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Political Web site errs in claims about capitalism

Ignorant blog makes for laughs with statement that government grants, protects individual rights

By Will Potter
First-year economics student

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Published: Monday, November 30, 2009

Updated: Sunday, November 29, 2009

By now dear reader you have probably either come to enjoy or vehemently hate my articles, but you’ve got to give me credit for sticking to principles of individual freedom.
I enjoy reading political blogs, and one of my favorites, Lew Rockwell, was discussing a new Web site he discovered called GovernmentisGood.com by Mount Holyoke professor Douglas J. Amy. If you enjoy a good laugh, check out this Web site. He states that capitalism only exists by government protecting it and our rights are not natural but given to us by the government.
He states that the “free market” caused the current financial crisis. By his reasoning, why even have capitalism? Instead just have government run the economy. It must be angry right-wingers who hate government, not people who realize that no other criminal organization could have killed 200 million people in the 20th century and gotten away with it.
You see, that was under Conservatives and dictators, but progressive leaders will only bring prosperity; I mean it’s not like Woodrow Wilson stifled free speech, sterilized the deaf and lied and got us into World War One.
There are obvious fallacies in Amy’s argument that government is good, and the fact that he is a professor who still believes these myths is ridiculous. If a historian or an economist made some of the statements that capitalism needs government and that government protects our rights and all we need is the right leadership to bring prosperity, they would surely be laughed at by their fellow colleagues. Then again I guess this is what political science majors would believe in because without any government they’re out of a job.
Let’s look at one of the obvious fallacies on his Web site that the market caused the current financial crisis. Everyone agrees that the depression began under the Bush administration and his supposed deregulation philosophy (whatever that means). Let’s take a look at the Bush presidency: We can see that he raised tariffs on imported steel, passed Sarbanes-Oxley, passed a huge welfare prescription drug plan for Medicare, told Greenspan to turn on the monetary spigots and inflate the housing bubble and massively bailed out industries toward the end of his presidency. That is some definite free market action by Bush. He stated, “I have to abandon the free market in order to save the free market” .
Unfortunately Amy’s ignorant views permeate throughout mainstream news media like Fox News, MSNBC, New York Times and the National Review. So, dear reader, read Mises.org or LewRockwell.com to get news stories not covered by the mainstream media and get to the truth behind historical and current events. And for laughs check out Amy’s Web site because he definitely has some anti-conservative mentality. (Note I am a Libertarian-anarchist not a Conservative.)
 

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19 comments

JB Smoove
Mon Dec 7 2009 08:33
Sorry Kristen, I assumed the previous poster (Your Name) was an interloper to our conversation (which is why I was so unnecessarily harsh).

I am afraid we must agree to disagree. I do not think it right that taxes are OK because some people don't mind paying for them.

All I am asking is for you to change your mindset. You seem to equate anarchy (absence of government) with chaos and violence.

Think of all of the things government "provides" for us. Now, imagine the private sector doing that. Police, roads, schools, etc.

My simple retort to anyone who approves of government programs is to ask, "Can you name one program the government has run that has been successful?" Government has a monopoly on many of these services, and we learn from day 1 in economics that monopolies are to be avoided because they provide poorer services at higher costs.

We probably wouldn't want our electronics stores or grocery stores run like the DMV or an inner-city school.

I would also ask you to think about this for a minute: Many Austrian economists predicted this current depression we are in (Ludwig von Mises predicted the Great Depression in the 20s), Where were all of the Neoclassical, Chicago, or Keynesian economists?

Heck, Krugman even advocated the policies of easy money in a column earlier this decade and never saw this depression coming. While people like Peter Schiff were being ridiculed for predicting the housing bust and the coming inflation (consult some Federal Reserve charts that show bank reserves, it is literally a vertical line. Of course, Bernanke has kept that in check by keeping interest rates low and paying the banks to hold on to their reserves (which is why lending has dried up), he will eventually have to deal with all of those excess reserves, but once the banks begin lending that money out, inflation will become a serious problem).

