The Flat Tax

[AmazonTania]

Actually many of these assumptions have been in classical economic theory since Adam Smith, if not before. Most of them can be found in Alfred Marshall. The best traditional treatment is Joan Robinson's theory of imperfect competition, and there is a recent trend for Nobel's to go to people writing about market asymmetry and information imperfections, including people like Lucas.

I wouldn't really call these assumptions. Adam Smith takes an approach on how to raise the estates of the less among us and how to elevate the suffering of those worse off. What he does is that he doesn't ask what do we have natural rights to. He just wants to know what will work to help these people. His investigation involves centuries of data, which he was able to assemble in one of his books, The Wealth of Nations. Empirically, it shows that the the best way to help those worse off among us is to allow for commerce, Free Trade, Free Migration and Limited Market Intervention.

He was never really worried about the wealth or kings. These individuals can take care of themselves.

I don't know of anyone who opposed free markets, not even Oscar Lange (University of Chicago and Polish Central Planning Board). The economic debate (as opposed to the ideological political debate which is all about money) has always been about how to make markets work more efficiently. The world is as we find it, with externalities and imperfect competition, regulatory capture and imperfect information. The greatest legacy of Milton Friedman (and the reason he is disappearing from the ideological Right, becoming an Unperson) is his exposition of the role of government using a pragmatic standard of what markets can do and what government can do to improve market behavior. It's really Friedman vs Hayek; with von Mises closer to Friedman.

There are those who want markets to be as free as possible, and then there are those who want markets to be as free as they would possibly allow. That is generally the difference between Free Market advocates and Central Planners. One school of thought believes people act in their own self interest. The other school of thought tries to influence economic and social behaviour. I find the best way to influence this behaviour is to incentivise bad people to do good things. Not because you tell them to do so, but because it's mutually beneficial for them to do so. The Free Market already has two ways of dealing with this:

1. Making force or fraud unprofitable.
2. The Rule Of Law.

The perfect competition model supposes a sufficient number of firms with sufficiently small market share that each views its demand curve as horizontal. The market fixes the price and the firm then determines its output. Supply curves are the aggregate of firm quantity decisions adjusted by firms entering and leaving the market. This model does not allow for branding, ignores location, and like Adam Smith's famous comment, takes a dim view of collusion. Imperfect competition spans a range from minor differentiation a la Joan Robinson (the drugstore on the corner) through progressively more market concentration to oligopoly and duopoly models and ending in outright monopoly. It's the DEGREE of monopoly power that matters, the close to the perfectly competitive model (a flea market) the more the results look like the results of the perfectly competitive model. And the reverse for markets with higher degrees of monopoly or monopsony power. To the degree that any firm can create differentiation and grow, it acquires some monopoly power (from the differentiation if not the size!) and departs from the results of the competitive model.

Now "free markets" do not mean the perfectly competitive model. But I propose that to the degree that "free markets" (I really think the term is way too elastic to have much meaning) depart from the perfectly competitive model, especially in the area of product differentiation, the less the advantages of classical economics perfect competition model will apply.

As long as there is open competition, then that is really all the competition you need. It sounds like you are advocating for a level playing field. This is really not what we want. A Free Market means that firms will work viciously for your business by producing goods and services. Some firms are better at this than others. This is mutually beneficial. but the degree of a monopoly in a free market is practically nonexistent. As long as open competitive occurs, the only way someone can obtain 100 % of the market share is if they are the absolute best at providing that good or service at the best price in which no competitor can possibly complete.

Why should this be seen as a bad thing?

What market intervention provoked the collusion Adam Smith observed in 1776? Intervention has been the response to collusion, not the other way around.

How about the East India Company? Originally charted as an organisation of merchants which have colluded and formed the East India Company and accomplished a complete trade monopoly. Adam Smith was a critic of the 18th century corporations that circumvented the operation of the market by obtaining monopoly power from the State. In the Wealth of Nations, Smith argued that the practices of monopoly corporations prevented the Age of Discovery from resulting in a generalised spread of commercial benefits. While it may be true that these were profit making enterprises, they were not true commercial capitalist businesses in the real sense of the term. The profits that they've gains were not due to free competition or voluntary corporation by willing buyers and sellers, but the use of political power. Historically, most (if not all) collusion has operated in his fashion. You have a politically privileged group of people, backed by the military power of the state, establishing trade relations with people that were not voluntary and highly exploitative.

