Comment by jasonisalive | Hacker News Reader

Comment by jasonisalive | Hacker News Reader

Articles like this (ignoring the insulting, historically-naive comparison) aren't news. If you have even a weak understanding of economic theory, it's clear that countries like Britain, France and the USA are all clinging to self-destructive public policies - driven by popular demand, mind you, not corporate interference. When the "developed world" becomes serious about competing economically with China (distinct from militaristic aggression), it will be plain to see. The following of the West's sacred cows will begin to fall:

1) Knowing better/attempting to overrule the free market (minimum wages, minimum labour conditions, centralised permits to sell goods such as drugs, medical services, legal services)

2) Giving "something for nothing" (subsidised/free education, subsidised/free healthcare, subsidised/free pensions/saving schemes.

Currently anyone who dares to question these aspects of Western economies is immediately eviscerated by the crowd. The culture of entitlement is very strong. Soon enough, however, with the last of the props that sustained these sick economies thus far failing (militarism, centralised currency control, controls on global mobility, global cultural allure), getting rid of them will be hailed as bold new thinking.

Labor markets would not magically become free markets (in the textbook-definition sense) if there were no regulations. People are forced to work in them, there aren't enough job openings per person to make the work availabilty high enough to make the market fluid, and a single employer can influence the price.

I suggest you try reading Econ101 more clearly before citing it to make such dangerous propositions as removing labor regulations.

On the contrary, it's you who is confused here. The conditions you're describing - a surplus in supply for a range of market goods (mostly low-skilled human labour) is the result of the continued attempts of Western countries to regulate against free market dynamics. Removing the perverse regulations which caused this imbalance to arise would result in a short, hopefully not too harsh correction, after which supply and demand would again equalise across the range of various market goods in question.

It's similar to the situation of a hypothetical (or not so hypothetical really) society which decided to "help out" potato farmers by limiting the price of a kg of potatoes to $10. What would you expect? Potato production would skyrocket as people try and cash in on the boom, while potato buying would plummet as people switch to unregulated alternatives.

Imagine this situation continuing on, with more and more vegetables becoming price-controlled, all the while as the mass of unemployed farmers grows and grows (because the system supports people in their failure to be vegetable farmers with unemployment handouts), the conditions of the market become worse and worse, and the further distortionary actions (for example, police crackdowns on blackmarket vegetable sales) required to sustain the whole system become more and more extreme. When someone questions the need for the price restrictions, the average citizen responds:

"Vegetable markets would not magically become free markets (in the textbook-definition sense) if there were no regulations. People are forced to grow vegetables, there aren't enough buyers per grower to make the demand high enough to make the market fluid, and a single buyer can influence the price."

Of course, this really isn't hypothesis. Citizens of today's socialised, regulated countries are just blind to the destructive consequences which surround them.

One point you haven't covered, is that there aren't enough companies offering jobs to create free-market conditions.

Look at what happened with the no-negotiation agreements between Apple and co. in Silicon Valley. This was for some high-wage people, so we're not talking about a wage floor issue here.

Yet those agreements stil happened , because a single company can influence wages. In a true free market, there are so many buyers and sellers that no single actor can influence the price.

Not to mention that on a more theoretical level, there is a lower bound on the amount of money people need to live, so there _is_ a lower bound on wages, or at least a lower bound on wages. This is also a pretty good argument for basic income, because it would make participation really voluntary.

> the West's sacred cows will begin to fall:

...blah...minimum labor conditions...free education

I think you've got that one backwards. Said cows will spread to China rather than falling. It's not sacred entitlement, just a practical choice of what regulations to pass and what to spend tax receipts on.

Removing social services will not make society more productive. Not having to constantly worry for your life and family works wonders for creativity, productivity and overall happiness. It's not about entitlement, it's about enabling the people to do great things.

By that logic we should socialise everything. Sure worked out well for the Soviet Union!

This is nothing more than a straw-man argument. You can't possibly fail to see the difference between a government providing social services on one hand and instituting a Stalinist dictatorship on the other, can you?

These are not "something for nothing" services. They are paid for by taxes. And in doing so, these services are generally supplied on a cheaper basis with better social outcomes than the private sector is able to.

But from the perspective of the users of these services, they are. With a socialised medical system, you don't pay upfront for your medical treatment. It's paid for from taxes from the whole population - and if your income is low enough, you may consume more resources than you provide towards the system - in which case you are getting something for nothing! The combination of these factors - obfuscation of payment, and disconnection of amount paid/good received - create the perverse incentives causing economic decline seen in the countries pursuing these policies.

And the argument about socialised services being more efficient definitely needs a citation.

If your main concern is cost, then why is it that healthcare per capita (including the taxes being used to pay for it) is lower in these countries than in ones where the people have to foot the bill through privatised mechanisms?

If your main concern is cost, empirically socialised systems cost less and generate better results.

I would love to see some citations for these claims.

This is just one of many such charts:

http://media.economist.com/images/20090627/CBB677.gif

Unfortunately it's impossible to make a proper comparison since essentially all developed nations except for the USA have adopted some sort of socialized medicine or (i.e. Switzerland) an extremely regulated private system. So USA has essentially been alone in its experiment towards private healthcare.

Given that the one system which is much more privatized than the rest has had such poor efficency outcomes I would say that the burden of proof is on anyone who would claim that privatizing even more wouldn't just make the problem worse.

It's pretty commonly known. See:

http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...

Because the people who "get something for nothing" already do so today, and you already pay those costs. People check themselves into the ER with injuries and infections that have progressed to the point where they are life-threatening because the injured and sick could not afford to see a doctor at the time they received the injury.

The reason they can go to the ER is because the ER has to treat you if your case is life-threatening. They then proceed to not pay the resulting bill, get taken to collections, and file for bankruptcy, which has the effect of giving them free medical treatment.

