April 2008 10:32 AM   [ Ignore ]   [ # 49 ]
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Here is a good example of where scientific methods could clear up some of the “Crystal Ball” (Trajan117 quote) aspects of economics.  Study real world examples of where the same culture and people are split up into two different economic systems.  One system is regulated and the other system is an unregulated, free market.

The comparisons you propose are both unscientific and ahistorical.

The “two economic systems” you refer to did not simply grow side by side in test tubes, but against one another as part of a global conflict in which one side (capitalist imperialism) always held the higher ground in terms of preexisting wealth, military strength and political influence. Meanwhile those countries that threw off capitalist rule were overwhelmingly situated in the hinterlands of the world economy (or regions that had previously been subject to decades of exploitation and underdevelopment by the imperialist colonizers). Moreover, the imperialists systematically used their advantages (bloody military interventions and other forms of miliitary pressure,  economic blockades, diplomatic isolation etc.) for the purpose of damaging or destroying the economies of the workers states wherever possible—eventually succeeding in the former USSR and Eastern Europe. 

This is not to say that there were/are no internal factors (e.g. bureaucratic degeneration misnamed as ‘socialism’) which negatively affect the development of non-capitalist countries, but these factors, too, were exacerbated by by both preceeding centuries of economic backwardness and the seige conditions created by hostile imperialist encirclement.

Once these factors are taken into consideration, and in view of the brutal the conditions in which they were born and struggled to survive, I would say that the workers states (like the former USSR) or today Cuba, China, Vietnam and North Korea (despite their bureaucratic deformities) show exactly the superiority of a centralized, planned economy over anarchic capitalist private property.

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Posted: 30 April 2008 11:22 AM   [ Ignore ]   [ # 50 ]
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brightfut - 29 April 2008 11:35 AM
rsonin - 28 April 2008 09:09 PM

Study real world examples of where the same culture and people are split up into two different economic systems.  One system is regulated and the other system is an unregulated, free market.  Maybe the unregulated free market would lead to most of the profit going to the rich, but at the same time maybe the regulated economy would be even worse for the poor.  Examples would be North vs South Korea, China vs Hong Kong & Taiwan, and West Germany vs East Germany.  See which system worked better for the most people.  If any conclusions could be drawn then they could be used to advise and guide other countries in their economic policies.

But that is one of my points: it’s not a case that there’s a simple dichotomy between free market and command economies, as in all your examples. N. Korea, E. Germany, and China did (or do) not have regulated free markets, they were (or are) communist command economies.

More applicable is the US vs. the social democratic model of Europe. Contrary to DJ’s claims, the free market operates in the EU and is heavily (even too heavily in some particulars) regulated. But the results are clear: Europeans in survey after survey live longer, are healthier and better educated, are happier, enjoy longer vacations and shorter work weeks, are less stressed and anxious, and, for all that, are more productive than we are in the US. They enjoy single-payer universal health care and a wide social safety net. They don’t face ruin if a family member gets seriously ill, or the main bread-winner loses his/her job. The EU is no utopia, of course, but the evidence is in: a regulated free market on the social democratic model spreads the goods around more equitably and leads to healthier, happier populations. CEOs in Europe live very well indeed, but they don’t earn 400 times the salary of the average worker in their companies, they don’t get $50 million annual bonuses or jump ship with $350 million golden parachutes.

I have had the advantage of having lived for extended periods in the EU, Canada, and the USA. I have witnessed first hand how these societies work. I have utilized, for instance, the health services in all of them. So I know, when I see some talking head on Fox “News” spouting right-wing talking points about how “socialized” medicine spells the end of health care in the USA, or is less efficient and more costly, or more dangerous to its patients, etc etc is complete rubbish. It works perfectly well, and *everyone* is covered. In fact, it was far more efficient than what I’ve experienced of the health system in the US. There, you show up, show your health card, have your procedure, and you’re done. Here you show up, fill out forms, have your procedure, and then spend months receiving bills and statements, writing checks, and making phone calls to clarify or challenge charges.  All of that administration costs money, and that’s why the privatized system we have here costs 20-30% in overheads, whereas in, say, Canada, it’s 2%.

It’s a matter of prioritizing where your tax dollars go.

Back here to my most basic point: these are just my political opinions. I don’t claim, as Michael Shermer does, a scientific mandate for them.

And a quick clarification about politics on PoI. Obviously there are political issues that ought to be addressed here (the war on science from the right or left, the scandalous inaction of our government in the face of climate change, the role of technology in our lives, etc etc). So I am not against all political discussion in PoI podcasts or this forum. I am against, however, a particular political ideology or agenda claiming that it is scientifically-based and, by implication, that competing ideologies or agendas are not “natural” or “rational” or whatever. That is what I didn’t like about this podcast.

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Posted: 30 April 2008 09:13 PM   [ Ignore ]   [ # 51 ]
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Balak - 30 April 2008 10:32 AM

The comparisons you propose are both unscientific and ahistorical.

