Peter Schiff: Medicare Recipients Are Lazy People Who Refuse To Pay For Their Own Health Care
Okay, to be fair, that is what Lawrence O’Donnell said, but wasn’t that sort of what Peter Schiff was getting at?
Peter Schiff is apparently an expert on economics, but you can tell, simply by what he is saying, that his view of the economy is totally skewed by his fanatical ideology.
Let me break down his logic to help illustrate my point.
First, it is Peter Schiff’s belief that government should not have any say in the market whatsoever, and that all regulation is bad for the market. I think everyone can agree that this represents Peter Schiff’s view quite accurately.
Having said that, Schiff feels that if the government would not have “taxed the hell out them (American workers) all of those years” that these people would have enough money to pay for their own health care, and it would be, “a lot less expensive.”
Schiff’s argument here is purely hypothetical, and regardless of the cost, Medicare provides seniors the luxury of not having to worry about bankruptcy.
There are flaws in Schiff’s argument.
I love it when right wing economists talk about “market forces” and “letting the free market run our economy.” They make it sound like the free market is some altruistic being that always knows exactly what to do and when to do it.
The free market is not some emotionless, all knowing entity. It is controlled by humans who are susceptible to greed, corruption, and exploitation. The free market is only as pure as the fallible human beings that control it.
If free market principles were allowed to rule, like Schiff wants, what that means is everything is based on maximizing profit. Two major byproducts occur when the only concern of an economy is profit.
- Quality goes down because corners must be cut to save money and compete (See China).
- Wages go down, because it pits workers against one another. For example, if there are no labor regulations, a woman can be paid significantly less than a man to do the same job. This forces wages down, because now a man must settle for a depressed wage if he wants a job.
If there is no regulation of the “market forces” by the government, you essentially place the power in the hands of CEOs who have no accountability to anyone but their share holders, and in order to keep the share holders happy, profit must be maximized by any means necessary. If that means exploitation and corruption, so be it.
If government regulations are allowed to control an economy, those who installed the regulations can be held accountable if the regulations are too intrusive.
Holding the government accountable for its actions is called Democracy.
Holding a CEO accountable for his or her actions is called impossible.
August 7th, 2009 at 4:29 pm
peter schiff is a ridiculous tool, he’s a broken clock. he’s “right twice a day” and the rest is silly right-wing ranting “get rid of the government!” and replace it with…crickets…
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August 7th, 2009 at 7:22 pm
It’s not that student loans caused college tuition skywards; it’s that the student loan programs were taken over by thugs, whether you call them Republicans or not, and turned into a money-making scam to enrich people like Schiff.
But, Schiff is dead wrong about markets should be unregulated. That is what got America into the present mess. The very lack of regulation and accountability by corporations because they were allowed to lobby Congress.
America doesn’t need less regulation. It needs more (at least regulations of business, specifically eliminating political rights to corporations).
It’s like I don’t know if I should laugh or cry everytime I see a corporation reporting a quarterly profit. The other day some company, I wish I could remember which, reported a $431 million profit in a quarter. I’m like huh? What is profit but proof that they were ripping off their customers in the first place.
The problem today in America is that corporations are too loosely regulated. They should be completely regulated to death, and then corporations would exist for one reason: to make a product that people need.
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August 7th, 2009 at 9:00 pm
@onceler,
Peter Schiff had articulated in exact economic detail exactly how the economic collapse would happen, while the wall street shills at CNBC and our own government LIED to us about how great things are. WHO SHOULD YOU SUPPORT?
@tamrhindi,
Corporations should be “completely regulated to death” ? Then how would they provide a product? You make no sense.
For the first 150 years of American history, we had very little to no regulation of private industry. In that time, Americans prospered like no one else before. Now your saying we must have regulation or we will have an economic collapse due to fraud. The facts dont agree with you.
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August 7th, 2009 at 9:25 pm
Hi Michael,
Although I respect your argument, I think it is way too simplistic.
First off, for the first 150 years of this country, the term “globalization” took on a whole new meaning.
I actually think the post does a nice job of explaining why “deregulation” is a bad idea, so I won’t rehash what has already been said. What I will say is that I don’t understand how a highly regulated corporation would cease to provide a product.
I am not necessarily for total government regulation, but I also think a “hands off” approach to the economy is just asking for a crisis.
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August 8th, 2009 at 1:40 am
I think you need to go back and see how in the first 150 years of our country corporations were not allowed to become monopolies(now many large corporations own smaller ones through subsidiaries – (more competition – better for us)
Also, corporations were not given the rights of “personhood” (human rights were more important than corporation rights) doesn’t seem that way any more.
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August 10th, 2009 at 9:44 pm
I was kinda interested in hearing Schiff when Lawrence O’Donnell introduced him, since he’s looking to run against Chris Dodd … then he spoke (I should have known better since this tool is from Westport).
Some people should just sit there, with mouth firmly shut.
I don’t care who gets the Democratic nod in CT, I will actively work for whomever is running against this brain surgeon.
