Maybe not a single of you are familiar with the situation Argentina is living right now. Since our return to democracy, 18 years ago, we've been in our ups and downs. The main constants are: - The fight for power (and money from illicit govenrment acts) between the main two parties: Peronism and Radicals. - An ever-increasing debt, from $30 bil in '83 to $140 bil in 2001, to pay for a megalitic state giving jobs for votes and favors.
What's happening now? Since ex-president Menem (from the Peronist Party) left the chair in 1999, we got a radical, Fernando de la Rua, as president (almost 50% of the votes, in response to the corrupt and failing Menem).
In this two years, economic recession got worse thanks to the first measures that de la Rua and his cabinet took, like tax raises and state employees salary cuts. The first tax raises got worse, then there were more salary cuts, including pensionned people (some of them earn $150 a month, and the minimum for a person to leave with some dignity is $500).
Now, everything has exploded. The last measures to impede the constant flow of capitals from Argentina to foreign countries, seeking better winds for investment, left our reserves in a bare minimum, not enough to keep the convertibility between the Argentinian Peso and the US Dollar (where 1 Peso equals $1). What happened? They don't allow any cash extraction superior to $250 a week, be it from a person or an enterprise.
The whole pay circuit got cut. Nobody's getting their salaries in time. Some govt. employees are waiting for three or four months. Private employees suffer at least a 15-day delay (like me).
And now, we've been suffering raids to supermarkets and other businesses from hungry masses looking for something to eat (and I bet there's someone behind them, besides hunger, commanding them to do so). For that, our beloved prez declared nationwide state of siege...
If you want, get informed about it. I'd like some opinions, please.
[ December 19, 2001: Message edited by: Dr. Jonas Bashir ]
Posted by Tahna Los (Member # 33) on :
If I hear any mention of the word "LIBERAL" over here, then I'll smackem.
Socialist? Clearly. Doing a bad job? Yes. Socialists always do a bad job? Don't go there. Mostly, Fine.
Okay, now time to get down to the heart of the matter. Imbecility? Yes. Laissez-Faire, yes, given that every cause has an anticipated or unanticipated effect, or both. Corruption? I won't go that far. Not every bad politician is corrupt, he just appears that way.
I feel for ya, dude. Liberals up here wouldn't stand for that kind of stupidity, except for possibly Jean Chretien.
They don't allow any cash extraction superior to $250 a week, be it from a person or an enterprise.
Even I would agree with First or Omega stating that was nothing more than a suicidal tactic.
Somehow, I bet that JeffK and Jay would feel the same way.
Posted by Dr. Jonas Bashir (Member # 481) on :
OKay, to clarify:
Radicals are supposedly center-left oriented, but always defended the agricultural powers of the country. They surged to oppose the conservatives around the 1910's.
Peronists, well, I think it's clear: center politics, populist measures and money wasting are their main tactics. But, Menem got himself allied with those (and sorry for this, Tahna, as I know it's not the same sense you're saying) with liberal economic views (meaning liberal in the traditional sense, not the US American view). Cavallo was his economy minister for 5 years, and he got us out of inflation and misery... for four years.
De la Rua got Cavallo AGAIN inside his cabinet, but the guy seems ruined, wasted: he proposed NOTHING of value to shock the country and make it walk again, for the last 9 months.
More information per request... Thanks for your opinion, it almost brought a tear to my eye...
[ December 19, 2001: Message edited by: Dr. Jonas Bashir ]
Posted by Omega (Member # 91) on :
*sigh*
Stupid politicians...
Posted by Siegfried (Member # 29) on :
It's interesting that you bring this up since I just read an article during the past week about Argentina making the first interest payment on a lot of the money that has been loaned to them. The article was not too enthusiastic about this for the very situations you describe, Jonas.
Based on what I've read (which is altogether not a whole lot) and what a couple of my friends have told me (they're from Argentina), I'd have to say that it is a combination of all three. And, I'll heartedly agree with Omega's "stupid politicians" statement.
There's rampant corruption. That's an unfortunate side-effect of government in general. As the saying goes, "Power corrupts." However, corruption seems to be much more prevalent in nations that are experiencing significant problems. Look at Mexico following Cardenas' term and Russia since the fall of the Soviet Union. It the politician's shift in priorities from the people to the person (themselves or possible the party).
I think the people in charge has also suffered from a huge amount of imbecility. Part of it is that in reference to allowing themselves to allow the Argetine people to suffer. It also seems to me, from what I remember, that the government over the past decade (and possibly further back) have made several bad decisions regarding their economy. Unfortunately, I can't remember specifics at this time (I'll have to brush up on it).
Posted by Dr. Jonas Bashir (Member # 481) on :
While you write, read and see about this I'll tell you the latest: people are marching in the streets, making noise with anything (cooking pots and pans, whistles, sirens) and going downtown, where the Government House is located. Despite the siege, they're going. By thousands. It's incredible.
They were in their buildings before. Now they're on the streets. I don't know how's this going to end.
BTW, the legality of the state of siege: supposedly the Congress should decree it, not the president, if the Congress is in session. Despite ordinaries have ended, they're STILL in sessions. Maybe the siege can be declared null. Who knows.
Posted by CaptainMike (Member # 709) on :
Wow.. sounds kind of serious. I hope that there isnt any unpleasantness.. what are your options if things get really hairy?
Posted by Dr. Jonas Bashir (Member # 481) on :
I have a child. I have a wife. Either I resist and fight to the last of my breath, or I ran away to the Netherlands. Provided how much money I have, I think I'll just sit back and wait while they step on my rights.
I hope there's a pacific 'revolution' and the government realizes their wrongdoings. If there's still democracy, I look to collaborate with that.
