Without logic, there can be no interpretation of any observed outcome. And as you have demonstrated on numerous occasions, you fail at logic.
I suppose you have never heard of investors before, huh?
I suggest you read this thread here and the accompanying articles.
I stopped caring to read the rest of your bs.
As with higher education, increased spending mainly covers tuition costs rather than increased inputs. Baumol’s cost disease again.
I see that you don’t read sources that are provided for you. Amusing.
I suppose the massive subsidizing of college has nothing to do with the rising costs? What about supply and demand? Hm? Oh, no, it’s just the idea that because other industries cost more, therefore college must now cost more. Holy fucking hell, what a non sequitur.
Yeah, it’s quite the non sequitur. How is it that fewer farmers can sustain more people? The reason manufacturing is slowing is because government is harming the calculation in the economy. Manufacturing is not slowing because there are more teachers. If this were a consistent theory, we’d all be starving from a lack of food.
Actually, both manufacturing and agriculture have shrunk a lot over time relative to GDP while increasing in absolute size.
Anyway, even Cato skirts around the fact that there is no support for the thesis that student aid raises tuition costs.
So what?
And I’m sure the housing crisis had nothing to do with subsidizing the loan industry.
I don’t like the FM’s either.
You might find these articles interesting:
http://www.zerohedge.com/news/did-jpmorgan-pop-student-loan-bubble
It’s quite simple and I don’t care what CATO has to say on the matter. Subsidize demand and prices increase.
I think the others have tried but I’ll give it another shot:
In every instance of ‘economic’ reality/currentness, certain projects have been undertaken at the expense of projects never undertaken. If I built 1 Mansion, that’s 3 small houses I could have but didn’t make. If I made 6 rocking horses, that’s 1 wagon I could have but didn’t make. The observed outcome is not what matters because it is just one option out of many.
This is the problem with these public works. The market system is guided by the votes of consumers to allocate resources towards those ends which suit consumers the best. If consumers stop buying licorice sandwiches, well I guess it’s not going to be profitable to make those licorice sandwiches and they’re not going to be around anymore. When a public work is initiated, imagine if those funds used on the work were still divided among the people before they were taxed. Those funds would have been ‘voted’ directly through stocks or purchases, or indirectly through banks. One cannot tell if a public work was ‘worth it’ because there’s no feedback loop. There’s no communication between the producer and consumer of good/service. It is unverifiable that that project was the best possible allocation of resources.
Like gotlucky says, investors. Risk can be split.
What? You mean like, get them on the train? Or perhaps your saying that there aren’t enough riders to justify the project. Then it probably will cease to exist. That said, in countries that are not societally overinvested in the auto industry and highways (read: europe), tend to have a liking for trains and such. We don’t because of the gargantuan highway system, another example of the state crowding out better projects. Given the american tendency towards cars and away from alternative transport, stemming from the consequences of infrastructure spending, trains and such are less feasible. It’s also a huge country with lots of rural space where autos are more convenient so it’s not totally fair to pin it 100% on the highways.
Ever heard of EZ Pass?
Do they? Pretty sure that parents want their kids to succed, that is y’know unless they’re using them as heads for welfare programs.
Ah so opposing public school means opposing education? News to me. In fact I value education so much that I think it should be unmonopolized and subject to a process which doesn’t tolerate incompetence. This does not mean excluding the poor. See here:
Parents tend to value education, because they tend to care about their kids. Again, the market responds to these needs. It would not ignore the poor of society (which by the way in America are much richer than the poor in the article above). Public schools make it a stupid idea to send your kids to private school because you’ve already paid for the public one.
Evidence of this? How do you explain the mass prevalence of preventative measures? Which countries have ‘private’ healthcare?
Oh really? So lightbulbs, steel, phones, cars, vaccines, modern medicine, computers, internet are what then?
See: the last five pages of this thread.
So I suppose their debt just kinda popped up then? And it would have been much worse had everything been privatized because they would have devalued the currency to pay for their wasteful negative-returning projects? If sweden is so great why has there been no net job creation since 1950? Anyways I’m not very impressed by credit ratings seeing as UK and US are still AAA/AA+ despite having insane debt/GDP levels
Once again. Broken window. Can you prove that the growth happened because of them or did it happen in spite of them?
I’m glad things worked out in Kenya. I’m not sure if the public schools there are more expensive to maintain or just funded less than private schools. Funding public schools while encouraging private efforts are not mutually exclusive. I’ll take you up on this obscure topic.
The train has to exist first.
Not sure if EZ Pass detectors at every intersection would be much cheaper.