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August 12th, 2009 at 1:36 am
@This-Is-Sparta
globalization isnt the problem. regulation of labor is the problem. we have no free market for labor. the government artificially forced up the cost of labor with minimum wage rules and artificial scarcity, due to limiting immigration.
the result of this interference was the total removal of a full layer of our labor force, the low wage layer. as soon as china opened up we got caught with our pants down. our businesses couldn’t compete so they had to close factories and move them to china.
wouldn’t it be better for chinese workers to come to america and work here at whatever wages the free market allowed? it would of enabled us to make our own products instead of importing them, we’d have a trade surplus instead of deficit. we’d be rich, instead of bankrupt. we’d have a real economy based on real things, instead of a fake one based on borrowing and spending.
yes you need regulations when the government enters the free market and distorts it. people go hog wild when trillions of dollars are injected by the fed. they will act recklessly when they know they will be bailed out. why not remove the government interference and the guarantees and the regulations and let the free market regulate itself? it did it before, it did a pretty good job, it can do it again.
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August 12th, 2009 at 1:57 am
@MJ
the government never actually prevented free market monopolies, because there never were free market monopolies.
the original meaning of monopoly is when a government grants franchises to business entities that prevent any competition at all, like utilities, or the fed.
the so-called monopolies during the industrial revolution were similar to current day microsoft. microsoft dominates their market, but there’s still competition from apple, linux, open source, and now google. one little misstep by microsoft and their competitors would take full advantage of it.
the free market handles the threat of these types of “monopolies” if you give it time. only when companies collude with corrupt politicians do they get unfair advantage causing the free market to fail.
one example of this are the anti trust laws, used by the corrupt businesses to keep competitors out by accusing them of “unfair trade.”
ironically, its the government that needs to be regulated to prevent them from regulating the free market.
i too am against corporate “personhood” and even business incorporation, another well meaning governmental invention that has been abused. it treats a business as a separate entity, protecting its shareholders from liability for debts. that encourages companies to get too big and powerful. ripe for abuse and too much risk taking. all businesses should be private.
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August 12th, 2009 at 11:35 am
Mike,
You said: “wouldn’t it be better for Chinese workers to come to America and work here at whatever wages the free market allowed?”
I don’t think you realize how many social problems that would create here in the United States, not because of the influx of foreigners (I am in favor of free movement across borders), it would cause problems in the system we already have. The only example I can give without writing a thesis paper to try and explain is this: Have you noticed the outrage of racist, right wing, xenophobes talking about the illegal immigration from Mexico?
My question to you, is why is it incumbent upon every aspect of the global society to try and accommodate corporations?
Rather than allowing cheap labor to move to the U.S. (which would cause a huge drop in American income, and if you think that will be accompanied with lower prices for products, then you are naive) we can do one of two things.
One, force China and other countries to implement and enforce human rights so that their workers do not undercut hardworking Americans.
Two, encourage corporations to not take part in the exploitation of cheap labor overseas.
Corporations have every right to make profit, but when the average CEO is making 500 times the amount of money his average worker is making, well that is just obscene.
One last point with regards the myth that cheap labor allows for cheaper products. If this is the case, why has the cost of NIKE shoes risen exponentially, even though they are notorious for exploitation of their workers?
Just once I would like to see someone blame the gluttonous and greedy corporations, rather than point the finger at unions who, God Forbid, might want to make a decent wage that would allow them to purchase the occasional non-essential commodity.
Sorry for the rant.
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August 12th, 2009 at 11:40 am
Sorry Mike, I missed one thing.
You said: the government never actually prevented free market monopolies, because there never were free market monopolies.
Please explain how the steel industry, and oil industry was not monopolized earlier in this nation’s history?
You also used Microsoft as an example. Microsoft was forced to bust up their monopoly by the courts.
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August 27th, 2009 at 12:31 am
This is total garbage. First off, O’Donnel didn’t even let Schiff talk for more than 4 seconds at a time before interrupting him. It was so planned. O’Donnel is a disgrace.
Ha! Yeah, government needs to regulate even more. We all know how well that worked out with Fannie May!! That comany wouldn’t have been able to operate the way they were without the feds standing behind their every move, and without the certainty that they would be bailed out if things wen belly up. ( another point he’s addressed has been the error of the “too big to fail” policy)
I will seriously doubt the intelligence of the people of CT (my birth state) if they vote Dodd back in, just like MA voted back in Frank. Fools.
I can’t believe you people on here have the nerve to stick up for Dodd, who had a hand in that whole debacle. You don’t have a clue what you are talking about. Someone above already said it best: Business can only operate so recklessly and at the cost of the tax payer when the government gets involved with all their oversight committees, GSEs and the federal bank. Nonsense.
Every time government starts subsidizing things, the prices sky rocket. Tuition, housing, healthcare, etc. It’s because demand and supply become supremely disproportionate.
Why not all the other alternate routes of reform for health care? You know why? Because the Democrats are in bed with the ABA, hence no Tort reform. And they won’t deregulate state competition because they know that would cause prices to drop even more and the public option would be left forever by the wayside. This isn’t about making a better system, it’s about controlling an enormous chunk of the economy, taxation and creating voter patronage networks.
