The Fairness of Free Markets

Walter Williams tells us that:

in a society of voluntary relationships income is not “distributed”; it is earned—earned by individual efforts to please one’s fellow man. One person is not poor because another is rich. The fact that people earn income reflects the morality of free markets. It is their ability and willingness to please their fellow man that enables them to have a claim on the productive assets of the society.

Is this true? Let's consider a hypothetical voluntary relationship.

Suppose you are driving off the beaten path in Death Valley with your wife and child and your car breaks down. I pass by. I'm your only hope of survival. You need water and a ride. I've got both. But I want $10M of your future earnings in exchange. I've got a contract and you can choose to sign it or not. If you do, should it be enforced? If you sign it you do so in a state where you are perfectly lucid. You are rational. Should a court enforce this contract in a free market world and respect my property rights?

According to the law today this contract would be ruled unconscionable and declared unenforceable. One party took advantage of its position of superior bargaining power in order to craft a contract that is excessively unfair.

Reading Williams you'd think that the court's action is unfair. You can't have a court come in violate a freely agreed upon contract. I've earned the $10M in your future compensation. I helped my fellow man.

That's a pretty bizarre stance in my world and I doubt very much Williams really believes this. He uses this definition of fairness in his economic arguments, but does he use it in his home? Let's suppose he had two children and let's suppose they happened to be stranded in town and wouldn't get a ride for 8 hours. Child A is hungry and Child B has $20. Child B says that she'll give Child A $10 provided Child A licks her boots. Child A after a few hours is desperate enough and does so. What would Williams say to his children when he finally arrived to pick them up and Child A complained? Would he say "Good job. You both helped your fellow man. One was able to be fed and the other was able to be entertained. A mutually beneficially transaction. This is a just and right a system as could possibly be devised."

When right wingers start arguing about economics they'll defend boot licking and bum fights. The bum knows what's in his own best interest so he and another bum should be allowed to fight each other in hopes of gaining meager compensation. I doubt very much these right wingers would say the same to their children that received boot licking for modest compensation. I bet they'd be outraged. I bet they'd say that their children should feed these hungry people rather than demand that they humiliate themselves.

But that all changes when they enter a blog comment section and start arguing.

Quote Of The Day

The crises of the mid-1990's hit countries that had, in general, embraced the policies of the Washington Consensus. The pattern was the same in each case. Following financial deregulation, countries enjoyed strong capital inflows and booming stock markets. Some seemingly minor event produced a reversal in market sentiment and a sudden flight of capital, producing an economic crisis. Following the crisis, the International Monetary Fund (IMF) and world markets sought to impose the 1980's package of public expenditure cuts and economic contraction, which only exacerbated the problem. Finally, in retrospect, the victims were blamed for minor divergences from the free market ideal which, before the crisis, had been seen as unimportant, or even praiseworthy.

John Quiggin, Professor of Economics at the University of Queensland writing in Zombie Economics

Documentary About Terrorism Against Cuba

If you get Netflix instant streaming and you'd like to see a documentary about the various acts of terrorism directed against Cuba you can watch Will The Real Terrorist Please Stand Up. It's interesting to see the various unrepentant terrorists interviewed. One thing I learned is how in Miami the Cuban exile community has actually engaged in a lot of terrorism against Americans. When policies are enacted that they object to they can bomb related people in the city. One person interviewed says that more bombs were going off in Miami than in many other war torn regions, like Beirut, and yet it's odd that people don't seem to notice. The US government seems uninterested or unwilling to put a stop to it, so the terrorists get their way.

Except for the title it doesn't seem to me the film tries hard to cause anyone to reach a particular conclusion. They just interview the various people and allow them to speak for themselves. Quite informative.

Manufacturing Consent-The Documentary

If you haven't seen the documentary done about Chomsky and Herman's book, it's definitely worth watching. I've embedded it here.



It was at the time the most successful documentary ever made by a Canadian producer. It was huge overseas. Shown in about 30 countries. Where it was shown in the US it tended to sell out, but it wasn't shown on television here. In fact it was barely reviewed. The NY Times did review it in a sort of positive review you can read here. The thesis seems to be, according to the NY Times review, "that the government is most responsive to the wishes expressed by the minority of citizens who vote." Huh? It's pretty hard to understand how someone could watch this movie and miss the point so badly.

As far as I know Chomsky never watched the film. He apparently was a bit annoyed because though there was an overwhelmingly positive response he found that people looked to him like he was the leader of a movement. I suppose this violates his anarchist sensibilities. But he doesn't blame the creators and thinks they did the best they could. People naturally react this way apparently.

You Are Irrational

In this Ted Talk Dan Ariely explains how humans decisions are easily manipulated such that they are irrational.

Should We Vote For Obama?