Posted by Dr. Jonas Bashir (Member # 481) on :
This just in: while thousands still march and go downtown, there are also rioters being stopped by the Police.
Economy Minister Domingo Cavallo resigned to his position ten minutes ago.
Posted by Siegfried (Member # 29) on :
And along with that, President De La Rua's state of siege declaration is giving him the power to suspend certain constitutional rights. Among those are the rights to assemble and travel freely. It's also going to be giving the police greater arrest power. You got protesters gathered around the Casa Rosada and thousands of hungry citizens clashing against riot police to get into the stores in a about half a dozen of Argentina's largest cities. Then there's the chaos that has to be going on in the rural areas.
With all of the violence and turmoil that's going on, please keep your family safe.
Posted by Shik (Member # 343) on :
Got any Nazis left? They're fairly effective in shorign up governments.
Or you could invade the Falklands again. Maybe after Britain stomps your balls this time, they'll give you aid.
Posted by CaptainMike (Member # 709) on :
If i ever witness a massive disruption in civil order where i live, and have some degree of fear for my safety or at least the future of my country, remind me not to confide in assholes who will poke fun at the situation.
or at least to stomp their balls when they do.
[ December 20, 2001: Message edited by: CaptainMike ]
Posted by Dr. Jonas Bashir (Member # 481) on :
Believe me: I have a huge share of sense of humor, so I don't really care.
We don't know what'll happen with the state of siege. Maybe it will get softened or enforced at full strenght: that's for the Congress to tell. Meanwhile, we still have protestors, and we may still have looting.
Then again, the Congress would lift cash withdrawal limitations, and make some more resolutions to end (with a high degree of risk for our economy) the main problem that generated this extreme situation.
Posted by Shik (Member # 343) on :
Mike: nationalism=severely evil. That is all I shall say on the subject.
Posted by First of Two (Member # 16) on :
Nationalism = a state of cultural consciousness that exalts one nation above all others.
That doesn't sound like evil, that sounds like simple 'hometown' pride... and in the case of the US, accuracy.
Don't give me this 'citizen of the world' nonsense. Most of 'the world' is a crappy place to live, dictatorships, religious tyrranies, communist regimes, civil wars, ethnic cleansing, banana republics... no, 'citizen of the world' is a step DOWN for many of us.
Still, what's happening in Argentina is horrid and shouldn't be made too much light of.
mathinks the central problem is here:
quote:- An ever-increasing debt, from $30 bil in '83 to $140 bil in 2001, to pay for a megalitic state giving jobs for votes and favors.
In other words, the same terrible marriage of socialism and cronyism that helped undo the USSR.
[ December 20, 2001: Message edited by: First of Two ]
Posted by Tahna Los (Member # 33) on :
I'd like to put those damned Union Bosses under the microscope.
Posted by Shik (Member # 343) on :
The thought occurs to me that "stability" is not a viable concept in Central & South America. Looking back through history, we see that the most efficient forms of government are all built around figureheads, from Huayna Capac & Huascar to Montezuma to Simon Bolivar. I'm thinking (from a very offhand, very light, very 'I need to shower & go to work" sort of desktop sociopolitical POV) that "democracy" simply isn't viable in these regions. There's too much centuries-old mung to cut through. Maybe a benevolent dicatatorship should be the best to hope for. This seems to be the can in much of the world as well.
Posted by Dr. Jonas Bashir (Member # 481) on :
Shik: lately, that model is beginning to change. After the whole dictatorship movement of the 70s, nobody in Latin America (with a couple of exceptions) wants a 'dictator' or dictator-like in power. Especially here. We're commending the attitude of the armed forces to avoid their intervention unless REALLY needed (if all other order-keeping forces are overwhelmed).
We just need someone executive at the chair, with a fast, effective Congress, and a clean justice system. At least, a little better than now.
Posted by First of Two (Member # 16) on :
quote:Maybe a benevolent dicatatorship should be the best to hope for.
I'm still available.
Posted by Siegfried (Member # 29) on :
And it looks like the job has opened up, too. President De La Rua has resigned his presidency. It has to be approved by the Congress, but I don't think Congress will do anything to resist it considering how violent things are getting in Argentina.
Posted by Omega (Member # 91) on :
Looking back through history, we see that the most efficient forms of government are all built around figureheads
Efficient government == bad. You need a government that can't get practically ANYTHING done, and thus doesn't interfere.
Posted by Jay the Obscure (Member # 19) on :
Now that's a pretty lame statement.
Posted by Malnurtured Snay (Member # 411) on :
Well, of course, because then Rush Limbaugh would have nothing to complain about and all his ditto-heads would see what a bag of shit he is Posted by The_Tom (Member # 38) on :
quote:Efficient government == bad.
Wow. A homeschooled teenager from Tennessee has conclusively answered a question academics have debated for centuries. Clearly we're sharing our virtual pad here with the father of a revoulutionary overhaul of the entire field of Political Science. Should we suspend forum operations for a week and hold a ticker-tape parade?
Posted by Shik (Member # 343) on :
Note that the statement he quoted was pre-qualified with the parameters of "Central & South America."
Posted by TSN (Member # 31) on :
Omega's just explicitly stated that his ideal government is an incompetent one. If I took any of his political opinions seriously before, I'm certainly going to stop now...
Posted by Dr. Jonas Bashir (Member # 481) on :
Yes, Shik, because for Omega's vision of global economics, those Central and South American states shouldn't be anything but client states for the USA. So, what a better way to intervene into local matters for the profit of the US than having to dictate local affairs for incompetent banana-republic presidents?
Posted by Grokca (Member # 722) on :
Dr. Bashir, how you holding up down there, the reports we are getting are very scary. Keep your family safe.
