Question to libertarians

[molotovcocktail]

Just wonder, how will reducing the government stop this current problems:

Economic Recession
Hunger in east Africa
Unemployment

Marxism have solutions to all this problems. Libertarians have a solution, but i cannot see how it is supposed to work.

[Ocean Seal]

It won't its an argument designed to keep the working class away from class politics ideologically. Libertarians (capitalists) have absolutely no scientific basis for why their plans will work. They have some Reagan quotes, some emotional speeches about the founding fathers, and scapegoats like welfare queens and immigrants. They want people to believe that the problem isn't capital, but rather state interference with capitalism much like fascists wanted people to believe that the problem wasn't capital but rather an international Jewish conspiracy. What they don't understand is that the state was the basis of development for capitalism, and there is no reason to believe that the ruling class will shrink it or that shrinking it will stop state-like institutions from springing up (private police, private armies, and so on).

[MURDOC]

I would describe myself as somewhere in the libertarian/anarcho-capitalist spectrum, so I will be glad to answer questions about these sorts of things and any other questions you or anyone else have.

Just wonder, how will reducing the government stop this current problems:

Economic Recession

In order to understand how to "fix" economic recessions, it is important you first understand what causes these recessions to begin with. Recessions, like the one we find ourselves in now, are caused by loose monetary policy initiated by central banks. The solution to a recession is to abolish central banking and return to competing, free market currencies. Interest rates should be set, like all prices, by the forces of supply and demand. When the government artificially sets the rate lower than it would be in a free market, the demand for lending exceeds the supply of lenders. The difference is made up for by inflation and leads to booms/busts.

For more: en.wikimedia.org/wiki/Austrian_business_cycle_theory

Hunger in east Africa

Open borders, free immigration and free trade all would drastically improve the lives of the poor in Africa and elsewhere in the world, and would require literally no political action on their own end (assuming they allow people to freely emigrate from theirr respective countries, which isn't actually the case a lot of the time in many socialist countries throughout the world both historically and today.)

If we want these countries to build sustainable, strong, healthy economies of their own, they should be encouraged to adopt market reforms and to allow/encourage trade and foreign investment.

Poverty in the third world, no different than poverty elsewhere, is the result of low productivity. Wages are simply a reflection of worker productivity:

federalreserve.gov/newsevents/speech/krozner20060927chart1.gif

If we want these people to have access to opportunities which will allow them to raise themselves out of poverty, the key is to allow for investment and capital accumulation which will give them greater access to productive, wealth producing endeavors.

Unemployment

Businesses employ people when they believe the benefit of hiring an additional employee exceeds the cost. If we want to encourage employment, we should remove restrictions/regulations which artificially raise the cost of employment. The minimum wage, legal requirements for paying time and a half for OT, requiring employers to pay health care expenses, etc. Looking at the other side of the equation, we can also increase the benefit of hiring employees by stealing less of their money via taxation.

Frictional unemployment also comes about during recessions, as capital is artificially funneled to sectors of the economy where it would not be under normal market conditions. The result is that people build too many houses, acquire skills/experience in house building and related industries, etc. The "solution" to this problem is the same as the first question you asked.

[MURDOC]

Libertarians (capitalists) have absolutely no scientific basis for why their plans will work.

The explosion in human living standards universally seen in countries that embrace markets over the last 100 years is the "scientific basis" for my beliefs.

They want people to believe that the problem isn't capital, but rather state interference with capitalism much like fascists wanted people to believe that the problem wasn't capital but rather an international Jewish conspiracy.

This sounds more similar to the justifications I've heard made in regard to why socialism has led to miserable living conditions, absolute destitution and inescapable grinding poverty in literally every single instance it has ever been put into practice.

[Revolution starts with U]

I would describe myself as somewhere in the libertarian/anarcho-capitalist spectrum, so I will be glad to answer questions about these sorts of things and any other questions you or anyone else have.



