On January 29 2010 12:48 Rothbardian wrote: This is the kind of productive work we get out of the "public sector" aka State.
Ripped from a friend's facebook:
"In 2004, there were 34,785 registered lobbyists—65 lobbyists per congressperson. This is an increase of 113 percent since 2000, when there were 16,342 lobbyists."
These numbers are made public by the Senate! It us up to us to think critically of what the consequences may be.
There is a serious overrepresentation of corporate clients and a huge under-representation of the everyday people. Is there even time with 65 lobbyists per congressperson to really leave time for their voting constituents voices to be heard?
I'm not anti-business nor am I completely pro-government. I believe in a healthy balance of both. I want to see a *working* checks and balance system. I am just starting to realize/feel my helplessness as a citizen in this political system.
Here are a few startling facts derived from Two Income Trap. Please note that this book was published in 2003, way before this economic depression/recession:
- "Subprime lending has . . .ensnare[d] people who, in a regulated market, would have had access to lower-cost mortgages. Lenders' own data show that many of the families that end up in the subprime market are middle-class families that would typically qualify for a traditional mortgage."
- "A study by the Department of Housing and Urban Development revealed that one in nine middle-income families (and one in fourteen upper-income families) who refinanced a home mortgage ended up with a high-fee, high-interest subprime mortgage.
- "In 2002, Citibank's subprime lending subsidiary was prosecuted for decptive marketing practices, and the company paid $240 million to settle the case (at the time, the largest settlement of its kind). A former loan officer testified about how she marketed the mortgages: "If someone appeared uneducated, inarticulate, was a minority, or was particularly old or young, I would try to include all the [additional costs] CitiFinacial offered."
- "According to one study, African-American borrowers are 450 percent more likely than whites to end up with a subprime instead of a prime mortgage. In fact, residents in high-income, predominantly black neighborhoods are actually more likely to get a subprime mortgage than residents in low-income white neighborhoods - more than twice as likely."
- ". . .lenders have found that foreclosing can be more profitable than just simply collecting a mortgage payment every month, because the property can then be resold more than the outstanding loan amount." ***my aside, obviously this was before the recession and looked what has bite them in the a$$***
- "Credit card issuers make their profits form lending lots of money and charging hefty fees to families that are financially strapped. More than 75% of credit card profits come from people who make those low, minimum monthly payments. . .These are the families that are singled out by the lending industry, barraged with special offers, personalized advertisements, and home phone calls, all with one objective in mind: get them to borrow more money."
- "Sears reportedly earned more money from the interest and late fees the company charged to its credit cardholders than it earned from selling merchandise."
- "Payday lenders and subprime mortgages companies deliberately target minority neighborhoods, confident that they can get away with fleecing these families."
- "Hispanic homeowners are nearly three times more likely than white homeowners to file for bankruptcy, and black homeowners are more than six times more likely."
- "In just two decades, the number of single-filing women declaring bankruptcy has grown by more than 600 percent. Women with children are more likely to lose their homes and more likely to be late on their bills. And single women with children are three times more likely to go bankrupt than men without children.
I'm probably not the best to answer to all this because I'm not well versed in the housing bubble but... I encourage you to look not at the voluntary mishappenings from both the lenders and the homeowners, they've made bad investments and now they're paying for it (well, the homeowners at least). Instead, look at what could have brought about such crisis in the first place. What made the lenders so propitious to lend to anyone with a beat, and what made people buy houses they couldn't afford? The bubble, right? Every real-estate was getting more and more expensive, and to not buy a good house would be to miss out on the opportunity. But why did housing experience such an artificial boom and not some other random market like... the shoemaking industry?
Well I don't know, I don't give enough of a crap to check it out but I'm sure you'd be amazed to look for that LOL. Sorry, I wasn't much of a help, was I?
I'll try to study a bit a.k.a find some articles at mises.org and spout it all here.
Yurebis, the problem is that the businesses made predatory loans and continue to do so because it is to their profit. It's an example of immoral business practices at work. In a completely deregulated market, what's to stop these businesses from fleecing customers?
Also, the statistics I listed are from BEFORE the housing bubble burst. The book is from 2003. It has nothing to do with the bubble at all. This is just the bread and butter of the banking industry owning the shit out of people who don't know enough about finance.