I also want to address your thoughts on sweatshop labor. Look at our own history of labor. We started off very low-skilled with many hardships and worked our way into a much more comfortable and humane situation. Why would you think other poorer nations will not inevitably end up there, as well?

Look at most government regulations. They are designed to benefit a certain party, whether it is corporate interests or unions, usually at the cost of consumers. Look at Obama's recent tariffs on imported tires from China. Who in America is being helped out by this? The poor people who now must spend more money to afford them?

I know I have hit on a ton of issues here (a bit schizophrenic, yes, I know) only because I am typing this from work (on my boss's dime, take that!).

I, too, have enjoyed our discussion. I look forward to your response.

And keep plugging away at Mises.org and LewRockwell.com. They'll make a convert out of you yet ;)

Kirsten
Fri Dec 4 2009 17:10
With all due respect, I do not NEED to do anything...a sentiment I would think you would approve of. What I choose to do is to see both sides of an argument, both the good and the bad. Your ideas do not sound radical as much as they sound uncaring and pessimistic. Again I say that government can and has been an agent of good and to ignore that issue is as great a blindness as that which you accuse us who support government regulation of having. To say that sweatshop labor is some kind of good, the best that can be expected, better than the alternative, is primitive and naive, especially considering that many families are forced to both prostitute their women and work their men near to death.
Where is your hope? Where is your incentive to fight for a better, not only richer, future? I understand this is idealistic, though I hope not ideological. Personally, I do not feel violated or robbed when I send my taxes in, and, as I accept that there are people who do feel robbed, I hope you can accept that there are people who do not. I do not say to you that you need to understand how much you depend on government for the very social stability that allows us to have arguments on such abstract and academic subjects as this, because we are not distracted by the simple struggle for survival or 14 hour workdays. I know you will not and that is fine, it is your right to disagree. I ask you only to see that I am disagreeing with you, not out of ignorance or naivity, but because I too have looked at the issues and evidence and simply come to a different conclusion. Perhaps my priorities are different.
Also, sorry I forgot to sign my name to my last post, computer was giving me some issues. Anyway, good to talk with you, I enjoy arguing :)
JB Smoove
Fri Dec 4 2009 14:47
Your Name,

Your fatal flaw is that the money that is being used for a bridge or whatever, is STOLEN from you.

Buying a washing machine may seem trivial, but it helps create jobs through VOLUNTARY spending.

You seem to have no qualms about abridging individual rights for the "group" or country. Where does it end? Who decides how much in taxes is "enough"?

That is my major problem. The money is taken from people by force. If you do not pay your taxes, you are fined. Do not pay the fine? You go to jail. Do not want to go to jail, you may be tasered or killed.

Look at property taxes. We NEVER even own our own property! We pay off our cars or homes, yet we must continue to pay the taxes. If we fail to pay these taxes, our property is stolen from us. Thus, our government is the true owners of our property.

If a robber points a gun in your face and steals your money, and then uses it to build a bridge the community will use, was that a good act? I certainly don't think so.

As for supposed "sweatshops", if these did not exist. these people would be starving and the children would be prostitutes. I am not saying it is an ideal situation, but the alternative is MUCH worse.

You seem to have good ideals and intentions, but you wish to use violence or threat of violence to achieve these ends. As I am opposed to all forms of aggression, I cannot agree with you.

I understand how bizarre and radical some of my claims may sound, but they are all logically sound. They just expose the machine for what it is: aggression used against the populace to benefit certain groups (whether they be voting blocs or corporations).

You need to realize that government is not "good." Government has always been bad. It kills, tortures, steals from, poisons, harasses, etc. its own people. You need to realize that the people in government are no better than the people in the corporate boardrooms concerned about profits. The only difference is: the government people are obsessed with power.

