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Comment by georgeecollins | Hacker News Reader

In the US the rhetoric is "free market". But in political practice this means responding to large corporations who often want laws that make if difficult for others to compete with them. Telecoms want to be able to coalesce into an anti-competitive oligopoly. IP holders want to control their rights for longer and longer. Commodity producers like farmers want state subsidies.

Americans love capitalism because it is the best system known to distribute resources. But we need to separate the idea of being pro-capitalism from the idea of being pro-corporate lobbying. They are not always the same.

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Capitalism is great because it divides decision-making authority in resource distribution to many people who can't distort the market on their own.

The disturbing trend I see is more and more decision-making power collecting to relatively few people, whose power is enough to change the market environment rather than reacting to it.

Our democratized political environment is far from perfect, but I'll certainly choose that over Communist despotism, and I fear if we don't do something we'll continue our slide to privatized oligarchy/despotism.

The problem is that American culture has a permanent belief that any form of socialism is guaranteed to come alongside totalitarianism, and an end to liberty. Which isn't necessarily unfair to believe- the two have a history of correlation.

But the result of that fear it's a form of corporate totalitarianism. You're free to choose your fate, but the options were dictated ahead of time by those in power, those with wealth. And all of the options will give them more power, more wealth.

The system exists today, sadly, in a form where those with wealth and power are also able to strongly influence culture, beliefs, society. And once you control those, you can control a democracy.

There's no such thing as a permanent belief. The strong association between socialism and totalitarianism only started in the late 1940s as a reaction to the horrors of the USSR. Before that, socialism had been expanding in America with widespread public support.

I'd say a major turning point was the Bolshevik Revolution, which was instantly demonised in the US, and led to Wilson's "red scare" - which effectively destroyed organised labour. It rose again in the 30's only to be crushed again after WW2

You make an important point. Those with the most power in this country are perhaps the decision-makers of media companies (NYTimes, WaPo, CNN, FOX) and online platforms (Google, Facebook, Twitter). Funny that their political leanings are mostly homogeneous.

I'm not an American, but I don't despise socialism because I think it will bring totalitarianism. I think it's an unnatural and unfair system. And I think this mismatch with natural order always results in failure and collapse, which has many forms. One of those is totalitarianism.

How do you square those beliefs about inevitable collapse with the lack of collapse in many advanced countries who have socialist-inspired policies?

They haven't collapsed yet. See also, Spain, Greece, Italy...

Must be nice to have a non-falsifiable theory of politics and economics.

Italy didn't look very collapsy when I was there last year.

See for us the difference between socialism vs Capitalism is like the difference between eating unhealthy (but tasty) food vs eating healthy food.

Not everyone who eats unhealthy food dies, nor does not everyone who eats healthy food lives to see 100. But fundamentally looking at other people who have managed to live despite of eating unhealthy food or some combination of these isn't the way to go.

The people who have lived to see 80 despite of eating McDonalds burger everyday, have done that due to a combination of good genetics + some other redeeming qualities. This does not mean that everybody should eat McDonalds or anyone talking about harmful effects of unhealthy food should shut up because clearly there are people enjoying their lives while eating unhealthy food.

Take for instance, an African country trying same socialist policies will not see the same effect as a European country trying them. Same thing goes with Capitalist policies.

Socialism in Russia was very 'Russian', and when they got Capitalism, it's again very 'Russian' in nature. In fact when you go back to Tsar's times, you'd find the same 'Russian' entity about their culture.

There are very few actually socialist countries at all. Almost every country right now is capitalist with varying tax rates.

Of the few truly socialist ones, the only one I wouldn't consider an outright failed state is China, and that's a can of worms unto itself.

Yes, and it is a good thing I merely said they had socialist-inspired policies, not that there were socialist countries.

This reminds me of Cloud Atlas...

There is a natural order to this world, and those who try to upend it do not fare well.

The natural order is the law of the jungle. The strong eats/exploits the weak. Would you agree that this is the most natural order? I think the whole point of civilization is that we can do better than that.

Let's define socialism as the collective control and ownership of the means of production and their profits, and capitalism as the private ownership of these things. In this case I'm not sure which is intrinsically more "fair". I care deeply about individual freedom and not having some collective telling me how I should live my life. But at the same time I care a lot about social justice and not having the rich and powerful grind the poor for personal profit.

It seems obvious that a good system would be one that strikes the right balance between these conflicting interests. It certainly isn't whatever is most "natural". Nature serves no purpose.

Also, a force we have to contend with is the development of technology. I think it has the consequence that the "right balance" is shifting more towards intervention from the state: due to increasing automation, the capital is getting an ever greater share of profits. At some point the state has to intervene to enable some redistribution of wealth.

