>It's sad how people just don't believe that markets are good at all.
The problem is that the definition of "free markets" has been badly muddied. What we have in most of the real world are not free markets. It skews everyone's opinion.
The problem is that the definition of "free markets" has been badly muddied. What we have in most of the real world are not free markets. It skews everyone's opinion.
As a counter example, many places in Asia have gone more pro-market in the last decades and have benefitted enormously from it.
It's all a matter of degree, of course. Eg South Korea isn't made up of only free markets. But it has noticeably freer markets than North Korea. Or China pre- and post Deng Xiaoping.
Singapore is perhaps the closest to a free market place on earth, and is also one of the richest and safest.
I don't think this is necessarily a counter example. Certainly some individuals in these countries are much better off than they were before. The economies of these countries may be doing better, but this growth has increasingly come at the expense of a vast number of individuals lower down the pole. The youth of China moved to the city from farming towns and villages, and now work to enrich the CEOs and executives of Foxconn. Children in Bangladesh and India are spending twelve hours a day making shoes for Nike. The well off in these countries are much more well-off than they were before, but the poor are potentially in a worse/more inescapable position than they started.
> Singapore is perhaps the closest to a free market place on earth, and is also one of the richest and safest.
Singapore is a heavily authoritarian country in which the state directly controls large sectors of the market[1] and daily life.
Some quotes from the source that illustrate the extent to which the Singaporean government is directly involved in shaping and controlling the country's markets:
> State monopolies provide all utilities, telephone and postal services, port and airport services, industrial estates, and radio and television. Government ministries provide a large part of medical and health services, all sanitation services, and all education for the population from primary to tertiary level. The state Housing and Development Board houses nearly three-quarters of the population in public housing estates.
In the non-social sector they own and operate: > Singapore Airlines, ...A state trading company, a state shipping company, two state join-venture shipyards, ...The Development Bank of Singapore
The government also owns "about 75% of all land in the country".
The rest of the paper goes into detail explaining how the government routinely intervenes with subsidies and tax policy in order to force the market into whatever shape it deems fit. So I think the fact that people view Singapore at anything close to a free market is more a testament to just how effective the propaganda that has been pushing free market economic thought has been.
[1] https://sci-hub.se/https://www.jstor.org/stable/2644389?seq=...
Would you count this statement as falsified, if eg the median income in Bangladesh went up? (Or any other percentile.) If not, what would falsify that statement?
Singapore is an interesting case. You are right about ownership. I am basing my estimate more on eg the low rate of government spending compared to total GDP, general ease of doing business, light touch regulation.
Close to my heart (coming from Germany) is the absence of pervasive occupational licensing in Singapore. Similarly the absence of minimum wage laws.
> The rest of the paper goes into detail explaining how the government routinely intervenes with subsidies and tax policy in order to force the market into whatever shape it deems fit. So I think the fact that people view Singapore at anything close to a free market is more a testament to just how effective the propaganda that has been pushing free market economic thought has been.
I am currently living in Singapore, and so far the 'propaganda' has been so effective that even living here I still see that it's fairly pro-market.
And that includes talking to 'normal' locals, and also to people running businesses here.
Malaysia is useful for contrast. The government is a much bigger drag on the economy there.
The paper you quote is fairly old, and also doesn't seem to reflect the consensus of economists. (It's nonetheless interesting though.)
I don't honestly know. Quality of life is in my mind the most important factor and is hard to measure, I don't think there's any one statistic or small group of statistics that can capture it.
What worries me at the moment is the trend of 40-50 years of productivity increases leaving wages far behind. The elimination of secure, well paying jobs for the lower working classes that have been replaced with gig/service work where you hope you'll be given enough hours to make end meet that week. Sectors of local economies destroyed or made dependent on global capital firms with huge losses. I want to know where it will end, because all I can see in the future is rising inequality and stratification.
> Close to my heart (coming from Germany) is the absence of pervasive occupational licensing in Singapore. Similarly the absence of minimum wage laws.
I'm not familiar with occupational licensing in Germany. But I don't have a problem with it if it's done to ensure safety/quality and there are minimal barriers to entry, employers seem all too happy to introduce inexperienced workers to situations which may not be obviously dangerous to the worker without proper training.
Minimum wage is a fairly contentious issue, what is it you dislike about it in particular? Interestingly it looks like some sectors have enforced a minimum wage:
https://www.minimum-wage.org/international/singapore
I'd be interested in knowing why cleaning and security were singled out specifically rather than a more general rule.
>I am currently living in Singapore, and so far the 'propaganda' has been so effective that even living here I still see that it's fairly pro-market. >And that includes talking to 'normal' locals, and also to people running businesses here. >Malaysia is useful for contrast. The government is a much bigger drag on the economy there. >The paper you quote is fairly old, and also doesn't seem to reflect the consensus of economists. (It's nonetheless interesting though.)
It was interesting to see how far back the disagreement on Singapore's economy goes.
First, people usually make that claim for the US. Living standards in the developed world have improved too visibly. So let's concentrate on the US.
