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Tom Britton

Director, Teacher, Language School

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Is America being destroyed by the Free Market system?

Could it be that unrestricted business and privatisation has created a profit drive and not competition to provide better quality goods and services? At what point would American people decide that the unrestricted Free Market doesn't serve the people?

Topics: behavior change
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  • Oct 6 2013: I would, if I may?, subvert the whole basis of your question.

    America is not just the USA. US cultural imperialism is so pervasive that when we talk about America we find we are talking about that bit of America that is the USA.

    What makes you think that there is a free market system?

    There is no free market in labour. For example, people from Mexico, and other parts of America, are not allowed free movement to the United States to find better paid work.

    More fundamentally, if there were a genuine free market then the failing financial institutions in the USA would have been allowed to fail, but the US central bank props up the failed system with quantative easing, in what some commentators have called "Socialism for bankers". The risk takers, "masters of the universe", have been gambling with the money of the humble tax-payer all along. When it comes down to the crunch the US government, the banks, and the Dow do not truly believe their own free market propaganda.
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      Oct 7 2013: None of this would have occurred without the FED
      • Oct 8 2013: Ending the fed will not fix this problem Pat, it is more pernicious than that.
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          Oct 8 2013: I don't agree.

          This is historic deja vu the debasement of the money is the key. The Romans did it by alloying their coinage. Most do it with inflation.

          The great depression started with an increase of the money supply though the fractiomal reserve rate followed by a decrese in the money supply.

          The current depression was the increase in the money by Greenspan and the decrease in credit by Bernanke.

          The economy has a natural disposition of deflation, this has been subjugated by the FED.
          Inflation is what makes the rich richer and the poor poorer.
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          Oct 8 2013: ah, sharon, thanks for clarifying. good that this debate is finally settled.
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    Oct 6 2013: Right now its being destroyed by the republicans holding the debt ceiling and budget to ransom.
    Economic terrorism?
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    Oct 3 2013: So are we all agreed that it is not some economic or political system that is involved. It's the people.
    Now, I have a theory at least in the US, that by accident or design, American Public Education accident or intent has dumbed down the population over the last 50 years.

    I recently saw a silly movie where the hero was an average guy, very average, IQ 100 average goes forward in time, 500 years and finds he is the smartest man in America and saves the country from ruin.

    Seriously? We have nosedived in 50 years and I do not find this silly. We have a large number of our population who will tell you that if it is on the TV or the internet, it must be true. A 30 second sound bite by a personable politician is gospel and we all will be saved.

    I am not talking about middle school dropouts, I am talking about college students... and my favorite response,

    'oh, I don't care, somebody will figure it out. I got my Facebook to take care of.'

    Are you kidding me? It's not about this market or that political system... America is dying of Apathy.
    • Oct 6 2013: I also think corruptions in the press or broadcasting, some groups that have power to announce, is super serious problem and we ought to sort it out and inform uneducated people in spite of the fact it is pretty hard.
  • Oct 2 2013: central planning has and always will fail. Read a book and study data.. America has been successful because of capitalism, Europe is in decline because of its increased utilization of central planning tactic and every great emerging power (Brazil,China,India) are emerging because they are adopting a free-market bottom up model of constructing there societies.
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      Oct 2 2013: "Read a book"... a bit of a vague recommendation there, but nevertheless I am planning on one day reading a book, I just have to learn how to read first.

      Yes America has been "successful because of capitalism". But what do you define as success? Are you referring to GDP? The annual GDP in the States is pushed up by trillions each year due to the amount of money the private individual has to spend on health care. This money supposedly is part of the economy, but this large section of the GDP is actually a representation of private debt and, thus, inefficiency.

      I don't know where you are getting your information about Europe, what exactly gives you that impression? Europe is chasing the Thatcher dream and has been fiercely privatising for three decades now in the wake of Thatcher. Most of Western Europe, as she wanted, is now based on the service industry and has lost manufacturing. Germany is succeeding partly because the back bone of their economy is based a huge global manufacturing industry, i.e. the common worker is employed. Germany is the most socialist country of Western Europe.

      Brazil, China and India.

      Brazil has an extremely chaotic economy. Looking at the figures alone is not enough. The money being made is very little to do with the general public. A lot of liberties have been taken with making that money. Large sections of the rain forest are disappearing and micro-societies are being wiped out. A small group of people are making some money out of this. The money is not filtering down.

      China's massive economy is very delicate. They have large newly built cities which could house millions of people - just ghost towns. There is no-one there. They were built off the back of a massive housing boom. It'll come crashing down just like Europe.

      India might stand a chance, we'll see, but I doubt it. The economy will grow, but it won't filter down much.

      Having lived in all three of these countries, I can tell you that this "development" is not trusted
      • Oct 2 2013: much work is needed in all societies but the central theme is give people freedom, let them organize, let them engage in free trade and utilize the apparatus of government only as a medium between conflictting interests in society and a means to maintain the status quo.. wonderful things happen in all societies when people have both freedom and trust in their system. no country embodies this ideally but those that are close or increasingly become closer become successful, happy, places of commerce and creativity.
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          Oct 2 2013: Let them create monopolies that abuse people's rights and manipulate them? Ok, obviously you don't want that. You provide a perfectly compelling argument Keith, but I just don't see where the line is drawn on the Free Market? Can we let a company get so big that the government can no longer regulate it? What can the government do about Fracking and all the other abuses? "Small government" is a nice concept. I like freedom, I like choice. But giant companies don't work for you and me. So what would you do about the problem?
      • Oct 3 2013: oil fracking is far safer than any alternative.. read i think the july issue of popular science if you get that magazine in Spain. Governments should not regulate business but establish certain parameters to protect particular interests. Companies survive by providing products that consumers want not by force. Companies can not force anyone to do anything and if they do its only made possible through the channel of government. governments do what governments do by using force thats the problem.. governments monopolize force.. even if an industry is owned by a single corporate entity it would provide jobs as people are willing to work and it would have to maintain a viable price for its consumers otherwise it would lose profit on volume.. only an idiot business would fix a price. some industries that do have fixed price i.g. oil and medicine, are only fixed because government subsidation and/or "protective" regulation
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          Oct 3 2013: Do you think prisons should be privatised or nationalised? The British government is talking about privatising prisons. Critics argue that it will be in shareholders' interests to keep prison populations as high as possible. Where do you stand on that issue?



          "Governments should not regulate business but established certain parameters to protect particular interests." - what's the difference?
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          Oct 3 2013: I've read arguments in favour of Fracking, stating that safety is the paramount issue for the drillers and that no other alternatives could possibly be as safe. I just don't buy it. Not only does it create lethal concoctions in the water supply, it takes vast amounts of water to actually drill. A hell of a lot of people are suffering right now.
        • Oct 7 2013: Ever seen anyone frack with liquid nitrogen. Its 72% of the air we breath. Pretty ecologically safe.
      • Oct 3 2013: im not totally sure about all the different dynamics of fracking but i would say that on some environmental grounds government has the obligation to police however the need for a good environment needs to be balanced with the economic/resource needs of a nation.. the way to fight for a cleaner environment is to lobby governments to cut defense and welfare spending and throw that money into scientific research...
        here in the US about a third of the prison system is privatized and i dont agree with it. Government has the right to govern areas where it is unethical and unfeasible for the market to operate. with that said though i think most importantly the world at large has to redefine its defintion of "Justice" and the way we deal with criminals needs to be ammended. prisons should be fore murderers, rapists, and other serious violent offenders. the focus should shift from prisons to rehabilitation and i feel we should utitlize alternatives like probation and house arrest more frequently
        ..oh and the difference in regulating and setting parameters is this.. governments should protect the rights of individuals and companies alike and nothing can interfere with those boundaries.. regulation is when a government subsidizes markets or legislates its practices.. as long a business doesnt impede on anothers rights then it should be able to operate the way it want
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    Oct 7 2013: If the “free-market” theories of Ayn Rand and Milton Friedman were correct, the United States of the last three decades should have experienced a golden age in which the lavish rewards flowing to the titans of industry would have transformed the society into a vibrant force for beneficial progress.

    After all, it has been faith in “free-market economics” as a kind of secular religion that has driven U.S. government policies – from the emergence of Ronald Reagan through the neo-liberalism of Bill Clinton into the brave new world of House Republican budget chairman Paul Ryan.

    By slashing income tax rates to historically low levels – and only slightly boosting them under President Clinton before dropping them again under George W. Bush – the U.S. government essentially incentivized greed or what Ayn Rand liked to call “the virtue of selfishness.”

    Further, by encouraging global “free trade” and removing regulations like the New Deal’s Glass-Steagall separation of commercial and investment banks, the government also got out of the way of “progress,” even if that “progress” has had crushing results for many middle-class Americans.

    True, not all the extreme concepts of author/philosopher Ayn Rand and economist Milton Friedman have been implemented – there are still programs like Social Security and Medicare to get rid of – but their “magic of the market” should be glowing by now.

