Speaking of Wall Street, where are the Ayn Rand, invisible hand of the free market idiots like MTR???
I kind of agree with Rand, BUT there is rock under her rapidly running water that many do not want to see. What happens when YOUR canoe is the leaky one. Should the other Randies let you on their canoes?
A simplistic idea may be that the invisible hand is working! The value of US capital has fallen because of the end othe era of cheap oil and the growth of industrial competitors more than able to take us on.
If this is true, those who worship at the Ayn Rand temple need to remember she is not a kind goddess nor is she an American patriot.
Maybe when Obama is elected, GWB will ask the black guy of he could err ahh move in early before the neighborhood really tanks?
9 comments:
Um... Well, the current financial crisis was caused by government intervention into the market. It was not, by any stretch of the imagination, a fault of a free market, simply because no free financial market exists.
Consider that the fundamental basis for the crisis is some hundreds of billions of dollars in bad loans--loans that no "greedy" lender concerned about being paid back would ever have given out. Rather, they were given out because government said it would back them up--which is, of course, exactly what's happening. Do a little research around Fannie Mae and Freddie Mac, two quasi-governmental agencies that are at the root of it all. You'll find that it's not the free market that's at fault.
WADR ... this seems to be the Republican mantra.
Leaving aside the dizzying effects of spin, my point really has nothing to do with reps vs dems. My point is that there is nothing in Rand that dictates success of America or, for that matter, the free market itself.
What we are seeing now, I suspect, IS a free market readjustment to the reality that America's share of real wealth of capital has gone down. Blame it on oil or on Bush or Fannie/Freddie .. if it were not the housing market it would be something else if:
1. the free market works
2. American properties (not just real estate) are over valued.
Ask yourself this, if you had a 100,000 to invest in real estate and your were offered similar terms in Beijing, Seattle, Dubai, Mumbai ... which would you choose?
You might still choose the US, but I suspect the decision wold be very hard if, as is increasingly so, globalism means that the "systems" in all these places provide equal legal guarantees.
What this means is that investments in the US now have to compete with investments in countries that have better resources than we do. In the past that did not matter since our system was better. But now that is not clear.
Plus, as capital, the productivity of that 100,000 is limited by the REAL local tax system. By "real" I mean all the costs of ownership. The mounting US debt ultimately is a tax on our productivity,
Botm line, like it or not, the new free market stretches way further than Rand understood. The competitors in these markets are not entreprenueurs as she envisaged, but mega-corporations .. the largest of which are themselves the governments of countries.
I have another analogy .. in a game of unlimited poker, that is if there is no limit on how big the bets can get, the wealthy player is at a huge advantage. If we have fewer chips ......
Ayn Rand not a patriot; you clearly know little or nothing about her nor about what a free market is. A free market is one in which a government does not use its powers to interfere with or block consensual trade. It does, however, respond to cases of theft, fraud, and broken contracts.
The US government has massively interfered with American banking for some 80 years. The distortions in the financial market that lead to the present crisis can be traced back through such things as the Democrat's Community Reinvestment Act, Fannie Mae and Freddie Mac, the manipulation of the prime rate by the Federal Reserve and most importantly the printing of fiat money on the whims of politicians and bureaucrats.
The above is becoming more widely understood, and was best explained back in July(!) in this Forbes article.
Incredibly, fools still blame the free market for this crisis and claim that more regulation is needed. This will in turn cause more distortions, impoverish even more people and likely cause another financial crisis.
It isn't very clever to treat arsenic poisoning with another dose of arsenic.
You may be right abut my knowledge of Rand, but I did not say SHE was unpatriotic. What I did say is that a free market is, by its nature, NOT patriotic.
Of course I agree we have never had a truly free market, outside of sci fi I doubt such a thing can even exist.
As for whether regulations are food or bad, that is also not the issue I was addresing. What I do addtess is obviuous ,, in a true free market capital will flow where it creates the greatest return.
So, it seems to me that the relative value of America itself MUST fall as resources outside the US become more valuable, e.g. oil, and as the productivity gap between Americans and other nationalities decreases.
