or Powell's or me• • •
"Mike and Jon, Jon and Mike—I've known them both for years, and, clearly, one of them is very funny. As for the other: truly one of the great hangers-on of our time."—Steve Bodow, head writer, The Daily Show
•
"Who can really judge what's funny? If humor is a subjective medium, then can there be something that is really and truly hilarious? Me. This book."—Daniel Handler, author, Adverbs, and personal representative of Lemony Snicket
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"The good news: I thought Our Kampf was consistently hilarious. The bad news: I’m the guy who wrote Monkeybone."—Sam Hamm, screenwriter, Batman, Batman Returns, and Homecoming
August 28, 2008
The market mindfuck
By The Scanner
“I believe that America's free market has been the engine of America's great progress. It's created a prosperity that is the envy of the world. It's led to a standard of living unmatched in history. And it has provided great rewards to the innovators and risk-takers who have made America a beacon for science, and technology, and discovery…We are all in this together. From CEOs to shareholders, from financiers to factory workers, we all have a stake in each other's success because the more Americans prosper, the more America prospers.”
— Barack Obama, New York, NY, September 17, 2007
Mark Thoma is an economics professor who runs the informative blog Economist’s View. Politically, he’s your standard-issue Democrat and he recently treated us to a standard-issue vision of economics as seen by Democrats:
This article by David Leonhardt describes Barack Obama's view of economic policy, and it is very similar to my own. Most of the time, it is best to leave markets alone, to let them work without intervention, and that should be our starting point. But markets fail, and part of the disagreement with those holding more conservative views is over how often markets fail, whether they can easily self-correct when there are problems, and how effective the government is at fixing problems when they exist.
Thoma is a victim of what is clinically termed the market mindfuck – a malady believed to affect over 90% of Democratic politicians. Now, in his academic work, Professor Thoma is a specialist in monetary economics and Fed policy, and it’s fair to say that like most elected Democrats he’s an admirer of the institution in general (and of Ben Bernanke’s policies in particular). So to provide some context for the market mindfuck, let’s briefly review what the Fed does.
Pursuant to the 1913 Federal Reserve Act and subsequent amendments, the government is effectively given an absolute monopoly on private bank reserves. A committee of government planning bureaucrats in Washington, known as the F.O.M.C., dictates the nationwide price of these reserves and feeds instructions to a bureaucratic department in New York. Based on these instructions, the department carries out constant intervention in the market -- literally on a minute-by-minute, hour-by-hour basis -- to control the quantity of bank reserves and ensure that the government-mandated price target is enforced at all times.
How do the government planners know what price to set? Being technically skilled state functionaries, they have developed a complex analytical apparatus that allows them to engineer just the right the price. It involves such things as calculating “output-gap estimates,” constructing “modified Taylor rules” and compiling “physical-input material balances” (whoops! sorry, that last one was Gosplan).
The health of the entire economy depends on this process. If the planning intelligentsia does its job well, the nation will be prosperous, demonstrating once again – to the mindfucked – that “most of the time it is best to leave markets alone” and “let them work without intervention” (though there is room to debate “how often” we will be forced, reluctantly, to permit exceptions to the golden rule).
* * *
The market mindfuck thus reveals itself as a formidable tool of ideological control. In accordance with the ancient principle of heads-I-win-tails-you-lose, it works as follows: If you advocate Policy A -- in which the government involves itself in economic decision-making to advance the perceived self-interest of the ruling class -- you will receive the warm approbation of the sages: What a sophisticated proposal; what a pragmatic approach. The Federal Reserve Act, as it happens, was a compromise between a reactionary plutocrat, an apologist for the Belgian rape of the Congo who called the income tax “communistic” (Sen. Nelson Aldrich of Rhode Island), and a bloodthirsty Southern white supremacist for whom no law “is so obnoxious that I would be willing to submit its fate to 146,000 ignorant Negro voters” (Rep. Carter Glass of Virginia).
On the other hand, if you advocate Policy B, in which the government involves itself in economic decision-making to benefit the working class, you will be summoned in grave tones before a tribunal of the very best men, who are charged with the duty of upholding the sacred doctrine – the doctrine that “most of the time, it is best to leave markets alone, to let them work without intervention, and that should be our starting point.”