    We should be able to assess whether laissez-faire capitalism is superior to the mixed public-private economy that dominated much of the 20th Century.
    • Oct 8 2013: The USA did not have a free market in the last three decades. Instead, there was active collusion between business and government to eliminate the free market. There has never been laissez-faire capitalism. Government has always interfered, and businessmen have always sought out and obtained government favoritism.
  • Oct 6 2013: Really? Really? You're asking that now, in this century? America is less free market than it has ever been at any time in its history. We have not had an unrestricted free market in the USA for nearly a century.
    • Oct 8 2013: Technically there has never been a "free market" as the propaganda intends. Some of the very first laws written under the continental congress had to do with trade and the revolution was fought over trade and corporate control.... It is the implementation of what people perceive as free market but is actually neo-liberal economic theory that is the problem.
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    Oct 3 2013: @Sharon
    Hi Sharon,
    You have a pretty good grasp of the situation, but you seem not to fully appreciate the commodities market.
    Yes, Morgan Stanley is big in this market and it would seem to effect the oil market ... but as always, it is not that simple.
    Oil, Hogs, Corn... Products need a lot of money up front to be available at a later date. Corn has ripened , Hogs grow big and fat, Wells have to be set up, drilled and capped to direct oil production. If I am a oil company, I have to put up $10s of millions to drill my well and do all the other stuff. I don't have that cash. So, I go to a bank and borrow that money. The bank says how am I sure I get my money back? Well, the commodity trader comes in and says, I will sign a contract to buy 50,000 barrels of oil at $100 a barrel. This is like an insurance on market price for oil.. The bank is happy and gives me the money, I am happy because I am going to drill my well . the trader is happy because he believes oil will be selling for $110 a barrel next year and he will make a fortune. The bank and I are good, we got our money.. But let's say the trader was wrong and the market for oil is only $90 a barrel when the note is called. He is a big time loser.
    Without commodity trading, there would be no oil, no corn, no bacon. You would have to raise your own. Although it is not well known, The commodity market has probably done more to make America great then almost any other entity.
    • Oct 3 2013: I have an awesome appreciation of the commodities market and full grasp of what it means to buy "futures" which is what you are speaking of and then what it means to trade in futures at the level of micro-highspeed high frequency trading and what that does to a market for anything, but especially for commodities.

      What Morgan Stanley did for better than 5 years was barely legal and everyone in the oil trade knew it, but no one was able to do anything about it. Real commodities traders were livid because of the way that they were skewing the market and the trade. We need genuine reform on high frequency trading and on the derivatives market. Again, your points about how economics works to drive the engines are all true. The problem is that the theories, not only even when they are correct but especially when they are correct, no longer account for the amazing things that are currently going on in the markets. The level of manipulation and collusion really debases the ability of the market to function as it is supposed to: as a means of bringing investment to the real economy. (BTW as a general indicator of futures for international trade I like the Baltic Dry as it is simply what is shipping period.)
  • Oct 2 2013: Tom, I think there are two words in English that are ill-defined and exquisitely important. One is love. The other is freedom.

    I love ice cream and my children but it is not at all the same emotion. The freedom TO do whatever I want and the freedom FROM the consequences of other people doing what they want are not the same freedoms.

    If language tells us what we value then we truly love, money, cars and anything sexual but we are actually not that big on love or freedom. (at least not English speakers.) I truly believe this failure of language is a key to our problems.
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      Oct 2 2013: Failure of language is the key to every problem. Language is used against the citizen to brainwash and create false realities, and the citizen embraces falsehood readily. Example of falsifying language: friendly fire, blue on blue, collateral damage, passed away, deceased etc
      • Oct 2 2013: "Failure of language is the key to every problem."

        Taken literally, this statement is obviously false. Language has nothing to do with fixing my lawn mower, and many other problems.

        Perhaps you meant that failure of language is the key to every political problem.
        Or perhaps that language is the key element to developing solutions.

        Is "failure of language" referring to the limits of language, exemplified by the words "freedom" and "love"? Or do you mean the deliberate use of language to obscure and confuse?

        I strongly believe that we should view all problems as problems of behavior, and not blame other things, such as language, technology, or the economic system. The key to every human problem is human behavior.

        I do agree that language is an extremely powerful tool that is often underestimated.
        • Oct 3 2013: I would say language is the key to every social problem. And social problems tend to influence everything else including the fact that you have a lawn and a mower etc. Language does more than describe reality it shapes it. You cannot think of something that has no concurrent term for you to express it to others. Otherwise the construct dies inside your consciousness. Americans are awesome at simply making p new words for new ideas. We are good at it and we adopt them readily, they spread easily. So, why can we not create new terms for the things which press us the most? These constructs of socialism and capitalism are terms for things that are poorly understood and in truth have never really existed. So we argue and scream. People act as if these are the only choices. They are not. They were not decreed by god, they are man made terms and constructs. You don't like them? Create a new one. It's time.
  • Oct 2 2013: Look how quickly the conversation here devolved. This is what we are reduced to. It is a sad sad state of affairs. Economics is not a science, it is a philosophy. At the micro-level you can prove specifics and you can prove some specifics are general larger levels, but when you are discussing issues like capitalism versus socialism you are mashing together a political theory and an economic one and NEITHER of them have ever worked completely. But, the only truly free market capitalist society we currently have is Somalia. Even a free market must have parameters, regulation and law - at the absolute barest minimum you must have contract and property law to make a purported free market work. Currently no country has a good example of this. What has happened in the US is that people fell under the spell of a group of people who convinced them that the only way to be free was to get rid of government. And they worked very hard to bring that about. What they got was a truly polluted version of corporatism that is not capitalism at all. The old economic theory of the horse and sparrow morphed into trickle down economics and was embraced by the right and the left. It has been implemented more broadly and completely than any economic theory in history across the US most of the EU and much of Asia. The end result of this long term vast experiment is what you see when you look around. It does not work and has not worked. As a matter of fact it has been a destroyer of wealth and a concentrator of extreme power in the hands of a very few. It is not the "free market" system that is destroying America (or the EU) because this is not a free market.

    I would posit this question: What is Freedom? Both the left and the right in the US are vehement that they and they alone are fighting for freedom. What if they are both right and both piteously wrong?
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      Oct 2 2013: Thank you for your insightful comments!

      I'm under the impression that the word "freedom" is key to politics in the States and of course it's for a very good reason. But using that word, inevitably, frequently leads to very hot debate and confusion. The concept is indeed difficult to define and it's intangibility is used to create a façade in the name of war time and again.

      In Europe, largely in the West, Freedom is generally just assumed (rightly or wrongly). The debate doesn't centre around it. It is rarely a case of "does this law give us more freedom or less freedom?" If anything, the word used is usually "fairness".

      Sharon, in your opinion what are the key elements that you think are preventing America from being a true free market?
      • Oct 3 2013: Corporate fascism. Intense concentration of wealth. I would specifically say the ruling Citizens United was a disaster for our republic as it sold "freedom of speech" to the highest bidder. Also, the Florida decision that gave Fox news the right to lie on its news programs under the guise that the regulation that said they could not lie was a violation of their corporate freedom of speech. In both cases, corporate entities were given rights. But those same entities did not have any of the responsibilities that go along with rights. Some corporations (and I am not painting them all as evil) but some have become larger than some countries (note that Mark Zuckerberg was invited to the G20 and treated as a head of state) That creates an outsize influence on the creation of the law over that of the impact of the voice of the people. In this setting some industries have become almost entirely monopolized which is very much against the free market. Media is down to 6 major outfits. Healthcare is down to fewer than 10. And banks, since the 08 crash have gotten bigger and more concentrated. This is bad for the free market construct and dreadful for our republic.
  • Oct 2 2013: I wouldn't say the free market itself is inherently bad.

    The real problems start when international corporations stop paying taxes, and when politicians can be freely bought and sold. Both aren't inherent free market problems though; its mostly an issue of campaign funding and international regulation.
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      Oct 2 2013: Ok, thanks

      How can a free market prevent a corporation becoming so big that it is more powerful than the government?
      • Oct 3 2013: Funding voting campaign is a big part of it.
        As it stands today, the only way to run for office in a lot of countries is via corporate backing. You'll simply be unable to gather up the funds otherwise, which means that the corporations own the politician and may have more say than the voters.
        We fund political campaigns in my country, at least on a national level. As result, corporate lobbies don't have a fraction of the power they have in the US.

        Paying taxes despite international activity is also a part of it, though not as significant. That one's more about balancing the check book than the balance of power at the moment.

        More crucial perhaps is a lawful prevention of having corporations start funding private military units to maintain the government's monopoly on violence, though that's more my long term speculation than a real problem at the moment.
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    Oct 2 2013: You are economically illiterate.

    The first thing you should do is find out what you don't know
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      Oct 2 2013: it will be pretty hard, considering that most major "intellectuals" advocate socialism and oppose free market. for example, what if he turns to krugman for more information? nobel laureate, after all. must know stuff.
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      Oct 2 2013: Pat, calling me economically illiterate is hardly an objective contribution considering you have no idea what I know or do not know.