On public healthcare, there’s the study I’ve already posted, plus this one. PHE, GHE, and THE represent public, private, and total health expenditure.
A lot of those innovations were either discovered at a public university (penicilin production), a public private partnership (semiconductors at Bell Labs), or by the government directly (DARPANET). Nokia, supported under Finnish industrial policy, is the largest and most internationally competitive cellphone maker. Probably could have picked better examples.
There’s not been very much evidence posted in this thread that the majority of public investments yield a negative return. Even a negative marginal return doesn’t necessarily indicate a negative average return. I.e., there’s a difference between “the government is currently spending too much” and “there should be no government spending at all”.
Some of the highest spending welfare states in the world run currently run balanced budgets. Government spending only creates deficits if not financed by taxes. I agree that there’s too much put into some programs, and labor regulations in Sweden are terrible for employment, but an across the board cut to public investment isn’t a good idea either.
I can’t. That’s only what the statistics show.
This thread has gone on for 5 pages and you still don’t seem to understand Bastiat’s parable of the broken window.
Hence correlation does not imply causation. Statistics can only show so much - which is our point. But even more importantly, they ignore at least half of the picture, as Bastiat points out in his parable of the broken window.
If you expect us to eventually stop bringing this up, you’re dead wrong.
I actually appreciate you getting into specifics this time. Now, apologies for this wall of text.
Could you do me a favor? Just as an intellectual exercise, while you are posting on this site, could you quit using the term “public”? The public is an abstraction and abstractions can’t act, but he way you say it makes it sound as if “the public” is an acting being that does stuff. Only people act, which means that all “public” action is necessarily performed by some ruling class bureaucrat. It’s not just about semantics, treating abstractions like people leads to all sorts of horrible generalizations and fallacies, including the belief that the state is an expression of societies collective will.
Well, that’s a more sophisticated argument than “hurr the government makes free stuff appear out of thin air” that we usually get from the left. I hope you agree then that no good or service will be any more abundant because it is provided by the state “for free”, and you also won’t fall back on that argument later.
In general, when meeting a problem like “failure to capture externalities”, why do you immediately jump to the conclusion that we need to nationalize that chunk of the economy? A lot of the time when people like you talk about ‘externalities’ it sounds like they are trying to find an academic-sounding excuse for nationalization. The question should be how to capture externalities, not how to justify nationalization. I think a lot of these problems can be solved though by technology, others through developed financial markets, and others simply depend on better economic understanding.
Anyhow, even when we haven’t exactly figured out how the market would fix it, we can be pretty sure that it would fix it somehow if we just let it work. So why is it that we always treat statism as the default position until we’ve shown that markets could work? We should keep in mind how much damage the state has done, even in the last century. It was, in fact, the leading cause of unnatural death. So why is it that people fear externalities so much that are unwilling to attempt a little too free markets?
You must be aware that there is such a thing as financial markets. People can borrow money. Indeed, if a project is beneficial to society, then entrepreneurs can expect a lot of revenue, and it will be no problem to find investors who want a slice of that. Who doubts that? I have even heard people on this forum argue that banks would naturally monopolize, because small bank couldn’t stomach the cost of building as many ATM’s a big bank. Really? They seem to be utterly unaware that there are other ways to finance business projects than the money in ones pocket. If a it is long term profitable to become a large bank, why would it be a problem to find investors who want to provide the money to start out large? In general, we can say this: If a project is the most valuable use of resources, then entrepreneurs can make a profit providing it, and then they can find investors who provide the funds in return for slice of the returns. If they can’t make a profit, then there are more valuable uses of those resources and the project shouldn’t happen.
Besides, why is it necessary to immediately jump to the conclusion that we should nationalize train stations? If it was impossible to fund projects like this in the market, couldn’t there just be a government agency that hands out funds to people who show that their project would be underfunded because of market failure? Why does the state also need to run it too? This goes for healthcare as well.
This is a good example of where technology can solve the problem. I see no reason why tolls for private roads couldn’t be charged automatically by computers without you even noticing, via cell phones or something like that. Then there’s monthly fees, or insurance. All of this is very manageable in a free market, if we are willing to think about it for a while.
If parents neglect their childrens education, then they aren’t doing well in government school either. If they are doing well, they would do even better in a liberalized system. Thus state schooling provides no benefit, it just monopolizes education in the hands of an expropriationary uncaring ruling class of uncaring, unaccountable bureaucrats. You wouldn’t give your TV away to some stranger who’s going to ruin it, but you will give away you child?
