Economic expansion and high productivity don't necessarily mean well being. The best way to measure the "progress" of a nation is not de GDP, is the human development. Capitalist countries may be the richest, but that wealth is only enjoyed by a small gruop off people. In more egalitarian societies, like the Nordic Countries, the majority of the population enjoys the best standards of living in the whole world, and they are not laissez-faire capitalists. The common good must always be the goal.
@giancarlo3000 The glaring problem in what you say is that there is no common good. That is, you and I would probably disagree as to what constitutes the common good. Therefore, when we use principles of central planning instead those associated with individual liberty, one view of the common good is imposed on society at large. This is the basic recipe for tyranny. Liberty does require responsibility and self-motivation. That may explain why so many object to it.
@fzqlcs Well that is exactly what we have to change if we want to survive as a species. The notion of the "non existant common good" is dangerous, For me common good means that everyone can do exactly what they can with no limitaions (monetary, religios, legal, government). Healthy and happy human beings should be the goal of any "economic" system. In an anarco-capitalist society the tyran would not be the state, would be the ones that acquire and control most means of production.
@giancarlo3000 The glaring problem in what you say is that there is no "common good." That is, you and I would probably disagree as to what constitutes this common good. When we use principles of central planning instead those associated with individual liberty, an elitist view of the common good is imposed on society at large. This is the basic recipe for tyranny. Liberty requires responsibility and self-motivation. That may explain why so many are willing slaves to government.
This phrase has been abused by people like Friedman beyond all recognition.
If you read what Smith said, he said that merchants by "preferring the support of domestic to that of foreign industry" benefits society as if "led by an invisible hand".
Smith was criticizing outsourcing and said invisible hand was a home bias that helped steer clear of it.
And yet everyone uses it to mean he was praising it.
as much as i agree with the free market and individualistic society. theres is 1 fundamental flaw thats been proven throughout history and that flaw is that it creates oppression within the race of others.its also proven that you can oppress others without noticing that your affecting them in a negative way, but at the same time i cant say an over planned society by a government force is a better way to go. as we are finding that it is simply unsustainable.
ignorance is bliss keep your fingers firmly in your ears and your head in the sand ignore any and all the problems with capitalism and and the monetary system. as you were
Freidman cleary did not read or understand Adam Smith. Type in 'Chomsky Adam Smith' and you will get an accurate description of Adam Smith's invisible hand. Before Chomsky is accused of bias he is only describing what Smith actually wrote.
"Chomsky is out of his area of expertise when he talks about economics..."
Nonetheless he manages quite adeptly to identify, and at least somewhat dismantle, the propoganda efforts involving distortions of Smith by others (which is the sort of thing he IS an expert, or really master, at doing)...so I'd almost just say your point is irrelevant if it weren't for the disgraceful attempt at the dismissal via the obvious fallacy.
In a free society, we do not tolerate anyone who imposes their intolerance on us, and dealing with these people in a just and lawful way is the one and only true function of government. Even collecting and disbursing government paychecks is only needed insofar as people would not be willing to do this sole public service for free. Everything else is discretionary, sometimes helpful, sometimes not, but never necessary.
If you presuppose people only do things for their own self-interest and incorportate that thought from the begining in your whole socio-economic model or system you should expect nothing else than selfish egoistic people.
And expecting that "the invisible hand", that's God by the way, is going to take care of things is one of the most ridiculous, irresponsible and grotesque things I've ever heard.
This is a BIG suppose; a guess on the part of the speaker.
Doctor Adam Smith only writes the term Invisible Hand 1 time, and that is toward the end of his primary thesis AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS. This segment of video repetes the upshot of Doctor Smith's opening 3 chapters, not the part where he mentions Invisible Hand.
The legitimate role of gov't in the free market is only to protect the life, liberty and property - unalienable rights - of its citizens from being taken by another by force or fraud.
@daviddtor no, you will have poverty no matter the economic system you choose. there will always be people with substance abuse problems and mental illness that don't fit in society, and the process of creative destructive will create short down turns in the economy. The difference is that these downturns will be more predictable and unfettered capitalism can help these poor people. If there's a need, the private sector will fill it.
Lassiez Faire Capitalism is the only economic system that naturally honors and advocates progression. All other economic systems advocate laziness which is a natural source of depression. It is an irrelevant argument on whether capitalism is perfect or not... Especially when we all know that the good fruits of capitalism far exceed all other economic systems. It is a fact that capitalism is the best economical system that we have to work with. We can be certain of that through principles
@PlacePolls basically. Yet some people are stuck in the Keynesian way of thinking in the sense that big government spending can stimulate an economy n wut not.
@PlacePolls That's BS. First of all it's not up to an economic system to "advocate" anything also any economic system can reward based on merrit. Japan for example has universal government run health care --are they lazier than we are? "fruits of capitalism?" really like Credit Default Swaps? The Great Depression? how about the Space Shuttle and Moon Landings --All government programs comrade. The Internet, GPS Satelites... Pretty big "fruits" id' say. The Digital Computer...
@sinistar99 Sounds to me like you need to stick to playing World of Warcraft, cause thats probably all your good at LOL! The fact is, Almost every componant of the space shuttle came from the genious of the private sector namely electricity, combustion, and lighting just to name a few. So basically what you are saying is the government gets all the credit for funding going into space, and the private sector had nothing to do with any of it?
If you mean by "progression" , growth in size and complexity, then capitalism, like any economic or political system, is just another form of empire. The thing about all empires is that eventually they stop growing and they then implode because they really aren't sustainable. The "good fruits" of capitalism is not the result of a "free market" ,because even the U.S.S.R's standard of living increased for a while but growth in the use of fossil fuels.
I think Communism failed because the main input for economic growth in post-industrialization capitalism was fossil fuels. In closed markets, energy availability tends to to stop growing, which means living standards will level off or decline as population increase. Cuba experienced a decline in living standards after petroleum imports stopped arriving after the U.S.S.R. collapsed. Capitalist societies were able to remain standing because they had access to more sources of fossil fuels. (oil)
Capitalist countries will start to have the same problems as the U.S.S.R. did, when demand for energy outstrips supply. The energy that capitalist countries use is mostly non-renewable which means, energy availability will decline in the future. There will be less fruits of labor when energy availability begins to decline because the fuel to run machinary will become to expensive to justify using the machinary. There will be mass unemployment. Governments will collapse.
Capitalism any political system that depends on capitalism for stability relies on growth in production and consumption. It encourages aggression because those who are accustomed to certain living standards will use the military to secure resources to continue to secure the resources that make those living standards possible. , why else did Japan have a large military build-up when it modernized and why is China quietly building up its military capability?
@UnknownVisions I'm gonna step aside from the useless word fight, instead i'll usemy words explaining this freshman level economics. The reason why it's subjective in theory is because not every sanction is either black/white or regulation/intervention: Many have gray areas which are hard to define. I hope you know the definition of "externality" in the study of econ, which will help u understand what I'm saying. Not to mention regulation isn't just about preventing coersive fraud jesus christ.
Where did I say regulation is just to prevent coersive fraud etc? I didn't. I said the role of government in economics should only be to prevent fraud.
@UnknownVision That clearly isn't the only role of the government. I'll give you a single example, which is environmental regulations. Every company owns a factory, but nobody officially owns the air or the river, therefore after centuries of pollution, we are in need to reduce carbon emission. Who's gonna set the rules for that? Wake the hell up and stop being a slave to a single economist's thought. FREE YOUR MIND.
@UnknownVisions you can read my comment and see that I'm saying that it SHOULDNT be the only role. Why? I explained w/ my environmental thing. It's called externality issues.
Capitalism is the historic evolution of private property relationship of alienation,exploitation and suffering of humanity in a modality of wage slavery in a politically manipulated,tyrannical Market Sysytem of Commodity production for Profit. A minority imposition of a system of abstract process of Capital accumulation and concentration and increasing human misery, enviornmental destruction, animal cruelty .A world of cooperation for our common needs and well being is an absolute imperative.
Your error is at the beginning of your query. Smith was not discussing the case of an individual; he was discussing the workings of the economy as a whole. Certainly, an individual CAN perceive that theft and fraud are in his best interest (usually incorrectly). The point is that, in the aggregate, people seek self-betterment and the best way of doing so (and thus the most adopted method) is to get income from meeting the needs of consumers to (unintentionally) everyone's benefit.
So your answer to my question is, "such people who commit fraud are minority, thus does not affect the economy as a whole."
Well, it seems like that's not necessarily the case. If you see lehman brothers, those decisions were made by only a couple people. That's minority for sure however their personal greed has given negative effects to the nation, and more extent, to the world.
What I am really wondering is whether government intervention is necessary.
It's more than that. The free market actively penalizes those who choose to engage in fraud and, in fact, results in less of it. Lehamn and Bear Sterns resulted due to wrong-headed government action (expansion of the money supply). Madoff happened because of wrong-headed government action (the SEC giving investors a false sense of security such that they did not reasonably assume that "too good to be true" actually was ... too good to be true.
in my opnion, whether the government intervening or not, does not disprove Adam's invisible hand theory. However, if anyone says the economy is self-sufficient because of the invisible hand, I would disagree and argue more deeply into interventions of market.
Alan greenspan has admitted too that the market is not quite self-sufficient than we think.
I apologize for being a bit irrelevant from the clip's point
Every single instance of a so-called "market failure" can, instead, be demonstrated to be a governmental failure. There does not exist a single instance in which government intervention in the marketplace has yielded superior results to truly free markets. That does not mean that there can be an absence of law - rights need be protected and fraud must be punished - but regulations tend to facilitate problems (including the energy price manipulation in California) and don't prevent fraud.
you just said there can't be an absence of law. But law is also just another form of government intervention as well. My question was, (and yet asking the same question twice) where do we draw the line? Like Milton says, the principle itself, and applying th principle are two separate things, which I agree that the fundamental idea of the invisible hand has no flaw (it's like a cellphone manual explaining how it works). But when it comes down to applying the principle, we face multiple problems
No, law is not an economic intervention (or an impairment to capitalism). The purpose of law is to punish those who directly infringe upon the rights of others. The vast majority of government regulation either attempts to intervene in advance (usually preventing better alternatives), favor one group over another ultimately at the expense of everyone, address problems that don't really exist or accrue power to itself.
