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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 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.

      • 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?

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