Intervention is usually the cause of collusion, not the response. Collusion without the backing of the military power of the state is highly unstable, and the market can deal with this easily and such arrangement is almost assured to be temporary in a free market. The first and most obvious complication is determining unanimously among the participating members is determining where exactly the prices of their goods and services should be set and which member of each firm should be permitted to produce. The ones which would most naturally be uneasy about such an arrangement would be the more efficient firms. These firms are more likely to disapprove any change in their own production in favour of the less efficient ones. Also, there will always be such a temptation to cheat by lowering their agreed upon prices, or increasing their production in attempt to secure their larger share of the market. The incoordination of these actions are more likely to cause the collusion of member firms to disintegrate.

Really? Then we can throw out most of the work of the 80's and 90's. The field was dominated by work on information asymmetry and decision making in conditions of imperfect knowledge.

In a market economy, prices are the information. Prices are very important has they reveal on the value of alternative uses of each parcel of property and resource in the economy.

I'm not sure what that means. There is a difference between spot markets and futures markets. Are you referring to futures markets as a time arbitrage?

I'm talking about profits, in general.

At last we agree! "Free markets" don't handle externalities. But they could. Re-read my argument for market based solutions to pollution above.

Well, the market itself does not have a mechanism for preventing externalities. Ordinary individuals can already deal with these variables themselves in a Free Market through the role of Property Rights, which is generally the only legitimate government function.

The solutions the pollution can always be determined by asking a simple question: Who owned the property which was soiled by the pollution? Property Rights are not just to protect the wealthy, but essentially everyone. Especially the least off among us. If I dump on my own property, that hurts my bottom line. If I dump on your property, then I'll face a lawsuit.

Voucher plans for education are another example of public policy to achieve social and economic goals by encouraging market-like behavior by participants.

Yes, but this is a general solution created by the government to fix a problem the government created themselves. It's always seen as in fair that private education cost so much and these greedy educational institutions are nickle and diming these families. The voucher problem is a response to prevent the possibly of education being a luxury for the wealthy. The problem is, this has already happened. In most schools in America, you go where your zone school is. If you don't have $250,000 - $400,000 to pick up and move to another location, you're stuck in the same sub-standard learning environment.

It's not a bad solution, but you could have done better by allowing individuals to have these choices they should have without a voucher anyway...

My answer is that economic policy is a process of trial and error. Hopefully theory and history steer us away from programs that are doomed to fail by inherent flaws. After that, we go with what works and stop doing what doesn't work. Both markets and market intervention will fail some of the time. We should not give up on either. The solution to bad policy is not no policy, it is good policy.

It's much easier to have trial & error when you have different states as oppose to an entire state. The best thing these country have to learn from are other countries. Many of these countries never pull away from their economic slumps. Part of market intervention is determining where you want that role in the market to be. I'm for limited, reasonable restrictions on economic sections.

I started my economic career studying the Soviet economy. I doubt you will ever encounter a more severe critic of the central planning model than me. But the extreme "free market" model is equally unworkable. We need to work with some reasonable toolkit rather than be deluded that some form of orthodoxy (anarchistic capitalism or Marxist socialism) is a real solution. I will come down on the side of making the economic system work for the benefit of the participants in general. I believe in Adam Smith's "Invisible Hand", but I also believe as Adam Smith did, that it needs a little help from proper government policy.

Best always,

Jamie

Some people want a pure free market. That's probably never going to be accomplished. Some people which government was better, not gone. No government is not required for a Free Market to work, just limited.

 

[asterism]

If you went to a fooball game, and there were no referees, in fact no sports officials at all, how do you think the game would be played? A kick here, and elbow there, from steroid inflated bruisers? Battles and beatngs on the field? Or worse? Would the sport endure at all?

Wait a minute, you may say, these are professionals, they wouldn't do that. No? What is the record so far, even with the oversight of all kinds of officials?

Ok, you may say, maybe but the ultimate judge would be the fans. They wouldn't go to games that had slid that far. No? What's the evidence? For one thing, with no oversight, fans wouldn't know all that was going on, and so could not make an informed choice. For another, people often make choices that seem illogical, for reasons that don't coorrespond to an intellectual decison about the issue in front to them. For example, a study a few years back found that most fans enjoyed the fights in hockey more than other aspects of the game.

The idea that the "market" will always cause the correct distribution of resources is a simplistic fallacy.

Redistribution through taxes is like having an overall, publicly sanctioned referee for the economy. Building more coal fired power plants might be the most profitable thing to do in the short term, but taking a broader view for society, it is probably a dumb idea. Who's going to say no, unless there is a referee? Tax policy can move a society into more productive, sustainable, pro-social directions than would be the case if left to narrow self interest.

