Stop me before I buy or sell again!

Two good articles about the market.  First, the healing powers of the minimum wage:
So let’s break down what she does for her $8 an hour.  She says “may I help you” to a customer, a customer gives her their order which she enters via a touchpad computer.  The computer computes and totals the order.  She enters the amount of cash tendered and it tells he how much change to give back.  Or she swipes a credit card, waits for the receipt to print and hands both back to the customer.  At some point after that, she hands the customer a tray with food on it or a bag containing it. 
Guess what else can do most of that?
Second,  Harry Binswanger confesses his guilt for playing a part in "market failure":
You see, a "market" is the interaction of individuals, buying and selling.  A market trade is distinguished from seizing goods by force.  In the supermarket, I trade my dollars for the items I take from the shelf.  That's, as the name says, a market.  If I just grabbed stuff from the shelves and ran out the door with it, hoping to evade capture, that would not be "the market" operating but theft. . . .
. . . When people like me are left free to make our own decisions, we screw up. We create chaos. We can't be trusted with freedom. That's when the government has to come in to clean up the mess.

23 comments:

DL Sly said...

"When people like me are left free to make our own decisions, we screw up. We create chaos. We can't be trusted with freedom. That's when the government has to come in to clean up the mess."

Noooo. That's when you realize what a f*%& up you are at business and do something productive with your life like get a job at a busines where someone else has the brains to keep it not only afloat but profitable.
Idiot.

MikeD said...

It was parody, Sly. He even fessed up to it being parody about 2/3 in.

Grim said...

Some unreconstructed individuals try to blame things like inflation, recession, and liquidity crises on (of all things) the government! They say that merely because the government prints and controls the money, it is somehow to blame when things go awry.

Funny thing about that, though: the government doesn't control the money supply by simple fiat. The Federal Reserve isn't an arm of the US government, although its board of governors is appointed by the President. It is a largely independent structure composed chiefly of banks, i.e., market entities.

So this particular set of complaints -- liquidity crises, recessions, inflation -- are laid at the feet of the market entities because it's what the Fed was founded to avoid. It's mandate is to maximize employment, keep prices stable, and moderate interest rates. In other words, it was created and given power over the money supply precisely to do these things.

I presume this "objectivist philosopher" knows that, but somehow he chooses to dodge the point.

Texan99 said...

The Fed's board of governors is appointed by the President to interfere in the market, because the government for which the President is an executive wants to interfere in the free market. Certainly the Fed uses banks as its tools to achieve its aims, but I have a hard time entertaining the idea that manipulation of the currency isn't to be laid primarily at the feet of the government.

It's possible to argue that the Fed use its interference powers for good rather than evil, but the Fed is a long, long way from a free market force. People who believe in the Fed believe the market has to be curbed and that the Fed knows how, which is the attitude the author is pillorying.

Grim said...

Well, he may not like the attitude, but he's playing hell with the facts. As objectivists tend to do, he's constructed a Manichean division between the noble Market (nothing but another name for Freedom!) and the evil government. The problem is that the Fed isn't the government. It's the market, or rather certain very rich and powerful forces from within the market, which came to the government in 1907 and forced the government to concede actual control over its own money supply in return for help resolving a crisis.

The Fed was created with that specific mandate for a reason. In return for taking on that mandate, the members of the Fed have enjoyed fantastic, unimaginable wealth and the power to print more of it for themselves at any time.

So if it's fair to criticize the people who are responsible for things like 'inflation, recession and liquidity crises,' well, that's the Fed. Not the government. And there's a reasonable position that suggests that the Fed does not do a good job -- indeed, may sometimes even encourage the things they are supposed to moderate -- because their very powerful position allows them to profit from them further.

So it doesn't fit the Manichean model. They had the power to force the change because of the wealth they had gained in the market, but they certainly not part of the elected government, nor the bureaucracy, and don't directly answer to us or our representatives. They sit at the very top of the food chain in the market as it exists today; they are the ones who get bailed out when things crash, and the ones who sock away all the 'quantitatively eased' money as corporate assets.

Grim said...

McQ is on stronger ground. Taco Bell introduced those touch-screen ordering systems nearly 20 years ago here in Georgia, for the 1996 Olympic Games. I loved them. You could plug in an order faster and with fewer errors -- put in any substitutions you want, and you can be sure the substitutions will at least get to the assembly line correctly.

Unfortunately they removed them all after the Olympics went away, for whatever reason. But the technology must be even better now.

DL Sly said...