In order to understand how to "fix" economic recessions, it is important you first understand what causes these recessions to begin with. Recessions, like the one we find ourselves in now, are caused by loose monetary policy initiated by central banks. The solution to a recession is to abolish central banking and return to competing, free market currencies. Interest rates should be set, like all prices, by the forces of supply and demand. When the government artificially sets the rate lower than it would be in a free market, the demand for lending exceeds the supply of lenders. The difference is made up for by inflation and leads to booms/busts.

For more: en.wikimedia.org/wiki/Austrian_business_cycle_theory

How does this explain the numerous and disasterous booms and busts experience prior to the adoption of central banking?
Isn't it more likely that the problem is popular demand for cheap credit and high wages?

Open borders, free immigration and free trade all would drastically improve the lives of the poor in Africa and elsewhere in the world, and would require literally no political action on their own end (assuming they allow people to freely emigrate from theirr respective countries, which isn't actually the case a lot of the time in many socialist countries throughout the world both historically and today.)

If we want these countries to build sustainable, strong, healthy economies of their own, they should be encouraged to adopt market reforms and to allow/encourage trade and foreign investment.

Poverty in the third world, no different than poverty elsewhere, is the result of low productivity. Wages are simply a reflection of worker productivity:

federalreserve.gov/newsevents/speech/krozner20060927chart1.gif

Is this not literally the exact stance the IMF and World Bank have taken over the last 7 decades? It is not seeming to work for the IMF, so what is different about your policy that would magically reverse this process?

If we want these people to have access to opportunities which will allow them to raise themselves out of poverty, the key is to allow for investment and capital accumulation which will give them greater access to productive, wealth producing endeavors.

I would say the key is to end private property, but... to each their own, eh?

Businesses employ people when they believe the benefit of hiring an additional employee exceeds the cost. If we want to encourage employment, we should remove restrictions/regulations which artificially raise the cost of employment. The minimum wage, legal requirements for paying time and a half for OT, requiring employers to pay health care expenses, etc. Looking at the other side of the equation, we can also increase the benefit of hiring employees by stealing less of their money via taxation.

1) Being employed at a job that doesn't pay the bills/groceries is no better than being unemployed and on welfare
2)Not pushing your externalities off on someone else is "the cost of doing business" in a free society
3) The capitalist taxes the productivity of his laborers, for his own gain, far more than the government could ever dream. One goes to work and creates $5 value. His boss keeps $4. His government only taxes $.30 of that remaining dollar
4) You do realize that prior to overtime protections you simply had to work overtime, at normal wages, or you were fired?

[tir1944]

Open borders, free immigration and free trade all would drastically improve the lives of the poor in Africa and elsewhere in the world

Omg what did i just read...

[Revolution starts with U]

Also Fox (get it? ) how are wages a reflection of worker productivity when worker productivity in the US has gone up drastically over the last 40 years while wages have remained flat, or in some cases gone down?

[molotovcocktail]

The explosion in human living standards universally seen in countries that embrace markets over the last 100 years is the "scientific basis" for my beliefs.

Where? All the countries who have experienced relative increase in living standards(Japan, South Korea, Brazil etc.) are due to overthrowing tyrannies and establishing a more efficient economic model than despotism( basically every country was despotic, and almost every economic model are more effective), or they have get rid of colonists that steal resources, increased welfare (Brazil, Scandinavia, Chile etc.), or found oil or an another valuable resource. The western countries are more centralized than they where 100 years ago, they got more centralized until the 70`s, since then have the relative living standards fallen in this countries.

[molotovcocktail]

In order to understand how to "fix" economic recessions, it is important you first understand what causes these recessions to begin with. Recessions, like the one we find ourselves in now, are caused by loose monetary policy initiated by central banks. The solution to a recession is to abolish central banking and return to competing, free market currencies. Interest rates should be set, like all prices, by the forces of supply and demand. When the government artificially sets the rate lower than it would be in a free market, the demand for lending exceeds the supply of lenders. The difference is made up for by inflation and leads to booms/busts.

