Wednesday, December 15, 2004

Third post concerning a thriving economy

Freedom is the most important factor in a thriving economy. The government's regulation of just about every aspect of running a business, as is common in America today, is a form of fascism.

All government licensing of professions should be repealed, from medicine, to plumbing, to child care. Licensing is simply a way for the State to extract more money from people, money which could have been saved, invested or spent in other ways. Voluntary organizations comprised of those in the profession should offer certification, if certification is desired. All government permits and regulations surrounding building should also be repealed, as this raises the cost of housing and running a business, because costs are always tacked on to the finished product.
Zoning laws should be highly curtailed or repealed altogether. People should be able to run businesses from their homes, or sell things out of handcarts if they so choose. Selling in that manner was extremely common in the late 19th and early 20th centuries, and the descendants of those people (Jews, Italians, Irish) are now firmly established as the middle class.

Trade barriers should be abolished. People should be able to buy, sell or establish business relations in any country, without having to deal with tariffs or other protectionist measures. Foreign aid should be stopped, being replaced with capital investment in developing countries, which can certainly include charitable organizations who seek to offer loans so that people can start their own cottage industries

Minimum wage laws should be abolished, as should child labor laws. In this age of new vistas in education, namely homeschooling, young people who are not academically inclined should be free to go to work, to apprentice, etc. Both minimum wage laws and child labor laws prevent this. Social security taxes and medicare taxes should also be abolished. Employers and employees should contract together to determine wages and benefits.

Socialistic, paternalistic, government programs should be abolished. All welfare programs, the government school system, the National Endowment for the Arts, the FDA (and the list would go well beyond 1500 words). All this is money that has been stolen from productive individuals and put into supporting huge bureaucracies, in addition to squelching individual/family/church initiative in caring for the poor, in education, and in private philanthropy. Of course, this means that taxes should be slashed to the absolute minimum, including taxes on businesses, on personal income, on sales, on inheritance, and the list could go on.

Immigration laws should be repealed, except perhaps to require health screening. With no welfare state in place, immigrants are a blessing to a country as they contribute to the economy by working and by purchasing goods here.
Government subsidies of every kind should be abolished, as should price controls of every kind. Interference like this hampers the working of the market by distorting the information about supply and demand, resulting in shortages or surpluses.

Although I don't understand it very well, I do know from my limited reading that the expansion of the money supply increases inflation, and our government is printing money 24/7. A return to a sound money system of some kind, which very well may be a free market in currency rather than government monopoly, is necessary to decrease inflation.

Political, personal and religious freedom is also a necessity for a thriving economy. The American experience contrasted with the Socialist/Communist nightmare illustrates this. When people are not seen as individuals who stand and/or fall on their own merit and initiative, but rather as cogs in the State machinery, they lose incentive to be productive in all arenas of life because they know that their money will be stolen, their speech curtailed, their exercise of religion restricted. Of course, a black market always pops up in these situations, which is then the cause of increased taxation to provide police to repress it.

Regarding environmental concern, there have always been environmental problems. Before the automobile, city streets were covered with horse droppings. People used to bathe, wash, drink and throw trash into the same rivers. The free market will provide some solutions to environmental problems as people desire solutions and innovate to achieve means to increase productivity while protecting resources. The best way to do this is to enforce private property rights. If someone, for example, needs wood for their business and takes it from their own land, the incentive not to deforest is great, as their livelihood depends on those trees. Read about "the Tragedy of the Commons" (a quick google search) to see what happens to common land and resources.

I will end by saying that this is not a perfect world, and there are no perfect people. Greed exists, exploitation exists, etc., but regulation by government does nothing to change this fact, and there is every evidence that when economic decisions and control fall into the hands of the State that totalitarianism follows. It is my belief that freedom and private property (coupled hopefully with Christian ethics) is the best opportunity for the most thriving society and economy that we can expect to see in a fallen world.


Blogger Cheryl said...

I must respectfully disagree with Samantha's opinion to a certain extent. I am a proponent of free market enterprise, but I am not convinced that it needs to be completely unregulated.