Only it wasn't free preventative care, or a free doctor's visit. It was a free visit to the ER and free inpatient treatment. Guess which is more expensive, a doctor's visit or a visit to the ER?

Given that you, the person with money, end up footing the bill either way, would you prefer the less expensive or the more expensive option?

In a fully private medical system people would bear the consequences of failure to invest wisely in medical goods and services (i.e. prevent worse health problems with cheap early treatment.) There would be the strongest incentives possible (your own wallet, not society's) for making the right decision. Sounds fine to me.

You are reaping the rewards of this now.

When you go to the ER without insurance, you get patched up and kicked out ASAP. This creates other complications... People can't work, they seek out social services, etc. So you have a situation where a chronic condition that you could manage for $4,000 a year costs exponentially more when you price in food stamps, disability payments, temporary assistance payments and other programs.

Sounds fine if you want the sick and dying decaying in the streets because they didn't have access to good education.

I've heard a lot of good things about this free market you mention. Can you please provide an example?

If you're really interested, pretty much any Econ 101 textbook, read closely and critically, will get you going. There are various economic schools of thoughts (Classical Liberalism, the Austrian school) with extensive literatures available for further in-depth reading.

I think he meant a real-world example. You gave him works of fiction. :-)

I'd really like it if you'd answer his actual question. My recurring issue with libertarians is that they make very grand claims based on untested, and frankly very simplistic, theory. Real economies have perennially made fools of those who think they operate like simple machines.

Without being an economist, I can tell you that the first few general books in most any education are simplified. I discussed economic models years ago with people writing code for them, it was interesting.

Subjects based on complex data sets without possibility of experiments are hard to verify for people external to the subject. (Famous other cases are climate science and evolution.)

From that, left wing extremists (I don't know anything about your position -- you might argue against "free market", which was the subject here or "libertarians" which you mention?) sometimes write conspiracy theories that all the academics in economy are idiots and/or in a conspiracy.

So let us skip this and instead look at practical results:

If you have a country with low corruption, competent state administration and a capitalist system you might get a good economic development. Otherwise, you will not.

My recurring issue with whatever you call the sort of person who gets angry and criticises someone like me, is that they never bother to actually go and read with an open and serious mind the vast literature of economic debate available. The sort of literature that makes you realise that a statement like "libertarians make very grand claims based on untested and frankly very simplistic theory" is total, utter bullshit.

Like I said, you can start with Econ 101, and work your way up from there. I don't know why they don't just give it a try. It's more fun to be open-minded than think you know everything already.

To me it is a shame to see people so stubborn and resistant to thinking differently.

You characterize the people who disagree with you as being both uneducated in economics and closed-minded. Have you considered the possibility that there are those of us who are well versed in economic theory, including those favoured by libertarians, and have come to the conclusion that while they're certainly as plausible as any other competing theory, the proof is in the pudding?

Many different economic systems have been tried all across the world and throughout history. Given all of your reading, surely you could point to an example of these theories being tried out in a real economy and succeeding?

If you know of a non-free market economy that works as well in a complex and dynamic society with many millions of people (e.g. communism seems to be ok up to about a village), we are all ears?

As far as I know, there are no successes. Most attempts couldn't have open borders, because everyone would leave.

(And yes, there are lots of other factors, like corruption and the natural resource curse.)

I agree that those who advocate communism always seem to fall back on what is essentially the "Well it's never been tried out properly" argument, which I don't find convincing at all. It also happens to be the argument I hear most frequently from libertarians.

Essentially, claiming that your economic theory will only work once a dramatic, complete, state-wide change as occured is a non-starter. Nations advance by degrees, and if there aren't small moves that can be made towards the goal that provide evidence that the theory is sound, it would be foolish to believe that big moves will fair any better.

I would genuinely like to see examples of where libertarianism ideals have been tried on a small to medium scale and been successful. And if there aren't any, same question as to jasonisalive: why is there such confidence among libertarians that it works in the real world?

I have no problem with what you write here, but must have missed something? Or are you mixing up comment threads?

To me it seems that only you talk about libertarians, while jasonisalive talked about generic economic research.

(Wikipedia confirms my belief that libertarians are quite heterogeneous and it is more of a political philosophy/ideology than about economy anyway.)

The irony of holding communist China up as some sort of free-market paradise...

I never said that at all. The only thing about China that I specified was the widely-agreed upon fact that they are out-competing the West in low-cost manufacturing. China has many problems, not the least a culture of corruption and coercion in government, as well as the absence of intellectual property protections. They are nevertheless (or rather owing partially to this) very competitive.

Anyway, the West doesn't need to respond to the threat of China and others (Korea for instance) by aping the worst aspects of these countries. True economic liberalisation will pose a far more effective and constructive counter.

Your condescension towards everyone else here, based on nothing more than moralizing ideology, does not actually counter the basic facts: social democracy is a very productive and effective system, in ways that neoliberalism (ideological "free market" schemes that somehow always end up forgiving the collusion of businessmen) is not.

As I said originally, anyone who questions the prevailing ideology of "social democracy" (if that's what we're calling it) is quickly attacked and shut down these days.

The difference between us is that what I propose has never been properly implemented and tested, while social democracy has, extensively. How you could make claims about the relative productivity of these two systems with the vacuum of test data is beyond me.

Anyway, I've made my claim, and I stand by it. I'm confident that eventually people will see the merits of it, even if it does take some thinking. In the short term it really doesn't matter if people disagree with me. We'll see how things stand in 50 years or so.

OK, well that answers the question in my other comment.

So, given that this theory has never been tested, why are you so confident in it? So confident, in fact, that you imagine everyone else in this thread to be completely ignorant of basic economics, or driven by ideological groupthink?

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