Swiftly you will see the ideological enforcers – journalists, economists, think tankers, politicians -- gather around you with looks of pity and concern on their faces. Somewhere in the room you will hear the sound of a door being bolted from the inside. Don’t be afraid, they’ll say in soothing tones. You’re among friends here. Believe us, we understand your feelings. But we’re concerned that you’ve lost sight of some fundamental truths. We want to help you, but first we need to hear you say, in your own words, that “most of the time it is best to leave markets alone, to let them work without intervention, and that should be our starting point.” You can say that, can’t you? Just say the words.
You feel the icy stare of the faceless men arrayed against you. With panic rising in your chest, your mind flashes wildly to the New York Fed trading desk where at this very moment the national price of bank reserves is being fixed by people who look exactly like these men. You catch sight of one of your tormentors in a corner of the room, a former IMF official holding a gleaming copy of the Economist with a pair of electrical pliers folded inside. You want to shout no, but gripped by terror you collapse and crumple in your chair. In a slow, mechanical drone, you mouth the words: “It is best to leave markets alone, to let them work without intervention; that should be our starting point.” Your statement is taken down by a clerk and sent off to the Washington Post for filing. Satisfied, the men rise and move toward the door. The IMF staffer gazes at you with a look of benevolent reflection. (“You were thinking of the F.O.M.C., weren’t you?” After a moment’s hesitation, you nod your head and begin to sob. An almost tender smile comes over his face. “You are no metaphysician, Winston,” he says paternally.)
* * *
Consider the New York Times Magazine article by David Leonhardt that Thoma points to. It begins its discussion of Obama’s economic policy by recalling the hoary “battle of the Bobs” of the 1990’s:
On one side was Clinton’s labor secretary and longtime friend, Bob Reich, who argued that the government should invest in roads, bridges, worker training and the like to stimulate the economy and help the middle class. On the other side was Bob Rubin, a former Goldman Sachs executive turned White House aide, who favored reducing the deficit to soothe the bond market, bring down interest rates and get the economy moving again. Clinton cast his lot with Rubin, and to this day the first question about any Democrat’s economic outlook is often where his heart lies -- with Reich or Rubin, the left or the center, the government or the market.
Here is the market mindfuck in all its gruesome fullness. Robert Rubin wanted the government to redirect income from taxpayers to bondholders. Therefore, he was in favor of “the market.” Robert Reich wanted the government to redirect income from bondholders to road-builders. Therefore, he was in favor of “the government.” Have you got the hang of this? Now try your hand at this stumper: In 2001, Alan Greenspan called for reversing the Rubin budget-surplus policy, announcing that we should now cut taxes for the rich – i.e., redistribute income from bondholders back to taxpayers. Okay. Was Alan Greenspan for “the government” or for “the market,” according to David Leonhardt? (No peeking!)
Or let’s take a different variation of the mindfuck, from the same article. Leonhardt says the “best example” of Obama’s embrace of the free market is his climate policy. Obama supports a cap-and-trade system to cut greenhouse-gas emissions. While many Congressional cap-and-trade bills call for giving away allotments of pollution credits to power companies, an option Leonhardt describes as a form of corporate welfare, Obama wants to auction the credits off. This is supposed to result in a more efficient allocation of credits as well as more money for the treasury. By supporting auctions, Leonhardt says, Obama has “moved the debate toward a more pro-market solution.”
Now, I don’t know much more about this debate than I read in the article; if you take at face value the reporter’s explanation of the issue, the auctions plan appears as the better of the two ideas. But the terminology is incoherent: Obama wants the government to invent a new commodity and create a new market that didn’t exist before, tradable pollution credits; maintain a monopoly on the production of the credits; unilaterally determine the aggregate supply of credits; and then forbid companies by law from emitting greenhouse gasses in excess of their holdings of credits. This is the solution that follows from the dictum that the government usually shouldn’t interfere?