Holding individuals and groups responsible for their actions and the harm that they DIRECTLY do to others is the function of law and it is in no way an impairment to capitalism or an economic intervention. Prescribing what companies must do in order to protect others or imposing trade restrictions to "protect" some group or redistributing wealth from one individual or group to another has never protected anyone and has led to nothing but economic destabilization and crisis.
"Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear." -- Alan Greenspan * The Assault on Integrity, 1963
Greenspan was certainly correct. The tragedy is that he abandoned those principles upon becoming a central banker and undermined capitalism by manipulating the economy via interest rates to such an extent that he facilitated the last two economic crises (in the latter case, along with his protege).
Greenspan provoked the econ crisis because of his fiscal policy? Those are pretty strong words and may I ask the source of that information? For 2008 crisis, I learned it was mainly caused by a couple investment banking firms manipulating illiquid bonds into liquid bonds, which led a jump in housing price. How is Greenspan's fiscal policy SPECIFICALLY have to do with the crisis?
You learned wrong (and confused symptom with cause). The marketplace controls the viability of investment through supply and demand (for loanable funds) and the related pricing mechanism (interest rates). This worked just fine for decades as none of the instruments (mortgage backed securities, credit default swaps, lower-grade bonds, subprime loans) were a problem at any time before the money supply increase or were ever deregulated at any time whatsoever.
Flooding the market with cheap money (which is what the Fed under Greenspan and Bernanke diid - growing the money supply a whopping 70% in a few years), radically distorts risk pricing signals in the marketplace. It creates huge incentives to move those loanable funds out into the economy (after traditionally viable borrowers have already been served) by making the rate of return for such instruments seem vastly higher and thus more viable.
At the same time, massive increases in the money supply send signals to the marketplace that inflation is a significant pending problem and makes leaving loanable funds idle seem far riskier. This monetarily created bubble (which also manifested in stoks, bonds and other financial instruments) PRECEDED and RESULTED in the risky investments that collapsed.
In fact, the entire boom/bust cycle back to 1790 is directly attributable to the same kind of money supply manipulation.
First, your answer regarding law is profoundly mistaken. If you truly believe that law is for only punishment, check out the term business law. One good example is the recent Sarbanes Oxley in 2002. Search it up and tell me laws have nothing to do with preventing or intervening markets. Now coming back to my question (for the third time asking the same question) where do we draw the line between intervention and no intervention? it is clear that we can't just simply have no intervention at all.
The distinction between law and regulation is a simple one. Sarbanes-Oxley is an example of regulation (all regulation is law but not all law is regulation). It is intervention and an unmitigated disaster. ALL intervention is destructive. Law designed to protect the rights of others by creating a mechanism for seeking redress are NOT interventions.
how is regulation not intervention? if i was to join an elementary class and start telling kids what to do and not to do, isn't that an intervention of their freedom? but also "regulation"? (if i want to call that regulation instead of intervention)
I now understand about the regulation (sry for the late understanding) ok now then since regulations is intervention, do you think milton friedman would oppose to regulation laws? because the market will learn by itself? Fletch, if you think of it personally, that's like telling a kid to do whatever he want, and then telling him "i told you so, now learn" after seeing the kid being a drug addict, If there is a game, in my opinion there must be a judge however i dont know where to draw the line
Uncle Milty was, at the center, a classical liberal (libertarian). As such he was opposed to NEARLY all such regulation but there is a wide range of opinion on among libertarians where that line should be drawn. Stil, drug use is an instructive example. He (and I) oppose all regulation of drug use. Not only does it interfere with the development/distribution of medicines (killing far more than has ever been saved by regulation), but it interferes with the basic notiopn of liberty.
Further, it creates more societal problems than it solves. The societal cost of prohibition, including the cost of incarcerating several million people, the crime associated with a black market that prohibition creates (it literally created the Mafia via Prohibition) and preventing market forces from making drugs safer to use FAr outweighs the wocietal benefit of supposedly protecting people from themselves.
Prohibition law creates a massive problem in US yes, but in South Korea or Singapore, it doesnt. The reason why the drug prohibition is a problem in US is because US had been smuggling drugs from the first place even before such law existed. The society ALREADY had a drug market unlike SK and singapore. Alcohol is pretty popular in SK and I bet the same societal cost will occur when theres an alcohol prohibition law.
Not at all. Nothing about South Korea or Singapore makes the results of such regulation any different. That perhaps they do a better job of enforcing drug laws in those countries (debatable, both have significant problems with opiates) doesn't change the nature of the impact.
The matter of children is a different and far more complicated one involving societally determining when one is a child and when one is an adult and the degree of responsibility the child's guardian has. A child lacks the capacity for informed consent and thus his rights are infringed upon by those who do harm to him in the absence of consent.
For adults, the issue is straightforward. The only competent judge is the individual himself.
Secondly, speaking of my second question regarding Greenspan's fiscal policy, you have answered with monetary policy examples. I understand your point about releasing cash more than the available commodity good creates inflation, however that has nothing to do with my question which was about Greenspan's fiscal policy's effect on econ crisis.
Speaking of your criticism against the $700billion money supply, same people like you were on line to screaming no intervention during the 1930's
Greenspan was Fed Chairman. He HAD no fiscal policy impact. Certainly, the money supply can be increased via fiscal policy (printing money or financing govt spending) but the Fed has no input there.
You are correct. The intervention in the 1930s (after a similar monetary bubble burst) did nothing but turn an economic downturn into the Great Depression. The intervention was disastrous.
I'm personally very interested in the government intervention theories as an econ student. Seeing how the government is spending 45% of the US GDP, while it was 7% 100yrs ago, I wonder where this country think it is heading. However, before criticizing government intervention I must truly understand and the more I study and think, I just can't come up with a conclusion because if you look at some fields, government intervention seems to create positive externalities.
The problem is that examples of positive externalities created by government are unbelievably rare. In order for them to exist, it must be demonstrated that they not only provide a benefit but that it exceeds the benefits that could otherwise have been accomplished by the private sector. These are limited almost entirely to polcie/courts and national defense (to the extent that it is used for defense) which are traditional govt roles and MAYBE roadbuilding and fighting infectious disease.
I understand about the traditional gov. roles, then may i ask what is your opinion about major time wall street frauds, which impacts the whole financial market. Do you still oppose to any sort of regulations or intervention to this? Fletch I disagree with public education and all, however I believe Milton is a bit extreme in his belief. Not that I'm saying his theory is wrong, (it's purely perfect actually) but applying the theory is a different thing (like he himself said). To get to my point,
Fraud is an infringement of the rights of others and must be punished. regulations designed to prebent it have never worked. Everything done at Enron, etc. was already illegal and Madoff was able to bilk so many becasue people relied on the SEC for a (false) sense of security rather than assuming that "too good to be true" is usually ... too good to be true.
The response to Enron, etc. (Sarbanes-Oxley) is more economically damaging than all the fraud combined.
I understand your point about cost>benefit of sarbanes oxley. How exactly do you prove this though? What are the cost? What are the benefits? (if too hard to explain, just give me a website address for something to read)
Economic analysis. The total cost of Enron, Worldcom, etc. (and even the other energy companies that, due to wrong-headed regulation, caused such a stir in the California energy market) came to as much as $65 billion (including losses, prosecutorial costs, etc.). The cost of compliance with Sarbanes-Oxley is estimated to have already exceeded $1.4 trillion and is greater than $100 billion per year ... and everything done in the scandal was already illegal.
i will keep those numbers in mind, especially the 1.4trillion. However i must question how these numbers are calculated. How can such cost of compliance can be estimated from the first place?
Having worked in the finance industry I can attest that we spent a boat load of time trying to keep compliant with these regulations and had to hire additional people to do so. It is a serious strain on business and prevents people from focusing on things that actually make them money.
The current crisis was not the result of fraud but of government manioulation of the money supply coupled with REGULATORY action on the part of Barney Frank, et al, Fannie Mae and Freddie Mac pushing for "more affordable housing" and sending the market signals indicating (correctly) that any significant losses would be socialized (stuck with taxpayers).
@FletchforFreedom Ummm negative you are incorrect banks were giving out loans to dead beats & paying to have them rated as "AAA" and then selling the shitty loans as "AAA" This was "ONE OF" the major causes of the current recession so when you say fraud and corruption had nothing to do with it you are talking out of your ass good sir i recommend you start reading asap it will help prevent you from looking like fucktard again in the near future
No such thing ever happened. Ratings agencies were harmed by the defaults and were not paid to grant higher ratings. The defaults (and the rating misjudgments that preceded them) were not due to fraud but to the distorted signals in the market resulting from the increase in the money supply. Since I've done the research as an economist in the financial services industry for the past 25 years, it's clear that it is not I, but rather my critics, who are fucktards talking out if their asses.
Friedman is actually a moderate on education. His take is not the total privatization that many libertarians endorse (because the public system is such a dismal failure), but rather the issuance of vouchers and school choice that still keeps education publicly funded but facilitate market incentives that improve education quality. This works in even more socialized economies in Europe.
I think the real gold question is to decide whether this intervention is appropriate or not, instead of blocking all sorts of interventions from the first place. You yourself seem not sure of what the government should do by saying MAYBE road building.
Here you are touching upon the pure theoretical and utilitarian arguments. The theoretical view is that, beyond the basic roles of government (protection of the citizenry), there is no appropriate intervention (the private sector provided roads just fine before government monopolized it). The utilitarian argument is that in cases such as road building, the government arguably can provide such services in such a way as to solve the "free rider" problem (externality).