There's only one guy that I read religiously and that's Glenn Greenwald. If he writes it in his column I read it. I think he would advise the left not to vote for Obama in 2012. Obama is killing US citizens with no due process, gets lavish praise from people like Dick Cheney for his handling of our overseas wars, aggressively punishes whistle blowers, pressures attorneys to let Wall St bankers skirt the law. He's an absolute disaster. Greenwald seems to side with Ralph Nader who likes to point out that these spineless liberals repeatedly demonstrate that they just have no breaking point. You can give them absolutely nothing and they'll still vote for you as long as you have a D next to your name. You've got to communicate that you have your limits or they will give you nothing.

You know what though? I think we did communicate that in 2010. Democrats stayed home instead of voting. And what do we have to show for it? Did the Democrats move to the left? We got Republican majorities in Congress. And what has this done for us?

We've got an economic crisis right now and it could be solved. Yeah, we have a deficit problem. We also have an unemployment problem. We also happen to have corporations and wealthy individuals sitting on record amounts of cash. You can solve the deficit problem by raising revenue and by cutting expenditures. But you don't want to cut expenditures when unemployment is as high as it is. In fact you want to increase them. So what you do is of course you raise taxes back to something like the prosperous 90's level, or the even more prosperous (and more progressive tax era) pre-80's level. You use the revenue to reduce the deficit and also spend some of it to spur demand. This improves the employment situation.

OK, that's my fantasy solution and I recognize that Republicans aren't going to go along with that. But in a reasonable political climate what you do is you compromise. Maybe I'm not going to get spending increases. But I can at least get some revenue increases in a sane world. I might offer some spending cuts in a compromising move.

But that's not feasible post 2010. These Republicans won't budge. No compromise. You cut spending. In exchange we'll give you nothing. That's the Republican compromise. That's insanity. This is the result of the 2010 election. Is this good for the country? Had Democrats won I wouldn't be happy with the results. But it would be better than this.

Obama is a war criminal. If the Nuremburg standard were applied he'd be hanged. But that's true of every American president since FDR. And it will be true of the next President whoever he is. I think the question is, do you want a war criminal that crushes the American poor or do you want a war criminal that might throw the poor a bone?

Or do you want a war criminal that will wreck the climate at an extremely fast pace. Obama is nothing to brag about on the environment. But at least he's not a member of the lunatic fringe climate denying anti science crowd. He says climate change cannot be denied, and economic growth must be sustainable in that it must combat this change. This may be rhetoric. He may do what his fossil fuel burning owners demand in the long run. But the Republicans can't even acknowledge the basic facts.

It's up to us to do the work that provides voters with a real choice. But suppose November 2012 comes and we haven't done the work required. Should we step aside and let a Republican win? These are real people that will suffer immensely with prolonged unemployment and the minimal benefits they have getting slashed.

Take an issue like a Boeing effort to undermine their union. The National Labor Relations Board's job is to flag violations of labor laws. Under Bush there's no problem. Bush just didn't enforce the laws, so Boeing can run rough shod over the union. Obama serves the same cronies, but he had to appoint members to the NLRB and he did go ahead and appoint some pro labor people. So what did they do? When Boeing broke the law they actually did something about it. Boeing is outraged of course. And Obama is doing what he can to help them out. He's appointed a former Boeing director to head the Commerce Department. So both Democrats and Republicans work to undermine unions and people on behalf of corporations. But under a Democrat you still have a bit of a chance. Under a Republican it's just blatant law breaking on behalf of wealth. That's real people that suffer. Do we stand back and let Romney walk into the White House? That's imposing unemployment and reduced wages on a lot of real people that will suffer.

What we need is a Presidential candidate that actually cares more about what people think than what wealthy corporations think. Then the war crimes would be scaled back, the police state can be rolled back, health care can be fixed, etc. Our best hope is that the occupy movement (possibly in conjunction with the Tea Party) can produce something like that. But if they haven't by November 2012 I think you do have to support the least worst option, and that is Obama over Romney.

The Fake USPS Crisis

Here's a bizarre one. You hear how terrible the US Post Office is. They lose tons of money supposedly. They operate at a loss. Government is terrible at everything. They should be abolished and privatized (even though it is explicitly authorized in the Constitution).

But have you heard why it is they are losing money?. In an absurd move Congress passed a law that mandated that the USPS prefund pensions, including health benefits, out for a full 75 years. And they had 10 years to do it. This means funding pension liabilities for people that not only don't work yet. We're talking about liabilities for people that haven't even been born. That's $105 billion in 10 years. On top of that none of this money applies to current retirees. That's additional funding that is required. Almost no large businesses could have a burden like that imposed on them and survive.

And here's another kicker. The USPS previously operated under a retirement plan called the Civil Service Retirement System. Since then a different system has replaced it. But the Post Office overpaid into the CSRS to the tune of $82 billion. The US Treasury has not refunded the money. If the USPS could get their hands on the money that is due to them then that, combined with the money they've already contributed to the 75 year forward retirement fund covers the requirements and the USPS operates in the black.

Democracy Now covers it here. Ralph Nader has some details here. What we are dealing with here is elements acting on behalf of private wealth and profit seeking, like AEI, are seeing to it that the rules are rigged so the USPS can't function. Then when they don't function they point to them and act like they are defective. Then they can be privatized.