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  1. #1
    deplorable basketcase Tellenbach's Avatar
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    Default Why Free Market Capitalism Works

    Quote Originally Posted by Coriolis
    Have you any evidence that this method will make a significant impact on poverty in the U.S., or it is only a theory?
    From 1980 to 2007, America's net worth climbed from $25 trillion to $57 trillion. More wealth was created in that 25 year span than in the previous 200 years.

    Before Reaganomics (1978 to 1981), middle class income fell from $32,319 to $30,916. Under Obama, we're seeing an even steeper drop in family income:

    The yearly income of a typical US household dropped by a massive 12 percent, or $6,400, in the six years between 2007 and 2013. This is just one of the findings of the 2013 Federal Reserve Survey of Consumer Finances released Thursday, which documents a sharp decline in working class living standards and a further concentration of wealth in the hands of the rich and the super-rich.
    US median income has plunged, inequality has grown in Obama “recovery”

    Now, let's look at the record after Reaganomics was instituted:

    The National Bureau of Economic Research stated that the period from 1982 to 1999 (Yes, Clinton mostly kept Reaganomics policies in place.) was the "longest sustained period of prosperity in the 20th century." From Arthur B. Laffer's "The End of Prosperity"

    1. The prime interest rate dropped from 21.5% in 1981 to 8.2% in 1987.

    2. The inflation rate dropped from 14.5% to 4% in just two years.

    3. Reagan lifted the price controls on oil and natural gas and this dropped the price of a barrel of oil in half.

    4. From 1981 to 1989, the U.S. economy produced 17 million new jobs.

    5. Federal tax revenues grew by 24% despite Reagan's tax cuts.

    6. African American's incomes grew at 11%, even faster than white Americans (9.8%).

    7. By 1989, an additional 5.9 more Americans were earning salaries of $50,000/year and more.

    8. People earning less than $10,000/year dropped by 3.4 million.

    Quote Originally Posted by Xander
    Anyhow, if you really want to discuss this...how about a new thread where you can explain this free market stuff? Unless you've already done one...<<<goes to look>>>
    Might as well get this done with. Ask away.
    Senator Rand Paul is alive because of modern medicine and because his attacker punches like a girl.

  2. #2
    deplorable basketcase Tellenbach's Avatar
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    How does Euro-style socialism compare?

    Between 2001 and 2006, the economic growth rate of E.U. nations was half that of the U.S. In the 1990s, the unemployment rate in Europe was consistently 50% higher than the U.S.

    Europe had adopted multiple anti-free market policies such as:

    1. massive welfare benefits for the unemployed,

    2. state ownership and heavy subsidies of key industries ( for example, Airbus got a $15 billion subsidy),

    3. laws against closing down factories,

    4. work place rules that make it difficult to hire and fire workers,

    5. high taxes on businesses to pay for lavish benefits including 4 to 6 week paid vacations and shortened work weeks, and

    6. minimum wage laws.

    In short, Europe declared war on free market capitalism. The French economy by only 1.3% from 1980 to 2000 while the German economy grew by only 1.5% in the 1990s. Ouch.
    Senator Rand Paul is alive because of modern medicine and because his attacker punches like a girl.

  3. #3
    Senior Member INTP's Avatar
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    Does it make an average joe have a happy life?
    "Where wisdom reigns, there is no conflict between thinking and feeling."
    — C.G. Jung

    Read

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    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tellenbach View Post
    How does Euro-style socialism compare?

    Between 2001 and 2006, the economic growth rate of E.U. nations was half that of the U.S. In the 1990s, the unemployment rate in Europe was consistently 50% higher than the U.S.

    Europe had adopted multiple anti-free market policies such as:

    1. massive welfare benefits for the unemployed,

    2. state ownership and heavy subsidies of key industries ( for example, Airbus got a $15 billion subsidy),

    3. laws against closing down factories,

    4. work place rules that make it difficult to hire and fire workers,

    5. high taxes on businesses to pay for lavish benefits including 4 to 6 week paid vacations and shortened work weeks, and

    6. minimum wage laws.

    In short, Europe declared war on free market capitalism. The French economy by only 1.3% from 1980 to 2000 while the German economy grew by only 1.5% in the 1990s. Ouch.
    EU's not socialist.

  5. #5
    deplorable basketcase Tellenbach's Avatar
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    Quote Originally Posted by INTP
    Does it make an average joe have a happy life?
    In general, yes. People in the U.S. are happier than Europeans and Americans were far happier under Coolidge/Reagan than under FDR/Obama.
    Senator Rand Paul is alive because of modern medicine and because his attacker punches like a girl.

  6. #6
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tellenbach View Post
    In general, yes. People in the U.S. are happier than Europeans and Americans were far happier under Coolidge/Reagan than under FDR/Obama.
    That's going to be a difficult point to support with evidence but I'm sure you intend to.