For more: en.wikimedia.org/wiki/Austrian_business_cycle_theory

I feel i am repeating myself here, i wrote this on a another thread (he never answered me), and i still wonder.

This is how bubbles occur:

Humans tend to think that "if that guy made a lot of money on tulips, why should not I get rich on tulips too?",
as a result of this, many invest in this object.This creates an increase in demand.
When the demand increases, the prices increases. The price will then rise higher than the actual value of the object, because higher amounts of an object are being bought than the amount of objects being consumed. The demand get to an unsustainable height.
At some point the prices get a fall. When the price fall, investors panic and start selling their investments. This reduces the price more, and the bubble bursts.

Can somebody tell me what this got to do with a centralized economy?

http://www.revleft.com/vb/bubbles-t1...78#post2261578

[Nox]

I would describe myself as somewhere in the libertarian/anarcho-capitalist spectrum, so I will be glad to answer questions about these sorts of things and any other questions you or anyone else have.



In order to understand how to "fix" economic recessions, it is important you first understand what causes these recessions to begin with. Recessions, like the one we find ourselves in now, are caused by loose monetary policy initiated by central banks. The solution to a recession is to abolish central banking and return to competing, free market currencies. Interest rates should be set, like all prices, by the forces of supply and demand. When the government artificially sets the rate lower than it would be in a free market, the demand for lending exceeds the supply of lenders. The difference is made up for by inflation and leads to booms/busts.

For more: en.wikimedia.org/wiki/Austrian_business_cycle_theory



Open borders, free immigration and free trade all would drastically improve the lives of the poor in Africa and elsewhere in the world, and would require literally no political action on their own end (assuming they allow people to freely emigrate from theirr respective countries, which isn't actually the case a lot of the time in many socialist countries throughout the world both historically and today.)

If we want these countries to build sustainable, strong, healthy economies of their own, they should be encouraged to adopt market reforms and to allow/encourage trade and foreign investment.

Poverty in the third world, no different than poverty elsewhere, is the result of low productivity. Wages are simply a reflection of worker productivity:

federalreserve.gov/newsevents/speech/krozner20060927chart1.gif

If we want these people to have access to opportunities which will allow them to raise themselves out of poverty, the key is to allow for investment and capital accumulation which will give them greater access to productive, wealth producing endeavors.



Businesses employ people when they believe the benefit of hiring an additional employee exceeds the cost. If we want to encourage employment, we should remove restrictions/regulations which artificially raise the cost of employment. The minimum wage, legal requirements for paying time and a half for OT, requiring employers to pay health care expenses, etc. Looking at the other side of the equation, we can also increase the benefit of hiring employees by stealing less of their money via taxation.

Frictional unemployment also comes about during recessions, as capital is artificially funneled to sectors of the economy where it would not be under normal market conditions. The result is that people build too many houses, acquire skills/experience in house building and related industries, etc. The "solution" to this problem is the same as the first question you asked.

A Libertarian who actually knows what he's talking about, that was a nice surprise

[molotovcocktail]

A Libertarian who actually knows what he's talking about, that was a nice surprise
__________________

Nope, he don`t. What he is saying is that the reason to unemployment is too high costs for employing people. It is just one problem, if the wages went down, it will increase the profit, and more of the money will thereby end up in the hands of the richest(the owners of the companies). The richest will use less of their money than the middle income, and the circulation in money will thereby fall.
The fall in the circulation will lead to a fall in consumption. Which means that less thing will be bought, and you got yourself a depression instead of recession.

I am stealing a question from an another forum:
Name one country that have cut their way to economic growth.

[MURDOC]

How does this explain the numerous and disasterous booms and busts experience prior to the adoption of central banking?

Inflationary monetary policy predates central banking, mainly via fractional reserve banking. States chartered and organized banks in order to monopolize the industry and inflate cooperatively. The federal reserve was created with the expressed purpose of allowing these institutions to debase/inflate while trying to avoid the constraints a true market would have held them to. It should come as no surprise to anyone who understands this why the greatest economic contraction/depression to ever occur took place a short time after.

