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sir_toejam



Posts: 846
Joined: April 2005

(Permalink) Posted: Jan. 06 2006,18:30   

ok, now i see this:

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Since you ask, absolutely not. Laissez faire systems as I understand them don't work - they tend to reward cheating and other mendacity and punish industry and honesty. Regulation is a practical necessity.



... and now I'm confused.  a true free market system IS a laissez faire system.

regulation is indeed a practical necessity.

uh, that was exactly what i was arguing for, and why i said a free-market educational system wouldn't work.  

could all this argument be over definition?

please tell me it ain't so.

  
sir_toejam



Posts: 846
Joined: April 2005

(Permalink) Posted: Jan. 06 2006,18:53   

stil there Flint?

or are you busy trying to invade yet other threads with this?

you can still end this any time.

remember, it wasn't me who got mad that folks disagreed with me, I disagreed with YOU, albeit vehemently.

so who is acting like the creationist?

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 06 2006,19:56   

Sir Toejam:

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and now I'm confused.  a true free market system IS a laissez faire system.

You have proposed a definition here. I would argue that an unregulated market would very quickly become an oligarchy. Free markets require continuous competition. Competition is unnatural and must be enforced. This calls for rather extensive regulation, since it's in the vested interest of the primary economic actors to circumvent such regulation and suppress competition. The result, in evolutionary terms is called an "arms race". It never ends. The primary actors keep finding ways to circumvent competition, the regulators keep stuffing a cork in it.

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what's hard to miss, is my shock that you would actually propose the value of a true free market economy in the face of the utter failure of laisez faire economics throughout history.

What baffles me is that what I've written could be interpreted as support for such a system. It's not a workable system. Rules are the rule! Anything resembling a free market requires continuous focused regulation. But regardless of the regulation (i.e. no matter how pervasive, how biased or directed, how micromanaged) people will STILL act in their perceived self-interest.

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the same is true of pure democracies, or pure communism.  they fail because of the nature of humans, not because in principle the theories or models are flawed, but because they can't take into account the variability and vagaries of human behavior.

I don't know if this is very defensible, because of both the variation in such systems, and the malleability of human nature. I'm willing to agree that there ARE limits and boundaries to human nature, and that systems pushing the envelope are dubious. Consider: marriages are pretty close to pure communism, but they work. Small towns, deciding things by voice vote at town meetings, are pretty close to pure democracy, but they work. Why? I have my theories, of course, but this question is important. I suggest (as a proposal, not a doctrine) that people as a species evolved in groups large enough to constitute communities (people are gregarious), but small enough so that everyone in the group knew everyone else. In such an environment, morality was important; social status was critical. Social, political, and economic systems were workable in 200-member groups that are NOT workable in 200-million person nations.

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greed is NOT good.  this is a myth.

And THIS is a Doctrine! Greed isn't necessarily bad; context matters. Personally, I think greed is a given. Any practicable market regulation must assume greed. But it can easily be argued that unregulated greed ultimately results in a net loss for the community.

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just like a true democracy, a true free market economy would NOT result in a better standard of living, or a better set of products, than a regulated economy would.

We're back to battling opinions here. I think "pure" democracy would self-destruct very quickly. I think a "pure" free market would do the same. The "invisible hand" presumes unrestricted competition. When competition doesn't happen, economic benefits become polarized.

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Funny, but I've heard your exact same arguments before; economists and politicians using them were often termed "Social Darwinists".

Not quite so funny, your ignorance of the subject has resulted in a serious misunderstanding. Ignorance has that effect. "Social Darwinsim" has historically made the bogus claim (by the "haves") that there is a biological justification for the economic and social status quo. Of course, there is no such justification. Economic circumstances have no biological component.

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Oh, and if you want to ever discuss anything with me ever again, or avoid having me hound YOU on every thread, I highly suggest you stop taking this debate to other threads.

Where direct parallels exist, I will point them out. I hope I've made my point: you've been rather reflexive in dismissing those not knowledgeable in your field, and equally reflexive in dismissing those MORE knowledgeable in THEIR fields. This doesn't reflect well on you.

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How could you possibly understand the value of a classic education if you never had one?

What do you consider a "classic education"? I'm quite curious. I'd certainly be willing to compete with you in terms of total degrees, total number of degress in different disciplines, total number of areas studied, total number or credit hours, and so forth. I was a "professional student" for *decades*. But perhaps you're equating a "classic educuation" with what YOU studied?

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calling me a creationist is really a form of projection, there Flint.

I pointed out that the technique you are using is a quintessential creationist technique. Of course I expect your response to be a combination of denial and accusation. That's ANOTHER creatinist technique. What would be dazzlingly NON-creationist would be to say "Maybe you know more about what YOU studied than I do, since I didn't study it." Of course, creationists dismiss knowledge as irrelevant...

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show me any time in history where a true laisez faire economy ever produced a stable and viable result.

A true laissez faire economy would be extremely unstable, if it were ever attempted. To my knowedge, it never has been. What's amusing to me is that I'm considered a far-left winger on the Ayn Rand-inspired forums, for my insistence that regulation is an absolute necessity. Depressingly, I've never found anyone sophisticated enough to discuss what sorts of regulation are appropriate, what regulatory limits might be imposed, what enonomic consequences might derive from various types of regulation, and so on. Nonetheless, I'm convinced that the KIND of regulation matters. We might wish to discuss this, once the necessities are dispensed with. Meanwhile, real-life politicaians have little choice but to deal with these questions, and do so daily.

