I think a little background is in order first. Most of my whole life I’ve described myself as a republican, kind of listening to my conservative Dad rant and absorbing some of his ideas over time. I had little evidence as to why being a republican was preferable to being a democrat, or vice versa. So, around the summer of 2009, a friend’s father introduced me to a character named Peter Schiff and that was my first look into Austrian Economics. Over that summer I began to read more and more about Austrian Economics and the… validity I guess of this theory just seemed to be reinforced at every turn by not only the news around the world (and especially the US) but also just by logic and reasoning. Well, as I began to accept AE through my various readings my political scale shifted further and further right (I never really agreed with republicans on abortion, gay-rights, etc) and I began to see the wonders of the free market more and more.
Skip to today, and I have a girlfriend who is very liberal (not classical) and against free markets. We try not to debate too much (she gets mad at me, I love it though) but when we do I always get these nagging questions as to the MORALITY of the free market or if indeed there is a morality other than profit.
So I guess my (her) questions would be as follows:
How can a free-market care for those in poverty?
------Her point is always that she sees taxes as necessary because people like me (selfish, uncaring, what have you) wouldn’t give to charity, help the poor, etc etc.
What is to stop large corporations from treating their workers miserably?
------ Here she always uses the example of Wal-Mart and their terrible treatment of employee’s. They have low wages (although not below minimum wage), insurance that is “bad”, disrespectful managers, no retirement etc etc. Why shouldn’t a company just pay enough to keep someone alive? Why pay them extra at all especially if it detracts from productivity?
How can you be a good person and free-market/capitalist when it results in so much “pain”?
----- I’ve tried to explain static/dynamic efficiency, and how wealth/capital/resources gravitate around those best suited to utilize/create more of these things, but she only sees capitalism as people exploiting other people more effectively than those people can exploit others. In the long run, its easy to see how suffering now is necessary for future production, but how can any of us sit here and say to a homeless man, an incredibly poor man, etc that “well, someone has to suffer for the rest of us… sorry.”
I guess that about sums of my questions. Any help or general refutations to these would be very much appreciated.
Expose the gun in the room. Work to expose that gun more and more often.
Once she looses confidence in here moral superiority, perhaps she will be more receptive to hear about the reality of scarcity and the economic problem.
A free-market would, in all likeliness, eradicate poverty in its entirety. Charity would be necessary in very rare occasions and, even then, would be quite adequately supplied. Ask her if she thinks the hundreds of thousands of charities in the U.S. show that people here are actually generous? Then ask her to imagine how much more they could donate if they didn’t pay any taxes…
Labour is a scarce resource corporations have to compete for. It’s not exactly in their best interests to be known as the worst employers. Besides, treating workers “miserably” is entirely subjective. Here in the U.S. “miserably” seems to mean minimum wage, non-union and menial. Well, if the same job existed in South Africa 20 million people would gladly compete for it compared to their “miserable” prospect of unemployment. See, notions like the fairness doctrine are entirely subjective. You can’t have a one-size-fits-all model for making everybody feel fairly treaty. Let the market work that out. If people don’t like it, they can move on to other prospects.
It doesn’t result in pain, but what they (socialists) hate is what they perceive to be “greed” getting some people a higher standard of living compared with others. As Snowflake noted in another thread, it doesn’t really matter that Bill Gates has billions of dollars. He still has a roof over his head, a warm place to sleep, food to eat and share with his family… Basically, what the vast majority of us have too! This old 2-minute snippet from a Milton Friedman interview ought to dispel the “greed” myth: http://www.youtube.com/watch?v=RWsx1X8PV_A
I have these types of conversations (debates?) all the time with people. And I enjoy it greatly.
One of the things I’ve come to realize, and it’s taken years for me to understand this, is that answering the questions never gets you anywhere.
Of course, you may want some idea of the answers in your own mind, but if you want to get these across to people you must must must challenge their basic assumtions and premises.
If you don’t get her to examine her own premises, the questions will just keep coming. Over and over and over again she will come up with new scenarios for you to hash out and will never move an inch closer to libertarianism.