If you had read my post carefully you would have understood that I was proposing that we study history and try to apply the scientific method to it to try to make economics less nebulous.  That’s what scientists do.  They apply the scientific method to seemingly chaotic situations and try to extract truth from it.  I made no conclusions from the proposed comparisons.  The result was that you called my request for historical examination “ahistorical.”  You called my request for scientific examination of historical economies “unscientific.”

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Posted: 30 April 2008 09:24 PM   [ Ignore ]   [ # 52 ]
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Michael Shermer’s interview, book and some of his recent articles touch on both politics and economics and so they are fair game for this thread.

In the 19th century it was Political-Economics.  Politics and economics cannot be separated.  People saying they are separate things are talking nonsense. 

The trouble is people let their social philosophies supercede the economics.

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Posted: 02 May 2008 08:30 AM   [ Ignore ]   [ # 53 ]
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Examples would be North vs South Korea, China vs Hong Kong & Taiwan, and West Germany vs East Germany.  See which system worked better for the most people.  If any conclusions could be drawn then they could be used to advise and guide other countries in their economic policies. (brightfut)

I agree with Balak that these examples are not very representative, not because they are ahistorical but because they are too historical.

If you want a good example, use an example that is limited to one economy - the examples of countries that were split is no good, because the splits created two new economies, oriented toward different larger economies, not two economies competing in one world economy.  A better set of recent examples would be comparing states that are basket cases with states that have managed some kind of “progress” (in quotes, because the “progress” is by no means unequivocal when you consider whole societies rather than a few cherry-picked economic sectors - establishing a factory is “progress”, bu not necessarily for the workers in it if they are underpaid, overworked, work in poor conditions, forced to work, etc.).

In any case, in virtually all the examples of 20th century economic success you will see a huge involvement of government.  Japan is one such example, where the line between government and business has been blurred since modern Western capitalist structures were first introduced.  China’s recent “progress” is entirely government sponsored and controlled.  Even in the U.S. government money in the form of government contracts forms the basis of a majority of corporations’ ability to plan (some very major companies would cease to exist without government money, many others would be crippled).

Try comparing one economy to itself, and see how it fares under a free-market free-for-all, and centralized planning.  Say - the U.S.  In every period where there has been a free-for-all, a few people get immensely rich, while others are ruined or kept poor, and then there is a period of reform and control where the middle class is slowly built up, only to be wrecked again.  In the late 1800’s there were a couple of depressions, then came reform.  In the post WWI years there was rampant corruption, and then a depression.  That depression was solved by government involvement - first the New Deal, which brought stability, then by WWII which brought prosperity - thanks to huge government involvement in the economy.  That involvement remained in place until the 80’s, when real wages started going down consistently, though not precipitously, because there remain huge institutions that continue o control large areas of the economy in some detail.

I think it is pretty clear that whatever country or economy you look at, you see that a lack of regulation almost inevitably leads to an increase in fraud, in violence, in unrest, in poverty, and all kinds of social ills, while government involvement leads to a more fair (though not entirely fair), more orderly, peaceful, prosperous, and happy society.  The problem with central planning has always been it fetishization of industrialism - all focus on the “commanding heights” and a disparaging of small business.  If you can avoid that, while allowing government to curb excesses and provide infrastucture (economic and physical), you get a betetr mix that leads to more freedom than any libertarian nonsense.  The question ends up as one of ethics, not economics.

Once these factors are taken into consideration, and in view of the brutal the conditions in which they were born and struggled to survive, I would say that the workers states (like the former USSR) or today Cuba, China, Vietnam and North Korea (despite their bureaucratic deformities) show exactly the superiority of a centralized, planned economy over anarchic capitalist private property. (Balak)

I don’t agree with this.  I think that the salient feature of planned economies that followed revolutions is their extremely rapid modernization.  But that modernization in turn depended on the technologies that alrady existed as a result of capitalist development.  In a sense, these economies were anomalies because they were in “backwaters”, and the Marxist theory applied to them was out of place because crucial elements of Marxist theory were absent (notably, a large and educated - in the Marxist sense - proletarian class).  The major achievement of those revolutions was not industrial, but agricultural, and only where they let up on the theory.

If you want to see a planned economy that tends to work well, you have only to look at capitalist corporations.  Every large corporation is nothing but a mechanism for planning production, for managing inputs and outputs, and managing demands as much as supply.  Much of government, even in the US, is devoted to economic planning - to gathering economic information and disseminating it in ways that seek to regulate the economy for the benefit of “the economy” (which usually amounts to a set of statistics).  This is probably the most important economic and political fact that libertarians (as well as socialist) overlook, or miss completely.  Just look at something like U.S. agriculture - heavily regulated, heavily planned, huge government involvement, near totalitarian corporate control, and it manages to produce so much food that overeating is the leading cause of death in the U.S. today.

No one advocates a completely centrally planned economy - such a thing cannot even exist.  However, the entire purpose of economics as a practical science (if it can be considered a such) is precisely economic planning.  That is the only mundane, practical, daily use of economic theory.  When a libertarian or free-marketeer complains of central planning or socialist planning or what have you, the real complaint is usually that law has gotten in the way of someone’s profit (i.e., someone’s frau

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