Cafe Hayek - Latest Comments in Cowen (and Manne) on Klein (and Stiglitz)

Re: Cowen (and Manne) on Klein (and Stiglitz)

SaulOhio — Thu, 04 Oct 2007 12:22:40 -0000

Does anyone have any information about Friedman's stance on the "pure and perfect competition" model? The Austrian economists I know well, especially George Reisman, seem to utterly reject it. Klein seems to criticize him for believing in free markets while they require the unrealistic conditions of pure and perfect competition. One of the reviews seems to be defending models of that sort. So what IS Milton Friedman's position on it?

Re: Cowen (and Manne) on Klein (and Stiglitz)

steep — Thu, 04 Oct 2007 12:00:13 -0000

So you're OK with your tax dollars going to fund a war to help an industry get its product to the market. - muirgeo

Yes. Protecting open trade routes and property rights have been part of US national interests since Jefferson.

You're OK with people claiming a "capitalist ideology" helping install and support regimes like Pinochet? I mean who is being logically inconsistent here? - muirgeo

I read Friedman's account of his speech. I don't see how he insatlled Pinochet. It seems to me that free-market policies cause totalitarians to lose power rather than gain it.

Both the idea of using force to install capitalism and the fact that such efforts were miserable failures that did indeed destroy the world for those who's countries were so effected is something you should get. But as you say...you don't. That's what I don't get. - muirgeo

I've been to Japan. EFFECTED by facism, rebuilt by capatalism. Just another miserable failure of more freedom and capitalism.

Capitalism is a good thing but it needs the oversight of an educated democracy.

- muirgeo

Present gov't propaganda in schools will never allow this. Education kills collectivism.

Such can't happen under the deregulated free for all the liberal and neoliberal policies which consistently decay into corporatism and banana republics. THAT is why no such economies or governments based on liberal principals ever existed or ever will exist. - muirgeo

Freedom in Hong Kong brought the present banana republic there, didn't it?

That is why the most successful societies EVER were based on a pluralistic democracy. - muirgeo

I prefer representative democracy like we have here in the USA. It has better built-in checks and balances.

Sorry for feeding. I usually just read and think, but I was a bit bored and wanted to participate more. Not as fun as it looks, and definitely not enlightening.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Darren — Thu, 04 Oct 2007 07:13:43 -0000

"Darren,

I agree and explained how I would limit the governments power."

Yes, as I recall, you said one of the ways you'd limit it would be through more things like NPR! So you're going to limit the government's power with additional sources of government-sponsored information and programming? Classic.

As for those other reforms you mentioned, they've all been tried and invariably lead to MORE corruption because layers upon layers of complicated election and lobbying rules do nothing but put up roadblocks for the less powerful in society while the more powerful have the resources to find ways around the rules. That's why campaign finance reform has been such a disaster.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Sam Grove — Thu, 04 Oct 2007 06:57:58 -0000

Muirgeo,

You don't seem to adequately comprehend:

1. The tribal nature of humans.

2. The incentives created by political power.

3. The nature of those who are attracted to political power.

4. The incentives given to business when politicians act to 'regulate' business.

5. The incentives politicians have to maintain or gain position in the formalized hierarchical tribal structure we call government.

6. The opportunities available to said politicians to maintain or gain position in that structure.

7. The infeasibility of 'the people' actually acting in concert to control the political structure for general benefit.

8. The inability of collective theories to apply in the real world.

9. The misdirection in thinking of people in a collective sense.

Construction of a model of the real world is full of pitfalls if the diversity of interestes of all the individuals that compose it are not accounted for, that is, referring to 'the people' is useful only in a very limited sense and really breaks down in the manner that you tend to use it. See #7.

You are living in a country with two broadly distinguished groups, 'liberals' and 'conservative' that are often at each others' throats.

Tell us how you plan to unite these opponents to constrain government, to your ends, when their political sentiments are so at odds?

Why are they so attached to their positions?

Until you can resolve these problems, your solution is no solution.