      If you are so insistent, feel free to try to enlighten me.
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        Oct 2 2013: I am. The first thing a person needs to know about something is that he doesn't. It is the first stumbling block to learning something. As Krisztian indicates the preponderance of "knowledge" on this subject is socialism, which blinds. Your own country is one of the PIGS.

        It is doubtful you can overcome this handicap.
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          Oct 2 2013: Pat, what on Earth makes you think I can't overcome that handicap. It goes without saying that one should appreciate one's own ignorance when trying to explore alternative ideologies or criticise current regimes. I'm very open minded and well aware of the limits to my knowledge, as I'm sure you are of your own. Obviously my own country is one the "PIGS", that goes without saying. But Orwell was talking about a corrupt Communist regime, so where does your comment come from? Additionally, what makes you think that I'm a socialist?

          You aren't conversing, you are bickering I don't see where it's getting you.

          Talk about the economy. Talk about politics. All you've done is talk about me. You know nothing about me. Evidently a person's lack of knowledge on a subject and how a person enters a discussion with that lack of knowledge is an issue of top priority for you.So why don't you take a look at the rather extreme assumptions you've made about me despite having no knowledge of who I am or what I know.

          The question in the title of this conversation is clear as day. You've entered here with a personal attack and haven't even attempted to contribute. I suspect you are more than intelligent enough to say something productive. If you disagree with someone, teach them. What exactly are you trying to achieve?
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          Oct 2 2013: Pat, you are officialy burned out :)
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        Oct 2 2013: PIGS is not an Animal Farm reference, look it up, it is an economic reference

        Whenever someone says they are open minded I know that is their second decision which is to mask their first one, which is you have already made up your mind.

        Your original question tells me your disposition on the subject, no amount of verbiage is going to get you to look as you have already been poisoned by the water you swim in.
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        Oct 2 2013: Jed

        I have come to realize the futility of trying to get one of these individuals to look. That is a million to one shot.
  • Oct 8 2013: It is that unrestricted Free Market Economy does not distinguish between what can, and what can not, be easily produced. Land can not be produced at all, or someone may say it can not be easily produced. It is the same with some other natural resources. So, generally, land is virtually monopolized.

    “One of the general principles of taxation is that one should tax factors that are inelastic in supply, since there are no adverse supply side effects. Land does not disappear when it is taxed.” – Joseph E. Stiglitz, http://www.nextnewdeal.net/wp-content/uploads/2010/12/principles-and-guidelines-for-deficit-reduction.pdf
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    Oct 7 2013: NO, it is the cause of its own destruction.
    A free market economy creates an opportunity for all to derive an income. It is in regulating the free market which problems arise. Most laws are and regulations are there to promote fair trade.
    Laws and regulations in free markets are manipulated to make entrepreneurship impossible.

    Entrepreneurship is about new ideas, not improving existing ideas and business. Improving existing ideas is progress... Entrepreneurship is about uniqueness, originality and something very different that is not on the market.

    Privatisation in the government sector is equivalent to throwing the baby out with the bath water... If you look at government as the parent and we the children... Then you have a negligent parent whose needs are put before the children. A parent who produces children to work for and financially support them, because that is why they had them - cheap labour.

    An unrestricted free market creates competition and drive for improved quality of products and services.
    eg: a food court, craft market etc... only some of them not all... depending on the powers that be.

    Not everyone is open to diversity and competition or the foresight for growth.
  • Oct 7 2013: Quite the contrary. The free market is the solution. When government steps in to make the free market "fair", they screw it up and the benefits of a free market disappear. With government "fairness" it becomes easier to game the system . A true open free market gets the most goods and services to the most amount of consumers.

    Example: Rent controlled apartments in NYC has created a housing inequity. You have people with great apartments overlooking Central Park paying rents from the 70s. These people aren't giving up their lease, they will illegally sublet whatever to keep that low priced apartment. The building owner gets frustrated due to lack of rent and turns the building into a co-op or condominiums and that makes it more unaffordable to future residents. If the market was a true free market there would be housing on all price levels but now it is skewed by gov't. intervention.
    • Oct 8 2013: You will always be able to find spaces where government intervention has damaged the market, but regulation is necessary for the market to remain free. Currently we have terrible monopolies in most major industries and those markets are no more free than those under communist rule. The media, energy, food, and other arenas are tightly controlled by corporate cartels that use the government as their lackey. Do not mistake this end result for cause. You are mistaking a symptom for the illness.
      • Oct 8 2013: Any regulation greater than a frame work, will skew a market. The more regulation, the greater probably the market will be controlled by a cartel. A small business can't afford the cost of compliance and be a nimble competitor.
      • Oct 8 2013: There is a difference between "regulation" that prohibits fraud, including fraud by omission, and "regulation" that dictates or attempts to dictate market outcomes or limit trade for some sort of "moral" purpose.
  • Oct 7 2013: It is not the free market that is the problem; in fact the free market is a major part of the solution. What is truly happening is that there is a disconnection between investors and workers. The former wants lower costs and the latter higher pay so there is always a conflict and tension between the two. The first part of the solution lays in increasing shareholding among the population at large. This could be achieved with a universal fund.

    The second part (albeit much harder to implement) is to allow the free movement of people. At present corporations can move freely and easily to lower labor costs because the workers in those countries are trapped. This is exploitation of captive people, if those people where free to move this market distortion would evaporate.

    Once free movement was established the reason to move from one’s homeland would disappear as there would be no economic-migrates, the feared exodus to the west would not happen. Lastly if global labor costs where more evenly distributed corporations would not fire the US workers to seek lower foreign labor costs.

    To be a truly free market labor must also be free to take a job anywhere - short of this there is no free market, just distortion.
  • Oct 7 2013: In the very centers of our civilization today are want and suffering enough to make sick at heart whoever does not close his eyes and steel his nerves. Dare we turn to the Creator and ask Him to relieve it? Supposing the prayer were heard, and at the behest with which the universe sprang into being there should glow in the sun a greater power; new virtue fill the air; fresh vigor the soil; that for every blade of grass that now grows two should spring up, and the seed that now increases fifty-fold should increase a hundred-fold! Would poverty be abated or want relieved? Manifestly no! Whatever benefit would accrue would be but temporary. The new powers streaming through the material universe could be utilized only through land. And land, being private property, the classes that now monopolize the bounty of the Creator would monopolize all the new bounty. Land owners would alone be benefited. Rents would increase, but wages would still tend to the starvation point!

    (From http://schalkenbach.org/library/henry-george/ode-to-liberty.html)
  • Oct 6 2013: Tom, read the history of the opium wars where British and US governments and troops tried to force China to open up for a free market. We talk about the beginning of 1800. Opium, drugs! And why did these western 'governments' (as now mainly consisting out of a rich elite) do so? Not because of some ideal but simply because of huge profits wich made the elite filthy rich. Over the last period of time western capitalists/business man moved their business over to Asia, transferred many jobs out of the US to ?Asia and prepared the rise of unemployment in the US. Why? because they do not care about America they only care about their money. So what is realy going on Tom?
  • Oct 6 2013: A failure to understand the unique qualities of land in a modern free market economy is a key cause of both the boom-slump business cycle and the wealth gap and only by understanding land while regulating it properly with a land value tax can these two flaws be eliminated from the free market economy. Ultimately all production depends on readily available land. If rent is privately collected then rapidly rising land rent will continue to create damaging business cycles and a widening wealth gap while governments resort to collecting more wealth from earned income sources. Another recession is in the making while the wealth gap grows larger. Clearly, a need for a new economic paradigm exists.

    On a statewide scale the idea of taxing land more and other items less has been successfully implemented in Pennsylvania. As cited in Incentive Taxation; writers Anthony Downs and Knighton Stanley wrote in the Washington Post "This seemingly modest reform [a building to land property tax shift] enabled Pittsburgh, Scranton, Harrisburg, and a dozen smaller cities to keep housing costs down, and renew and revive blighted neighborhoods. These activities, in turn, unlocked job opportunities" (Incentive Taxation September 1999, 4). The two authors are referring to Pennsylvania's "Graded Property Tax Law" which allows cities to tax land values more than building values.
    (From - The Need For a New Economic Paradigm (2001) - http://www.progress.org/thacker.htm)
    • Oct 8 2013: That works in smallish urban areas, but does not work across full systems. You cannot value land in use for housing and business the same way you value land for farming. Many farming families have to give up their land because they cannot earn enough income on it to pay their taxes. While I agree that we should farm vertically, but maintaining open space is also important.
      • Oct 9 2013: The land value tax (LVT) can be applied well both to farmland and urban land. It is based on the actual rent of the land. And the appraisal is assisted by computerised software. If farmers generally did not earn enough income to pay taxes, it should be that the appraisers’ field teams had not performed their duties well, but I think this case is rare. My reference is "Estimating Land Values" at http://www.henrygeorge.org/ted.htm.
  • Oct 4 2013: Tom,

    Is your question based upon the financial meltdown that occurred in 2007-2008?
    • Oct 6 2013: Except that wasn't a result of a free market. It was a result of "socialism for the rich", in which government and big business collude in "crony capitalism". In a free market, government does not play favorites. In a free market, the government does not favor the rich over the poor or vice-versa. In the USA, large corporations are favored by government and have been for a long time. Thus, we do not have a free market. To repeat myself, when government takes sides, a free market no longer exists, and favoring the rich means that government has taken sides.
      • Oct 7 2013: I am not going to argue about the influence of large corporations, especially financial ones, on the government. What I would say is that the government took the banking industry back to the 1920's by removing all the controls placed on banks prior to 1932-1933 which was to stop bank failures.