Posted by Dr. Jonas Bashir (Member # 481) on :
Things are going better. Rioters are mostly gone. Law enforcement is stronger now, even when the state of siege has been lifted (last measure taken by De La Rua today, who's still technically the president). Looting may cease too, now that food distribution is going along.
The future economical and political scenario is far more important. The worse thing it could happen is to fall in the old ways: worthless money printed everyday and inflation...
Posted by First of Two (Member # 16) on :
quote:Central and South American states shouldn't be anything but client states for the USA.
You mean like Puerto Rico?
All of the benefits of statehood, including economic support, and none of the drawbacks? They should be so lucky.
Anyway...
Considering that the most 'efficient' governments have to be those of the Fascists, and the most 'involved' governments have to be those of the Communists, and BOTH of those systems being horrible and far worse than our current inefficient, uninvolved government, I'd have to come down on Omega's side. He's only stated the obvious.
Posted by Omega (Member # 91) on :
Omega's just explicitly stated that his ideal government is an incompetent one
Inefficient, not incompetent. Competence is the knowledge of what you're doing. Efficiency is the ability to do things quickly or cheaply.
Government is a parasite. Notice that every problem mentioned is because of a government interference? Government raised taxes, government disallowed out-country money transferral, government borrowed money to increase in size, now government is going to cause inflation by printing more money. Has the government done a signle GOOD thing through this entire situation, with the exception of keeping order by force? No? Well, then give them THAT job, and prevent it from doing the rest, at least very easily. Then they won't be able to screw up your country any more.
It's really simple.
The government causes problem "A". Therefore, prevent them from doing so again, by whatever means necesary.
Posted by Dr. Jonas Bashir (Member # 481) on :
Now that you explained yourself, maybe you're right. What you're stating here is: a quick'n dirty solution is nothing but a 'patch'. One of the things De La Rua said was he was a fireman, putting out fires everywhere. Each one of his solutions was a jury-rigged construction around the problem.
Let's make an imaginary example. You have a working machine in a factory, center of the whole production chain. if you want to stop a leak in the hose of a machine, you have two options: take out the hose and replace it with a brand-new one which will be more efficient but delay production for two days, or patch it and make it run in 20 minutes, but the machine will make a lot of effort and risk a breakdown. De La Rua, the factory manager, without looking the situation any better, takes the word of the foreman, Cavallo, who says: 'let's patch it, it may go OK'. De la Rua says 'Go ahead' and leaves to take a cup of coffee.
Repeat the above 10 times in a year. What will you have? A broken-down machine and the whole factory stopped? Of course.
[ December 21, 2001: Message edited by: Dr. Jonas Bashir ]
Posted by First of Two (Member # 16) on :
If you don't want to put out fires, the best thing to do is practice fire prevention, not buy a bunch of extinguishers.
That's Omega's and my point. Government 'assistance' is like cough medicine. It may treat the symptoms, but it almost never gets rid of the underlying illness. Instead, it 'masks' the problem. And that's not good enough.
Sometimes, when you mask the symptoms but don't treat the infection, the illness gets worse and worse.
Posted by Shik (Member # 343) on :
quote:Originally posted by Dr. Jonas Bashir: So, what a better way to intervene into local matters for the profit of the US than having to dictate local affairs for incompetent banana-republic presidents?
Flunky: "Who are YOU?!?" Jeremy Hawke: "I'm James MonROE....& here's a taste of the Monroe DOCtrine!!" *BLAM!* *flunky falls dead & Hawke/Monroe grabs girl to kiss her* "Oh, sweet LIBerty..!"
Posted by Malnurtured Snay (Member # 411) on :
Welfare ...
quote:Many welfare critics believe that anyone who wants a job can find one. The fact that so many millions are on welfare, they believe, is a sure sign of a poor work ethic, laziness, immorality, sloth, etc.
However, Milton Friedman won a Nobel Prize for his discovery of the "natural rate of unemployment" -- which is the unemployment rate that inevitably results when inflation is what the markets expect it to be. Today, most economists calculate that the natural rate of unemployment is about 6 percent. When the unemployment rate starts dropping below this, the economy starts "overheating" and developing a bad case of inflation. To combat this, the Federal Reserve tightens the money supply, which brings unemployment back up and inflation back down.
The upshot of all this is that we will always have 6 percent of our workforce unemployed. It is therefore wrong-headed to demonize these temporary unfortunates for not having jobs, or accuse them of lacking a work ethic. Even if we could put them all to work, the result would be runaway inflation -- a prospect which sends shivers down the backs of markets. Furthermore, a small reserve pool of labor is healthy for the market, because it keeps the economy flexible and capable of change. It means that there is always a percentage of workers who are moving between jobs, finding a better match between their skills and the jobs available. It also means there is a percentage of the workforce leaving obsolete jobs and now training for more modern ones. Because a reserve pool of labor is a benefit for business, it should be a cost of doing business -- hence, the rational for social benefits and public job training.
Calling for the unemployment rate to be reduced to zero is terrible economics. Yet this is precisely what many welfare critics are trying to do by chasing everyone off the welfare rolls and into jobs.
