RFC: Is there anything like a good government intervention?

[BitterTea]

If you just make the State disappear today, you will not get anarchy, you will get chaos.

Reminds me of a parallel drawn by Molyneux (not sure if it was his idea)...

If a congregration of priests get hit by a meteor, the result is not "atheism".

[1715310330]

1715310330

[1715310330]

1715310330

[1715310330]

1715310330

[FreeMoney]

Answering the original question:

Arresting counterfeiters is a good government economic intervention.

A counterfeit-proof currency like bitcoin is better, of course.

Counterfeiting is not a real crime. Putting ink on paper hurts no one.

The real crime is issuing notes promising to redeem for gold, breaking the promise, and maintaining the value of your pictures by force.

[Babylon]

Hi guys,

Read a somewhat disappointing Richard Duncan article this morning in which he rightly criticizes the government propping up zombie industries but then goes on to suggest that the money could be better spent in other industries that encourage growth. I see this as a classic case of how most people view politics and economics "I think the government should <insert policy preference here>". They want to use the government's ability to coerce and the wealth it gains through taxation, to build their vision of the world regardless of whether that world is what people want or whether it is practical in any real way.

This is also what makes the libertarian view so hard to sell, how do you pitch a plan based on doing nothing? Of course the suggestion is not that nothing happens but rather that the world can self organize far more efficiently than a politician could ever plan. This in my view is what makes a politician, someone who forgets their just a human being, without perfect knowledge, and begins to imagine they can effectively manage the lives of other from a distance.

So maybe there is an economic intervention other that close all state departments except the police, drop all regulations and stop taxing that can help the economy. Does anyone have any suggestions as to what a positive economic intervention might be?

The government's role, economically, is to do things that private industry wont do that need to be done.  The space program was an example of this.  Research into medical advances that will save the lives of poor people would be a good example.  Work on transportation backbones, as this is generally too large a project for private companies.  Currently we are facing peak oil and without significant investments in an alternate transportation system the US is going to be in very big trouble soon.  Building a new system (which would probably rely mostly on rail) is not something that is within the capability of any one company, or in their best interests, but it is still a vital project that needs to be completed.

[Babylon]

Answering the original question:

Arresting counterfeiters is a good government economic intervention.

A counterfeit-proof currency like bitcoin is better, of course.

Counterfeiting is not a real crime. Putting ink on paper hurts no one.

The real crime is issuing notes promising to redeem for gold, breaking the promise, and maintaining the value of your pictures by force.

It is not only banknotes which can be counterfeited.

[kiba]

Counterfeiting is not a real crime. Putting ink on paper hurts no one.

The real crime is issuing notes promising to redeem for gold, breaking the promise, and maintaining the value of your pictures by force.

You're reasoning in nonsense! What if I counterfeit 1 trillion dollars and use it like nobody's business?

[Stephen Gornick]

It is not only banknotes which can be counterfeited.

Funny you should mention that.  In the news today:

Italy confiscates euro20 billion in fake US bonds:
  http://finance.yahoo.com/news/Italy-confiscates-euro20-apf-1927243563.html?x=0

[FreeMoney]

Counterfeiting is not a real crime. Putting ink on paper hurts no one.

The real crime is issuing notes promising to redeem for gold, breaking the promise, and maintaining the value of your pictures by force.

You're reasoning in nonsense! What if I counterfeit 1 trillion dollars and use it like nobody's business?

Paper returns to it's correct value more quickly than it is on trajectory to do now. The consequence of not putting people in cages for coloring paper a certain way is that we'll no longer have a bubble in paper painted a certain way.

If your worldview collapses when someone suggests not caging people for non-violent actions it might be worth rethinking.

That might sound a little self-righteous, it isn't meant that way; I'm just figuring things out myself. I came to this particular realization around the time I learned the folly of IP. They are essentially the same and the arguments are similar. Some business models don't work unless you use violence to stop people from doing exactly what you are doing with their own stuff. We should abandon those models and not apologize for force.