Isn't it more likely that the problem is popular demand for cheap credit and high wages?

No, that seems far less likely. This isn't even attempting to explain the existence of recessions. There is always a demand for cheaper credit and higher wages. And yet we don't have constant, never ending booms/busts.

Is this not literally the exact stance the IMF and World Bank have taken over the last 7 decades? It is not seeming to work for the IMF, so what is different about your policy that would magically reverse this process?

The IMF is a state sponsored entity which exists primarily to prop up failing states. The stance each of these states has on trade and international investment vary, but to the extent that the IMF and world bank have managed to liberalize barriers to trade, we have seen enormous strides. There is still enormous room for improvement, obviously.

I would say the key is to end private property, but... to each their own, eh?

I can't think of a better way to ensure endless grinding poverty than to forcibly forbid individuals from having any sort of stake on their own future and well being. "Ending private property", as if that was even somehow a remotely obtainable/tenable goal, would do just that.

1) Being employed at a job that doesn't pay the bills/groceries is no better than being unemployed and on welfare

Not necessarily true. Lots of people start out at low paying jobs when they are young. They use the skills and experience they learn to get into better positions that pay better. Unpaid internships come to mind, but the same also applies to stocking shelves, mopping floors, working a cashier, etc.

2)Not pushing your externalities off on someone else is "the cost of doing business" in a free society

Not sure what you mean by this.

3) The capitalist taxes the productivity of his laborers, for his own gain, far more than the government could ever dream. One goes to work and creates $5 value. His boss keeps $4. His government only taxes $.30 of that remaining dollar

Wages and capital returns both are determined via competitive forces. If I can pay you $1 to generate myself $5 worth of value, then why can't others? Why doesn't a competing factory open up across the street and offer to pay you $2? $3 in risk free profit is nothing to scoff at. Of course, if he did that someone else might come along and offer $3... and so on... The resulting distribution of wage/profit will be determined by the supply/demand of capital and the supply/demand of the particular labor in question.

This is exactly what I was referring to when I said that wages are a reflection of productivity. Competition to attract workers capable of producing value drives the market clearing price of labor up.

4) You do realize that prior to overtime protections you simply had to work overtime, at normal wages, or you were fired?

True in some jobs, probably not true in others. Most people in developed countries today are paid in salary and do not receive any overtime pay at all. This is how my job works. I do not mind because the salary is more than fair. I am thankful there is no law in place which requires my employer to only allow me to work 40 hours per week, because doing so would result in me making far less money.

[Zealot]

This sounds more similar to the justifications I've heard made in regard to why socialism has led to miserable living conditions, absolute destitution and inescapable grinding poverty in literally every single instance it has ever been put into practice.

Did Glenn Beck tell you that?

[MURDOC]

Where? All the countries who have experienced relative increase in living standards(Japan, South Korea, Brazil etc.) are due to overthrowing tyrannies and establishing a more efficient economic model than despotism( basically every country was despotic, and almost every economic model are more effective)

Correct, these countries overthrew centralized command economies and established economies which more strongly embraced market reforms.

The western countries are more centralized than they where 100 years ago,

Maybe slightly, not significantly enough so as to impede the basic functioning of markets.

since then have the relative living standards fallen in this countries.

This is a myth. Living standards have risen among every demographic and every income group in just about every country in the world over this time.

[MURDOC]

Nope, he don`t. What he is saying is that the reason to unemployment is too high costs for employing people. It is just one problem, if the wages went down, it will increase the profit, and more of the money will thereby end up in the hands of the richest(the owners of the companies).

As I pointed out earlier, wages are not the only "cost to employment". There are numerous other expenses the state imposes via regulatory requirements. Also, lowering taxes encourages employment too because it increases the benefits of hiring employees. This does not result in a decrease in wages, obviously.

The richest will use less of their money than the middle income, and the circulation in money will thereby fall.
The fall in the circulation will lead to a fall in consumption. Which means that less thing will be bought, and you got yourself a depression instead of recession.

