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Home > Politics
Liberal Economic Policies: Ineffective and Profoundly Immoral? NO.
by Bob Powell, 2/26/17
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Summary:

  • What's called "classical liberalism" is not liberalism, it's neoliberalism or "free market capitalism".
  • Liberal policies, what he calls progressive, are not immoral; insufficiently-regulated capitalism is immoral.
  • The real problem is the redistribution of costs in capitalism, which is the most prevalent "socialism" in the U.S. and the world.
  • The idea that the "free market" is moral is a lie.

Contents:
Liberalism vs classical liberalism and neoliberalism.
Trump voter writes "progressive is "not only ineffective but, more importantly, profoundly immoral."
Why that is nonsense and why the reverse is true.
American Enterprise Institute propaganda video by Arthur Brooks: "Don't eat your dog: The surprising moral case for free enterprise."

The Exchange:

I responded to a Trump voter on "liberalism" and "classical liberalism". Here's what he wrote:

Relative to an opinion piece by Nicholas Kristof, "Trump Voters Are Not the Enemy". a Trump voter wrote:

... (for anyone else listening in, I did vote for Trump) The sentence in the Kristof article that caused me to comment is "Tolerance is a liberal value." He's right, tolerance IS a liberal value, but it is clearly not a progressive value as can be seen by many of the comments above. I believe there are many other classic liberal values that have little or no overlap with progressive values and I personally have a big problem with the use of 'liberal' as an epithet and the use of 'liberal' to describe the current Democratic party. I fear, Dave, that you may be one of the few liberals left in that party. Classical liberalism From Wikipedia

 

I commented in response that "classical liberalism" is not liberalism:

... "classical liberalism", and it's newest incarnation "neoliberalism", is *not* liberalism. It is, as in your reference, "economic liberalism which is also called free market capitalism." It is, in effect, corporatism.

To be a liberal means acknowledging, and correcting for, the failures of "free market" capitalism. Here is a "Free Market Failures and Weaknesses Overview"

 

His reply on how progressive is "not only ineffective but, more importantly, profoundly immoral."

I admit it is a highly personal quirk, Bob Powell, but I believe it a great injustice for someone with your political proclivities to be considered a liberal although I see you define yourself by that label in your article. In my mind you are a progressive.

I did read through your linked article which, I think, accurately presents a progressive viewpoint of economic policy. It is exceedingly unlikely that either one of us is going to change his mind, but please allow me to present an 'alternative' perspective.

Let me suggest that a progressive approach to the economy is not only ineffective but, more importantly, profoundly immoral. In many ways our economy is already socialistic, not because the government owns the means of production, but because central regulation is already so pervasive, the effect is relatively comparable and it is likely you would suggest that regulation should be even more controlling. What we have now is a situation where regulation is so complex and omnipresent that only large corporations can effectively skirt those shoals. Those corporations do not care because those regulations profoundly reduce the possibility of competition. Those corporations have both the money and DC lobby manpower to heavily influence regulatory content (e.g. technology HB-1 visas that replace the jobs of citizens with foreign (what are effectively) indentured servants). The number of small business start ups is decreasing and small business are a major driver for employment. This is immoral.

Total cost of federal regulation was estimated by the National Association of Manufacturers as ~$2 Trillion in 2012 and you can find similar figures elsewhere. Just think of the number of wars Trump could finance with that kind of money! But more seriously, this economic drag cuts the overall growth rate which reduces opportunities for those who need the work the most. This is immoral.

The bottom line is progressive economic policies produce the precise economic stress and disparities that progressives most complain about. Just look at what is happening to the middle class and economic disparity in that progressive redoubt California.

Let me leave you with a fun short explanatory YouTube from the the estimable Arthur C. Brooks entitled "Don't eat your dog."

 

Here's my response to his nonsense:

I believe it a  great injustice for someone with your political proclivities to be considered a liberal although I see you define yourself by that label in your article. In my mind you are a progressive.

I define myself as a liberal and I explain what that means. That a Trump voter calls me a "progressive" means nothing, because he doesn't understand vitally important aspects of either economics or business (as described in my article).

Let me suggest that a progressive approach to the economy is not only ineffective but, more importantly, profoundly immoral. In many ways our economy is already socialistic, not because the government owns the means of production, but because central regulation is already so pervasive, the effect is relatively comparable and it is likely you would suggest that regulation should be even more controlling.

The idea that "our economy is already socialistic" and that "regulation is already so pervasive" is a matter of degree. It's obvious that regulation is inadequate and in my article on Much of What's Called "Socialism" Is Just Pragmatic explains why and why doing what's practical is not strictly ideological, but logical.

The need is both to properly address the failures and weaknesses of capitalism and to eliminate the "cost redistribution" -- indeed, the real "socialism" -- inherent in capitalism. That's what a "free market" means: "free to redistribute costs onto the public" ... costs in terms of dollars, health, and death.

Unless costs are internalized into products and services, "market forces" do not properly regulate supply & demand. See  "Market forces" vs the "free market"Taxes: 2C or Not 2C?, and Colorado Springs: A Broken Region

The fact is that capitalism is insufficiently regulated for all the reasons I cite. It is profundly immoral.