Second, that claim usually comes about by people comparing productivity statistics to wage statistics. Usually, both of those data sets are inflation adjusted, but via different measures of inflation.
To avoid that complication, we can just look at the ratio of nominal wages to nominal GDP over time.
https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-... has a graph that shows that labour share falling from about 66% in 1947 to ~58% in 2016.
That's a fall to be sure, but calling the change something like 'leaving wages far behind' seems a bit dramatic.
If I remember right, most of that lost 8% went to higher land rents. The share of capital is generally stable.
I find land rents as problematic as the next Georgist.
> I want to know where it will end, because all I can see in the future is rising inequality and stratification.
Globally, inequality has gone down massively over the last few decades. Billions of people used to starve. Now people in China and (many in) India obsess over which smart phone to buy.
> I'm not familiar with occupational licensing in Germany. But I don't have a problem with it if it's done to ensure safety/quality and there are minimal barriers to entry, employers seem all too happy to introduce inexperienced workers to situations which may not be obviously dangerous to the worker without proper training.
In Germany, the government requires a two to three year apprenticeship for you to be allowed to eg cut hair or fix a computer or lay bricks or cook etc.
In Singapore, you mostly just have to do a short health and safety training, and then it's up to the customers to reject your bad haircuts.
> Minimum wage is a fairly contentious issue, what is it you dislike about it in particular?
They are an instance of the 'Copenhagen interpretation of ethics': https://blog.jaibot.com/the-copenhagen-interpretation-of-eth...
If we want poor people to have more money, we should levy a general tax of some kind, and then use the proceeds to give them more money.
Minimum wages put a burden on people who interact with poor people instead. So they encourage you to find ways around having to interact with poor people. Eg you can avoid the burden by eg replacing workers with robots, or by shopping at a more upmarket place than Walmart. Or eating at fancy restaurants instead of Burger King.
(You might notice that the people shopping at places that hire a lot of minimum waged workers tend to be also on the poorer side.
And I don't think business owners are absorbing the costs of minimum wages, because capital is internationally mobile.)
> It was interesting to see how far back the disagreement on Singapore's economy goes.
I asked Google Scholar to tell me who cited the paper you quoted to get some further context. The paper and author seem to be embedded in some particular corner of economics.
Wikipedia and most of the rest of the world describe Singapore as free market. (Including also the economists blogging at econlog.)
> I'd be interested in knowing why cleaning and security were singled out specifically rather than a more general rule.
I might look up the history behind that. In general, I assume it was some pragmatic bending to political pressure. In some instances the population is not quite as free market as the government here.
I really like the system Singapore has for cars. Basically, the government sets an overall limit for the number of cars on the island. It's about a million at the moment. Those one million permits are auctioned off to the highest bidders for ten years at a time. Each month, roughly 1% of permits expire and are auctioned off again.
The auction is a simple affair:
The government takes all the bids from the current month, and determines the lowest price that clears the market. Ie every one who bid more than the clearing price gets a permit at the clearing price. Everyone who doesn't get a permit bid less than the clearing price.
To come to the point: often people suggest that instead of every winner paying the same price, winners should be made to pay what they bid.
For some reason, that's supposed to make big companies pay more in the end, and individuals pay less.
Of course, big companies are exactly the kind of institutions who can afford the modelling and research to forecast the clearing price, and they can also afford to miss out or get a few extra cars in their fleet.
(Thus the government understands economics a bit better than much of the population.)
It's also a good illustration of how the government intervenes here, instead of letting everyone drive a car, but does so in a way that econ 101 would approve of.
Student loans, house loans, car loans, payday loans. Food deserts, prison standard of living. Social mobility in general. "Right to work", worker protection. At-will firing. Non-existing safety nets. Days of vacation and parental leave. Average savings per capita.
Most of the above are absolutely more feudalist (not sure about the neo prefix). Some of these are literally unimaginable at the other side of the pond.
Well I wouldn't call this a failure of the free market because this is actually the exact opposite situation. Americans have decided to solve funding for education through private funding, which is fine in principle but then they ruined the free market component through extreme government intervention that sets up perverse incentives. It's a text book example of government intervention gone wrong. The way it should have worked is that degrees with good job prospects are cheaper to finance than those where people end up unemployed. If people pick the wrong degree that's fine because they can discharge the debt which causes interest to go up and make the uneconomical degree more expensive. It also means that colleges don't get a free money siphon and waste all the money on things that don't improve the job prospects of their students.
The free market utopia would be that average people go to college and money printing "corporate drones" leave college. People can then use their wealth to pursue their true interests in their spare time, or you know at least feed their kids. Instead what we have right now is basically 18 year olds chasing their dreams and everyone around them (advisers, bankers, government, college) tells them to go ahead while those young people are about to blow their foot of with the debt and no job prospects.
>house loans
Not sure what's wrong with those to be fair. The free market works here because money is just another type of commodity. It's fungible, it doesn't matter what bank you go to. The central bank printing press is causing some asset inflation but it's not fundamentally broken, just tilted.