Schiff has broken down in great detail just how the government plan will not only not provide better service but cost more in the end, i.e. the ample and inevitable taxation on the middle class that will come as massive numbers will migrate to the gov plan as a result being taxed 8% if they are NOT on it. And the gov can only provide for free because it feeds off the tax pool and will underprice its insurance. It can operate at a loss because it can always print more money from the federal bank, which it will roll over on the taxpayer in inflation. Medicaid and Medicare, which make up a huge portion of healthcare as it stands, already result in as much.
Whoever thinks that O’Donnell knows what he’s saying, and that Schiff is some “right wing insurance shill”, needs to be smacked upside the head because they are the tool and the ignoramus.
This isn’t about partisanship, this about reality. Hopefully, in 2 years, the people of CT will grow a brain and vote in Schiff.
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August 27th, 2009 at 1:01 am
Atticus: You asked about oil and steel, which your sixth-grade teacher taught you were “monopolized” in the 19th century. Huh. Funny — doesn’t the neoclassical definition of monopoly involve rising prices and falling output? Quiz question: were steel and oil prices rising or falling in the late nineteenth century? Bonus question: was output rising or falling?
If you do not know the answers to these questions, why not just shut up, instead of repeating propaganda you learned from the track coach who was himself only one chapter ahead of the class when he taught you American history?
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August 27th, 2009 at 1:24 am
Onceler, you really need to understand the TRUE causes of the crisis.
Peter schiff did, that is why he was right and all the other CNBC shills were wrong. he saw the distortions government regulations and interventions created years ago and knew there was no free lunch and the house of cards would collapse.
He is a constitutionalist, by the way.
Regulation destroys wealth plain and simple..the market is self regulating…you speak of “cheap products” well if you provide crappy products good luck making a profit.
We didn’t have anything close to a free market.
Look at your money…..money is 1/2 of all transactions and it is CONTROLLED AND MANIPULATED by the FEDERAL RESERVE, that’s 1/2 on the way to central economic planning, and you guys call it free markets and say we had too little regulation??
You guys are only fooling yourselves, you really need to understand how markets work. I urge you to read Tom Wood’s Book..he explains this.
“it’s not a crime to be ignorant of economics…but it is irresponsible to have a loud and vociferous opinion on economic issues while remaining in that state of ignorance.”
You guys should understand markets better..why don’t you actually read Schiff’s Crash proof and see why he predicted the crisis..he points out every government intervention distorting market forces that would eventually hurt us and built the bubbles.
http://www.amazon.com/Meltdown-Free-Market-Collapsed-Government-Bailouts/dp/1596985879/ref=sr_1_1?ie=UTF8&s=books&qid=1251350605&sr=1-1
Please read….and don’t be ignorant of how much regulation there was….
We haven’t had free markets since the 1800s, and that was when america was most prosperous. regulations destroy wealth overall, they drive up prices…companies must pay to abide by regulations which causes higher prices, when market competition is the natural regulator that serves to drive DOWN prices helping everyone!
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August 27th, 2009 at 1:34 am
The lack of this article’s journalistic standards on ethic and objectivity is nearly absolute. At least the author admitted that the guest never said those things in the interview, but immediately in the next paragraph Che kills the last bits of his credibility by implying that this is exactly what Mr.Schiff would mean if he had been given the chance to actually state his opinions in that ridiculous interview.
Lawrence O’Douchebag seems like a shameless attack dog; a Bill O’Reilly of the left. Anyone with more than one working braincell would agree that that interview was just plainly stupid, no matter what your party affiliation is.
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August 27th, 2009 at 3:06 am
Almost every single sentence in this post is wrong, though of course the poor kid who wrote it is just repeating what he learned in junior high. You can hardly blame him — this sort of propaganda is what the kids are taught.
The brighter kids realize it’s a load of b.s. designed to make them obedient little servants of their wise overlords who protect them from the evil corporations, and seek out the truth. The slower kids memorize what the teacher tells them, reproduce it on the test, and repeat it like drones for the rest of their lives.
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August 28th, 2009 at 9:49 am
so you assume that while CEO’s are greedy, evil people, government actors are wonderful, honest and act only with integrity when redistributing wealth, right?
Wrong.
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August 28th, 2009 at 12:58 pm
atticus1104,
I’m not sure if you were joking with, “Please explain how the steel industry, and oil industry was not monopolized earlier in this nation’s history?”. Are you going to sit there with a straight face and say that?
Carnegie brought prices down to under $20 a ton from over $160 a ton in about two decades. Rockefeller brought the price down of kerosene to a mere 10 cents per gallon from one dollar per. Both men did this while tremendously increasing output. Do you comprehend how innovation like that benefits society by creating wealth and raising the standard of living for everyone?
This site needs to be Dedicated to Fabricating Ignorance if it’s where people like you, atticus, think they are being educated.
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August 28th, 2009 at 2:41 pm
Hello all,
Wow guys, why all the hostility? This is a silly blog that maybe gets a handful of people to read it.
I’m all for a spirited debate, but come on…
I actually didn’t read through all of the comments, so I will just respond to Jake’s.
