When Government Plays Doctor

[SOCALHUSKER]

i was reading up on the free market and well-known free market supporter said that pure free-market can't exist because of corporations ability to coerce their shareholders with a majority vote. so, that alone defeats the concept.

 

martin whitman is his name i believe.

 

he also said "a free market situation is probably also doomed to failure if there exist control persons who are not subject to external disciplines imposed by various forces over and above competition."

 

reasons cited were

" 1. Very exorbitant levels of executive compensation… 2. Poorly financed businesses with strong prospects for money defaults on credit instruments… 3. Speculative bubbles… 4. Tendency for industry competition to evolve into monopolies and oligopolies… 5. Corruption."

 

he also cited the US economy, saying that in some areas, it isn't regulated enough and others, over-regulated.

 

and before you say anything, yes it's wikipedia

 

Link??

[huskerjack23]

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

 

it's close to the bottom

[huskerjack23]

this is my view...we need to be conservative with money. that's all i hear from older people. but, these older people believe in the free market as well, aka economic liberalism.

 

i just don't like it because it's not a long term strategy. in the short term, yeah go for it. but you'll never see the "holy grail" of market equilibrium. it's unattainable. the peaks will always have valleys.

[carlfense]

you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

We might disagree on a lot of things Jen, but you nailed this one. I don't think there really is a good solution. Purely profit regulated business won't work (in medicine anyways) . . . but excessive government intervention bogs everything down. The tough questions provide unsatisfactory answers.

 

Where is your proof for this? Has it ever been tried? Please try and show me an example of the free market failing because of its own undoings. 100% of the time you will also uncover the truth, that government intervention is what ruined it.

 

I already gave you one. DES. Look it up. Maybe throw in "DES" and "birth defects" or "cancer." This was before the days of FDA regulation. Doctors prescribed whatever they felt would work...and it had disastrous consequences. I'll see if I can find you a link.

 

Edit: Here's a quick rundown of DES. This drug was given to millions of women by doctors across the country over a 30 year period. Doctors prescribed DES because they believed that it helped prevent miscarriages. Once this hypothesis was actually tested in the 1970s researchers realized that DES not only did not reduce miscarriages at ALL . . . it also caused cervical cancer in these women's children. http://www.birth-defects-injuries.com/pgs/des.html

[SOCALHUSKER]

i was reading up on the free market and well-known free market supporter said that pure free-market can't exist because of corporations ability to coerce their shareholders with a majority vote. so, that alone defeats the concept.

 

martin whitman is his name i believe.

 

he also said "a free market situation is probably also doomed to failure if there exist control persons who are not subject to external disciplines imposed by various forces over and above competition."

 

reasons cited were

" 1. Very exorbitant levels of executive compensation… 2. Poorly financed businesses with strong prospects for money defaults on credit instruments… 3. Speculative bubbles… 4. Tendency for industry competition to evolve into monopolies and oligopolies… 5. Corruption."

 

he also cited the US economy, saying that in some areas, it isn't regulated enough and others, over-regulated.

 

and before you say anything, yes it's wikipedia

 

A free market supporter who doesn't believe in the free market. I like that. It's like calling a person a Christian who doesn't believe in Christ.

 

First off, Martin Whitman is nowhere near being a free market supporter. He says he believes in capitalism but what he actually believes in corporatism. He's an investment advisor specializing in speculation, and believes capitalism can be obtained by having only a little bit of government intervention, as if that's possible.

 

His criticism of the free market, while well-thought out, has a few gaping holes in it. You bring up his point that a "pure free-market can't exist because of corporations ability to coerce their shareholders with a majority vote." But guess what, a corporation is also voluntary and in a free market, the money one has invested can just as easily be removed. How does he go about calling a voluntary transaction, coercion? Please tell me that? How you can say, that his biggest fallacy alone defeats the idea of free markets is beyond me.

 

His second declaration is just as bad. "a free market situation is probably also doomed to failure if there exist control persons who are not subject to external disciplines imposed by various forces over and above competition." Where do I begin with this one. "Probably doomed" and "if there exists." So, what if...(fill in the blank here) No crap huh, obviously it wouldn't be a free market "if there exists control persons." We've seen that already with government intervention. The rest of his points, which you called reasons cited, are actually effects based directly off this one so do I even need to go further. Of course all his other criticisms would happen if there exists control persons not subject to external disciplines. What he doesn't touch on is where these "control persons" would come from if we actually had a free market. Can you answer that one?