And when you answer that last question, accurately, you'll be unable obtain a resolution to the problem.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Lee Kelly — Thu, 04 Oct 2007 06:49:48 -0000

Many Liberals (classic) seem not to trust the people

Bingo. I do not trust anyone with arbitrary power, not businessmen, idealogues, CEOs, politicians, lobbyists, philosophers, scientists, or "the people". All are fallible and corruptible, and I do not desire, nor trust, anyone to engineer society.

Re: Cowen (and Manne) on Klein (and Stiglitz)

vidyohs — Thu, 04 Oct 2007 06:32:10 -0000

"The government forcefully took money from taxpayers and gave it to Haliburton. That is the very definition of intervention"

Muirgeo

It is so wrong for government to give money to anyone under any circumstance......but wait, muirgeo, did government "give" it, or did Haliburton do something to "earn" it. If you'd just put down the Karl Marx collegiate Dictionary and grab a Webster's, if they have one in your church library, you might be able to use the same language we do.

"This could well involve less nefarious over regulation freeing up the economy while also promoting truer market conditions."

muirgeo

I didn't believe it could be done but you exceeded the absolute incoherence of a paragraph I read on the Robber Baron thread. What in the name of God, ours not yours, could you have possibly been trying to say in that paragraph?

"I'm hear trying to educate myself on classic liberal economics."

muirgeo

No you're not, muirgeo, people have been trying to educate you but you have the most severe case of the "yeah buts" I have seen in a long time. Russ educated you, but there you were....."yeah but", and out come some more nonsense. Others tried, Sam Grove in particular, clear concise explanations......and there you were your fingers on the keyboard just desperate to get your "yeah but" posted.

I know you won't get it but here is another explanation couched in street language.

Analogy:

We have the wonderful mechanism (you do understand, muirgeo by the word mechanism I am referring to something mechanical, you know gears, pulleys, and gizmos) of capitalism, free markets, and free enterprise that, left alone uninterfered with by government, is providing wealth to all those who participate and in direct relation to how effective they are in participating. However, capitalism, free markets, and free enterprise do not provide for those very very few that "will not" do for themselves beyond bare subsistence, so these folks are the small percentage we call lazy, shiftless, drunks, village idiots, or the town fool.

Your church seeing opportunity to seize power converted these lazy, shiftless, drunks, village idiots, and town fools into "needy poor people" who must be helped because they breath air and not for what they contribuite to any good of society.

So we have a wonderful machine humming along and we throw socialism in the works and it begins to grate like rocks and diminish the effeciency of the machine by derailing belts, wearing down gears, grinding pistons and plugging up pipes. The longer we allow that socialism in our machine of prosperity the slower and more laborous it is to produce those things we value. Consequently the numbers of the lazy, the shiftless, the drunks, the village idiots, and the town fools increase dramatically as there is less and less prosperity being produced.

Like good mechanics, we who are capable of understanding that 2 plus 2 equals 4, would be acting in the best interest of everyone to in the most effective and swift way possible clean our machine, replace or fix the damage caused by the socialism, and guard it forever against the luddite intentions and efforts of the Socialist Church and its socialist evangelicals.

This is the very basic something you can't grasp, or choose to ignore, either way it makes you sound foolish.

Simple concept here, muirgeo, try and get it.

In 1983 I became a business owner. I guarantee you that I, like every other business owner, did not think one day....oh my, I need to start a business so I can fulfill my civic duty and employ people. No, muirgeo, what I did was say I want control of my own destiny and income so I will start my own business to "make money" for myself and my family. Do you have that simple concept now, muirgeo?

Businesses are begun because some one wants to make money. The only purpose of a business is to "make" money. If it does not make money, it will grind to a stop.

I am ethical and I do business that way, I know that others do not. It is my job and yours to identify those who do not, file charges against them for criminal acts, and turn the thing over to "our" government who should then indiscriminately dispense justice and compensation from seized assets if any should be forthcoming.

Since you worship State as your God, you are simply incapable of thinking in any context that does not begin and end with State.

I am sorry but I respect neither your intellect or the command of words with which you choose to expose it.