I for one think that forced state schooling actually keeps kids from learning by locking them up for decades. State schools couldn’t really teach any less, the three R’s only take about 100 hours to communicate, but the government manages to not get it done in a decade. I’m beginning to believe that state school is a stratification tool, i.e. the purpose is to keep the commoners locked up so they can’t learn anything, and that way only children of the rich kan get a proper education. It makes us all worse off if people are kept dumb just so maintain hierarchy.
Not to mention that state schooling isn’t about education, it’s about conditioning. Monarchies invented it in the 19th century to create an obedient populace and maintain a heirarchical society, education was always an excuse.
As an aside, US primary education is actually a lot more centralized than in much of Europe. And it is a lot worse than in Europe. Especially places like Finland and Sweden, that leftists like to idolize, have actually privately run, yet publicly financed, schools. Yet for some reason people just pretend that US schools are free market and Swedish schools are socialist and interpret the failure of US schools as a failure of markets. Go figure.
Yes, private hospitals want to make money. That is not a problem, nor a reason to nationalize the entire industry. So do gas stations and buses. You can always find some anecdotal damage due to perverse incentives in free markets (you find it in every grocery store), but this is a small price to pay for the immense benefits of a for profit health care system that manages to efficiently allocate resources and create technological progress. Imagine we would have seen the progress we had in computers and cell phones in the last two decades in health care technology. We would be way better off than we are now, despite your doctor being a greedy jerk who just wants to give you the most expensive treatment you don’t need.
Comparisons between countries can’t tell us anything about how good health care would be in a free market, because the countries that don’t produce progress can import those technologies and provide roughly the same health care as those that produced it. It’s about not seeing the opportunity costs again, If all countries produced health care technology then humanity would way better off than if only a few with markets did and everyone compied their innovations.
Thank you for citing the infant mortality statistic! Because this one is actually based on a very easy statistical mistake. Infant mortality is defined as children that die more than a day after birth, otherwise it’s stillbirth/abortion. Countries with private healthcare (I’m talking about the US in this case) manage to save more children, but that means they delay the death of many into that window where it is counted as infant mortality. In Europe they die before it is counted as infant mortality, hence a lower infant mortality rate. You can look this up, it’s accurate.
I know this is just one statistic, there are plenty of other health statistics that supposedly show countries with national health care on top. (And many have similar explanations.) But you got to wonder why you believed this one even though it is refuted in two sentences. How come you were utterly convinced until now that the infant mortality rate shows national health care to be better? Were you told deliberate misinformation? Is everything you believe in that slanted? I just want you to think about the assumptions you’re making, and not to trust everything you were told so blindly.
Which is a mistake, as Terence Kealey points out. It costs almost as much to copy an innovation as to make it, because you need scientists on staff who know enough in that particular field to understand what they’re looking at. That means that it is very much profitable to make an innovation, because the creator can monopolize it for a while while others catch up. And by the time others have copied it society benefits because other producers deliver it too and there’s competition and falling prices. So private markets in R&D actually couldn’t work more perfectly.
Not to mention that government science is frequently a useless waste of resources, an not in any way economically useful. Companies develop stuff that people need, but governments fund science that backs up the latest authoritarian fad.Thats why government science is often even destructive, becuase scientists who are funded by the state have very perverse incentives. Which is why they come up with dangerous and destructive pseudoscientific fads like eugenics and climate change.
Also, innovation would be a lot more valuable if the state didn’t artificially monopolize intellectual property and create barriers to entry everywhere. If everyone can just copy your product, it becomes a lot more valuable to make new inventions, because that’s the only way to be competitive. You can try being a computer company that refuses to innovate, but I suspect you would go out of business.
Yeah, I guess there’s a study saying everything. That’s why empiric studies get us nowhere. We’re bound to just pick the ones that happen to confirm our views. And governments are very keen on financing studies that justifies their existence. Not to mention that it is impossible to say anything about opportunity costs through empirical comparisons. It’s like trying to guess how great it would have been if you had bought the other brand of ice cream by measuring how happy the guy who did buy that one is.
GMM, VAR, cointegration, and other techniques all use lags to determine causality. If it’s obvious to you, it’s probably obvious to the person who made the study.
“Public” is a precise and commonly understood term. I would like to see a better alternative.
Please provide a citation for the claim that Scandanavia is particularly interested in private primary and secondary schooling.
Empirics.
We already have plenty of pre-public infrastructure experience where the private sector underprovisions infrastructure. It’s been done.
Because public libraries don’t kill Grandma. Also, back to the point on public healthcare.
It sounds like it would work, but it doesn’t in practice.
Banks aren’t necessarily concerned with a time horizon beyond the average tenure of a board member or shareholder.
The problem is when some of the highest returning investments are foregone because of the huge number of potential customers who don’t have enough individual interest to fund the project.