Let’s try to follow the logic. The explanation, presumably, is that in the giveaway plan, the government would determine not only the total number of credits but also the initial allocation of credits among companies; whereas in the auction plan, “the market” decides the initial allocation. But wait! What would be the point of having the government decide how credits are to be allocated among companies anyway, except as a corporate giveaway? Only the total number of credits affects the environment, not their distribution. If there were some pressing environmental reason why we would want to control the allocation of credits, then the “pro-market” auction solution would be a total failure; the distribution of credits would end up being determined by the relative economic value of credits to each firm rather than by whatever environmental criteria we were trying to enforce.
Surely it can’t be the mere existence of an auction that makes the plan “pro-market.” (After all, wasn’t it “pro-government” Bob Reich who wanted to auction off Treasury bonds -- i.e., run a deficit -- to build roads that would probably get built through competitive bidding?) The pollution-credit giveaway plan is neither more nor less “pro-market” than the auction plan. In both cases, the government creates the market. It’s just that in one version, the market is apparently created so as to benefit polluters and in the other one it isn’t. It is hard to resist the conclusion that the auction plan is presented as “pro-market” solely because – at least in this presentation – it’s the better of the two plans.
* * *
The market mindfuck is all the more insidious because the victim, usually a hapless Democrat, is complicit in his own mindfucking. By accepting the premise of the mindfuck, the victim automatically places his own views – indeed, precisely those views which distinguish him from his right-wing opponent -- under a cloud of probationary suspicion. This suspicion can only be dispelled after a rigorous examination process in which the judge and jury are the very ideological enforcers who insisted on the slanted premise in the first place. When the verdict arrives, the victim’s ideas may turn out to be lamentably “anti-market” or intelligently “pragmatic.” Such verdicts closely correlate with cui bono.
There is only one cure for the mindfuck: The patient must refuse to recite the catechism. When enjoined by his ideological enforcers, a strictly rejectionist posture must be assumed: “No, I’m sorry. Most of the time the government should not refrain from intervening in the market. The market is not a better allocator of resources than the government. Government policies create markets. That should be our starting point. Once we all agree on that, then we can debate the real question: Who should benefit from those policies, and how?”
Judging from the Obama quote at the head of this post, we may not see a cure in our lifetime.
Nice.
Posted by: Seth at August 28, 2008 09:32 PMVery nice. I'm kinda proud of myself, because I once made the same point to a friend of mine regarding the market in pollution credits--it wasn't some spontaneous Hayekian process at work, but a government-imposed limit on how much pollution could be generated, with the distributional details left up to the market to decide.
Posted by: Donald Johnson at August 28, 2008 10:10 PMhey now this is quite the good stuff.
Posted by: almostinfamous at August 29, 2008 12:22 AMI probably would have submitted this piece to reddit if the writer/publisher had had the sense to us the phrase 'mindrape'. I feel we are getting a bit too 'gritty' here on the net and there are a lot of impressionable children that don't need a constant diet of this type of language. Forgive me, but I am old(er) and grew up in a world where most speakers and writers of public materials acted like they had some sense.
regards...Jack
Posted by: Jack Alexander at August 29, 2008 12:43 AMJack Alexander, you think that rape is preferable to fuck???
Posted by: GaryS at August 29, 2008 01:37 AM...Did somebody just say that "fuck" is an uglier word than "rape"?
Posted by: hf at August 29, 2008 01:46 AMHow about "skullfuck"?
Posted by: Squicky McGee at August 29, 2008 02:46 AMYou read Jamie Galbraith's "The Predator State" didn't you?
Posted by: bobbyp at August 29, 2008 07:44 AMIn fact, "market failure" is not an exception to the rule: markets always fail, 100% of the time. The ideology of the so-called "free market" is theology, not science. Or rather, its akin to the Ptolemaic universe. In order for the "free market" to function the way economics professors say it does as they indoctrinate freshmen, there need to be, for example:
No externalities -- all of the social costs and benefits of a transaction are captured in the dealings between buyer and seller. That happens exactly never.
Perfect information -- buyer knows everything about the product and alternatives. Hardly ever pertains, at least not without government regulation to require labeling.
No transaction costs -- never true.
Perfect competition -- very rare.
No provider induction of demand -- uncommon.
