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Old 19.12.2011, 14:01
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Re: Vote on minimum wage- what would you do?

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Define "free market" please. Do you mean markets free of monopoly rents (seeking to attain allocative efficiency) or markets free of rules where actively seeking monopoly rents is, logically, the ultimate goal of the rational economic actor?

Free market as in free without Government interference, a system of very limited Government where government doesn't govern economic activity. Basically a system of very limited Government where Government is there to help solve disputes between two parties. Disputes that arise when one party breaks a contract. Free market does not at all imply free of monopolies. Monopolies aren't necessarily bad but most monopolies that are bad were created with the help of government regulation and laws and therefore aren't healthy monopolies as they could defy natural market forces that otherwise would have acted against it.

The beauty of free markets is that this system would beautifully self-regulate.
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  #122  
Old 19.12.2011, 14:29
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Re: Vote on minimum wage- what would you do?

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There cannot be a free market without bailouts and other excesses because it is an inherent property of the free market that certain groups, corporatoins etc amass money, influence and power to the point that they start influencing and controlling the government to further their own ends.
Bailouts directly influence market demand and supply; so to suggest that there cannot be a free market without bailouts is a false statement.

To have Government system where individuals and corporations influence government decision and set centrally planned economic policies is also anti-free market. So you are once again wrong when you state that such influence is part of the free market as such a system is not that of a free market economy.

From your first paragraph it becomes obvious to me that you are confused about economics and do not understand a free market system and therefore cannot recognize its advantages.

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Only a strong and independent government can stand up and say no. The weak government that free market folks are advocating is a government that is too weak to have any balls.
And I have to disagree with you once again. I agree that it is important to have a government that stands up and says no but such a government only exists in the form of a free market system where government doesn't dictate economic policies that influence market behavior through stimuli of either supply or demand side.
Only when you have a system where you eliminate all outside influence and allow the market to function will you have a system that has balls....otherwise you end up with a corrupt government that functions to enrich the pockets of those that can influence government policies and that you will always have when it is widely accepted that the Government is there to interfere in the market place with bailouts, subsidies, tax breaks, and other policies that result in a disruption of natural supply and demand..

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Just as pure socialism is wrong, so is the pure market wrong. Extremes are always wrong. There is a middle way that combines the best of both. That is the world in which we live.
I take that you meant free markets when you wrote pure in that first sentence. I disagree once again with you as only a free market allows for necessary corrections to take place. It's government economic policies that allow nonviable economic conditions to persist. When a market is free and allowed to function it does correct when such corrections are necessary. The RE market and artificial interest rate policy are the perfect examples that come to mind.

Here's a good article on the topic that explains how it was anti-free market policies (brought to us by the influence of various business interests) that allowed for the housing bubble to continue growing. Under a free market that bubble would have never reached such proportions and would have naturally corrected with demand and supply imbalances.

http://www.wtffinance.com/2011/04/wh...-market-crash/

I'm realistic enough to know that a free market doesn't equate to a perfect market. However, in a free market system, bad economic policies are not rewarded and economic participants (corporations and individuals) are forced to learn from their own mistake and those of others. A free market system provides direct feedback on the condition of the economy...when you interfere you basically distort natural behavior and feedback...I equate centrally planned economies to the CIPA disease. Sure, good times might last longer, bubbles grow bigger but ultimately there are consequences for such distorted behavior.
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  #123  
Old 19.12.2011, 16:17
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Re: Vote on minimum wage- what would you do?

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This is a bit like the socialism debate. People who defend socialism say the bad examples set in the Soviet Union and its allies were not real socialism, and if *real* socialism were allowed to come into being the world would be perfect with dancing singing rainbows ever after.

You are saying exactly the same of the free market. You are discounting all examples of the free market's failings and saying the market wasn't really free.
Which part of the market do you think was 'free'?

I can tell you that the FIRE industries (Financial, insurance, real estate) are amongst the most regulated industries in the world. So could it be a very tiny possibility, that it was the very regulations that caused the crisis? Regulations that were created not for the benefit of the public.

To see how well the government regulates (in most western countries) lets look at the other regulated industries.
Education - disaster - every year in spite of better technology costs rise.
Health - disaster - every year in spite of better technology costs rise
Food industry - cancerous, not cancerous, who cares? certainly not the government. In spite of thick book of laws and regulations, transparency is fading.
Pharmaceutical - similar to health - filled with favouritism, dodgy decisions, subsidies etc
Energy - hehe

Is it coincidence that these industries are in the state that they are? Well no, they all involve government.

Back to the debt crisis:

First of all, the main problems in the current crisis is debt.

Where was a part of the debt coming from? Well the banks who in turn are supervised by the Central Bank. Interest rate policy is one way the central banks try to control the price of money. Are central banks independent. Of course NOT. In the US, 12 members decide what the price of money will be (Interest rates). Yes, thats 12 people from 300 million decide.

This is about as far from free market as you can get.