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show me any economic periodical that espouses the virtues of a free-market educational system over a public one, and provides data to support such an argument.

This is a confusing request. I'm not trying to equivocate here, I'm trying to say something. Early in American history, in the days where the frontier was real, education was totally unregulated. Of course, the quality varied with the capabilities of the instructor(s). Whether or not the students of those schools were "better educated" than the students who went through the Eastern Establishment schools is impossible to quantify. Then as now, I would expect the best of either system to far exceed the worst of either system.

But moving up to the present, you still find this a problematical issue. In inner cities, where public schools are battleground day care centers, education is a happy accident. You can easily find home-schooled and private-schooled students who have won national science awards, won national science-fair trophies, won national (you name it - chess competitions, spelling bees, etc.). With even LESS effort, you can find home-schooled students who can't find their ass with both hands. Indeed, the argument against free-market educational systems is that the variation in their success is unacceptably wide. Which is why I supported such systems, but with regulation. I proposed that they be like the college system, where accreditation matters. My unabashed goal is to allow each child to maximize his/her potential. My observation is the public schools for the most part (with exceptions at both extremes) hew to the mundane median; private schools occupy the extremes. I quite sincerely don't know how to inspire both public and private (and home) schools to do a uniformly outstanding job.

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You may have studied some economics texts, but your knowledge of history appears astoundingly bad.

Accusations like this are hard to credit without any concrete illustrations. All I can say is, I studied both political and economic history extensively, MANY credit hours. I like to think I learned something in those courses. If my knowledge is "astoundingly bad" in comparison to yours, how much political and economic history have YOU studied? If I said that your knowledge of biology were "astoundingly bad" (never having studied it myself), would you feel personally remiss? Or would you dismiss my ignorant conclusions for what they'd be?

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I can only conclude that this is the result of that "lack of classical education" that you espouse as a virtue.

And I espoused this where?

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stil there Flint? or are you busy trying to invade yet other threads with this?

No, I'm still taking you seriously and trying to answer you rationally.

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remember, it wasn't me who got mad that folks disagreed with me

Yes it was, and yes I remember. I haven't become angry at anyone yet. I'm still trying to communicate, rather than taking my ball and going home.

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so who is acting like the creationist?

so far, YOU have been. In spades. But as I say, I haven't given up.

  
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 07 2006,18:57   

Flint,

So how about we tackle the economics of healthcare?

We've got two good examples close to home: Canada (a very nearly communist approach to medicine) and the US (a very capitalist approach to medicine).

Both approaches appear fairly broken.

In Canada it can take MONTHS to get diagnostic tests and treatment for cancer patients no matter how much money you might have.  I might add that this is months that those patients cannot afford to lose.

In the US it can take excessive amounts of money to get necessary treatments.  But if you have the cash you can get in to the a Dr. on the day you make the appointment.

Interestingly, there was an evening news program (can't remember which it was) that discussed this issue recently.  Their conclusion about the US problems were that
1) Newer (and more effective) treatments are more costly than old ones
2) When it comes to people's health nearly everyone is unwilling to skimp on getting the best healthcare.
3) As insurance prices go up, those unlikely to need insurance drop their coverage.  Meaning only those with needs (healthcare costs) are left, making the cost for insurance higher, which entices other healthy members to drop out.
4) The US is the only industrialize western country without nationalized healthcare.  This means our businesses incur costs that competing foreign companies do not have to pay (directly).  They estimated that GM paid more in healthcare costs last year than they did for the steel used in their products.
5) In general insurance and healthcare companies are NOT getting wealthy off of the steep rise in health care costs.
6) The major component of the steep rise in costs was expensive treatments like those for cancer (see issue #1).

I think all of this boils down to (as Flint would say) supply and demand.

In both cases, the behavior of the govenments has essentially artificially reduced the "costs" associated with getting healthcare.  In Canada's case, this is obvious: everyone pays into the system via taxes but incur no additional charge at the time of service.  This strongly stimulates demand for those services because there's no additional cost of getting them.

In the US's case, this is partially due to the US law requiring healthcare workers to provide services regardless of the patients ability to pay.  I think it is also partially due to how the healthcare insurance works.  It does not provide enough feedback back to the insurance holders.

So what this boils down to is rationing healthcare.  What standards do we use (money)?  Who will be left out in the cold (the poor)?  Or do we switch to Canada's standard in which those that need prompt treatment are left in the cold?

  
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 07 2006,19:01   

Oops, I didn't put in the additional text that in the US healthcare workers are required to provide services in life threatening situations regardless of the patients ability to pay.

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,03:40   

JimB:

Sorry for the long delay. My video controller took a dump. I'll cheat and use my work computer here...

I think you're right about supply and demand. These forces become especially problematical (and painful) when it comes to health care.

Personally, I'd start by noting the sheer cost of health care, not in dollars so much as in the requirements of providing it effectively. Perhaps the important factors are:
1) Good physicians require enormous amounts of education, experience, and other training. And it may well be the case that only a small minority of people are capable of becoming highly qualified despite any amount of training.
2) Serious health problems are a lock. Everyone dies. Studies show that at least half the average person's medical costs occur in the last few months of their life.
3) For better or worse, the public is unforgiving about any perceived errors made by any health care providers. Malpractice awards are stratospheric.
4) State of the art medical care (drugs, equipment, etc.) calls for materials that are prohibitively costly to produce, but for which the demand is generally too low for truly high-volume production.
5) The state of the art is in rapid flux; yesterday's drugs and machinery are obsolete today. And maybe didn't work very well anyway. And maybe today's aren't that effective either.
6) But the same demand for perfection and penalties for malfunctions increases the cost of producing these things by orders of magnitude. Legal dispensation requires climbing an Everest of red tape, which requires lots of expensive people working for years.