As for Carnegie and the steel industry. Carnegie actually sold his steel industry to J.P.Morgan who, with the help of high tariffs set by corrupt politicians, was able to keep foreign competition out which allowed him to maintain a price of about $28 a ton. The problem is, that price could be set at just about anything Morgan wanted because there was no other place to purchase steel from.
The main point I want to make about this is, yes he was able to keep the price of steel down through technology and innovation, and output up through the horrible exploitation of his some 200,000 workers, but there was little competition.
A larger issue that reared its head during this time was vertical monopolies (or controlling every aspect of something’s production).
Take for instance, Rockefeller and Standard Oil. Rockefeller cut deals with the railroads to ship his oil and unfairly charge other companies too much for transportation, eventually putting Standard’s competition out of business.
Rockefeller had his hand on several companies, which allowed him to control the oil from extraction to the sale. That is a monopoly.
A severe concentration of wealth does not raise the standard of living for everyone. Workers in these factories worked atrocious hours for obscenely low wages.
I really don’t expect you to see my point, and I probably won’t concede your points either, but I am definitely up for some spirited banter, just keep it friendly.
Cheers Mate(s)
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August 28th, 2009 at 3:43 pm
Jake LeMaster:
“Do you comprehend how innovation like that benefits society by creating wealth and raising the standard of living for everyone?”
While in concept you would be correct, in reality, it’s not. There have been several reports that state this country is experiencing the largest disparity in wealth since the Gilded Age.
While those at the top of the private enterprise ladder have been enjoying ever-increasing salaries and bonuses, and have done quite well these last years, the average workers salaries have been stagnant, and have not kept up with the rate of inflation, which stagnation has actually decreased the standard of living for the average worker.
How is it fair that those at the bottom, who make it possible for those at the top to live the lives they’ve become accustomed, are shafted once again?
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August 28th, 2009 at 6:12 pm
Harsh working conditions? To quote Robert Murphy:
“Capitalists had no power to compel workers to enter their factories; the workers did so because they viewed doing so as better than begging on the streets or turning to crime or prostitution. The factory system inaugurated by the new capitalist institutions was vastly more efficient than the medieval guild and manorial system, allowing an explosion of population. Millions of people literally owe their lives to modern capitalism. It is true that working conditions in the 1800s were wretched compared to later times, but improvements were possible only because of capital accumulation, which raised the productivity of labor. The doctrine of exploitation is most clearly exploded by asking for whom the factory workers toiled. Mass production creates products for the masses; the landed aristocracy did not buy the entire output of the factories.”
Ceteris paribus, it would be preferable to work in a location with air conditioning, rugs, the atmosphere that fine art and quality furniture can bring to a job setting. However, other things are not always equal. Less wealthy people, in particular, would far more prefer that more of their salary be given to them in the form of money wages, and less in terms of better working conditions. As for the employer, the method in which he pays out salaries is a matter of complete indifference to him. To the company, “a buck is a buck is a buck.” That is, if the employees want a very high proportion of their total earnings in money, and very little in the form of working conditions, then the business has every incentive to acclimatize them. And The employer who pays more to employees than they produce for him is set on a path to insolvency. (Nor can wages drop much below productivity levels, or there’ll be a high quit rate, as other firms raid these workers. e.g., if a worker’s productivity is $4 per hour, paying him $6 per hour will require a loss to the owner of $2 per hour. If the wage is only $2 per hour, profits of $2 can be earned, but some other employer will entice this worker away from his original employer with an offer of, say, $2.25, and then another at $2.30, and yet another at $2.35, until, at equilibrium, the wage will tend to reach $3 per hour.)
The worker considers the working conditions and the value of leisure as well as other nonmonetary factors in reaching his decision about employment. Those lines of work associated with notably favorable nonmonetary characteristics would attract a greater number of workers than those characterized by significantly unfavorable working conditions. Higher wage rates or prices than otherwise necessary would be paid those working in the generally disliked jobs; conversely, lower wages than otherwise required would be paid to those employed in the generally favored jobs.
Better working conditions can only derive from increased capital. You can’t say that this isn’t true, any moreso than you can say that if cavemen banded together in the Stone Age thousands of years of human hardships could have been prevented.
Anytime a labourer demands a wage higher than the market level, he lowers productivity. This combined with lower working hours can greatly effect an economy. The broken window fallacy warns us to not just see ‘that which is seen,’ but also that which is not.
By having higher wages than the market level, and by having lower hours, they hurt productivity. That means fewer goods are being produced. Fewer goods means higher demand for goods that are remaining. Higher demand for less goods = higher prices. While the worker’s monetary wages have increased, his ‘real wages’ (his money purchasing power) has actually decreased. A cheap price (wage) for labor is much more beneficial to poor workers than a higher price.
The comment that “workers in these factories worked atrocious hours for obscenely low wages.” again takes the option out of working, and makes it appear as if they are being obliged by the gun and prison. This is not true.
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August 28th, 2009 at 9:17 pm
How can you all take a website seriously that says you get free health care. Wake up people it is not free. If it was free, then why is there a line on my paycheck for a medicare deduction. And you say schiff is the dumb one, you all are idiots.
