Radical?

Libertarianism, Health, and a Brief Overview of Economic Calculation

Will companies actually pay workers more?

They will increase wages if they want to keep workers. To generate profits a company must invest in capital, therefore increasing profits as well as wages. When capital is increased, the need for better trained/certified/skilled workers becomes apparent. These workers are paid more for their greater skill (a doctor usually has a higher wage-rate than a nurse).


People won’t leave their jobs or strike for higher wages.

Well, people do anyway. They do strike, they do demand. In fact, the consumer demand controls the economy. Our voice (as consumers) have demanded that companies continuously produce better, high quality products for cheaper prices. It’s quite remarkable. Workers would be able to move about their labor market if allowed. The government (generously) has provided tax incentives to companies to offer benefits that often lock employees into their job location, when they’re unable to find the same benefits elsewhere they’re discouraged from relocating. This is the result of government intervention.


Why are Medications so expensive?

Medications are expensive because of many factors: the amount of capital necessary for the production of pharmaceutical drugs, the cost of testing/standard/general regulations provided by the Federal Drug Administration, and the lack of competition in the pharmaceutical industry. You are correct. Pharmaceutical companies can charge whatever they wish to sell their drugs, as they should. However, the pharmaceutical companies do not play on a fair field - a field that has been set by the government. If the pharmaceutical companies were on a free market, in which they were not subjected to any government intervention (including testing), they would be free to charge whatever they wish for their products. Again, supply and demand. Since this is not the scenario and the pharmaceutical industry is forced (mostly with welcoming arms) to play under certain regulations, this actually damages the competition in this particular market. For example, these companies are subjected to submitting a patent for their new drugs. This makes it very difficult for new drugs to be produced quickly, as well as researched. Tag this on with massive testing requirements - competition is easily melted away, leaving only a few players with little incentive to decrease their prices (most of their prices are fixed in the first place), this assures that the pharmaceutical companies receive a sort of “fixed profit.” They’re not subjected to risk, nor to the consumer demands of the market. This is the result of government regulation, not the free market.

This may help some: http://mises.org/daily/1805


Economic Calculation

A socialist economy is one in which the collective (or the state) owns all property; therefore, no one (individual) owns property (property of any kind, such as; money, their house, their desk, their own person, etc.). There are varying degrees of socialism--the only idea I have run across that addresses the direct distinction between a socialist and capitalist economy was formulated by Ludwig Von Mises. Basically, he stated that an economy that is no longer capitalist is one that does not have a private stock exchange, in which people (capitalists) can purchase ownership in companies. Anyway, when all property in an economy is owned by the state, there can be no exchange of property, obviously, since all property is collectively owned and there can not be a transaction or trade of property. If two individuals are in an economy (a socialist one) and if they both own the same coffee maker and pair of shoes, they will simply share each item--there is no need for an exchange since neither individual holds the item to his or her own individual belonging. Due to this fact, an economy without property exchange will be unable to set prices. Prices are reflected by each individual’s value over a certain piece of property. In a capitalist economy, our two fellows, with their coffee maker and pair of shoes, will be able to value each item accordingly and set a price for each--as well as influence the other’s individual prices (supply and demand). Since no one owns any property in a socialist economy, individual pieces of property can not be valued; and therefore, prices can not be set for these pieces of property. Without prices, our socialist economy can not determine profit and loss. If I sell my coffee maker for five dollars after building it for three dollars, then I’ve made a profit of two dollars (obviously). If I do not know the price to build the coffee maker, I will be unable to know the price in which I should sell the coffee maker, leading me to not have the ability to calculate my profit. So now we can settle that a socialist economy can not calculate profit and loss. If we can not calculate profit and loss we can not determine where to allocate resources in our economy (this is not true for a family-sized economy, in which you can allocate resources daily without the use of prices and profit & loss). We can not allocate resources properly (by properly I mean, those who want/need a coffee maker the most) because no one in our economy knows if taking this coffee maker is going to satisfy their want (we are unable to place values). Example: in the Soviet Union, the central government was not able to calculate that its population needed food over MIG-29’s. So the Soviet Union built hundreds of MIG-29’s rather growing or producing food. Their government guessed on what they should build and where they should build it. Where as, in the US, individual businesses can interact with consumers to determine the wants/needs of each individual person. This theory I have just presented was originated by the economists, Ludwig Von Mises and Frederich A. Hayek, it is called the theory of Economic Calculation and it was used to disprove the idea that a socialist economy could stably function and operate without the use of a market.