> Let's define socialism as the collective control and ownership of the means of production and their profits

> I care deeply about individual freedom and not having some collective telling me how I should live my life

Indeed, you're critiquing an inherent characteristic of socialism, that you even mentioned in your own definition in the first quote. Good so far.

> capitalism as the private ownership of these things

> I care a lot about social justice and not having the rich and powerful grind the poor for personal profit.

... Wait what? Capitalism doesn't prevent social justice and doesn't mean that the rich and powerful grind the poor for personal profit.

This is a textbook false equivalency.

> At some point the state has to intervene to enable some redistribution of wealth.

Not really, in a true capitalist society the producers would know that they need consumers or else they'll lose their income, it's self-correcting. A state is tangential to that.

The reason the USA might or might not be going into a totalitarian oligarchy is because of the state, not in spite of it.

And, unfortunately, you've just demonstrated a common problem in economic and political discourse: that issues quickly descend into one dimensional, black & white, us vs. them absolutionism.

Not surprisingly this seems to occur most commonly where public education is underfunded or nonexistent: you end up with an undereducated electorate putting undereducated people into positions of leadership who then make underinformed decisions.

Sociological, economic, and political issues are multidimensional and must be treated as such.

TL;DR Education is important. Stop electing dumb people.

You make a good point and I agree and can see the correlation in so many governments.

However, won't educated people in power make informed decisions for their own benefit?

I'm willing to bet some, if not most, of the worst leaders in history were highly educated. Being educated doesn't make you a good person.

I'm willing to bet being educated makes you more aware of bad decisions.

OR, being educated simply means that your delusions and deceptions are on another level.

Possibly makes it easier for them to defend their delusions and deceptions as well.

When people are educated beyond their intelligence it makes them more convinced that their bad decisions are really good decisions.

They certainly would (and undoubtedly have.)

However, I would surmise that a better educated society, having learned how to apply rational thought, would reduce the likelihood of that occurring and/or would minimize the damage when it does (and it would.)

Their own benefit is 1) getting re-elected, and 2) being remembered through history as one of the great leaders.

Politics are a horrifically inefficient and error prone way of enriching yourself. To the extent that politicians value money, it's usually about getting elected again, possibly to pursue higher offices where they think they can have more impact.

Our corruption problem is not so much about money for politicians to spend personally, but to spend on further campaigning.

> Stop electing dumb people.

You don't see irony in that statement?

The funny thing is that your "disturbing trend" has been the status quo for a long time and not far from a more efficient version of the Communist despotism you fear.

Also, your statement that the "democratized political environment is far from perfect" was the understatement of the century.

> Capitalism is great because it divides decision-making authority in resource distribution to many people who can't distort the market on their own.

There are plenty of cases where it's rational for participants with the necessary resources to participate in some portion of the market to work together to "distort the market." This is why antitrust law is designed not just to target monopolists, but also cartels.

Communism != socialism.

Communism and socialism are very different systems.

Communism includes centralized government control over markets, and pseudo-religions. It falls apart because sane people come to power and realize just how stupid it is.

Socialism, as practiced in some European countries, has free markets. That's a critical difference lost on people who bring up communism in these kind of discussions.

> Communism includes centralized government control over markets, and pseudo-religions. It falls apart because sane people come to power and realize just how stupid it is.

You mean state-capitalism. Communism is where the people, not the government, own the results of production. An example on a much smaller scale, existing inside a different system, would be workers being given shares in the company that they work.

I used to believe in "free markets" until the financial crisis of 2008 . Then it became clear that the people who shouted "free market" the loudest didn't like it when market forces hit themselves. And they changed the market rules to their benefit. It's a rigged game.

We should replace "free market" with " functioning market". It's pretty clear that a lot of markets are dysfunctional and benefit only a few.

Or actually mean free market when we talk about "free markets". That is, we should make it very clear that the market rules shouldn't change to benefit specific corporations.

Yes. I had a similar realization as GP during the financial crisis. I realized how small a minority of people actually want free markets, themselves included.

That's all well and fine until one market segment (finance) can grind capital for unrelated industries into the ground by crunching credit. It's a classic ecosystem problem, some of the critters in the pond are going to rise above others in the chain, and that can cause ill effects everywhere if not properly controlled.

Given that one of the defining characteristics of humanity is that we've been cultivating ecosystems for millenia, it's not that much of a stretch to say we're going to cultivate our own invented ecosystems for the betterment of the system. It's actually a stretch to say -- we're just going to throw all these actors into a system of shared responsibility, and they'll just work it out.