        It is interesting because if you replace margin calls with mortgage backed securities, you have basically the same scenario.
        • Oct 7 2013: If you refuse to consider the corrupt institutional partnership of businesses and government in "socialism for the rich", then you refuse to talk about a free market entirely and prefer to make up something and pretend it is a "free market".
      • Oct 7 2013: Bryan,

        Can you give me your definition of a Free Market?
        • Oct 7 2013: A market in which the government does not take sides. All it does is protect against fraud, violence, misappropriation, theft, etc. Pollution is a form of theft if it materially interferes with "quiet enjoyment" of property that I have a legal right to use (using "quiet enjoyment" in the legal sense). Concealment of pertinent risks in an investment is a form of fraud. Indeed, while the former idea has yet to wend its way through legislation, the latter is explicitly prohibited by law, but the government took sides and looked the other way for very large corporations. It permitted them to commit fraud and then refused to punish them. Thus, since the government did not act as a neutral agent, the government interfered with the operation of the market, rendering it no longer free. If government permits employers to take violent action against employees for unionizing, government has taken sides and the market is no longer free. If a government permits employers to punish employees for trying to organize on their own time (including their lunch time), the government has taken sides and the market is no longer free. In addition, extremely obtrusive regulation makes a market not free. Examples: Requiring someone who only braids hair and never cuts it to take full training and certification as a barber--several US states do that. Prohibiting food truck owners from selling their wares within a certain distance of restaurants--several US cities do that. There are a host of government interferences in the market that ensure it is no longer free.

          The problem is that totalitarian goons (aka capitalists and socialists) have lied to us all for decades. They say "free market" when they actually mean "socialism for the rich". Most people have been taught to blindly swallow propaganda and never think, so they swallow the lie that a government-industry collusion is some kind of "free market". Crony capitalism is not a free market.
  • Oct 3 2013: When the computers or smartphones sales changed the dominance among the manufacturers, the dominance shifted from the likes of HP and Dell to Apple and Samsung, also from Nokia, Blackberry to iPhones and phones with Google Android OS. It also happened in automobiles. The Japanese and German cars gradually outsold the American cars. All of those have involved some profit motivation, BUT THE MAJOR REASON HAS BEEN THE COMPETITION BASED ON THE PREFERENCE OF THE WORLD CONSUMERS. How can you say that "(it is) the profit drive and not the competition to provide better quality goods..."? Remember that the bankruptcy of General Motors and Chrysler were bleeding in loss of "profits" but still failing in competition, which was the real cause.
    The term of Failure in Language is kind of ambiguous. First this "failure" has nothing to do with what language you use; be it English or Spanish. The real problem is the MIS-USE of the MEANING of the words you use (in English or Spanish). The real problem here is the ambiguous usage of the word "profit drive" and the "competition". In fact, even the same word, quoted from different articles, might mean as a criminal or a victim. Most of the argument here just involves two extreme views of the free marketers or the anti-free marketers. One side condemns reckless profit drive marketers, the other side argues that free market system is the driver of economic growth, and the profit drive is just the by-product (and the incentive) of the competition in a free market system.
    Finally, let me say that the TWISTING OF THE MEANING OF ANY WORDS IN ANY LANGUAGE HAS BEEN WITH US FROM LONG TIME AGO AND WILL STAY WITH US FOREVER AND EVER. If every one agrees on all the uniform meaning on every word, then TED Discussion will probably be out of business soon. :< ).
  • Oct 3 2013: My 2 pennies.......

    Spend several hours on a weekend in a Walmart in America. Take in the whole view. Everything. Then, ask the Free Market question. There is something MUCH MORE fundamental at work. The system that emerges over time ALWAYS feeds the DEMAND.....regardless of whether the demand is AUTHENTIC or SOCIETALLY PROGRAMMED.

    Society IS indeed fragmenting. We will point and point and point to outside causes. We will even attack or question America's number One religion(Capitalism) before we discover the root cause. But the cause is directly in front of us and obvious for anyone who has grown tired of the insanity.
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      Oct 4 2013: What do you mean by insanity?
      • Oct 6 2013: The insanity of violence. When Violence is considered on a spectrum of severity, it's possible to see that actions may either drive toward greater Separation or toward greater Wholeness. We are on an upward swing of Separation......which is completely necessary and natural with respect to human nature and the Dualistic rules of this world. We are running our course.....still, even though I accept the situation of our trajectory, I feel suffering in witnessing it. It is easy to spot societal symptoms of the state we are currently in. The trajectory is solidifying.
    • Oct 6 2013: Looking at Walmarkt one could say America is doing well . I just read Four of the Walmarkt Walton 'Children' together have over 100 billion US dollars. So who is complaining?
      • Oct 6 2013: Yes Yes! Perspective is everything I'd say. :-)
        Here is Kabir's thought on the Walton's:

        "I don't think there is such a thing as
        an intelligent mega-rich
        person.

        For who with a fine mind can look
        out upon this world and
        hoard

        what can nourish
        a thousand
        souls?"

        There is no Right. There is no Wrong
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    Oct 3 2013: Tom, By reading your question and the explanation, I would guess that you are NOT well versed in economics. Political policies are the cause of the success and failures. In the USA we are undergoing a change from a free market system to a Socialist inspired system of big government, unfunded social programs, the socialist strategy of government control of industry and removal of private ownership in property and business, and Keynesian economics. All the enemies of Socialist / Communist manifestos are being addressed. Which means that Capitalism in all forms must die.

    Your question should be what is killing the free market system? Why is the national debit greater than the GDP? Why is the USA on the brink of depression and recession? Why is the fed flooding the system with 85 million dollars a month that never reach the general population?

    Have you looked at the economics of the PIGS and what has occurred and why? Read what occurred in Argentina in 1916 and overlay it with the current problems in the USA almost a perfect match.

    Study economics and history for the answers to what should be your real question.

    Be well. Bob.
    • Oct 3 2013: Robert if you truly understood economics you would know that this is quite far from the truth. The time in US history when we were socialst was right after WWII when the government controlled the major infrastructure and - at the time - even controlled wages and production output of major corporations. That is socialism, and our messed up health care is the end result of a response by the then free market to the socialism of the time. In the last 30 years (since Reagan) we have moved SO FAR into an economy based entirely on a Randian version of game theory driven free market that socialism is the farthest from where we are. The Argentinian situation in 1916 had everything to do with colonialism and nothing to do with what we have now. I know this is an ideologic issue for you but I truly beg of you to see this for what it is. The Obamacare system is very very fr from socialism the only thing about it that is even slightly (and I truly mean that) socialist is the insistence that you must participate. But there are so many options and it is so corporately driven and designed to benefit business that it bears no resemblance to a socialist system. Please rethink what socialism actually looks like and remember that Fox news won the right to lie in the courts.
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        Oct 3 2013: Sharon, I admire your loyalty to the Party, however ... Obamacare was carefully designed to be a failure. If the twenty somethings do not "mandatorily donate" to the "tax" the system will fail, insurance companies will fail, and within two years we will have a national health entitlement program completely funded by the government.

        The policies being offered are a joke and the co-pays and costs to individuals are 50% or worse with limited coverage. This is not a help to the poor only a step to socialized medicine at the expense of those working and contributing.

        In Argentina Hipólito Yrigoyen, of the Civic Union, to won the elections in 1916. He enacted social and economic reforms. This completely reversed the progress of Mitre, who sought to industrialize the country, and promoted a massive wave of European immigration that led to the strengthening of the state, the development of modern agriculture and to a near-reinvention of Argentine society and economy. The country emerged as one of the ten richest countries in the world, benefiting from an agricultural export-led economy as well as British and French investment. Driven by immigration and decreasing mortality the Argentine population grew fivefold and the economy 15-fold. That got sucked dry by the social reforms immediately. Argentina fell from the top ten to the bottom.

        There was no colonialism .. no interference from the outside .. Just a elected leader that tried to Socialize the country and broke it. Ergo the same as the USA today.

        I must have been at work supporting the entitlement programs the day Fox News won the right in court to lie legally to the country. Please provide a reference.

        Sharon I enjoy your posts but we respectfully disagree on this issue.

        I wish you well. Bob.
        • Oct 3 2013: http://caselaw.findlaw.com/fl-district-court-of-appeal/1310807.html

          is the ruling on the case. During arguments, the lawyer for Fox indicated that under the 1st amendment they were allowed to lie. That statement was picked up and erroneously stated as part of the ruling.

          That argument was ignored and not listed in the ruling

          The other argument is that Fox news is part of the entertainment division which occurred in 2012.
      • Oct 3 2013: http://caselaw.findlaw.com/fl-district-court-of-appeal/1310807.html

        is the ruling on the case. During arguments, the lawyer for Fox indicated that under the 1st amendment they were allowed to lie. That statement was picked up and erroneously stated as part of the ruling.