One of the most important aspects of a succesful modern economy is having a functioning middle class. Statistically, those with a middle income tend to spend with the most beneficial effect. Their money goes into the community, to businesses that creat employment. When there is a huge surplus of income, it can often lead to negative effects, such as the recent housing bubble, or stock market run-ups. Tax policy is a way to ensure a vibrant middle class.

A flat tax would simply redistribute wealth upwards, in an economy where this is already a massive problem. The idea that the rich would then use this money in the most pro-social manner is absurd, if history has any meaning at all.

You've got that wrong. One of the (if not THE) most important aspects of a successful modern economy is a fair and efficient system of commerce. The result of a successful economy is a strong middle class.

The problem with using the tax code as a means to engineer society is that it does not adequately fund the government.

Yes, we want a fair and efficient system of commerce, but a strong middle class is not necessarily an outcome of this. Today the middle class is atrophying, and it is not because of the fairness or unfairness of markets, but due to techological change, and to the social and political paradigm that has arisen, partly due to fundamental change, and partly due to the spin of those whose goal is self-interest.

I think it's because the governments are meddling too much and participating as a part of the market instead of being an impartial referee. Another reason is because it's not as bad to be poor these days so more people are less motivated to achieve financial success, which then leads to a cycle of dependency. That's not an argument to get rid of the social safety net, but it should not become a hammock.

 

[Foxfyre]

One of the greatest fallacies of our time is the misguided belief that taxing the rich more will somehow redistribute wealth among the people. The only redistribution of wealth by doubling or tripling the tax burden on the very wealthy will be X dollars removed from the private sector economy to swell the size, scope, and power of government while there are even fewer opportunities for the poor to become wealthy.

That should not be the goal folks.

 

[Auteur]

I think it's because the governments are meddling too much and participating as a part of the market instead of being an impartial referee. Another reason is because it's not as bad to be poor these days so more people are less motivated to achieve financial success, which then leads to a cycle of dependency. That's not an argument to get rid of the social safety net, but it should not become a hammock.

Implicit in your post is the notion that free markets always function efficiently, while government tends to be bureaucratic and wasteful. Yet this is not necessarily the case, as history has shown. Oldfart explains the fallicy of free markets much more knowledgeably than I in the post on the previous page. And the derision of government in the US is of course famous by this point; it is a long running imperative of the financially omnipotent, spun out to serve their best interests, which is a low tax, low regulation environment. For the middle class and lower, this is not a welcome development.

As for welfare, I think this is often an emotional issue as resentment looms large in those that have to work hard at jobs that are not all that desirable, and suffer the thought that others are getting a free ride. Again, it serves the needs of the affluent to spin this image as much as possible, because these are the sort of services they will never need. In fact welfare forms a rather small part of the budget in the US, quite a bit less than in other countries. Are people more content to be poor these days? I'd like to see a study that backs this up. If anything, I imagine being poor is even more of an anathema today, as images of the ultra rich are everywhere, and the contrast must be upsetting.

In our complex society today, governments "meddle" every second of the day, as they must. Without that, we would look more like Somalia than a '60s image of suburbia.

 

[Auteur]

One of the greatest fallacies of our time is the misguided belief that taxing the rich more will somehow redistribute wealth among the people. The only redistribution of wealth by doubling or tripling the tax burden on the very wealthy will be X dollars removed from the private sector economy to swell the size, scope, and power of government while there are even fewer opportunities for the poor to become wealthy.

That should not be the goal folks.

Ah yes, the "job creators", as in an Ayn Rand novel. The rich don't necessarily create jobs. If you had a billion dollars in your investment portfolio, would you pace about all day thinking up ways to get those poor crackers down in Alabama working? Or would you be drinking nice whiskey, and dreaming up investment tricks that tend to be the occupation of those with too much time, and too much money? Be honest now.

Directing resources to areas of the economy that will have the most social benefits is much more likely to be a job creator however. And why would be private sector do this? Unless there is profit involved, there is no reason. Corporations are after short term gain, and there are plenty of opportunities to achieve this in the world. Why bother with the unemployed in America? GM recently opened a new car plant, one which they hope will be a money maker for them. In China. Was employment near the top of their list of priorities?
It is only a body responsible to the people that is likely to pursue pro-social goals. Not in every case to be sure, but this is the tendency, and history gives us plenty of examples.

 

[Wry Catcher]

Your opinion, mine is you lie by omission.