[FreeMoney]

What happens when we have atomic level duplication machines? One Benjamin in, two come out, you can't tell which is real. What now?

Shall we make duplication machines illegal?

Bad premises lead to bad outcomes. The notion that one person should hurt another for doing the very same thing is a bad premise.

[Sjalq]

The government's role, economically, is to do things that private industry wont do that need to be done.  The space program was an example of this.  Research into medical advances that will save the lives of poor people would be a good example.  Work on transportation backbones, as this is generally too large a project for private companies.  Currently we are facing peak oil and without significant investments in an alternate transportation system the US is going to be in very big trouble soon.  Building a new system (which would probably rely mostly on rail) is not something that is within the capability of any one company, or in their best interests, but it is still a vital project that needs to be completed.

Firstly the space program was by no practical measure necessary, it was an extreme tax load to growl at a competing state.

Research into medical advances to save the lives of middle class and rich people are the only medical advances that can save poor people as prices fall through competition. To stifle the advancement race between pharmaceutical and medical companies is to stifle healthcare.

The transportation backbone can and has been built by private companies. They do it faster, cheaper and safer.
http://mises.org/journals/scholar/internal.pdf

The government has almost NO plan for peak oil, their idea is to kill Arabs and take their oil. In this case I agree, only something an oligarchy or government would get involved in. If you do not allow prices to reflect the true cost of oil you postpone the problem. If you allow people to solve the problem themselves prices indicate to them viable and inviable paths. If prices increase, telecommuting and commuting becomes orders more attractive than taking a car. If oil is subsidized and we keep waiting for the gov to save us we prolong and worsen the problem.

Of the $ 3.5 Trillion federal budget 3 Trillion goes to Medicare (789 Billion), Social Security (702), the war machine (690), income insurance (435), interest payments (203) and federal pensions (199). 1.9 Trillion of these goes to some form of welfare that would be much better spent my simply handing it back out to Americans and letting them decide what to do with it.

Note: very, very little is spent on items such as infrastructure. The science and infrastructure you speak of represented in the dept of Transportation, dept of Education, dept of Housing and urban development, dept of Energy, dept of Agriculture, NASA, the EPA, the National Science Foundation and using a stretch of the imagination, the United States Army Corps of Engineers account for a total spend of 296.2 Billion. That is a very sad 8.5% of the budget! Contrast that to the combined revenues of approx $ 4.2 Trillion of the energy, oil and automotive companies in the top 100 companies by revenue. Honestly I have more hope that Toyota develops an efficient electric car and Sony develops cheap solar panels.

We've been fed the line that the government is there to give us policemen and roads, this is simply a gross distortion of a fractional truth that is used to justify an immense tax burden.

"Citations"
http://en.wikipedia.org/wiki/2009_United_States_federal_budget
http://en.wikipedia.org/wiki/List_of_companies_by_revenue

[ptd]

The government's role, economically, is to do things that private industry wont do that need to be done.  The space program was an example of this.  Research into medical advances that will save the lives of poor people would be a good example.  Work on transportation backbones, as this is generally too large a project for private companies.  Currently we are facing peak oil and without significant investments in an alternate transportation system the US is going to be in very big trouble soon.  Building a new system (which would probably rely mostly on rail) is not something that is within the capability of any one company, or in their best interests, but it is still a vital project that needs to be completed.

Who are you to say what is and what isn't worth doing? To challenge your specific examples:

• The space program generated an awful lot of R&D, but it cost even more money (so high cost to development ratio). Privately funded research would have been more efficient
• Health care needs to be cheap, government bureaucracy makes it really expensive (all that testing) and patent law prevent the goverment from reducing the cost
• Relying infrastructure spending has decent chance of being successful (and thus profitable), gets funded by massive pension funds (who like promise of good returns in a decade). Doing something unprofitable is by definition a waste of time.
• If peak oil starts to become a problem prices will go up (supply and demand). This means that it will become cheap to use alternative stuff and hey presto, problem solved.

Building railway lines and stuff privately is by no means unprecedented.