[SOCALHUSKER]

this is my view...we need to be conservative with money. that's all i hear from older people. but, these older people believe in the free market as well, aka economic liberalism.

 

i just don't like it because it's not a long term strategy. in the short term, yeah go for it. but you'll never see the "holy grail" of market equilibrium. it's unattainable. the peaks will always have valleys.

 

Where do you come up with this stuff? The free market is absolutely a long term solution, it requires businesses/government to not only think long term but also to look at the effects of policy on society as a whole, not just on one group. On the contrary, what we are experiencing today in our "planned economy" is about as short term as it gets. They regulate to the bubble of the day, propping up industry after industry in the short run and in the end, creating even bigger catastrophes and even bigger bubbles down the road. Sounds like a great long term plan to me.

 

As for the "peaks and valleys, " If I'm guessing correctly, you're talking about the business cycle. It comes about because of inherently damaging and ineffective central bank (Federal Reserve) policies; which sets artificially low interest rates, resulting in excessive credit creation, speculative "bubbles" and "artificially" low savings. Anyways, the low interest rates stimulate borrowing from the banking system. The expansion of credit causes an expansion in the supply of money, through the money creation process in a fractional reserve banking system. This in turn leads to an unsustainable "monetary boom" during which the "artificially stimulated" borrowing seeks out diminishing investment opportunities. This boom, or "peak" as you call it, results in widespread malinvestments, causing capital resources to be misallocated into areas which would not attract investment if the money supply remained stable. When credit creation cannot be sustained because it debases the currency and will eventually collapse the dollar, the printing press is shut down, the money supply suddenly and sharply contracts and the "busts, credit crunches and recessions", or a "valley" as you call it, occur. This correction is necessary for the market to clear and for resources to be reallocated back toward more efficient uses. This is not a result of the free market, but a direct result of government intervention and a centrally-planned economy.

[huskerjack23]

are you saying that the free market will never have anything bad going for it? there will never be down time? i'm assuming businesses will still need start-up capital taken from financing. if the market assumes one of those businesses fails, then they won't be able to pay the bank. enough of them fail, the bank fails. the bank needs capital too, if it fails then it's bank will fail, and so on.

 

entire regions of the country are failing. but who cares? the free market made them fail. the people didn't spend the money on those businesses, now they have no money because the banks failed. if you tell me that banks fail because of centralized government, then you're falling on deaf ears. banks fail in spite of it.

 

i'm sorry...i can't just blindly follow any form of anything. there's some legitimacy to your ideas and it would be stupid of me to dismiss them, but the world isn't black and white. i know of society's ills and that tells me that a free market is an ideal scenario with ideal situations.

[SOCALHUSKER]

 

I already gave you one. DES. Look it up. Maybe throw in "DES" and "birth defects" or "cancer." This was before the days of FDA regulation. Doctors prescribed whatever they felt would work...and it had disastrous consequences. I'll see if I can find you a link.

 

Edit: Here's a quick rundown of DES. This drug was given to millions of women by doctors across the country over a 30 year period. Doctors prescribed DES because they believed that it helped prevent miscarriages. Once this hypothesis was actually tested in the 1970s researchers realized that DES not only did not reduce miscarriages at ALL . . . it also caused cervical cancer in these women's children. http://www.birth-defects-injuries.com/pgs/des.html

 

I will admit, that's a horrible thing to be subject to or have to deal with, but I would hardly call that the fault of the free market. You said that it happened in the days before FDA regulation but according to your own source the drug was introduced in 1938. If the first FDA regulation, Pure Food and Drug Act, was introduced in 1906, how was this able to slip by them? Who's to say that any amount of regulation would have caught this? If technology at the time didn't allow for certain testing to be done, the consequences of the drug would not have been determined by anyone. Did you see the year the drug was discontinued, 1971. That means with 33 years in technological growth and 33 years of government regulation, the drug was used and never proven to be fatal. So, even if the free market did have regulation in place, which it didn't because the government was already regulating, even they probably would not have caught the drug before it was already widely used. How can you to fault the free market for something the government was already intervening in and for something that technology at the time would not even have prevented? It is just like I stated before, the free market has never been fully employed, so there's no proof it can't work and when people blame the free market when things go wrong, 100% of the time they will find government intervention is what caused it.