We should also keep in mind that because there are more workers than jobs, there is a bit of competition for those jobs. This means that those workers who do not compete as well as others might find themselves unemployed more often. (This trend is slight to moderate, and should not be overestimated.) In any society of unequal talents, we should probably accept this as inevitable. However, let's suppose for a moment that society becomes outraged over this state of affairs, and accuses these unfortunates of all manner of moral shortcomings. And suppose that the unemployed, chagrined by these criticisms, pull themselves up by their bootstraps, retraining themselves and successfully landing jobs. In that case, another group of workers will take their place in the ranks of the unemployed, and they will become the objects of society's scorn. What, then, should we do about this persistent underclass? Apply the Final Solution? (But then someone else will become the 6 percent unemployed. Sigh…
Of course, this opens up the debate on whether inequality is natural or socially caused. Ironically enough, if it's natural, then conservatives can't criticize those who remain on welfare longer than others - it's completely unavoidable, at least in a meritocracy that must keep a 6 percent unemployment rate. Most thinking persons will realize that inequality has a large social component, which provides a rationale for social programs to help unemployed workers become even more competitive.
The best society can do is rotate more workers in and out of the reserve pool of labor, as obsolete or temporary jobs close down and new, more modern jobs arise. And the only economically sound way to do that is to provide training and personal development opportunities for the unemployed, so they are qualified when the labor market rotates them into those newly-created jobs.
The 6-percent natural rate of unemployment should dramatically tone down, or at least qualify, the debate on welfare. Critics are faced with a surprisingly difficult question: what alternatives are better?
Rob Said:
quote:All of the benefits of statehood, including economic support, and none of the drawbacks? They should be so lucky.
Or luckier!
quote:The U.S. has the highest productivity per worker in the world. But how Americans spend that productivity is another matter entirely. Working with slightly less, the other rich nations of the world have built clearly better societies: better health and vital statistics, universal health coverage, smaller health costs, less violent crime, less pollution, higher home ownership, more democratic participation, greater social programs, less government corruption, less teenage sex, fewer teenage pregnancies, fewer abortions, larger middle classes, less poverty, less child poverty, greater savings, greater investment, less debt… the list goes on and on.
Omega said:
quote:Efficient government == bad.
quote:In determining the best size of government, we should first note that both governments and markets do the same thing: they exchange goods and services for money. For example, a customer may pay $10 for a restaurant dinner, whereas a citizen pays tax money for police protection.
But if they both do the same thing, then why not let the market do it all? Or why not let the government do it all? The answer is because it depends on the goods and services being offered. Governments and markets are better suited for providing different things.
Below is a comparison of how government and markets make transactions. First we’ll describe the general model, and then show how both the market and government fit the model. To make the comparison easier, letters will mark the appropriate analogs:
The General Model: A group (A) delegates power to individual providers (B) within an institution (C) to provide goods and services in exchange for money (D). The group has their choice of many providers competing to provide them goods, and they give consumer satisfaction units (E) to their preferred choice. Those providers receiving a sufficient number of units will be delegated to power (F), and those that do not will be denied power (G). This competition keeps prices down, quality high, and incompetent providers out of the system.
The Market: Customers (A) delegate power to individual companies (B) within the market (C) to provide goods and services in exchange for money (D). Customers have their choice of many companies competing to provide them goods, and they give dollars (E) to their preferred choice. Those companies receiving a sufficient number of dollars will stay in business (F), and those that do not will go bankrupt (G). This competition keeps prices down, quality high, and incompetent companies out of the market.
Government: Citizens (A) delegate power to individual representatives (B) within government (C) to provide goods and services in exchange for taxes (D). Citizens have their choice of many candidates competing to provide them goods, and they give votes (E) to their preferred choice. Those candidates receiving a sufficient number of votes will be elected to office (F), and those that do not will be denied office (G). This competition keeps prices down, quality high, and incompetent representatives out of government.
The fact that customers vote with their dollars while citizens vote with their votes is an important difference with enormous implications. Consider how this difference affects the issue of natural monopolies:
Natural Monopolies
In any marketplace, competition is essential to keep things efficient. Providers who have no competitors are called monopolies. Economists consider monopolies to be a market failure, because monopolies can raise prices, drop quality, and receive extra profits for nothing. People could better spend this wasted money elsewhere, on things that actually raise their standard of living.
Monopolies arise in several different ways, but a common one is the natural monopoly. This is a monopoly where competition is prevented by the very nature of the market or technology itself. Examples include telephone, electrical, gas and water utilities. The only way these services could see competition would be to install competing electrical lines and water pipes in the neighborhood — an absurd and wasteful idea. Because private competition is not desirable, public competition is the best solution. Governments restore competition to natural monopolies because the elected officials running them must compete for votes. Most nations allow their governments to run their natural monopolies directly, but the U.S. has a hybrid system, in which private utilities are publicly regulated to avoid monopolistic abuse.
Sometimes improved technology can turn a natural monopoly into a competitive marketplace, as in the case of cable TV eroding the monopoly power of network TV, or fiber optics introducing competition to long-distance phone service. But new natural monopolies are always arising, often created by new technology. For example, the invention of cars created the natural monopoly of roads. (You can't have several competing roads leading to your door). The result is that the number of natural monopolies in the economy remains fairly constant, even if their constituency changes.
Utilities are not the only example of natural monopolies. Most public goods are natural monopolies as well.
Public and Private Goods
To understand this part of the debate, it's important to distinguish between a public and private good. A public good is non-exclusive and non-rival. Non-exclusive means that it’s difficult to keep non-payers from consuming the good. Non-rival means that one person’s consumption doesn’t subtract from another person’s consumption of the same good.
The classic example of a public good is national defense. National defense, once established, protects payers and non-payers alike. And one person’s enjoyment of national defense is not decreased by an immigrant who enters the country and enjoys it also. In other words, once the nation is defended, it doesn’t cost more to protect 200 million citizens as 100 million.
By comparison, a merchant selling apples is selling a private good, because he can exclude non-paying customers from consuming his apples. And every bite of an apple that a paying customer eats is one less bite available to others.