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September 10th, 2009 at 10:16 am
“The free market is not some emotionless, all knowing entity. It is controlled by humans who are susceptible to greed, corruption, and exploitation. The free market is only as pure as the fallible human beings that control it.”
I would remind you that the government is not some emotionless, all knowing entity either. It is controlled by humans who are susceptible to greed, corruption, and exploitation too. However the factor that you seem to miss or ignore is that the government has guns, the free market — for all its faults — does not.
Forcefully taking from Paul to care for Peter was never the America that the founders of this country envisioned either and they understood full well the corruption that would stem from such practices.
While the founders understood the need for certain government provided basic services, our founders also knew full well that it was not moral for an individual to steal and they knew full well that it was no more moral when the people vote weasels into office to do their bidding for them.
Government forced charity is a fraud worse than all the Bernie Madoff’s in history; it is slavery and tyranny by the mob that is ultimately backed up with a gun if you do not comply.
Read your constitution and quit trying to read special privileges into it that are simply not there… The blind and bleeding heart welfare statist — left and right – who assume people are idiots are breaking this nation and many of our founders warned us of the ultimate outcome of such folly.
“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them“ “…Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition…” “…The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first.” ~ Thomas Jefferson
…But then I guess the founder of the Democratic Party would even be seen as a right wing nutcase by today’s lowered standard.
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September 10th, 2009 at 10:41 am
This is a silly post. Go back to Econ 101. Easy rebuttal:
“1. Quality goes down because corners must be cut to save money and compete (See China).”
Only if no one wants to pay for this “quality”. Gas stations went from full service to self service because no one wanted their “high quality service”. I’m perfectly happy with my Chinese-made goods thank you. Maybe you just need to learn to shop?
“2. Wages go down, because it pits workers against one another. For example, if there are no labor regulations, a woman can be paid significantly less than a man to do the same job. This forces wages down, because now a man must settle for a depressed wage if he wants a job.”
But if you do have labor regulations, then that woman can’t get a job. This is better how? Sudden increases in the labor supply will always have bad effects until new jobs are created for the extra labor to do, because the total amount of money available to pay for labor cannot change quickly. Regulations can shift the effect from wages to unemployment, but that’s about it. Regulations cannot magically increase the total amount of money paying for labor.
Also you are forgetting the output of that female worker. Cheaper female workers meant more tanks and less debt for the United States in WWII. Cheaper Mexican or Chinese labor today means more goods for all of us. Wealth ultimately comes from the amount of goods we enjoy, not from wages. If that “depressed” wage the man has to suffer through can now buy him an ipod, a netbook, and a million other things he didn’t used to be able to afford, how is he worse off?
Wages ultimately don’t matter, it is what you can buy with those wages that matters. All through the “recession” since year 2000 people have ignored the huge gains in quality of life brought to us by the internet and other new technologies, because they have focused on monetary measures of wealth and narrow measures of goods prices. Who cares about depressed wages when the internet comes along and doubles your quality of life? Would you really want to risk losing or delaying such innovation just to get 5% higher wages or something? So you can buy a new horse and buggy?
On profit
If “profit” is so evil, what is the alternative? What other means should we use to motivate people to go to work?
Answer: THERE IS NO OTHER MEANS. Thus far in history, the only other means invented have been:
1. Force. This is called Slavery, serfdom, etc. Very Bad.
2. Nationalism. Love of the Fatherland, Mother Russia, etc, Communist brainwashing. Often turns out even worse than #1 because at least if you are a slave your owner cares about your health.
3. Family. Work for the welfare of the tribe. Works in primitive societies but can only be extended to about 150 people or so before things get impersonal and the love faucet dries up. This is what Communists try to tap but it quickly turns into #2.
Whelp that’s about it. Sorry socialists, there is no viable alternative to working for profit.
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September 10th, 2009 at 11:34 am
C’mon, the blogger has a Che Guevera pic.. and we all know that admirers of Che know all about the economy and are full of teenage wisdom. Every undergraduate social studies student knows that. Don’t confuse us with the facts!
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September 10th, 2009 at 12:14 pm
“Okay, to be fair, that is what Lawrence O’Donnell said, but wasn’t that sort of what Peter Schiff was getting at?”
No, Schiff is not blaming the recipients, he’s saying that the system is fundamentally flawed.
“First, it is Peter Schiff’s belief that government should not have any say in the market whatsoever, and that all regulation is bad for the market. I think everyone can agree that this represents Peter Schiff’s view quite accurately.”
While Schiff apparently follows Austrian economics, I don’t think that he’s a full-blown market anarchist or anarcho-capitalist (like I am) but rather a minarchist who believes in limited government.
“The free market is not some emotionless, all knowing entity. It is controlled by humans who are susceptible to greed, corruption, and exploitation. The free market is only as pure as the fallible human beings that control it.”
All true. But the free market is controlled by everyone who participates in the marketplace, including you and me, and not by some oligarchical organization or force. Government, on the other hand, “is controlled by humans who are susceptible to greed, corruption, and exploitation.” Worse, government is controlled not by everyone, but a relatively small, oligarchical group of people who are more motivated by special interests than by any desire for the “public good”. Read up on Public Choice theory.