        That argument was ignored and not listed in the ruling

        The other argument is that Fox news is part of the entertainment division which occurred in 2012.
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          Oct 3 2013: The case was Ayre VS Fox but the facts were about "whistle blower and FCC rules. So why the big boo hoo about Fox. She messed up the case by not playing by the numbers. The whole issue is about federal rules. Fox told her to provide proof ... she didn't. Instead she fought them and made threats. The story was dropped and she was released under her contract agreement.

          Do you agree that all media either distorts or slants the news in favor of the managements desires. Absolutely. So to some Fox lies while others just report favorable news as desired by the managements politics.

          Gotcha ... now I understand.

          I wish you well. Bob.
        • Oct 5 2013: Sticking specifically to the construct of the ruling: the ruling was that the FCC rule that insisted that news programs must be "true" had to do with the differentiation of Fox as news versus entertainment. Fox has been proven statistically to allow far more flat out falsehoods than other cable news networks did. I agree that the others are now starting to fall down the fox-hole. But, when you can show that people are more misinformed by watching fox than by refusing to watch any news at all, you have a problem. A misinformed electorate is bad for everyone. I am not loyal to any party, I think the left right paradigm is a distraction from the entirety getting shafted by the up/down dynamic. If more people recognized that the far left and the far right are actually mad at the exact same thing we could at least begin constructive dialogue over how to fix it rather than screaming across the abyss at one another.
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    Oct 3 2013: No.

    By "free-market" I assume you mean the balancing dynamics of supply/demand?

    For the moment I'll put to one side the chaotic nature of that "balance".

    Assuming linear balance, we see how the concept of competition sets-in when there is a scarcity. So competition is usually included in the discussion of "free market".

    Scarcity can occur naturally due to ecological/environmental/geographical limits - generally via population pressures (carrying capacity).
    Scarcity can also be precipitated by hoarding.

    Hoarding is at the root of the "tragedy of the commons" - this precipitates the need for a "state" - the state regulates the commons in order to prevent scarcity-through-hoarding.
    In and of itself, hoarding is a necessary thing - it is the accumulation of a buffer required to meet variability. It is no coincidence that wealth management occurs as an art-form in deeply seasonal geographical areas such as Western Europe.

    Applying a common state regulation beyond the geographical context of seasonal wealth management will cause instability over-all.

    When seen in that light, America is not being destroyed by the free market. It is being destroyed by geographical incompatibility of the American system of state.

    The Federal/state structure of American political economics would prevent this - it worked well in the past.
    But now, the global state (globalist trans-national corporation) over-rides both levels of American state and imposes an econo-politic which is grossly mismatched to regional and local geography.
    The result is massively inappropriate hoarding - this creates global scarcity, social instability, and as you observe: destruction (murderous competition).

    I would argue that federal systems are not very stable, but global systems are disastrous.
    The American off-shoring of murderous competition has reached its limit through global empire, and will shift back to the US until the inappropriate econo-politic collapses. i.e capitalism.
    • Oct 3 2013: I think you are on the right track. But, what many people are missing out on is the incredible impact on both supply and demand by the quants and their control over the economic systems of the globe. If countries refuse to play ball they can (and do) attack economically in devastating ways without one shot being fired. This trend is something really out of keeping with tradtitional economic models and makes attempting to fit what is happening into them an exercise in futility.
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        Oct 3 2013: I agree.

        I spent about 20 years as a supply/demand analyst.
        It has nothing to do with ideology - it has all to do with getting market adaptation accurate enough to react within the supply cycle.

        The thing gets hijacked as an ideology - as a political weapon.

        This abuse is done on all sides of politics - and I dismay at the gullibility of people until I remember that BBB - Bs Baffles Brains - and there is no way to escape it without really knowing - and no one has time to know everything. .. sad .. but it does pre-arm you to know that it goes on.

        I set aside the chaotic nature of market "balance" - Taleb has a lot to say about that - and I recommend his last 2 books. I don't agree with it all, but it's definitely in the right ballpark with markets and the nature of risk.

        Lately I'm more concerned with chaotic system dynamics - specially bubbles. Market bubbles and other forms that display similar characteristics.
        At the bottom end I see things going on with general entropy .. and from that basis I look at political economics in terms of concentration limits.
        From that I see an opportunity to use default human tribal dynamics as a systems based political economics - almost where Marx and Engels found themselves, but with a more neuro-biological basis. Couldn't call it "communism" but it is also remote from current forms of socialism and the many varieties of capitalism.

        I identify global capitalism as being geographically impossible.

        This might be stabilised by placing strict currency barriers and preventing siegniorage from allowing the externalisation of competition - as is being done with the petro-dollar.
        I would also like to see all forms of insurance outlawed apart from local-geographical risk spreads - such as health care.
        The key is voluntarism - mandatory taxes turn a state from a servant to a tyrant.
        It's simply not necessary - our fears rule us too much.
        • Oct 3 2013: Mitch one of the traedies of the common iaspects is what makes voluntary tax payment extremely unlikely an outcome under any circumstances. If we pay taxes to pay for things which we all share, roads, infrastructure and others, then who is to tell me I must pay my taxes if they are all still there? Your business needs that road more than I do - you pay for it! Soon many would desire to shift the burden to others (which is what happenes anyway). and the infrastructure would decline - and you end up with an America - once a jewel of infrastructure with 20% failing bridges.
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        Oct 4 2013: Hi Sharon,

        I can only speak from experience here:

        I once ran an online tribe - it was ultra-competitive.
        The first thing I established after totemic identity was a voluntary banking system.
        It wasn't a deposit/withdraw bank it was a tribal development bank - essentially a tax - and completely voluntary.

        Certain members were privileged to receive voluntary donations - under the agreement that they were to distribute these funds to those on the border of our domain - to make them strong enough to continue expansion for the benefit of the tribe.
        This arrangement worked like magic. Our tribe dominated the board within a few weeks.
        After the critical expansion stage required to get all members to saturation wealth levels, the banks became superfluous.
        The donation stats conformed to a power-law curve with few donating much, many donating little.

        This works.

        Our ambient attitudes prevent us from comprehending it - we simply have no model for the power of tribal voluntarism - because all our political institutions are founded on domination - violence.

        The disciplinary mechanism I used was the threat of exile.
        As it turns out, people fear exile more than any other punishment.

        The other key dynamic is default tribalism - this has been obscured to us .. but some keep it secretly known to their own advantage.

        Part of my intention here and elsewhere is to get this back into the public domain.

        Hope it helps!
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        Oct 8 2013: hi Sharon,

        There's no reply button on your most recent post - so I'll post it here:
        The default tribalism seen in Africa, then Middle East and South America is clearly not adapted to modern reality. But there is one form of tribalism that has evolved: the capitalist corporation.
        In its current form it is designed to destroy and expropriate value, but if it were transitioned into a more holistic tribal model, it would be uniquely positioned to take-up the social evolution that has occurred over the last 11 thousand years. So .. for instance, you would truncate shareholding and feed-back surplus to the management and operational staff, you would impose a grand anti-trust to limit corporation size to 150 productive adults and you would make the corporation responsible for the welfare of all members and their families. Special provision would be made to accommodate inter-corporate migration and recruitment as well as enshrining exile into the most rigorous constraint and ritual (in such a world, exile is a death sentence - as it is in any tribal setting).
        THese measures would have to be phased-in .. the first step would be to encourage the formation of worker-owned enterprises.
        Language problems might be overcome by retaining the internet .. but there will always be dialectic drift - language is part of the totemic identity. That's important .. the current concept of "brand" is an abstraction from totem.
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      Oct 4 2013: If capitalism collapse,which system would be the best replacement ,socialism,communism,or a new one?
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        Oct 4 2013: Hi George,

        I favour a new tribalism.

        In the current political climate it is radical way beyond any form of anarchy. But, paradoxically, it is frustratingly close to what everyone knows in their hearts.

        What will probably happen is that capitalism will simply phase-shift as it has done many times in the last 300 years.

        It will probably look close to fascism - but a decentralised version .. close to feudalism.

        The problem with that paradigm is that it makes easy targets of enclaves with billions of people serving as "hinterland" for exploitation. So I cannot see it lasting long.

        You can see some obvious preparations for this as elites withdraw into gated communities with private security forces. This is further strengthened by increased communication ssurveilance and AI used to detect organised revolt in time to disrupt it (NSA surveillance of "citizens") - pretty effective - but does not account for default comms between real people. So neo fascism will be transitionary.

        If we do it right, the enclaved elite present a golden opportunity.

        Please see the idea in this documentary, and you will know the way forward.
        hint: "tuberculosis analogue":
        http://www.youtube.com/watch?v=eYG0ZuTv5rs
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          Oct 5 2013: Hi Mitch,

          I am pretty interested in your unique thoughts. Tribalism,my first impression is it sets back human progress. But, deep down,when you look at each phase of human history,it seems we made no progress at all, unless you referring to the revelation of science. I mean tribalism,feudalism,capitalism,socialism,etc,there is no single form of society could be separated from hierarchy. Though as a man,we all longing for authentic justice,equality,fairness. In that perspective, there is no progress at all. For instance,the increasingly centralized wealth,definitely separates people as rich and poor,lucky and unlucky.