Now, add all these things together, and it quickly becomes apparent that the social cost of providing state of the art medical treatment to everyone who needs it, is going to bankrupt even the richest State. Half the citizens would be health care providers, caring for the other half, paid for in goods and services nobody would be left to produce.

(There's an interesting parallel with law enforcement. If we wish public safety at the same level we want national healthcare levels, half of the population would be cops watching the other half, and half our buildings would be prisons.)

In other words, there is going to be a point of diminishing returns, some point where a nation is providing all the medical care it can afford to provide *as an economy.* And inevitably, that point is going to be reached WELL before there's enough care to go around. The questions the become:
a) Are we as a nation providing as much *total* care as we can - i.e. is the market properly balancing healthcare demands with all other demands?
b) How is the available care being distributed? In other words, what distortions is the State introducing to the market for moral and/or political purposes?

In different ways, the US and Canada both subsidize health care. The economic result is that there is MORE of it than a hypothetical free market would provide. Since there STILL isn't anywhere near enough to go around, the US and Canada have made different allocation decisions. The US has elected a system that provides care on a timely basis. Since there plain isn't enough to provide to *everyone* on this basis, the US sorts the recipients by ability to pay. The poor (except for low-quality emergency care) lose out.

Canada has chosen to provide care on a "treat everyone equally" basis. The shortage of care under the Canadian system means that *everyone* waits a long time. In serious cases, the delay proves fatal. In other words, Canada sorts the recipients by *severity of problem*, an effective triage approach where those with the worst problems, rather than the poor, lose out.

But the point is, *someone* must lose out. Competent health care is always going to be scarce and expensive; that's the nature of the beast. No matter HOW we decide to distribute it, some receive (adequate) care and most do not.

So at this point, I'd like to ask how an "unbroken" system is going to distribute a resource that everyone needs, but only a few can receive enough of. In your ideal world, who gets it and who doesn't?

  
Dean Morrison



Posts: 216
Joined: Dec. 2005

(Permalink) Posted: Jan. 09 2006,04:08   

Flint.. seems like you have made a very good case for spending taxpayers money on preventative medicine: as the cost-benefit ratio is so favourable - and not leaving it to the 'free' market as you originally advocated.
Winners all round and lots of floating boats.

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,04:19   

Dean,

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Flint.. seems like you have made a very good case for spending taxpayers money on preventative medicine: as the cost-benefit ratio is so favourable - and not leaving it to the 'free' market as you originally advocated.


Bear with me, but I have several problems with this statement, and I'd like to address them one at a time.

1) I did not advocate leaving anything to the 'free' market - I have been very very careful NOT to advocate any such thing on this thread. I have tried to point out that the market is in the business of making allocation decisions, and that different market distortions (economic policies) influence these allocations. I haven't recommended any particular allocation.

2) I did not make a case for spending taxpayer money on medical care. Making such a case would *necessarily* require that I specificy and justify what I would want LESS of, in order to get MORE medical care. Remember, recommending goodies for everyone is what politicians do. Economists must recognize that there are only so many goodies available, not nearly enough to go around, and that if we increase medical goodies, we must *decrease* something else. Politicians never say what we should have LESS of.

But a cost/benefit ratio cannot even be approximated without consideration of the costs. You may have interpreted (though I didn't say explicitly) that allocating more resources toward health care is a benefit. In fact, I think it could be regarded as a benefit, but no benefit comes without a cost.

And therefore, the ONLY reason you see "winners all around" is because you've carefully ignored the losers. But there HAVE to be losers. Money taken away from you by government to pay for someone else's health care, is money YOU don't have to spend on what YOU want. You might not consider this a loss, but most people will. You might consider it a loss worth taking, but it's still a loss.

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,04:58   

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You might consider it a loss worth taking, but it's still a loss.


No, it's an investment, just like a lottery ticket.

Seriously, I have been grumbling about paying high French social security since moving to France four years ago. but since I was diagnosed with cancer 4months ago, operated on within 6 weeks, and receiving all (I hope and believe) necessary aftercare, with the further assurance that my illness is 100% covered for life (as all long-term illnesses such as diabetes, etc.,) I am relieved and grateful to be in a "socialist" system. where healthcare is available quickly and efficiently to those that need it.

  
BWE



Posts: 1902
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,06:08   

Ok, I'm back  :)

Oh good, we've gotten into health care. First, one quick regression back to walmart:
Flint, I am trying to educate myself on this issue. Please correct me where I am wrong, -You are saying that there are trade offs with walmart's model and that the consumers who pay a lower price are recieving one end of that tradeoff and the communities that subsidize walmart through healthcare food stamps rent subsidies and the like (not to mention the employees themselves) are on the other end of that tradeoff. Is this an accurate analysis?

Then you are saying that the benefit/cost balances and it is up to us to change policy if we so choose, right?