Your name
Thu Dec 3 2009 22:58
Smoove,
Well, I started with Mises.org, but frankly could not stay there very long as all my screaming at the computer was annoying my roommates. I am loathe to think that money is the most important thing in the world, and unfortunately that seemed to be the underlying idea behind most of the articles I saw there. Personal freedoms, my dear sir, are are well and good, greatly to be desired of course, but the extension of personal freedom to mean the right to hold all of your money for yourself with never a thought or care for the good of the community in which you live is, to tell the truth, abhorrent to me. We none of us are islands and the sacrifice of a tiny percentage of our income (and in America it is indeed tiny comparitively) so children can go to school for free or so that there are firefighters to put out a burning house or so that a policeman can respond to burglery or so that a criminal is guaranteed legal representation for free or so that there are traffic lights to stop us from crashing into each other or so that roads are kept drivable or so inspectors are hired to make sure our food isn't poisonous or for any number of other reasons is, to me, a perfectly valid, indeed necessary thing to do.
The idea that personal consumer spending is inherently and always good is, well to be blunt, a fraud. Given a choice between a bridge and a new washing machine, I will take a bridge. After all, how many washing machines can one family own? At some point, the supply will simply outweigh the demand and all economic hell will break loose in any case. The idea that consumer spending is the exercise of free choice, depsite the millions of dollars spent on advertising that clearly have a great effect on consumer choice, is only supported by government regulations that establish a minimum level of honesty in said advertising (and let's face it-it is a VERY minimum standard). Consumer spending would have companies fighting to provide the lowest price, regardless of the human cost of getting to that price. A low price does not show the conditions of the workers that make that product, does not take into account the price of getting that product to the store, and consequently allows for horrors to occur that the market both does not care about and can do nothing to fix. You may say, well tell consumers about the conditions and they will not buy from abusive stores, but I hope you know as well as I do that that is simply not true. Sweatshops, near slave-labor conditions, long hours, child labor-these conditions do not occur in the US precisely because of government regulations but they do occur in countries where many companies operate, precisely because their governments have not stepped in to stop it. When the aquisition and retention of money is the highest hope, that hope falls far too low for me. To fight a market that is amoral and indifferent to human suffering takes another force that does seek to be moral and establish some balance between business obsession with the bottom line and basic humanity. As the US is the richest country in the world, I am disinclined to think that its laws are biased against the companies or against the consumer. My apologies if this was somewhat angrier than usual - I did try to keep it civil. I hope only that I have persuaded you and the author of this article to no longer laugh at the idea that capitalism would be insupportable without government regulation. Any greater change of attitude is, I understand, unlikely.
JB Smoove
Thu Dec 3 2009 14:47
Kirsten,

I am glad you looked into the ABCT.

I would now direct you to look at the classic essay "What is Seen and What is not seen" by Frederic Bastiat or to peruse Henry Hazlitt's "Economics in One Lesson" to learn about the Broken-Window Fallacy.

These two theories (really Hazlitt's is a modernization of Bastiat's) explain how any government spending (including harmless-looking ones like bridges and other infrastructure) cost society in terms of the consumer goods that are lost if the funds to build the infrastructure were never taken from the taxpayers.

Ie. for every government-created job that is visible (construction workers building roads) what is NOT SEEN are the jobs that are lost because that consumer spending that never occurred (factory workers who build washing machines, etc.).

So, you're supposed "job creation" actually is a net gain of zero jobs. Plus you have to look at the fact that the money the government spends is forcibly taken (taxes aren't voluntary) while the consumer spending (or however people choose to freely spend their income) is spent through voluntary (ie. peaceful) transactions in the marketplace.

I don't blame you necessarily for being sympathetic to Keynes (most economists are, which is why nearly all of them did NOT see this depression coming, while Austrians like Peter Schiff predicted it a year before it happened).

Read some of the stuff dealing with Keynes on Mises.org. They do a pretty good job of discrediting him.

As for money, look into some of Murray Rothbard's stuff. He has written entire books dealing only with money. It is a well-understood topic by Austrian economists, it just gets misunderstood by Keynesians (who blame "animal spirits" and such, literally Keynes' own words, for marketplace disruptions.

Hopefully this will be of some use to you. It has been a pleasure conversing with you.

