As always, my comments in bold type.
It’s by Thom Hartmann on Commondreams.org
Now the thing is, I make many claims in my rebuttal without giving sources. Sadly it is hard for me to find them now. A search at mises.org will probably produce them.
I’ll skip the intro and cut to the chase:
In actual fact, there is no such thing as a “free market.” Markets are the creation of government.
Oh? Why?
Governments provide a stable currency to make markets possible.
First of all, govts nowadays provide an UNSTABLE currency. Need we go further than Ben Bernanke and the gremlins who run the Euro, both of whom have declared their intention to devalue their respective currencies at the rate of two percent a year. Also, the US dollar has lost at least 95% of its value in the last hundred years. So much for a stable currency.
Secondly, money has existed without the govt minting it. Check Wikipedia about trade beads, wampum, manillas. Even banknotes originally were NOT govt money, but printed by privately owned banks
They provide a legal infrastructure and court systems to enforce the contracts that make markets possible.
We have seen how that works when the bondholders of GM did not get their money when GM went bankrupt, and instead it was given to the unions. The govt court systems are a total mess, and anyone who expects to get his contract enforced quickly and without great expense by going to court is very naive.
As for legal infrastructure, the laws of the land are an outrage. They are always written to benefit the politically connected. They make markets impossible, not possible. The choking regulations ensure that the existing big companies need not fear small competitors. And lets not go into anti trust laws.
If the govt relinquished its monopoly on the court system, private courts would soon make govt courts but empty buildings.
They provide educated workforces through public education,
Before private education was forced at gunpoint upon the US citizenry, the literacy rate was 95%. Now it is pathetic. 25% of high school graduates, who have diplomas, cannot answer this question:
If X+2=4, what is X? Yep, they don’t know that 2+2=4.
And those workers show up at their places of business after traveling on public roads,
Wait a minute. Are you saying that without the govt there would be no roads? The first roads we had were all built by the private sector. Even today, if the govt got out of the way, the private sector could build better roads at a fraction of the bloated cost the govt charges to build them
rails, or airways provided by government.
All the rails in the US were laid by private businessmen. As for airways, does he mean that the govt created the sky?
Businesses that use the “free market” are protected by police and fire departments provided by government,
We did very well with volunteer fire departments, which exist to this day in many places. We do not need the govt to overpay firemen for us.
As for police, woe to the man who has any contact with those violent chararcters. Can anyone here tell us of a single instance where a policeman protected him from anything at all?
and send their communications - from phone to fax to internet - over lines that follow public rights-of-way maintained and protected by government.
Which is of course a tragedy. Compare the quality of the news, or anything else, on the private sector internet and the govt licensed Television.
I notice a theme here. The author points out all the services the govt has appropriated to itself and monopolized by violence, [not by public demand], and then tells us how lucky we are that the govt provides these services. It is like the local Mafia thug demanding protection money, then bragging about how he provides a public service, protection. Govt, stay out of the way in the first place and we will all be better off.
And, most important, the rules of the game of business are defined by government. Any sports fan can tell you that football, baseball, or hockey without rules and referees would be a mess. Similarly, business without rules won’t work.
Any sports fan can tell you that the rules should be impartial. Imagine a game where the rules said that teams from New York get 5 points for every goal they score**, and teams from other cities get one point. Those are the rules the govt makes, benefiting their pals and robbing the average man.**
Which explains why conservative economics wiped out the middle class during the period from 1880 to 1932,
Any serious economist, and even Ben Bernanke, says that it was the govt who did the wiping out, by meddling with the money supply.
and why, when Reagan again began applying conservative economics, the middle class again began to vanish in America in the 1980s
No. Wikipedia points out that the only damage that Regan caused to the middle class was his taxing them. Which is not conservative economics. Conservative economics is cutting taxes and govt spending.
Evan a Socialist cheerleader like Krugman admits that the Reagan years were great for the economy, see that Wiki.
- a process that has dramatically picked up steam under George W. Bush.
Bush increased govt spending, meddled with the interest rate, printed money, all big time destroyers of the free market
The conservative mantra is “let the market decide.” But there is no market independent of government,
What does this even mean? We have already refuted his claim that govt is essential for a free market. On the contrary, the more govt, the less free the market, by definition.
so what they’re really saying is, “Stop corporations from defending workers and building a middle class, and let the corporations decide how much to pay for labor and how to trade.”
There must be a typo here. Maybe the second word in the sentence should be “unions” or “Obama”.
If it is “unions”, then of course he spouts nonsense. Unions “defend” the union bosses by giving them money they dont earn, sometimes “defend” their membership by giving them higher wages than they deserve at the expense of the rest of the working community, and ultimately drive the companies they invade to bankruptcy. The latest example is most of the states in the union, driven to bankruptcy by unions getting their workers fat pensions. Before that GM was driven to bankruptcy by the unions. The whole Rust Belt was driven to bankruptcy by the unions. No union activity builds a middle class, quite the opposite.