Re: Cowen (and Manne) on Klein (and Stiglitz)

muirgeo — Thu, 04 Oct 2007 06:29:20 -0000

Darren,

I agree and explained how I would limit the governments power. But the idea that you can have a government with NO power is silly. The power of the government just needs to reside with the people and not with corporations. The economy exist for the people not the other way around. Likewise for the government.

Many Liberals (classic) seem not to trust the people because they are themselves the cream of the crop in their Ivory Towers. So why should they abdicate any power to the rabble? Fr them I suggest they drop out of society and go start a new somewhere else because the people will run this country in the end.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Thu, 04 Oct 2007 06:07:59 -0000

See I don't think the government and it's regulatory roll is corrupting the markets. I think the markets see easy money to be made by corrupting the government and becoming one with it.

And in the absence of markets, there would be what? No greed? Please. Markets are just voluntary exchange, and have absolutely NOTHING to do with corruption and greed. Yes, market participants will use government corruption, but that has nothing to do with their participation in markets. People are greedy; they were greedy before capitalism, and will still be greedy if capitalism is ever replaced.

You can't say "markets" corrupt anything, or get corrupted. People do that. People do use government for their own advantage. If government claims power over a certain market, market participants may find it cheaper and easier to lobby government for advantages rather than out-do their competitors. This isn't a result of markets at all, its a function of greedy individuals using government to vie for more money.

All of the phenomenon you mention have no causal relationship with the existence of free markets whatsoever. It so happens that the nations with the freest markets are also the ones with the least corruption. In fact, the things you mention are the exact opposite of what markets are. Its like saying, "peace breeds war, because peace always leads to war, so peace must be bad". Markets are the antithesis of the behaviors you speak of, so when a market is free, any government action in it must necessarily produce corruption. There is just no other reason to intervene into a free market.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Lee Kelly — Thu, 04 Oct 2007 06:03:56 -0000

There are more ways to corrupt political power than wealth, most prominantly concentrated voter power. The method is different, but the result is similar i.e. one group benefits at the expense of another.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Darren — Thu, 04 Oct 2007 05:52:22 -0000

"I think the markets see easy money to be made by corrupting the government and becoming one with it."

Muirgeo, what everyone's patiently trying to explain to you is that government's corruptibility is directly proportional to its power. An infinitely powerful government is infinitely corruptible due to infinite incentive to corrupt. A government with zero power (that is, a truly free society with no government at all) is completely incorruptible. It's government power and intervention that is the root cause of what you apparently see as actions of the free market.

Re: Cowen (and Manne) on Klein (and Stiglitz)

muirgeo — Thu, 04 Oct 2007 04:57:34 -0000

"Tell me what government intervention resulted in the no bid contracts that have made Halliburton stocks sore."

muirgeo

The government forcefully took money from taxpayers and gave it to Haliburton. That is the very definition of intervention.

G

And who was the prior CEO boss of Halliburton? Who convened an energy policy in private with industry leaders allowed in but NOT the American public. Who holds hands with the King of Saudi Arabia? Who has an Oil tanker with her name on it?

See I don't think the government and it's regulatory roll is corrupting the markets. I think the markets see easy money to be made by corrupting the government and becoming one with it.

The answer is electoral reform, lobby reform, open government, strict punishment of conflicts of interest and the democratic process involving a well educated public (that would be more NPR and less conglomerated corporate media). This could well involve less nefarious over regulation freeing up the economy while also promoting truer market conditions.

Those are the solutions most people want and hopefully the ones we WILL get if we can separate the co-joined twins of corporatist and sold out politicians.

Re: Cowen (and Manne) on Klein (and Stiglitz)

muirgeo — Thu, 04 Oct 2007 04:45:37 -0000

Most of the essay just seemed to be a rant about how paying private companies to provide services to the government is going to destroy the world. I don't see the logic in the argument, and I didn't see any in the essay.

Posted by: steep

So you're OK with your tax dollars going to fund a war to help an industry get its product to the market. You're OK with people claiming a "capitalist ideology" helping install and support regimes like Pinochet? I mean who is being logically inconsistent here?