Your name
Thu Dec 3 2009 00:14
Of course you're an anarchist. How long do you honestly think you'd last if there was no government protecting your homeschooled looking ass?
Kirsten
Wed Dec 2 2009 20:01
Smoove,
I have no defense against my admitted ignorance of the details of economic theories. My only comfort is that most economists don't really understand what is going on either, or so they say. Money is so dang complicated.
Still, I did read up on the Austrian theory, blaming low interest rates set by the government for falsely increasing consumer confidence that banks have the hard money to back up their loans. During a boom, borrowing increases, fueled by artificially low rates set by the government, the supply of money is not enough to meet the demand, the charade is exposed and a recession follows that resets the actual supply of money to the demand. At least, this is how I understood it. Perhaps it is because we are in the middle of a recession and so these issues are fairly mainstream now, but I didn't find this idea as revolutionary as you did. Anyway, I have no argument with this theory, though I admit I take a more Keynesian view of economics. As a mere historian, I confess to being something of a humanist and so don't mind some government spending if it provides jobs and improves lives. Doesn't always work that way, but I think it's the right idea.
Also, I'm glad you presume I meant the the Great Depression, since that's what I said. My point was that Wilson had not much to do with it, which is why I didn't understand why 'Wilson-era regulation' (the creation of the Fed in 1913?) should be credited (pun intended) with a role in the 1929 crash. Is it the Austrian theory again, that the Fed kept rates so low that credit expanded out of control and the BAM! Black Friday? Fair enough, at least the follows logically and is supported by some factual evidence. Hm.
Also, I put forward the idea that there is a difference between investment in the country's infrastructure (railroads, Eisenhower's interstate system, public schools, hospitals, so on and so forth) and subsidizing banking companies just so that they can remain super-rich. Again, it must be the Keynes in me, but I'd say the government got more than its money back in these investments. After all, Northern railroads helped keep the Union together, interstates eases transportation and allows for freer movement of goods (as do RR's as well actually) and people, and schools and hospitals provide a priceless service. That's my boost for responsible government spending, though as I freely admit, the crucial words there is responsible and not spending.
JB Smoove
Wed Dec 2 2009 13:12
Kirsten,

Read up on the Federal Reserve (aka the ULTIMATE regulator, since it can determine how much our money is worth(. This institution was created during Wilson's administration.

As for the depression, I presume you mean the great depression, that didn't happen until a decade after Wilson. How is he really relevant to it? Did you forget about the presidents and Federal Reserve policies that occurred during the "Roaring '20s" (aka the credit bubble era).

You should look into Austrian Business Cycle Theory. Read some Mises or Rothbard and learn to understand economics.

I cannot comment on your education, but it is appalling to see how many historians have NO idea of economics whatsoever.

These are the same people that hail Lincoln for his policies that expanded railroad building and then scream at Bush for giving money to his cronies on Wall Street. Guess what? It's ALL corporate welfare.

Read up on the Austrian School of economics and see how the veil is lifted from your eyes in regards to the "history" that is taught at USC. I should know, I majored in history at USC and was fed a good bit of garbage. Do some reading independently and enjoy the ride!