In the course of determining the health of some local fisheries, we take small scoops off the ocean floor at different depths. Above 40 fathoms near harbors we are seeing vast ecosystems being over run by non-native species who are following the rules. I wouldn't want to haphzard a moral stance on this phenomena. It does have the capacity to effect our fisheries in a negative way but perhaps that is unimportant since we are doing a very nice job of destroying them without these invaders' help.  Hmmm. I'm not sure how that relates but I somehow feel like it does.

My point would be in the walmart example that the cost is born unequally by the community over the benefits of the lower prices. In fact, I would go on to say that, despite the fact that it is all, er, mostly, perfectly legal and in step with the rules, the simple act of conducting business by walmart is detrimental to many communities and therefore the tradeoff is not equal. If you follow that line of reasoning, then you would say that the rules should be changed? No? So, How much education do I need to arrive at that conclusion?
Now, how much education do I need to arrive at the opposite conclusion? The conclusion that despite using chinese manufacturing to avoid environmental regulations (ANd I am avoiding the issue of cheap labor, let's assume that markets seek out cheap labor and this this is a neutral issue) , despite shifting the costs of paying their employees onto the local communities, despite the loss of local business that does contribute to the communities' wellbeing by providing a living wage and healthcare, that walmart is playing by the rules, is succeeding, and is making stockholders money so it is in fact a good thing?

If education is the element that changes these factors then our education system is in the business of creating values and moral opinions I think. That, by the way, is an aside and not a discussion point.

--------------
Who said that ev'ry wish would be heard and answered
When wished on the morning star
Somebody thought of that, and someone believed it
Look what it's done so far

The Daily Wingnut

   
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,06:27   

BWE,

Re: You don't like how Walmart affects local communities and you therefore wish to change the rules...

I think that Flint would agree with you that if you don't like Walmart and wish to curtail it's expansion, you should change the rules.

Clearly the communities into which Walmart expands have the capacity to understand what affects it'll have.  And yet, they ask Walmart to come in.

The citizens of those communities complain about the decline in the local businesses, the low wages that Walmart pays, but still go to Walmart to shop.

My small community has a Walmart.  Although I do not refuse to shop there, I generally take my business elsewhere (for multiple reasons).  Interestingly as I drive by the Walmart, it's parking lot is almost always full.  Clearly the citizens of my community do not share my opinion.

  
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,06:41   

Alan,

I don't consider either health care insurance or lottery tickets and "investment".

I picked healthcare as an interesting economic issue because it is exceedingly difficult to divorce our emotions from logic for this type of problem.

It's all well and good to define coverage, costs, rationing, etc. for something like healthcare; but as soon as it's MY (or heaven forbid my CHILDREN's) health, my emotions will kick in and I'll want the best of everything!  Furthermore it's easy to say in those situations that it's not *fair* for me to have to bear the entire cost.

The show that I saw on healthcare indicated that the majority of the cost increases were caused by the cost of treatment for certain difficult problems (e.g. cancer).  If it wasn't for the new and exceedingly expensive (albeit effective) treatments for these diseases, then the increases would have been much lower.

Here in the US, I've noticed that the healthcare insurance, now has a lifetime benefits cap.  I don't recall seeing these 10 years ago (of course I might not have been paying attention).  I think these caps are designed to limit the insurers total liability in cases of cancer or other high costs health issues.

Regarding preventative care.  I'm certain some of it provides a net cost reduction.  The question is how much?  I would add though that the preventative care is typically not prohibitively expensive.  Most middle income families can afford it without too much problem.

Interestingly, I know couples that refuse to get their children vaccinated.  They don't want their kids to suffer from the potential side effects of vaccinations.  They also assume that since every other parent is getting their kids vaccinated that theirs will be OK.  The problem is that this has become a trend with greater and greater percentages not vaccinating their kids.  Once a critical threshold of non-vaccinated kids is reached, the population will be ripe for an "epidemic" of disease for which there is a viable vaccine (measels, mumps, rubella, etc.).  I'm sure these couples will be the first to complain when their kids suffer long term problems or death from their own short sightedness.

  
Dean Morrison



Posts: 216
Joined: Dec. 2005

(Permalink) Posted: Jan. 09 2006,07:35   

Flint: you may not have noticed the use of the word 'preventative' - the word that was carefully used when the issuse of healthcare was originally brought up.

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2) I did not make a case for spending taxpayer money on medical care. Making such a case would *necessarily* require that I specificy and justify what I would want LESS of, in order to get MORE medical care. Remember, recommending goodies for everyone is what politicians do. Economists must recognize that there are only so many goodies available, not nearly enough to go around, and that if we increase medical goodies, we must *decrease* something else. Politicians never say what we should have LESS of.


Palliative medicine is, as we all agree, very expensive. Expenditure by society now on inexpensive preventative medicine is a worthwhile expenditure as it reduces future costs. The market is one way of allocating resources; but not the only one; and as it is no more able to excercise foresight than 'Natural Selection' - it is not neccesarily the most efficient one (Note that this is the use of the word 'efficient' in the sense that economists apply it to markets, and to which I alluded earlier).

Preventative medicine applied to communicable diseases should make the point even clearer to you. Market economics would never have been able to eradicate Smallpox. We are all benefitting economically (and medically) for not having this disease lingering on in the poor of the world. 'Goodies for everyone' as you say.

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,08:02   

BWE:

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You are saying that there are trade offs with walmart's model and that the consumers who pay a lower price are recieving one end of that tradeoff and the communities that subsidize walmart through healthcare food stamps rent subsidies and the like (not to mention the employees themselves) are on the other end of that tradeoff. Is this an accurate analysis?