@jkugez thats what the government ought to do. The US government's role is far beyond. 45% of our GDP is government spending, and in my point of view, we are a half-aristocracy country ran by dozens of governors.
Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
@rainzoro Far more fraud has been implemented by governments with to much power. Examples include Stalin, Hussein, Hitler, and the list goes on. A private company can't draft you into a military and force you to kill others but a government sure can.
Pursuing your interest in a free market in which people decide whether to buy your goods is fine. It's only the coercive hand of government that can take your money without any benefit to yourself.
@thebestsumoeva i understand how the gov can steal but my question was about private firm's and individual's decisions harming others financially. You're saying the gov is the true hot shot. I get that but I'm not talking about the government.
@rainzoro Of course it is possible, that is why we have a court system, where individuals can take their grievances before their peers for a resolution. The government need not be involved at any level.
@sciencemile Lets be clear here, I'm sitting at my home peacefully and they are the ones trying to violate me. I can make it incredibly easy for them by being another Zombie like everyone else or I can take responsibility to defend my self.
Bear in mind the only force that has the coercive power necessary to draft people is the government. You have far more to fear from a tyrannical government than a large corporation.
@thebestsumoeva But that's just how it is right now; corporations don't have the power to "draft" or its equivalent because that power is held by the governments; if a corporation tried to take that power away, they'd have to fight the government for it. In places where it isn't, terrorist organizations or black-market businesses essentially do the same thing, kidnapping children for armies, organs, slaves, etc. Some of these actions occur exactly because people vote for it with their dollars.
@thebestsumoeva I'm all for spiting the efforts of an oppressive force, if only to make the costs of doing their vile acts a little higher.
But like a Chess Game, you need to think a couple steps beyond the "Get Rid of Government", and see whether things would get better, or worse. See what your assumptions are, and question them.
What makes the government special that they can maintain armies and hold drafts? If it's just because they hold the power, will that power simply vanish with them?
@sciencemile BTW I noticed your name indicates you like Science. As a Physics major and an Undergraduate Research Assistant I was wondering what kind of science you are interested in?
@thebestsumoeva Ah well the name was never intentionally to mean I like science, any more than it was intended to mean I like measurements of distance.
But if I had to pick, I'd say I'm most interested in Biology and Astronomy.
"The Law is one of the most important books ever written on the uses and abuses of law. While short, The Law has proven itself time and time again to be life changing to those who read it"
A true capitalist society doesn't accept fraud. Which brings about the governments only true purpose - to be a coersive force capable of preventing fraud. and acting against those who commit fruad.
As Friedman said, someone after profit needs to do something in order to get that profit in terms of a service or product that people want - therefore they benefit society and produce growth as everyone gets something they want - be it a car, food, clean water or housing etc.
@UnknownVisions so ur saying in a "true capitalist society" ther would be no fraud bc the gov. perfectly prevents it. That's only a concept and can never be true in reality. Law is always created after the occurance of a coersive incident. not before.
I'm not saying there would be no fraud. I'm saying that it would be something that would be legislated against and rejected by people in the market as that is not a tennant of a free market economy.
I was just saying that the concept of fraud isnt acceptable in a free market economy and I was just checking that you weren't saying it was part of free markets.
@UnknownVisions There is or can be NO market that is free from regulation, not to mention the definition of regulation is entirely subjective. THAT IS WHY WE CALL IT THE FREE MARKET THEORY or the invisible hand theory. The question was why does such theory exist. If you don't understand the question this time, don't even bother replying.
@UnknownVisions Hey did you know that a true capitalist society doesn't accept limits on immigration either? If freedom to move capital is not accompained with freedom of labourers to move anywhere the invisible had is by definition broken.
@UnknownVisions It is amazing the lack of understanding people have of these simple theories. that people competing with and accomodating to each other results in things like the iPhone. There is no justification for this product other than a small group of people thought it would be desirable to a larger group of people, and were right. People need to understand that if we had central planning it would have never been made. Officials would have decided that we have enough mobile phones already.
@UnknownVisions Not sure how credit default swaps benefit society... The greatest achievements have come from personal inspiration and people coming together for a cause, not profit. The space program, vaccines that cure diseases, the beginning of the Internet, all government programs done by We the People. Sometimes it's more profitable to treat a disease than to cure it or to make something that breaks to sell more. The "Free Market" is not the best model for everything.
@UnknownVisions The only reason you need governments in the coersive form you know today IS the capitalist market-system. I find it fascinating that you honestly believe that people pursuing their own self-interest is going to magically be fraud-free. When profit is the motivation you should expect nothing else that fraud and corruption. The free-market IS fraud. The only thing it creates is Monopolies and Cartels. And the "State" is merely a market creation to give the illusion of choice.
@The34gl3 - You're ignoring the competitive factor, and government's role in creating the ills you speak of.
Anyone can want a monopoly, but it takes gov't power to really make it happen. The free market destroys monopolies.
People don't get rich by committing fraud. They get rich by giving people what they want.
It's when government gets involved, and favors one person over another that fraud and monopolies thrive. That's the system we have today. It's not capitalism, it's crony-capitalism.
@UnknownVisions Except Friedman and his counterparts have a record of perpetuating the fraud that favours them, while ferreting out direct and legitimate market activity that is less desirable. To take his word for it you would have to ignore his history of policy influence, which is distinctly in line with what you would reasonably call "neo-conservative."
Divorcing the man from his theory still reflects a distinct favour for corruption and coercion: the great cannon of the "free market."
@NodrogTrax - If only what you're espousing were true, instead of a lie told so many times that you think it to be true. You NEED it to be true. It makes you feel better about yourself and your political desire to tell other people what to do with their lives.
Except that the actual history doesn't jive with what you're selling.
@mpc91 Damn, you are right. I don't know how I could be so foolish and irresponsible with my own critical process for so many years. You've convinced me; your logic and detailed analysis has made a shambles of my mutualist economic leanings. I will now fashion my agenda by your example; I will no longer read anything other than Rand, Block, Friedman, and other Austrian schoolers. In fact, I will stop reading entirely! Then it will all fall into place for me, as it has for you.
@rainzoro Yes a misguided person may think that they can improve their self interest by perpetrating fraud. But in a free system if you scam your customers then word gets out, you lose business and eventually go out of business.
@netster007z I understand that misguided person would be out of business, but that doesn't prevent from another misguided person to emerge. I understand that Enron got handcuffed, but that didn't prevent from Lehman Brothers to (partially) bring down the world economy did it? I hope you economist's slaves please understand my argument this time.
So my point is, it's either two cases. First, perhaps the freemarket is not self-sufficient after all, or I'm looking at the short term point ofview
@studentofsmith "must be prepared to... replace it" Perhaps I'm looking for an improvement, not a replacement. Just because I criticized one portion of a system does not mean I disagree with the entire system or propose to replace and eliminate the entire system. The question is, how do we prevent ppl from coersively harming others. I'm an financial econ/accounting major and I get to take this class called "Ethics" which is cute, and my question to you ppl is what other solutions do we have.
@studentofsmith Just for clarification, my question "what other solutions do we have," I mean how do we prevent "unethical" coersive crimes. Answers including "Thats why we have police" is not valid because I'm asking how to PREVENT, not how to deal with crime AFTERWARDS.
So I'm kinda asking a fundamental question about human instinct. We all have greeds, and there are good greeds and bad greeds. Can we shut out the second one forever. If so, how? because my Ethics class isn't gonna cut it.
@rainzoro In large part dealing with crime afterwards works to prevent future crime. When big crooks get locked up that is a deterrent against theft by others. We can't transform all men into angels. Having strong rule of law and sentences is the best deterrent I can think of. Also, I am referring to enforcement of real crimes such as theft and assault, not the victimless police distractions such as drugs.
@rainzoro I admit the free market is not perfect. However in the market, those who perpetrate fraud go out of business quickly. There is not a government on earth that puts the fraudsters out of business faster than the market does.
On the contrary the government passes regulations, tariffs, subsidies... that stifle competition and prevent the fraudsters from going out of business.
What fraud did Lehman Bros commit? Fannie and Freddie, government institutions primarily caused the recession.
@netster007z I am totally with you about free market being more efficient than the government. My question was, can we go further. I now totally sound like some guy who needs help but bear with me for one second.
The social system we have right now is this.
You make fraud, we use enforcement to punish you. So the only way we have in eliminating the incentive of committing fraud is by enforcement.
I'm asking is there anything else other than enforcement. Like my Ethics class? idk.
@rainzoro I cannot think of a way to 'improve' on the free market in this respect which would not in the future become another example of burdensome government. If you have an idea that works in theory let's hear it.
@netster007z Your opening line to your comment was, "I admit the free market is not perfect", Yet you go on in the rest of your comment and explain why it works so wonderfully... I know the free market is the best market for any economy because its the only thing that works... (literally). Thanks for the post.
@PlacePolls My claim is not that it is perfect. My claim is that it is better than any alternative I have seen. Do you have a better economic system? Let's hear it.
@netster007z Lassiez Faire Capitalism is the only economic system that I trust... Because in the end it is the only one that works in a healthy and functional economy. I am 100% AGAINST any government intervention or regulation when it comes to the economy.
@rainzoro Well yes and the people that choose to go that route don't enjoy their victories for very long, they usually end up in prison or even worse.
In this particular video you can see how Milton Friedman butchers the message of Adam Smith. Friedman butchers Adam Smith's actual message, because he wanted to further an agenda of replacing one tyranny, with several private unregulated tyrannies. What Friedman conveniently fails to tell the viewer, is that Adam Smith was actually a precapitalist. Adam Smith was a figure of The Enlightenment. What we would call "capitalism" he despised. People read snippets of Smith, a few phrases in school...