Your name
Tue Dec 1 2009 22:35
Kirsten,
That was the most thoughtful thing ever posted on here. Thank you.
Kirsten
Tue Dec 1 2009 22:06
Larry,
In a brief statement of personal defense, I will say that I am a History major and so do little else but re-read history books. It is sometimes really quite dull. Also, I would never recommend Rolling Stone as a history source...except perhaps to someone looking to learn more about why the Beatles fell apart or the musical inspirations of Metallica. It only has some political articles that can offer interesting and generally well-researched points of view.
I agree with Elex, in that your view of an Anarcho-Libertarian society seems nothing more than an idealized version of our current system. I do not disagree that a "free society" could and has worked on a small scale (although I do disagree that Ireland is a valid example of peaceful governance in a sustainable form). I do dispute the idea that it could provide any form of security or sanity on a large scale, in a country of America's size and cultural differences. Of course we have issues of police brutality, miscarriages of justice, and generally terrible things that happen. But the great thing about the system is that it at least provides a way to rectify these problems. People do not always chose to try to stop these issues, but that seems to me to be a problem in human nature, and not necessarily in the system. After all, government is made up of individual people, and its problems are the problems of single human beings writ large. Just as humans are complex beings, so is government. Ignorance, waste, bias, cruelty can live in the same house as wisdom, efficiency, honesty, and kindness. I refuse to believe that because government is guilty of great harm it is incapable of great good. Indeed, there are historical examples to bear out this view. I would argue that Roosevelt-era welfare programs, (not Wilson era-his presidency was followed fairly quickly by the Great Depression...hardly evidence that he ever regulated anything. He was primarily an idealist, though also a racist and sexist. Again, the complexity of humanity is sometimes just depressing), the Marshall Plan that rebuilt Europe, Lyndon Johnson's civil rights laws, the Supreme Court that declared segregation illegal, hell, even Reagan's minimal role in helping to end the Cold War and allow Eastern Europe to breath again, are all examples of good on so great a scale that only a strong government could have enacted it. I agree there are enough examples of atrocity as well, and I only do not cite them because I think that you know what they are already.
Speaking as someone who has been in quite a few protests against government stupidity and downright cruelty, I end by saying that I am not blind to the follies of government, but feel that any system that trusts to the inherent goodness and fairness of people will probably end as a tyranny of the majority and be no better guarantor of human rights or liberties than what we have now. Try to reform people and you will by default reform government.
Elex
Tue Dec 1 2009 21:13
Larry,
What you describe includes a government. Courts and laws = government, only if it is run by common law, the laws would be made by the courts. So if your point is that you don't need government to have rights, your system fails to live up to your ideals. Also, I don't see why you think the courts in this mythical land would not infringe on rights if you believe current courts do so. I'd also note that people can appeal court decisions in our current system, so I'm not sure what you're talking about there.
Police protection which requires sufficient ability to pay does not uphold the rights of those that lack the ability to do so. Also, what would these security firms be targeting if not violations of laws created by government? And who's to stop the firms from doing whatever they want if not a government? Additionally, in this mythical land, gangs could simply bomb your security firm or all security firms and there goes all rights for everyone.
You can live in such a society if you'd like..just go to a failed state and pay a gang to protect you, or build a time machine and go back to 4000 BC. If that's your thing, go for it, but what you describe includes a government and does not guarantee rights for all.

PS: Are you Bill Potter?

Long balls Larry
Tue Dec 1 2009 19:43
Dear Elex,
an Anarcho-Libertarian society would still have courts, laws, and police. laws would be based on common law and police would be provided by security or insurance firms. Ask columnist Will Grigg how abuseful the police are because he writes stories on lewrockwell.com all the time detailing police abuse because they have a monopoly on protection. people would be able to appeal their decision unlike the current system where the supreme court can infringe on peoples' rights like they did to the japanese in world war two. Look up medieval Ireland and Murray Rothbard to see how an anarcho-libertarian society would be possible. what is necessary is too look beyond government schooling history and see that a free society could work. the situation you describe is chaos and not anarchy because anarchy is just the absence of government not of rights.
Elex
Tue Dec 1 2009 18:49
Larry,
Go to Somalia and see how your rights hold up. Rights don't exist in reality without laws, courts, police etc. You may find that "horrid," but it's true. And I don't mean to spark any more controversy, but the sky is also blue.
Long Balls Larry
Tue Dec 1 2009 13:51
"There are no rights without a government to guarantee them"

That is a horrid statement. So, a government that can (and should by your logic) should be able to take them away, correct? After all, without a government, you have no rights...hmmm

@Kirsten:

Go back and re-read your history books. Most of the major regulatory agencies (the Federal Reserve is a HUGE example) were pushed for by corporations to keep out competitors. The Fed was started by large bankers who needed a "lender of last resort" to bail them out whenever necessary. Look at the "wonderful" anti-monopoly legislation that is always being used by other companies to punish Microsoft.

These corporations woo the regulators and get laws passed that benefit them. Learn some REAL history, not the junk you read in Rolling Stone.