Close enough.

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Then you are saying that the benefit/cost balances and it is up to us to change policy if we so choose, right?

Yes.

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My point would be in the walmart example that the cost is born unequally by the community over the benefits of the lower prices.

Economic policies, as a rule, shift costs and benefits around. We discussed the progressive income tax a few pages back. The entire purpose of this strategy is to place the costs entirely on those who get no direct benefits, and benefit those who pay none of the costs. We do this because as a nation, we have made the political decision that government costs and benefits should be borne unequally.

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the simple act of conducting business by walmart is detrimental to many communities and therefore the tradeoff is not equal.

I'm not sure I understand this. Benefits match costs, but are not borne by the same populations. A member of a community might consider the "WalMart effect" to be either beneficial or detrimental, depending. I don't think you'll find unanimous agreement.

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If you follow that line of reasoning, then you would say that the rules should be changed? No? So, How much education do I need to arrive at that conclusion?

Which conclusion? I would argue that you need a good deal of education to determine HOW to change the rules, so that you don't suffer too many unexpected consequences. I don't think you need ANY education to determine WHETHER to change the rules. That's an emotional decision.

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that walmart is playing by the rules, is succeeding, and is making stockholders money so it is in fact a good thing?

Any time you speak about a "good thing", you need to qualify this by specifying whom it's good for, and in what way. It's an exceedingly rare case where anything anyone considers a good thing (for him), someone else considers a bad thing (for him). IF WalMart's goal were to pay huge dividends to its stockholders (but it's not), then WalMart's tactics would be a "good thing" for the stockholders, in their opinion. But instead, WalMart keeps their costs to a minimum to keep their prices to a minimum, and their profit margin is industry average. This is a Good Thing in the opinion of those who shop there, while they are shopping. But many of the same people who shop there to get low prices, simultaneously lament the effects WalMart has on the rest of the community, which they consider a Bad Thing. NOT bad enough to shop elsewhere, of course...

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,08:22   

Dean:

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Expenditure by society now on inexpensive preventative medicine is a worthwhile expenditure as it reduces future costs.

"Worthwhile" is a value judgment. I agree that an ounce of prevention is worth a pound of cure. If I'm selling prevention, this is my sales pitch. If I'm selling cure, I place my emphasis somewhat differently...

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The market is one way of allocating resources; but not the only one

This claim needs a bit more depth. I think you could argue that most policies are designed to modify supply and demand, so as to make the market serve new motivations. Some resources are indeed allocated outside any market mechanism.

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it is no more able to excercise foresight than 'Natural Selection'

"The market" in this sense shouldn't be anthropomorphized. The market is an emergent result of zillions of discrete individuals making autonomous economic transations. To a very real extent, people make these transactions in anticipation of future trends and/or events. It would be quite accurate to say that "the market" is exercising foresight to the degree that the individual actors are doing so.

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it is not neccesarily the most efficient one (Note that this is the use of the word 'efficient' in the sense that economists apply it to markets, and to which I alluded earlier).

That sense of efficiency had to do with how much information the market had about its transations, how transparently that information was available to all participants. And in this sense, the market is as efficient as available information (both quantity and quality) permit. Inefficiencies are introduced through secrecy, misinformation, and the sheer perverse refusal of the future to make itself known until it's too late to take advantage of it.

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Preventative medicine applied to communicable diseases should make the point even clearer to you. Market economics would never have been able to eradicate Smallpox.

I don't know. I can tell you that my community offers vaccinations - through my doctor, my employer, or whatever. For a fee, I can purchase preventive medicine. Legally coercing people to be vaccinated isn't a market mechanism, though, I agree...

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We are all benefitting economically (and medically) for not having this disease lingering on in the poor of the world. 'Goodies for everyone' as you say.

Yep, there are bargains out there to be had. We might regard disease, like pollution, as an economic externality. Communities band together to cooperate for the common good, which in practice means forcing someone to do or refrain from doing something in the interests of everyone else, whether they want to or not. We experience a constant community debate as to whether any action's benefits exceed the costs by enough to justify imposing the costs on (some) members of the community, who rarely wish to pay it.

  
Dean Morrison



Posts: 216
Joined: Dec. 2005

(Permalink) Posted: Jan. 09 2006,09:00   

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Expenditure by society now on inexpensive preventative medicine is a worthwhile expenditure as it reduces future costs.


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Flint replied: "Worthwhile" is a value judgment. I agree that an ounce of prevention is worth a pound of cure. If I'm selling prevention, this is my sales pitch. If I'm selling cure, I place my emphasis somewhat differently...


by society Flint - not individuals in a market. The market is blind to these universal benefits. A society might make the value judgement that such a treatment is worthwhile. If you want to sell a new preventative medical treatment to society - then it needs to have the funds to pay you. through taxation.

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it is no more able to excercise foresight than 'Natural Selection'


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Flint replied: "The market" in this sense shouldn't be anthropomorphized. The market is an emergent result of zillions of discrete individuals making autonomous economic transations. To a very real extent, people make these transactions in anticipation of future trends and/or events. It would be quite accurate to say that "the market" is exercising foresight to the degree that the individual actors are doing so.