  7. #7
    deplorable basketcase Tellenbach's Avatar
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    Quote Originally Posted by Lark
    That's going to be a difficult point to support with evidence but I'm sure you intend to.
    Not difficult at all. I lived through the 80s under Reagan and I lived through these 6 years under Obama. Night and Day. Also, compare the Roaring Twenties under Coolidge with the Great Depression under FDR; again, night and day. People are happier when the nation is prosperous.
    Senator Rand Paul is alive because of modern medicine and because his attacker punches like a girl.

  8. #8
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tellenbach View Post
    How does Euro-style socialism compare?

    Between 2001 and 2006, the economic growth rate of E.U. nations was half that of the U.S. In the 1990s, the unemployment rate in Europe was consistently 50% higher than the U.S.

    Europe had adopted multiple anti-free market policies such as:

    1. massive welfare benefits for the unemployed,

    2. state ownership and heavy subsidies of key industries ( for example, Airbus got a $15 billion subsidy),

    3. laws against closing down factories,

    4. work place rules that make it difficult to hire and fire workers,

    5. high taxes on businesses to pay for lavish benefits including 4 to 6 week paid vacations and shortened work weeks, and

    6. minimum wage laws.

    In short, Europe declared war on free market capitalism. The French economy by only 1.3% from 1980 to 2000 while the German economy grew by only 1.5% in the 1990s. Ouch.
    The thing is, that welfare states, health and safety laws, minimum wages, they are all aspects of functional capitalism.

    If you impoverish your work force by underpaying them, have them work in conditions adverse to their health and safety and create conditions under which unemployment, even temporarily, or sickness, disability or dependents means destitution and death then the work force's lives will be nasty, brutish and short.

    What you wont have is a skilled, educated and motivated work force, you eliminate the most pressing concern of the conservative mind which is the free loader or free rider problem but you do so by eliminating your human resources.

    Its a politically and ideologically motivated solution to a problem which dis-proportionally occupies the minds of the wealthy, fiscal conservatives and those who most strongly identify with them but its very bad economics. You need human resources.

    Next of all a well paid, educated and healthy workforce provides a mass consumer base, the purpose of the economy, presumably the purpose of a free market, is the equitable and efficient management of scarce resources to supply consumers.

    Without consumers there is no demand, there are supply problems in the economy consequently, under supply, over supply which is wasteful of resources and takes costly price corrections to remedy, involving recession, in the worst cases depressions, boom and bust.

    Europe has far from declared war on free market economics, Europe has for a very long time sought to steer a path besides the dogmas of either socialism or capitalism, for the reason that central European powers, in particular Germany, value political moderation and pragmatism and do not want extremes and extremism the like of which gives rise to either nazism or communism.

    I'm not sure if you see yourself as a patriotic American or have some other allegiance but the reality is that the free market is a fable, it was excusable that such opinions existed when political economy was a brand new idea, more idea than tried and tested reality, but its not really excuseable that the same faith is placed in it now as then. The fable, or ideology, is merely whatever arrangement serves the ruling class in its class struggle with everyone else.

    That is why any hard won workers rights or poverty relief has to go, it provides choice, it makes the subordinates free to choose, they might not want to work for the most atavistic managers who see them as nothing other than a resource to be used up and tossed aside like yesterdays coal turned to ashes.

    Now, knowing that, does not mean someone has to opt for socialism, you may believe that property owning democracy and simultaneous calculations performed using price signals is the best way to equitably and efficiently manage scarce resources but when that is, as has been the case repeatedly, is eclipsed by the class war of the most prosperous, the plutocracy, the whole system is jeopardised or goes into crisis.

    Remember when the public servants, low paid workers, benefits claimants, health and safety regulations, consumer rights and workers rights caused the world economy to go into crisis requiring a massive tax funded kick back to the too big to fail conservatives in the city? Nope, neither do I.

    I do believe in socialism, socialism's not welfare, lawful capitalism and the management of powerful special (rich) interests to off set crisis though.

  9. #9
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Tellenbach View Post
    Not difficult at all. I lived through the 80s under Reagan and I lived through these 6 years under Obama. Night and Day. Also, compare the Roaring Twenties under Coolidge with the Great Depression under FDR; again, night and day. People are happier when the nation is prosperous.
    You're generalising from you subjective experience. I dont believe it is representative.

    I'm sure you're going to dismiss it as propaganda but the weight of historical fact is not on your side of the argument.

    There is an organised and well funded movement to revise history afoot, of which you are a great representative, but the depression was not caused by FDR it was caused by Wall St. and their political cronies, it was the New Deal, and ultimately, probably the second world war, which pulled the US and the world out of the depression.