....and the Fed is to blame primarily for this depression. It wasn't so much "Clinton-era deregulaton" but moreso "Woodrow Wilson-era super-regulation."

Good luck with the remainder of your college years. Hopefully you can spend some time looking through the myths and pop history taught by people like Doris Kearns Goodwin and her ilk.

Elex
Mon Nov 30 2009 21:00
Mr. P,
There are no rights without a government to guarantee them..it'd just be you with your 9 iron trying to protect all your property, which you would lose to the first "rational and self-interested" person to come by with a gun.
Kirsten
Mon Nov 30 2009 16:03
Well Mr. Potter, I did read Amy's website, though I am now wondering if you did. Amy does not say that "capitalism only exists by government protecting it," but instead argues that "Our [American] version of a market economy is highly managed and humanized by government laws and policies." This is a more nuanced and sophisticated argument, saying that capitalism is an independent idea in and of itself, but as it is practiced in America (which is, indeed, only one way to practice it), it has been modified and protected from excess by government regulation. Amy argues that capitalism left unrestrained, a true "free market" would tear society apart, dividing the haves from the have-nots, allowing the rich to use their money to get more money, while the poor would have no power to enact change. He does not create this scenario from thin air: the late 1800s and early 1900s provide plenty of real-life examples of the horrors of unrestrained capitalism. This was the time when government could and did step in to do some good. Teddy Roosevelt won his spurs by working to end monopolies and restore some sense of competition to the market. Regulations on working hours and wages and an end to child labor are all regulations that were so unwelcome to the corporations of the day that only the government was could possibly have both legislated and enforced them. I would urge you to use your own advice and think independently. Clearly you approached Amy's website from your own ideological viewpoint, or you would not have so misread and misunderstood his argument. I do not say that you would then agree with Amy; only that you clearly do not even understand what he is saying to be able to disagree or agree with it.
On another note, I think that it is by no means agreed that the Bush years were responsible for the current economic crisis. Most sources that I have read, including the New York Times, the Times of London, and even Rolling Stone, agree that Clinton era deregulation legislation is the real culprit. I think again, you have a preconceived notion of what liberals and conservatives believe, and so view the arguments going on through that lens. While no doubt gratifying to sit back and laugh at the foolish Democrats and Republicans, and I agree there are some very foolish people out there, that does not mean that some do not have valid points to make. The true independent mind is not afraid to say, yes that idea is right and I agree with it. I would suggest to you some Matt Taibbi articles-he is certainly biased towards a liberal viewpoint, but his allegiance is to the ideals and not to people. He criticizes Dems and Republicans, Bush and Obama, politicians and idealists equally. Hopefully you will be able to use your next few years at college to actually expand your ideas and attempt to let go of your ideological paradigms. They are are rarely helpful to intelligent conversation.
Deez Kruggerands
Mon Nov 30 2009 14:42
bull moose progressive,

nothing better than that old Yankee queer, Teddy Roosevelt blowing up some Spaniards, huh?

Ever heard the old saying, "Give a queer a gun and he'll shoot at everything?"

Go back to the same tired rhetoric of Bush is bad, Obama is good, no, they are not the same, blah blah blah. Wake up and realize how duped and brainwashed you are, thinking that the two political parties are even remotely different.

Wake up and realize that Big Government and Big Business are one in the same. Government is bad. Governments have the blood of over 200 million people on their hands in the 20th century alone.

Grow a pair and think critically.

Will, excellent article as usual.

Dan McLaughlin
Mon Nov 30 2009 10:49
Mr. Potter,
Come back when you ar a fourth-year, and also tomorrow, and the next day, and next year, and the year after. Never stop searching for and speaking the truth. Your comments show an ability to see through the whitewash and the hogwash. I wish I was a bold and knowledgable as you are when I was your age. I am sure, with your comments and your attraction to Lewrockwell.com, that you are aware of the Austrian school of economics. Blessings on you. Keep up the good work and the good fight.
Bull Moose Progressive
Mon Nov 30 2009 07:30
Mr. Potter,
Come back when you are a Fourth-Year and you know what the hell you are talking about.






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