I remember an awesome idea that McDonald's tried in Jacksonville, NC about 10-15 yrs ago. They had built a new restaurant at the corner of the busiest corner in town, but instead of putting in order towers where you talk to some obscure, *buzzy-voiced* teenager, when you pulled up to order at the first window, you spoke to a real person who then input your order into the computer, then you paid - all at the same time. By the time you drove up to the next window, your order was ready and you were on your way.
What.
A.
Concept!
I never had an order get screwed up at that McDonald's.
Never.
Buuttt, apparently, it made too much sense, because it had been re-formatted into a regular, old drive-thru some years later by the looks of when we drove by there a few years ago when we were stationed in Cherry Point.

Texan99 said...

When the Fed governors are appointed by businessmen, I'll buy that argument. At most, we have a government manipulation of the market in which free citizens, actually engaged in business, have retained a bit of a voice and some power to act independently and professionally--subject to being replaced if they step too far out of line--although that doesn't help much, if no one ever gets appointed to the Fed except people with severely statist convictions about the economy. People who think if you just fiddle with the right levers, you can correct all that messy business that citizens do.

I can imagine a world in which the Fed is a purely private cartel, but we don't live in it.

douglas said...

"The problem is that the Fed isn't the government. It's the market, or rather certain very rich and powerful forces from within the market, which came to the government in 1907 and forced the government to concede actual control over its own money supply in return for help resolving a crisis."

Hmm, that's not a free market, it's fascism, isn't it? A joining of corporate power to governmental power?

Grim said...

Well, what you might call small-f fascism isn't even that: it's just a sentiment of 'we hang together or we hang separately' among a self-identifying group, as symbolized by the fasces (a very popular symbol in early America, and still present in numerous of our government's official symbols). It's the sentiment behind the famous rattlesnake cartoon from the Revolutionary War.

So in a way, you can rightly think of the United States as having long been a kind of proto-fascist state, as is proper given that what we call capital-F Fascism is a fully modern ideology, and the USA was the first fully modern state. Everything that would become Fascism is prefigured in the way we set things up (and indeed genuinely Fascist parties appeared here also -- one was almost elected to power in Atlanta in the 1930s).

With the Fed, though, I think the real distinction with Fascism is that a Fascist state uses the power of government to capture corporate wealth, organizing it for the state's own purposes (such as conquest). The Fed worked just the other way: a few very powerful and wealthy men approached the President, and agreed to save the United States from a moment of severe financial crisis in return for the government surrendering control of its own currency to those wealthy men.

So the Fed captured the government, and has since been organizing the government for the purposes of the Fed -- not the other way around.

If the market captures the government, is it still not a 'free market'? Or is this what happens when the market takes over the power of the constitutional, democratic state?

douglas said...

"United we stand", "E Pluribus Unum", all fascist slogans. In the larger sense, yes.

Now, you can quibble about who started it, but whether it was powerful men who captured the government, or vice versa, once the government and the 'market' have been sufficiently joined, it's fascism then, and we're only talking about degrees. Surely, it's fairly far removed from a free market.

"If the market captures the government, is it still not a 'free market'? Or is this what happens when the market takes over the power of the constitutional, democratic state?"

No, it wasn't the market that captured the government, it's a group of men (who also happen to be powerful players in the market), acting contra to free market principles. Whoever grabs the power of the state to serve ends other than those outlined in our constitution, it's no longer a free market system under a republican form of governance.

I hadn't really been against the Fed, per se, before, but you're moving me that direction.

Grim said...

No, it wasn't the market that captured the government, it's a group of men (who also happen to be powerful players in the market), acting contra to free market principles.

That's true in a way, but in another way, it was just another act of market freedom by those men. They were just freely choosing to use their wealth to make one more deal: give us actual control of the government's currency, and in return we'll bail you out of the immediate crisis. The objectivist philosopher will tell you this was just an exercise of their freedom -- no worry about yours, or the millions of other Americans whose government was bought from them.

The fact that this deprived the rest of us of the constitutionally guaranteed representative government -- well, what's that worth, 'representative government'? Government is in the sphere of evil, according to the objectivist: what do you care if you are slaves to one form of government or another? The thing to celebrate is the beautiful exercise of freedom by those rich men, who stepped up in a crisis and made a deal that served the mutual interests of both themselves and the currently elected officials.

So says the objectivist, if he's honest. This one isn't: he pretends they don't exist, and lays the very problems they promised to mitigate at the feet of the government that sold away its responsibility for them.

Texan99 said...

Perhaps what we're looking at here is an intertwining of government and market, which can be viewed as either government influenced by the market or or a free market overborne by the police power. The latter worries me as a contradiction in terms, while the former does not.