[kiba]

• The space program generated an awful lot of R&D, but it cost even more money (so high cost to development ratio). Privately funded research would have been more efficient

As far as I know, private companies are trying to make space flight cheaper, which mean we can launch more space experiments. Which mean...charities can actually do space exploration.

Space agencies? What do they do to make space exploration cheaper? They fund some private space contracts....that's all they do. Someday, they will be an insignificant blackhole of waste.

[Babylon]

The government's role, economically, is to do things that private industry wont do that need to be done.  The space program was an example of this.  Research into medical advances that will save the lives of poor people would be a good example.  Work on transportation backbones, as this is generally too large a project for private companies.  Currently we are facing peak oil and without significant investments in an alternate transportation system the US is going to be in very big trouble soon.  Building a new system (which would probably rely mostly on rail) is not something that is within the capability of any one company, or in their best interests, but it is still a vital project that needs to be completed.

Who are you to say what is and what isn't worth doing? To challenge your specific examples:

• The space program generated an awful lot of R&D, but it cost even more money (so high cost to development ratio). Privately funded research would have been more efficient
• Health care needs to be cheap, government bureaucracy makes it really expensive (all that testing) and patent law prevent the goverment from reducing the cost
• Relying infrastructure spending has decent chance of being successful (and thus profitable), gets funded by massive pension funds (who like promise of good returns in a decade). Doing something unprofitable is by definition a waste of time.
• If peak oil starts to become a problem prices will go up (supply and demand). This means that it will become cheap to use alternative stuff and hey presto, problem solved.

Building railway lines and stuff privately is by no means unprecedented.

Health care costs are dramatically lower in countries which have government run health care plans.  Your assertion that governments drive up the cost of health care is completely unfounded.

The western railroad expansion was funded by the government with land giveaways to the railroad companies, backed by government force against American Aboriginals.

[Babylon]

• The space program generated an awful lot of R&D, but it cost even more money (so high cost to development ratio). Privately funded research would have been more efficient

As far as I know, private companies are trying to make space flight cheaper, which mean we can launch more space experiments. Which mean...charities can actually do space exploration.

Space agencies? What do they do to make space exploration cheaper? They fund some private space contracts....that's all they do. Someday, they will be an insignificant blackhole of waste.

Without space agencies doing the extremely unprofitable foundation work it would not now be profitable for private companies to get involved in space travel.

Whether space travel, colonization, etc. is an absolute good is disputable, however it is highly unlikely we would be involved in it if it were not for government putting us on that path.

[hugolp]

Health care costs are dramatically lower in countries which have government run health care plans.  Your assertion that governments drive up the cost of health care is completely unfounded.

You are joking right? I live in one of those countries and its not cheaper at all.

In fact, Ive gone 4 times to the hospital near my home. Everytime I see people being treated in the corridors because there are no rooms. My aunt had to go to the private clinic because there was a 6 months waiting list to cure her chataracts. Imagine 6 months my old granma without being able to see (she still lives on her own). Thats government "caring" for you. Every winter authorities ask us not to go to the hospital during some weekends because they become totally saturated. Etc...

The western railroad expansion was funded by the government with land giveaways to the railroad companies, backed by government force against American Aboriginals.

Not all the lines. In fact, there were three lines that made the east-west route first. Two with government help, one private. The only line that its still used is the private one. When you build something thinking in the people needs to get profits you make something useful for the people. When you use the policitcal process you make something useful for a few (the ones that got rich with the government help).


Btw, I feel like you are just throwing talking points one after the other, without going nowhere. When your talking points are rebutted, you throw more. What are you trying to say?

[Babylon]

Health care costs are dramatically lower in countries which have government run health care plans.  Your assertion that governments drive up the cost of health care is completely unfounded.

You are joking right? I live in one of those countries and its not cheaper at all.

In fact, Ive gone 4 times to the hospital near my home. Everytime I see people being treated in the corridors because there are no rooms. My aunt had to go to the private clinic because there was a 6 months waiting list to cure her chataracts. Imagine 6 months my old granma without being able to see (she still lives on her own). Thats government "caring" for you. Every winter authorities ask us not to go to the hospital during some weekends because they become totally saturated. Etc...