What he posted wasn't opinion, lamebrain.
You just hate wealthy successful people because you've spent your life in LE sucking cock. You're fine with plutocrats making over $200k/yr in public pensions, but not fine with people actually earning that much by working.
You fail to mention any argument against the flat tax other than it might benefit wealthy people. That's your sole concern, Mom he got a bigger piece than me!
In fact flat tax is the fairest thing out there: everyone pays the same. So no off shore bank accounts. No tax loopholes. And especially no non-tax paying voters voting themselves more and more. Maybe that's the part that bothers you.

"sucking cock", not me. I suspect you've confused me with Warrior. How did your date with him go? Are you still in the closet, or did your 'engagement' with Warrior give you the courage to come out?

Thank you for the straw man, sadly the hay was wet and it fell apart before you could ignite it. I don't worry about what others have, I worry about what they do with it, and that is buy members of Congress and members of state Assembly's and State Senates. For that is the surest road to a Plutocracy.

I know you're stupid, and I know you're a liar. Why do you go out of your way to prove it to everyone else?

 

[asterism]

I think it's because the governments are meddling too much and participating as a part of the market instead of being an impartial referee. Another reason is because it's not as bad to be poor these days so more people are less motivated to achieve financial success, which then leads to a cycle of dependency. That's not an argument to get rid of the social safety net, but it should not become a hammock.

Implicit in your post is the notion that free markets always function efficiently, while government tends to be bureaucratic and wasteful.

Not true.

Yet this is not necessarily the case, as history has shown. Oldfart explains the fallicy of free markets much more knowledgeably than I in the post on the previous page. And the derision of government in the US is of course famous by this point; it is a long running imperative of the financially omnipotent, spun out to serve their best interests, which is a low tax, low regulation environment. For the middle class and lower, this is not a welcome development.

As for welfare, I think this is often an emotional issue as resentment looms large in those that have to work hard at jobs that are not all that desirable, and suffer the thought that others are getting a free ride. Again, it serves the needs of the affluent to spin this image as much as possible, because these are the sort of services they will never need. In fact welfare forms a rather small part of the budget in the US, quite a bit less than in other countries. Are people more content to be poor these days? I'd like to see a study that backs this up. If anything, I imagine being poor is even more of an anathema today, as images of the ultra rich are everywhere, and the contrast must be upsetting.

In our complex society today, governments "meddle" every second of the day, as they must. Without that, we would look more like Somalia than a '60s image of suburbia.

That's such bullshit. Somalia is a collapsed Marxist state, not a libertarian paradise.

As for being poor today, it is celebrated by those gaming the system.

[ame=http://www.youtube.com/watch?v=NzspsovNvII]Chapter Jackson - It's Free Swipe Yo EBT (Explicit) - YouTube[/ame]

 

[asterism]

Your opinion, mine is you lie by omission.

What he posted wasn't opinion, lamebrain.
You just hate wealthy successful people because you've spent your life in LE sucking cock. You're fine with plutocrats making over $200k/yr in public pensions, but not fine with people actually earning that much by working.
You fail to mention any argument against the flat tax other than it might benefit wealthy people. That's your sole concern, Mom he got a bigger piece than me!
In fact flat tax is the fairest thing out there: everyone pays the same. So no off shore bank accounts. No tax loopholes. And especially no non-tax paying voters voting themselves more and more. Maybe that's the part that bothers you.

"sucking cock", not me. I suspect you've confused me with Warrior. How did your date with him go? Are you still in the closet, or did your 'engagement' with Warrior give you the courage to come out?

Thank you for the straw man, sadly the hay was wet and it fell apart before you could ignite it. I don't worry about what others have, I worry about what they do with it, and that is buy members of Congress and members of state Assembly's and State Senates. For that is the surest road to a Plutocracy.

I know you're stupid, and I know you're a liar. Why do you go out of your way to prove it to everyone else?

Do you honestly think your union doesn't buy politicians?

 

[Quantum Windbag]

I think it's because the governments are meddling too much and participating as a part of the market instead of being an impartial referee. Another reason is because it's not as bad to be poor these days so more people are less motivated to achieve financial success, which then leads to a cycle of dependency. That's not an argument to get rid of the social safety net, but it should not become a hammock.

Implicit in your post is the notion that free markets always function efficiently, while government tends to be bureaucratic and wasteful. Yet this is not necessarily the case, as history has shown. Oldfart explains the fallicy of free markets much more knowledgeably than I in the post on the previous page. And the derision of government in the US is of course famous by this point; it is a long running imperative of the financially omnipotent, spun out to serve their best interests, which is a low tax, low regulation environment. For the middle class and lower, this is not a welcome development.