“If free market principles were allowed to rule, like Schiff wants, what that means is everything is based on maximizing profit.”
Profit is simply an indicator of how good businesses are at meeting consumer demand (i.e. providing the goods and services that you and I want). Businesses that don’t meet consumer demand earn losses instead of profits, and have to either change their practices and policies, or else go out of business. It’s impossible to have that kind of accountability in government.
Do wages go down in a free market? Certainly, without a minimum wage law, employers would desire to pay as little as possible for labor. But that’s true even with the minimum wage law, and yet most people get paid more than minimum wage–why is that? Why aren’t most people simply paid the legal minimum wage? Because, while employees compete for jobs, employers compete for labor. In a free market, where regulations could not be used to restrict their competition, employers would have to compete even more fiercely for good employees, and wages would probably be even higher than they are now.
“Holding the government accountable for its actions is called Democracy.
Holding a CEO accountable for his or her actions is called impossible.”
If you don’t like Wal-Mart, you can shop at any of their competitors any day of the week. If you don’t like McDonald’s, there are easily several other burger shops you can go to, or fast food places of other kinds (mexican, pizza, chicken, etc). And for that matter, there are other types of restaurants if you prefer not to have fast food. You “vote” whenever you decide where to spend your money (or not spend your money) whenever you want to. You can even change your “vote” every day if you want to.
With government on the other hand, you can only vote when an election is held (usually 2 or 4 years, depending upon the particular office). Sure, you can vote a scoundrel out of office, IF you can get enough other people to agree with you, and assuming that the other candidate isn’t also a scoundrel. Ironically, government has restrictions on Third party access, which limits your voting options rather drastically. It’s like only being able to shop at either Wal-Mart or K-Mart, and whichever one you choose, you have to wait 2 or 4 years before you can change your mind and shop at the other store. Even though you’d actually prefer to shop at Target or Sears, they aren’t allowed as an option.
Besides, if government is so easily accountable through democracy, then how did the corporations and special interests come to have so much more power over government and influence on the regulations than “the people” in the first place? No, there are real problems with democracy. The only effective way to restrict the corruption of government by special interests is to limit government. The less it can do, the less reason there is for them to seek influence over it. Corporations and big business can’t run amuck without government privilege, and in a free market are more susceptible to consumer demand (i.e., what you and I want), not less, because they would have little or no government protection. True, they could act criminally, but since that is not a legitimate free market action, then it would be proper for government to “interfere” in those cases. The problem with most regulations is that they aren’t restricting criminal activity, but non-criminal activity and voluntary transactions. On the other hand, there’s no reason to think that the market couldn’t devise better ways of dealing with criminal activity, too, but I’ll reserve my anarcho-capitalist rant for another day.
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September 10th, 2009 at 2:15 pm
I love this quote from the blog:
The free market is not some emotionless, all knowing entity. It is controlled by humans who are susceptible to greed, corruption, and exploitation. The free market is only as pure as the fallible human beings that control it.
This is especially true of government. It is controlled by humans who are susceptible to greed, corruption and exploitation. Government is controlled and owned by the very corporations it purports to regulate. If you think your legislative representative is not beholding to the folks that contribute to the campaign – then you’re living in a fantasy world. In the free market, however, all transactions are voluntary. When government gets involved it is coercive. So I go with Peter Schiff on this. It’s only common sense.
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September 10th, 2009 at 3:17 pm
One other difference that I unintentionally left out of my post is that the free market consists of people making voluntary exchanges with each other, while the government’s primary tool is coercion, not voluntary exchange. Sure, sometimes it is necessary to use force, but only for defense or justified retaliation. A lot of government policy is just out-and-out initiation of force.
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September 10th, 2009 at 5:55 pm
Christ, the trolls are just slithering out beneath the pond scum.
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September 10th, 2009 at 6:22 pm
Well, what I think is that the von mises posters are in a heady world of perfect peer-to-peer capitalist transactions – a bit unreal when at ground level we get pummeled with offers for sham-wows and onion choppers. I’m sure I desperately need those things, don’t I?
From the von mises site:
“The role of government in a capitalist society is very simple: provide transparency and enforce fraud. Only a government that does this and only this may preside over a true liberal-capitalist economy.”(Mises Daily, Nick Scipione)
I can get on board with that. And, when the prevailing practice is ‘transparency’ about products rather than tricky manufactured consent marketeering – I’ll be ready to go for the whole pure and unfiltered laissez faire program.
So what about transparency. Tell me, will I really only be fully-alive and fullfilled if my hair has no split-ends? Did you have to blow up a mountain-top and destroy my favorite landscape to make your widget? What happens to it at it end-of-useful-life, is it going to pollute my drinking water in the landfill? Are you going to conceal those facts from me when I decide whether or not to buy?
It’s a nice theory, sort of, but really it’s your own utopia for the time being. Only when your free-choice/market exchanges are really peer, as in truly knowledgeable qualified parties to an agreement does it become as rational as you so vigorously present.
Health care wise – the largest [ie. universal] single risk-pool is going to be the cheapest all the way around – we should go for that.