Canadian philosopher, George Grant, noted that captialism is a way of life based on the principle that the most important activity is profit-making. When captialism is untrammaled by the concept of virtue and character (something that free enterprise cannot manufacture as a matter of course) then all traditions of virtue are dissolved, including the aspect of virture known as love of neighbor and love of country. Outsourcing is a good example of what the private governments of multinational companies can do. They are free to go into a country, consume the resources, and leave when the regulators want them to clean up their acts.

If one has no long-range multi-generational concern for the future, then living for the moment and grabbing for all the gusto you can get becomes the order of the day, even for free market capitalists. The net result is a land raped and pillaged of resources, and people who are coldly jettisoned when they are perceived to be less productive and no longer profitable to the max.

If I own a piece of property on a river, and I set up a pulp mill and, unregulated by anything other than a voluntary association of other pulp mills, I may freely pollute the river with dioxins and other effluent as a cost effective means of disposing of these wastes. This is to the detriment of others who use the river for their livelihood and means of sustenance, like fishermen.

In such a situation, the only recourse a small fisherman has is to ask for the civil magistrate to act on his behalf, since he likely lacks the monetary means to get the pulp mill to stop its actions, or recompense him for earnings lost.

Without a doubt, free enterprise has brought many benefits to many people. It has also brought many woes. I am beginning to re-think a lot of my capitalist notions and amend them in light of the practicalities of what I see around me. Free market captialism can only work properly if a nation and its people are virtuous. Unfortunately, I don't see a lot of virtue in my country (Canada) or the US.

12/15/2004 04:12:00 PM  
Blogger Samantha said...

So glad you're here, Cheryl!!

In the course of your re-thinking (which I know you always do in light of your reading of the Scriptures) what have you come up with as the best alternative?

Cyber Hugs!

12/15/2004 04:37:00 PM  
Blogger Dingo said...

Unfortunately, your form of anarcapitalism is as discredited as communism is. It has never worked (19th century UK and US) and continues to be a failure (e.g. Bangladesh).

12/16/2004 11:53:00 AM  
Blogger Samantha said...

Actually, I'm not quite an anarchocapitalist, but I think the State has no part in economic life except in cases of fraud.

Can you specify how the free market has been discredited? I don't know anything about the economic system in Bangladesh, but I was recently reading a quote by an economist named Lord Bauer that was interesting. He stated that the mindset of people has much to do with how well they develop economically, and several of these philosophies are present in the Hindu mindset, including:

"...acceptance of a pre-ordained, unchanging and unchangeable universe...insitence on the unity of the organic attitude of which reluctance to take animal life is a corillary...belief in perpetual reincarnation, which reduces the significance of effort in the course of the present life."

It looks like this topic is not a real thriller to most people, but I love it, and I would really like to hear more specifics from Dingo.

12/17/2004 07:56:00 AM  
Blogger Cheryl said...

Hey Samantha! Thanks for the welcome.

I haven't thought really deeply about this issue, but I note that OT economic principles were not entirely free-market, in that God did place restrictions upon the people as to what they could do with their property.

Examples would be, Sabbath keeping. Only acts of mercy and necessity were allowed on this day. Other examples were the land-use laws that entailed property upon a family in perpetuity. A man could not sell away his property to make a fast buck, blow the proceeds, and leave his future descendants landless and in poverty. Instead, God imposed a sort of limited land-lease system where property was returned to the original owners every fifty years.

Additionally, if you planted a field of wheat, your property rights did not extend to allowing you to forbid all people from trespassing upon it. At harvest time the corners were to be left unharvested as a means of providing food for the poor. Again, this was a restriction that God placed upon the "rights" of property owners, which was enshrined in law.

I believe the reason God enshrined this in law was to illustrate the fact that, unless we are constrained to be so, people tend to be short-term individualistic thinkers who don't think in covenantal, community,long-term, multi-generational fashions. We see this especially in western culture in terms of built-in obsolescence in the goods produced, the desire for instant gratification and instant cures, and consumption that focuses on the here and now.