Capitalism is a good thing but it needs the oversight of an educated democracy. Such can't happen under the deregulated free for all the liberal and neoliberal policies which consistently decay into corporatism and banana republics. THAT is why no such economies or governments based on liberal principals ever existed or ever will exist. That is why the most successful societies EVER were based on a pluralistic democracy.

Here's the score board;

Pluralistic Democracy 31

Liberal Fiefdom 3 (Swaziland, Saudi Arabia. Oman)

That's kind of a blow out!

Re: Cowen (and Manne) on Klein (and Stiglitz)

Tom — Thu, 04 Oct 2007 04:43:09 -0000

"Government is the only thing that prevents me from walking outside and going on a shooting spree in order to gather groceries "

Pat, you would soon be dead yourself. Why would you need groceries?

Re: Cowen (and Manne) on Klein (and Stiglitz)

Sam Grove — Wed, 03 Oct 2007 23:02:38 -0000

Scott can you say Project for a New American Century. Here are some key signatures on the 1998 letter to President Clinton urging regime change in Iraq.

Donald Rumsfeld, Paul Wolfowitz, Richard Perle, John Bolton, Richard Armitage, and Elliott Abram

Exactly! Savor the moment. We're almost on the same page.

Were it not for their positions in 'the government', where would these guys be?

Ah, but then you might say something along the lines of: "if only we had the right people in government".

Then we might say something like: "Christ, you're hopeless."

Re: Cowen (and Manne) on Klein (and Stiglitz)

muirgeo — Wed, 03 Oct 2007 20:30:00 -0000

"The government intervention that made Halliburton soar was called Operation Iraqi Freedom. I could check my sources, but I'm pretty sure that the government did that.

Scott Clark

Scott can you say Project for a New American Century. Here are some key signatures on the 1998 letter to President Clinton urging regime change in Iraq.

Donald Rumsfeld, Paul Wolfowitz, Richard Perle, John Bolton, Richard Armitage, and Elliott Abrams

Re: Cowen (and Manne) on Klein (and Stiglitz)

Sam Grove — Wed, 03 Oct 2007 20:29:18 -0000

And my statement that Klein is unqualified to critique what she criticizes is based upon my perception that her motives have subjugated any possiblity of objectivety, much as Democrats/liberals and Republicans/conservatives are unqualified to critique each other. They do not criticize, they attack.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Sam Grove — Wed, 03 Oct 2007 20:24:41 -0000

Markets do not "fail". It is a gross misunderstanding of the market to suppose that it does fail. Market is a coarse term to refer to the economic behavior of humans.

When people make poor choices, the market responds. It's more like "karma".

Markets are not designed mechanisms with a creator's specified purpose which it might fail to achieve.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Wed, 03 Oct 2007 19:22:32 -0000

And if viewed properly, one of the incentives [think market pressure or a market signal] to pursue more knowledge would be a transaction or two where one got burned or suckered.

Good point.

Beside, the term “imperfect” here is way too subjective! Who gets to decide who is imperfect (or even perfect) and why is that someone choosing the way s/he does?

The state's economist does, evidentially. How they reconcile their views with the subjective theory of value, I have no idea. How do we distinguish "market failure" from "something the economist doesn't like"? I don't know if I've ever heard an economist remarking about market failure and actually acknowledge that markets respond to and attempt to correct market failure themselves when they are allowed to do so (e.g., the Internet's impact on consumer information asymmetry).

If what you had written above are really the views of Stiglitz then he ought to renounce his title and not be able to reclaim it until he retakes a course in Micro.

Like I said, it could be a straw-man. But as I've read them, those are the assumptions needed to make his policy suggestions hold water. I'm not talking about the math behind his models though - he didn't get a Nobel Prize for Wither Socialism? after all.

Re: Cowen (and Manne) on Klein (and Stiglitz)

scott clark — Wed, 03 Oct 2007 18:55:54 -0000

Pat,

I also like the part where you shoot all the humans, but you cooperate with the vending machines. If you;d shoot all the people, why wouldn't you just smash the vending machines?

Re: Cowen (and Manne) on Klein (and Stiglitz)

lowcountryjoe — Wed, 03 Oct 2007 18:50:43 -0000

Markets fail because information and humans are imperfect.