To my way of thinking, a democratic government is supposed to be responsive to its voters' wishes, and the market is a powerful expression of the wishes of a lot of people. As long as individual congressmen are not taking bribes, I'm happy to see the government acknowledging and acceding to the market's messages.

A free market that bows to government edicts, however, is no longer a free market. Experience tells us that a market can tolerate a certain amount of forcible intervention before it weakens and dies, but I'm not persuaded the intervention is ever helpful, even if it's not always immediately fatal. (Venezuela is taking a while to die.) The essence of a free market is that each transaction is a free choice between its participants. Force negates that. The government's role should be to prevent fraud and theft, not to intervene in lawful free choices simply because it's convinced it has the skill to "correct" the choices according to some Keynesian principles, or a desire to use the market to promote social justice, affirmative action, or the like.

Grim said...

The essence of a free market is that each transaction is a free choice between its participants. Force negates that. The government's role should be to prevent fraud and theft, not to intervene in lawful free choices...

Two problems:

1) This was a free choice transaction: the government was selling and the soon-to-be Fed was buying. It still seems illegitimate, because what the government was selling turns out to be a core part of the national sovereignty, which it holds in trust from the people of the United States. The mere fact that it was an 'exercise of freedom' by the rich using their resources of their own free will, to buy something the government was happy to sell for reasons of its own, can't legitimate the transaction. Some things can't be subject to markets.

2) You can't get any traction on that problem by talking about "lawful free choices" v. government regulation, because the only metric for a lawful choice is the law. The government didn't do anything illegal: indeed, it passed a law to legitimate and formalize the transaction.

The problem is more basic, and it's a fundamental problem for the whole objectivist tradition (such as it is). There's something else going on here, something their tradition completely ignores.

Douglas is calling the move a move into fascism. I'm going to say that it isn't properly that, at least not capital-F Fascism, because the Titans of Industry -- that is, the leaders of the market, the very kinds of people that Rand herself sets up as the heroes of the story her philosophy is trying to tell --- were buying the state, not the state seizing the market.

There's something fundamentally illegitimate about what they did. This kind of "freedom" is much more problematic than objectivism does or can recognize given its limitations -- one of which is that it is a "philosophy" that sets out to tell a kind of story, rather than to understand the truth as such.

E Hines said...

You're operating from the premise that government can ever be a legitimate participant--transacter--in a free market. Of course, it cannot be (which is not to say it cannot be a necessary participant in a free market).

Government has no property, so it has no thing to offer in a free market. Government has no money, so it has no wherewithal to purchase in a free market.

That we allocate some of our money to government in the form of taxes, and that we authorize government to make certain transactions--in our name--in no way takes government beyond that occasional necessity of participating.

Even taking your claim that Morgan, et al., traded stopping some bank runs for getting control over a central bank as accurate, that would not have been a legitimate free market transaction carried out between equals. It would have been, instead, a transaction between a small coterie presuming to speak for all the market--which of course they had no DOC to do--and a clearly inferior entity--the employee of a rather large committee of which they were a small part.

Eric Hines

Grim said...

You're operating from the premise that government can ever be a legitimate participant--transacter--in a free market. Of course, it cannot be (which is not to say it cannot be a necessary participant in a free market). Government has no property, so it has no thing to offer in a free market...

That's a pretty contentious view, which would require some argument. I'm not sure it's sustainable.

For one thing, in terms of real estate it's directly in contradiction with the entire history of US law, and the British law since the Norman Conquest. Under both those systems, the government (the king, in the older system) is the only one who owns real property. You just hold it in fee.

E Hines said...

Except for the part about British law having little bearing in the US--we made that break some years ago, incorporating a body of laws, but not the system. We wrote our own system, which includes the primacy of the people over all aspects of government; devolving the executive to an equal, not superior, member of our employee; and elevating the courts to an equal, not inferior, member of our employee.

And here, whatever property government holds, it holds in our name, not its own.

Eric Hines

Grim said...

If that were true, it could not alienate its property claims -- could not, that is, sell anything.

The truth is that there are no mechanisms for the People to enforce the claim you make for them, nor to compel the government to undo a sale it has chosen to make -- whether of old aircraft carriers or the right to control the currency. The government makes the only law it chooses to recognize, and the Constitution means no more than what it chooses to say it means -- through Congressional bills freely interpreting its clauses, through Presidential signing statements, or through Federal court rulings. It is completely untethered from the People, though it is highly responsive to those Titans of Industry of whom we were just speaking.

The only hope, short of replacing the system entirely, is when some internal factions strive against each other. The BLM and Texas may have a huge fight coming as to which government owns what land, but neither of them are going to admit that the people own it.