This, as for the ethical idea of private ownership of property, is the reason why Libertarians oppose socialism.


Photo thanks to this site.

-Jeff

Free Market Defense Problem

I was recently reading a thread on Mises.org, and a member had a question regarding Rothbard's novel,"For a New Liberty" and a situation posed to him by a "socialist friend." Theoretically, a free society would be able to handle violent disputes or "wars" through private means. The poster's friend was wondering what would happen if say, Microsoft grew so large in size and had such a massive amount of money that it could easily fund a private military and act against the population of the society - "take over." Couldn't the "Microsoft Military Force" have the funding to knock out any other private military's? How could the society prevent such a situation without a state (government apparatus)?

The theory of Economic Calculation by Ludwig Von Mises would explain why no entity could ever grow so large as to "take over" the population of the Earth - but that's a post for another day as well.

First, I would like to point out that just because a military force may have the most "funding" or resources, compared to its opposition, doesn't translate to an expected triumph.

I felt that the following response was most qualified to answer the poster's question:

"The argument is flawed in many respects.
1. Irony: Does your socialist friend realize that his concern is basically that Microsoft will turn into his government? You should point that out to him immediately.
2. Absurdity: By his own line of reasoning, Microsoft can buy anything it wants. It can buy all the bakeries and have a monopoly on bread and then starve everybody, or perhaps it can buy all of the shoes and have a monopoly on shoes. Then we'll all be at the mercy of Microsoft begging for bread and shoes.
3. Incentive: War is costly. Unlike a government, which can externalize the costs of its action to all of its subjects, a private entity would have to bear the full cost at its own expense. So the incentive for such costly aggression is very much working against you.
4. Market Reality: Our starting point is a successful enterprise such as Microsoft. As successful as it may be, as long as consumers have other wants in their lives except for MS software (do we still have to eat?), it's capital value is only going to be a fraction of the total capital value in the market.
5. Financial Reality: The funds to buy all of these weapons and soldiers will just not be there. Keep this in mind: the capital value of the firm is a function of its money making potential. So now, where would it get the funds?
A. Profits. Profits are always temporary and are never secured. As successful as we can imagine Microsoft to be, the total profits is likely to be a small fraction of the total capital value of the firm. Any annual profit will simply not be anywhere near sufficient to fulfill this fantasy of initiating and conducting a war. it's simply absurd. If the firm was to plan a gradual buildup of arms, it must divert its profits/savings away from those same productive investments that have made the firm profitable in the first place. The firm itself would be seeding its financial destruction making the whole endeavor impossible. The diminishing profits and even before that, the expected diminishing profits as a result of the firm's non-productive investments, e.g., arms buildup, will make the firm's capital value tank.
B. Capital Value - What if the owners collude and sell their shares to raise the funds. In this case, we are no longer talking about Microsoft the firm taking over the world, but a bunch of idiots who have sold their shares just so they can consume it. And on what? weapons? armed men? How much fire power can they buy and how long can they sustain this army for, with nothing but a fixed amount of cash? Remember, we are no longer talking about Microsoft but a bunch of individuals who have raised some cash in order to go on a criminal endeavor, which according to your friend is likely to conquer the world.
Your friend fails to realize the difference between political power and economic power. The first is gained by the initiation of force or threat of force and the latter is gained only by voluntary consent. To transition from the latter to the former is not so easy as it seems. In fact, without the public supporting such an institution, it is hard to see how it is even possible."


This response was made by the user "DD5" from Mises.org.
The thread can be found at this link: http://mises.org/Community/forums/p/14160/301265.aspx#301265
Photo courtesy: afhub.com

-Jeff


Unlike Jeff, I don't know how to read. Sorry guys, you won't be seeing me quote much.
-Ashley

Types of Me

http://www.lewrockwell.com/blog/wp-content/uploads/2010/07/24-types_of_libertarian.png

-Jeff

I think I'm the "Denial-ican" and "The Apostle". You are definitely the "Missionary" and "More Libertarian Than Thou" with a bit of "Creepy".

-Ashley

You're not "The Apostle," that would definitely be moi.  I've never even read any Rand so...I'm not the "Missionary."  I understand the "More Libertarian Than Thou" but "Creepy?"  I would say, I'm the "Naive," "Whitey," or "Petulant" one.  You're a "Denial-ican" most definitely, with a bit of "Terrified" on the side.