No, this is why markets actually work. The whole point of trading with someone else is to make yourself -- from your own perspective -- better off than before you engaged in the trade. Sometimes this involves poor decision making by one party or the other. But, nonetheless, a poor decision that was made reflects a well-intended effort to maximize one's utility given the constraints [knowledge is, indeed, a constraint if viewed properly]. And if viewed properly, one of the incentives [think market pressure or a market signal] to pursue more knowledge would be a transaction or two where one got burned or suckered.

Beside, the term “imperfect” here is way too subjective! Who gets to decide who is imperfect (or even perfect) and why is that someone choosing the way s/he does? If it means that we -- we meaning everyone -- go into transactions without total knowledge and are guided, at least in some part, by some emotions that may or may not be all that rational, then hell, yes, the imperfection label fits. But hello, without such imperfections, we would not be human and we sure as hell would all have the same opinions as one another. How much economic (market) activity do you think would occur in that kind of setting -- a setting composed of perfectly like-minded people all with the same information and preferences to guide them? If Stiglitz could answer that, he sure would have a monopoly on imagination.

If what you had written above are really the views of Stiglitz then he ought to renounce his title and not be able to reclaim it until he retakes a course in Micro.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Mark Brady — Wed, 03 Oct 2007 18:12:36 -0000

For a critique of Klein from the anti-imperialist left, read Alexander Cockburn's essay here, where he makes some good points.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Brad — Wed, 03 Oct 2007 17:45:46 -0000

I feel like such an insider to be the first to question why Tyler read the whole book! At any rate, Naomi Klein is best explained away by a one minute snippet in an EconTalk podcast. I was listening to the one with Russ and Don on Law and Legislation while driving from Carson City to South Orange County Monday evening, and Don was channeling Hayek about how capitalism doesn't claim to yield satisfaction by everyone every time. In fact, no system can. But it does yield the most overall satisfaction, and give most of us the best shot at being satisfied.

My feeling about Naomi Klein is that she is the next Tammy Bruce. Young, intelligent, attractive, accomplished (Ms. Bruce was head of NOW LA chapter), leftist. I remember first hearing about Clinton's Lewinski problem on Bruce's early morning radio show. It devastated her to have to report it, but she did because it brought Clinton's feminist credentials into question. And that started a dramatic shift in her thinking and politics. Klein's Canadianess puts her at a disadvantage in undergoing that kind of evolution, but it's still in the realm of possibility. Perhaps that's along the lines of why Stiglitz approaches her with kid gloves.

Re: Cowen (and Manne) on Klein (and Stiglitz)

scott clark — Wed, 03 Oct 2007 17:20:04 -0000

Pat,

Is government the only thing that prevents your shooting spree? Non-government actors will shoot back as soon as you identify your violent intentions. Do you think that is the best strategy to gather groceries? Even the most violent criminals must rely on cooperation for most of the things they consume. It might not matter if you can concieve of cooperation without government, most of the time you cooperate anyway.

Re: Cowen (and Manne) on Klein (and Stiglitz)

Pat — Wed, 03 Oct 2007 17:12:20 -0000

As I sit here in my dorm at the University of Chicago, I am considering whether to walk across the street and listen to Klein give a talk about her new book this week. I went to a lecture by John Mearsheimer and Steven Walt last week, so I think I owe it to her.

Scott Clark, you should read Thomas Hobbes' Leviathan. Government is the only thing that prevents me from walking outside and going on a shooting spree in order to gather groceries and a couple of bucks for the vending machine. You may conceive of market transactions without government, but who says I can?

Re: Cowen (and Manne) on Klein (and Stiglitz)

SaulOhio — Wed, 03 Oct 2007 16:35:06 -0000

I have to wonder what interventions muirgeo thinks a market needs from government in order to exist. All that a market needs from government is protection of private property rights and enforcement of contracts. I wouldn't call those interventions, but protections. If a cop arrests a mugger that would have chosen me as his next victim, the cop isn't intervening with MY actions, but helping to leave me free to act. It is the mugger who would have been intervening in MY life if not for the cop.