          As religions,philosophy,science and politics are claiming their own goals,they upgrade their principles and ideals to meet the needs of respective utopia. The truth is none of these has dominated the course of mankind to reach perfect world.

          Since you've thrown the words 'a new tribalism' on the table, I assume you are one of them who are caring and pursuing a direction for mankind,which you posit is the right path.

          I would admit I am one of them too. My limited mind tells me we should purse it from individual level,to purify people's heart and behavior.Neither religion,nor politics is my choice.

          What do you think, Mitch?
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        Oct 4 2013: You know,

        I've been thinking on the dynamics of "exile".

        There might be a compassionate interpretation of it.

        Instead of eliminating the enclaved alpha psychopaths, we could use the elite enclaves as a place of exile.

        In a global world, there is no "away" to throw things. As a minor component of a large ecosystem, "away" means contribution to other species.
        In a human dominated global picture, there is not the biodiversity to cope with human "away".

        For instance, in the old world, exile meant pushing a human into free-game - the tribe had no compunction to attack, and other tribes would not risk admitting an exile (there had to be a reason for the exile) and therefore the exile is attacked by all tribes plus the ecosystem's predatory "garbage collectors"..
        But in the human dominated world, where there is no "away", we could use the enclaves.
        The exile could be isolated into a meaningless life of luxury .. would remove the stigma and enforce the exclusion of destructive psychopaths without polluting the main population with examples of psychopathic cruelty - which is the paradox that has prevented us from doing just that before now.

        We just invert the walls - not to keep us out, but to keep them in.

        Worth consideration.

        Thoughts?
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        Oct 6 2013: Hi George,

        As I see it, human tribes do not differ much from tribes of other hominids such as baboons, chimps, and gorillas. The exception is that we can form inter-tribal affiliations.
        These inter-tribal affiliations become political systems.
        WHere these political systems go wrong, in my opinion, is what happens with the tribes that enable them - and more cogently, what happens to the surpluses that these tribes generate.
        Any political system that fails to recognise the basic tribal structure upon which it is built, will eventually collapse.
        The tribal surplus is the evolutionary advantage that made us into humans in the first place: strength-in-numbers + 2 hands-are-better-than-one = surplus.

        In most political systems, some of that surplus is re-directed to fuel the creation and maintenance of the political system (taxes, tithes and military). I think that is a mistake.
        I don't think that tribal affiliations require any infrastructure besides tribal recognition of the agreements between tribes (alliances).
        I could be wrong .. perhaps some surplus could be needed, but beyond a certain level, the resource will become an opportunity for a separate tribe to form - causing "class" to emerge as a non-productive tribal unit in its own right.
        On top of that, when the stable size of a tribe is exceeded, it will split into factions. If these factions are not properly recognised as separate tribes, it will import the class hierarchy into the tribe - which gives a false appearance of stability .. tribal boundaries will form vertically as hierarchy in addition to the natural formation of lateral affiliated tribes.
        Specialisation also becomes an issue .. when you look closely, the benefits of technology are far smaller than the disadvantages they bring with them - specialist tribes form into priesthoods that become unaccountable in terms of the surplus they draw.

        SO .. I can see a lot of room for improvement in humanity.
        As it stands, I think we are in the Tower of Babel.
        • Oct 8 2013: Mitch your Towr of Babel synonym is apt as language failures do seem to be rearing their ugly heads as we construct reality quite differerntly from one another depending on which tribe we identify as. I have given you position great thought, and suspect I will more because of the tribalism that exists and impacts the ability (for centuries now) of empiralistic forces to govern such areas as much of the Middle east and Africa. While you may not wish for empirialistic forces to govern these people and as such their tribalism has worked to rpevent such dominion, it has also rpevented them from effectively ruling themselvse in such a way that both provides safety and security AND allows some level of individual rights. Have you read Jihad vs McWorld? Barber now is a promoter of smaller and smaller versions of decentralized governance. (city-state as tribe?) I remain dubious of the value as I deconstruct the definition of exile and how we determine deviance and its sanctions.... No matter which direction this path goes it predicts great chaos ahead for humanity.
  • Oct 2 2013: "Is America being destroyed by the Free Market system?"

    No. In my opinion, the USA is not being destroyed, but if it is, people are doing the destroying, not the "Free Market system."

    "Could it be that unrestricted business and privatisation has created a profit drive and not competition to provide better quality goods and services?"

    I define the "profit drive" as our desire to better the circumstances of our life, and the lives of our children. It is inherent to human nature, and not created by anything else. Similarly, competition is not created; competition is a natural consequence of natural human behavior. Laws can be used to shape how we compete, but laws will never do away with competition altogether.

    "At what point would American people decide that the unrestricted Free Market doesn't serve the people?"

    First, in the USA, what we refer to as the Free Market is very restricted by law. We will probably continue with our current "system" until the people are convinced that there is a better way. That will not occur for a long long time.

    In my opinion, you are grossly misrepresenting the economy of the USA. I suspect this is due to misunderstanding, or perhaps just sloppy use of language. I do not mean this to be insulting, but it is difficult to converse about the economy without sticking to the facts and using language accurately.
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      Oct 2 2013: I can't see anything insulting, thanks though.

      I like your definition of profit drive! But mine is different. I meant profit drive as in an emphasis on building profits and in doing so making substantial sacrifices that the public has to endure in order for the enterprise to gain said profits.

      Where have I mucked up my use of language? Which facts that I have stated do you take issue with?

      Is competition really part of human nature or has it been bread into us? How can you explain the harmony of Amish communities and Jewish Kibbutz?

      Very restricted by law? I'm not so sure. And besides, those rules are very bendy indeed. Monopolies govern the government.
      • Oct 3 2013: "How can you explain the harmony of Amish communities and Jewish Kibbutz?"

        Indeed, empathy and cooperation are also part of human nature. When the Amish sell anything outside of their own community, they are competing. The Amish way of life competes with the outside world to retain the Amish children. Similarly, every Jewish Kibbutz is competing with every other social organization (cities, corporations, etc.) to retain its people and recruit new members. Competition exists whenever someone has a choice between two or more products, places to live, philosophies, etc. etc. It is our ability to choose that creates competition, and that is certainly inherent to human nature.

        Competition and harmony are not incompatible with each other. Two workers will cooperate while competing for a promotion. Their level of cooperation is likely to be a consideration for getting promoted.
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    Oct 2 2013: Hi Tom,
    I have been looking at your conversation and... well, America is not really a free market system as that is defined. There are a number of restraints on entrepreneurs, some good and considered necessary and some are "questionable" here in America..
    So, the question begs, Is America being destroyed by it's economic system. Again, I find destroyed a little over the top.
    Hindered... Constrained.... Limited maybe be more appropriate, but it's your question.
    Ok, what do I think? I am not sure. Economics is a soft science and I am more into the easier ones, like chemistry.
    But, talking to my neighbors who are in business, next door owns a dry cleaner and across the street makes custom doors and windows for fancy houses..... they tell me that the first employee a new business has to hire is a lawyer to keep track of all the government compliance requirements, forms and paperwork that has to be completed. Now there are new requirements for health insurance to be provided for employees and even more forms to complete. That law is very complex. I have been told and any failure in proper reporting or compliance failure, makes the employers subject to prosecution regardless of intent..... you know, any ignorance of the law is no excuse.

    There is no unrestricted business in the United Sates that is legal.

    Further, the American Consumer, one of the biggest economic forces in the world, are not sympathetic when a company puts out a bad or dangerous product.... regardless of the intent. Even in the past year, there has been a number companies that are no more for selling dangerous products, none of which was intentional... maybe one let their product out knowing there may have been problems.

    So, what ever is destroying America, I don't think it is a Free Market System
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      Oct 2 2013: I'm not quite sure about your last paragraph before your conclusion. You said that the American consumer is not sympathetic when a dangerous or bad product is put out. Not sympathetic to whom? The victims or the enterprise?

      Hopefully you're saying that the American consumer doesn't approve of dangerous products! :) If so, that is what I would naturally assume. Nevertheless, whether they approve or not, there is little they can do about it:

      Fracking is a highly dangerous method of gas drilling and has poisoned thousands of citizens. The unsuspecting victims are given a massive document to sign and told "if you sign this, we'll give you 100'000 bucks. We;re going to drill next to your land, or maybe on it". The dodgy chemicals are smashed into the ground and the drinking water is contaminated. Everyone on that land gets cancer. http://www.dangersoffracking.com/. The companies that do this kind of thing are far bigger than the government, unlike the local traders down your street. This is the cheapest way of doing it and gains the biggest profit. The Free Market system allows a company to grow as big as it likes. At some point, the company gets too big for the government to control, bribes start flying around and the next thing you know you have the most corrupt nation on Earth.