-Jeff

Arizona's SB1070

Ronald Reagan once remarked that, "A nation without borders is not a nation". The border between the United States and Mexico is being ill-enforced to the point where the divide simply does not exist--it is not defended by anything more than a simple sign, a dozen cameras with the operators stationed miles away, and a few feet of fence. The current approach being taken by the national government to secure the boundaries of the United States is moot. After years of being ignored by the federal government, Arizona finally decided to act on its behalf. Arizona recently passed Arizona SB1070, or The Supporting our Law Enforcement and Safe Neighborhood's Act, in order to curtail the problems it has been facing due to illegal immigration. The law remains popular, despite protests and sneers from President Obama.

The Supporting our Law Enforcement and Safe Neighborhoods Act is an example of the state government protecting the rights of its citizens when the federal government fails to intervene properly, evoking the Tenth Amendment. Many would argue that the Supremacy Clause would prevent the state governments from venturing in to the area of citizenship and immigration, but the national government has already made it a crime to be an illegal alien within America. The difference between the federal law and the state law is the fact that the state actually attempts to prosecute those who break the law, unlike the national government. Because the federal government appears to not see the connection between the murders, kidnappings, drug wars, etc. that occur within the border states that are perpetrated by illegal immigrants and the fact that there is an illegal immigration problem, it is within the jurisdiction and the police powers of the state of Arizona to regulate unlawful activity for the well-being of the citizens. In this instance, being an illegal alien as well as the crimes the illegal alien has committed would be grounds for multiple offenses. The Arizona law would not only cut down on the crime within Arizona that is considered malicious on both the state and federal level, but it would enforce the federal law which claims that it is a crime to be an undocumented resident. This law also relates to the Fourteenth Amendment, since the Fourteenth Amendment breaks citizenship in to two spheres: national and state. Being an illegal resident is now not only an offense to federal citizenship, but it is now in violation of state citizenship.

Arizona SB1070 is flawed, however, in what it intends to do once an illegal alien is found on American soil. The law makes it a minor misdemeanor to be an illegal immigrant. After the original Arizona SB1070 was deemed to be too harsh, the Arizona legislature passed another law, House Bill 2162. According to this new law, a first offense of being an undocumented resident carries a mere hundred dollar fine (decrease from five hundred dollars) and a possible twenty-day jail sentence (decreased from sixty days). Similarly to Ben Franklin's belief that, "We should make the poor uncomfortable and kick them out of poverty", the government should make those who are illegal face a harsher penalty than shelter, three meals a day, and various other luxuries that jail includes. The tax-payers of Arizona should not have to support the illegal immigrants thriving within their state when they are imprisoned; the Arizona tax-payers already pay for the benefits that the illegals receive such as welfare. The law should be amended to include provisions that would deport illegal immigrations, rather than let them repeat a cycle of government-sponsored living at the tax-payer's expense.

P.S. Obama siding with Mexico over Arizona is an act of treason.

Photo source:A pole outside of a 'Subway' restaurant in Phoenix, AZ.

-Ashley

Isn't Everything Technology?

Isn't everything technology?  The common stereotype (or archetype) placed on actors in movies, television shows, games, etc. of the man/woman who resents technology - you know, the old guy?  Yeah, well, I think there is flaw with these people's logic.  I mean, is a wooden table or writing or language not a technology?  How can one resent technology that they have used their entire life?  I believe the real problem lies with their fear/avoidance of change.  Write in if you have another opinion, agree, or just think I'm out of my mind.

-Jeff

The old guy symbolizes resistance to change, in general. Technology, at least the rapid change of technology, is a form of change; therefore, the old guy resents the technological advancements. He is nothing more than a symbol of "the old stubborn person stuck in his ways"--a Hollywood way to mock people with subtlety. Regardless, there are reasons to be wary of technology. Would you be capable of surviving today, right now, if all internet access was cut off (http://www.prisonplanet.com/obama-can-shut-down-internet-for-4-months-under-new-emergency-powers.html)? You probably would not be able to. Similarly, if all pencils were gone tomorrow, what would you do? The reliance on technology is what the "old man" is generally against. People cannot live without their technology and it is a very frightening realization.