[SOCALHUSKER]

are you saying that the free market will never have anything bad going for it? there will never be down time? i'm assuming businesses will still need start-up capital taken from financing. if the market assumes one of those businesses fails, then they won't be able to pay the bank. enough of them fail, the bank fails. the bank needs capital too, if it fails then it's bank will fail, and so on.

 

entire regions of the country are failing. but who cares? the free market made them fail. the people didn't spend the money on those businesses, now they have no money because the banks failed. if you tell me that banks fail because of centralized government, then you're falling on deaf ears. banks fail in spite of it.

 

i'm sorry...i can't just blindly follow any form of anything. there's some legitimacy to your ideas and it would be stupid of me to dismiss them, but the world isn't black and white. i know of society's ills and that tells me that a free market is an ideal scenario with ideal situations.

 

No, I never said nothing bad ever comes out of the free market. The point I was trying to make is the problems are taken care of much more quickly and efficently if the market is allowed to adjust without government intervention. The intervention only prolongs and further distorts the market. If the market needs correction, it corrects itself. When this happens unproductive businesses and those the market no longer deems as necessary, fail. This allows productive businesses and new markets to pick up the slack, further growing the economy. The government; through politicians, special interests and the regulation they create; like to bail out their friends or business partner's failing businesses. This creates an artificial bubble and doesn't allow the market to correct itself. When the money is misallocated to unproductive entities the productive businesses lose, no new markets are created, and there's no economic growth. We are seeing this unproductive action today and people are somehow convinced that spending more, borrowing more and going further into debt is helping. That's not the solution, that's the problem.

 

You do bring up a very good point about the domino effect and it's true, things could get ugly if the necessary precautions are not taken. That's where personal responsiblity comes along. If people know they won't be bailed out by the government and know that it's their money on the line, you would see a far more responsible and informed society. Do people not take better care of their own stuff, than they do something given to them or things owned by someone else? Creditors wouldn't just loan to anybody, investors would be well-researched, and businesses would offer better products and services. People would be held accountable for their actions and we would be a much more prosperous and free society.

 

You say banks fail in spite. Show me a well-managed bank that has failed in spite? Yes, banks, like any other business, will fail if they are run poorly. Do you think banks operate independent of society? The banking industry is one of the most highly regulated industries in the world. If you think the regulations and policies of the Fed and the FDIC don't have any effect on how banks operate, you need to read up. The policies of the Fed have led to every economic downturn this country has ever faced and it will continue until the dollar completely collapses or the Fed is abolished.

[HuskerJen]

you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

How do you know this? Can you provide proof for this statement?

 

I will totally agree with you about your stance on government intervention. It has been played out all too often; never has it been shown to work and never does it end gracefully. The free market on the other hand has never been given a chance and now might be the time to start.

 

I assume you are referring to my free market vs government run comment...

 

Have you watched the news the past six months?

[SOCALHUSKER]

you're so pro-free market that it's unfathomable. and you can't be dissuaded.

 

Yep, it's the only way!!!

 

 

And therein lies the rub...a true free market doesn't work because when left to their own devices the individuals running a company always put profit ahead of everything else: responsibility, the environment, workers rights, etc.

 

In other words they can't be trusted to act ethically on their own.

 

On the other hand...

 

If government runs the industry it becomes excessively complicated because it is mired in needless beauracracy and regulations.

 

So what's the solution here? Is there a solution? Is there a middle ground between socialism and a pure free market economy?

 

How do you know this? Can you provide proof for this statement?

 

I will totally agree with you about your stance on government intervention. It has been played out all too often; never has it been shown to work and never does it end gracefully. The free market on the other hand has never been given a chance and now might be the time to start.

 

I assume you are referring to my free market vs government run comment...

 

Have you watched the news the past six months?

 

Except that everything in our economy that has transpired over the last six months (actually the last 97 years if you care to be more specific) has been a direct result of government intervention, not the free market.

[HuskerJen]

Except that everything in our economy that has transpired over the last six months (actually the last 97 years if you care to be more specific) has been a direct result of government intervention, not the free market.

 

Are you kidding me? Are you saying that Fannie Mae, Freddie Mac, AIG and all the other corporations receiving "bail-out" money were run into the ground because of government intervention?