'anthropomorhized'? - where is the human hand in 'Natural Selection' Flint? If anything you could accuse me of anthromorphizing 'Natural Selection' by making an analogy with ' the market'.
To the degree that the motivations and foresight of individual actors in a market might not allocate resources in an optimal way; even for an individual actor; then markets may be 'inefficient' (I'm not saying most are - just that this can happen). At which point it is legitimate for a government to step in and allocate some of societies resources to an issue for the common good.


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Preventative medicine applied to communicable diseases should make the point even clearer to you. Market economics would never have been able to eradicate Smallpox.


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Flint replied: I don't know. I can tell you that my community offers vaccinations - through my doctor, my employer, or whatever. For a fee, I can purchase preventive medicine. Legally coercing people to be vaccinated isn't a market mechanism, though, I agree...


There is a concept in epidemiology of 'herd immunity' - think of it as being worth your while to immunise someone else so they don't infect you. We can't rely on noble-spirited people to do this because others will be 'market-driven' to cheat, and not contribute (or bother to get themselves immunised if herd immunity starts to take effect).
To ensure no-one cheats we institute universal taxation for public goods.

Yes we do indulge in community debate on the nature of the community goods we should pay for, and the who should pay how much from them.

A 'Laissez-faire' or 'free market' position is one that says we should minimise spending on community goods and services, and minimize the contribution of the wealthy.

It is not an inevitible conclusion drawn from the study of economics; it is a particular (and 'value-laden' ) viewpoint.

Which is why I objected to you introducing it into  Tara's thread about the intelligence of her friends and their acceptance of evolution.

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,09:38   

Dean,

I think we're mostly communicating, but in some cases just missing. Probably my fault...

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If you want to sell a new preventative medical treatment to society - then it needs to have the funds to pay you. through taxation.

Why necessarily through taxation? If I invented a preventive treatment that was guaranteed effective, and I sold it for an affordable price, would you buy it?

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To the degree that the motivations and foresight of individual actors in a market might not allocate resources in an optimal way; even for an individual actor; then markets may be 'inefficient' (I'm not saying most are - just that this can happen). At which point it is legitimate for a government to step in and allocate some of societies resources to an issue for the common good.

Not everyone would agree with you here. Yes, lack of information and various structural rigidities make the market less efficient. But government action introduces LOTS of inefficiency no matter WHAT it does. So efficiency really isn't the issue at all here. What's at issue is (a) whether something is beneficial enough for the "common good" to justify coercion by the State; and (b) how we determine where that point lies. But this is the content of politics and political science since before recorded history. Just what is the "optimal" way for a community to make decisions that affect that community, so that we approximate some "ideal" midpoint between the community inferfering too much with the life of the individual, and the individual interfering too much with the well-being of the community.

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There is a concept in epidemiology of 'herd immunity' - think of it as being worth your while to immunise someone else so they don't infect you.

I'm well aware of it. It's a good argument for involuntary vaccination.

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A 'Laissez-faire' or 'free market' position is one that says we should minimise spending on community goods and services, and minimize the contribution of the wealthy.

Really? Do you have a link? My notion of "laissez faire" is that the market should not be regulated. "Laissez faire" means "let do", and implies that anything goes. It does NOT necessarily imply that there is no government or no taxation, nor does it specify anything in particular about the poor or the wealthy. It just says that the government won't act as the mediator in contract enforcement.

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It is not an inevitible conclusion drawn from the study of economics; it is a particular (and 'value-laden';) viewpoint.

Absolutely. I am most emphatically NOT a proponent of "laissez faire" economics. However, I'd like to point out that truly elementary microeconomic analysis presumes such a system, much as elementary physics presumes no friction or boundary effects. These are simplifying assumptions to clarify certain principles; they aren't reality.

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Which is why I objected to you introducing it into  Tara's thread about the intelligence of her friends and their acceptance of evolution.

I don't understand this accusation. What I objected to was an economic analysis that carefully assumed away and ignored ALL of the benefits, to misrepresent a situation as a "pure" cost. This kind of "analysis" is either profoundly dishonest, or profoundly ignorant. So I tried to point out that for every benefit there are costs (to someone), and for every cost, there are beneficiaries. Economics consists of identifying both the costs and benefits, and the economic actors experiencing them.

In the process, I seem to have encountered some poorly-thought-out but nonetheless (and perhaps *therefore*) intensely-held political positions. To the point where even *mentioning* that there are benefits purchased with costs, sets some people off like fireworks. Someone on this thread actually said (and quite evidently believes) that anyone who shops at WalMart does so out of pure abject ignorance and for no other reason!

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,10:00   

JimB, I'm English, I was being ironic :)

Mind you, life is a lottery, and whether to "invest" in healthcare is also a lottery for an individual or a community. Being part of a caring community is less of a lottery than going it alone, i suggest.

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,10:12   

Flint asks

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If I invented a preventive treatment that was guaranteed effective, and I sold it for an affordable price, would you buy it?


If you knew that alcohol and tobacco shortened many people's lives would you ban them, knowing the loss of income from reduced taxation, which might otherwise contribute to additional healthcare.

BTW, I agree with Dean,  preventative healthcare, especially dietary advice and education within the public school system, could have huge benefits to the US economy.

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,10:27   

Alan Fox:

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If you knew that alcohol and tobacco shortened many people's lives would you ban them, knowing the loss of income from reduced taxation, which might otherwise contribute to additional healthcare.