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September 10th, 2009 at 6:37 pm
Dennis, that dude selling the Sham-wow and Slap Chop didn’t pummel you- he pummeled a hooker that bit his tongue.
Anyway, your comment is almost as good as the original post. I suggest you dwell on the thought about the knowledge problem you mentioned, and ask if that same problem, that you prescribe to the market, does not also apply to the state.
You may be disappointed.
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September 10th, 2009 at 7:11 pm
Everything wrong in our markets and economy is all due to The Federal Reserve. Abolish the FED and we won’t have endless BS wars, no boom-bust business cycle, stable money so you can plan for retirement, no income taxes so you can afford health insurance or whatever else you want to buy. It would also get rid of a lot of corruption in government and corporations. It would would be the best thing in the world. Read “creature from jekyll island” by g edward griffin or “end the fed” by Ron Paul for more info.
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September 10th, 2009 at 7:21 pm
Katie, we’ll still have to worry about the government permitting FRB.
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September 10th, 2009 at 8:10 pm
Che, the visitors from Mises.org are addressing the details of your post, but don’t seem to be focusing on the fundamental point. When you speak of corporations using lobbyists or bribery to pull government strings, you’re quite right: they’re pure evil.
The commenters here appear not to be addressing that issue, which may give the impression that they absolve the corporations and blame the government. I think that’s a miscommunication on their part, because they’re failing to point out something to you that they are taking as given.
That is, the fundamental distinction between the hitman and the man who hires him. One has a gun and kills people. The other is guilty of conspiracy, etc. Both are vile criminals. It’s the same when a corporation bribes a politician into giving him a monopoly–on providing electricity to Detroit, say. Both are vile criminals. But the politician is the man with the gun in his hand. He decrees prison for competing providers; and if they resist this kidnapping, they will be forcibly subdued or even killed.
If the corporate fat-cat tried to imprison or kill competitors, they could defend themselves–with deadly force, if necessary. But there’s no defense against the politician. If you resist his demands, he will send local enforcers with guns. If you resist the local enforcers, he’ll send SWAT teams, helicopters, feds. If you resist them, he’ll send soldiers and tanks. When you resist the political muscleman, you’re a “criminal.”
That’s why, although I don’t trust the government OR Walmart, I’d much rather have Walmart after me than the government. Even if Mr. Walton were a madman, and hired gunmen to kill me, there’s a CHANCE I can defend myself successfully. I won’t have the near-infinite resources of government arrayed against me, and a nation more-or-less united in the conviction that I’m a bad man deserving whatever fate government decrees for me.
By reducing government, deregulating, etc., we’re advocating that the armed hitmen be brought under control first. We don’t condone the SOBs that hired the hitmen; we’re just much more optimistic about the odds if we eliminate their muscle.
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September 10th, 2009 at 8:15 pm
There are sixty-some comments here, I don’t have the time or will to read all of them as they undoubtedly repeat one another, so forgive me if I worsen the situation with more yet more repetition.
First off, the original article here is Marxist. This is not an insult, simply fact. The author maintains that markets lead to the extortion of one group of people by another, employers exploiting their employees. By definition, in a market this cannot be. Would you continue working in a job if you felt you were being given a fraction of your true worth? No, you would search for a new job where your skills (if you have any) will be rewarded.
Mr. Woods’ response was well-written so far as it was grounded in reality. He refuted the original article point-for-point with well-regarded economic knowledge, things you learn in the first two months of a microeconomics course. He was very crass in his personal assessments of his opponents, the reason for which I fail to see, as ridicule rarely converts.
The rebuttal above, however, ignored the well-written parts of Mr. Woods’ response, those covering economic and political theory, and instead focused on Mr. Woods’ personal attacks. “Che” did not refute, nor even attempt to refute, a single point of Woods’, instead telling him that he ought to play fair while attempting a high-ground, conciliatory tone that masks the facts:
Che has no idea what he is talking about.
Economically, Marxist theory is rubbish. Politically it is worse. Despite Che’s assertions that he isn’t a socialist, his postings here say, in essence, “The market is not to be trusted, and the government, though only a bit better, can and will solve it.” Che says he doesn’t feel he has control over business but he does over government. Yet, he influences the level of power of every corporation in the world, as his purchase or his choice not to purchase any given good will ultimately show up on balance sheets everywhere. This is palpable influence, control even. Conversely, every 2/4/6 years he has one vote to cast among hundreds of millions, and if his decision here is not in line with 50%+1, his decision is rendered pointless. A vote cast for a loser is no vote at all.
And in response to the posters below, a number of you expressed disdain for corporations. I am no corporate apologist, as the acts committed by CEOs are often terrible. The key here is not that the terrible acts, but what allowed them. Why could Enron screw its stockholders and employees? Because the government poured subsidies on its natural gas business (since NG is cleaner than coal or oil) and the lauded regulatory system turned a blind eye to or approved their philandering.
Also, one post caught my eye. If we “regulate corporations out of existence,” and eliminate their ability to create profit, why would anyone bother to produce the “goods people need”? Assuming you work at all, would you work for free simply because someone else demanded whatever it is you do? If you were coerced, forced, to work without benefit, would you be happy about it? Would you be enthusiastic that you are being legally robbed? Or would you be pissed that you have been declared to be of no value and find every trick and loophole to get out of performing the work?