      "maybe one let their product out knowing there may have been problems."

      While the majority of your comment is useful, I have to take issue with this one. The abuse of corporate power is too long to list and the effects are devastating the planet.
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        Oct 3 2013: Sorry Tom,
        if I wasn't clear. No, if you put out a bad product in America, you are out of business. Said and done And if you have violated a myriad of laws on product safety, you may face criminal prosecution and certainly civil liability.
        You have mentioned fracking and the consequences there of. Glad you mentioned that. I live short drive just north of one of the largest gas fields under production in the USA, Eagle Ford.
        So, is it as bad as you have suggested? No. Your sources are hysterical propaganda, which on the internet is a very easy task. First. You are correct in that people are paid to have their land mined. That has been done since... forever. And it's legitimate.
        Now, mining gas. Again you have it correct. A well is drilled into the earth and water, sand and some binding chemicals are pumped into the strata and gas is released. Where you go off the tracks, these wells go down 3 miles (5km) into the strata that the gas occurs. Drinking water like what I have my home comes from aquifers about 450 to 600 feet ( < 200 m.) Contamination is not likely. Most of the stories about burning water faucets were found to be caused by swamp gas (methane) which can occur at ground level and often does. And yes, the companies that do "fracking" are major corporations as the investment in just one well is in excess of $10 million and a little beyond most of my neighbors. But, again, there is no free market in the US. Drilling companies in south Texas are onsite monitored by county, state and federal regulatory agencies,
        There is the EPA, OSHA, Texas Railway Commission (don't ask) and county officials billing for damages to local roads by the heavy equipment passing by. Again, there is no Free Market system in the USA.
        Worse, if the USA ever did become a Free Market state...thousands of lawyers hired by those big corporations to stay ahead of the laws would be out of work :)
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          Oct 3 2013: "Most of the stories about burning water faucets were found to be caused by swamp gas (methane) which can occur at ground level and often does." Most of them? What about the rest? And what about all the cancer victims and their law suits? Is that just fiction?

          Do those officials watching corporations have any more real power than you or I? Money buys blind eyes.

          "Bad" products might not sell well in America? What is a bad product? We're not just talking about broken clocks here. Dangerous faulty medicine for example (Bayer), exploitation of workers in foreign countries to keep prices low, stolen oil etc. Good products? Of course not. They're selling like hot cakes.
        • Oct 3 2013: Mike I think you are being a tad naive here. Cigarettes were known and proven to be very bad for people and yet people continued consuming them for generations because they were readily sold and advertised as safe. Ford sold a car that they knew blew up on read end impact and this is STILL taught in MBA programs that Ford's decision was the right one. The pay outs were cheaper than the fix would have been. People are struggle with what is done to small business frequently fail to exponentially calculate out to include the massive multi-nationals and their behavior. I have had run ins with fracking and yes it is dangerous and a very very bad idea for it to be happening without any EPA oversight. Essentially, people are ending up with refineries in their backyard that are not regulated properly for what they are doing in them (yes I do know quite a lot about the refining industry) GMOs are getting a terrible reputation because Monsanto is treating them so irresponsibly. They've been instroduced into the biospere with very little understanding of their impact when there is (outside of hysterical media) good evidence of terrible downstream second generation problems with many of them. The old system that worked under the invisible hand worked when you could see the manufacturer and see the problem. Now the beginning and ends are far too far away and far too powerful. I dearly wish those who agree that the free market works well under the right settings could grasp the vital and vast differences between your local dry cleaner and an immortal multi-national like a Monsanto.
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        Oct 3 2013: Tom,
        Stay focused.... What is it that goes on in acting schools in England... My son attended LAMDA and he came back a little over the top. Is paranoia a requirement to be an actor?

        A bad product is one that causes unintended consequences. Recently, a large farm didn't clean produce well and a number of people died of e coli. Do you believe that the intent of this company was to kill people and effectively destroy their company? Did Bayer purposely produce a faulty medicine?
        What would be the purpose? I can find no business model that suggests to eliminate your customers.
        Are there people in business that have bribed other people... in government. Sure. Are there 3rd world countries that have exploited their citizens to produce product for the more industrialized nations... dozens. Are you condemning the system for people committing illicit or illegal acts? Or even unintentional mistakes?
        People do bad things... not economic systems. Free markets and even highly regulated markets like these are in the US are geared to provide goods and services to customers and make a profit. There has to be profit involved or... why would they provide goods and services. They couldn't in fact.

        How does one steal oil? Although, I did hear of pirates taking tankers...
        • Oct 3 2013: Mike actually oil is an easy commodity to "steal" what has happened in the industry is commodity traders buy up the comodity with no intention of using it so that they can control the supply end. For several years the largest oil company on the planet was Morgan Stanley. These influences cannot be underestimated. Countries do it by controllig supply, but no country or even OPEC is as efficient and ruthless at it as is Morgan Stanley.
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    Oct 2 2013: weird reasoning.

    1. there is no unrestricted "business and privatisation" in the US. the trend is the opposite for a good 100-150 years. things got a lot worse since.

    2. "profit drive" and competition to provide better goods are the same thing. if you provide better goods, you make profit.

    3. if you look around in spain, one of the many places where business is pretty much restricted, you see that problems are not at all solved, nor they are in the process of solving. but rather, things are out of balance, and violent changes are imminent.
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      Oct 2 2013: Arguably, providing worse goods and services and presenting the product as good makes a profit. Marketing, making something cool, makes a profit. Drug companies, for instance, are not focused on "better goods". Looking at people like Bayer, who have knowingly delivered AIDS infected "vaccines" to thousands of innocent people are certainly not interested in providing "good products to make profits. The U.S. government turned a blind eye to it because they are being paid. The story repeats itself over and over again.

      I can't see why you would think the is no unrestricted privatisation in the U.S. The larger corporations are free to do whatever they want. The biggest of the banks have had such free reign that orchestrating an economic crash is just another day at the office. The Federal bank in the U.S is a private bank lending the government money at interest, just like the E.C.B and Bank of England. They are not state banks. They have been fiercely irresponsible and played into the hands of profiteering for about 30 people.

      Problems are "not all solved" in Spain!? That's the understatement of the century. Spain, along with the rest of Western Europe, is just following in Thatcher's legacy.
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        Oct 2 2013: apparently, you never tried to sell any product. try to make a worse product than your competitor, sell it through marketing, and see how far that gets you.

        your statements about the US fed is ... let's say inaccurate. since when the chair and board of a private company is selected by the president? how the FDA, OSHA, freddie and fannie and all the other (hundreds of) state organizations and administrations fit in the free market idea?

        spain just as france, greece and italy are socialist bastions. it is something of an achievement, considering that europe as a whole is a socialist area, with rarely less than 45% of the GDP ran though the government. by the sheer amount of taxes, the economy suffocates. the companies that thrive receive huge sums from that loot, that is how they thrive. you are being robbed, and you can't see that the guard you trust is in fact the robber.
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          Oct 2 2013: Apparently I HAVE tried to sell a product and am currently doing very well out of it indeed. Selling through marketing is a very powerful element in business. There are substandard products floating around all the time that are designed to break and be replaced. The free market wouldn't work if we never replaced anything.

          Those state organisations you mention in your second paragraph are not really state run. They are run for profit and money is given to the American economy on a debt basis. Every cent that enters the system is lent to the government with interest. It doesn't have to be that way. It shouldn't be that way! There is a middle man skimming off the top!

          I honestly don't know where you got the idea that Western Europe is socialist. All of the countries you mentioned in your second paragraph have centre-right/right wing governments and follow a clear path of Capitalism. Lets be clear about this, the first on your list is Rajoy, the leader of Spain. He's right wing, it's a right wing party, simple as that. The opposing party is slightly less right wing. Got it? I am baffled by your comment. The economies have been given free reign and while America does remain the most privatised country in the world (even the wars are now privatised), Europe is not far behind.

          The economies have been suffocated by debt. Where that debt comes from is the real debate. Where do you think it has come from?
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        Oct 2 2013: if you indeed experienced selling a product, it boggles my mind how can you overlook the importance of product quality in a free market setting. why companies spend millions of dollars on product development? why we have R&D at all? it is obvious that reducing costs is a way to increase profit, but it is also obvious that it is limited severely by the fact that if the volume is reduced as an effect, eventually the revenue will drop. that is the power of the free competition. we don't need companies to do be moral or benevolent. we just want many of them, so they compete.

        having accountants or having a budget is not the defining characteristics of a for profit company. the company on the free market is subjected to profit and loss, and in the extreme case, bankruptcy. do you think freddie will ever go bankrupt? sure not. they are operating on specially crafted laws, they enjoy state guarantees, and they can trust that the government will keep them in operation no matter what. this is not the free market. this is just a shady way to steal money out of the central budget.

        i exactly mentioned one data point: in europe, you can hardly find a country with less than 45% of the GDP being redistributed by the state. you can not find a country without public healthcare, without public schooling, without central bank, without massive, all-penetrating regulations (like safety regulations, labour laws, etc). in addition, often mass transit, railways, electric grid, power plants are all either state owned or regulated by special law, and are effectively state owned. these are all social institutions. in europe, being 40-50% socialism is the norm. parties using misleading titles change this picture in no way.
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          Oct 2 2013: Yes, quality sells, but at a lower profit. All sorts of dodgy products and services thrive in the market place, be them openly crappy or crappy in the guise of high quality.