In my view there is no free market. It's all man made rules. The only free market I can think of is total anarchy with no state enforcing any rules. The (probably physically) strongest wins.

What about all the market rules that were originally created to protect specific (groups of) corporations from competition?

I'd argue they should change in response to challenges by new entrants, unless actually necessary to deliver some actually valuable benefit to the public.

Stopping corporate-driven regulatory change now just locks in the position of whoever got their regulatory capture done early.

The fact that there were those too big to fail who got bailed out with people's money tells you that this freedom is fake. Free my ass. But you have to sell the dream to dumb masses.

There were no free markets before 2008 and none after, either. So what is your point? Had we real free markets, a one major thing would have happened--all those banks that broke the law and did so many hugely unethical things would all be gone right now and we could recover. Instead, they all got bailed out--with our money (see: gas prices during that time, as well as direct transfers via TARP, low interest rates, etc.).

If we had real free markets, we would have sound money, we would not have a huge federal government with multi-trillion dollar budgets, the change in your pocket would still be worth something, not that anyone even BOTHERS with change anymore. I can go on and on, but the point is we aren't free and THAT is the problem!!!!

None of us have ever experienced anything remotely free market in our entire lives in the macro sense. Hell, people are even afraid to simply haggle on the price of a new car and we're even fearful of cash money nowadays.

" So what is your point? "

My point is that the people who are shouting "free market" the loudest don't like it when they have to experience it themselves.

Free markets don't experience inflation? A free market-having nuclear global superpower with 300M people wouldn't have huge budgets?

> Free markets don't experience inflation?

A free market with free money (and not a govt controlled money like today), would experience a natural inflation or deflation. Most likely it would experience a natural deflation (considering it would have gold or silver as the basis of its currency).

The problem is that people like to skip over the gritty details about what makes a free market work well, and in so doing lose a lot of foresight into how to appropriately respond to some problems. Markets work better when information is freely available and easily understood, and when people act rationally. Humans aren't always all that rational, and information is routinely obfuscated and distorted. What's worse, sometimes we pass laws to make this worse instead of better because it's not well understood by some lawmakers.

"Free market" does not mean "unregulated market". Free markets are those in which there is healthy competition. Regulations that oil the gears of competition are pro-free-market.

But it may be worth switching language to something like your "functioning market" because at this point it will be hard to convince most people that this is what "free market" means.

Another step along the euphamism treadmill...

I think most people believe in free markets for people who sell things for them, but prefer protection for their own goods and services. It is human nature. I would like to unpack our policy choices from an ideological wrapper like "free markets", which in theory everyone is in favor of and always relative. The label lets people get away with the lazy thinking that if business lobbies for X, it must be good for the economy, and if government wants to regulate Y it must be bad for the economy. Neither statement is always true. What we tend to believe is based on our prejudices rather than thinking about each choice on a case by case basis.

Exactly. Rent-seekers love to appeal to 'free market' capitalism while actually doing the exact opposite—using government power to create competitive moats.

I would love to be able to point to several specific examples of rent-seekers using government power to create competitive moats, but I like almost everyone , am not nearly well enough informed.

Intuit's lobbying to keep the federal tax code complex is a fun example.

How about law schools forcing everyone to do massively expensive degrees to be allowed to take the bar?

Keep in mind, you can support some kind of exam and educational requirement while asserting that the scope and scale of ABA requirements represents regulatory capture.

There's a surplus of lawyers, so they aren't doing a great job of abusing their capture.

There's also states that have an apprenticeship pathway to the bar, but people seem to think those are pretty onerous too.

The median salary for a lawyer in SF is about 200k a year. Try finding a lawyer who will work for cheap. Plenty of people are denied essential legal services because they can't afford a lawyer.

Sure, the regulatory capture of the legal market does extend to areas beyond the standard law school market.

Isn't everything overpriced in San Francisco? Does the median salary there even tell us anything about the market for lawyers in California?

The employment rate in the legal profession as lawyers for law school graduates appears to be about 70% historically for new graduates. Those who went to a top 10-20 school are doing very well and probably those to whom you are referring to in your sample. https://www.nytimes.com/2016/06/19/business/dealbook/an-expe...

Your general point is well taken, but do you think the fact that there is notable unemployment among law grads demonstrates that the ABA requirement (in most states) that people complete a very expensive three year degree is not an example of regulatory capture? Or that the existence of a non trivial number of law grads proves that the requirement does not affect the availability and price of legal services?

As you can probably tell, I do think the ABA does still function effectively as a cartel. In fact, the seemingly paradoxical co-existence of brutally indebted and underemployed law grads and the lack of available and affordable legal services may in fact be a consequence of cartel-like behavior in the legal industry.

