Jack, in Comments on last week’s TT post: Turning politicians into corporate servants … by Dr Peter Willans
I think the point about the USA being highly regulated is debatable. If the Fed ‘regulates’ the banks and financial institutes, yet share jobs and people between these institutions, there is little evidence of true independence and a capacity to regulate. I think this was the irony that proves the point that many (including yourself Davies) are making. Regulation is not regulation by name only and certainly not when infected by cronyism. The financial system annexed the regulators and government who were totally ineffective and ultimately complicit. It is a good example of how crony capitalism will prevail because the system has been changed and manipulated to allow such self interest to seem normal.
‘Lunatics taking over the asylum’ was never a more appropriate expression. In fact, the bankers lobbied to remove the regulations restricting banks speculating with money from ordinary accounts that had been in place since the Great Depression. Its removal under Clinton caused the funny money (created by such banks) to be pumped into the real estate market that was the cause of the crisis you mention i.e. it was the consequences of deregulation.
Frédéric Bastiat suggested that plunder results from both greed as well as misdirected good intentions and I think (from memory) his greatest objection to socialism was the fact that people play god and tend to enforce association and fraternity by unions. However, I’d like to think that we have come far enough for most people to identify some social goods that people can agree on. Identifying legal plunder will always be relative to what you feel constitutes a good. Free market and financial crony types may decide that what they do is moral and glorified (as the quote suggests). However, my perspective is that vaccination programs, a new hip for an old citizen, health care for the poor, education, ecologically sustainable development etc are investments and not plunder. We can’t afford them because we value other things more highly that we never question.
Interestingly, if you dig a bit deeper into that book I think it is the ‘suffering’ caused by plunder that is presented as the issue. Please correct me if I am wrong.
I won’t argue about Sweden past my prior points, which I think we might have at least some tacit agreement on. I did not suggest Hong Kong was never going to succeed, only that it is not by a free market policy alone that its success can be attributed. It is the oddest of all cases and the land rent tax is absolutely a critical difference.
I’m not a champion of any school of economics because I think human nature undermines any system where an elite benefit from control. I really do wish I had more faith, but it would be silly to ignore reality. Many systems might work if only the focus was upon the interests of people and the planet rather than for the self interest of the elite making loot. I do not believe that any system without a clear objective, direction, principle and ethic can deliver the type of economic system capable of dealing with the global issues we face today. I do not believe that human nature has proved itself worthy of no regulation.
In theory, you are right about many of your points but isn’t this the dilemma? Any school of economics does not adequately factor human nature, debt or rent tax on the use of natural resources at all. It avoids confronting the dilemma of what we should value the most and least. In doing so it fails to address what values we must have in order to possess a compass.
Overall, such ‘school’s of thought risk something more fundamental when we champion them. For the present battle ground is for the cognitive map of what the problem is at a far more fundamental level. People have to decide what is right, sensible, caring and desirable. These ‘schools’ provide the illusion that there is only a choice between A or B, take it or leave it. They also suggest that complex ethical and environmental problems are addressed by mindless market mechanisms that are set and forget. Like magic they will remove the toughest of human stains, if only you believe.
The question of whether the environment should be legally plundered by those who pay no rent for its use and in doing so cause suffering and damage the opportunity of future generations, is not a choice of adopting the Austrian or any other school of economics. It is a moral decision that only people can determine if provided with the right information unaffected by crony bias and manipulation. The choice is to live in a community within an environment first in the manner people see as fit, and to produce an economy to provide for this.
It is a really good essay to look at if you would like to appreciate how the essential moral dynamic of politics, prudential regulation, law and the interest and self interests of the people have changed little in 163 years. In particular, rent seeking and the ability for some to legalise and legitimise plunder has stayed the same with the same motivation.
While the essay is is now used and claimed by various disciplines for different reasons (e.g. The Austrian School), what strikes me is this attempt to look for justice and a better system has largely ended in ruin due to the bitter reality of human nature. In a way, the book was prophetic and realistic about this. As the forward points out, Bastiat once looked to the American system as the ideal. He quite correctly concludes that Bastiat would have been mortified by the reality of the present day USA.
The rent seekers, plunderers and Robber Barons of today are those using and degrading natural resources, making profit from war, suffering (human and non human) and consuming the future. The irony is that it is mostly for nothing we would call truly productive, other than to expand an ever larger pool of funny money produced by the financial institutions that make spiralling costs, asset prices and debt possible. The ultimate stupidity is that the plunderers are now thought of to be ‘too big to fail’. But unless they do fail they will continue to take the earth down an unsustainable path.
The con job is that many (most?) people think that this is the way it really has to be and there are no alternatives. To many, Dracula has drunk too much of our blood now to be killed by a stake through his heart. Feed him more blood lest he die!
Here is the PDF: