A few days ago, a commenter accused me of being an “economic liberal.”
Not sure what that means, I searched Google and found this explanation:
A market system in which government regulates the economy is best. Government must protect citizens from the greed of big business. Unlike the private sector, the government is motivated by public interest. Government regulation in all areas of the economy is needed to level the playing field.
The free market system, competitive capitalism, and private enterprise create the greatest opportunity and the highest standard of living for all. Free markets produce more economic growth, more jobs and higher standards of living than those systems burdened by excessive government regulation.
The problem is that neither of these paragraphs mention anything about HBD or post-scarcity economics where people are being replaced by machines and computers.
I used to be a libertarian, and I believed that the amount of money people make is exactly equal to the amount of value they create for the economy. I have since realized that’s wrong. The vast majority of libertarian types believe that, and would probably stop being libertarians if they stopped believing that, which I guess proves that libertarian economics is wrong.
“Greed is good” (to quote Gordon Gekko) if the economy works such that the only way to make money is by creating value. In such a fantasy economy, greed creates value which benefits everybody.
But what about an economy in which vast fortunes are made not by creating value, but my merely transferring it, or worse, creating negative value through negative externalities? In such an economy, greed is bad and not good, because greed is making things worse for the non-greedy rather than better for them.
And then I take issue with the term “free market,” because people use it to mean both a laissez-fair market as well as competitive market in which prices are set fairly by supply and demand and where other suppliers can jump in to fill demand to bring prices down, thus benefitting consumers. The industrial era United States economy has only been like that if you compare it to the Soviet Union, which was an extreme in the other direction that was obviously a failure.
Perfect competition, or even anything close to it, is not what the market automatically moves to in the absence of government regulation. Monopoly is a lot more profitable than competition, and greedy people want to make money, so they will do what they can to set up monopolies so they can become rich. Government antitrust law is preventing companies from having even more monopoly power than they have today, thus there’s at least one government regulation that fosters competition rather than preventing it from happening. And thus, competition is not the opposite of government regulation, but can be complimentary to it.
I believe that the economy we’d like to live in won’t happen magically by itself if government takes its hands off. Things would get worse. So it’s my belief that the role of government is to create an economy where there is competition, real competition, and to create an economy where people who create value are rewarded, but where there is no reward for value transference.
In fact, I believe that value transference industries which require no creativity should be socialized. Such as the finance industry. The government could run the finance industry for the benefit of the public instead of for greed. It might be slightly inefficient compared to some idealized private industry, but it would be more efficient and better for the public than the current state of affairs. And then , since the best and the brightest and the greediest wouldn’t see any profit in working for government, they would be forced into careers where they might actually create value instead of merely transferring it.
Categories: Economics/Class Relations