As it turns out, private markets cannot provide most public goods. The reason is the free-rider problem. Suppose private companies, not government, supplied our national defense. Customers would pay these companies to defend the nation, and their decision to buy the protection would be voluntary, otherwise it would not be a free market. Unfortunately, many citizens could decide to take a free ride, enjoying national defense for free while others pay for it. But if everyone took advantage of this, no one would pay for national defense at all.
Public goods are best provided by public institutions like government. The government requires citizens to pay for the good by law; citizens then become forced riders, or compelled taxpayers. This "coercion" is justified because the majority of voters prefer it to the alternative, which is defeat and enslavement by the Hitlers and Stalins of the world.
Examples of public goods include environmental protection, public parks, law and order, standardizing weights and measures, a common education, a common language, public health, printing and controlling a national currency, and more. Examples of public goods provided by private merchants include fireworks displays and street musician performances — although getting paid for these services by all who enjoy them is impossible.
The ultimate public good: law and order
Imagine a land with no law and order. Everyone would be free to commit violence and aggression without worrying about police retaliation. Greed would spur individuals to rob, cheat and steal at every opportunity. Jealous lovers could kill with impunity. Nothing could stop your neighbor from driving you off your land and taking your property, except your own use of defensive force.
In such anarchy, only the fittest and luckiest would survive. But even after these survivors won their first battles, they would only find themselves in a new round of conflict, this time against proven and battle-tested survivors. The price of continual war isn’t worth it, even to the survivors. Society avoids this bleak scenario by agreeing to cooperate for survival, or at least limiting the competition to fairer and less harmful methods. This more stable and peaceful approach makes everyone richer in the long run.
But cooperation requires rules that everyone lives by. Unfortunately, private markets cannot provide such law and order. Take, for example, the law against murder. How could the market enforce such a law? With government, the answer is simple: the police enforce it. But how would the free market provide police protection? Some libertarians have proposed imaginative solutions, like having private police agencies compete on the free market. You might subscribe to Joe’s Security Forces, and I might subscribe to Bill's Police Agency. But suppose one day I steal your car. You could call your police agency to come and arrest me. But I could claim the car is rightfully mine, thanks to a bad business deal between us, and call my own police agency to defend against your theft of my property. The result is tribal warfare. What’s worse, the richest citizens would be able to afford the largest private armies, and use them to acquire yet more riches, which in turn would fund yet larger armies. Libertarian scholars have attempted to save their idea with even more imaginative arguments, but the exercise only proves the unworkability of the idea, and the vast majority of scholars reject the whole approach.
The folly of this exercise becomes even more apparent when you consider how the free market would provide the law itself. Again, some libertarians propose private legislative companies competing on the free market. By paying a legislative company a few hundred dollars a year, you could buy whatever slate of laws you would like to live by. Unfortunately, two people might claim sole ownership of the same property, and point to their different slate of laws awarding them ownership. In that case, the law is of no help in identifying the true owner, and the two parties are left to negotiate. These negotiations would occur under conditions of anarchy, and the side with the most power, influence or police force would win the negotiations. This would be a society of power politics, where might makes right.
True law and order can only be provided by a single entity covering the entire group in question. That is, law and order is a natural monopoly. A single private company can’t run this natural monopoly for two reasons. First, it would have no competition, unlike government, which could restore competition through voting. In other words, governments are democracies, but private companies are dictatorships, and if only one company provides law and order, you might as well have a monarchy. Second, true law and order is also a public good, much like national defense, but one that offers protection against internal enemies instead of external ones. Free riders could enjoy the benefit of the private company’s law and order without paying for it. Having democratic government provide law and order is the only way to solve these problems.
The true extent of law and order
When most people think of "law and order," they generally think of police officers fighting street crime. However, the most important laws in society are actually the laws that set up our social, property and business systems.
For example, business laws protect us against fraud, false advertising, breach of contract, copyright infringement, embezzlement, insider trading, monopolistic abuse, unfair market manipulations and hundreds of other ills that would occur under true anarchy. Without business laws, the market could not even operate. For example, if we did not have copyright laws discouraging people from pirating all their software, computer programmers could not even make a profit, and would have no incentive to produce.
Property laws protect us against theft, invasions of privacy, trespassing, pollution, vandalism, and disputes over property boundaries and ownership. Without these laws, we would have no stable system of private property.
Social laws guarantee our freedom of speech, religion, press, ballot box, due process, and equal rights. Without these laws, we would not live in a free society, but in tyranny.
Again, the free market could not provide these public goods without suffering from free riders and tribal warfare. This leads to an important conclusion: the public sector creates the rules that the private sector needs to operate.
Public infrastructure
Another irreplaceable role of government is providing national infrastructure, which includes roads, electricity, telecommunications, postal systems, and other large-scale underpinnings of the national economy. Historically, private enterprise has been unable to afford building national infrastructure. Only government has the pockets deep enough to fund such huge projects. Almost always, these projects lay dormant or underdeveloped until the government takes them up, and then progress is rapid.
Nor would we want private companies so large that they could provide national infrastructure; any company that large would surely be a monopoly, for competitors of equal size would be a waste of the nation's resources.
The classic example is road building. Private companies tried building toll roads and turnpikes in the early 1800s, but the projects were not viable. Most companies lost money in the long run, and only a few made slim profits. As a result, America’s road system languished. But a dramatic boost in road building came with Eisenhower's Federal Aid Highway Act of 1956, which authorized the creation of over 40,000 miles of interstate highway. These highways expanded, interconnected and accelerated the U.S. economy, with profound results. They allowed the middle class to migrate from the cities to the suburbs, with an enormous increase in privacy and quality of life. They also breathed new life into commerce.