This is the "economy as a perpetual motion machine" fallacy: mises.org/daily/3384

I am stealing a question from an another forum:
Name one country that have cut their way to economic growth.

Canada: cato-at-liberty.org/canadas-spending-cuts-and-economic-growth

[IcarusAngel]

Austrian economists should be banned from this forum. Recessions were actually longer and more severe when we had a gold standard. Furthermore, when deregulated, banks engaged in FRB to an even greater extreme in many countries. In fact an economy could not function without expanding the money supply (as was the problem during the great depression) and a single gold standard with a price set and enforced by some mythical private agency -- as Rothbard advocated -- would lead to greater consolidation of resources.

Austrian Business Cycle theory is based on the natural rate of interest which doesn't exist.

Not only are the people at the Mises Institute global warming deniers and conspiracy theorists, many are also racists and even holocaust deniers. Rothbard was a revisionist who manged the history of fractional reserve banking, supported David Duke, was a racist, and even supported torture.

[IcarusAngel]

http://johnquiggin.com/2009/05/03/au...-cycle-theory/

It's also been proven that bubbles could exist in any economy.

[Revolution starts with U]

Inflationary monetary policy predates central banking, mainly via fractional reserve banking. States chartered and organized banks in order to monopolize the industry and inflate cooperatively. The federal reserve was created with the expressed purpose of allowing these institutions to debase/inflate while trying to avoid the constraints a true market would have held them to. It should come as no surprise to anyone who understands this why the greatest economic contraction/depression to ever occur took place a short time after.

Im sorry. I tought you expressly said this was the fault of central banking:

Recessions... are caused by loose monetary policy initiated by central banks.

So now it seems you are backing off that stance, and instead postulating that it is "fractional reserve banking" rather than specifically central banks that are the problem.

No, that seems far less likely.

If the problem is, then, fractional reserve banking as opposed to central banking:
1)Could there not be a central bank that uses 100% reserve banking
2)Since fractional reserve banking is a market phenomenon (meaning it developed on the market) would one not then have to assume that it is caused by some market demand? Is not the most likely demand for fractional reserve banking (>100% reserves) public demand for cheap credit and high wages?

The IMF is a state sponsored entity which exists primarily to prop up failing states. The stance each of these states has on trade and international investment vary, but to the extent that the IMF and world bank have managed to liberalize barriers to trade, we have seen enormous strides. There is still enormous room for improvement, obviously.

You didn't answer the question.
What is different about your plan than the IMF? They have had the same policy for decades and it has proved disastrous time and again.

I can't think of a better way to ensure endless grinding poverty than to forcibly forbid individuals from having any sort of stake on their own future and well being. "Ending private property", as if that was even somehow a remotely obtainable/tenable goal, would do just that.

^ Lots of words, no substance. But then again, there's no substance to just the sentence "End private property" either. So why don't we save this debate for another thread, as Im sure it will come up

Not necessarily true. Lots of people start out at low paying jobs when they are young. They use the skills and experience they learn to get into better positions that pay better. Unpaid internships come to mind, but the same also applies to stocking shelves, mopping floors, working a cashier, etc.

And most of them move up into jobs that still don't pay the bills.
But, more importantly, this still didn't answer the question. How is voluntarily working a sub-subsistence level job any better than being forced to do the same?

Not sure what you mean by this.

Health and safety regulations are a means to make the company itself bear the costs of what they would rather treat as externalities. Whether or not they are succesful is a different discussion for a different thread. But that is what they are, generally, intended to do.

Wages and capital returns both are determined via competitive forces. If I can pay you $1 to generate myself $5 worth of value, then why can't others? Why doesn't a competing factory open up across the street and offer to pay you $2? $3 in risk free profit is nothing to scoff at. Of course, if he did that someone else might come along and offer $3... and so on... The resulting distribution of wage/profit will be determined by the supply/demand of capital and the supply/demand of the particular labor in question.

1)Do you now see the impossiblity of capitalism leading to a prosperous society for all, rather than a privelaged minority?
2)You're free to move to a country with lower taxes (at least in the states, and most modern countries). What makes the taxation governments engage in any different than the taxation capitalists engage in?