          Why don't we need companies to be moral or benevolent?

          Ok, Freddy in his socialist (is that implied?) company gets a bail out from the government and keeps a couple of million people employed and dinner on the table. What is wrong with that? Moreover, the biggest subsidies ever given by the government have always gone to private companies. Look how much America has been bailed out. Would you, as a capitalist, have let all those companies disappear?

          Europe is continuously moving away from socialism and the governments are privatising more and more. The prison systems and the NHS are currently on the conservatives debate table up for privatisation. Calling Western Europe Socialist is a real stretch of the imagination. There are lots of private schools and yes, the banks are called "state", but, just like the Federal bank, they are not state, they are owned by share holders.

          The only socialist state left in Western Europe is Germany.
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        Oct 2 2013: let us recall what your original statement was: free market delivers crappy products. i showed why quality rises in a free market setting. it does not matter if you don't like some products. consumers do. and honestly, i like you, you are a thinking guy and all, but when it comes to what is good, i have only two definitions. one is majority opinion, the other is strict ethics according to theory. my theory is austrian economics. and according to that theory, you produce whatever the hell you goddam desire. it can not possibly be harmful. people either buy it or not.

        we don't need companies to be benevolent the same way as we don't want a knife, a drill, a machine to be benevolent. or think about a referee. what if a referee makes a decision that makes many people sad. you can say, the referee only thinks about rules, and not about effort and background stories and all. yep. that is the job of a referee. they get their salary for that. they must not care about anything else than the rules. we don't want benevolent referees. we want precise referees. the same goes for entrepreneurs. we want entrepreneurs to go for the highest profit. if they consider anything else, they are a failure.

        bailout is horrible. it says: if you win, you can keep it. if you lose, we bail you out. what behavior this lead to in your opinion? what would you do in such a setting? this is the exact opposite of the free market. on the free market, if you lose, you lose. see the difference?

        europe moving away from socialism means that we opt for 49% socialism over 50% socialism. this is nothing. the last standing bastion opposing socialism is germany. a country that decided to decommission all nuclear power plants, the country that blamed egypt for an endemic clearly linked to organic farms in germany. the beacon of freedom is a socialist/statist/protectionist/fasist country. we are doomed.
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          Oct 2 2013: Hahah! Brilliant! I didn't say Germany is the beacon of freedom, nor that it was perfectly Socialist, but I think that in Western Europe, it is the nearest thing to Socialism. I also do not think that Socialism is viable. But yes, we agree on one thing: we are all doomed!

          What do you think would happen to America if the bailouts hadn't happened and the debt ceiling wasn't raised again?
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      Oct 2 2013: Isn't this just another circular argument? There seem to be pulls working in different directions.

      Companies strive to produce better products to beat the competition. After they start selling this better product, they equally strive to cut cost. This leads to lowering the quality of the product. Making profit and beating the competition is the art of balancing quality and cost.

      Tom seems to be right that a product of superior quality would not sell without marketing. Likewise, one can literally sell shit if it is presented and advertised the right way.

      Free market works for the benefit of the consumer as long as there is competition. Given that money attracts more money, in unregulated economy, very soon we have monopolies. Monopolies take away choice from consumers and kill the drive for cost reduction and quality improvement. Monopolies can only be eliminated by govenment regulations (is there another way?).

      And, finally, the government also becomes a monopoly and it also needs to be regulated - hopefully, in a peaceful way, but this cannot be guaranteed or predicted by any laws. Strong government = more regulation and oppression. Weak government = chaos, instability, and revolt. Take your pick.

      The circle is complete. There is nothing else to say or discuss here.
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        Oct 2 2013: what you need to consider is what is "quality"? we hear a whole lot of this argument. microsoft sells more than linux, vhs sells more than beta, coca cola sells more than ... any healthy drink, mcdonalds sells more than whatever organics. but all these arguments contain a hidden assumption that there is some absolute measure of quality. they ignore the true goal of everything: satisfaction. vhs was better because it was longer (2 hr vs 60 or 30 minutes). windows is better for less setup time. mcdonalds is better as you can skip a decision. the end is psychic gain. and this is where it becomes a tautology. people prefer what people prefer. this is the essence of the free market economy. it is value neutral. whatever people want, the free market delivers. this is why it is attacked so fiercely. many people are not comfortable with other people. they want to hide them, deny them. hence the state, and the tyranny of intellectuals. if you can come up with a smart phrase, you can suppress the opposition. for a while. this is what politics is all about. gaining temporary popularity. but eventually we win. eventually coercion will be exposed and abandoned. in 10 years or a 100, i don't know. but it will happen.
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          Oct 2 2013: I agree that satisfaction is a strong measure of quality, but so is longevity. There are light bulbs that are still working that were made in Eastern Germany in the 1970s. The light bulbs were not made for profit. They were made to serve the purpose they was designed for. But if our products never died, the system as we know it would collapse. When a product is only made for profit, it has to break at some point. We are wasting massive amounts of resources, holding back technology, destroying the environment, abandoning impoverished families, and a whole host of other things, all in the name of profit.
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          Oct 3 2013: Re: "what you need to consider is what is "quality"?"

          I happen to manage quality for a job. First of all, to have a meaningful discussion about anything, a context is needed. I believe, here the context is product quality. A book on quality control by Douglas Montgomery defines it as "fitness for a particular purpose". This, again, is meaningless without a narrower context. Falling apart in water is a desirable quality for toilet paper, but isn't for paper towels.

          Durability may or may not be desirable - depends for whom and for what. There are uses for disposable plates, cups, silverware, and table clothes. Whether it's ethical to use disposable stuff is a different discussion. Disposable syringes may be a good idea. Whether making profit is ethical is also a different discussion - depends how we use the profits.

          But you are right: "people prefer what people prefer." - "Some like it hot, some like it cold, some like it in the pot nine days old." Some people want to be free, some want to be secure. If a free economy shifts towards regulation - is it possible that this is what people prefer? Are people free to restrict themselves? Go figure.
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        Oct 2 2013: Thanks for you killer comment Arkady. We can't call business regulated when the reality is that the big boys call the shots and only in their best interests.

        "Monopolies can only be eliminated by government regulations (is there another way?)."

        No, I don' think there is another way. But the government is so much smaller than the Monopoly, it just isn't going to happen. Unless, of course, you're talking about eliminating the monetary system all together...
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          Oct 3 2013: I don't see much difference between government and monopoly. Government is monopoly. Government and corporations are interested to keep people happy and safe as much as a farmer is interested to keep his livestock fed and protected from wolves. It seems to work for both - the farmer and the livestock.

          Things may seem upsetting and disturbing and one can always find plenty of reasons to worry, but that's how this world works and moves forward - as a result of interaction between opposing forces. It's normal.
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          Oct 3 2013: First there was Montgomery Ward who rose to power by catalog sales to accommodate rural customers

          Then came Sears who had both Catalog and brick and mortar stores to accommodate the urban .customers.

          Then came Walmart who were more efficient because of computer technology and the advantage of buying from lower cost countries.

          Now Amazon is capturing sales because of lower cost and low cost delivery.

          The biggest company in history GM should be gone now. Microsoft is becoming more irrelevant by the year.

          All the while the customer is the winner.



          https://www.youtube.com/watch?v=baxaay2m9yk
      • Oct 3 2013: Arkady, awesome comments here, you get it. Sanity is found in the balance of power between government, capital and labor. It is never something that is found, it is something that is fought for and tugged at all of the time. Currently in the US, capital bought the government and convinced labor the government was the problem. And people keep trying to end government leaving themselves open to being preyed upon by corporations that are bigger than the government.
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        Oct 3 2013: Arkady

        The only monoply that can exist is by government decree, any tropes to the contrary are fodder for the economically illiterate.
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          Oct 3 2013: Pat, I admit that I am not well educated in economy, but just looking at how things work, money grows exponentially. E.g. you have a dollar and you use it to make another dollar and you are lucky to repeat the process 20 times. Now you have a million. Let's ignore the government, income taxes and such. When you produce stuff by the million, your cost is a lot (several times) lower than the cost of producing the same stuff by the hundred. Now you have tremendous advantage over smaller competition. You can sell your product at a price that smaller competition simply cannot afford. This is how Walmart drives small shops in the area out of the business.

          This seems to be how economy works if it is left to its own devices, does it not? Why do you say that monopolies exist only by government decree?
  • Oct 2 2013: Good point now the definitions. Is corporate socialism really the free enterprise syste? Also, one of the first villians in the American Mythos is a corporation. While there are those who complain about the 14th Amendment being used as intended. San Mateo County v. Southern Pacific Railroad is the finest example of fiction and the the court legislating in American Jurisprudence. MAny are glad that Senator Roscoe Conkling twice declined appointment to the United States Supreme Court.