The problem I have with Austrian economics is it imagines a world where people are perfectly rational and perfectly educated in economics/finance when people are FAR FAR away from this ideal. It's like saying Communism would be perfect as long as everyone works to their max productivity all the time and has faith that everyone else will too.
Take a step back. Who was the guarantor of these loans? When you take risk away from the market calculation of course people will take undue risks they would never do without the Moral Hazard foisted upon them. If the Government never guaranteed these loans in the first place they would have never happened. Secondly, if we didn't have the Federal Reserve which is a State chartered creation, as are all Central Banks we wouldn't of had these types of loans either. Even after that you can attribute massive distortions also on FDIC. No one looks at Bank liquidity, or strength anymore. No one looks to Consumer Reports on the best banking institutions. Why? FDIC.
You should take a small step back and look at the historical perspective. We had a much more freer Economy in the 19th Century, yet, we had the greatest increase in the standard of living during that Century during a time where there was no Central Banks (for the most part, as the First and Second Central Banks didn't last that long). There was no FDIC. There were little to no regulation. There were no internal improvement subsidies. There was no Welfare. There was no standing army. The complete and total spending by the Government totaled anywhere between 1 to 2% of GDP, where as today it is 45%+. How come we had this enormous growth with a largely unregulated economy? We had wholly private infrastructure in energy, roads, waterways, sewage, etc. Prices lowered all throughout the 19th Century. We had commodity-currency, etc.
How do you explain this? You still have not addressed this at all. It is as if you are ignoring the entirity of the 19th Century and acting like it never happened.
Rothbard is an anarchist. True, he is also an Austrian School Economist but I feel that you are misrepresenting Austrian Economic theory when you stick mostly to the more polarizing figures.
On January 29 2010 13:41 lixlix wrote: Rothbard is an anarchist. True, he is also an Austrian School Economist but I feel that you are misrepresenting Austrian Economic theory when you stick mostly to Rothbard.
Are you aware the modern day Austrian School is 99% anarchist? I am also a Voluntaryist (Anarcho-Capitalist).
Seriously within the School it is no longer debatable about Statism vs. Anarchism. It is pretty much the dominant Economic and Social Theory espoused. Sure, there is Peter who is a Minarchist, but generally, everyone is an Anarcho-Capitalist.
Hoppe Block Murphy Tucker Hulsmann De Soto Di'Lorenzo Woods Rockwell
etc.
Even some Chicagoites are turning Anarcho-Capitalists like Friedman. The next great revolution will be an all voluntary society.
"In 2004, there were 34,785 registered lobbyists—65 lobbyists per congressperson. This is an increase of 113 percent since 2000, when there were 16,342 lobbyists."
These numbers are made public by the Senate! It us up to us to think critically of what the consequences may be.
There is a serious overrepresentation of corporate clients and a huge under-representation of the everyday people. Is there even time with 65 lobbyists per congressperson to really leave time for their voting constituents voices to be heard?
I'm not anti-business nor am I completely pro-government. I believe in a healthy balance of both. I want to see a *working* checks and balance system. I am just starting to realize/feel my helplessness as a citizen in this political system.
Here are a few startling facts derived from Two Income Trap. Please note that this book was published in 2003, way before this economic depression/recession:
- "Subprime lending has . . .ensnare[d] people who, in a regulated market, would have had access to lower-cost mortgages. Lenders' own data show that many of the families that end up in the subprime market are middle-class families that would typically qualify for a traditional mortgage."
- "A study by the Department of Housing and Urban Development revealed that one in nine middle-income families (and one in fourteen upper-income families) who refinanced a home mortgage ended up with a high-fee, high-interest subprime mortgage.
- "In 2002, Citibank's subprime lending subsidiary was prosecuted for decptive marketing practices, and the company paid $240 million to settle the case (at the time, the largest settlement of its kind). A former loan officer testified about how she marketed the mortgages: "If someone appeared uneducated, inarticulate, was a minority, or was particularly old or young, I would try to include all the [additional costs] CitiFinacial offered."