As for welfare, I think this is often an emotional issue as resentment looms large in those that have to work hard at jobs that are not all that desirable, and suffer the thought that others are getting a free ride. Again, it serves the needs of the affluent to spin this image as much as possible, because these are the sort of services they will never need. In fact welfare forms a rather small part of the budget in the US, quite a bit less than in other countries. Are people more content to be poor these days? I'd like to see a study that backs this up. If anything, I imagine being poor is even more of an anathema today, as images of the ultra rich are everywhere, and the contrast must be upsetting.

In our complex society today, governments "meddle" every second of the day, as they must. Without that, we would look more like Somalia than a '60s image of suburbia.

Oldfart made a fool out of himself in that post.

I have a challenge for you, prove that, without government meddling, we would be in worse shape.

I won't hold my breath.

 

[The Rabbi]

Your opinion, mine is you lie by omission.

What he posted wasn't opinion, lamebrain.
You just hate wealthy successful people because you've spent your life in LE sucking cock. You're fine with plutocrats making over $200k/yr in public pensions, but not fine with people actually earning that much by working.
You fail to mention any argument against the flat tax other than it might benefit wealthy people. That's your sole concern, Mom he got a bigger piece than me!
In fact flat tax is the fairest thing out there: everyone pays the same. So no off shore bank accounts. No tax loopholes. And especially no non-tax paying voters voting themselves more and more. Maybe that's the part that bothers you.

"sucking cock", not me. I suspect you've confused me with Warrior. How did your date with him go? Are you still in the closet, or did your 'engagement' with Warrior give you the courage to come out?

Thank you for the straw man, sadly the hay was wet and it fell apart before you could ignite it. I don't worry about what others have, I worry about what they do with it, and that is buy members of Congress and members of state Assembly's and State Senates. For that is the surest road to a Plutocracy.

I know you're stupid, and I know you're a liar. Why do you go out of your way to prove it to everyone else?

No, I'm sure you're the cocksucker here.
No straw man. You support union thugs earning $200k/yr but not businessmen who actually do something. I'm not mistaken about it.

 

[Wry Catcher]

One of the greatest fallacies of our time is the misguided belief that taxing the rich more will somehow redistribute wealth among the people. The only redistribution of wealth by doubling or tripling the tax burden on the very wealthy will be X dollars removed from the private sector economy to swell the size, scope, and power of government while there are even fewer opportunities for the poor to become wealthy.

That should not be the goal folks.

That's ridiculous. The poor rarely become part of the 1%. Yes, Horatio Alger offered stories where boys from poor beginnings live comfortably in the middle class but none entered the world of Carnage or the Roosevelt. Your opinion is fiction too.

You want the poor to have greater opportunity, don't vote for a Republican. That party has been taken over by Callous Conservatives. Doubt me, read some of your posts and posts by others on the right.

 

[AmazonTania]

Ah yes, the "job creators", as in an Ayn Rand novel. The rich don't necessarily create jobs. If you had a billion dollars in your investment portfolio, would you pace about all day thinking up ways to get those poor crackers down in Alabama working? Or would you be drinking nice whiskey, and dreaming up investment tricks that tend to be the occupation of those with too much time, and too much money? Be honest now.

If the rich aren't the job creators, then who exactly signs your paychecks if you aren't signing it yourself?

Directing resources to areas of the economy that will have the most social benefits is much more likely to be a job creator however. And why would be private sector do this? Unless there is profit involved, there is no reason.

Profits are the only reason, and really, the most effective and most efficient ways to allocate such resources. You can dream up all the possibilities of if these resources were directed in ways which satisfied you the most, but there are reasons why these resources aren't allocated this way: because it's inefficient and unprofitable. Profits signals businesses to keep doing what works, and to stop doing what does work.

You can come up with more efficient ways to allocate these resources if you'd like, but they'll be to expensive, and no one will want any part of it.

Corporations are after short term gain, and there are plenty of opportunities to achieve this in the world. Why bother with the unemployed in America? GM recently opened a new car plant, one which they hope will be a money maker for them. In China. Was employment near the top of their list of priorities?

Yes, otherwise they would have never opened up another factor in China at all. If Corporations are only in it for short term gain as you claim, then why don't you see corporations opening opening factors in America and in China at the same time? After all, if you could make $1 Billion Dollars worth of revenue in America and $11 Billion dollars in China, why wouldn't you?

