In which I bastardize the phrase "Corner Solution"

The End Of American Capitalism

Will Obama Usher In a Socialist Economy?

And so on. I think the latest round of ignorant economic arguments have started to drive me a little bit crazy. There's an ongoing sort of battle in economics, more accurately pop economics, or theories of business and policy, that seems to find it impossible to argue without resorting to what I'd call a corner solution. Or said another way, the "it's all based on this one thing, and everything else doesn't matter" type solutions. And to me it tends to be instructive to note who advances these arguments, and what their interests are.

It's not surprising that the entrepreneur class would gravitate towards a theorist who postulates that said class is the root of all virtue and creator of all value, like a Joseph Schumpeter, or the many others since, and their passel of magazine covers and business books sold in an airport near you.

The entrepreneur class finds this interesting.

As an aside, I most certainly enjoy articles that say people named "Nick" tend to me more attractive and successful. For some reason such arguments resonate strongly with me.

It's not surprising that the vast classes of salaried employees might have gravitated towards the Labor Theory Of Value. It's not shocking that as the industrial revolution came into full swing, the allure of communism was extremely attractive for large numbers of people around the world. It postulated that the vast masses were the root of all virtue and creator of all value.

The vast masses found that interesting.

It's not surprising that people who already had successfully acquired wealth and paid quite a bit in taxes gravitated towards people like Arthur Laffer and supply side theories. It's hardly a shock that people who the market had deemed to be winners would advance the theory that the market is always right, and that it always distributes resources with perfect efficiency. People like Lucas and Sargent and Friedman on the academic side, or Ayn Rand (god help us all) on the pop culture side said that the rentier class was the root of all virtue and creator of all value.

The rentier class found that interesting.

There's an entire industry devoted to privatization of everything. They're not interested in discussing the details, asking if privatizing X really leads to more efficiency. Hard to figure out why, until you notice, of course, that they're the ones looking forward to getting their hands on the assets. You could argue that the private sector does everything more efficiently. It's a good way to get a contract providing armed soldiers to the US military at 10 times the cost of just having actual, you know, soldiers do the same job.

The advocates of privatization find that interesting.

It's sure hard to figure out how these theories spread, isn't it. The reality of course is that a well functioning economy is created by a mix of inputs. Corner solutions don't work. Total state ownership of the means of production (communism) strips incentives and leads to corruption and terrible allocation of resources. We've established that didn't work. Well sort of, China hasn't done too badly lately has it, and they are nowhere near an open economy.

In contrast total privatization leads to a mafia state, an oligarchy of one dollar = one vote. Check out what happened in Saipan and the Marianas over the last couple decades for a good idea of what a privatization and entrepreneurship utopia looks like. It's not so good.

Here's a quick two theories, let's throw them out:

1) Markets are probably the most efficient and effective way of allocating resources and creating wealth.

2) Markets almost never work properly without some oversight and command of state authority.

Here's the kicker: Ideas #1 and #2 are not incompatible.

Prosperity requires effective flow of capital and capitalists and the ability for people to have incentives to innovate and invest and assume risk and reap rewards. It also requires government intervention where market failures occur (like making sure insurers are properly capitalized, or to break up monopoly situations) and to stimulate things that the private sector can't or won't efficiently create because of excessive time horizons, risk, coordination issues, or capital requirements (things like the interstate highway system, the internet, air traffic control, etc, for example).

It also requires a properly compensated, healthy, educated, and stable workforce. One that's able to make rational decisions, live with some risk mitigation to income or life events, and not constantly subject to monopsony pricing of their wages. Not only does it lead to increased efficiency, and greater wealth for all classes, it does have the not at all insignificant side effect of keeping those excluded from the economic system from scaling the iron gates and running up on the lawn with guns drawn. As they say.

It's been an amazing and historic week. An inspiring one, no matter which side of the aisle you're on. I would hope. But it's sad to see that the same tired arguments prevail, on the right, but on the left as well sometimes.

Capitalism is dead. Long live Capitalism. No we can't have national health care it's socialist. Multi-national corporations are evil. All rewards are due to the innovative class, labor is valueless and fungible.

And so on...

The reality is that entrepreneurs, bankers, investors, academics, inventors... and yes, government regulators, bureaucrats, factory workers, and cashiers all contribute to prosperity. All or nothing attitudes are kids stuff.

Or more often, the refuge of those who have a vested interest in advancing the interests of the group they most identify with. As it's been said, It is difficult to get a man to understand something when his salary depends upon his not understanding it.

Comments

[Jimmy Choo UGG]

"Justiz zugestellt werden in Bezug auf offizielle Anerkennung MacPhail sowie seiner / ihrer Familie zu sein", behaupten Legal professionelle General Sam olens behauptet in einer Erklärung., [url=http://www.uggkaufen.net/]ugg stiefel[/url] , Joan MacPhail-Harris, Ihre Witwe des Draw MacPhail, angewiesen, dass zugeordnete Klicken Sie auf die "Es ist eine Zeit in Bezug auf Heilung", die wirklich Davis 'delivery Features stattgefunden, in denen Sie Ihre Frau bemerkt, "nichts, was sich freuen wird", auch von Davis' Tod und dass Ihre Frau hatte über seine oder ihre Angehörigen gebetet. "Wahrscheinlich werde ich trauern, dass Davis Familie, weil sie jetzt gehst, um einige unserer Beschwerden sowie Ihre weh wissen", instruiert Ihre Frau, die AP in ein Handy mit von Jackson gerecht zu werden., [url=http://www.uggkaufen.net/herren-stiefel-wholesale-26.html]Damen Stiefel[/url] : "Ich bin Arten von taub. Mein Partner und ich nicht das Gefühl, dass es wirklich stattgefunden sind ", MacPhail neue Mutter, Anneliese MacPhail beauftragte der tatsächlichen AP in einem Telefoninterview aus Ihrer Freundin Wohnung mit Columbus, Georgia" Alles, was innere Gedanken Schmerzlinderung neben Zufriedenheit Früher Leiden Tinnitus warten fast alle diese mehrere Jahre, sie werden zu einem späteren Zeitpunkt kommen. können wir mit Sicherheit eine Reihe von Zufriedenheit wollen. ".