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There cannot be a free market without bailouts and other excesses because it is an inherent property of the free market that certain groups, corporatoins etc amass money, influence and power to the point that they start influencing and controlling the government to further their own ends. Only a strong and independent government can stand up and say no. The weak government that free market folks are advocating is a government that is too weak to have any balls. One of the reasons that economy today is in the state it is in is because the goverment has for too long been blindly jumping to the demands of corporations and banks.
Your post follows like this:

Big business = Run by people (humans) = Bad
Government = Run by people (humans) = Independent (because they say so of course) = Good

???

Do you see why it doesnt make sense, and what you want cant exist? Both sides of the equation involve a group of people.

What you are saying is that we need to find incorruptible people to run the system. The flat out fact though is, they dont exist. And dont just think that corruption of the monetary kind can influence the system. How about extortion (because i have skeletons in my closet), or what about nepotism (this decision will greatly benefit my daughter). The fact is, there are many things that can influence our decisions - and its not just money. Personal experiences, fear, threats, medical conditions, lack of knowledge in a certain field, deliberately being misled by others etc etc.

In free markets we have a simple rule:

Power = eventually bad - even when you are a saint.

So how do we control the 'power' bit? Well thats the important part and you start by de-centralising decisions.

By creating simple rules and guidelines to live our lives and then thats IT. Nothing else. Finished.

If there is no individual or small group of individuals that control the changes in a system - then there is no one to influence easily, right?
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  #124  
Old 19.12.2011, 16:17
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Re: Vote on minimum wage- what would you do?

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To have Government system where individuals and corporations influence government decision and set centrally planned economic policies is also anti-free market. So you are once again wrong when you state that such influence is part of the free market as such a system is not that of a free market economy.
I think this argument bites it's own tail.

My argument: in a supposed free market, coroprations will amass enough money to influence the government to re-write the rules in their favour. There fore the market can never truly be free.

Your counter-argument: If they did that, the market wouldn't be free.

This is like saying chickens and foxes can live together peacefully, because if the foxes eat the chickens then they aren't living together peacefully.

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From your first paragraph it becomes obvious to me that you are confused about economics and do not understand a free market system and therefore cannot recognize its advantages.
thank you for being patronising.

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And I have to disagree with you once again. I agree that it is important to have a government that stands up and says no ...
And how can the government do that if it starved of funds and capabaility and undermined by lobbyists who tell it what to do while preaching that only a weak government can be a good government?

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but such a government only exists in the form of a free market system where government doesn't dictate economic policies that influence market behavior through stimuli of either supply or demand side.
Only when you have a system where you eliminate all outside influence
which is why big free-market corporations have massive lobbying budgets while at the same timing calling for taxes to be slashed? Make sure the government feeds out of your hand so they can't stand up against you.

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and allow the market to function will you have a system that has balls....otherwise you end up with a corrupt government that functions to enrich the pockets of those that can influence government policies and that you will always have when it is widely accepted that the Government is there to interfere in the market place with bailouts, subsidies, tax breaks, and other policies that result in a disruption of natural supply and demand..
What is different between "natural" supply and demand and such supply and demand that is designed to best serve the interests of the people?

It may well be that a free market system left uncontroleld will find an equilibrium that best serves its own interests. But the task of government is to create the incentives to make that point of equilibrium coincide with the ebst interests of the country and people. Take for example pollution. It may be in the best interests of a corporation to pollute in an uncontrolled way as it saves them most money. But for the country as a whole the effect is the opposite as it destroys people's quality of life and maybe kills them. Now only a government can impose regulations that create incentive to find cleaner production methods. This can be done through outright bans or through fiscal incentives that offset the gains of free pollution. So with such an mechanism the market is no longer totally free but it is still fair (if not fairer). It is not disadvantaging anyone because it applies to all competitors equally.
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  #125  
Old 19.12.2011, 16:20
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Re: Vote on minimum wage- what would you do?

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Big business = Run by people (humans) = Bad
Government = Run by people (humans) = Independent (because they say so of course) = Good

???
Last time I checked government was democratically accountable. If a government fails they can be voted out.

Try voting out the board of a big corporation. Even if you acquire a massive block of shares you'll probably still be outgunned because the majority is held by funds (that is managed by people who don't consult with those who actually put up the money) and the likes of who have different goals than you do. Big corporations are run by old boy's clubs and they sure do know how to keep the pesky small shareholders at bay. I do know as I've been to anough shareholder meetings myself.
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  #126  
Old 19.12.2011, 16:22
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Re: Vote on minimum wage- what would you do?

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If there is no individual or small group of individuals that control the changes in a system - then there is no one to influence easily, right?
this is a bit like saying the best way to avoid taking wrong decisons is to take no decisons. So the sum of all random effects is taking us on the best possible course. I don't think so somehow.
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  #127  
Old 19.12.2011, 16:41
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Re: Vote on minimum wage- what would you do?

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I think this argument bites it's own tail.