- Ashley

If we assume that we cannot live without technology, we must look at life without it, and that's another great, and very frightening realization.  Therefore, man would not make technological advancement unless the cost was less than that of the profit reaped.  Risk is necessary for society - another topic that needs to be addressed on another post.

-Jeff

What is Market Failure?

For anyone that has read a high school or college level economics textbook, 'market failure' is one of those bold, defined study words. You know, in economic theory "wherein the allocation of goods and services by a free market is not efficient." Well, I don't think that simple definition does the job. It brings about a loaded word at the end of the statement: efficient. What is efficiency? Is something efficient to me, also (and always) efficient to you? I don't think so. The word "efficient," when speaking about whether something is optimal, must be subjective to individual values. Murray Rothbard dives into this subject a bit more in his work, "America's Great Depression." If the Serbians (speaking on the mass genocide in South Eastern Europe) wish to eradicate the Muslims in their country, then wiping out every Muslim is efficient. However, this is not true for the Muslims, for they do not wish to be wiped out. So we're brought to the conclusion that efficiency is determined by the wants of one individual (individuals can hold similar wants). Therefore, it's hard to determine what the free market has actually failed to do unless we recognize the wants of each individual.

In the definition of Market Failure, we're left to assume that the free market fails to allocate goods and services to the collective efficiently - producing a net loss. If we assume that some sort of forceful hand is necessary to correct this imperfection in the market, then we must also assume humans are prone to creating error, and error must be corrected by this same forceful hand. This topic will definitely be a post for later.


Photo thanks to this site.

--Jeff

Response to the BP Oil Crisis

The BP oil spill was created when an oil rig exploded. The cause of the destruction has been determined to be nothing more than an accident. The oil spill continued to rage for months. Various companies and organizations have been accused of being involved with the oil spill, but many Americans, as well as American politicians, assume that the majority of the blame should go to BP itself. The anger that is directed towards BP should be placed on the federal government, as the government's interference with the oil industry is the cause for the oil spill.

It is important to note that, by definition, accidents are never intentional. BP did not destroy its own rigs due to some sinister motive. In fact, BP is suffering as a result of the oil spill disaster. BP's stocks have plummeted, individuals have lost confidence in the company, and it has decided that it will cover all of the costs associated with clean-up and damages. Overall, gas prices have skyrocketed as a result of the crisis, causing anger to be directed towards BP. BP is clearly being punished by the free-market as the consequence of the oil spill; therefore, there is no need for government to "put the boot" on BP.

The government, however, is responsible to BP's error as well as the spread of the oil spill. Due to the numerous regulations that the government places on oil industries, the industries are able to take excessive risks, yet be subjected to strict regulations in the case that the government feels as if they did something "wrong". The federal government subsidizes the oil industry, which forces the companies that take the money to abide by harsh regulations. Companies that receive subsidies are more likely to take risks than those that do not receive government assistance, since the government is the one supplying the money as opposed to the company paying for all of its operations at its own expense. While it cannot be determined whether the oil spill was created due to a risk, accidents are surely the result of risks. BP is actually being altruistic in the fact that it is covering both the liabilities of the oil spill and the clean-up costs; the government only mandates that environmental liabilities be paid up to $75,000,000, but BP is willing to pay every single fee (the liabilities are calculated to cost an upwards of $100,000,000,000). The government is also responsible for the spread of the oil because it determined that BP was incapable of solving the problem on its own. The government took the authority away from BP to clean up its own mess, and replaced it with government-engineered responses. The solutions that the government has tried were slowly adopted and proven inadequate. If left to its own, BP has the capabilities of solving the oil spill. BP knows the severity of consequences that were created as a result of the spill; therefore, it has a desire to find the most efficient means by which to fix the spill. BP has the drive to find the fastest course of action to solve the problem at the lowest cost, which will save it time to rebuild its reputation and money that would be spent on capital. The government, however, is incapable of determining what is the best solution the problem. The government is an entity in which monetary value does not matter, so it does not care how much it will cost to fix the problem. The government can also benefit from the negative publicity that BP is receiving in order to further an environmentalist agenda and push for stricter regulations on the oil industry. This proves that when the government mingles in to affairs that private businesses can handle on their own, disasters become catastrophes.

-Ashley

Fresh Start

Phew, fresh start, let's do this!  Boo-yah.

Thanks to "HowStuffWorks.com"