Quite the contrary, Adam Smith fully embraced the Enlightenment-based concept of "perfect liberty" including economic liberty. So long as you stick to the correct definition of capitalism (the private exercise of the power of ownership over the means of production) he was unflinchingly in favor of it. It was mercantilism and corporatism (a form of socialism sometimes absurdly called "state capitalism") that Smith objected to.
Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent the division of labor from proceeding to its limits!
That is a complete mischaracterization of Friedman's position. He, in fact, NEVEr argues that the division of labor is detrimental and his comments about the perils of businessmen and realted criticisms are directed at the (government-maintained) guild system and is not a reversal of his intial (and maintained) advocacy of free markets, capitalism and the division of labor.
@skindancin, on second thought, don't answer my question about The Stock Market. I've got more important things to do, than to argue with someone who gave the outgoing Gang of Criminals, Bush/Cheney, enough votes to steal the presidential election... twice.
Sorry for the delay, yet glad to have done so just to see this pap you write. Look at what you write here about me: off-topic, clueless, and wrong - yet it is done based on your assumptions. Another bad assumption you make is that somehow if there is a swing in the market, economics must not be scientific. BAD premise! Down boy. It's give and take. Perhaps Govt. through Fannie and Freddie and various and sundry subsidies and taxes, play a role. Or do you think that is a bad premise? :-)
and must be adopted only after being examined at great length and very carefully, not only with very scrupolous, but with very suspicious attention. It comes from a kind of people who in general are interested in deceiving and oppressing the people, and who, in many circumstances have deceived and oppressed it".
Those who consider Adam Smith simply as an apologist of the uncontrolled private enterprise show not to have considered or read parts of what he said like this:"Now the interest of the dealers is always, from some points of view, different from the public interest and also the opposite of it. The proposal of a new law coming from those people must always be listened with great caution,
There is no public interest. There is no public. There are only individuals.
If the "interest of the dealers" is always against some fictional interest of "the public," then the interest of the politicians and their cronies is even more so because there is nothing to regulate them.
They claim monopoly power over the lives of everyone else. They enforce this idea with guns and prisons and threats of violence.
This comment has received too many negative votesshow
Economists Kenneth Arrow and Gerard Debeu mathematically proved the Invisible hand was real.
Economist Alfred Marshall invented or should i say "discovered" the supply and demand method. He too said, that the market equilibrium come about because of the Invisible hand.
John Maynard Keynes had no problem with free-market economics, he just believed that governments, from time to time, should intervene to stop recessions...
Adam Smith did not speak about the invisible hand of the market only, but also about the visible hand of the state, that must intervene when there is the risk of monopolization or oligopolization of economy.
The state creates monopolies, oligopolies, cartels, and all such like. That's why it exists.
When the politicians "regulate" an industry, they create conditions which will be to the benefit of their favorites. This is why large corporations lobby for laws, often write laws, and give campaign contributions to both wings of the Party.
This system of looting allows the pols to stay in power and their benefactors to reward them, and vice versa.
This comment has received too many negative votesshow
Does the current situation mean we have been dope slapped by the invisible hand? One tiny detail of so-called free markets is that it assumes knowledge on the part of all players which means transparency. There is nothing transparent about the derivative markets so they fall by definition outside of free markets of the kind we should defer to or support without reservation. Were you really surprised Mr. ? Hard to believe.
1)Economics in its classical stage, which encompassed the work of both possessive-individualists, like Adam Smith, David Ricardo, Thomas Malthus, and John Stuart Mill, and socialist thinkers such as Karl Marx, was called political economy. The name was significant because it pointed to the class basis of the economy and the role of the state. To be sure, Adam Smith introduced the notion of the "invisible hand" of the market in replacing the former visible hand of the monarch. But, the....
2)political-class context of economics was nevertheless omnipresent for Smith and all the other classical economists. In the 1820s, as Marx observed, there were "splendid tournaments" between political economists representing different classes (and class fractions) of society.
However, from the 1830s and '40s on, as the working class arose as a force in society, and as the industrial bourgeoisie gained firm control of the state, displacing landed interests (most notably with the repeal of..
Economic expansion and high productivity don't necessarily mean well being. The best way to measure the "progress" of a nation is not de GDP, is the human development. Capitalist countries may be the richest, but that wealth is only enjoyed by a small gruop off people. In more egalitarian societies, like the Nordic Countries, the majority of the population enjoys the best standards of living in the whole world, and they are not laissez-faire capitalists. The common good must always be the goal.
giancarlo3000 3 weeks ago
@giancarlo3000 The glaring problem in what you say is that there is no common good. That is, you and I would probably disagree as to what constitutes the common good. Therefore, when we use principles of central planning instead those associated with individual liberty, one view of the common good is imposed on society at large. This is the basic recipe for tyranny. Liberty does require responsibility and self-motivation. That may explain why so many object to it.
fzqlcs 3 weeks ago
@fzqlcs Well that is exactly what we have to change if we want to survive as a species. The notion of the "non existant common good" is dangerous, For me common good means that everyone can do exactly what they can with no limitaions (monetary, religios, legal, government). Healthy and happy human beings should be the goal of any "economic" system. In an anarco-capitalist society the tyran would not be the state, would be the ones that acquire and control most means of production.
giancarlo3000 3 weeks ago
@giancarlo3000 The glaring problem in what you say is that there is no "common good." That is, you and I would probably disagree as to what constitutes this common good. When we use principles of central planning instead those associated with individual liberty, an elitist view of the common good is imposed on society at large. This is the basic recipe for tyranny. Liberty requires responsibility and self-motivation. That may explain why so many are willing slaves to government.
fzqlcs 3 weeks ago 2
Adam Smith (1723-1790)
watch?v=Z92pjQVgqmY
KenMacMillan 2 months ago
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This phrase has been abused by people like Friedman beyond all recognition.
If you read what Smith said, he said that merchants by "preferring the support of domestic to that of foreign industry" benefits society as if "led by an invisible hand".
Smith was criticizing outsourcing and said invisible hand was a home bias that helped steer clear of it.
And yet everyone uses it to mean he was praising it.
AndroidPolitician 2 months ago
There's 2 ways to make a product that people want to buy. Make a very good cheap product...or find a stupid person.
Guess which one people do?
SzlampStudios 4 months ago
@SzlampStudios
You hit the nail on the head...nice one.
ElDukerino1 3 months ago
as much as i agree with the free market and individualistic society. theres is 1 fundamental flaw thats been proven throughout history and that flaw is that it creates oppression within the race of others.its also proven that you can oppress others without noticing that your affecting them in a negative way, but at the same time i cant say an over planned society by a government force is a better way to go. as we are finding that it is simply unsustainable.
econonerd12 5 months ago
ignorance is bliss keep your fingers firmly in your ears and your head in the sand ignore any and all the problems with capitalism and and the monetary system. as you were
meganlovesreiya 5 months ago
Comment removed
MrJellyJars 7 months ago
Freidman cleary did not read or understand Adam Smith. Type in 'Chomsky Adam Smith' and you will get an accurate description of Adam Smith's invisible hand. Before Chomsky is accused of bias he is only describing what Smith actually wrote.
Strat765 7 months ago
@Strat765 Chomsky is out of his area of expertise when he talks about economics...
dmowings 5 months ago
@dmowings
"Chomsky is out of his area of expertise when he talks about economics..."
Nonetheless he manages quite adeptly to identify, and at least somewhat dismantle, the propoganda efforts involving distortions of Smith by others (which is the sort of thing he IS an expert, or really master, at doing)...so I'd almost just say your point is irrelevant if it weren't for the disgraceful attempt at the dismissal via the obvious fallacy.
ElDukerino1 3 months ago
I love how free market fundamentalists tend to ignore the fact that Smith also advocated regulated markets and was worried about price collusion
jampt1989 8 months ago
In a free society, we do not tolerate anyone who imposes their intolerance on us, and dealing with these people in a just and lawful way is the one and only true function of government. Even collecting and disbursing government paychecks is only needed insofar as people would not be willing to do this sole public service for free. Everything else is discretionary, sometimes helpful, sometimes not, but never necessary.
koahzvika 8 months ago
the invisible hand is the biggest lie since the lies n manipulations of the christian chruch in europ n elswhere.
the centre of the univers is the earth...
the body is bad..
human is wicked..
BIGBIGGER Lies
it is nowadays proofed that the invisible hand is just a theroy!
GreenDevilAngel 8 months ago
you collectivists refuse to accept or acknowledge the role of COMPETITION
competition is what counters the fraud
competition is what counters the "greed"
monopolies are the result of no competition
and another thing; what is the alternative to competition that works well in the world? stop hating on capitalism and defend the alternatives
we'll be waiting
2dum2getsocialism 8 months ago
What a crock of business school horseshit. Friedman's a daft twat.
sockorocko 9 months ago
If you presuppose people only do things for their own self-interest and incorportate that thought from the begining in your whole socio-economic model or system you should expect nothing else than selfish egoistic people.
And expecting that "the invisible hand", that's God by the way, is going to take care of things is one of the most ridiculous, irresponsible and grotesque things I've ever heard.
The34gl3 9 months ago
just like in upton sinclairs the jungle
alienmode 9 months ago
This is a BIG suppose; a guess on the part of the speaker.
Doctor Adam Smith only writes the term Invisible Hand 1 time, and that is toward the end of his primary thesis AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS. This segment of video repetes the upshot of Doctor Smith's opening 3 chapters, not the part where he mentions Invisible Hand.
centurion180ad 9 months ago
What a over simplification of the human condition and a hot turd!
ttowntvcom 9 months ago
The legitimate role of gov't in the free market is only to protect the life, liberty and property - unalienable rights - of its citizens from being taken by another by force or fraud.
TomOviedo 10 months ago
Is not true capitalism and free market as utopic as civilized socialism?