And so on and so forth. In any event, even this Ptolemaic theory does not predict that it's mythical "free market" produces justice, although its proponents pretend it does, just by making up the assertion. It's still appropriate to redistribute resources to those who get screwed. There actually is no valid argument against that embedded in the fantasy at all -- it just provides enough smoke and obfuscation to pretend there is.
Economics is a vast edifice of bullshit erected on a foundation of sand.
Posted by: Cervantes at August 29, 2008 07:49 AMI think we should let the market decide if the intertubes are too "gritty"
Posted by: cap'n Keys at August 29, 2008 07:55 AMTom, if we're worried about children reading this then mindrape is just as bad as mindfuck. If we're worried about adults, the issue isn't very interesting. In theory I sorta sympathize. In practice I don't give a frack. (Battlestar Galactica comes in handy on this "issue".)
Posted by: Donald Johnson at August 29, 2008 08:10 AMThat's a little unfair to Ptolemaic astronomy, Cervantes. Now that was an intellectual edifice constructed by brilliant men (Hipparchus is my hero and Ptolemy was no slouch) that did a decent job explaining the data using postulates that were reasonable given what people knew at the time.
It's for economists, orthodox and heterodox, to explain whether their theories are as defensible.
Posted by: Donald Johnson at August 29, 2008 08:15 AMThe pollution-credit giveaway plan is neither more nor less “pro-market” than the auction plan.
I think this illustrates the problem with the article, and how it's mis-using terms. Which is kind of surprising, as the article almost had it a few sentences earlier:
What would be the point of having the government decide how credits are to be allocated among companies anyway, except as a corporate giveaway? Only the total number of credits affects the environment, not their distribution. If there were some pressing environmental reason why we would want to control the allocation of credits, then the “pro-market” auction solution would be a total failure; the distribution of credits would end up being determined by the relative economic value of credits to each firm rather than by whatever environmental criteria we were trying to enforce.
The auction plan is "pro-market" because it uses a market to allocate resources. The government-allocation plan is "anti-market" because it instead uses government fiat to allocate resources. Where the resources originated is a complete red herring.
Surely it can’t be the mere existence of an auction that makes the plan “pro-market.”
No - it's how resource allocation is controlled.
Roughly speaking, "pro-market" policies are ones which use some kind of market to allocate resources. That is why Rubin's plan was "pro-market" (market makes investment decisions) and Reich's was not (government makes investment decisions).
The market is not a better allocator of resources than the government.
All you've done is replace one false catechism with a false catechism you like better.
The fact of the matter is that sometimes markets are better allocators of resources than governments (witness the failure of the USSR's farm policies) and that sometimes markets are worse allocators of resources than governments (witness the failure of the USA's healthcare policies). Insisting that one or the other is always best is nothing more than dogma.
Government policies create markets.
And - if they're good policies that create good markets - those markets should generally be left alone. That government policies create markets is not "anti-market".
Markets are good because they're typically an excellent way of efficiently allocating resources. One of the reasons this is true is because more centralized planning almost always lacks information as compared to individual actors in a market. That's also one of the reasons why government interference in markets is often bad - the government has less information on individual transactions than the actors involved in those transactions do, and so will tend to make sub-optimal choices; less information = more waste, essentially.
This doesn't mean markets are in any way sacred, simply that they're a valuable tool, and hence a very sensible thing for a good government to use. Like all tools, however, there are situations where markets don't work correctly; one example is a natural monopoly. In that case, governments can and should use more appropriate tools than free markets, such as regulated markets or government allocation.
And therein lies the main point of contention: when is a free market the best tool to use, and when are other tools preferable? It's a tough call, and different people will come to different conclusions.
Given that, let's return to your "market mindfuck":
We want to help you, but first we need to hear you say, in your own words, that “most of the time it is best to leave markets alone, to let them work without intervention, and that should be our starting point.” You can say that, can’t you? Just say the words.
People who say that have come to the conclusion that the information disparities involved make free markets such a powerful tool for the government that more often then not those markets can distribute resources in a better way than government fiat can.
They're not saying markets are perfect.
They're not saying markets exist without governments.
They're not saying markets are more important than people.
They're just saying that markets are really, really useful for allocating resources in a good way.