As Che says, companies are run by people. They are not separate entities, they work on the same principles. Treating companies as evil, government as fair, and people as virtuous is like saying cheese is both smelly, yellow, and delicious. All of the assertions are correct, none have any real meaning, and they all just reflect a different facet of what is being described.
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September 10th, 2009 at 11:29 pm
Those who claim that the market failed because it was not regulated haven’t read all the regulations. Nor has anyone else I’ll bet because quite frankly who has the time? The fact remains however that the regulations on the financial markets were extensive and highly intrusive and distorting. The regulatory treatment of Frannie and Freddie alone did more damage than the “free market” ever did. The top five causes (not in order) of the GFC were 1) the Fed (govt.), 2) Frannie and Freddie given special treatment (govt.), 3) generous, well let’s be honest fraudulent ratings given to mortgage backed securities (a cartel enforced by government) 4) guarantee of bank deposits (govt.) 5) the enforcement of th eCommunity Redevelopment Act in such a way as to persuade bankers to give loans to minority deadbeats (govt.), note that they were already lending to good minority applicants. So how is it the free market’s fault?
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September 11th, 2009 at 4:17 am
Che,
Do as you say you intend and read Woods’ Meltdown. Make your way over to mises.org and poke around a bit. It’s one of the most resourceful sites I have ever encountered. Lots of articles and plenty of books available for free.
Perhaps the saddest and most common difference between many Liberals (how I used to describe myself) and Classical Liberals (the term I now use describe my philosophy) is that both groups concern themselves with so many of the same issues but have opposite solutions. In general, liberals today believe the answers to our ills are to be found thorough the State while Classical Liberals recognize the solutions are to be found in the market. Liberals seek to empower government. Classical Liberals seek to empower the people.
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September 11th, 2009 at 8:12 am
Michael Price:
“So how is it the free market’s fault?”
Does the word ‘greed’ ring a bell? It’s painfully obvious that the free market cannot regulate itself. One of the mistakes Clinton made while president was repealing the Glass-Steagal Act, which was in place to help prevent exactly what happened to the financial market.
In my mind, the Glass-Steagal Act should be restored in order to prevent another meltdown such as we’ve experienced. The next time, it could be much, much worse.
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September 11th, 2009 at 11:16 am
Per Che’s rebuttal, corporations cannot do their evil without the power and legitimacy of the government–it’s that simple. As I said, before, I can choose any day of the week to not shop at Wal-Mart, as they have many competitors. Government, on the other hand, tends to restrict my choices, and voting politicians out of office is not a very effective way of controlling government.
The fact that fallible human beings are involved in the market makes no real difference, beceause fallible human beings are also involved in government. The real difference, as I said before, is that government uses coercion to limit your options, while the market works to provide more options. Absolute and perfect freedom doesn’t exist for either the market or governments to provide, but I would prefer to work with those who give me more choices, not fewer.
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September 11th, 2009 at 11:59 am
“Does the word ‘greed’ ring a bell? It’s painfully obvious that the free market cannot regulate itself.”
It’s not clear what you mean, Veronica. Are you talking about the greed that encourages businessmen to offer better and cheaper products and capture more market share, or the greed that encourages them to capture more influence over government? Why does anybody think that giving government more power is somehow going to restrict the corporations’ influence over government? The exact opposite is true. The free market certainly can regulate itself, because the free market is decentralized, the ultimate in checks and balances, and doesn’t include the power of government–it’s the government and its influences that cannot be regulated, and more government regulation won’t change that, no matter how much it interferes with the market. Intentions aren’t so significant–the market provides good incentives for people to act on, while government power provides bad incentives for people to act on. Greed under good incentives is beneficial to society; greed under bad incentives is harmful to society.
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September 11th, 2009 at 12:16 pm
Veronica,
Are you just going to ignore Michael’s five examples of governemnt distortion of the free market?
Does the word “fear” ring a bell? In a free market, people’s greed for gain is held in check by their fear of loss. The only way to remove this natural free market check is through some form of force or fraud. Government interventions (like the five Michael listed) fit the description. Government interventions eliminate the natural check on greed and perpetuate the problem.
Take Fall ‘08 as an example. We saw the stock market tanking, and big financial insitutions/banks (AIG, Lehman, Bear Stearns, WaMu, etc.) humbled beyond measure. Do you know what that was? It was the free market’s (what remains of it) attempt to correct the mistakes of the past. The institutions that had been reckless and irresponsible were going to receive their just comeuppance. But then the government came in and bailed them out. It is downright shameful that the government came in to rescue the reckless at the expense of the prudent.
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September 11th, 2009 at 7:32 pm
“In general, liberals today believe the answers to our ills are to be found thorough the State while Classical Liberals recognize the solutions are to be found in the market”
More to the point, left-wingers regard force as acceptable, and classical liberals, as the name implies, favor liberty.
The more our dealings with our fellow human beings are voluntary, the better off we all are. One needs only a modicum of familiarity with history to know this.
-jcr
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April 14th, 2010 at 9:11 am
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