What we have now is a situation where regulation is so complex and omnipresent that only large corporations can effectively skirt those shoals. Those corporations do not care because those regulations profoundly reduce the possibility of competition. Those corporations have both the money and DC lobby manpower to heavily influence regulatory content (e.g. technology HB-1 visas that replace the jobs of citizens with foreign (what are effectively) indentured servants). The number of small business start ups is decreasing and small business are a major driver for employment. This is immoral.

It's true that large corporations can shirk regulations. It's a constant battle. When they do that, it's trial lawyers who work to hold them to account. Trial lawyers are demonized by corporations and by Republicans (and by the too-many Democrats) they control.

Somehow "conservatives" don't demonize the legions of corporate lawyers who work to help corporations shirk those regulations. Because "corporations have both the money and DC lobby manpower to heavily influence regulatory content" does not mean that regulation is inappropriate. It only means that corporations control government.

That Trump's Cabinet picks have more wealth than third of American households combined proves
The U.S. has hit the trifecta:
- Oligarchy is rule by the few.
- Plutocracy is rule by the wealthy.
- Corporatocracy is a society governed or controlled by corporations.
We have all three.

As far as the problems of small businesses, large corporations are the real enemy of small businesses. Big box stores have destroyed tens of thousands of small businesses.

Microsoft, when it could not acquire a startup because the entrepreneurs didn't want to sell, would bundle a similar feature into Windows to destroy the small business.

Corporations are not "persons", they are property. They are machines designed for profit that don't care about the environment, their employees, or the U.S. economy. It's only regulations that require them to care even a little.

This is immoral.

Eliminating regulations won't help small business, it would only empower corporations to be even more ruthless than they are.

As an example: Wage Theft is a Much Bigger Problem Than All Other Theft: It's at least TWICE theft from bank robberies, convenience store robberies, street and highway robberies, and gas station robberies combined: $280M vs. $139M. Or more, much more, because "most victims never report wage theft and never sue. The real cost of wage theft to workers is much greater, and could be closer to $50 billion a year".

Total cost of federal regulation was estimated by the National Association of Manufacturers as ~$2 Trillion in 2012 and you can find similar figures elsewhere. Just think of the number of wars Trump could finance with that kind of money! But more seriously, this economic drag cuts the overall growth rate which reduces opportunities for those who need the work the most. This is immoral.

The National Association of Manufacturers is, obviously, a biased source that cares only about the profits of its member organizations. It doesn't care about the U.S. economy or U.S. citizens except as it can use them for profit.

The problem is that externalities of fossil fuels alone dwarf the NAM complaint according to the International Monetary Fund, that bastion of liberal thought:

IMF: 'True cost' of fossil fuels is $5.3 trillion a yearLiving on Earth, 6/07/15

A new report from the International Monetary Fund says global use of fossil fuels costs taxpayers and consumers $5.3 trillion year. That's trillion - with a T.

Now Forbes complains "the fossil fuel companies are most certainly not receiving that sort of subsidy".

But never mind who receives the subsidy, when costs are not internalized, market forces do not properly balance supply & demand. Markets are distorted to favor fossil fuels over other energy sources and more fossil fuel energy is used than would otherwise be the case.

This is immoral.

The IMF states in part, what I as a liberal say: "when individuals, households, and firms do not internalize the indirect costs of or the benefits from their economic transactions. The resulting wedges between social and private costs or returns lead to inefficient market outcomes".

How about that? Liberal is the "new conservative" and "conservative" isn't conservative at all.

Externalities: Prices Do Not Capture All Costs, Thomas Helbling, IMF
There are differences between private returns or costs and the costs or returns to society as a whole

Today, the most pressing and complex externality problem is greenhouse gas (GHG) emissions. The atmospheric accumulation of greenhouse gases from human activity has been identified as a major cause of global warming. Barring policies to curb GHG emissions, scientists expect this problem to grow and eventually lead to climate change and its accompanying costs, including damage to economic activity from the destruction of capital (for example, along coastal areas) and lower agricultural productivity. Externalities come into play, because the costs and risks from climate change are borne by the world at large, whereas there are few mechanisms to compel those who benefit from GHG-emitting activity to internalize these costs and risks.

The atmosphere, in fact, is a global public good, with benefits that accrue to all, making private bargaining solutions unfeasible. Identifying and agreeing on policies for internalization of the social costs of GHG emissions at the global level are extremely difficult, given the cost to some individuals and firms and the difficulties of global enforcement of such policies (Tirole, 2008).

Externalities pose fundamental economic policy problems when individuals, households, and firms do not internalize the indirect costs of or the benefits from their economic transactions. The resulting wedges between social and private costs or returns lead to inefficient market outcomes. In some circumstances, they may prevent markets from emerging. Although there is room for market-based corrective solutions, government intervention is often required to ensure that benefits and costs are fully internalized.

The bottom line is progressive economic policies produce the precise economic stress and disparities that progressives most complain about. Just look at what is happening to the middle class and economic disparity in that progressive redoubt California.