If he means"Obama", that’s wrong, too. The govt “defends” workers by imposing a minimum wage, which increases unemployment, by taxing their employers to provide Social Security and other spurious benefits, which reduces their wages, and by ignoring union violence, which bankrupts the companies the union invades, as above. The govt cannot build a middle class, it can only destroy it by taxing it to death and imposing obstacles to businesses [who would hire more workers].
This is, at best, destructive to national and international economies, and, at worst, destructive to democracy itself.
The employer cannot “decide” how much to pay a worker. Otherwise he would always pay him close to zero. The worker’s wage, like all prices, is determined by the law of supply and demand.
How to trade? There is only one way to trade in a free market, by voluntary consent of both parties involved. It’s not rocket science.
Markets are a creation of government, just as corporations exist only by authorization of government. Governments set the rules of the market.
We have refuted this earlier. And does he think there is no buying and selling except when there is a govt out there meddling? This is contradicted by history. One little example: What govt was involved when settlers in America traded with the Indians?
And, since our government is of, by, and for We The People, those rules have historically been set to first maximize the public good resulting from people doing business.
Totally ridiculous. Our govt is not of, by and for We the people. It is of, by and for a small group of politicians and their pals.
And all the rules the govt imposes are to hurt the public good and benefit their pals.
If you want to play the game of business, we’ve said in the US since 1784 (when Tench Coxe got the first tariffs passed “to protect domestic industries”) then you have to play in a way that both makes you money AND serves the public interest.
Of all the examples, he chose the best example of a law that hurts the public interest and helps only a small group of manufacturers.
Which requires us to puncture the second balloon of popular belief. The “middle class” is not the natural result of freeing business to do whatever it wants, of “free and open markets,” or of “free trade.” The “middle class” is not a normal result of “free markets.” Those policies will produce a small but powerful wealthy class, a small “middle” mercantilist class, and a huge and terrified worker class which have traditionally been called “serfs.”
Totally false. Where is this coming from? Certainly not from the economic history of somewhere on this planet.
The middle class is a new invention of liberal democracies,
So there is no middle class today in China? And there was none under the various monarchs of the 19th and 20th centuries? Total nonsense.
the direct result of governments defining the rules of the game of business. It is, quite simply, an artifact of government regulation of markets and tax laws.
Totally false. Note that he presents no evidence for this, because there is none.
When government sets the rules of the game of business in such a way that working people must receive a living wage,
I guess he means minimum wage laws, which notoriously increase unemployment.
labor has the power to organize into unions just as capital can organize into corporations,
As above labor unions bankrupt the host they feed on.
and domestic industries are protected from overseas competition,
which impoverishes the whole country
a middle class will emerge.
No it wont
When government gives up these functions, the middle class vanishes and we return to the Dickens-era “normal” form of totally free market conservative economics where the rich get richer while the working poor are kept in a constant state of fear and anxiety so the cost of their labor will always be cheap.
No evidence for this whatsoever. Not to mention that in the Dickens era it was the poor who got richer than they ever were, thanks to the industrial revolution.
When conservatives rail in the media of the dangers of “returning to Smoot Hawley, which created the Great Depression,” all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.
At gretaer expense to them, when they could have gotten the same stuff for less. Smoot Hawley did not start the depression, but it helped extend it.
Smoot-Hawley “protectionist” legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy (“1.4 percent at most” according to many historians) its long-term effect was to bring American jobs back to America.
No. Unemployment was terrible all the years of Smoot Hawley.
The fact that the “marketplace” was an artifact of government activity was well known to our Founders. As Thomas Jefferson said in an 1803 letter to David Williams, “The greatest evils of populous society have ever appeared to me to spring from the vicious distribution of its members among the occupations… But when, by a blind concourse, particular occupations are ruinously overcharged and others left in want of hands, the national authorities can do much towards restoring the equilibrium.”
And the “national authorities,” in Jefferson’s mind, should be the Congress, as he wrote in a series of answers to the French politician de Meusnier in 1786: “The commerce of the States cannot be regulated to the best advantage but by a single body, and no body so proper as Congress.”
Plenty of Jefferson’s writings say the opposite, It depends if he was President at the time or not.
But there is a deeper problem here. What’s this “Founders” business, with a capital F?
Are they Gods? Superhumans who knew more than ordinary mortals? A bunch of Einsteins, every last one? Nope, they are human beings, just like the garbage man who lives next door. Their ideas should be examined on their merits, and they themselves should not be exploited in service of the fallacy of appeal to authority.
Of course, there were conservatives (like Hamilton and Adams) in Jefferson’s time, too, who took exception, thinking that the trickle-down theory that had dominated feudal Europe for ten centuries was a stable and healthy form of governance.