You may well disagree with that conclusion - for all that, I may disagree with that conclusion - but that doesn't justify ascribing shadowy motives to people who have honestly arrived at it. If anyone's playing the "thought police" role here, it's you, by offering emotional pressure rather than rational arguments to make your personal belief about the usefulness of this tool seem "correct".
Markets are a tool; no more, but also no less. You seem to have forgotten that latter half.
Posted by: Pitt at August 29, 2008 08:25 AMTom and Jack: you're terrifyingly wrong. Rape is a stronger word than fuck, and may well always have been, and I'm amazed you didn't notice. Fuck's status as a curse word actually neutralizes it to a certain extent since it is overused and overindulged in our faux-puritan society.
If you say "fuck" as an explicative to your mother, your excess may be excused. If you use "rape" as the same, there would be considerable shock value.
If you're going to peddle prudishness, it helps to actually have a consistent standard of behavior. Get back to us when you've obtained one.
Posted by: No One of Consequence at August 29, 2008 10:59 AMI'll segue into a topic close to my heart. Markets should NOT be judged solely by their ability or inability to provide more efficient allocations of resources. This is the fallacy of classical econ: "Let markets operate where they succeed, and let government help with the rest."
What is the definition of success?
It is mostly measured by GDP.
This is a highly distorted nonlinear measure that progressives should treat with caution. If you want to compare the US with Sri Lanka, then yes GDP is the best measure to explain why Americans are better off.
But, to take one example, the US towers over Western Europe GDP/head-wise; yet many studies by reputable economists have established that quality of life is much higher in Western Europe for the large majority of the population.
This is an observation that even The Economist made a long time ago "How come the UK can claim a higher GDP than France when the latter nation is so obviously richer?"
In particular, social justice is the kind of wealth that is not well measured by output creation in rich countries. (Again, it is crucial to differentiate with poor countries.)
The nonlinearity is easy to grasp: there is a world of difference between having one car and zero car, but how better off you are when you purchase that fifth car is debatable.
I believe that efficiency should not be the sole criterion for letting free markets rule or having government intervention.
Yes, sometimes, to opt for inefficient resource allocation is the preferable tradeoff society should choose. (There are tons of examples.)
Markets are a tool but their rule should not be determined solely by efficiency considerations.
This is the trap most liberals fall into.
In particular, government should not be allowed to allocate resources only if it can prove it can do a more "efficient" job.
When I hear the word "efficient," I ask "efficient for whom?"
The auction plan is "pro-market" because it uses a market to allocate resources. The government-allocation plan is "anti-market" because it instead uses government fiat to allocate resources. Where the resources originated is a complete red herring.
Bullshit. You've thrown out a red herring. The government, in creating a policy, surveys the market and determines the likely results of said policy. As such, it retains responsibility, in every sense, for said policy. The "market" only allocates resources at the behest of the government that created the market. To pretend that the government drops out of the equation just because it involves more parties is childish in the extreme. By that logic, Blackwater, a private corporation, can commit atrocities in Iraq that the U.S., which hires and oversees Blackwater, is in no way responsible for. After all, Blackwater's hiring and behavior is the result of market decisions. The fact that the government created the mercenary market is, by your bullshit, a red herring.
Posted by: No One of Consequence at August 29, 2008 11:05 AMBernard makes a very important point about the definition of success, but I want to respond to Pitt for the moment. First, thank you for the comment. Your comment is helpful because you understood everything that’s in the post. But you didn’t understand the post.
I didn’t argue for a mirror-image of the mindfuck, with the chant switched around to “the government is the best allocator of resources; that should be the starting point.” (I went out of my way, in the penultimate paragraph, not to phrase it that way.) Nor was it an argument for any particular flavor of economic analysis. In principle, the notion is compatible with any type of economics, from New Classical to Marxist.
Rather, it was an argument about the relationship between words and things. To say that “most of the time the government shouldn’t intervene in the market; that should be the starting point of the debate” is right away to orient the entire debate around an image that (1) is false: Since the government creates each market, it’s always intervening, often in very explicit ways; and (2) systematically and needlessly biases the discussion, in all the ways I tried to describe.