The western railroad expansion was funded by the government with land giveaways to the railroad companies, backed by government force against American Aboriginals.

Not all the lines. In fact, there were three lines that made the east-west route first. Two with government help, one private. The only line that its still used is the private one. When you build something thinking in the people needs to get profits you make something useful for the people. When you use the policitcal process you make something useful for a few (the ones that got rich with the government help).


Btw, I feel like you are just throwing talking points one after the other, without going nowhere. When your talking points are rebutted, you throw more. What are you trying to say?

You stated that healthcare in your country is more expensive, and then cited longer waiting times as your evidence.  Longer lines don't equate to price.  The price is shifted, in your country, from the individual to the government but it is not increased, it's dramatically lower.  Yes, people have to wait longer, that's what happens when more people are being treated by the same number of facilities, supply and demand.

When I don't understand someone's argument I don't reply to it.  I usually find that if I don't understand what he said it is not going to be a productive discussion.

[hugolp]

You stated that healthcare in your country is more expensive, and then cited longer waiting times as your evidence.  Longer lines don't equate to price.  The price is shifted, in your country, from the individual to the government but it is not increased, it's dramatically lower.  Yes, people have to wait longer, that's what happens when more people are being treated by the same number of facilities, supply and demand.

When I don't understand someone's argument I don't reply to it.  I usually find that if I don't understand what he said it is not going to be a productive discussion.

I did not cited evidence. I changed paragraph because I was talking about another issue. That is what paragraphs are used for.

[gene]

The government's role, economically, is to do things that private industry wont do that need to be done.  The space program was an example of this.  Research into medical advances that will save the lives of poor people would be a good example.  Work on transportation backbones, as this is generally too large a project for private companies.  Currently we are facing peak oil and without significant investments in an alternate transportation system the US is going to be in very big trouble soon.  Building a new system (which would probably rely mostly on rail) is not something that is within the capability of any one company, or in their best interests, but it is still a vital project that needs to be completed.

Firstly the space program was by no practical measure necessary, it was an extreme tax load to growl at a competing state.

Research into medical advances to save the lives of middle class and rich people are the only medical advances that can save poor people as prices fall through competition. To stifle the advancement race between pharmaceutical and medical companies is to stifle healthcare.

The transportation backbone can and has been built by private companies. They do it faster, cheaper and safer.
http://mises.org/journals/scholar/internal.pdf

The government has almost NO plan for peak oil, their idea is to kill Arabs and take their oil. In this case I agree, only something an oligarchy or government would get involved in. If you do not allow prices to reflect the true cost of oil you postpone the problem. If you allow people to solve the problem themselves prices indicate to them viable and inviable paths. If prices increase, telecommuting and commuting becomes orders more attractive than taking a car. If oil is subsidized and we keep waiting for the gov to save us we prolong and worsen the problem.

Of the $ 3.5 Trillion federal budget 3 Trillion goes to Medicare (789 Billion), Social Security (702), the war machine (690), income insurance (435), interest payments (203) and federal pensions (199). 1.9 Trillion of these goes to some form of welfare that would be much better spent my simply handing it back out to Americans and letting them decide what to do with it.

Note: very, very little is spent on items such as infrastructure. The science and infrastructure you speak of represented in the dept of Transportation, dept of Education, dept of Housing and urban development, dept of Energy, dept of Agriculture, NASA, the EPA, the National Science Foundation and using a stretch of the imagination, the United States Army Corps of Engineers account for a total spend of 296.2 Billion. That is a very sad 8.5% of the budget! Contrast that to the combined revenues of approx $ 4.2 Trillion of the energy, oil and automotive companies in the top 100 companies by revenue. Honestly I have more hope that Toyota develops an efficient electric car and Sony develops cheap solar panels.