This is exactly what I was referring to when I said that wages are a reflection of productivity. Competition to attract workers capable of producing value drives the market clearing price of labor up.

Ya, but the one glaring problem is that productivity has increased dramatically while wages have remained static or gone down.
Theory is meaningless (its actually not theory at all) if not based on evidence.

True in some jobs, probably not true in others.

No.. Im pretty sure that was the whole idea behind overtime protection laws in the first place. Its the owners business, you are just a tool. If his tool doesn't work to his standards, at least in a free market society, he can dispose of them as he wishes.
Prior to such laws, you were obligated to work overtime, at normal pay, or you were fired.

Most people in developed countries today are paid in salary and do not receive any overtime pay at all. This is how my job works. I do not mind because the salary is more than fair. I am thankful there is no law in place which requires my employer to only allow me to work 40 hours per week, because doing so would result in me making far less money.

No such law ever existed, or was even proposed.

[MURDOC]

1)Could there not be a central bank that uses 100% reserve banking

That would defeat the entire purpose of the central bank.

2)Since fractional reserve banking is a market phenomenon (meaning it developed on the market) would one not then have to assume that it is caused by some market demand?

It "developed on the market" in the same way that wanting to steal someone's wallet "developed on the market". Just because some activity exists within the framework of a market economy does not make it a "market phenomenon". The fact that banks that did this in free markets lose their credibility and go bankrupt is a demonstration of this.

What is different about your plan than the IMF? They have had the same policy for decades and it has proved disastrous time and again.

My "plan" is to abolish all state barriers to trade and immigration. To what extent does this match with the IMF's plan? To what extent has the IMF succeeded in this? You can probably answer this stuff for yourself.

And most of them move up into jobs that still don't pay the bills.

You are under the impression that "most" people in developed countries have jobs which "don't pay the bills"? Not sure what you are basing this on. It is demonstrably false.

But, more importantly, this still didn't answer the question. How is voluntarily working a sub-subsistence level job any better than being forced to do the same?

Because you can stop and work at another job, or stop working entirely, or start your own business. The key is choice.

1)Do you now see the impossiblity of capitalism leading to a prosperous society for all, rather than a privelaged minority?

no?

2)You're free to move to a country with lower taxes (at least in the states, and most modern countries). What makes the taxation governments engage in any different than the taxation capitalists engage in?

Because I never consented to the government's taxation. The US government has a monopoly on governance within the US. The capitalist I work for does not have a monopoly on employment.

Ya, but the one glaring problem is that productivity has increased dramatically while wages have remained static or gone down.
Theory is meaningless (its actually not theory at all) if not based on evidence.

Like I said, this isn't actually true. Standards of living have increased dramatically.

No.. Im pretty sure that was the whole idea behind overtime protection laws in the first place. Its the owners business, you are just a tool. If his tool doesn't work to his standards, at least in a free market society, he can dispose of them as he wishes.
Prior to such laws, you were obligated to work overtime, at normal pay, or you were fired.

You know this as fact for all jobs that ever took place before these laws existed? All employees were required to work 40+ hours per week? There was no part time employment at all? That was the only point I was trying to make there.

No such law ever existed, or was even proposed.

I'm aware. And I am thankful. Do you think such a law should exist so as to ensure people like me who are paid on salary are not "exploited"?

[molotovcocktail]

This is a myth. Living standards have risen among every demographic and every income group in just about every country in the world over this time.

It have been a nominal growth.

Canada: cato-at-liberty.org/canadas-spending-cuts-and-economic-growth

I meant countries where cuts in government are the main reason to economic growth, in Canada new oil founds are the main reason to growth, and the site never shows any diagrams of growth in the Canadian economy, it just said it happened.
In addition, it is just a meta-analysis. Just because two things happened in the same time, do not mean they automatically have a connection. For instance,if you take a meta-analysis between shoe size and reading ability, you will find a clear connection...