Another reason why governments are better at road building is eminent domain. This is the power to build roads where they are logically needed, by compelling land owners to sell their property at fair market values. Critics protest the coercive nature of eminent domain, but consider the alternative. If private road-building companies asked landowners to sell their property voluntarily, roads would either not be built at all, or they would zigzag crazily across the map.
Why? Because some property owners would not sell their land at any price, for reasons of sentimentality, convenience, stubbornness, or misjudgment. Others would jack up their price tenfold or a hundredfold, knowing how keenly, say, two cities would like to connect to each other. Some libertarians argue that such a high asking price would reflect the true value of the land between the two cities, if they were willing to pay it. But the problem with that argument is that if every individual landowner asked an astronomical sum, the total costs of the project would skyrocket. The costs might easily exceed the budget of the road-building company. And they would certainly make tolls skyrocket, reducing the potential economic benefit and activity between the two cities, and diverting it instead to the former landowners who do not produce anything more for their windfall. So eminent domain makes society richer in the long run.
Highways are but one example of how publicly funded infrastructure has increased commerce. Others include:
Settling the West: The U.S. government played a primary role in settling the West. It conducted massive land purchases like the Louisiana Purchase ($15 million), the Texas/California purchase ($25 million), and others. It then gave the land to American settlers for a song, thanks to the Homestead Act and other giveaways. Conquest, where it occurred, was done primarily by the U.S. Army, not gun-toting pioneers. The government also subsidized the Wells Fargo postal routes, agricultural colleges, rural electrification, telegraph wiring, road-building, irrigation, dam-building, farm subsidies, and farm foreclosure loans.
Funding Railroads: In the late 19th century, the government gave away 131 million acres in federal land grants, at enormous cost to itself, to railroad companies to build their railroads. Four of the five transcontinental railroads were built this way. To help them, Congress authorized loans of $16,000 to $48,000 per mile of railroad (depending on the terrain).
Rural Electrification: In 1935, only 13 percent of all farms had electricity, because utility companies found it unprofitable to wire the countryside for service. Roosevelt's Rural Electrification Administration began correcting this market failure; by 1970, more than 95 percent of all farms would have electricity.
U.S. Mail: Many people think that the privately owned UPS, which delivered 3 billion pieces of mail in 1997, is America’s postal success story. But this figure pales in comparison to the U.S. Postal Service, which delivered 190 billion pieces of mail that same year. The U.S. Postal Service also achieves a 91 percent on-time delivery rate charging among the lowest rates in the industrialized world. No private organization could hope to match these numbers. It is also interesting to note that the privately-funded Pony Express was a financial failure that lasted only a few years. The government subsidized the Wells Fargo Company, which succeeded delivering mail to California for rest of the 19th century.
The Internet: In the 1960s, the government created ARPANET, which was used and developed by the Defense Department, public universities and other research organizations. In 1985, the National Science Foundation created various supercomputing centers around the country, linking the five largest together to start the modern Internet we know today.
NASA: Thanks to America’s space program, today we have a fleet of satellites that conduct global telecommunications, weather observation and warning, ozone and global warming studies, intelligence missions, high-resolution and high-accuracy mapping, as well as detection of forest fires, oil spills, El Nino events, natural disasters and earth-threatening asteroids. Space exploration was so inherently difficult that it took decades and hundreds of billions of dollars before the practical benefits became possible. Private companies could not have possibly afforded such investment, or waited so long until it bore fruit.
The Treasury and Federal Reserve System: The Treasury prints the very money the economy runs on. And using Keynesian policies to expand or contract the money supply, the Fed has completely eliminated economic depressions in the last six decades.
Federal Emergency Management Agency: Today FEMA has won widespread praise for its response to natural disasters like earthquakes, hurricanes, floods and tornadoes. No private business could wait the long intervals between disasters like FEMA does, or bring relief to entire cities or states.
Human Genome Project: The government provides the money and the organization for this 20-year project, which will give medical science a road map of the human genetic code. Researchers have already found genes that contribute to 50 diseases.
Centers for Disease Control and Prevention: This legendary American organization, popularized by the movie Outbreak, isolates and wipes out entire plagues and diseases that strike anywhere in the world. "The CDC," says Dr. James Le Duc of the World Health Organization, "is the only ballgame in town."
Mass education: This is probably the most remarkable example where the government overcame a market failure. Prior to the 1840s, the vast majority of Americans were illiterate. What few schools existed were private schools that educated boys only from the richest families. However, during the 19th century, the government began funding mass education at both the elementary and high school level. Between 1900 and 1996, the percentage of teenagers who graduated from high school mushroomed from 6 to 85 percent. The government also began issuing grants and loans for college education, and college enrollees aged 18 to 24 mushroomed from 2 to 60 percent. In essence, the government is responsible for the educated workforce that causes today’s economy to excel.
Market Failures
Finally, government is useful for correcting market failures. Economists define market failure as "an imperfection in the price system that prevents the efficient allocation of resources." There are many types of market failure; here are the definitions of the most important ones:
Asymmetric Information: This is any difference in information and expertise between two negotiating parties. For example, in the used-car market, the seller's information is based on sales that he conducts every day, but the buyer's information is based on a purchase he conducts only a few times in his lifetime. The resulting exchange is likely to be unfair or one-sided.
Adverse Selection: This is any unfair exchange based on asymmetric information.
Externality: Also called the spillover effect. This occurs when someone other than the buyer shares the costs or benefits of the product. The classic example is pollution. Factories can either treat pollution, which costs money, or dump it for free into the air or water. If they dump it, then not only are customers paying a price for the product, but local citizens too, in the form of higher mortality and disease rates, less fertile land, environmental catastrophes, etc. Sometimes the spillover effect is both positive and negative. An airport benefits its flying customers, but it also subjects the local neighborhood to various externalities. Positive ones include increased local business; negative ones include noise pollution.