Is not corruption where the problem is?
daviddtor 1 year ago
@daviddtor no, you will have poverty no matter the economic system you choose. there will always be people with substance abuse problems and mental illness that don't fit in society, and the process of creative destructive will create short down turns in the economy. The difference is that these downturns will be more predictable and unfettered capitalism can help these poor people. If there's a need, the private sector will fill it.
horeslayer 1 year ago 2
@horeslayer "If there's a need the private sector will fill it?" Really? we kind of tried that and it didn't work out so well.
sinistar99 10 months ago
@sinistar99 nah. Freddy Mac and Fannie May were the biggest part of the real-estate melt down.
horeslayer 9 months ago
The government should be there to protect the free market from corruption, fraud and crimes.
Thaths what the government should do nothing else.
unfad1ng 1 year ago
Lassiez Faire Capitalism is the only economic system that naturally honors and advocates progression. All other economic systems advocate laziness which is a natural source of depression. It is an irrelevant argument on whether capitalism is perfect or not... Especially when we all know that the good fruits of capitalism far exceed all other economic systems. It is a fact that capitalism is the best economical system that we have to work with. We can be certain of that through principles
PlacePolls 1 year ago 21
@PlacePolls basically.
mmamolina 1 year ago
@PlacePolls basically. Yet some people are stuck in the Keynesian way of thinking in the sense that big government spending can stimulate an economy n wut not.
mmamolina 1 year ago
@PlacePolls That's BS. First of all it's not up to an economic system to "advocate" anything also any economic system can reward based on merrit. Japan for example has universal government run health care --are they lazier than we are? "fruits of capitalism?" really like Credit Default Swaps? The Great Depression? how about the Space Shuttle and Moon Landings --All government programs comrade. The Internet, GPS Satelites... Pretty big "fruits" id' say. The Digital Computer...
sinistar99 10 months ago
@sinistar99 Sounds to me like you need to stick to playing World of Warcraft, cause thats probably all your good at LOL! The fact is, Almost every componant of the space shuttle came from the genious of the private sector namely electricity, combustion, and lighting just to name a few. So basically what you are saying is the government gets all the credit for funding going into space, and the private sector had nothing to do with any of it?
TheShredAdventures 10 months ago
If you mean by "progression" , growth in size and complexity, then capitalism, like any economic or political system, is just another form of empire. The thing about all empires is that eventually they stop growing and they then implode because they really aren't sustainable. The "good fruits" of capitalism is not the result of a "free market" ,because even the U.S.S.R's standard of living increased for a while but growth in the use of fossil fuels.
DaFuckyouat 4 months ago
I think Communism failed because the main input for economic growth in post-industrialization capitalism was fossil fuels. In closed markets, energy availability tends to to stop growing, which means living standards will level off or decline as population increase. Cuba experienced a decline in living standards after petroleum imports stopped arriving after the U.S.S.R. collapsed. Capitalist societies were able to remain standing because they had access to more sources of fossil fuels. (oil)
DaFuckyouat 4 months ago
Capitalist countries will start to have the same problems as the U.S.S.R. did, when demand for energy outstrips supply. The energy that capitalist countries use is mostly non-renewable which means, energy availability will decline in the future. There will be less fruits of labor when energy availability begins to decline because the fuel to run machinary will become to expensive to justify using the machinary. There will be mass unemployment. Governments will collapse.
DaFuckyouat 4 months ago
Capitalism any political system that depends on capitalism for stability relies on growth in production and consumption. It encourages aggression because those who are accustomed to certain living standards will use the military to secure resources to continue to secure the resources that make those living standards possible. , why else did Japan have a large military build-up when it modernized and why is China quietly building up its military capability?
DaFuckyouat 4 months ago
I love this fellow, he's so deliciously evil
abysmalparadox 1 year ago
@abysmalparadox
faggot...
LogicalFlawDetector 8 months ago
@UnknownVisions I'm gonna step aside from the useless word fight, instead i'll usemy words explaining this freshman level economics. The reason why it's subjective in theory is because not every sanction is either black/white or regulation/intervention: Many have gray areas which are hard to define. I hope you know the definition of "externality" in the study of econ, which will help u understand what I'm saying. Not to mention regulation isn't just about preventing coersive fraud jesus christ.
rainzoro 1 year ago
@rainzoro
Where did I say regulation is just to prevent coersive fraud etc? I didn't. I said the role of government in economics should only be to prevent fraud.
UnknownVisions 1 year ago
@UnknownVision That clearly isn't the only role of the government. I'll give you a single example, which is environmental regulations. Every company owns a factory, but nobody officially owns the air or the river, therefore after centuries of pollution, we are in need to reduce carbon emission. Who's gonna set the rules for that? Wake the hell up and stop being a slave to a single economist's thought. FREE YOUR MIND.
rainzoro 1 year ago
@rainzoro
I said it SHOULD be the only role. Seriously please learn how to read correctly.
UnknownVisions 1 year ago
@UnknownVisions you can read my comment and see that I'm saying that it SHOULDNT be the only role. Why? I explained w/ my environmental thing. It's called externality issues.
rainzoro 1 year ago
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Capitalism is the historic evolution of private property relationship of alienation,exploitation and suffering of humanity in a modality of wage slavery in a politically manipulated,tyrannical Market Sysytem of Commodity production for Profit. A minority imposition of a system of abstract process of Capital accumulation and concentration and increasing human misery, enviornmental destruction, animal cruelty .A world of cooperation for our common needs and well being is an absolute imperative.
arzoyan 1 year ago
Adam smith only says "invisible hand" once in the entirety of the Wealth of Nations books. <_<, wtf are these people talking about.
sciencemile 1 year ago
If it's in my best interest to sell crack how does that benefit everyone as a whole?
AndroidPolitician 1 year ago
Joe Stiglitz gives Adam Smith the Invisible Finger
watch?v=9qjvwQrZmpk
jbryant13 1 year ago
The invisible hand... is picking your pocket!
:-D
skazhiprivet 1 year ago
@skazhiprivet I think Uncle Sam on the end of that hand.
fzqlcs 1 year ago
I have a question.
If this "invisible hand" leads a person from benefiting the society while pursuing his individual interest,
is it also possible to harm the society while pursuing his individual interest?
for example frauds.
rainzoro 2 years ago
Your error is at the beginning of your query. Smith was not discussing the case of an individual; he was discussing the workings of the economy as a whole. Certainly, an individual CAN perceive that theft and fraud are in his best interest (usually incorrectly). The point is that, in the aggregate, people seek self-betterment and the best way of doing so (and thus the most adopted method) is to get income from meeting the needs of consumers to (unintentionally) everyone's benefit.
FletchforFreedom 2 years ago
So your answer to my question is, "such people who commit fraud are minority, thus does not affect the economy as a whole."
Well, it seems like that's not necessarily the case. If you see lehman brothers, those decisions were made by only a couple people. That's minority for sure however their personal greed has given negative effects to the nation, and more extent, to the world.
What I am really wondering is whether government intervention is necessary.
rainzoro 2 years ago
It's more than that. The free market actively penalizes those who choose to engage in fraud and, in fact, results in less of it. Lehamn and Bear Sterns resulted due to wrong-headed government action (expansion of the money supply). Madoff happened because of wrong-headed government action (the SEC giving investors a false sense of security such that they did not reasonably assume that "too good to be true" actually was ... too good to be true.
FletchforFreedom 2 years ago
in my opnion, whether the government intervening or not, does not disprove Adam's invisible hand theory. However, if anyone says the economy is self-sufficient because of the invisible hand, I would disagree and argue more deeply into interventions of market.
Alan greenspan has admitted too that the market is not quite self-sufficient than we think.
I apologize for being a bit irrelevant from the clip's point
rainzoro 2 years ago
Every single instance of a so-called "market failure" can, instead, be demonstrated to be a governmental failure. There does not exist a single instance in which government intervention in the marketplace has yielded superior results to truly free markets. That does not mean that there can be an absence of law - rights need be protected and fraud must be punished - but regulations tend to facilitate problems (including the energy price manipulation in California) and don't prevent fraud.
FletchforFreedom 2 years ago
you just said there can't be an absence of law. But law is also just another form of government intervention as well. My question was, (and yet asking the same question twice) where do we draw the line? Like Milton says, the principle itself, and applying th principle are two separate things, which I agree that the fundamental idea of the invisible hand has no flaw (it's like a cellphone manual explaining how it works). But when it comes down to applying the principle, we face multiple problems
rainzoro 2 years ago
No, law is not an economic intervention (or an impairment to capitalism). The purpose of law is to punish those who directly infringe upon the rights of others. The vast majority of government regulation either attempts to intervene in advance (usually preventing better alternatives), favor one group over another ultimately at the expense of everyone, address problems that don't really exist or accrue power to itself.
(cont.)
FletchforFreedom 2 years ago
Holding individuals and groups responsible for their actions and the harm that they DIRECTLY do to others is the function of law and it is in no way an impairment to capitalism or an economic intervention. Prescribing what companies must do in order to protect others or imposing trade restrictions to "protect" some group or redistributing wealth from one individual or group to another has never protected anyone and has led to nothing but economic destabilization and crisis.
FletchforFreedom 2 years ago
"Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear." -- Alan Greenspan * The Assault on Integrity, 1963
skidancin 2 years ago
Greenspan was certainly correct. The tragedy is that he abandoned those principles upon becoming a central banker and undermined capitalism by manipulating the economy via interest rates to such an extent that he facilitated the last two economic crises (in the latter case, along with his protege).
FletchforFreedom 2 years ago
Greenspan provoked the econ crisis because of his fiscal policy? Those are pretty strong words and may I ask the source of that information? For 2008 crisis, I learned it was mainly caused by a couple investment banking firms manipulating illiquid bonds into liquid bonds, which led a jump in housing price. How is Greenspan's fiscal policy SPECIFICALLY have to do with the crisis?
rainzoro 2 years ago
You learned wrong (and confused symptom with cause). The marketplace controls the viability of investment through supply and demand (for loanable funds) and the related pricing mechanism (interest rates). This worked just fine for decades as none of the instruments (mortgage backed securities, credit default swaps, lower-grade bonds, subprime loans) were a problem at any time before the money supply increase or were ever deregulated at any time whatsoever.