- "According to one study, African-American borrowers are 450 percent more likely than whites to end up with a subprime instead of a prime mortgage. In fact, residents in high-income, predominantly black neighborhoods are actually more likely to get a subprime mortgage than residents in low-income white neighborhoods - more than twice as likely."
- ". . .lenders have found that foreclosing can be more profitable than just simply collecting a mortgage payment every month, because the property can then be resold more than the outstanding loan amount." ***my aside, obviously this was before the recession and looked what has bite them in the a$$***
- "Credit card issuers make their profits form lending lots of money and charging hefty fees to families that are financially strapped. More than 75% of credit card profits come from people who make those low, minimum monthly payments. . .These are the families that are singled out by the lending industry, barraged with special offers, personalized advertisements, and home phone calls, all with one objective in mind: get them to borrow more money."
- "Sears reportedly earned more money from the interest and late fees the company charged to its credit cardholders than it earned from selling merchandise."
- "Payday lenders and subprime mortgages companies deliberately target minority neighborhoods, confident that they can get away with fleecing these families."
- "Hispanic homeowners are nearly three times more likely than white homeowners to file for bankruptcy, and black homeowners are more than six times more likely."
- "In just two decades, the number of single-filing women declaring bankruptcy has grown by more than 600 percent. Women with children are more likely to lose their homes and more likely to be late on their bills. And single women with children are three times more likely to go bankrupt than men without children.
I'm probably not the best to answer to all this because I'm not well versed in the housing bubble but... I encourage you to look not at the voluntary mishappenings from both the lenders and the homeowners, they've made bad investments and now they're paying for it (well, the homeowners at least). Instead, look at what could have brought about such crisis in the first place. What made the lenders so propitious to lend to anyone with a beat, and what made people buy houses they couldn't afford? The bubble, right? Every real-estate was getting more and more expensive, and to not buy a good house would be to miss out on the opportunity. But why did housing experience such an artificial boom and not some other random market like... the shoemaking industry?
Well I don't know, I don't give enough of a crap to check it out but I'm sure you'd be amazed to look for that LOL. Sorry, I wasn't much of a help, was I?
I'll try to study a bit a.k.a find some articles at mises.org and spout it all here.
Yurebis, the problem is that the businesses made predatory loans and continue to do so because it is to their profit. It's an example of immoral business practices at work. In a completely deregulated market, what's to stop these businesses from fleecing customers?
Also, the statistics I listed are from BEFORE the housing bubble burst. The book is from 2003. It has nothing to do with the bubble at all. This is just the bread and butter of the banking industry owning the shit out of people who don't know enough about finance.
The problem I have with Austrian economics is it imagines a world where people are perfectly rational and perfectly educated in economics/finance when people are FAR FAR away from this ideal. It's like saying Communism would be perfect as long as everyone works to their max productivity all the time and has faith that everyone else will too.
Oh I see. Ok. What's your contention then? Because till the buble burst, I think everyone was content with their ever-increasing house prices. So much so, that people were willing to bet on variable or high interest rates, falsify their income statements, whatever it may be.
The ones who can stop greedy entrepreneurs (aka competition) are other greedy entrepreneurs who will engage in a sort of reverse-auctioning style of battle to get the most consumers. They will raise as much as they can, only so much that someone else can't come in and undercut him!
Austrian economics does imagine something like, "men act to their own benefit" but that's about it. What would a statist propose as a principle instead, "men are dumb and need a slavemaster?" I think the former would make more sense! Who is to help you make a good decision if not yourself?
Not having knowledge, or not seeking it, also makes part of human action also. I think the argument is that, when inaction brings more benefit than acting, then not acting makes sense. Someone not looking to become a masters in finance has judged that he will not get enough benefits from such knowledge given the perceived costs.
Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
On January 29 2010 13:49 StorkHwaiting wrote: Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
You still don't understand. The banks would have never authorized or underwritten these loans knowing they would have never returned on their investment (the loan) because in the Free-Market these would be a death sentence of any institution. Bankruptcy and liquidation would have followed. Of course, they didn't care about the ability of the loanee to pay the loan, because they were guaranteed payment on the loan because the Government guaranteed these loans, and because there is always a "lender of last resort" or, the State / Central Bank. The Government has been bailing out institutions since forever. Remember S&L? What about the 1980s bailouts? What about before then? The problem isn't from the Free-Market the failure is of Statism. Time and time again.