That being the case, I am arguing that a country comprised of individuals will be at a compative disadvantage over one that can choose to enhance national capital.
no?
Wow, your response to me said, I did not say SHE was unpatriotic.
But your post said, (your bold & italics):
"If this is true, those who worship at the Ayn Rand temple need to remember she is not a kind goddess nor is she an American patriot."
I think that is pretty clearly saying Rand is not patriotic.
Those who have read "The Letters of Ayn Rand" or knew her personally found her to be extremely kind, and very patient with honest minds. People who proved themselves to be intellectually dishonest did indeed incur her scorn or anger.
Scorn and anger are quickly noted by people who, for whatever evasive reasons, do not want to examine the cause. Also, those who are Leftist or Religious objected to her views and, rather than think them through, indulged in ad hominem attacks —especially those spawned from 'an element of truth'.
These things spread rapidly over the Internet, whereas more rational minds do not repeat facts, arguments or opinion without checking their sources.
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You wrote:
"My point is that there is nothing in Rand that dictates success of America or, for that matter, the free market itself."
Have you read "Capitalism: The Unknown Ideal" and "The Virtue of Selfishness" and "Philosophy: Who Needs It?" and many other collections and articles by Rand?
Rand even wrote that she could not have grasped the value of the free-market had it not been for the very nearly free markets of 19th C. Scotland (Adam Smith era) and 19th C America. She was able to put it together, and to grasp that full protection of Individual Rights to Life, Liberty, Property (includes contract enforcement) and the Pursuit of Happiness, was the only moral approach to politics. That is, full Separation of State and Economy.
I promise you that Rand did understand how far a free market could go, and therefore I disagree with this claim:
"Botm line, like it or not, the new free market stretches way further than Rand understood."
For one thing, America is still the freest market in the world (though Ireland has recently freed itself up quite a bit).
The corporations in a free market have no more power to coerce someone into something he does not like than does any single 'little guy'. What they do have is economic power, which they acquire by providing goods and services the little guy is willing to pay for.
The little guy regularly votes with his wallet, as opposed to placing a pencil mark on a ballot. That ballot, if unwisely marked, encourages politicians to use the coercive power of government to interfere in consensual trade. Which means, it empowers politicians to enact the laws of a coercive state.
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As for America losing its relative value, I agree. Americans largely have their voting-selves to blame. The federal debt is now over $455,000 per household. See this NYT page. Only the wealthy top 1% could contribute that money without being notably hurt in their pocket. Effectively, no one else can pay for it.
The American dollar is, technically, worthless paper. Other nations are starting to catch on, and are changing their ways of doing business.
I say, America should return to a gold standard, repeal every bit of legislation that hampers private trade, and eliminate government spending in every sector. Reducing taxation may even help Washington pay off the debt. This would have to be done in steps. Each step must be chosen systematically, so as to give ordinary citizens ever more control over their own earnings, and thereby enable them to strengthen their own financial position. There are many ways this could be accomplished.
I know, I know: fat chance of that happening!
Why gold? Why not moon rocks?
Every 'currency' whether silver, gold, cigarettes (used by POWs) or tins of mackerel (used by prison inmates), serves as a value integrating tool. In varying degrees, all the millions of other goods in a market are valued in accordance with the currency. In this way everyone who uses the currency comes to equate its value with other goods in their part of the world, and to make material value choices according to that standartd. Gold serves best:
Gold and economic freedom are inseparable, . . . the gold standard is an instrument of laissez-faire and . . . each implies and requires the other.
What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. Where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity. Precious jewels, for example, are neither homogeneous nor divisible.
More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable . . . .
The term “luxury good” implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron . . . .
Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth.
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold . . . .
The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
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Money is the tool of men who have reached a high level of productivity and a long-range control over their lives. Money is not merely a tool of exchange: much more importantly, it is a tool of saving, which permits delayed consumption and buys time for future production. To fulfill this requirement, money has to be some material commodity which is imperishable, rare, homogeneous, easily stored, not subject to wide fluctuations of value, and always in demand among those you trade with. This leads you to the decision to use gold as money. Gold money is a tangible value in itself and a token of wealth actually produced. When you accept a gold coin in payment for your goods, you actually deliver the goods to the buyer; the transaction is as safe as simple barter. When you store your savings in the form of gold coins, they represent the goods which you have actually produced and which have gone to buy time for other producers, who will keep the productive process going, so that you’ll be able to trade your coins for goods any time you wish.