First question the morality of government. Free markets are moral because they are voluntary, the business man wields no more power in the market than one of his lowly workers, contrary to common perception.
The free market doesn’t care for the unfortunate, people do. The same must be true of socialism, socialism doesn’t care for people, people do. But wealth distribution by force is flawed, people should choose a voluntary method of charity.
Competition for labour.
Being a good person is a choice, a statist cannot be a good person because he advocates theft and violence, at least the anarchist has the opportunity to be a good person.
The good news is that these are some of the easier objections to answer.
You need to read this. Everyone should read it. I know everyone has time constraints so I don’t make reading recommendations willy-nilly… if you read anything, you should read Bastiat. Here’s a quote where he addresses the underlying fallacy of your girlfriend’s (very common) argument:
The claims of these organizers of humanity raise another question which I have often asked them and which, so far as I know, they have never answered: If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind? The organizers maintain that society, when left undirected, rushes headlong to its inevitable destruction because the instincts of the people are so perverse. The legislators claim to stop this suicidal course and to give it a saner direction. Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority.
They would be the shepherds over us, their sheep. Certainly such an arrangement presupposes that they are naturally superior to the rest of us. And certainly we are fully justified in demanding from the legislators and organizers proof of this natural superiority.
How is it that welfare bureaus come to be staffed with selfless heroes if humans are, as your girlfriend believes, ravenous wolves? Perhaps welfare bureaucrats and elected politicians really are more selfless than the rest of us but the question, then, is why. Perhaps, if we discover the mechanism by which welfare bureaus come to be staffed with such heroic, selfless individuals, we can use this understanding to improve mankind generally.
The arbitrariness with which people think about employers and employment is always astounding. On the one hand, the popular belief is that “sellers have all the power”, that is, since we buy things from big corporations and big corporations have a lot of money, this somehow enables them to “set the prices” of the things we buy, so that we have to accept higher prices whether we like it or not. But, when it comes to labor, now buyers have all the power… employers buy labor and it is the laborers who are selling. The presumption is that those with more money have more leverage on the terms of the sale. But the question that is not answered is why. How does it matter to me how much money you have when choosing whether to work for you or someone else? If some other, less wealthy individual is offering me a better wage, all your money can’t keep me from choosing to work for the employer offering the better wage. In other words, the market does not care how wealthy or poor the individuals are who participate in the market. All that matters is that sellers prefer to sell at higher prices than lower and buyers prefer to buy at lower prices than higher.
So, the real issue is wage competition. How can businesses restrict wage competition? Well, there are several ways… for example, you might lobby the government to pass a law declaring that overtime does not have to be paid until a worker works more than 40 hours in a week… or, you might lobby to pass a law declaring that overtime pay need be no more than 1.5 times base wage… or, you might lobby to pass a law that health benefits do not have to be granted until an employee is “full-time”, that is, until he works a full 40 hours per week, and so on. Many of the labor laws which are characterized as “protections” for employees are exactly the opposite… protections for employers. These legal protections are, as another poster mentioned, “the gun in the room”, they are the use of legal force to reduce competition in the marketplace. So, the power of employers doesn’t come from the digits in their bank accounts, it comes from the law and the power of the law to enforce cartels, in this case, a buying cartel, instead of a selling cartel.
This is the easiest to answer. What your girlfriend (like most people) does not understand is the very simple concept of revealed preference. What revealed preference means, is that we know what people want by virtue of what they actually choose… so, I can know you value an iPod more than owning a car, for example, if you are willing to spend your money on an iPod and the music to put on it instead of making car payments. It might seem crazy to me, since I would rather make car payments than own an iPod and music for it, but you have revealed your preferences through the choices you have made.
When we bring the idea of revealed preference to voluntary exchange, something very powerful happens. If you and I exchange with one another, we are revealing that we each preferred what the other person had. So, if I have an apple and you have an orange, and we exchange, then I have revealed that i preferred to have an orange to an apple and you have revealed the opposite. But what is miraculous about voluntary exchange is that we are both more satisfied with the state of affairs after exchanging than we were before exchanging. Hence, there has been a double improvement in human welfare.