However, you never see this trend. In fact, you often see these factors close down in America. There is a reason for that: manufacturing in America is virtually unprofitable. If it were profitable to produce in America, it really wouldn't have mattered where these businesses tried to expand. You could have still had your American factors and expanded to emerging markets in Asia if you wanted to.

It is only a body responsible to the people that is likely to pursue pro-social goals. Not in every case to be sure, but this is the tendency, and history gives us plenty of examples.

Such as?

 

[Wry Catcher]

What he posted wasn't opinion, lamebrain.
You just hate wealthy successful people because you've spent your life in LE sucking cock. You're fine with plutocrats making over $200k/yr in public pensions, but not fine with people actually earning that much by working.
You fail to mention any argument against the flat tax other than it might benefit wealthy people. That's your sole concern, Mom he got a bigger piece than me!
In fact flat tax is the fairest thing out there: everyone pays the same. So no off shore bank accounts. No tax loopholes. And especially no non-tax paying voters voting themselves more and more. Maybe that's the part that bothers you.

"sucking cock", not me. I suspect you've confused me with Warrior. How did your date with him go? Are you still in the closet, or did your 'engagement' with Warrior give you the courage to come out?

Thank you for the straw man, sadly the hay was wet and it fell apart before you could ignite it. I don't worry about what others have, I worry about what they do with it, and that is buy members of Congress and members of state Assembly's and State Senates. For that is the surest road to a Plutocracy.

I know you're stupid, and I know you're a liar. Why do you go out of your way to prove it to everyone else?

No, I'm sure you're the cocksucker here.
No straw man. You support union thugs earning $200k/yr but not businessmen who actually do something. I'm not mistaken about it.

I never said you were mistaken, I've said over and over you're a liar and stupid. Vulgarity is declasse and your actions with Warrior were at one time illegal in America. Lucky for you progressives gave you and s/he (depending on the positions you assumed) license to act out your desires.

I'd bet I have more income today as a retired LEO then you will ever earn. Why, cause I'm smart and not a liar.

 

[AmazonTania]

One of the greatest fallacies of our time is the misguided belief that taxing the rich more will somehow redistribute wealth among the people. The only redistribution of wealth by doubling or tripling the tax burden on the very wealthy will be X dollars removed from the private sector economy to swell the size, scope, and power of government while there are even fewer opportunities for the poor to become wealthy.

That should not be the goal folks.

That's ridiculous. The poor rarely become part of the 1%. Yes, Horatio Alger offered stories where boys from poor beginnings live comfortably in the middle class but none entered the world of Carnage or the Roosevelt. Your opinion is fiction too.

The 1% is an income threshold of $380,000. That's not a high hurdle to jump over. As for 'rarely,' that's not actually true.

You want the poor to have greater opportunity, don't vote for a Republican. That party has been taken over by Callous Conservatives. Doubt me, read some of your posts and posts by others on the right.

So the poor will have a better chance if they simply voted for the other party? How is that working out so far?

 

[oldfart]

What makes the "free market" ideology so misleading is that most of the proponents are unaware of the assumptions behind it. To get markets to get to optimal solutions you have to assume the following:

1. Perfect competition in all product, factor, and financial markets, a.k.a. NO LARGE FIRMS.
2. No collusion among market participants, including no trade associations.
3. Perfect information in real time instantly available to all market participants.
4. Perfect knowledge by all market participants of the future with no uncertainty. The market participants must also be immortal.
5. The complete absence of all externalities, both positive and negative (i.e. social cost must equal private cost) in all markets.

Why do I have to assume stupid things that have nothing to do with free markets in order to believe in free markets?

You only have to accept the assumptions if you claim that free markets have the advantages classical economists attribute to perfect competition. Since you do not assume these "stupid things", your defense of free markets rests on what again?

This is not a representation of the real world. If people really believe in "market solutions" then they would not obsess on the ideal but would work toward solutions that address these failings and make markets work more like perfectly competitive models. Of course that would mean abandoning 99.44% of all conservative cant, but hey, they don't want to improve things, they just want a political issue.

They are not representative of anything other than your delusions. You cannot find a single pro free market economist that ever made assumptions like this. The only place I ever see them is on internet blogs written by idiots who think that the only way to have a vibrant economy is to have the government planning it. Even Marxist economists that oppose free market solutions do not argue that a free market requires perfect knowledge among all participants, they leave that position for the drooling idiots that think that 9/11 was an inside job.

