Oppose Redistribution; Communism and Socialism

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mcg
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09 Sep 2010, 2:34 pm

Orwell wrote:
There was a depression in the 1890s (before any minimum wage laws existed) with persistent unemployment in excess of 10%. That's just one example, which can be found by anyone with two minutes and access to Wikipedia.
That was caused by those other government-imposed factor I previously mentioned, the McKinley Tariff and the Sherman Silver Purchase Act being the main ones. Rothbard's History of Money and Banking in the US covers this and other panics in more detail, if you are interested.

Orwell wrote:
mcg wrote:
Orwell wrote:
mcg wrote:
Yes, I would expect him to work for $3/hr if he had no money or other job prospects. That being said, a university educated engineer is capable of producing more than $3 of marginal product in an hour, so in a competitive labor market he would certainly be making above that, even if he was unable to find another job as an engineer.

Not necessarily true. Other posters have already pointed out the problems of monopsonistic competition, where market forces can result in workers being paid significantly less than the marginal value they add.
Competitive market implies perfect competition. I am skeptical that the situation you describe would ever occur in a truly free market. Do you have any examples?

The problem is that "perfect competition" is an abstraction used for toy examples in introductory economics. It doesn't actually exist in the real world. In labor markets, the buyers (employers) have significantly more market power than sellers (employees) meaning that in general employees must take whatever is on offer, even if it is a clearly worse deal than they would get under hypothetical perfect competition.

Look, other posters have already talked about this. Just read about monopsonistic competition on Wikipedia and you'll know more than you do now. You might be right that the situation I described wouldn't occur in a "truly free market" if you define perfect competition as an aspect of a truly free market. But in that case, there can never be a "truly free market" so your argument is moot.
No, my definition of truly free market is not tautological. It is simply a market with the complete absence of explicit coercion (as opposed to kind-of free market we have in the US). Again, if you would like to give a specific example then I can point to specific legislation.



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09 Sep 2010, 6:12 pm

mcg wrote:
That was caused by those other government-imposed factor I previously mentioned, the McKinley Tariff and the Sherman Silver Purchase Act being the main ones. Rothbard's History of Money and Banking in the US covers this and other panics in more detail, if you are interested.

In part, perhaps. There have been plenty of economic problems in times with little or no government involvement as well, so it really seems unreasonable to posit that government is the source of all economic ills.

You really need to move past the oversimplified single-cause explanations of every economic phenomena. Do all anarcho-libertarians embrace such absurdly cartoonish worldviews?

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No, my definition of truly free market is not tautological. It is simply a market with the complete absence of explicit coercion (as opposed to kind-of free market we have in the US). Again, if you would like to give a specific example then I can point to specific legislation.

Um... such a market still does not imply perfect competition. Certainly no labor market is even close to perfect competition.

OK then, there is unemployment in Somalia. Wanna tell me what legislation causes that? :roll:


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Awesomelyglorious
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09 Sep 2010, 7:01 pm

mcg wrote:
Competitive market implies perfect competition.

Yeah, it totally doesn't.
1) Perfect competition doesn't exist.
2) Perfect competition is not necessarily the most efficient state of affairs for a particular industry, as for many industries, economies of scale are necessary, which entails larger but less firms.
3) Neoclassical economic models are just abstractions and simplifications.

I mean, look, mcg, if you want to make the case for a more market-oriented economy, or even an anarcho-capitalist economy, you don't have to make extreme claims, but rather even arguing that it is somewhat of an improvement is sufficient.



mcg
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09 Sep 2010, 8:21 pm

Orwell wrote:
In part, perhaps. There have been plenty of economic problems in times with little or no government involvement as well, so it really seems unreasonable to posit that government is the source of all economic ills.

Do you have a specific example? It seems to me that the government has always been involved with the economy.

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Um... such a market still does not imply perfect competition. Certainly no labor market is even close to perfect competition.

Can you just give me a specific example of a field were workers are (on average) being paid less than the marginal product they produce? I suspect that the government has somehow tampered with the capital or factor markets in such a case, but we can discuss it more if you give a specific example.

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OK then, there is unemployment in Somalia. Wanna tell me what legislation causes that? :roll:

Somalia was a s**t hole before anarchism, and has been improving since. The comparison is always to the same country BEFORE the policy change. Again, like I said, nothing happens instantly. You are looking at absolutes when you should be looking at improvements or declines. Since adopting anarchy, extreme poverty has plummeted, in addition to improved infant mortality and increased life expectancy and access to health facilities.

edit: fixed quote tags



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09 Sep 2010, 8:49 pm

mcg wrote:
Orwell wrote:
In part, perhaps. There have been plenty of economic problems in times with little or no government involvement as well, so it really seems unreasonable to posit that government is the source of all economic ills.

Do you have a specific example? It seems to me that the government has always been involved with the economy.

The early US under the Articles of Confederation had loads of economic problems in the absence of a government that would have been powerful enough to do serious damage. Under the stronger federal system established in the Constitution, the economy stabilized and began to grow. In the mid to late 19th century, with virtually no regulation, the early industrial economy was extremely turbulent, with deep depressions occurring quite frequently.

I won't bother citing the 1920s, as you will of course blame the Great Depression on the Federal Reserve and refuse to listen to any other explanation, regardless of what facts I cite.

Quote:
Can you just give me a specific example of a field were workers are (on average) being paid less than the marginal product they produce? I suspect that the government has somehow tampered with the capital or factor markets in such a case, but we can discuss it more if you give a specific example.

Just read this. http://en.wikipedia.org/wiki/Monopsonistic_competition


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iamnotaparakeet
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09 Sep 2010, 11:16 pm

Even the lameness which is Rasmussen College at least taught, in its microeconomics course, that there is no such thing as perfect competition. There is always asymmetry in share of market, in information distribution, in everything economic. The ideal market concepts are just thought-experiments to attempt to demonstrate economic principles without the insuperable complexity of the actual systems.