The zero-sum fallacy, which is extremely common, views every transaction as a transfer of wealth from one individual to another, that is, that there is only one party who benefits or “profits” from an exchange, usually proportional to the loss of the other party. This is a good characterization of most government transactions and crime but it is a poor characterization of market exchange. In the free market, since each party only partakes in the exchange because he or she wanted to, each party to an exchange is revealing that they preferred the state of affairs after the exchange to the state of affairs before the exchange. So, just as I can know you prefer an iPod to a car by looking at how you spend your money, so we can see that people prefer the things they exchange for to the the things they exchanged away. When you give up your free time in exchange for money, you are revealing that you prefer the money to the free time. When you give up your money in exchange for an iPod, you are revealing that you prefer the iPod to having a larger cash balance in the bank.
Now, back to the pain that is supposedly the fault of the free market. The pain and suffering in the world is not the result of any political or economic theory. The pain and suffering in the world are the consequence of an omnipresent and inescapable fact of nature: scarcity. Scarcity, in the economic sense, means “finite” or “limited in availability.” Time is scarce, space is scarce, energy is scarce, fresh water is scarce, food is scarce, clothing is scarce, shelter is scarce, transportation is scarce, communication channels are scarce and so on, ad nauseum. There are a few things which are abundant (not scarce), such as, breathing air or the view of the stars at night (depending on where you live).
Scarcity means that, at every point in time, we are all constantly being faced with a choice of how to use the resources available to us. With each course of action we choose, we repudiate all the other possible courses of action we could have taken. There are many other ways we could have used the physical resources available to us but did not. The benefits we could have obtained from using physical resources differently is called opportunity cost. We are all struggling to minimize our opportunity costs by maximizing the efficiency with which we utilize the physical resources available to us to achieve our individual ends. Far from being a bad thing, this inherent tendency towards conservation is a good thing. Critics of the free market often misrepresent it as believing that humans are “maximizers”… i.e. that humans want to maximize everything… the size of our car, the size of our house, the size of our french fries and so on. Humans are “consumers” and seek to consume as much as possible, the critics say we believe. The truth is that free market theory characterizes humans as economizers. We economize our available resources. This is why people spend so much effort shopping. They are seeking to fulfill their wants with the least expenditure of energy (since it took energy to labor to earn the dollars which they are about to spend at the store). The cheaper they can buy an item, the less energy must be expended to have what is desired. Of course, for the same price, we prefer larger to smaller goods. But this is the same thing as saying that we seek to economize, since whatever excess goods we obtain can, in principle, be sold or exchanged for something else we desire more.
As you can see, this whole complex of ideas has tremendous bearing on the issue of conservation of the environment. Many liberals (in the American sense) do not understand that things they oppose - private property, free exchange, etc. - are the only means for conserving physical resources, including intangible resources, such as the earth’s beauty and biological diversity.
Tell her she is fear mongering. Ask her what evidence she has that such would be the case. Ask her why family and friends would not help their own poor family and friends?
Point out the fact that Wal Mart does not operate in a free market, as such it is an irrelevant example of how companies would act in a free environment. It is just more unfounded fear-mongering.
Excellent reminder. Both parties in a free exchange are more satisfied after than before the exchange. It’s not a zero sum game. It is quite miraculous, as you say. Your other points are right on the mark as well. I saved this post as a favorite. Thanks.
Free markets offer jobs which reduce poverty. Look at the tax revenues of the countries of former Soviet states such as Lithuania, Latvia, Slovakia, Bulgaria. These countires used to be under socialist rule and after the fall of the Belin wall and their gaining independance from the USSR they began with progressive tax structures. They realized this was returning them to socialism and threw off the shackles and instituted a more fair tax stucture…a Flat Tax system of say 15% for both individual income tax and corporate tax. The result…more entrepreneurs started businesses, employing more people, and more capital investment from foreigners. The result…more gov’t tax revenues and less class warfare!