(cont.)
FletchforFreedom 2 years ago
Flooding the market with cheap money (which is what the Fed under Greenspan and Bernanke diid - growing the money supply a whopping 70% in a few years), radically distorts risk pricing signals in the marketplace. It creates huge incentives to move those loanable funds out into the economy (after traditionally viable borrowers have already been served) by making the rate of return for such instruments seem vastly higher and thus more viable.
(cont.)
FletchforFreedom 2 years ago
At the same time, massive increases in the money supply send signals to the marketplace that inflation is a significant pending problem and makes leaving loanable funds idle seem far riskier. This monetarily created bubble (which also manifested in stoks, bonds and other financial instruments) PRECEDED and RESULTED in the risky investments that collapsed.
In fact, the entire boom/bust cycle back to 1790 is directly attributable to the same kind of money supply manipulation.
FletchforFreedom 2 years ago
First, your answer regarding law is profoundly mistaken. If you truly believe that law is for only punishment, check out the term business law. One good example is the recent Sarbanes Oxley in 2002. Search it up and tell me laws have nothing to do with preventing or intervening markets. Now coming back to my question (for the third time asking the same question) where do we draw the line between intervention and no intervention? it is clear that we can't just simply have no intervention at all.
rainzoro 2 years ago
The distinction between law and regulation is a simple one. Sarbanes-Oxley is an example of regulation (all regulation is law but not all law is regulation). It is intervention and an unmitigated disaster. ALL intervention is destructive. Law designed to protect the rights of others by creating a mechanism for seeking redress are NOT interventions.
FletchforFreedom 2 years ago
how is regulation not intervention? if i was to join an elementary class and start telling kids what to do and not to do, isn't that an intervention of their freedom? but also "regulation"? (if i want to call that regulation instead of intervention)
rainzoro 2 years ago
Again, all regulation is law, NOT all law is regulation. Regulation IS intervention (and destructive).
FletchforFreedom 2 years ago
I now understand about the regulation (sry for the late understanding) ok now then since regulations is intervention, do you think milton friedman would oppose to regulation laws? because the market will learn by itself? Fletch, if you think of it personally, that's like telling a kid to do whatever he want, and then telling him "i told you so, now learn" after seeing the kid being a drug addict, If there is a game, in my opinion there must be a judge however i dont know where to draw the line
rainzoro 2 years ago
Uncle Milty was, at the center, a classical liberal (libertarian). As such he was opposed to NEARLY all such regulation but there is a wide range of opinion on among libertarians where that line should be drawn. Stil, drug use is an instructive example. He (and I) oppose all regulation of drug use. Not only does it interfere with the development/distribution of medicines (killing far more than has ever been saved by regulation), but it interferes with the basic notiopn of liberty.
(cont.)
FletchforFreedom 2 years ago
Further, it creates more societal problems than it solves. The societal cost of prohibition, including the cost of incarcerating several million people, the crime associated with a black market that prohibition creates (it literally created the Mafia via Prohibition) and preventing market forces from making drugs safer to use FAr outweighs the wocietal benefit of supposedly protecting people from themselves.
(cont.)
FletchforFreedom 2 years ago
Prohibition law creates a massive problem in US yes, but in South Korea or Singapore, it doesnt. The reason why the drug prohibition is a problem in US is because US had been smuggling drugs from the first place even before such law existed. The society ALREADY had a drug market unlike SK and singapore. Alcohol is pretty popular in SK and I bet the same societal cost will occur when theres an alcohol prohibition law.
rainzoro 2 years ago
Not at all. Nothing about South Korea or Singapore makes the results of such regulation any different. That perhaps they do a better job of enforcing drug laws in those countries (debatable, both have significant problems with opiates) doesn't change the nature of the impact.
FletchforFreedom 2 years ago
The matter of children is a different and far more complicated one involving societally determining when one is a child and when one is an adult and the degree of responsibility the child's guardian has. A child lacks the capacity for informed consent and thus his rights are infringed upon by those who do harm to him in the absence of consent.
For adults, the issue is straightforward. The only competent judge is the individual himself.
FletchforFreedom 2 years ago
Secondly, speaking of my second question regarding Greenspan's fiscal policy, you have answered with monetary policy examples. I understand your point about releasing cash more than the available commodity good creates inflation, however that has nothing to do with my question which was about Greenspan's fiscal policy's effect on econ crisis.
Speaking of your criticism against the $700billion money supply, same people like you were on line to screaming no intervention during the 1930's
(con.
rainzoro 2 years ago
Greenspan was Fed Chairman. He HAD no fiscal policy impact. Certainly, the money supply can be increased via fiscal policy (printing money or financing govt spending) but the Fed has no input there.
You are correct. The intervention in the 1930s (after a similar monetary bubble burst) did nothing but turn an economic downturn into the Great Depression. The intervention was disastrous.
FletchforFreedom 2 years ago
I'm personally very interested in the government intervention theories as an econ student. Seeing how the government is spending 45% of the US GDP, while it was 7% 100yrs ago, I wonder where this country think it is heading. However, before criticizing government intervention I must truly understand and the more I study and think, I just can't come up with a conclusion because if you look at some fields, government intervention seems to create positive externalities.
rainzoro 2 years ago
The problem is that examples of positive externalities created by government are unbelievably rare. In order for them to exist, it must be demonstrated that they not only provide a benefit but that it exceeds the benefits that could otherwise have been accomplished by the private sector. These are limited almost entirely to polcie/courts and national defense (to the extent that it is used for defense) which are traditional govt roles and MAYBE roadbuilding and fighting infectious disease.
FletchforFreedom 2 years ago
I understand about the traditional gov. roles, then may i ask what is your opinion about major time wall street frauds, which impacts the whole financial market. Do you still oppose to any sort of regulations or intervention to this? Fletch I disagree with public education and all, however I believe Milton is a bit extreme in his belief. Not that I'm saying his theory is wrong, (it's purely perfect actually) but applying the theory is a different thing (like he himself said). To get to my point,
rainzoro 2 years ago
Fraud is an infringement of the rights of others and must be punished. regulations designed to prebent it have never worked. Everything done at Enron, etc. was already illegal and Madoff was able to bilk so many becasue people relied on the SEC for a (false) sense of security rather than assuming that "too good to be true" is usually ... too good to be true.
The response to Enron, etc. (Sarbanes-Oxley) is more economically damaging than all the fraud combined.
FletchforFreedom 2 years ago
I understand your point about cost>benefit of sarbanes oxley. How exactly do you prove this though? What are the cost? What are the benefits? (if too hard to explain, just give me a website address for something to read)
rainzoro 2 years ago
Economic analysis. The total cost of Enron, Worldcom, etc. (and even the other energy companies that, due to wrong-headed regulation, caused such a stir in the California energy market) came to as much as $65 billion (including losses, prosecutorial costs, etc.). The cost of compliance with Sarbanes-Oxley is estimated to have already exceeded $1.4 trillion and is greater than $100 billion per year ... and everything done in the scandal was already illegal.
FletchforFreedom 2 years ago
i will keep those numbers in mind, especially the 1.4trillion. However i must question how these numbers are calculated. How can such cost of compliance can be estimated from the first place?
rainzoro 2 years ago
It's available online. Just google "Economic Consequences of the Sarbanes-Oxley Act of 2002".
FletchforFreedom 2 years ago
Having worked in the finance industry I can attest that we spent a boat load of time trying to keep compliant with these regulations and had to hire additional people to do so. It is a serious strain on business and prevents people from focusing on things that actually make them money.
sdfkjllshadflhadfshl 1 year ago
The current crisis was not the result of fraud but of government manioulation of the money supply coupled with REGULATORY action on the part of Barney Frank, et al, Fannie Mae and Freddie Mac pushing for "more affordable housing" and sending the market signals indicating (correctly) that any significant losses would be socialized (stuck with taxpayers).
FletchforFreedom 2 years ago
@FletchforFreedom Ummm negative you are incorrect banks were giving out loans to dead beats & paying to have them rated as "AAA" and then selling the shitty loans as "AAA" This was "ONE OF" the major causes of the current recession so when you say fraud and corruption had nothing to do with it you are talking out of your ass good sir i recommend you start reading asap it will help prevent you from looking like fucktard again in the near future
midgety1 1 year ago
No such thing ever happened. Ratings agencies were harmed by the defaults and were not paid to grant higher ratings. The defaults (and the rating misjudgments that preceded them) were not due to fraud but to the distorted signals in the market resulting from the increase in the money supply. Since I've done the research as an economist in the financial services industry for the past 25 years, it's clear that it is not I, but rather my critics, who are fucktards talking out if their asses.
FletchforFreedom 1 year ago
Friedman is actually a moderate on education. His take is not the total privatization that many libertarians endorse (because the public system is such a dismal failure), but rather the issuance of vouchers and school choice that still keeps education publicly funded but facilitate market incentives that improve education quality. This works in even more socialized economies in Europe.
FletchforFreedom 2 years ago
I think the real gold question is to decide whether this intervention is appropriate or not, instead of blocking all sorts of interventions from the first place. You yourself seem not sure of what the government should do by saying MAYBE road building.
rainzoro 2 years ago
Here you are touching upon the pure theoretical and utilitarian arguments. The theoretical view is that, beyond the basic roles of government (protection of the citizenry), there is no appropriate intervention (the private sector provided roads just fine before government monopolized it). The utilitarian argument is that in cases such as road building, the government arguably can provide such services in such a way as to solve the "free rider" problem (externality).