    The periods of prosperity you describe were not universal prosperity by any stretch of the imagination, the prosperity was the preserve of very small elites, who could and did gamble with it in such a way which had consequences for all, including the hard working, low paid individuals who were struggling to subsist as it was. Again that's historical fact and pretty much undisputed.

    People are happier when they can share in prosperity and dont just create it for others who piss it away as though it were nothing to begin with.
    Likes Xander, The Wailing Specter liked this post

  10. #10
    Lex Parsimoniae Xander's Avatar
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    The problem with the free market starts and ends with control and power.

    There is no free market that cannot be manipulated by those that constitute it the same as any other group or organisation. The larger the power base of the manipulator, the larger the effect of their movements. Can we at least agree that in any complex organism that the thing with the most power has the most power to affect change?

    Does it not follow that once this is in place that those with the most power will look after their own interests first?

    Without wishing to be confrontational I would also point out that all of the data gathered is circumstantial to the outcome. I have the same argument with politicians who claim that by sending out leaflets every week that they increased voter turnout. They fail to take into account the vast amount of information they are not looking at which, in this case, is that the person in question has a whole lot more effecting their lives than the delivery of a political leaflet. No data is gathered to directly support whether any voter decided to make their change due to the leaflet, the association is assumed.

    Some information to consider
    Quote Originally Posted by Wikipedia
    Economic liberalism, deregulation and decline of unions[edit]
    John Schmitt and Ben Zipperer (2006) of the CEPR point to economic liberalism and the reduction of business regulation along with the decline of union membership as one of the causes of economic inequality. In an analysis of the effects of intensive Anglo-American liberal policies in comparison to continental European liberalism, where unions have remained strong, they concluded "The U.S. economic and social model is associated with substantial levels of social exclusion, including high levels of income inequality, high relative and absolute poverty rates, poor and unequal educational outcomes, poor health outcomes, and high rates of crime and incarceration. At the same time, the available evidence provides little support for the view that U.S.-style labor-market flexibility dramatically improves labor-market outcomes. Despite popular prejudices to the contrary, the U.S. economy consistently affords a lower level of economic mobility than all the continental European countries for which data is available."[64]

    Sociologist Jake Rosenfield of the University of Washington asserts that the decline of organized labor in the United States has played a more significant role in expanding the income gap than technological changes and globalization, which were also experienced by other industrialized nations that didn't experience steep surges in inequality. He points out that nations with high rates of unionization, particularly in Scandinavia, have very low levels of inequality, and concludes "the historical pattern is clear; the cross-national pattern is clear: high inequality goes hand-in-hand with weak labor movements and vice-versa."[65]
    Wikipedia Article Link

    Also something to consider that whilst a free market may seem to free business to pursue it's course as required by the market it will still be hampered by the people who constitute the organisations. There is rampant reliance on interviews (shown repeatedly to be unreliable), nepotism and reliance on academic qualifications as indicators of professional performance. You see currently the incompetence encountered commonly covered by something referred to as the "Peter Principle" is mitigated by the regulations and laws put in place to protect the wider community from some asshat with a business and money.

    To return to a previous example
    Intel required to pay $1.4 billion fine over anticompetitive tactics against AMD | The Verge
    BBC NEWS | Business | EU slaps a record fine on Intel

    With such practices the big boy in the market (Intel) managed to harm it's only real competitor in the x86 chip market (the mainstream PC CPU) and secure it's position. Remove the protections and AMD could have gone to the wall meaning that for any home PC running Windows you would HAVE to buy an Intel chip. This is a company who (like other chip manufacturers) sells those chips which happen to turn out better for much higher prices and even sells those which to other industries would be considered faulty products (such as quad core chips where only half the cores work as designed so they just disable those cores and sell it as a dual core). They can make plenty of money and then use it to ensure that no one threatens their profit line. Where's the free market protection on that kind of practice?

    Another example
    Microsoft Corp v Commission - Wikipedia, the free encyclopedia
    If you want a desktop PC and like games, there's only one choice for the common consumer, Windows. Why? Because DirectX has dominance. The end result is a company who can do whatever they wish. There are many cases where a company has been told that they owe license fees and are offered a choice, either Microsoft sues them for a lot of money or the company signs up to buy from Microsoft for the next however long. Thus they continue to dominate the market despite Linux being hailed as a more competent system. Sure it's a product of their work so there is a case for it to be allowed to continue unabated but when that company requires payment from it's customers even when they aren't using their products, then it becomes and abusive company. The protections in place haven't allowed competition (some might say the product has beaten all rivals and their position is deserved) but it has limited a company which shows willing to use their position to ensure they are the undisputed king from engaging in any more questionable tactics such as almost ensuring that everyone uses IE.
    Isn't it time for a colourful metaphor?

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