Workers otherwise known as employees can leave and go work somewhere else. Remember, in a free market I am free to purhcase or not to purchase at will. If a company loses the loyalty of their customers by no longer offering something of value, they lose revenue, market share, and profit.
People who have earned their wealth through hard work and some of the most charitable people in the world. They give freely of their time and money. These people are your everday Americans coaching little league and helping others. Read the book Who Really Cares. People who are self made millionaires (about 60% of those in America) are charitable with their own money. Statist are very charitable with other peoples money…and they feel good about this.
My background, I am a business owner and most of my friends are small business owners as well who I see at these little league practices every day.
I couldn’t imagine how toughtit would be to have a socialist girlfriend. I had a socialist friend once and lets just say it didn’t end well.My current fiance I convinced to believe in an-cap but she doesn’t care about it much and she thinks the general idea is great ,though she has her own idea of how it should/could work in real life.
Your girlfriend assumes people won’t act in a charitable way unless coercion is present.Empirically the large sums given to charities voluntarily(excluding the state supported charities or excluding that aspect of various charities) disprove this.You could ask her does she need to be coerced to give to help others.I bet she would say no. Then say exactly.If you can voluntarily help others then other people can do this too.Next mention that welfare can be provided voluntarily without the negative effects of the welfare state like breakup of communities, breakup of families,making people state dependent etc.Remind her the free market instills in individuals independence but also cooperation. WIth so much wealth being produced and so many more jobs poverty would be vastly reduced and where it did exist individuals would be much better equipped to help others or find help.Tell her about the mormon’s welfare program that’s completely voluntary(see rothbard’s For a New Liberty). Religious institutions and secular ones would care for people.From the angle of history refer to friendly societies.
If I’m honest I’m not too strong on the economic aspect of this one.I know it’s something to do with marginal revenue product and how if the wage of an individual is higher(worker is paid more than ‘worth’ to employer) than this the employer will become bankrupt and lower(worker paid less than ‘worth’ to employer) then competition will correct this as the worker will quit for a job better in accord with their ('worth). Am I right about this? Sorry If I’m not I’m not very confident on wages or labour economics.I’m still learning almost all of austrian economics and still quite don’t understand all the major aspects.I aim to improve this very soon.
This argument from your girlfriend sounds almost marxist.
This is the zero sum fallacy. Remind her that when I trade with you say I have a pen and you have money then I get money and you the pen and then I can use my money for something say giving to charity or starting a website etc etc and you can use you having your pen can trade it to someone else who values it for something else and so on So you have something to give to something who wants it and both benefit from the trade else they would not have traded.
I think your girlfriend just misunderstands what capitalism is.OH and say that the system we have today is corporatism(mix of Big Business and government) not capitalism (though of course a market exists but not how we conceive of it ) so really largely she’s attacking at straw man.Tell her that you oppose corporatism too then explain something about capitalism.
I know these aren’t the best answers compared to other people’s replies but it’s about all I could think of right at this second.
I posted this awhile ago. It should be of help with gun exposition for the OP.
I suggest to the OP that he asks his girlfriend what what premises does she derive her conclusions from. IOW: what facts does she base her ideas on. You can then get to the root of the problem.
On a personal note, I think it’s pretty lame to act as the middleman considering the alternatives. Why not just introduce her to this site? Once she starts reading, her fallacies will be challenged, and perhaps they will be ebbed away.
Well, her point at the present is (I assume, as its hard to get anything substantial from her arguments) is that conditions are bad now, that people need to be helped now, and that there isn’t enough help right now (obviously she is referring to those who are homeless, in ‘extreme’ poverty). I guess, that on top of all these charities people are still living in ‘horrid’ conditions so more needs to be done and if it can’t be done voluntarily then obviously the best option is government coercion.