Pitt: """" The auction plan is "pro-market" because it uses a market to allocate resources. The government-allocation plan is "anti-market" because it instead uses government fiat to allocate resources. Where the resources originated is a complete red herring. """"
If only for the sake of argument, I’ll grant that you’re making a meaningful and coherent distinction here, but you miss the point. According to Thoma, it is usually best to **“leave markets alone,”** to let them **“work without intervention.”** This is the mental model on which the entire mindfuck is based (even when a different choice of words is used to express it): Markets are off on **that** side of the room, whirring away magically by their own devices, while the government is here on **this** side of the room sullenly observing; the question being, will the government get up and cross the room to stick its finger in the works? When it does, that’s “government.” When it abstains, that’s “the market.” Most of the time, the government should stay in its corner.
If there’s to be the slightest consistency at all, any attempt by the government to set up a cap-and-trade system should, by these lights, be classified as the government sticking its fingers in the works. Now, **which** method it chooses to use when it does so – (a) a method that benefits the public by forcing companies to make use of a government-created market, or (b) a method that benefits the polluters by giving the initial credits away in amounts determined by government fiat – obviously falls into **neither** the “government intervenes” nor the “government leaves the market alone” category. It’s just a question of how well-designed the policy is. Yes, part of good policy design is having an understanding of the dynamics that arise when large numbers of economic actors interact – i.e., how “markets” behave. But it is utterly impossible to study or model or predict these dynamics until one first makes assumptions (implicit or explicit) about **how the government designed the market in the first place.**
So it’s the mental model that I’m criticizing; that’s the mindfuck.
Pitt: """" Roughly speaking, "pro-market" policies are ones which use some kind of market to allocate resources. That is why Rubin's plan was "pro-market" (market makes investment decisions) and Reich's was not (government makes investment decisions. """"
Now this really is incoherent. Or arbitrary, to be exact. As I pointed out, Reich’s policy did use “some kind of market to allocate resources”: Reich wanted to obtain investment funds through the market (auctioning Treasury bonds). Rubin wanted to obtain investment funds through government fiat (taxation). Reich wanted to use the funds for a government-chosen purpose (roads), spent via a market mechanism (contractor bidding), relying on the market to make the policy stimulative for the economy (the expenditure multiplier). Rubin wanted to use the funds for a government-chosen purpose (reducing private holdings of Treasury bonds), spent via a market mechanism (open market purchases), relying on the market to make the policy stimulative (lower interest rates). So why is Rubin pro-market and Reich pro-government?
But none of this is really important; the argument isn’t meant to be an exercise in hair-splitting. To repeat, it’s about the relationship between words and things. In the market-mindfuck paradigm, which you see reproduced in all the newspapers, Rubin’s taxes-for-bonds plan is labeled “market-friendly.” Okay, whatever. But then so is offshore drilling – i.e., the federal government licensing its own property to private firms in order to change the supply of oil. (Hmm.) So is granting Microsoft a monopoly on the production of Windows CD-ROMs. (That’s odd.) Or Alan Greenspan commanding the short-term interest-rate to rise and fall from his government office building. (Wait a second.) Or Republican mayors who can’t get enough of eminent domain and tax abatements. Or ex-Wall Street SEC commissioners who spend all their time forbidding people from short-selling bank stock or selling unregistered securities or acquiring blocks of equity without disclosure or filing unaudited financial reports, etc. etc. None of these get labeled “pro-government.” But building highways does.
If you can really see a simple, innocuous formula in all this, you’re cleverer than me, that’s for sure. To me, it looks like a mindfuck.
As with any ideology, the choice of words is critical. As are the contradictions.
Take this for example. "Neoliberal policies favor free markets."
That's a propaganda line. You can tell that because the word freedom appears twice in that one sentence. When you hear it, you're supposed to parse it as "Freedom favors freedom," and who among us doesn't want to be free?
Good.
But then comes the High Priest, Tom Friedman, to explain what that freedom is all about. It's about wearing a straitjacket, the straitjacket being, of course, the ultimate symbol of freedom. How much freedom does it buy you? Friedman explains:
"Once your country puts on the Golden Straitjacket, its political choices get reduced to Pepsi or Coke."