 

It was Congress's failure to practice due diligence on Mae, Mac, etc that allowed these companies, meaning the people who ran them, to make the poor business decisions they did.

 

* If there weren't laws telling companies not to dump pollutants into rivers and streams they would do it.

 

* If there weren't laws limiting the size of a particular industry there would be about 4 monopolies running everything.

 

* If there weren't laws governing minimum wage most companies would pay people .25 cents a day.

 

* If there weren't laws requiring minimum safety standards companies would allow someone who smokes to handle dynamite.

 

Look, the point here is that companies can not be trusted to do what's right, ethical or proper when left alone; which is exactly what would happen in a true free market system.

 

So again I ask: What's the solution here because neither system, free market or socialism, in their respective true forms, work.

[SOCALHUSKER]

Except that everything in our economy that has transpired over the last six months (actually the last 97 years if you care to be more specific) has been a direct result of government intervention, not the free market.

 

Are you kidding me? Are you saying that Fannie Mae, Freddie Mac, AIG and all the other corporations receiving "bail-out" money were run into the ground because of government intervention?

 

It was Congress's failure to practice due diligence on Mae, Mac, etc that allowed these companies, meaning the people who ran them, to make the poor business decisions they did.

 

* If there weren't laws telling companies not to dump pollutants into rivers and streams they would do it.

 

* If there weren't laws limiting the size of a particular industry there would be about 4 monopolies running everything.

 

* If there weren't laws governing minimum wage most companies would pay people .25 cents a day.

 

* If there weren't laws requiring minimum safety standards companies would allow someone who smokes to handle dynamite.

 

Look, the point here is that companies can not be trusted to do what's right, ethical or proper when left alone; which is exactly what would happen in a true free market system.

 

So again I ask: What's the solution here because neither system, free market or socialism, in their respective true forms, work.

 

What proof do you have that any of your scenarios would happen? Articles, Economic Journals, Gut feeling? I'd like to see it. Have you read any of my other posts? Reread what I have written regarding the Feds policies of artificially low interest rates and the effects it has on the economy/business cycle. Then tell me again that government intervention hasn't been the cause of our economic woes.

[SOCALHUSKER]

 

 

Are you kidding me? Are you saying that Fannie Mae, Freddie Mac, AIG and all the other corporations receiving "bail-out" money were run into the ground because of government intervention?

 

 

HuskerJen, here's a good read for you. BEWARE OF OBAMANOMICS

[huskerjack23]

Except that everything in our economy that has transpired over the last six months (actually the last 97 years if you care to be more specific) has been a direct result of government intervention, not the free market.

 

Are you kidding me? Are you saying that Fannie Mae, Freddie Mac, AIG and all the other corporations receiving "bail-out" money were run into the ground because of government intervention?

 

It was Congress's failure to practice due diligence on Mae, Mac, etc that allowed these companies, meaning the people who ran them, to make the poor business decisions they did.

 

* If there weren't laws telling companies not to dump pollutants into rivers and streams they would do it.

 

* If there weren't laws limiting the size of a particular industry there would be about 4 monopolies running everything.

 

* If there weren't laws governing minimum wage most companies would pay people .25 cents a day.

 

* If there weren't laws requiring minimum safety standards companies would allow someone who smokes to handle dynamite.

 

Look, the point here is that companies can not be trusted to do what's right, ethical or proper when left alone; which is exactly what would happen in a true free market system.

 

So again I ask: What's the solution here because neither system, free market or socialism, in their respective true forms, work.

 

What proof do you have that any of your scenarios would happen? Articles, Economic Journals, Gut feeling? I'd like to see it. Have you read any of my other posts? Reread what I have written regarding the Feds policies of artificially low interest rates and the effects it has on the economy/business cycle. Then tell me again that government intervention hasn't been the cause of our economic woes.

here's the thing. the free market is governed by the rule of law. a country of this size with the kind of civil liberties that we have, there won't be one universal guideline for what that rule of law is. there would be factions of people all across the country organizing together to insure their survivability (usually based on ignorant prejudgements). this in turn can cause chaos if relations between the peoples becomes violent.

 

the free market doesn't take racism, sexism, status discrimination, prejudices, etc. into consideration. this is why it's idealist.