Imperfect competition: This is any situation where a monopoly or oligopoly controls the market for a certain product. The lack of competition raises prices, lowers quality, slows down innovation and exploits customers.
Path dependency: This is the tendency to stick to a certain path, trend, technology, method or location, even after more promising alternatives appear. The most commonly cited — and now disputed — example is the QWERTY typewriter keyboard. This 19th century system placed the most commonly used letters far apart on the keyboard, purposely slowing down typing to avoid key jamming. Of course, today's electronic keyboards do not suffer from jamming, and a better system, DSK, cuts down on typing time by 10 percent. Unfortunately, society is committed to the old system, because it is too costly to retrain all typists and retool all keyboard production everywhere. Conservatives have raised objections to the QWERTY example, but path dependency has been found in thousands of other places in the economy as well. Examples include the English vs. the metric system, steam vs. gas engines, water-cooled vs. gas-cooled nuclear reactors, and the centralization of entire industries in a single city, like auto production in Detroit, or aircraft production in Seattle, or movie-making in Hollywood.
Failure to provide public goods: As outlined above, free markets cannot provide most public goods, or goods that are non-exclusive and non-rival. Attempts to do so result in a free-rider problem, where consumers may enjoy the good without paying.
Because markets are the cause of market failures, it follows that markets cannot correct them. But they are solvable by government. For example, governments can educate consumers, regulate polluters, break up monopolies, subsidize retraining, retooling or relocating programs, and provide public goods like national defense.
Once you consider all the goods and services that only government can provide (or provide well), it should become clear that government plays an extensive, beneficial and irreplaceable role in society. Conservatives and libertarians who wish to scale back government would only create more problems than they solve.
The advantages of markets
Markets do have their advantages over government, depending on the type of goods and services offered. Markets are better at handling most private goods. Why? It is a truism that democracy only works when the people are educated. Voters would be overwhelmed trying to educate themselves on the best prices for bicycle parts, the best safety features for surgery or what 32 flavors an ice cream store should sell. It is easy to see that a lot of ignorant votes would be cast in a system where voters attempted to run every aspect of the economy. In a free market, customers can become experts only on the things they want to buy, and then vote with their dollars.
Under the current (and imperfect) system, markets also have other advantages of specificity. First, elections take place only once every two or four years, so consumer choice mechanisms are much weaker in government. (This could be solved by holding more frequent elections, initiatives and referendums.) Also, markets allow people to vote for very specific things — like Ben & Jerry's ice cream over Haagen Daz. In an election, people vote on generalities — like a politician's overall record, which may include disagreeable as well as agreeable policies. (This, too, could be resolved by allowing voters to vote on more specific issues and offices.)
Flare's Right Wing:
Beaten ... to ... a ... bloody ... pulp ...
[ December 21, 2001: Message edited by: Malnurtured Snay ]
Posted by First of Two (Member # 16) on :
Too bad you can't think for yourself.
Trying to win through voluminous cut-and-pasting, because you know that none of us who have JOBS really have the time to refute every part of your gigantic argument, thus enabling you to declare victory in absentia.
Chickenshit.
Posted by Malnurtured Snay (Member # 411) on :
Rob,
I just love it when you resort to personal attacks instead of trying to refute claims. Sort of proves that what you try and tell people is pure and utter bullshit.
[ December 21, 2001: Message edited by: Malnurtured Snay ]
Posted by First of Two (Member # 16) on :
Well, the first line is personal. I admit that, although I'd bet $ that your post is, in fact, in no part your own words, so that the object is not entirely without merit.
The second paragraph is, however, a precise evaluation of your current tactic.
The third line is a simple adjective. My evaluation of the tactic.
Posted by Dr. Jonas Bashir (Member # 481) on :
AHEM!
May I have your attention? Thank you.
Here, the problem is not welfare as 'spoiling potential workers'. Welfare is EXTREMELY needed because this is not the case of the US, with a cronic, 'base', unemployed population. Here we have 5 million people under the 'poverty line' (the bare minimum to survive with some dignity). 2.5 million of them were thrown into poverty during De La Rua's presidency! Imagine that: he duplicated the amount of poor people to 15% of thw total population!
It has a lot to do with political views: peronists are masters of welfare programs. Radicals don't do the same, so the amount of people being kept by the Menem presidency with some assistance were suddenly cut from it in 1999.
Maybe there is a parallel with the US after all...
Posted by Malnurtured Snay (Member # 411) on :
Yes, Rob, that's why I quoted it. Because it wasn't my own words. Duh. You've quoted quite a few things yourself (take a look at the other thread going on). Let's think about it.
I have a job too, Rob. And aren't you the guy surfing here when on the clock (so to speak)? This can wait until you get home. See, thats what I, and I'm sure a great many others, have to do (as I don't have access to the web at work). So you're actually lucky in that you presumeably have the ability to counter me at both work and home.
So stop bitching about it.
And since you apparently either can't find anything wrong with the post, or you haven't read it, 'chickenshit' summarizes your response to it.
Sorry for hijacking your thread, Jonas
Saw some nasty pictures on CNN of cars burning. Hope you and family are alright.
[ December 21, 2001: Message edited by: Malnurtured Snay ]
Posted by First of Two (Member # 16) on :
Actually, I don't have the ability to counter you at home. A few scattered moments at work are all I get, so I make the most of them.
What I'm saying is that I believed that you did not so much post that essay only to provide evidence for your point (as I did in the aforementioned 'other thread') as to provide an argument that was so large and long-winded that noone could be troubled to refute its various and sundry points without an even larger, longer post.