>car loans
I have heard that it is difficult to get financing for small cars in the USA because Americans don't buy small cars anymore. I personally can't comprehend this but why not just get a used car instead? What else is wrong car loans?
>payday loans
Yeah this is definitively a complete failure for the free market. There are some people that are doing so badly that lending them money for a profit will just make their situation worse. This is something that can only be solved through charity or welfare with no strings attached and no expectation to get the aid back. If someone is lacking $500 then charging them $600 isn't going to solve their problems. Giving loans to people who can't pay them back is always a bad idea. However, there is also a group of people who is merely late on their payments but can eventually get back on their feet. 30% annualized interest for small loans can be a perfectly acceptable solution for people who are a high default risk. Payday loans are often something insane like 500% annualized interest and they also offer extremely poor repayment conditions. They just shouldn't exist.
>Food deserts
This is caused by differences in access to transportation. If all the "not poor" people use their car to drive to a Walmart that is 15 miles away then poor people won't get access to a decent store within 15 miles.
>prison standard of living
Yes, another failure of the free market but also a case of the people involved being morally corrupt through and through. It's basically legalized slavery and the prison wards can always ask for more "slaves".
>Social mobility in general.
Well, this is primarily caused by labor abroad increasing supply for everything and pushing down prices to a level where richer nations can't compete. The "corporate drone" I mentioned above does very well in such a situation because his skills are still in high demand. The problem we have is that there are not enough "corporate drones" who get a profitable degree. Upskilling is extremely important because low skilled workers basically compete with dirt cheap labor abroad nowadays.
>"Right to work", worker protection
The free market can work in favor of workers if businesses are competing for workers. As I said, there is a lack of workers that companies want. If you have to compete with your neighbors it's a race to the bottom. I can't say the free market failed here. It's inherently a difference in culture.
> Non-existing safety nets.
Yeah this is one of the weirdest things about the USA. It's easy to get fired, but it's also even easier to lose everything once you lose that job.
>days of vacation and parental leave.
One of the greatest failings of the free market is that it can't ensure reproduction of our species. Going by what the bean counters say we would never have kids.
>Average savings per capita.
This is probably influenced by culture. Owning housing often causes savings to go up. In renter societies you often see people own less capital than in home ownership focused societies.
Overall the USA somehow managed to have both the worst parts of the free market and the worst parts of government intervention in one ugly package. It's very surprising to me. I'm pretty sure that if they could have avoided the worst parts of government intervention that they would put my own country to shame. Instead there are some rich dudes in a gated community and lots of poor people around the gated communities. Yeah sure the rich dudes brag about how rich they are rich but that's not the only important thing for me. It's also not guaranteed that I will be one of them if I go there. I never want to live there. If I was on exile I'd rather go to countries that are not as wealthy as Germany than to the USA.
I readily admit that I just brainstormed to support my initial association, so not all points are going to hold their water. But you seem to agree to a direct relationship of free market and feudalistic traits, so do you actually agree, but wanted to introduce nuance?
Sounds like social mobility for me but not for thee?
You know that 'evil' cheap labour from other countries is just folks trying their best at getting some social mobility? Foreigners are people, too.
Never said cheap labor was evil or that foreigners aren't people. I never made a judgement good, neutral, bad. Not sure why you read it that way?
I'm not seeing it, either that most of the above are feudalist, or that the US is more feudalist than Europe.
Food deserts? Feudalism was an agricultural society. Peasants worked on farms. "There's no grocery store poor people can get to easily without a car" wasn't really a thing back then.
At-will firing? That's capitalism, not feudalism. In feudalism peasants were attached the land. "Go peasant for a competing lord" wasn't a thing either. More like at least the US idea of Europe being someplace where it is impossible to fire an employee once they get hired. That sounds like feudalism.
Days of vacation? "While we may be accustomed to images of medieval peasants toiling away from dawn until dusk and be convinced from this that we have it better than they ever did — a 13th-century laborer could have up to 25 weeks off per year". Working all the time is capitalism, not feudalism. Europe is way more feudalist on this measure too.
Payday loans are feudalist? You think serfs got payday loans? Or car loans? Someone told a peasant back then, "Oh sure, here's a house, it's yours, pay me back over the next 30 years"?
Right to work? What does that have to do with feudalism? If you were attached the the land, you had to work it for the benefit of the lord, it wasn't whether you paid dues to the Peasants Local 1347 or not.
Criticize capitalism all you want, but it is not feudalism.
Germany has Aldi and Lidl to help against food deserts.
Not sure what you mean by prison standards of living?
About social mobility: have a look at 'The Son Also Rises' for an interesting approach to historic and cross country comparison.
I am still quite confused about why you link all these things with feudalism? Feudalims was really heavy on intervention and paternalism. Just the opposite of what a market based order would be.
The balance is usually tilted slightly towards free markets because many governments are often incompetent but the free market doesn't tolerate incompetence or inefficiencies. In many cases it is so hyper efficient that smaller players have such a hard time that monopolies form and globalization brought this to a new height where we have entire countries like China specialize in manufacturing to the point where USA/Europe can't compete and seek out other opportunities.