Texan99 said...

That the government's interference in the free market could be more severe than it is, I can agree. That businessmen have from time to time accepted moderate intervention for fear that more severe intervention would be imposed, I can agree. That government intervention in the market is a good idea--that's the part I find unpersuasive.

E Hines said...

You're arguing as though government is some sort of separate entity. That's the case only if we allow it to be. The mechanisms for enforcement are laid out quite clearly in our social compact documents. And in the event, if government becomes a separate entity, we no longer have any obligation to it. And like any bully, it will have only the power a timid supplicant surrenders to it.

The only hope, short of replacing the system entirely, is when some internal factions strive against each other.

Or when government's employer--that's us--sets about our duty. Shirking it gives us what we deserve.

But that battle has been joined for a few years, and it's not at all yet lost.

Eric Hines

Grim said...

Mr. Hines,

I do think you're quite wrong about the ability of the government to act as a party to buying and selling things. The Army owns things the Navy doesn't, and if the government's foreign sales office sells something to Israel (say an Apache helicopter) it is truly alienated. So I don't buy that part of your position.

On the issue of the Fed, we've shirked our duty for a hundred years -- if indeed we can have a duty to do the impossible ("Ought implies can," said Kant), which I suspect is what it would be to undo the purchase of the government by the oligarchs without undoing the whole government. I'm not sure from what you say if you think it's a form of fascism or an illegitimate seizure and sale of something to which they were never entitled to sell or to buy. That would be close to my position.

On the issue of the right of the People to determine moral values for their community, two more states this week have had Federal courts tell them that they have no right to do it, and have their duly elected attorney generals refuse to defend their democratically enacted laws -- indeed, in one case, a provision of a state constitution.

I did my civic duty this week, but no one I voted for advanced past the primary -- as usual. As always, indeed, by the time we get the field settled for the general election, there are no candidates I really want to see elected to any office at any level.

Tex,

If we could say that, in general, markets should be left to work then we would not disagree. But there are important exceptions, where markets should not be allowed to exist. Here is one: they should not be able to buy part of the sovereignty won by blood. Both parties to this transaction are criminals, but not by any positive law: indeed, they control the law. An appeal to a higher law than any positive law -- or any market transaction -- is necessary.

Texan99 said...

This is an argument we often have. I would say that, if something must be done, it's wrongful to refuse to do it unless one receives a price. If something must not be done, it's wrongful to accept a price to do it. That covers, for me, any special status things like "sovereignty won by blood" may have. Beyond that, if something is morally lawful but not compulsory, it may be done for an agreed price, the government has no business sticking its nose into voluntary transactions pursuant to which the price is set.

E Hines said...

...if indeed we can have a duty to do the impossible ("Ought implies can," said Kant)

A non sequitur: it's not impossible at all, until we meekly surrender in the matter. And: "Hard means possible," say I. Kant wasn't far wrong on that one.

the ability of the government to act as a party to buying and selling things

Here you're confusing the capacity to act as an agent in a transaction with acting in its own name. Of course, for those transactions we've authorized the government, it can and should broker the deal whereby it transfers some thing it holds in our name to an authorized (by us) recipient, and it holds in our name the receipts it collects for that thing. And the opposite. But for all those transactions, government is exchanging our goods for our receipts--government has nothing of its own. If the government makes an unauthorized transaction, that's on us to correct. Whether such an unauthorized transaction is fascism or an illegitimate seizure--that's not a very interesting matter to me. It's labeling, not assessing a principle and working to a solution. Which solution already seems clear to me, but that's why we have these discussions.

That we've shirked our duty for a hundred years--regarding the Fed or any other entity of government--in no way excuses our shirk, nor validates the government's behavior, nor makes it impossible to correct. It's simply the situation as it exists today, and the situation with which we must deal, lest we more monstrously shirk our duty to our children.

On the issue of the right of the People to determine moral values for their community, two more states this week have had Federal courts tell them that they have no right to do it....

Not the first time the courts--Federal or State--have gotten it wrong, and there are a variety of ways to correct the error. None of them involve meekly acquiescing.

...no one I voted for advanced past the primary....

No candidate ever will be perfect, nor will any piece of legislation be. Nor any court. It's why I apply the Buckley Rule to candidates, legislation, and nominations. No conflict, whether at the ballot box or at gunpoint, is a one-shot affair; these are iterative processes, and it will take repeated cycles. That's how the Progressives have brought us to this pass. I don't accept that Progressives are smarter, or more stubborn, or have more...stick-to-itiveness...than we.

Eric Hines