Thus, when anyone replied to it at all, you could, Omegalike, continue to declare victory because not ALL the article's points were successfully refuted.
You may not have intended that, but that's what it looked like.
If only we could discuss these points as individual points, rather than in one huge lump, it would make life much easier.
Posted by Dr. Jonas Bashir (Member # 481) on :
Jeff, thanks for asking. Actually, we both work near hot spots. Lily works 2 blocks away from the Govt. House in the MasterCard offices (possible target of anti-US American or anti-bank rioters), and I work 3 blocks away from the Congress.
I saw the path of destruction along Rivadavia ave. yesterday... you could see thick black smoke columns from half a km. away. A BlockBuster, a McD, a supermarket and several banks were destroyed and raided there. The other places were left untouched. These scenes repeated themselves in various areas of the city.
Meanwhile, today a thousand protestors from a far-left, almost army-like group (MTP or Movimiento Todos por la Patria) marched to the Govt. house and were stopped by the police.
Posted by Malnurtured Snay (Member # 411) on :
Ah, thanks for clarifying Rob. I'll try to post only the most important stuff, but still leave the link for someone to skim over the rest of the info.
Posted by First of Two (Member # 16) on :
Okay. I'll try to be less snippy.
Posted by Malnurtured Snay (Member # 411) on :
Okay, let's hug, make up, then dance the dance of joy.
Posted by PsyLiam (Member # 73) on :
"The U.S. has the highest productivity per worker in the world."
Really? Higher than the monstrously over-worked Japanese?
Posted by Balaam Xumucane (Member # 419) on :
quote:Originally posted by First of Two: All of the benefits of statehood, including economic support, and none of the drawbacks?
Drawbacks like Senators and Representatives in the houses of Congress?
[ December 22, 2001: Message edited by: Balaam Xumucane ]
Posted by First of Two (Member # 16) on :
You haven't known many Senators and Representatives, have you?
Actually, Puerto Rico has a non-voting representative. He could vote if they became a state.
Posted by Grokca (Member # 722) on :
Hey isn't Porto Rico stuck in a position of taxation without representation then. How do you Americans stand for that, you should be financing a revolutionary war for them to help them get away from their oppressive government. Anyone from P.C. out there should start dumping tea in the harbours.
Posted by Cartman (Member # 256) on :
quote:...you should be financing a revolutionary war for them...
Naw. The US only finance other nations/groups when (a) local interest(s) is/(are) at stake.
Posted by Shik (Member # 343) on :
It's not repression if they like it. They keep voting to remain a commonwealth.
Posted by Cartman (Member # 256) on :
That's like saying Hitler or Stalin were democratically elected.
And of course people continue to vote for the commonwealth - as if they have a choice! Citizens there don't exactly live in a free world, ya know.
Posted by Shik (Member # 343) on :
Puerto Rico isn't the free world?
Posted by Cartman (Member # 256) on :
Migrate and see for yourself.
Posted by First of Two (Member # 16) on :
Well, it IS Puerto Rico, after all, not "Richport."
I've been away from the media for several days... what's the sitch it Argentina now?
Posted by Tahna Los (Member # 33) on :
Looks like Argentina is finally caving into international pressure to devalue the peso, the major hurdle to investment there.
Lets see what happens.
Posted by Omega (Member # 91) on :
DEvalue? So they're going to cause massive inflation to fix their economy?
STUPID!
Inflation is BAD! They used to cut peoples' hands off for creating fake money. Now we re-elect them.
Posted by Dr. Jonas Bashir (Member # 481) on :
I don't think that's their exact plan. The peso will artificially be tied to the US Dollar 1:1 for a while. That's been established by the president and his cabinet. The REAL level of reserves has been revealed: $3.3 billion, while there are almost 10 billion pesos in circulation.
What will they do? They'll begin the emmission of a new currency, unoriginally called 'Argentino', which won't be convertible with USDs. Rumors say they will take out all pesos from circulation and let the free-floating Argentino as the new currency.
Now, there's something more important. We defaulted. Yes, in a mass cheering in front of the Argentinian congress members, Rodriguez Saa (the prez) declared payment default for our national debt. Intentions are to renegotiate the debt with new rates and maybe a capital cut. Meanwhile, the surplus will be used for social programs in an orthodox Keynesian style: making everyone work for a couple of bucks building infrastructure.
Posted by Dr. Jonas Bashir (Member # 481) on :
And yet again EVERYTHING CHANGED.
Another pot & pan protest, more rioting, fights between mobs from political parties, and even people breaking into the Congress and burning stuff.
Now we have a new president, elected by the Congress, and for two years, until December 10 2003. Eduardo Duhalde, former governor of Buenos Aires (the biggest province) and senator, peronist, suspected of having connections with major drug dealers, very demagogic in action and speech.
What are the main points? Devaluation of the peso, convertibility of our currency with the US dollar, the euro and Brazillian Real, some solutions for cash withholding (long-term solution) and more stuff we don't know, yet...
Posted by Tahna Los (Member # 33) on :
quote:Originally posted by Omega: DEvalue? So they're going to cause massive inflation to fix their economy?
STUPID!
Inflation is BAD! They used to cut peoples' hands off for creating fake money. Now we re-elect them.
Yes I know it's stupid, but I did say International Pressure. They are being told to stop tying the Peso to the Greenback and devalue in order to invest. I would not be surprised if the US was part of the pressure.
This is, after all, one of the consequences of the Capitalism. Mexico suffered at one point under similar, but not the same, circumstances. There is pressure for Canada to tie its Loonie to the Greenback, but seeing what has happened in Argentina, I hope it doesn't happen any time soon.
