[ExI] Valid economic reasoning should never go out of style

Dan dan_ust at yahoo.com
Mon Jun 1 17:15:03 UTC 2009

--- On Mon, 6/1/09, BillK <pharos at gmail.com> wrote:
> On 6/1/09, dan_ust wrote:
> <snip>
>> (To be extremely clear: in a free market, there would
>> be no government
>> intervention -- either to set interest rates or to
>> make it easier or harder
>> for people to buy (or sell or suck the wallpaper off)
>> homes.)
> I'm afraid that it looks to me as though you are arguing on
> the basis
> of faith in 'free market' theory rather than letting the
> facts tell you their own story.

Facts must be interpreted, but, in this case, where are the facts that support your contention?
> You will never get a free market without intervention,
> either from
> government or 'big business' or powerful people or
> organizations.

Were that so, then you could not blame free markets for what happened?  After all, if there can be never be "a free market without intervention," then you can't seriously blame free markets for any problems.  Wouldn't you have to argue that some sort of interventions were to blame?  (Logically, you might debate over which interventions were to blame.)
> So nobody can really contest your descriptions of the
> wonders of free
> markets, because we have never had them and we never will.

I'm not so sure about that.  I do admit, to have completely free markets -- zero interventions -- would require total elimination of statism.  That's unlikely under current conditions.  However, it's still possible to approximate that goal by eliminating interventions, though likely better in a thoughtful manner.
> If anyone points at bad examples you will always be able to
> say that
> it wasn't *really* a  free market and, of course, you
> have no examples
> of a successful free market on your side.

One must start with a valid theory of economics to understand the examples.  Without this, there's the problem, since we can't experiment in economies, of tracing out what causes what in an economy.  E.g., the price of homes rose during the housing boom.  Care to tell us why that happened?  And why did housing prices decline?  Without a valid theory of economics, you're left with what here?  Citing newspaper headlines and pundits for an explanation.

> After the Fed and
> Bush let
> the markets rip and caused financial disaster, amazingly,
> you say,
> 'Well that's because they didn't let them rip enough! It
> was only a
> half-hearted rip.'

But my argument was not and has not been that the Fed and Bush "they didn't let them rip enough."  I cited specific examples of interventions -- this time around and earlier (Do you, e.g., admit that Sarbannes Oxley is an intervention?  Is the Fed setting interest rates an intervention?  Is the CRA an intervention?  Is support of Freddie Mac and Fannie Mae interventionist or not?) which you've ignored.

> If that isn't a faith-based statement, I
> don't know what is!

Well, for one you made up, sure.  I never said that.  I've maintained and still maintain that the Bush Regime was interventionist in character.  I also maintain that the Bush Regime did NOT lower the amount of interventions; it didn't stand still or turn back interventions.  Yes, some of its rhetoric was pro-free market, but that's a typical tactic for the GOP.  When it came to actually delivering on this, what we see is subsidies for the politically connected, addition of new regulations (Sarbannes Oxley), continuance or increase in tariffs (recall the steel tariff), and huge increase in government spending (which is an intervention in the market in two ways: the government has to get the money to spend (via taxaton, borrowing (delayed taxation), or inflation(a form of distributed taxation: the value of the money unit declines, with time lags and path dependencies, over the whole economy)).  Or do you disagree on these being facts?




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