We've been fed the line that the government is there to give us policemen and roads, this is simply a gross distortion of a fractional truth that is used to justify an immense tax burden.

"Citations"
http://en.wikipedia.org/wiki/2009_United_States_federal_budget
http://en.wikipedia.org/wiki/List_of_companies_by_revenue

I agree with some of what you say, but I would like to make some key points that you may already understand. Please bear with me if that is the case. The "space race" and technologies developed at universities were meant for future industry - for the benefit of companies. This is an externalizing mechanism by the private sector and is a natural consequence of business capturing government.

Today, companies can't develop biotechnology because of their quarterly constraints. They push for public funding into universities in the hope that they can buy out researchers and patent the technology.

It wouldn't be so bad if the public could just benefit directly from the research without having to pay a company too. In this scheme, companies are glorified middlemen/marketing boondoggles. In fact, they represent tremendous inefficiencies in the economy. On the flip side, consider that government can do things that companies can't. They can run production at a loss. This is extremely important if you want to avoid things like economic depressions.

[Nefario]

With relation to healthcare, in America healthcare is available at need but at high cost, this high cost is caused by excessive government regulation.

In countries where healthcare is "provided" by the government there is a shortage of it, or if the cost is heavily subsidised there will be a shortage of it. The example being all government funded health systems in Europe, some better or worse than each other.

Any time when you fix a price below the market price the result is a shortage, that is what money is for, in economic terms, to allow the distribution of finite resourses to people who have infinite wants and needs.

The display of shortage of healthcare in The EU is in waiting times, waiting times for what may be basic proceedures or tests, very often these are the cause of many patients becoming dead while they are waiting for tests. It is also displayed in the quality of healthcare which is far below the expensive, but private healthcare in the US.

In China healthcare is regulated by the government,not too heavily. There are some private hospitals but nearly all are government owned. And the patients must pay the full cost of healthcare at treatment(cash up front). The cost for Chinese people is very high but that is because their pay is low, the cost for western people is very low.

For example, I had a small tumor, the size of a ping pomg ball removed from my buttox for about $120, all costs included. For an American this might not be muct but it was a lot for me.

The short version, all government intervention causes costs to go up and quaity to go down. Beaurocrats must be paid and they do nothing to help the system they work for, but make it worse.Driving up costs and driving down quality.

In second the government also outlaws competition, also keeping prices up and quality down, and this is what most regulatin does, outlaw competition. It is why everywhere in the western world you can never get a Taxi and why they are so expensive.

[Sjalq]

It wouldn't be so bad if the public could just benefit directly from the research without having to pay a company too. In this scheme, companies are glorified middlemen/marketing boondoggles. In fact, they represent tremendous inefficiencies in the economy. On the flip side, consider that government can do things that companies can't. They can run production at a loss. This is extremely important if you want to avoid things like economic depressions.

Forums unfortunately do not fully lend themselves to working through arguments like these.

The only way that the government can run production at a loss is by forcefully taking resources from the people. It will do so either through direct taxation or inflation. Once that resource is depleted government will collapse and yield that it too is not immune to the law of natural consequences. Take the collapse of the Soviet Union as an example.

It is unfortunate that the argument persists that either the New Deal or WW2 "pulled" the economy out of the great depression. Due to consistent government intervention the economy took a decade to restructure itself. Industries that did not produce or provide that which ordinary people could use needed to be shut down and the resources (human and otherwise) reassigned to active sections of the economy. The economy recovers once this restructuring is underway, once people have to quit their jobs as SUV sales people and instead go be hybrid car sales people. It is akin to constantly sending out fire fighting teams in an ecosystem that is dependent on seeds being exposed to extreme heat to germinate. People do not want to face the painful restructuring process and instead prolong the suffering.

The above process can happen in spite of consistent government intervention but what is not valid is to say that since it happened we can only be thankful since imagine how long it would have taken without the government intervention.

Saying that companies that deliver things are inefficiencies is like saying arteries are inefficiencies since they require resources and only add to the distance blood needs to travel to an organ.