Well, as I recall, the US tried to ban alcohol. The effects of that effort were regarded as profoundly negative on society, MUCH worse than the alcohol ever was, and indeed a good argument can be constructed that those effects are still with us. Prohibition lasted 12 years, easily long enough for crime to get organized and STAY organized.

However, you are correct that while we wouldn't eliminate smoking or drinking, we WOULD eliminate the excise taxes imposed on these activities. The savings that consumers enjoyed in lowered taxes, by experience, were more than offset by lowered product quality. Of course, it's an ill wind that blows nobody good: organized crime made a fortune. This was the single most profound economic effect of prohibition - and also an effect *completely unanticipated* by those who thought they were doing everyone a favor.

After all, the demand never diminished. The attempt was made to cut off the supply. This invariably causes prices (and profit margins) to skyrocket. When profits are astronomical and not obtainable legally, then they are obtained illegally. Always. Our current "war on drugs" makes drug dealers so wealthy they don't know how or where to store all the money. These dealers also contribute heavily to anti-drug politicians; they know the score even if do-gooders don't get it.

If you're asking for my personal values, I would require that everything known about the health effects of smoking and drinking be prominently displayed so anyone curious about them couldn't possibly miss them. Then I'd let people make whatever informed decision they saw fit.

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I agree with Dean,  preventative healthcare, especially dietary advice and education within the public school system, could have huge benefits to the US economy.

In general, what you're talking about is information. I think most people will take preventive steps if they're aware of them, and if those steps aren't too inconvenient. And I also agree that preventive health care however achieved would increase per capita productivity significantly.

But once again, the question isn't whether such care would increase productivity, reduce sick time, etc. The question is whether others *ought* to have the authority to impose "wise" health choices on you. And that is not an economic issue at all. That goes back to the philosophical tradeoff between obligation and liberty. We all owe the community something for the value the community provides. But HOW MUCH do we owe, and how do we DECIDE how much we owe?

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,10:49   

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Then I'd let people make whatever informed decision they saw fit.


Then why not cocaine, or heroin. (BTW if anyone gets offered morphine as a painkiller after, say, an operation, my advice is say "yes please"). Tax income, no policing of drug crime, pure product with controllable doses and no cutting with lethal stuff such as scouring powder. Prohibition was a disaster, control and taxation works with alcohol and tobacco; why not?

  
BWE



Posts: 1902
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,10:53   

Tragedy of the commons. Of course people shop there. You know, Game theory study, can't find it but I'll post it when I do: American kids almost always tended toward defection while European kids chose cooperation more of the time. I know this is opening my flank but my point is simply that economics is of course amoral but a moral choice, one that would choose cooperation in the prisoners' dilemma (note how I define moral choice) would choose to change the rules somehow, anyhow, to force walmart to change business practices even at the cost of raising prices. Their model is defection. We'll take it where we can even though we both could lose in the long run. (It's also kind of an imperial policy - the economy is based on sucking the smaller communities then moving on when they are no longer sources of wealth)

--------------
Who said that ev'ry wish would be heard and answered
When wished on the morning star
Somebody thought of that, and someone believed it
Look what it's done so far

The Daily Wingnut

   
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,10:59   

Perhaps it all boils down to whether we choose theft or toil?
Indeed, if we can choose as individuals.

  
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,11:13   

My personal perception of theft, is that it is the economic equivalent of biological parasitism.  The host is perfectly capable of surviving without parasites/theft.  Furthermore, it damages the host and only benefits the parasite/criminal.  If the host is too overburdened by parasitism/theft, then it dies/collapses - taking the parasites with it.

The toil economy works more like a biological organism in which cells/individuals cooperate for mutual benefit.

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,11:32   

I think you may be a closet socialist, JimB. :D

  
Flint



Posts: 478
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,11:41   

Alan Fox:

Quote
Then why not cocaine, or heroin. (BTW if anyone gets offered morphine as a painkiller after, say, an operation, my advice is say "yes please"). Tax income, no policing of drug crime, pure product with controllable doses...

In other words, legal with reasonable regulation (to regulate perhaps age of purchase, quality of ingredients, etc.) Yeah, you'd get my vote.

JimB:

Quote
My personal perception of theft, is that it is the economic equivalent of biological parasitism.  The host is perfectly capable of surviving without parasites/theft.  Furthermore, it damages the host and only benefits the parasite/criminal.  If the host is too overburdened by parasitism/theft, then it dies/collapses - taking the parasites with it.

Exactly so. This is called the "free rider" effect. Where everyone is honest, nobody needs a lock. A single, or a very few, thieves have it made. But as theft becomes more commonplace, people start taking steps to make it harder to do - make it more expensive. Same with WalMart and the local community - WalMart's health requires a healthy community, where customers come from. So WalMart can't afford to damage its host too much without damaging itself.

BWE:

Where everyone tries to get more than everyone else out of a community resource, the entire community loses. Many ecologists are convinced that by breeding like bacteria, we have already exceeded the steady-state carrying capacity of the planet. The known result of overbreeding your resource base is a population implosion. What people have been "smart" enough to do is exploit the entire planet, and switch to new resources as prior ones are depleted.

This strategy has two effects: it allows us to spend longer building up to a higher total population, and it guarantees a maximally vicious implosion when the time comes (because the resources we've spent took 10^8 years to accumulate, and will take that long to recover). We have treated the entire planet as "the commons" and we've been engaged for a couple of hundred years in desperate haste to consume all we can of it before anyone else gets there first.