You are not looking at the cause. You are looking at the symptom and trying to diagnose a cure based on the symptom. It's like trying to cure a cold by giving someone cough medicine.
What was private infrastructure? Here is a paper by Di'Lorenzo.
The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400 [private] turnpikes were chartered and built . . .
This article is really illuminating. You should give it a read. It isn't long at all.
PS: You are aware that currently roughly about 50% of the total land mass of America is public and most unused? Why not allow people to homestead this land?
I was about to reply a very watered down version of rothbardian's post so instead I'll just vouch for that.
The state has incentivized so many booms and crashes that it's not even funny. If you wanna blame anyone for all the malinvestments being made in any market I think that's where you should look first to find the possible truth.
On January 29 2010 13:59 lixlix wrote: Using the housing bubble as evidence of either the evils of free market or the evils of government is just silly.
The bubble is created by one thing, greed, both on the part of the lender and on the part of the borrower.
Again no. The bubble is caused by artificially low-interest rates.
On January 29 2010 13:49 StorkHwaiting wrote: Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
You still don't understand. The banks would have never authorized or underwritten these loans knowing they would have never returned on their investment (the loan) because in the Free-Market these would be a death sentence of any institution. Bankruptcy and liquidation would have followed. Of course, they didn't care about the ability of the loanee to pay the loan, because they were guaranteed payment on the loan because the Government guaranteed these loans, and because there is always a "lender of last resort" or, the State / Central Bank. The Government has been bailing out institutions since forever. Remember S&L? What about the 1980s bailouts? What about before then? The problem isn't from the Free-Market the failure is of Statism. Time and time again.
You are not looking at the cause. You are looking at the symptom and trying to diagnose a cure based on the symptom. It's like trying to cure a cold by giving someone cough medicine.
What was private infrastructure? Here is a paper by Di'Lorenzo.
The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400 [private] turnpikes were chartered and built . . .
This article is really illuminating. You should give it a read. It isn't long at all.
PS: You are aware that currently roughly about 50% of the total land mass of America is public and most unused? Why not allow people to homestead this land?
OK, those are good points Rothbard. Thanks for keeping at it. I'd agree you're right in this situation.
Btw, just for the record, I am against central banking. I'll read your article very soon. It's not coz I'm lazy, I'm just looking through one of my stories right now that's about to go to print for any last minute typos . Will be back shortly.
On January 29 2010 13:49 StorkHwaiting wrote: Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
You still don't understand. The banks would have never authorized or underwritten these loans knowing they would have never returned on their investment (the loan) because in the Free-Market these would be a death sentence of any institution. Bankruptcy and liquidation would have followed. Of course, they didn't care about the ability of the loanee to pay the loan, because they were guaranteed payment on the loan because the Government guaranteed these loans, and because there is always a "lender of last resort" or, the State / Central Bank. The Government has been bailing out institutions since forever. Remember S&L? What about the 1980s bailouts? What about before then? The problem isn't from the Free-Market the failure is of Statism. Time and time again.
You are not looking at the cause. You are looking at the symptom and trying to diagnose a cure based on the symptom. It's like trying to cure a cold by giving someone cough medicine.
What was private infrastructure? Here is a paper by Di'Lorenzo.
The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400 [private] turnpikes were chartered and built . . .
This article is really illuminating. You should give it a read. It isn't long at all.
PS: You are aware that currently roughly about 50% of the total land mass of America is public and most unused? Why not allow people to homestead this land?
Rothbardian, could you be a little more specific in responding to StorkHwating's criticism that US growth was a result of the abundance of natural resources in North America not the free market. I assume that his argument is that a mixed economy would have just as much growth. Thanks.
On January 29 2010 13:49 StorkHwaiting wrote: Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
You still don't understand. The banks would have never authorized or underwritten these loans knowing they would have never returned on their investment (the loan) because in the Free-Market these would be a death sentence of any institution. Bankruptcy and liquidation would have followed. Of course, they didn't care about the ability of the loanee to pay the loan, because they were guaranteed payment on the loan because the Government guaranteed these loans, and because there is always a "lender of last resort" or, the State / Central Bank. The Government has been bailing out institutions since forever. Remember S&L? What about the 1980s bailouts? What about before then? The problem isn't from the Free-Market the failure is of Statism. Time and time again.