Now the individual will of people not "perfect" but it can organize resources faster and more accurately than any central planning body has ever proven to.

[gene]

Forums unfortunately do not fully lend themselves to working through arguments like these.

If you mean that my response was terse, I can grant you that. However, the forum can facilitate as productive and detailed a discussion as we can manage. It is up to us to set the standard.

The only way that the government can run production at a loss is by forcefully taking resources from the people. It will do so either through direct taxation or inflation. Once that resource is depleted government will collapse and yield that it too is not immune to the law of natural consequences. Take the collapse of the Soviet Union as an example.

Even in a purely capitalistic society, you must agree that resource (re)allocation will not happen unless there is some sort of mechanism for enforcement. Not all transactions will occur with all parties (especially those that pay "external" costs) happy with the outcome.

The situation that I was thinking of is, for instance, an economy suffering due to the effects of widespread real-estate speculation as a result of economic "financialization." Consider the production of raw material, such as concrete or steel. If they were still being produced in the country suffering economic problems, the limitations of private ownership (fiduciary responsibility to meet quarterly targets) will force the companies to lay off large portions of their labor forces. This will further depress the economy, as the laid-off workers no longer have the ability to consume goods and services. The process degenerates via a positive-feedback mechanism.

Now, let's consider those industries being run outside of the constraints of quarterly profits. The industries can continue to produce raw materials, which are required for things like infrastructure development and maintenance, as well as other goods. The work force can continue to consume goods and services. Yes, the government incurs a debt, but this is a situation in which debt is tolerable. In good times, countries should be accumulating surpluses to help deal with the bad times. Anyways, the positive feedback situation present in the previous example, with which we are very familiar - we are experiencing it now - would be mitigated and the economic situation would improve far more rapidly. After recovery, the industries would return to profitability and the debt repaid.

Of course, this requires a large industrial capability to produce raw basic goods - currently lacking in the US.

It is unfortunate that the argument persists that either the New Deal or WW2 "pulled" the economy out of the great depression. Due to consistent government intervention the economy took a decade to restructure itself.

The New Deal helped control some costs, but we can debate that. I'll put that aside for now. With respect to the war, I think your case it far weaker. The enormous production of war materials (think of all the steel, aluminum, textiles, etc. required) certainly helped pull the country up. Notice that the country incurred debt in the process (bonds), similar to the process I outlined in the second case, above. The clincher was that the US emerged as the dominant economic and military power after WW2. This afforded unparalleled opportunities to exploit resources and labor on a global scale. The party has been ending in the last few decades, which is partly why the US economy has been developing so many bubbles and why it is now based on pure, unsustainable debt. There are things that can be done to arrest and reverse this process (such as (re)establishing domestic modern productive industry), but the people that own the country don't like those options.

Another (rarely mentioned) factor that helped bring down the rate of unemployment is the gruesome fact that over 400,000 working-age American men perished in the war.

Industries that did not produce or provide that which ordinary people could use needed to be shut down and the resources (human and otherwise) reassigned to active sections of the economy. The economy recovers once this restructuring is underway, once people have to quit their jobs as SUV sales people and instead go be hybrid car sales people. It is akin to constantly sending out fire fighting teams in an ecosystem that is dependent on seeds being exposed to extreme heat to germinate. People do not want to face the painful restructuring process and instead prolong the suffering.

The above process can happen in spite of consistent government intervention but what is not valid is to say that since it happened we can only be thankful since imagine how long it would have taken without the government intervention.

I'm having a difficult time parsing these paragraphs.

Saying that companies that deliver things are inefficiencies is like saying arteries are inefficiencies since they require resources and only add to the distance blood needs to travel to an organ.

Now the individual will of people not "perfect" but it can organize resources faster and more accurately than any central planning body has ever proven to.

Perhaps. But that isn't the situation I had described. What I described are two centralized systems operating in series.

1) the government funding basic research to develop technologies that are to be commercialized by private companies

2) the private companies that take those technologies and repackage/market them (for a hefty price) to the people that already paid to have them developed in the first place.