If very smart people were allowed to self-study and take the bar, they might be able to offer lower cost legal services, free of the severe debt that accompanies a 3 year JD at UC Irvine, for example.

Honestly, I'm not even sure the quality of lawyers would go down if we eliminated the requirement. Why? Because really smart people who can learn rapidly may be turned off by a program that forces them to go through 3 years at 50k a year, when there are other fields that allow them to learn at a more rapid pace. If the bar exam remained rigorous, allowing smart people to learn at their own pace might actually draw more talented people in, yet in a way that would allow them to keep prices lower. It might also be possible to require some apprenticeship and coursework, but less onerous and with less debt. Keep in mind, regulatory capture can involve expanding reasonable requirements for licensure into unreasonable and onerous ones. Arguing that regulatory capture exists does not commit you to arguing agains any regulation.

I want to be clear this is just a thesis - I'm intrigued by the possibility, and as you can tell, it think there's a good chance it's true, but no, I'm not totally convinced, and it's hard to test - to really know, it would have to happen at scale, with enough time to ramp up, something that could take a generation or more.

It requires ~3500 hours of study in a law office or judges chambers (spread over 4 years), but California has a non-tuition path to the bar:

http://www.calbar.ca.gov/Admissions/Requirements/Education/L...

Yeah, there are a lot of edge cases. And of course, it's reasonable to point them out.

But again, do you think that, generally speaking, these edge cases (and notable underemployment among law grads) indicate that the ABA is largely ineffective in restricting supply and increasing costs?

Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying. Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories. Sometimes it seems like we have nothing but moats all the way down.

> Read up on Lawrence Lessig for an unpopular(sadly) view and many pervasive instances of corporate socialism and legitimized corruption, aka: lobbying.

I read his book about lobbying and campaign finance. I don't recall that it did much to point out specific cases where a person or corporation lobbied for the government to create anticompetitive conditions. It might have been a more persuasive book if it had.

> Mega corporates bleeding red until the competition can no longer afford to compete, closes shop and we are left with oligops in most categories.

This is indeed a thing that happens a lot. But it does not mean the government has been used as a tool to suppress competition.

I don't recall the title ATM, but he laid out a pretty thorough description on how ADM & Monsanto have gamed the system. So when people talk about farmers+subsidies is good to know a large % goes to those two companies. If memory serves was in excess of 80 or 90%. Quick search resukts didn't jump out at me.

And that is your healthcare and insurance industries writ large.

>Americans love capitalism because it is the best system known to distribute resources.

Well, as far as "distributing resources" goes, Swiss or Nordic capitalism (which Americans would call "socialism") is far better.

Spot on! But American exceptionalism will not ackgnowledge that. Freedom!

Yes, entrepreneurs are flocking there to take advantage of their low, low taxes and non-stagnant economies.

I don't care what "entrepreneurs" do.

Their citizenry doesn't have large swaths living like third world workers / peasants at the mercy of their corporate overlords and sudden illness and such, and that's enough for me.

Why the smugness? In particular, Norway's GDP per capita is notably higher than that of the US in both PPP and nominal measures. And both countries outrank the US in terms of the so-called "quality of life" or "where-to-be-born" index.

You want to be born there because they are relatively small groups born on top of huge reserves of oil. Not really applicable or relevant to the economy in the US.

Norway is not freely spending the oil wealth, instead it's going into a sovereign wealth fund with protections on spending. So I really don't think you can dismiss their success with their oil reserves.

Norway's approach seems to be a very smart way to handle the oil wealth and atypical of most outcomes. See the phrase "resource curse," natural resource riches like oil typically hurt the economic growth of the nations that should be benefiting from it.

Why organize one's society solely around the interests of entrepreneurs, or those who prefer a particular form of government?

So that you get innovations like the iPod, Facebook and various gadgets -- while working 60 hours/week to make ends meet and you're still a sudden illness away from debt.

http://www.independent.co.uk/life-style/gadgets-and-tech/fea...

Companies don't start because of a low tax environment, but because of market demand. If low taxes mattered, Kansas would lead the way in business creation and economic growth

Switzerland's pretty nice, actually. Sweden's economy grew by 3.3% last year, which is not bad at all.

Corporations of a certain size start looking and acting awfully Soviet. An economy dominated by mega-corps is almost indistinguishable from the Soviet economy. Over time due to regulatory capture and revolving doors it becomes a fully socialized planned economy, but one whose socialism only benefits the rich and the connected.

Yes! You are woke!

"Free market" is a political trope.

It has been used in various ways, in various contexts, over the years and generations. But at base, it remains a political trope.

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