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Today, people are beginning to understand that the government’s account is overdrawn, that a piece of paper is not the equivalent of a gold coin, or an automobile, or a loaf of bread—and that if you attempt to falsify monetary values, you do not achieve abundance, you merely debase the currency and go bankrupt.
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Gold is also relatively rare, and difficult to obtain. This reduces the likelihood of a sudden influx of gold into an economy, which would act in a manner similar to ordinary currency inflation. It takes effort to obtain, and that effort increases if gold is in short supply when a gold coin represents more goods and services than it would if gold were abundant use.
Gold could not be printed at the whim of politicians and bureaucrats, thereby diluting the money supply and causing inflation. Printed, fiat, money when diluting the money supply devalues all citizen's savings and earnings. Yet the government that prints the money, as the first to spend it, is able to use the pre-inflation value of the dollar. This is another way governments tax their citizens, but that is not possible under a gold standard.
Note, also, that gold would not have a dollar value. Instead, the dollar has a gold value. E.g. a twenty dollar bill might be worth 1/8 oz of gold, but one could not word it the other way around as we do today. Gold would be the standard, *represented* by paper notes or non-gold specie currency.
All this is cultural and religious. There are many commodities rarer and harder to produce than gold. As with any other "luxury," a societie's desire for gold is cutuural .. in India the stuff is worth its weight in gold, in the USA less.
Even assuming some intrinsic property that amkes gold a useful counter, as opposed to shells, platinum, iridium, or moon rocks, that vlaue is only important to the extent others are willing to exchange theor good for gold.
Try getting people in drought afflicted Africa to choose between a source of water and gold. What they want is not gold, it the ability to convince you to provide water, if you have it.
In nay case if YOU want to trust in the vakue of gold or baseball cards you are utterly free to do so. You can even, if you wish, carry around IOUs redeemable in gold as long as you do not call theme money.
"Cultural", yes, but where in the dickens do you get "religious"??
Sure, a monetary standard could be shells or platinum, but they simply are not practical. Platinum is too rare and shells are too common, plus shells are hardly homogeneous, divisible or possessing substantial decorative/aesthetic and industrial value. Those characteristics of gold, some intrinsic and some cultural, are sufficient. The only remaining issue is common cultural acceptance as a standard. (That acceptance is not arbitrary, as your comment seems to be saying.) Gold has value, but it is also well-suited to serve as a standard of exchange. Such a standard is an absolute necessity for standardizing productive effort of humans on an exchangeable, material scale.
Yes, *I* could try to use whatever I want, but then it would not be a standard. It would not integrate the valuing of others. Nor can MY appreciation of its value in the market-place apply to purchasable goods and services. That requires everyone else's agreement —which takes us back to the concept of the integration of value!
It is common for people (including economists) to fail to grasp the significance of the integrating function of a proper monetary standard.
Money is a means of exchange of stored production. You likely learned, as early as the age of six years, the meaning of paper notes and coins as payment... first for candy bars and eventually for life insurance. Later you had to learn how much productive (by intellect or by labor) effort, on your part, will bring you that purchasing power, and how it is represented by those paper notes and coins.
Except, paper money and coins that are not backed by a proper standard have a shifting value depending on how much the government prints, or who is offering them —the latter reduces to primitive barter, say, trading chickens for bread.
Fiat money is a deceit, in a way a precious metal cannot be.
P.S. the starving African native example IS a reduction to primitive barter, where gold cannot function. It cannot be compared to more advanced cultures, even within that culture. Nor does the fact that tyrants appreciate wealth and use gold as a measure of their *unearned* wealth alter the utility of gold.
(Sorry, this was a rather "stream of consciousness" composition, so it may not develop as logically as I would otherwise like.)
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