You are not looking at the cause. You are looking at the symptom and trying to diagnose a cure based on the symptom. It's like trying to cure a cold by giving someone cough medicine.
What was private infrastructure? Here is a paper by Di'Lorenzo.
The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400 [private] turnpikes were chartered and built . . .
This article is really illuminating. You should give it a read. It isn't long at all.
PS: You are aware that currently roughly about 50% of the total land mass of America is public and most unused? Why not allow people to homestead this land?
OK, those are good points Rothbard. Thanks for keeping at it. I'd agree you're right in this situation.
Btw, just for the record, I am against central banking. I'll read your article very soon. It's not coz I'm lazy, I'm just looking through one of my stories right now that's about to go to print for any last minute typos . Will be back shortly.
Understood :p I'm glad we can have a civil debate. It is so refreshing to be able to really have a back and forth exchange and debate. Hell, even two years ago I didn't know much of this stuff either. A little self-education, and then some courses under tutelage of Austrians really helped out
It really helps to both read Economic Theory and to read History. They really do go hand in hand.
On January 29 2010 13:49 StorkHwaiting wrote: Rothbard, I highly doubt poor Latino people took out these loans because they thought there was a government guarantee. Rather, I think they stumbled around the bank in a semi-literate haze and just wanted to know how much they had to pay each month to have a house. And after a whole lot of gobbledygook they walked out thinking they were getting a sweet deal at $1,100 a month on their house mortgage.
Then they were scared and confused when that monthly suddenly jumped to $1,600 a month for no reasons they could fathom.
You should take a small step back and realize we're talking about humans here. Not robots imagined in an academic's dreams.
You know why there was a great increase in the standard of living during the 19th century? Because the USA was busy exploiting an entire freaking continent that they just recently conquered. I'm pretty sure if you gave any decently functional society an entire unspoiled continent of natural resources, they would experience some pretty solid growth too. It's a pretty easy explanation and one I hope you can wrap your head around, as I find it somewhat troubling you would not be able to come to this conclusion yourself.
What exactly was a private infrastructure in roads? The Oregon Trail? Sorry but just rofl man. You're talking nonsense.
You still don't understand. The banks would have never authorized or underwritten these loans knowing they would have never returned on their investment (the loan) because in the Free-Market these would be a death sentence of any institution. Bankruptcy and liquidation would have followed. Of course, they didn't care about the ability of the loanee to pay the loan, because they were guaranteed payment on the loan because the Government guaranteed these loans, and because there is always a "lender of last resort" or, the State / Central Bank. The Government has been bailing out institutions since forever. Remember S&L? What about the 1980s bailouts? What about before then? The problem isn't from the Free-Market the failure is of Statism. Time and time again.
You are not looking at the cause. You are looking at the symptom and trying to diagnose a cure based on the symptom. It's like trying to cure a cold by giving someone cough medicine.
What was private infrastructure? Here is a paper by Di'Lorenzo.
The [private road-building] movement built new roads at rates previously unheard of in America. Over $11 million was invested in turnpikes in New York, some $6.5 million in New England, and over $4.5 million in Pennsylvania. . . . Between 1794 and 1840, 238 private New England turnpike companies built and operated about 3,750 miles of road. New York led all other states in turnpike mileage with over 4,000 as of 1821. Pennsylvania was second, reaching a peak of about 2,400 miles in 1832. New Jersey companies operated 50 miles by 1821 . . . [B]etween 1810 and 1845 over 400 [private] turnpikes were chartered and built . . .
This article is really illuminating. You should give it a read. It isn't long at all.
PS: You are aware that currently roughly about 50% of the total land mass of America is public and most unused? Why not allow people to homestead this land?
Rothbardian, could you be a little more specific in responding to StorkHwating's criticism that US growth was a result of the abundance of natural resources in North America not the free market. I assume that his argument is that a mixed economy would have just as much growth. Thanks.
Sure thing. I didn't really want to tackle it in a post, because it is a long expose and not something that is easily truncated in short segments.