FletchforFreedom 2 years ago
@rainzoro thats what governments are for...to protect against that
jkugez 1 year ago
@jkugez thats what the government ought to do. The US government's role is far beyond. 45% of our GDP is government spending, and in my point of view, we are a half-aristocracy country ran by dozens of governors.
rainzoro 1 year ago
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theriseofeden 1 year ago
Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
theriseofeden 1 year ago
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Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
theriseofeden 1 year ago
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Not in a free market. The invisible hand is a function of a state of voluntary actions / cooperation. The extent that ANYONE initiates coercion and uses force or fraud to inhibit the ability of another to control his own person / other property is the extent that individual self interest is harmed. Despite the good intentions of equally self interested presumptuous politicians, the extent that governments coerce instead of defend voluntary action is the extent that they are effectually criminal.
theriseofeden 1 year ago
@rainzoro previous comment was for rainzoro
theriseofeden 1 year ago
@rainzoro That is why Friedman is a proponent of tort laws. It's not in your best self interest to get arrested.
BurnBeforeEating 1 year ago
@rainzoro Far more fraud has been implemented by governments with to much power. Examples include Stalin, Hussein, Hitler, and the list goes on. A private company can't draft you into a military and force you to kill others but a government sure can.
Pursuing your interest in a free market in which people decide whether to buy your goods is fine. It's only the coercive hand of government that can take your money without any benefit to yourself.
thebestsumoeva 1 year ago
@thebestsumoeva i understand how the gov can steal but my question was about private firm's and individual's decisions harming others financially. You're saying the gov is the true hot shot. I get that but I'm not talking about the government.
rainzoro 1 year ago
@rainzoro Of course it is possible, that is why we have a court system, where individuals can take their grievances before their peers for a resolution. The government need not be involved at any level.
mattpkp 1 year ago
@thebestsumoeva
"A private company can't draft you into a military and force you to kill others"
Why can't they? Who's going to stop them?
sciencemile 1 year ago
@sciencemile
"Why can't they? Who's going to stop them?"
I will with my colt 45 and if thats not enough I got my 223 under my bed.
thebestsumoeva 1 year ago
@thebestsumoeva
Those are for you, I assume? Suicide is just as effective if you think violence is going to stop them from getting their way.
sciencemile 1 year ago
@sciencemile Lets be clear here, I'm sitting at my home peacefully and they are the ones trying to violate me. I can make it incredibly easy for them by being another Zombie like everyone else or I can take responsibility to defend my self.
Bear in mind the only force that has the coercive power necessary to draft people is the government. You have far more to fear from a tyrannical government than a large corporation.
thebestsumoeva 1 year ago
@thebestsumoeva But that's just how it is right now; corporations don't have the power to "draft" or its equivalent because that power is held by the governments; if a corporation tried to take that power away, they'd have to fight the government for it. In places where it isn't, terrorist organizations or black-market businesses essentially do the same thing, kidnapping children for armies, organs, slaves, etc. Some of these actions occur exactly because people vote for it with their dollars.
sciencemile 1 year ago
@thebestsumoeva I'm all for spiting the efforts of an oppressive force, if only to make the costs of doing their vile acts a little higher.
But like a Chess Game, you need to think a couple steps beyond the "Get Rid of Government", and see whether things would get better, or worse. See what your assumptions are, and question them.
What makes the government special that they can maintain armies and hold drafts? If it's just because they hold the power, will that power simply vanish with them?
sciencemile 1 year ago
@sciencemile BTW I noticed your name indicates you like Science. As a Physics major and an Undergraduate Research Assistant I was wondering what kind of science you are interested in?
thebestsumoeva 1 year ago
@thebestsumoeva Ah well the name was never intentionally to mean I like science, any more than it was intended to mean I like measurements of distance.
But if I had to pick, I'd say I'm most interested in Biology and Astronomy.
sciencemile 1 year ago
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@rainzoro
Quote:
"The Law is one of the most important books ever written on the uses and abuses of law. While short, The Law has proven itself time and time again to be life changing to those who read it"
Frédéric Bastiat
The Law
Remove brackets and spaces:
tinyurl(.)com/TheLawByFredericBastiat
swiftysmithuk 1 year ago
@rainzoro
A true capitalist society doesn't accept fraud. Which brings about the governments only true purpose - to be a coersive force capable of preventing fraud. and acting against those who commit fruad.
As Friedman said, someone after profit needs to do something in order to get that profit in terms of a service or product that people want - therefore they benefit society and produce growth as everyone gets something they want - be it a car, food, clean water or housing etc.
UnknownVisions 1 year ago 31
@UnknownVisions so ur saying in a "true capitalist society" ther would be no fraud bc the gov. perfectly prevents it. That's only a concept and can never be true in reality. Law is always created after the occurance of a coersive incident. not before.
rainzoro 1 year ago
@rainzoro
I'm not saying there would be no fraud. I'm saying that it would be something that would be legislated against and rejected by people in the market as that is not a tennant of a free market economy.
I was just saying that the concept of fraud isnt acceptable in a free market economy and I was just checking that you weren't saying it was part of free markets.
UnknownVisions 1 year ago
@UnknownVisions Then what's the purpose for the existence of this theoretical concept of perfectly free market?
rainzoro 1 year ago
@rainzoro
A market free of REGULATION, not free from PROTECTION FROM FRAUD.
In a free market situation the governments only role is to protect against people threatening/frauding etc etc.
If you seriously don't understand it after that I'm done with you.
UnknownVisions 1 year ago
@UnknownVisions There is or can be NO market that is free from regulation, not to mention the definition of regulation is entirely subjective. THAT IS WHY WE CALL IT THE FREE MARKET THEORY or the invisible hand theory. The question was why does such theory exist. If you don't understand the question this time, don't even bother replying.
rainzoro 1 year ago
@rainzoro
*facepalm*.
Where did you pull those statements from? Your arse?
Regulation isn't subjective. It's the government implementing sanctions on business. How is that subjective?
Why does the concept of free markets exist? The same reason the concept of regulated markets exists.
There obviously can be markets without regulation. If a government doesnt tell people how to do business thats free.
Btw parroting my no confidence ultiimatum just makes you look silly ;).
UnknownVisions 1 year ago
Comment removed
rainzoro 1 year ago
@UnknownVisions
hellofaname 1 year ago
@UnknownVisions Hey did you know that a true capitalist society doesn't accept limits on immigration either? If freedom to move capital is not accompained with freedom of labourers to move anywhere the invisible had is by definition broken.
DonVoghano 1 year ago
@UnknownVisions It is amazing the lack of understanding people have of these simple theories. that people competing with and accomodating to each other results in things like the iPhone. There is no justification for this product other than a small group of people thought it would be desirable to a larger group of people, and were right. People need to understand that if we had central planning it would have never been made. Officials would have decided that we have enough mobile phones already.
aussieconservative 1 year ago
@UnknownVisions Not sure how credit default swaps benefit society... The greatest achievements have come from personal inspiration and people coming together for a cause, not profit. The space program, vaccines that cure diseases, the beginning of the Internet, all government programs done by We the People. Sometimes it's more profitable to treat a disease than to cure it or to make something that breaks to sell more. The "Free Market" is not the best model for everything.
sinistar99 10 months ago
@UnknownVisions The only reason you need governments in the coersive form you know today IS the capitalist market-system. I find it fascinating that you honestly believe that people pursuing their own self-interest is going to magically be fraud-free. When profit is the motivation you should expect nothing else that fraud and corruption. The free-market IS fraud. The only thing it creates is Monopolies and Cartels. And the "State" is merely a market creation to give the illusion of choice.
The34gl3 9 months ago
@The34gl3 - You're ignoring the competitive factor, and government's role in creating the ills you speak of.
Anyone can want a monopoly, but it takes gov't power to really make it happen. The free market destroys monopolies.
People don't get rich by committing fraud. They get rich by giving people what they want.
It's when government gets involved, and favors one person over another that fraud and monopolies thrive. That's the system we have today. It's not capitalism, it's crony-capitalism.
mpc91 6 months ago
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@UnknownVisions
the invisible hand is the biggest lie since the lies n manipulations of the christian chruch in europ n elswhere.
the centre of the univers is the earth...
the body is bad..
human is wicked..
...
BIGBIGGER Lies
it is nowadays proofed that the invisible hand is just a theory!
GreenDevilAngel 8 months ago
@UnknownVisions Except Friedman and his counterparts have a record of perpetuating the fraud that favours them, while ferreting out direct and legitimate market activity that is less desirable. To take his word for it you would have to ignore his history of policy influence, which is distinctly in line with what you would reasonably call "neo-conservative."
Divorcing the man from his theory still reflects a distinct favour for corruption and coercion: the great cannon of the "free market."
NodrogTrax 7 months ago
@NodrogTrax - If only what you're espousing were true, instead of a lie told so many times that you think it to be true. You NEED it to be true. It makes you feel better about yourself and your political desire to tell other people what to do with their lives.
Except that the actual history doesn't jive with what you're selling.
mpc91 6 months ago
@mpc91 Damn, you are right. I don't know how I could be so foolish and irresponsible with my own critical process for so many years. You've convinced me; your logic and detailed analysis has made a shambles of my mutualist economic leanings. I will now fashion my agenda by your example; I will no longer read anything other than Rand, Block, Friedman, and other Austrian schoolers. In fact, I will stop reading entirely! Then it will all fall into place for me, as it has for you.
NodrogTrax 6 months ago
@NodrogTrax - Why should you read, you already clearly know everything?
Your arrogance is matched only by your ignorance.
mpc91 6 months ago
@rainzoro frauds would be weeded out technically because they would lose customers and a non fraud would come in to the market to make money.