My argument: in a supposed free market, coroprations will amass enough money to influence the government to re-write the rules in their favour. There fore the market can never truly be free.
And that's why I state that only a free market is free and "fair". Once you have the power of government you have special interests creating rules and regulation to their advantage. If we would limit the power of government and allow the free market to function we wouldn't have as many problems in the world and the economic problems I'm talking about are just at the infancy stage of what has yet to come for the many faux-economies.

It's clear that you embrace government regulation and that you have faith in the people representing you to be neutral and act in the absolute best way possible. Something I think is a myth and only possible in a fairy tale....I think the market would be more efficient at making the best decision. Let's agree to disagree. I'm outta here.
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Old 19.12.2011, 16:48
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Re: Vote on minimum wage- what would you do?

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It's clear that you embrace government regulation and that you have faith in the people representing you to be neutral and act in the absolute best way possible. Something I think is a myth and only possible in a fairy tale....I think the market would be more efficient at making the best decision. Let's agree to disagree. I'm outta here.
Okay, just as an assumption, suppose you are right, and the free market always does what is in the best interest of all the people. Very well. But tell me, how does the market know what is in the best interest of the people? It doesn't because the free market has no intelligence. It's not some sort of God. You are riding on a bus driving at full speed and the driver is blind. That is the free market. Free market types can at best demonstarte there is some sort of equilibrium. they're not even sure about the stability criteria of the equilibrium. They have no idea whether that equilibrium is the best of all possible worlds but they claim it is. That my friend, is a religious belief, no more, no less.
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  #129  
Old 19.12.2011, 16:54
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Re: Vote on minimum wage- what would you do?

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Last time I checked government was democratically accountable. If a government fails they can be voted out.
What if government is the same on both sides, then does it make a difference!

Before, your complaint was big business involved with government, so why the complaint if you can just change the government . How does it help in our democracy if all sides of politics are involved with big business? I mean these are your words. I gave you the answer in my last post - remove government influence from the problem would be a good start.

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Try voting out the board of a big corporation. Even if you acquire a massive block of shares you'll probably still be outgunned because the majority is held by funds (that is managed by people who don't consult with those who actually put up the money) and the likes of who have different goals than you do. Big corporations are run by old boy's clubs and they sure do know how to keep the pesky small shareholders at bay. I do know as I've been to anough shareholder meetings myself.
What type of money do you think many of those funds hold? Pensions I would say. And who legislates that? Government.

Dont like the other funds? Dont invest in them. I dont exactly because of this, they dont represent my interests. I dont invest in corporations who I believe arnt doing the right thing. Who on earth would except if your being hypocritical? Thats what the sell button is for.

Ok. So you cant vote out management of a corporation i.e. ABB, Nestle, Swatch, Roche or Actelion. So what? That influences my daily life how exactly? The government on the other hand can influence my daily life with taxes, regulations, laws, pensions etc etc etc.

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this is a bit like saying the best way to avoid taking wrong decisons is to take no decisons. So the sum of all random effects is taking us on the best possible course. I don't think so somehow.
Of course not. I never said that changes cant happen. I just said you shouldn't be able to influence a small group to get what you want.

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how does the market know what is in the best interest of the people? It doesn't because the free market has no intelligence. It's not some sort of God
Oh my. Your on your own here Backtoch, im out

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You are riding on a bus driving at full speed and the driver is blind. That is the free market.
No, thats Bernanke in charge of the Federal Reserve. Except its worse - He is blind and telling his passengers that he can see well because he studied at Princeton. Meanwhile his passengers are screaming telling him to stop because of the cliff ahead.

Last edited by Lex; 19.12.2011 at 17:21.
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  #130  
Old 19.12.2011, 17:10
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Re: Vote on minimum wage- what would you do?

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Okay, just as an assumption, suppose you are right, and the free market always does what is in the best interest of all the people. Very well.
\

I never stated that a free market would function in the best interest of all people.

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But tell me, how does the market know what is in the best interest of the people? It doesn't because the free market has no intelligence.
The market is composed of all people participating or wanting to participate in economic transactions, so there is supply and demand. When you state the the market has no intelligence, are you suggesting all people are idiots? I don't necessarily think that people are making smart financial decisions but I think a lot of that can be attributed to people not having to learn from their mistakes and those of others as we have anti-free market economies that reward financial stupidity.



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It's not some sort of God.
But a panel of a couple of eocnomists or business people with a hidden agenda can decide for everybody else...I make the case that regulation is playing financial god...

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You are riding on a bus driving at full speed and the driver is blind. That is the free market.
This conversation is over as I'm done wasting my time on you. If you truly think that a business with assets would hire an incompetent driver...that is more the system of big government creating equal opportunity for everybody through regulation and not the works of the free market. But let's assume you are that corporation...people would quickly learn not to participate in economic transactions with you and not to accept your services.


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Free market types can at best demonstarte there is some sort of equilibrium. they're not even sure about the stability criteria of the equilibrium. They have no idea whether that equilibrium is the best of all possible worlds but they claim it is. That my friend, is a religious belief, no more, no less.
LOL!
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