The Fallacy of Conservative Economic Dogma

[Morereason]

The Fallacy of Conservative Economic Dogma
Journal of plasmacutter (901737), from Slashdot

http://slashdot.org/~plasmacutter/journal/191810

Republicans and libertarians adhere to a fundamentally fallacious economic policy which ignores such basic concepts as moral hazard.

Some may call this a "favorite gut reflex of left-liberals", i'm sure many will attack me with similarly baseless accusations of blind, partisan railing against the "system". This is, to be as blunt as Dick Sutphen, bull****.

I'm degreed in the field, partisan hackery has nothing to do with this issue.

Modern conservatives and libertarians neglect we have, in the history of the us, already applied both of their policies in actual practice in the modern age:
Around the the turn of the century, we took a "hands off" approach to capitalism.
This led to vast and horrendous poverty, monolithic and abusive monopolies, and eventually to the depression and the collapse of the economy as a whole.
Then in the Reagan era we had a "supply side" approach which attempted to create jobs and economic growth by offering wealth incentives to corporate owners and controllers, which also led to recession because the worker was not receiving that wealth to spend on finished goods.

Both of these approaches ignore the moral hazard of placing proprietors in control of the distribution of wealth. They will invariably, if unchecked , take every opportunity to keep this wealth to themselves rather than pass it on to consumers and facilitate the consumption which expands our economy.

The problem is conservative elements seem to think economics has a "goal" of absolute efficiency. Economics is a science, a tool to be used to shape policy toward society's benefit.

The most "absolutely efficient" system involves labor working for minimum subsistence, and without regulation to insure a middle class there won't be one. Business proprietors will suck up every bit of profit they can at the expense of the majority of the populace.

It goes further than this as we enter the twenty-first century, however.
Today's multinational conglomerates have power through market dominance which rivals or even surpasses governments, and as such need to be required to obide by the constitutional standards of life, liberty, property, and due process, or they can and will commit abuses against human and consumer rights.
This is already quite visible in the DMCA, under which hollywood has legislative control over the tech industry, and plays judge, jury, and executioner against senior citizens, college students, and single parents for a morally accepted, everyday activity.
Another quite visible example is the corporate assertion that property they sold to you, such as video game consoles, is still "theirs" to govern.
Is this neo-serfdom what conservatives really want? The absolutist opposition to regulation they display seems to support this perception.
I'm especially astonished that libertarians, who champion a life of self determination, would rail against invasive government on one end and support invasive corporate practice on the other.

The open, perfectly competitive market does not exist; nothing even close to it exists, and this fact has absolutely nothing to do with regulations. Tacit collusion, network externalities, and monopolistically competitive markets (this is different from the purist "monopoly") pose serious barriers to entry for some new guy to ride to the rescue in the marketplace. Only careful regulation can assist in this regard, and today this is just not the case. Regulation needs to be overhauled under careful public scrutiny, not eliminated or placed further into corporate control. Such a process can never be perfect, nothing in politics ever is, but this is no reason to oppose change.

[keep_it_real]

1. Obama spoke about regulation at his speech on the economy in NY recently.

[flamin lib]

2. Yeah, I knew that. So much of the Republican/Conservative

mantra is demonstrably wrong with empirical data. They say if minimum wage is raised people in min wage jobs will be unemployed yet the Bureau of Labor Statistics shows otherwise. They say Republicans are for small government, yet the BLS shows private sector jobs decline under Republican Presidencies and public sector employment grows. They say tax cuts are paid for with increased productivity but the Government Accountability Office says the best that can be hoped for is a 30% return, or 60% lost revenue.

They say it often and loud and idiots believe.

[Morereason]

3. I think a lot of us understand this. What I liked is that

this economic blogger does a very good job of explaining it.

[chknltl]

4. Well said! Morereason

I am just a self taught student. (Books like Thom Hartmann's "SCREWED The Undeclared War Against The Middle Class" and David Cay Johnston's recently released "FREE LUNCH" have been quite educational.)

IMO The biggest threat to the world today is America's runaway capitalism unrestricted. If it were just us, (America) I might be tempted to say let the experiment run it's course so that future capitalistic democracy's can learn from our now twice repeated mistakes. Sadly, America has that "BIG STICK" still in the form of the largest nuke arsenal AND the mightiest military this planet has ever seen. This translates to a serious world problem!

In my further estimation, the best course may be to bring about change from within in the form of reigning in our unrestricted capitalism through what remains of our democracy. I see no other way, because our downfall so far has caused millions to die and many more to suffer. It can only get worse! It is almost like we have become the last remaining cop on the planet and that planet just figured out that we are a crooked cop! That opens up the world to some nasty shenanigans as the greedy seek to stake out further claims, well those that the crooked cop isn't showing interest in!

Roosevelt got it right with the New Deal but as far as that 'speak softly and carry a big stick' thingy goes...perhaps we forgot how heavy a burden that stick was as Eisenhower so eloquently warned...maybe it is time to share that load with other democracies as a form of a new M.A.D. detente.

I enjoy reading things like this, I also learn from folks like you. Thank you and please, I encourage you to continue posting this sort of material because imo., it gets to the very heart of America's problem and perhaps to the heart of a far bigger problem facing our planet at this time. I feel that capitalism unrestricted in the hands of those who also control our military might is a problem equal to the Cold War in potential. Thanks to capitalism unrestricted, Armageddon may have been placed back on the table. Well that's how I see it.

[Morereason]

5. I can't take credit. It comes from a Blog (see link), but I totally agree with you

I agree, I see many even on this board that still believe the "free market" ideology, that it will be our economic savior, when the reality is that regulation and using the market to benefit all people is really what has worked for us, not the latter.

[chknltl]

6. oopsy!

:blush: I guess I kinda got too absorbed by what I was reading. Worse yet we have more than a few DUers who write things of this caliber, (as you can easily see, I am not one of them), so it was a natural for me that you were the author.
Oh well, "boo-boo's occur".