AroundSun 1 year ago
@rainzoro Yes a misguided person may think that they can improve their self interest by perpetrating fraud. But in a free system if you scam your customers then word gets out, you lose business and eventually go out of business.
netster007z 1 year ago
@netster007z I understand that misguided person would be out of business, but that doesn't prevent from another misguided person to emerge. I understand that Enron got handcuffed, but that didn't prevent from Lehman Brothers to (partially) bring down the world economy did it? I hope you economist's slaves please understand my argument this time.
So my point is, it's either two cases. First, perhaps the freemarket is not self-sufficient after all, or I'm looking at the short term point ofview
rainzoro 1 year ago
@rainzoro I think I understand your argument. Your argument, essentially, is that the free market isn't perfect.
True. The free market isn't perfect, it's just least bad.
Anyone who criticizes the free market as not being perfect must be prepared to state what superior system he has devised with which to replace it.
Your earlier point regarding externalities such as pollution is well taken. Friedman's view of this can be found here: [watch?v=VHFIbfUi5rw]
studentofsmith 1 year ago
@studentofsmith "must be prepared to... replace it" Perhaps I'm looking for an improvement, not a replacement. Just because I criticized one portion of a system does not mean I disagree with the entire system or propose to replace and eliminate the entire system. The question is, how do we prevent ppl from coersively harming others. I'm an financial econ/accounting major and I get to take this class called "Ethics" which is cute, and my question to you ppl is what other solutions do we have.
rainzoro 1 year ago
@studentofsmith Just for clarification, my question "what other solutions do we have," I mean how do we prevent "unethical" coersive crimes. Answers including "Thats why we have police" is not valid because I'm asking how to PREVENT, not how to deal with crime AFTERWARDS.
So I'm kinda asking a fundamental question about human instinct. We all have greeds, and there are good greeds and bad greeds. Can we shut out the second one forever. If so, how? because my Ethics class isn't gonna cut it.
rainzoro 1 year ago
@rainzoro "how do we prevent ppl from coersively harming others?"
You mean completely? To the best of my knowledge that is not possible under any economic system.
studentofsmith 1 year ago
@rainzoro In large part dealing with crime afterwards works to prevent future crime. When big crooks get locked up that is a deterrent against theft by others. We can't transform all men into angels. Having strong rule of law and sentences is the best deterrent I can think of. Also, I am referring to enforcement of real crimes such as theft and assault, not the victimless police distractions such as drugs.
netster007z 1 year ago
@rainzoro I admit the free market is not perfect. However in the market, those who perpetrate fraud go out of business quickly. There is not a government on earth that puts the fraudsters out of business faster than the market does.
On the contrary the government passes regulations, tariffs, subsidies... that stifle competition and prevent the fraudsters from going out of business.
What fraud did Lehman Bros commit? Fannie and Freddie, government institutions primarily caused the recession.
netster007z 1 year ago
@netster007z I am totally with you about free market being more efficient than the government. My question was, can we go further. I now totally sound like some guy who needs help but bear with me for one second.
The social system we have right now is this.
You make fraud, we use enforcement to punish you. So the only way we have in eliminating the incentive of committing fraud is by enforcement.
I'm asking is there anything else other than enforcement. Like my Ethics class? idk.
rainzoro 1 year ago
@rainzoro I cannot think of a way to 'improve' on the free market in this respect which would not in the future become another example of burdensome government. If you have an idea that works in theory let's hear it.
netster007z 1 year ago
@netster007z Your opening line to your comment was, "I admit the free market is not perfect", Yet you go on in the rest of your comment and explain why it works so wonderfully... I know the free market is the best market for any economy because its the only thing that works... (literally). Thanks for the post.
PlacePolls 1 year ago
@PlacePolls My claim is not that it is perfect. My claim is that it is better than any alternative I have seen. Do you have a better economic system? Let's hear it.
netster007z 1 year ago
@netster007z Lassiez Faire Capitalism is the only economic system that I trust... Because in the end it is the only one that works in a healthy and functional economy. I am 100% AGAINST any government intervention or regulation when it comes to the economy.
PlacePolls 1 year ago
@PlacePolls Aha we agreed all along. I guess I kinda misread your first response.
netster007z 1 year ago
@netster007z Yes we do, lol, I figured you misread because of the tone of the response I gave you.
PlacePolls 1 year ago
@rainzoro Well yes and the people that choose to go that route don't enjoy their victories for very long, they usually end up in prison or even worse.
wvu212 1 year ago
In this particular video you can see how Milton Friedman butchers the message of Adam Smith. Friedman butchers Adam Smith's actual message, because he wanted to further an agenda of replacing one tyranny, with several private unregulated tyrannies. What Friedman conveniently fails to tell the viewer, is that Adam Smith was actually a precapitalist. Adam Smith was a figure of The Enlightenment. What we would call "capitalism" he despised. People read snippets of Smith, a few phrases in school...
CosmicFork 2 years ago
Quite the contrary, Adam Smith fully embraced the Enlightenment-based concept of "perfect liberty" including economic liberty. So long as you stick to the correct definition of capitalism (the private exercise of the power of ownership over the means of production) he was unflinchingly in favor of it. It was mercantilism and corporatism (a form of socialism sometimes absurdly called "state capitalism") that Smith objected to.
FletchforFreedom 2 years ago
Everybody reads the first paragraph of The Wealth of Nations where he talks about how wonderful the division of labor is. But not many people get to the point hundreds of pages later, where he says that division of labor will destroy human beings and turn people into creatures as stupid and ignorant as it is possible for a human being to be. And therefore in any civilized society the government is going to have to take some measures to prevent the division of labor from proceeding to its limits!
CosmicFork 2 years ago
That is a complete mischaracterization of Friedman's position. He, in fact, NEVEr argues that the division of labor is detrimental and his comments about the perils of businessmen and realted criticisms are directed at the (government-maintained) guild system and is not a reversal of his intial (and maintained) advocacy of free markets, capitalism and the division of labor.
FletchforFreedom 2 years ago
@skindancin, on second thought, don't answer my question about The Stock Market. I've got more important things to do, than to argue with someone who gave the outgoing Gang of Criminals, Bush/Cheney, enough votes to steal the presidential election... twice.
CosmicFork 2 years ago
Sorry for the delay, yet glad to have done so just to see this pap you write. Look at what you write here about me: off-topic, clueless, and wrong - yet it is done based on your assumptions. Another bad assumption you make is that somehow if there is a swing in the market, economics must not be scientific. BAD premise! Down boy. It's give and take. Perhaps Govt. through Fannie and Freddie and various and sundry subsidies and taxes, play a role. Or do you think that is a bad premise? :-)
skidancin 2 years ago
The invisible hand is the Illuminati
DayOfTheZen 2 years ago
and must be adopted only after being examined at great length and very carefully, not only with very scrupolous, but with very suspicious attention. It comes from a kind of people who in general are interested in deceiving and oppressing the people, and who, in many circumstances have deceived and oppressed it".
MelWK 2 years ago
Those who consider Adam Smith simply as an apologist of the uncontrolled private enterprise show not to have considered or read parts of what he said like this:"Now the interest of the dealers is always, from some points of view, different from the public interest and also the opposite of it. The proposal of a new law coming from those people must always be listened with great caution,
MelWK 2 years ago 5
"different from the public interest"
There is no public interest. There is no public. There are only individuals.
If the "interest of the dealers" is always against some fictional interest of "the public," then the interest of the politicians and their cronies is even more so because there is nothing to regulate them.
They claim monopoly power over the lives of everyone else. They enforce this idea with guns and prisons and threats of violence.
The free market, OTOH, is voluntary.
MillionthUsername 2 years ago
This comment has received too many negative votes show
Economists Kenneth Arrow and Gerard Debeu mathematically proved the Invisible hand was real.
Economist Alfred Marshall invented or should i say "discovered" the supply and demand method. He too said, that the market equilibrium come about because of the Invisible hand.
John Maynard Keynes had no problem with free-market economics, he just believed that governments, from time to time, should intervene to stop recessions...
Get an education Susie...
albertsamerica 2 years ago
Adam Smith did not speak about the invisible hand of the market only, but also about the visible hand of the state, that must intervene when there is the risk of monopolization or oligopolization of economy.
MelWK 2 years ago
"the state, that must intervene..."
The state creates monopolies, oligopolies, cartels, and all such like. That's why it exists.
When the politicians "regulate" an industry, they create conditions which will be to the benefit of their favorites. This is why large corporations lobby for laws, often write laws, and give campaign contributions to both wings of the Party.
This system of looting allows the pols to stay in power and their benefactors to reward them, and vice versa.
MillionthUsername 2 years ago
"The hand is invisible because it doesn't exist" - Joseph Stiglitz
MelWK 2 years ago
That music is awesome lol... Oh yeah... and Milton Friedman is a genius too.
themagus187 2 years ago 2
This comment has received too many negative votes show
Does the current situation mean we have been dope slapped by the invisible hand? One tiny detail of so-called free markets is that it assumes knowledge on the part of all players which means transparency. There is nothing transparent about the derivative markets so they fall by definition outside of free markets of the kind we should defer to or support without reservation. Were you really surprised Mr. ? Hard to believe.
ourearthhome 2 years ago
1)Economics in its classical stage, which encompassed the work of both possessive-individualists, like Adam Smith, David Ricardo, Thomas Malthus, and John Stuart Mill, and socialist thinkers such as Karl Marx, was called political economy. The name was significant because it pointed to the class basis of the economy and the role of the state. To be sure, Adam Smith introduced the notion of the "invisible hand" of the market in replacing the former visible hand of the monarch. But, the....
Bigmartinno1 2 years ago
2)political-class context of economics was nevertheless omnipresent for Smith and all the other classical economists. In the 1820s, as Marx observed, there were "splendid tournaments" between political economists representing different classes (and class fractions) of society.
However, from the 1830s and '40s on, as the working class arose as a force in society, and as the industrial bourgeoisie gained firm control of the state, displacing landed interests (most notably with the repeal of..
Bigmartinno1 2 years ago