In healthcare, a large portion of costs go toward paying administrative and marketing costs, which are much lower under public programs. Rail lines could be privatized, but if they’re a natural monopoly they still have to be regulated. Otherwise one ends up with a situation like British Rail.
True, but the evidence on private schooling is mixed at best.
Please cite sources that “Europe” has a higher rate of death pre-infant mortality. I’m not sure what you mean. Are you saying that the EU has a higher rate of miscarriage? The “window” counted as infant mortality begins at birth. It’s the ratio of infant deaths to live births.
Many of these statements are hypotheticals which are not supported by evidence.
I would agree with your point if there was significant disagreement between studies. But there is still an overwhelming majority of findings indicating that public infrastructure is productive on average in the United States.
The opportunity cost to the economy is going to be mediated through taxes, lending, inflation, and interest rates, where it exists. Cointegration implicitly takes into account financing constraints as long as the funding components- borrowing, taxes, inflation, etc- are not extracted from the model (they rarely are). Endogenous tax and borrowing changes coming before or after spending changes exert their effects on the spending regression. It’s even possible to construct a more detailed nonlinear model explicity accounting for tax changes.
Once again ignoring the Broken Window I see.
On Finland:
I’m not familiar with their system, but I wouldn’t be surprised to see it was better than the US’s.
Explain please?
Do we? The railroads were subsidized monetarily and through land grants. Highway systems were monopolized by states and federal government.
Could you actually answer? Me picking my nose doesn’t kill Grandma either. So now we should pay me 500k a year to pick my nose right?
Ha, oh really? Banks don’t lend to businesses for long term projects?
Proof? Are you claiming that banks don’t offer long-term loans?
This doesn’t make sense to me. The returns on an investment are defined by the interests of the consumer.
Oh really, administrative costs are less in public programs?
http://hadm.sph.sc.edu/Courses/ECON/classes/Friedman.html
Hospitals are increasingly state-monopolized and they then hire tons of useless workers.
Ah. This is the study that samples 3% of charter schools? Sounds good.
Once again ignoring the broken window.
What?
Empirical evidence, or evidence obtained from observation.
Largely because railroads and highways often did not exist at all before government involvement. The railroad bubble wasn’t a bright moment in public infrastructure, but as a whole these programs were important to industrialization.
No.
Often, in high-return infrastructure projects, they don’t.
The previous studies noted underinvestment in infrastructure, with reduction in public funding exacerbating underinvestment.
edit: Here’s a more detailed look at the rationale for public infrastructure investment. There’s the simple answer, then there’s the complicated matter of particular externalities involved in infrastructure that are dispersed too thinly across the economy for the agents benefting from them to be interested in investment.
Voters are consumers, and if they don’t expect a return they vote against a project.
Referring to your source:
The evidence that public healthcare rather than HMO managed care is the cause of this increase remains “anecdotal”. Again, healthcare inflation was not much slower before Medicare and Medicaid.
Give examples.
While we’re at it, here’s Adam Smith on the subject:
Once again, ignoring the fundamental argument permeating the entire thread which you don’t care to address. Before we continue discussion, would you please summarize the parable of the broken window and its implications?
You continue to refer to emergence of public works as proof that private works did not work, yet refuse to acknowledge the government’s lead in infrastructure and also the likelihood that transportation spending did not merit its own costs in those eras which you point to. Sure there were no private freeways in the colonial era, because they weren’t wanted. Mass transport spending projects came with the civil war with state railroad projects and then state roads. Private transportation infrastructure hasn’t been granted a chance.
I understand the parable like this: Government activity produces negative consequences that may be assumed to exist without proof.
Actually, there was a long history of counties and states pursuing local private rail systems without investing in national scale projects. There’s little reason something like the interstate highway system wouldn’t have been just as productive if created earlier in industrializing New England, either. Even after many decades, the private sector never stepped in.
It’s possible to claim that private sources would have eventually decided after tens or hundreds of years to begin builiding a significant number of highways. But considering the high productivity of public programs enacted, and the fact that countries with private infrastructure do not experience particularly high infrastructure returns, there’s not much indication that the private sector would do better, if it invested at all.
Earlier in this thread, you were asked:
Can you prove that the growth happened because of [European state welfare and nationalization programs] or did it happen in spite of them?
And you answered:
I can’t. That’s only what the statistics show.
In other words, you admitted that you can’t prove any causal link(s) concerning the (alleged) statistical correlation between the advent of European state welfare and nationalization programs and subsequent economic growth. But instead of owning up to this admission, what do you do next? You try to wiggle out of your admission by making an argument from verbosity. Try again.