Some days, I feel truly sorry for our grandchildren.

  
JimB



Posts: 16
Joined: Jan. 2006

(Permalink) Posted: Jan. 09 2006,11:43   

Alan,

When I was a teen I read about socialism.  At that time, I thought it sounded like a utopian society, "from each according to their ability, to each according to their need".

It sounded like how people *should* treat each other.

Then my father pointed out that in every case it's been tried in large scale societies, everyone quit working.  Why work when you could not work and still get what you need from others.  And some of these societies died out from it!

Now I still think it *sounds* utopian but extremely impractical.  Plus, I'm now enjoying the capitalistic fruits of my own "from each according to his ability" (education et al).  I'm now firmly ensconced in my capitalist home :) !

  
Alan Fox



Posts: 1556
Joined: Aug. 2005

(Permalink) Posted: Jan. 09 2006,12:05   

Quote
I'm now firmly ensconced in my capitalist home :) !


Me, too!

  
Dean Morrison



Posts: 216
Joined: Dec. 2005

(Permalink) Posted: Jan. 09 2006,12:21   

I' glad we're bringing a few biological analogies into the debate on economics. I think there is some room for 'crossover thinking' although there is also the possibility of overstretching.
As for capitalism/socialism - it really is a continuum. I'm sure that there are libertarians in the states who consider George Bush to be a closet socialist. (After all he's spending a lot of the taxpayer's money - even if it is on war).

It's just that some of us would like a leveler playing field than others...

I'm in my capitalist home but my (mutual) building society own half of it.

;)

  
haceaton



Posts: 14
Joined: Dec. 2005

(Permalink) Posted: Jan. 10 2006,13:59   

Flint:
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From what I have read about WalMart (quite a bit), you are simply wrong. WalMart makes lots of money. What do they DO with that money? Do they pay their upper management exorbitant salaries? No. Do they pay out high dividends to their stockholders? No. Do they pay decent wages or bonuses to their rank and file? No. So where DOES the money go? By observation, WalMart converts their cost savings (however achieved) into lower prices. By comparative industrial standards, they aren't doing this to get personally rich. Their profit margins aren't exceptional. So you have fallen one step short here.


Really, are you that naive? It doesn't take a genius to realize that *margin* is not profit. Margin times volume = profit. Walmart, like all good profit making enterprises seeks to maximize total profit. They do this by trying to find the peak in the total profit curve. Evidently, they believe this peak lies at lower prices than they have yet been able to achieve. Bully for them, they may well be right. I think many other capitalist (e.g. record companies) drive their prices way too high just for the huge margins and make themselves poorer in the process.

Bill Gates once had a wet dream where he would monopolize the market for banking and transaction clearing software so he could make virtually all commerce clear through servers that he would control. I'm sure he intended to charge very low per-transaction clearing fees, while netting a few trillion profit anually. This is no joke, he really believed it. He underestimated his monopoly power and essentially got nowhere with this plan. But at least he wasn't stupid like you and thought the way to achieve massive wealth was by maximizing his profit margin. This despite the fact that he has monopoly power within his market and does use outsized margins to his advantage in his main business.

Really Flint, for a guy that argues that the rest of us are economic dolts, you're looking pretty pathetic. Since you're interested in the subject of Walmart and have read, but misunderstood, what they were up to, let me give you a highly simplified tutorial:

(1) Maximize corporate income (volume x margin)
  (a) raise volume through lower prices
  (b) use whatever techniques necessary to keep the best margin possible while doing this. Strategies
       include: (i) economies of scale (ii) market power (iii) government subsidy (iv) theft (v) fraud
       (vi) conspiracy.
(2) Pay minimum taxes.
  (a) Use creative "accounting" to show minimal profits to the IRS, while a different creative "accounting"
        to show shareholders maximal profits.
  (b) Obtain wherever possible tax credits, deferments, etc.
(3) Never, ever pay a dividend. Dividends are taxed and it is challenging to give them only to the "right" shareholders.
(4) Do not pay employees decent wages or give any benefits you can avoid. These just raise costs.
(5) Do not pay management oversized salaries.
  (a) salaries are taxed as income, you don't keep as much this way.
  (b) Not all of management "deserve" to dip into the money stream. Only a special few may
        drink from the well.
(6) Walmart's expanding profits (NOT MARGIN; PROFITS) will result in rising market valuation - this is where the real money is made.
     (a) Favorable tax treatment for "capital gains"
     (b) Unlimited upside, only requires a greater fool to pay a higher price. Fools are born at an
          alarming rate, so this is a slam-dunk.
(7) Use stock options to inflate the float while directing the new shares to the special few. Ordinary shareholders
     will fall for this dilutional sucker-punch every time.
(8) Use the magic of every share of stock is worth what the last trade price (i.e. the excepted standard for stock
    valuation) to convince bankers that your newly minted stock is worth a bundle.
(9) Borrow as needed against this "equity".
(10) Get all offspring listed in Forbes World's Richest People.
(11) Lobby like #### to repeal the inheritance tax so the family can keep it all in perpetuity.
(12) Lather, Rinse Repeat.

This is why the Waltons are filthy rich and you are not. You have no idea how the game is played. Seriously, if you are wondering why the energy and chemical moguls are lobbying hard for trading pollution credits, then you really ought to ask yourself "What do they know that I don't know ?" Instead you think you're smarter than them. Nothing could be further from the truth.

  
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