This illustrates that "food stamps" (SNAP) are hardly a problem.

Tax Expenditures (Tax Breaks) are 10% greater than all Discretionary Spending. And we wonder why there's government debt and many swallow the lie that Social Security is the problem.

That Tax Breaks for the top 20% are larger than Military Spending is a result of capitalism and its lobbyists.

This makes it clear that "Capitalism" is exactly "crony capitalism" that caters to capitalists and the wealthy.

This concern by a Trump voter for the "middle class and economic disparity" is touching, but fake. So-called "conservative" economic policies drive people into poverty and keep them there and make the wealthy even richer -- see the list.

Just as destructive, if not more so, are Tax Expenditures, that Alan Greenspan called "Tax Entitlements", which enormously favor the wealthy. These Tax Loopholes are bigger than the Loop.

-- Tax Expenditures ($1.22T) are 10% greater that ALL Discretionary Spending ($1.11 Trillion, funded by income taxes)! WTF???

-- 50.6% ($617B) of Tax Expenditures go to the top 20%; that's more than military spending ($599B, 54% of Discretionary Spending)! !!!! WTF???

-- 16.6% of Tax Expenditures goes to the top 1% ($203B); that's over twice the 7.7% ($94B) that goes to the bottom 20%

-- Tax Expenditures going to the top 20% ($617B) are 8.3X larger than SNAP Benefits ($74.1B)

-- Tax Expenditures going to the top 1% are ($203B) are 2.7X SNAP benefits ($74.1B)

As for, "what is happening to the middle class and economic disparity in that progressive redoubt California", economic disparity is everywhere in the nation. The problems in California (infrastructure backlogs, pollution, traffic) appear first there because it has long been one of the most attractive regions in the nation. Along with its near-term economic success comes long-term downsides, downsides coming to every region in the nation.

That's because, as I explain in the Growth Facts of Life and A Broken Region:

Given free migration, no place can long remain more attractive than any other place (where "attractive" is the composite of factors that attract). That is, people move here until Colorado Springs becomes as unattractive as any other place.

Those who don't understand this, are ignorant about urban dynamics.

Let me leave you with a fun short explanatory YouTube from the the estimable Arthur C. Brooks entitled "Don't eat your dog."

This video, Don't eat your dog: The surprising moral case for free enterprise, is from the execrable, extremist, right-wing American Enterprise Institute.

Arthur Brooks' book on The Road to Freedom should be rather "The Road to Penury", which has been the case for the vast majority of U.S. citizens who have endured decades of stagnant wages as costs have risen.

He says, in the best of propaganda styles that "We all know that free enterprise is best system ever devised for creating material prosperity". Actually he confuses "free enterprise" with "free market capitalism" that is actually "crony capitalism" or just plain "capitalism".

That's because capitalism is Crony Capitalism. It's designed to favor cronies as the Tax Expenditure data shows ... that's not Brooks' "earned success"; it's "unearned, entitlement success" and it's not rewarding "hard work." It's the epitome of a "welfare state" for the wealthy.

Tax Entitlements for the weathy, tax policies that favor the wealthy, economic policies that rig the system against those who work for a wage (see Why Unions and a Minimum Wage Are Necessary), and cost redistribution onto the public are the opposite of "true fairness" that Brooks claims to applaud.

It's not about "spreading the wealth around". It's about stopping the maldistribution of wealth in the first place and halting the "spreading of costs around" to the public at large in terms of $$$, illness, and death. That cost redistribution is immoral and theft.

His "grade redistribution" experiment is a sham that doesn't at all relate to what's happening. It's a blatant lie.

Brooks states that capitalism is actually the "best system ever devised to value the short-term over the long-term" and result in the destruction of Life on Earth: The Physics of Global Warming explains why this is so. Now you can't get more immoral than that. Insufficiently-regulated capitalism is the epitome of immorality.

The problems in Greece are not due to "socialism", but due to the failures of capitalism and banking regulation. The EU has no way to recycle trade surplusses in some countries (e.g., Germany) into trade deficit countries (e.g., Greece, Spain). Brooks is a flat-out liar.

No economic system is mentioned in the Constitution and, though he'd like it to be, capitalism is not sacred. It is, as it exists in the U.S., profane. Any economic system can become authoritarian in the absence of a strong democracy. See Why Government and for What?

Right-wing, "conservative" economic policies have been enormously successful to keep compensation flat even as productivity has risen steadily. People aren't "Taxed Enough Already"; they're paid too damn little.

Yes, "delayed gratification" is a problem ... for all humans. This is why addiction is such a problem, in my view the greatest challenge, for humans. See Addiction and The Crisis Syndrome.

Capitalism exacerbates the problem. Addiction to the short-term results is embedded in capitalism; see Net Present Value Calculations: Why short-term thinking is embedded in capitalism and corporate decision-making, and why only government can attend to the future.

What's called "free trade" has been enormously destructive. See Trade Truth #3: 'Trade' Talking Points.

In summary, while Arthur Brooks is an excellent propagandist, he is a horrible human being.


URL: http://www.exponentialimprovement.com/cms/liberaleconomicpolicies.shtml

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