Remember that growth hinges on capital and savings. In the 19th Century the US did not have a Capital Gains Tax. Did not have an inheritence tax. Did not have an inflation tax. Did not have an Income tax. Did not have property taxes. Did not have really any taxes save for the occasional excise and small dutys and imposts. While we still did have a commodity-currency, and while we did make some horrible mistakes in banking such as outlawing branch banking which resulted in massive bank failures in I believe the 1840s, we were more or less Laissez-Faire in the traditional sense (Not the radical anarchistic Laissez-Faire approach). Just imagine that you have a pendulum. On the right side represents both Economic and Civil liberty, and on the left represents prosperity. In the 19th Century America was more or less 85-90% Laissez-Faire. Conversely, the pendulum will swing further into prosperity the greater amount of economic and civil liberty one has. Take it to its logical conclusion of Market-Anarchism, will result in the greatest amount of prosperity. You can easily demonstrate the validity by looking at historical examples. For instance, Cuba, USSR, East Germany, etc. These Nation-States had little to no economic liberty and were (or still are in Cuba's case) accordingly very poor. It is likewise easy to see this correlation given the fact that Hong Kong is prosperous and North Korea is not.
Isn't North Korea larger than Hong Kong? Doesn't North Korea have more resources than Hong Kong? How then, is Hong Kong more prosperous?
Returning to America and really, the European Nation-States also in the 19th Century. Remember, the 19th Century for the most part was prior to fervant Nationalism which ultimately results in protectionist and mercantilistic policy. This meant that throughout the 19th Century the world was largely a Free-Trade mecca. From repeal of the Corn Tariffs in Britain to the Free-Trade summits of the Laissez-Faire liberals in France, to the Jacksonian and Cleveland periods in America goods and services flowed freely from these Nation-States. There were little impediment. Capital could easily flow into the most productive areas. This, we call Division of Labor. It is only natural that certain products will be made cheaper in certain areas. There is no reason to artificially pump up prices which are ultimately paid for through subsidy and thus, inefficiency. This destroys wealth, capital, and standards of living as evidenced by the Great Depression. What happens is that specialities arise. It is advantageous for the people of America to specialize in products that net a greater gain by sole production than if both America and Britain produced the good. This means in the aggregate more of the two products are made if each specializes than if each were to try to be figuratively "Jack of all trades, master of none". This is what happened in the 19th Century, which as we can see results in greater standard of living.
I will also return to what Joseph Schumpeter has said:
An ‘automatic’ gold currency is part and parcel of a laissez-faire and free-trade economy. It links every nation’s money rates and price levels with the money-rates and price levels of all the other nations that are ‘on gold.’ It is extremely sensitive to government expenditure and even to attitudes or policies that do not involve expenditure directly, for example, to foreign policy, to certain policies of taxation, and, in general, to precisely all those policies that violate the principles of [classical] liberalism. This is the reason why gold is so unpopular now and also why it was so popular in a bourgeois era. It imposes restrictions upon governments or bureaucracies that are much more powerful than is parliamentary criticism. It is both the badge and the guarantee of bourgeois freedom—of freedom not simply of the bourgeois interest, but of freedom in the bourgeois sense. From this standpoint a man may quite rationally fight for it, even if fully convinced of the validity of all that has ever been urged against it on economic grounds. From the standpoint of etatisme and planning, a man may not less rationally condemn it, even if fully convinced of the validity of all that has ever been urged for it on economic grounds.
At this time every country was under a commodity currency. It stifled the ability of the State to enact wide ranging social measures which are destructive of capital. With little to no taxation in Britain, France, and America an explosion of capital happened. This ultimately flowed to the entreprenuers such as Tesla and Westinghouse who had no adverse Moral Hazards levied upon by the State. I think a good cursory knowledge of the foundation of capital and its effects will adequately explain why such a growth occured. I like this simple yet effective piece by Irwin Schiff:
^ This is really good.