A lot of this has its roots in the individualism that is fostered by a Baptistic, individual notion of salvation, rather than a covenant community focused approach to life that is prevalent in North America.

I don't think we have really seen what a Biblical system of economics really looks like. Instead we have a free market system that has been given a Christian gloss, but still has aspects to it that don't quite tally with the picture I see in Scripture. Though the particulars of the OT law no longer apply in our circumstances, I think we need to work on drawing out the general equity they contain.

As a historic post-millenialist, I am confident that it will be produced in time.

12/18/2004 12:33:00 PM  
Anonymous Anonymous said...

The purpose of a government is to protect its citizens, to foster an environment where the people can prosper and have free influence on the governing body. The governing body was designed to be transparent and minimally invasive to the lives of private citizens. This country was founded on such liberty.

Of course this is the ideal and no human institution is perfect. Among our greatest failings is our inability to predict with much accuracy the events of the future. It was simply impossible for the founding fathers to envision the industrial revolution. The concept of a corporation or a market was absolutely alien to them. That these bodies of men we call corporations would ultimately create the very same inequality among citizens and erosion of liberties that the founding fathers fought so valiantly against was simply in the realm of the unknowable. But the absolute brilliance of the founding fathers was that they gave us a system that could change and adapt and could solve new problems. It is still not perfect but our government is the result of their prediction that they could not predict the future.

In the early part of the 19th century the United States would have been very close to meeting nearly all of Samantha's ideals. This was a time at the beginning of the industrial revolution, things like the FDA were yet to be invented, trade barriers were more physical than legislated, there were no labor organizations or labor laws, and the western world was in the midst of the Victorian era of hyper-religious sensitivities. It was the times that lead to the roaring twenties and it was the first American economic explosion which lead directly to the first American economic depression.

Life in the 1920s in America wasn't all about doing the Charleston in speakeasies for everyone. Finding a job was difficult, finding a job that paid a worthwhile income was next to impossible. Families had little choice but to send their children to work in sweat shops just so the family could put food on the table. The ratio of corporate executive compensation to worker compensation was higher than at any time in American history except the history we've been making since the 1980s. Corporations were drawing more and more power and money and giving their workers less and less. When the market crumbled under the weight, the people found that the corporations had given them nothing, no job, no health care, no cushion to protect them in hard times, and no way to affect a change.

That is why the government stepped in first by creating jobs building up the American infrastructure and then by legislating rules beneficial to workers at the expense of the corporations. At last workers could unionize so they could pool their resources and take on the unimaginable power and wealth of the corporations. Finally, if workers did not get compensated fairly they had a means of getting that compensation other than being unemployed. For the first time in American history people could be certain that they could have lives outside of their workplaces and know that their young children would not have to endure the horrors of sweatshop labor. And if a worker was forced out of a job, they could be confident that they would have a safety net until they could find themselves work again. This was the renaissance for the American worker and I contend that it solidified a generation's will to fight and die for others in World War II. This was the foundation of the American dream and the economy did not plummet; rather, it skyrocketed. By the 1950s America's economy was 50% of the world's economy despite the fact that businesses no longer had free reign.

Corporations are filled with brilliant, industrious people that are well versed in manipulating the government. Monetary power goes a long way and many of the corporations grew to have more spending power than some countries. It is this unprecedented influence that the architects of the new deal were unable to fathom and is the fault of the system that we have today. The corporations have successfully lobbied to erode many of the economic protections that were in (or inferred from) the new deal. The 1980s (and more so the 1990s) ushered in a global marketplace where corporations are at the same time found in a country and not subject to that country's rules. There is far more sweatshop labor now than there ever was in the 1920s -- although not in the US. Physical barriers to trade are all but inconsequential so the last remaining barrier are government-imposed restrictions and tariffs. Environmental laws that have been under constant attack to the point that people in government question the validity of the science that says those laws must stay.