In the name of freedom. Friedman is too dumb to see the contradictions. Marxists were a whole lot smarter and buried their contradictions much deeper.
But what they have in common is the determinism, the inevitability. Classical economics is meant to be the "End of Economics." Nothing to choose any more. Brilliant con artists!
They're not saying markets exist without governments.
As the response points out, they are if you trust the plain English meaning of their words.
They're just saying that markets are really, really useful for allocating resources in a good way.
This seems like an exceptionally silly way to put it. Let's lay the cards on the table here: markets are useful for saving us work. This may have an advantage, especially for a lazy person like me, and if we rule out the use of this tool altogether we may have more work than any human or government could handle. But that doesn't mean we should treat the (theoretically) quick and easy way as good without looking at the facts of each case. Nor does it justify speaking of "market-friendly" plans. We wouldn't talk about "hammer-friendly" strategies for solving a problem, so this term plainly hides the people who would benefit behind a screen of pseudo-science.
Posted by: hf at August 29, 2008 02:24 PMThere is no "the market". There are classes with varying degrees of education and wealth: informational resources and owned resources. There never can be a "pure" market: that would require the demolition of government, which as the Soviet, French and other revolutions show just leads to another powerful institution stepping forward to fill the gap. Almost certainly they would be based on the existing corporations, though they would change somewhat in the process. Even abolishing the corporations (though how one would do that in the absence of a world government, I'm not clear about) would not be sufficient for marketopia. Disproportionate aggregations of power will always occur. That is a problem for the remainder of the ruling class, which is why the elite is so tiny in many countries. But where the elite is reasonably large, or at least the upper middle class is (*)
and it has at least some power, those can be overturned. That is why democracy arose: it reduces the number of family members killed.
It suspect it even happens in countries like the USSR. It's not formalised in any meaningful way, obviously, but I don't believe the Soviet Union fell because Ronnie Raygun gave a few snappy speeches or wasted more taxpayers' money on the military. I think it fell because its ruling class opposed it. Though it simply wasn't working as a resource allocating mechanism, I'm not certain that it wasn't allowed to get into a worse state than it might have to hasten reform. The Russians never reformed, mind, because they were then screwed over by the US (relative to Poland: c.f. The End of Poverty), allowing drunken Boris then the oligarchs and Putin to take over.
(*) not the faux middle class of naive enthusing: sadly in significant part working class traitors who won the citizenship and/or melanin lotteries conned into supporting oppression of their equivalents
Posted by: me at August 29, 2008 02:38 PMI guess the two strategies the core of the parties push are:
R. Destroy the middle class so the domestic poor may be oppressed as much as those abroad.
D. Obtain the consent of the middle class to oppress the poor abroad.
The Rs have been using the second to achieve the first (and haven't they done well?) by "deregulating" (*) the media. Perhaps that's why Al Gore facilitated the internet. Exploitation of poor people should only happen outside the US.
(*) wonderfully Orwellian, meaning giving it over to be regulated by its owners and funders rather than its viewers.
Posted by: me at August 29, 2008 02:55 PM"Pro-market" is bullshit, of course, no question about that.
But I don't think this qualifies as 'mindfuck'; 'market' is just a word, the word they use to describe their ideology. They have a real, consistent ideology. Call it something else, let's call it "pro-capital", for example - any objections? No? OK, now let's modify the quote:
I believe that America's pro-capital policies have been the engine of America's great progress. It's created a prosperity that is the envy of the world... etc.
It's true that the US is a rich country, technically advanced, with a large middle-class, etc., right?
So, has it happened despite its pro-capital policies? Are the WWI and WWII responsible for its success? Geography? Slavery in the past? Imperialism in the past and present? All of the above, but not the pro-capital policies?
This is a sincere question; I would appreciate an answer.
Posted by: abb1 at August 29, 2008 04:04 PMThey're not saying markets are perfect.
They're not saying markets exist without governments.
They're not saying markets are more important than people.
They're just saying that markets are really, really useful for allocating resources in a good way.
Actually they're saying all of the first three things, and are by no means saying "just" the fourth thing. As demonstrated quite plainly by their response whenever someone points out a situation where markets do not allocate resources in a good way.