Maybe fuedal Europe had a trickle down theory, and maybe Hamilton and Adams believed in it, but those things only happened in Bizzaro World, not here on planet Earth.
Jefferson took exception, in an 1809 letter to members of his Democratic Republican Party (now called the Democratic Party): “The care of human life and happiness, and not their destruction, is the first and only legitimate object of good government.”
Oh, we all agree on that. The q is, what should the govt do to care for human life and happiness? The correct answer is meddle as little as possible.
But, conservatives say, government is the problem, not the solution.
Oh, absolutely. Learn Austrian Economics, and find out why that is true.
Of course, they can’t explain how it was that the repeated series of huge tax cuts for the wealthy by the Herbert Hoover administration brought us the Great Depression,
We cannot explain it because the two are unrelated. Even Bernanke knows that. He and all economists of all schools are unanimous in attributing the great depression to govt meddling, in this case money printing.
while raising taxes to provide for an active and interventionist government to protect the rights of labor to organize throughout the 1930s, 1940s, and 1950s led us to the Golden Age of the American Middle Class.
Ah, our good friend post hoc rears his cute head here. In any case, the 30s and 40s were terrible terrible years for the middle class. The 30s were the great depression, remember? The 40s, until 1946, were war years, when everything was scarce, right down to food and clothing. The Golden Age began when Truman cut govt spending to a THIRD of what it was under FDR.
(The top tax rate in 1930 under Hoover was 25 percent, and even that was only paid by about a fifth of wealthy Americans. Thirty years later, the top tax rate was 91 percent, and held at 70 percent until Reagan began dismantling the middle class. As the top rate dropped, so did the middle class it helped create.)
Who says that ugly tax rate helped things? The economy would have been even better had taxes been nice and low. As for Reagan, see above.
Thomas Jefferson pointed out, in an 1816 letter to William H. Crawford, “Every society has a right to fix the fundamental principles of its association.” He also pointed out in that letter that some people - and businesses - would prefer that government not play referee to the game of business, not fix rules that protect labor or provide for the protection of the commons and the public good.
We must, Jefferson wrote to Crawford, “…say to all [such] individuals, that if they contemplate pursuits beyond the limits of these principles and involving dangers which the society chooses to avoid, they must go somewhere else for their exercise; that we want no citizens, and still less ephemeral and pseudo-citizens [like corporations], on such terms. We may exclude them from our territory, as we do persons infected with disease.”
I dunno, you are not quoting him, but putting words into his mouth. Did he say “play referee to the game of business”? Who knows how you mangled both the content and the context of Jefferson’s letter?
In any case, Jefferson is not God. See above.
Most of the Founders advocated - and all ultimately passed - tariffs to protect domestic industries and workers.
So they did something stupid, or maybe greedy, that hurt the United States. What is your point?
Seventy years later, Abraham Lincoln actively stood up for the right for labor to organize, intervening in several strikes to stop corporations and local governments from using hired goon squads to beat and murder strikers.
Hooray for him. I also don’t want goon squads running around beating and murdering. Sadly, it is well documented that by the 20th century the tables had been turned, and govt was supporting goon squads who beat and murdered FOR THE UNIONS.
But conservative economics - the return of ancient feudalism
What ignorance. The free market has nothing to do with feudalism. Son, you need some Wikipedia in your life.
- rose up after Lincoln’s death and reigned through the Gilded Age, creating both great wealth and a huge population of what today we call the “working poor.” American reaction to these disparities gave birth to the Populist, Progressive, and modern Labor movements.
Maybe in the Bizzaro world, but that’s not at all what happened here.
Two generations later, Franklin Roosevelt brought us out
No he didn’t. He died after over a decade in office with the depression still chugging along full speed ahead.
of Herbert Hoover’s conservative-economics-produced
See above that the great depression was not caused by conservative economics. What gall to write otherwise.
Great Depression and bequeathed us with more than a half-century of prosperity.
But now the conservatives are back in the driver’s seat, and heading us back toward feudalism and serfdom (and possibly another Great Depression).
No. Obama is in the driver’s seat, continuing Bush’s policies only more so, and both were and are doing unheard of govt meddling.
Only a return to liberal economic policies - a return to We The People again setting and enforcing the rules of the game of business -
What do you mean again. Businesses are regulated at very turn. The govt meddles and meddles, more evry day , in our lives and our financial affairs.
will reverse this dangerous trend. We’ve done it before, with tariffs, anti-trust legislation, and worker protections ranging from enforcing the rights of organized labor to restricting American companies’ access to cheap foreign labor through visas and tariffs.
TY for anming the three biggest destroyers of wealth.
The result was the production of something never before seen in history: a strong and vibrant middle class.
If the remnants of that modern middle class are to survive - and grow - we must learn the lessons of the past and return to the policies that in the 1780s and the late 1930s brought this nation back from the brink of economic disaster.
We are doing exactly what we did then, only ten times worse.