If I said labor is scarce, I’m sure she would bring up the unemployment rate (somewhere around 17%(?)) to say otherwise. And while I would rightly counter that a repeal of minimum wage legislation would eliminate that, she would say its impossible to live, to even survive, at less than minimum wage. I honestly do not know how to counter this point. As for your South African point, she’d find it meaningless as we’re talking of affairs in the United States and that our combined wealth is so great that taxation high enough would eliminate this poverty.
Again, she would bring up that not EVERYBODY has these things, and some roofs are leaky, some houses are in disrepair, some people do not have enough food (when she was small her parents didn’t have jobs, refused to get jobs, refused to go on welfare, and subsequently she was fed very little). Bringing up Bill Gates would merely agitate her to ask why does he need this extra money? Why can’t he have it taken away from him or why doesn’t he give it up voluntarily? To this I would have no answer, other than he earned this money; however, this seems pretty weak that because someone worked and made it rich that he should have in excess what others have so little of.
Her point is that they aren’t voluntary because big businesses can control the standard of living of individuals based on their wage rates. People have to work to live, so how can it be that it is voluntary if there are needs? That quote seems very similar to one I’ve read in Freidrich von Hayek’s Constitution of Liberty (a book I’m currently reading).
Her predictable point here would be either that a) well at least there aren’t rich businessmen exploiting workers for a profit (something she sees as inherently evil) b) the free-market is doing a terrible job right now, look at all the homeless, all the low productivity workers, all the unemployed.
Her point is, in a free market, a vast majority of people choose to be “bad” people by not voluntarily giving up their riches to solve other people’s poorness. That the ends are what make a good action good, and not the means. Whats strange is when I asked her about Robin Hood, she said that he was a bad person for doing this, but she didn’t draw the correlation to government.
Honestly, I doubt she would care for the reasons why such people exist, only that said people do exist and do good, even if it means infringing upon other’s (others too selfish to give up all or some of their wealth) rights. Doubtless, she would consider herself one such kind person (as she does volunteer/donate etc etc) and has stated that she is a better person than others because of her actions.
I have nothing (on her behalf) to say to the first paragraph because I can’t see any fallacies that she might point out. However, in the wage competition section, she would talk about how workers compete for lower wages so that they are more likely to get hired and so their standard of living declines so that the company can make a profit. As for those laws, I’m sure she would see it as more of a good thing than bad, that, at a certain point, employers would have to pay more for more labor.
The only thing I can really see is that people don’t labor at low rates voluntarily. They live with means and standards lower than the majority because the only job they can get is a minimum wage one. They would love to get paid more but they don’t have the skills/productivity. Some people are incapable (due to lower intelligence, handicaps, etc) from working more productively than X… what does the free-market do about them?
On a personal note, this was probably my favorite couple of paragraphs to read, and the way you wrote it was eloquent and logical.
I mean, I have, but she asserts she doesn’t have free time to read these things and doesn’t desire to read them. I’m not going to tell her whether or not she has free time or not (though she has plenty of time to talk to me). If I could I would insist on her reading, but alas…
Its wonderful she has such high self-esteem and an image of herself as a good/kind person. Would she be able to hold onto that if the state began to evaporate and it became up to her to be the one with the gun extorting wealth from ‘better off people’ or have the poor go without t**hat particular type of welfare she advocates?
Well this is just wrong. Even the dumbest least productive workers can secure remunerative employment in free societies. Labor productivity is a function of capital per worker (and therefore savings) more than anything else. This is why the American gets paid much more than his intelligent Indian counterpart. This is why even the lowest wages in America (low being a relative term) are enough to sustain life comfortably. Poor people in America have cars, running water, TVs, ect. Americans take this fact for granted. “Poverty” in Africa, Asia, and the Balkans, means something entirely different (these regions have never seen economic freedom, and as such, have never accumulated capital and structured it efficiently).
Labor is always scarce, but there will be those who may not find remunerative employment (mentally disturbed/handicapped and those addicted to narcotics). Either way, taxation destroys capital and therefore reduces the demand for labor, lowering real wage rates. Your girlfriends attempt to justify theft and coercion is merely an appeal to emotion, and when she mentions the current economic condition she’s completely obfuscating the question at hand.