First I am impressed by your civility. It is matched by your grasp of history of economic thought. "Free market" ideologues obviously do not want to talk about these assumptions because to do so exposes the unreality of the model. Any decent microeconomics text from Alfred Marshall on lists most of these assumptions. If you don't like them, simply abandon the competitive model.

Only if tax policy is intended to support a middle class! It's a value-neutral tool. Since the 80's it has mainly been used to concentrate corporate power in both manufacturing and financial sectors, promote international tax avoidance distorting trade, and redistribute massive amounts of income and wealth to the top 0.01% of households.

No it hasn't, but thanks for proving me right about you being a whacko fringe idiot, and not a serious thinker in economics.

I am a Taoist. That means that I do not feel responsible for your bad manners, your ignorance, or your inability to reason. You cannot even realize when you have lost an argument, but I'll give you a clue: a certain tip-off is when you cannot understand the other person's post and are reduced to invective.

 

[Wry Catcher]

One of the greatest fallacies of our time is the misguided belief that taxing the rich more will somehow redistribute wealth among the people. The only redistribution of wealth by doubling or tripling the tax burden on the very wealthy will be X dollars removed from the private sector economy to swell the size, scope, and power of government while there are even fewer opportunities for the poor to become wealthy.

That should not be the goal folks.

That's ridiculous. The poor rarely become part of the 1%. Yes, Horatio Alger offered stories where boys from poor beginnings live comfortably in the middle class but none entered the world of Carnage or the Roosevelt. Your opinion is fiction too.

The 1% is an income threshold of $380,000. That's not a high hurdle to jump over. As for 'rarely,' that's not actually true.

You want the poor to have greater opportunity, don't vote for a Republican. That party has been taken over by Callous Conservatives. Doubt me, read some of your posts and posts by others on the right.

So the poor will have a better chance if they simply voted for the other party? How is that working out so far?

Poorly. Not because the poor don't have some clout, but because greed is no longer a deadly sin, it has become a virtue. At one time the vast majority of Americans had empathy, today many Americans have bought into the ideology of Reagan and his followers: "It's your money, fuck the rest of them".

Rand Paul is an asshole, though I suspect you find him a step short of some deity. I wonder, have you ever studied the cause for civil unrest and revolution. In a word Greed.

While it's not a perfect see:

James Chowning Davies - Wikipedia, the free encyclopedia

As the differential between the very rich - the 5% - and those who once believe they could achieve such success widens shit hits the fan. That may include so many of the Callous Conservatives who vote for Republicans and Libertarians - they one day might string up Rand Paul from a tree.

 

[AmazonTania]

That's ridiculous. The poor rarely become part of the 1%. Yes, Horatio Alger offered stories where boys from poor beginnings live comfortably in the middle class but none entered the world of Carnage or the Roosevelt. Your opinion is fiction too.

The 1% is an income threshold of $380,000. That's not a high hurdle to jump over. As for 'rarely,' that's not actually true.

You want the poor to have greater opportunity, don't vote for a Republican. That party has been taken over by Callous Conservatives. Doubt me, read some of your posts and posts by others on the right.

So the poor will have a better chance if they simply voted for the other party? How is that working out so far?

Poorly. Not because the poor don't have some clout, but because greed is no longer a deadly sin, it has become a virtue.

Greed is defined as a desire to acquire more than what is necessary for basic survival. This categorises everyone. Greed has never been a deadly sin. It's always a part of human nature. As expectations of the quality of life increases, people expected more from their standard of living. Can you name a single era in history before the 17th century when anyone, anywhere ever protested poverty? I doubt that you can. Did people suddenly become greedy around the 18th century? Not really, people just expected more as their quality of life increased.

It can be argued that the only thing one needs for basic survival are a few articles of clothing, a one room apartment and two meals a day. Anything more than this is greed.

As always, Greed is subjective.

At one time the vast majority of Americans had empathy, today many Americans have bought into the ideology of Reagan and his followers: "It's your money, fuck the rest of them".

No one ever makes money with that attitude, so stop pontificating. In order to make money, it has to be available to other people.

Rand Paul is an asshole, though I suspect you find him a step short of some deity. I wonder, have you ever studied the cause for civil unrest and revolution. In a word Greed.

Again, greed virtually defines everyone. It's a constant, not a variable. How does anyone make money in a market system? They find out what people want, and they give it to them. People can only make more money by making people like me and you better off.

That is greed.