Posted by: Dan at August 29, 2008 04:06 PMI'm just laughing at the idea that there are "impressionable children" reading a blog that regularly brings us depressing views of some of the worst sides of human nature as expressed in politics, but they're going to be horribly shocked by the word "fuck".
Other than that, nothing to add.
Posted by: Hee Hee at August 29, 2008 06:13 PMNo One of Consequence
I have spent the last half hour skimming Mark Twain stories to find the one I'm sure I remember whose protagonist is a boastful little boat who is hailed by some stately liner and must accede that it is “No One of Consequence” bound for “Nowhere in Particular”.
It has been many years since I read it but it always struck me as one of the best pretension pricklers Twain ever wrote. But now I can’t find the story. Am I wrong? Or did your nom de blog have a different source? Oh, and I think you are right about whose herring is red.
Saying, “Where the resources originated is a complete red herring.” ignores the fact that, at least theoretically, that stockholders who provide the resources for a market entity have the right to determine how those resources are allocated. The results are economic but the process is political. The use of my taxes or the property we all hold in common, such as ethereal bandwidth, is no different. If I pay, then I get to play, or at least my representative in Washington does.
I am _very_ poorly read and I don't think I've read the Twain story (but it jogs a memory). I was using this name off and on during BB (Before Blogs) for another issue. My reasons for using it I'll pass on for this post, but as for origin. . . Wesley refers to himself as no one of consequence at one point in The Princess Bride. I do not think I consciously took it from that, but I sure as hell love that line. (I'm a geek, I have to love the Princess Bride, it's in the handbook.) I know that movie better than Twain, so maybe it was that.
Posted by: No One of Consequence at August 29, 2008 11:31 PMThe rape/fuck talk is a sideshow.
The proposition that markets are just a tool somewhat forgives the "tools" who wield disproportionate influence within most of them. Remember, perfectly competitive markets are a tbeoretical construct, wages are not equal to marginal productivity ( a clever economist dodge to avoid consideration of distribution in modeling ) and oh yeah the efficient markets hypothesis is the king of mindfucks.
Kenneth Boulding must be about ready to rise from his grave to settle this misguided debate.
A most commendable post, I'll be a regular reader because of this effort.
Posted by: self at August 30, 2008 01:06 AMThanks, No One,
Maybe you are right, maybe that phrase doesn't mean what I think it means. Anyway, my thanks for the enlightenment.
I took an undergraduate course in Microeconomics class several months ago. The text book for the class was written by Paul Krugman and Robin Wells.
In Chapter 1, we learn that "markets usually lead to efficiency." (15) We learn that "[n]o branch of the US government is entrusted with ensuring the general economic efficiency of our market economy . . ." We learn that markets tend towards equilibrium and this is demonstrated by an example: in a supermarket, when people are waiting in line for a register, and a new register opens, people will move to stand in line for the new register until all the lines are equal again.
While a "story about supermarket checkout lines may seem to have little to do with economy-wide interactions," it "in fact ... illustrates an important principle. A situation in which individuals cannot make themselves better off by doing something different—the situation in which all the check out lines are the same length—is what economists call an equilibrium. An economic situation is in equilibrium when no individual would be better off doing something different." As their abstract model demonstrates, "[m]ost of the time, it is best to leave markets alone, to let them work without intervention, and that should be our starting point." QED.
They summarize with "principles that underlie the interaction of individual choices:
1. There are gains from trade. [Duh]
2. Markets move toward equilibrium. [As supermarket check out lines so clearly illustrate, provided we apply a sufficient level of abstraction to the real economy]
3. Resources should be used as efficiently as possible to achieve society’s goals. [Duh]
4. Markets usually lead to efficiency. [Says who? Efficiency for whom?]
5. When markets don’t achieve efficiency, government intervention can improve society’s welfare." [Like when the Fed intervenes on an "a minute-by-minute, hour-by-hour basis?" And whose "welfare" exactly are we talking about when we say "society?"]
Anyways, thought you might find this interesting.
Posted by: Sam at August 30, 2008 02:24 PMThree words come to mind . . .
wank, wank, wank.
