Posted on 01/24/2006 11:31:04 AM PST by Marxbites
There is no other way to respond to the above comment other than simply to say you don't know what the heck you are talking about.
You are the absolute king of trying to create a scenario that has no relevance to the real world.
And if you don't think the penalty for breaking a law or regulation invokes the principle of risk premium, then I'll be glad to just let you think I don't know what I'm talking about and I'll gladly proceed without the benefit of your economic wisdom.
My father, a retired physician, once accepted a German Shepherd puppy as compensation for a simple surgical procedure. The "income" was not reported to the IRS (although it should have been). I can use it as an example because the statute-of-limitations on the tax code violation has long since expired (rest easily, pop). So let's see: we have a black market/underground economy transaction with attendant risk premiums, exchange of goods for services, mutual satisfaction . . . how can this be considered as anything other than a purely "free" market transaction? I'm interested to hear your opinions.
I refer you to my comment #23. And if you think having someone point out that you are wrong is rude, then I am 1rudeboy.
That is simply not the case. None of the Founders that I am aware of advocated completely Free Trade. Even the greatest financial and economic thinker of the group, Alexander Hamilton, understood that tariffs were necessary to support the government.
And what could be more hilarious than pretending that there was "free" trade when most of the exports were essentially the products of stolen labor from slaves. That slavery could only be maintained through the power of the State so it was intimately involved in production long before the commodities were ready for export. The "free" part doesn't start when the ships are loaded for export but must be throughout the whole economic chain of transactions.
Nor is Rothbard's contrast of free trade and mercantilism entirely accurate. Once men live as part of a group/tribe/nation/kingdom other factors come into play outside individual relations. Hence concern for the whole society by leaders and rulers comes to overrule individual benefits.
Free Trade may be the economic maximizing goal but let us not pretend that it ever really existed or that it can exist as long as there are nation states. Perhaps it can only be achieved via World Government when borders no long exist nor governments seeking to improve their charges lives.
In both examples it is government intervention that causes higher prices for drugs and the lawn-care company service.
How can it be considered anything other than the rarest of transactions in our ecomony?
And the existence of rare and isolated 'free' transactions within an otherwise regulated market does not create a 'free market.' But continue to beat your head against a wall to try to prove a silly, and already failed, point. You seem to enjoy it.
As I was trying to explain above with no success, the risk premium is actually a market factor, much like such notions as availability, time-before-delivery, etc. Simply because a risk premium exists and is included in the cost of a transaction are not examples of some mysterious "anti" market force.
What exactly makes nobles more noble than serfs and merchants? Can one really posit that their "concern" is anything more than their self-interest couched as the "public good"? Do they really make decisions which benefit others without any consideration of the benefit (sustained power and perks if nothing else) to the individual "public servants" themselves.
No wait, it's a myth that's not a myth but only rarely?
My neighbor grows great honeybell tangelo's. I have lemon and grapefruit trees. We regularly trade one for the other. Seems pretty risk free to me and I think it's relevant.
My father grew up on a Colorado farm during the depression. They had little money to speak of but the nine kids never went without. Everyone bartered. The teacher at the one room school house was paid in crops and livestock. Can't imagine they were breaking any laws but there certainly were no restraints, at least that I can think of, on their trade.
This still goes on today in many countries so why is this not a real, common and current example of the freest of markets?
Simply because a risk premium exists and is included in the cost of a transaction are not examples of some mysterious "anti" market force.
Most industries could be self regulated wherein there would be competition among oversight businesses. Sort of similar to driving schools. Some provide a higher quality service -- some cost less but not necessarily deliver less quality driving skills. It's government monopoly on oversight that skews the market. Who's the competitor of Underwriters Laboratory?
But keep trying to show the existence of a free market. It is entertaining.
While you are at it, perhaps you can explain how the cost of regulatory compliance associated with the 'simple surgical procedure' - even the simple disposal of biohazard waste, or CLEA compliance of HIPPA paperwork, was paid for with that puppy.
What do you think of attempts to reduce regulations to encourage 'freer' trade?
There is a difference between "free market" and "fair market". An unfair market is not free, and a hindered market is not fair.
Yes you said the free market is a myth. When you are provided with examples of a free market, you sputter that such examples are rare. The question now is simply how many examples do you need?
A transaction is not a market. Not even in your imaginary world.
There was pretty general agreement until Adam Smith that the way to maintain prosperity in a kingdom was to keep gold and silver (money) from leaving the country through purchase of imports since that decreased the money supply and therefore economic activity. Mercantilism was not simply a means of promoting the noblity's concerns but was actually a much more complex method which regulated all other aspects of the economy. There was great concern not to allow the lower classes to be crushed.
Forrest McDonald wrote an excellent book, Novus Ordo Seculorum, describing what mercantilism meant and it was not the simple caricatures we are used to seeing.
Of course the Marxist view is that such economic systems are completely class oriented but that is a simplification which does not always hold water. Nor were all kings unconcerned about their subjects' well being.
But a discussion of historical facts should not be confused with agreeing with the actions taken or the thoughts thought. While, to me, the Hamiltonian system of tariffs was appropriate in 1790 it is not today for many reasons.
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