While it's not a perfect see:

James Chowning Davies - Wikipedia, the free encyclopedia

As the differential between the very rich - the 5% - and those who once believe they could achieve such success widens shit hits the fan. That may include so many of the Callous Conservatives who vote for Republicans and Libertarians - they one day might string up Rand Paul from a tree.

The 5% is not very rich. It's just affluent. Rich is defined by a net worth exceeding $1 million dollars. And I'm really not clear on what your issue is. Is your issue that many people will not be able to make it into the 1% or is your issue that people won't get a chance to succeed in life?

 

[oldfart]

I think we are pretty much in agreement on most points, so I'll try to keep the comments short.

There are those who want markets to be as free as possible, and then there are those who want markets to be as free as they would possibly allow. That is generally the difference between Free Market advocates and Central Planners.

I think that both "free markets" and "central planning" have become too much code words devoid of meaning they once have had. Today too many defend monopoly and oligopoly, domination of a market by two or three firms, as free markets. Central planning has lost its connection to the command economy which was intended to replace prices in the Soviet system. I believe well functioning economies must go with what works, which generally means robust markets supported by good government policy with regard to commercial law and the kind of necessary interventions Milton Friedman so famously advocated; and, yes, even a level of private and public planning to improve market information.

What I have an antipathy to is the tendency to either rely on regulation (command economy) rather than market mechanisms on one side and the tendency on the other to oppose both regulation and market solutions and pretend that somehow the problems will just go away.

As long as there is open competition, then that is really all the competition you need. It sounds like you are advocating for a level playing field. This is really not what we want.

My position is that the benefits of perfect competition require unattainable assumptions. They remain as benchmarks to measure policy against, but we should be pragmatic in attempting to use an economic toolkit to get as close to those results as possible. Usually this means encouraging players to behave as market participants rather than defendants in a RICO trial. We have criminalized too much and incentivized too little.

How about the East India Company? Originally charted as an organisation of merchants which have colluded and formed the East India Company and accomplished a complete trade monopoly. Adam Smith was a critic of the 18th century corporations that circumvented the operation of the market by obtaining monopoly power from the State. In the Wealth of Nations, Smith argued that the practices of monopoly corporations prevented the Age of Discovery from resulting in a generalised spread of commercial benefits. While it may be true that these were profit making enterprises, they were not true commercial capitalist businesses in the real sense of the term. The profits that they've gains were not due to free competition or voluntary corporation by willing buyers and sellers, but the use of political power. Historically, most (if not all) collusion has operated in his fashion. You have a politically privileged group of people, backed by the military power of the state, establishing trade relations with people that were not voluntary and highly exploitative.

Sounds like a Citizen's United world! You can't really buy a legislator, but you sure can rent them for a few votes.

Intervention is usually the cause of collusion, not the response. Collusion without the backing of the military power of the state is highly unstable, and the market can deal with this easily and such arrangement is almost assured to be temporary in a free market. [/quote]

There is a long and large literature on the origins of monopoly, collusion, and oligopoly, ranging from decreasing cost "natural monopolies" to "first past the post" models. Some of these arrangements are unstable, but many seem to be able to go on indefinitely. How many electric companies serve your city?

Well, the market itself does not have a mechanism for preventing externalities. Ordinary individuals can already deal with these variables themselves in a Free Market through the role of Property Rights, which is generally the only legitimate government function.

Which is more efficient, quicker, and available to more people; a quasi-market as I described, or the American tort system? How many successful lawsuits are won each year by private citizens against coal power plants?

Finally, I think the role of competitive theory is to set the goals of market efficiency we strive for. Not all markets are created equal; some work better than others. While there is an intellectual argument that can be made for minimalist government involvement, I tend to look for ways to have markets work better; better information, lower transaction cost, less monopoly and monopsony power. Better markets should give us better results and a higher standard of living.

 

[oldfart]

Implicit in your post is the notion that free markets always function efficiently, while government tends to be bureaucratic and wasteful. Yet this is not necessarily the case, as history has shown. Oldfart explains the fallicy of free markets much more knowledgeably than I in the post on the previous page.

Oldfart made a fool out of himself in that post.

I notice you advanced no arguments against any of the points made. Or did I miss it?

I have a challenge for you, prove that, without government meddling, we would be in worse shape.

I won't hold my breath.

Challenging someone to prove a negative. I guess that's what passes for logic in your alternate reality.

 

[oldfart]

That's such bullshit. Somalia is a collapsed Marxist state, not a libertarian paradise.

And here I thought that Somalia was a failed Islamist state. What the hell, Marxist, Islamist, libertarian, it's all the same to some people!