While manufacturing previously made up the lion's share of the economy in the US, that has since dwindled as evidenced by the empty factories in the rust belt and the exodus of factory jobs to the underdeveloped countries around the world. What the corporations have become better at than anyone could have imagined is disseminating information. Where our main products once were tangible, we now are mainly in the business of selling ideas. And it is the ideas that we are getting sold that are the most disturbing: that laissez faire is the best means of controlling the market, that individual freedom is tied in with corporate freedom, that fewer environmental laws actually makes sense, that corporate mergers equal more choice, that a bland, homoginized world where one cannot tell one place apart from the next is the ideal, that as go the corporate stock prices goes American prosperity. These ideas are not founded in reality but they are certainly excellent for the corporations' bottom lines.

As a country we must not only do what we can to stop the erosion of the new deal programs, we must also fight to build up the those laws that have been eviscerated by the corporate machine. After all they were designed to protect us and our nation's economy in the first place. Furthermore, in the new global economy, our country must accept and embrace its interdependence with every other country on the planet and take the lead to enact treaties and laws that will protect not only our own people but every people everywhere in the world. Laissez faire business practices are not new or novel ideas and our own history has shown that they simply do not work. The free market isn't free, the price for a free market is far too heavy for civil liberties and our environment.

There are many books on the subject a couple that I've read are No Logo by Naomi Klein and Jihad vs. McWorld by Benjamin Barber. Both of those books have impeccable references and lists of other books that you can read to learn more.

12/19/2004 12:21:00 PM  
Blogger Mike said...

Not sure why the last comment posted as anonymous. I posted it.

12/19/2004 01:39:00 PM  
Blogger pmork said...

"It was simply impossible for the founding fathers to envision the industrial revolution. The concept of a corporation or a market was absolutely alien to them. "

What about the advanced capital markets created by the Dutch and the English in the late 1600s? What about companies such as the South Sea Company founded in 1711? You give the Founding Fathers too little credit. Remember, a corporation is really just a piece of paper that separates management and ownership.

Neither the advent of advanced production techniques during the industrial revolution nor further enhancements from double-entry bookkeeping up to the LLCs or junk bonds invalidate the principle of individual rights that the U.S. was founded on.

12/19/2004 02:31:00 PM  
Blogger Mike said...

No, the principles upon which corporations are founded upon do not in and of themselves serve to limit civil liberties; however, the abuse of power by corporations and/or the lack of regulation of corporations does historically lead to the erosion of civil liberties. The point is that the state is supposed to be transparent and malleable by the people whereas the corporations are allowed to be opaque and rigid to the people. The state should use its power to ensure that the corporations actions are clear and that individual rights are upheld. If the state will not do this, it simply will not happen because the free market will coalesce around a select few massive nodes which will ultimately control the markets. Just as there could never really be political anarchy since humans will inevitably set up local power structures, the markets will never be completely free since the powerful will influence the weak. That is already happening today with companies like Wal-Mart forcing suppliers to sell products more cheaply than they can afford which in turn means that those suppliers are forced to increase prices for other retail stores which drives up the prices and makes people want to shop at Wal-Mart which gives Wal-Mart the leverage to demand even lower prices. That isn't supply and demand that is a downward spiral power play.

None are more weak than the individual citizen who, in a "free-market", will be forced to succumb to the whim of the corporate will, not the other way around.

12/19/2004 04:12:00 PM  
Blogger Dingo said...

I think Mike has said it much better than I ever could. Thanks for chiming in and taking the ball. To kind of reiterate a little though (I'm a lawyer... I like to hear myself talk) Karl Marx and the theory of communism was a direct result of an acarcapitalistic system. The workers were being exploited and the power base was with the rich. There was no protection of rights or safety net for those who fell behind. Marx did not intend communism for places like Russia and China that were economically backward at the time. It was meant for England and America where there was a hands off approach to governance.

I see the government and its role a little bit like raising kids. If you are too loose with them, they grow up with no responsibility and take advantage of you. If you are too tyrannical, they rebel and fight against you (or are completely stifled). But if you give them just enough guidance and discipline them when they do get out of line, they usually grow up quite well. The key is finding the right middle ground. It is not an exact science.

12/20/2004 05:13:00 PM  

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