As we can also see by the article I previously sourced, what we now think of as public goods, or services, were pretty much wholly privatized in the 19th Century. This meant that roads, waterways, trash, etc. were under market mechanisms and accordingly were price calculated. Today we can see without the calculation of price mechanisms that we run into massive shortages, especially in regards to water. Why do we have all these regulations preventing entreprenuers from building mass de-salinization plants? Why do we have over use of water resources in the first place? Because it's so cheap and the State refuses to privatize to allow for Say's Law to take effect. We would never have a shortage of water if for instance, the price of water was in proportion to its availability. We wouldn't need to fine people for using water. We wouldn't need Police State measures making sure we were abiding by State dictates.
It really isn't too complicated though. We just have to once again be confident in liberty and freedom.
I also skipped over regulatory policy, which includes the Sherman and Clayton debacles. That is for another time, but was also another contributor. A "monopoly" in the Free-Market can only happen for a fleeting and temporary period of time, and such a source or "single supplier" will only happen given that the supplier both prices it's products cheaper than all competitors and the quality of product is much higher. I don't think anyone would argue against these beneficial characteristics, but alas they did, and they won in the late 1890s. From Standard Oil to ALCOA it was a bane to consumers. I could go on for pages about this travesty, but needless to say a quick search on mises will pull up the relevant articles.
On January 29 2010 14:20 Yurebis wrote: thats too cheesy. how about "lets stop saying lets", u collectivist? lolol
Bah. I hate Rand. Collectivism is the hierachal (sp? kinda getting tired at the moment lol) structure that a group has rights over an individual. Stereotyping for instance, is not collectivism, nor is putting people into groups or labels. Collectivization is collectivism, for example.
Of course we can disagree, but that is generally my view on that subject :p
On January 29 2010 14:20 Yurebis wrote: thats too cheesy. how about "lets stop saying lets", u collectivist? lolol
Bah. I hate Rand. Collectivism is the hierachal (sp? kinda getting tired at the moment lol) structure that a group has rights over an individual. Stereotyping for instance, is not collectivism, nor is putting people into groups or labels. Collectivization is collectivism, for example.
Of course we can disagree, but that is generally my view on that subject :p
This I simply don't understand. I am an Objectivist and I can understand that you dislike Rand's opposition to anarchism -- but I can't understand why that leads to "Hat[ing]" her. Perhaps you dislike her ethical theory? Or her "absolutism" ?
In regard to the post on economic growth in early america, thanks. It is really useful for me.
BTW, you may have read this (but probably after The Sociology of the Ayn Rand Cult" paper) but it is an interesting examination of Rothbard's early views on Rand:
On January 29 2010 14:20 Yurebis wrote: thats too cheesy. how about "lets stop saying lets", u collectivist? lolol
Bah. I hate Rand. Collectivism is the hierachal (sp? kinda getting tired at the moment lol) structure that a group has rights over an individual. Stereotyping for instance, is not collectivism, nor is putting people into groups or labels. Collectivization is collectivism, for example.
Of course we can disagree, but that is generally my view on that subject :p
This I simply don't understand. I am an Objectivist and I can understand that you dislike Rand's opposition to anarchism -- but I can't understand why that leads to "Hat[ing]" her. Perhaps you dislike her ethical theory? Or her "absolutism" ?
In regard to the post on economic growth in early america, thanks. It is really useful for me.
The reason I dislike Rand so much is because she said of libertarianism:
"Because Libertarians are a monstrous, disgusting bunch of people"
Not only that, she was fervantly Pro-IP. I am anti-IP in the Stephen Kinsella and Rothbard tradition. She also hated Rothbard, and she was a cultist. She proclaimed individuality, yet did not allow anyone in the Cult of Rand to be an individual. This is clearly documented especially so when her son left. Here is what Rothbard had to say:
Introduction: The Paralysis of Criticism: Society Without Opposition
Part I: One-Dimensional Society
1. The New Forms of Control 2. The Closing of the Political Universe 3. The Conquest of the Unhappy Consciousness: Repressive Desublimation 4. The Closing of the Universe of Discourse
Part II: One-Dimensional Thought
5. Negative Thinking: The Defeated Logic of Protest 6. From Negative to Positive Thinking: Technological Rationality and the Logic of Domination 7. The Triumph of Positive Thinking: One-Dimensional Philosophy
Part III: The Chance of the Alternatives
8. The Historical Commitment of Philosophy 9. The Catastrophe of Liberation 10. Conclusion
EPT
. Will be back shortly.
