First, it's my first post here, so hello, nice to meet you all!
Disclaimer: I'm not really an all-out Libertarian, but sort of a "fellow traveller", generally sympathethic to it, though preferring a broader cultural and historical perspective. I consider myself a Conservative - not in the "Daddy State" but rather in the Oakeshottian (or rather Aristotelian) sense. Oakie and Hayek had a lot in common - but that's another topic.
For now, I'd be interested in your opinion about Neoliberalism - not about the theory of Friedman but rather the "IMF Neoliberalism" - Chile, Russia, "shock therapy" etc. My opinion is not very positive about it, I think it's just yet another form of social engineering, but I'd first like to hear yours before I'd explain mine.
BTW please post here links to articles or blog posts to articles that criticise IMF / "shock therapy" Neoliberalism or Neoliberalism in general from a Libertarian, Austrian or any-other-pro-market-but-Neoliberal point of view. Thanks!
The problem with Neoliberalism is that it is more like mercantilism than it is free trade. Politically well connected companies or groups get subsidies at taxpayer expense. Check out these United States Federal programs you never hear about but are very real. The Export-Import bank and The Overseas Private Investment Corporation or the OPIC, which is not private since the government owns and manages it and gets it's funding almost exclusively by owning large parts of the Federal Deficit. So it indirectly gets paid by the Federal budget. The goal of these two companies is to subsidize, insure and or give cheap loans to companies that want to set up operations in countries that normally would be to dangerous to invest in. They also help in so far that sometimes when companies invest in poorer nations the skill level is very low and therefore cost of dealing with local workers is high and sometimes on a natural free market it might not be worth the investment. For instance alot (though not all) of Pinochet's "miracle" was politically controlled since the Export-Import bank gave massive trade credits to companies that would invest there who normally would not due to a bunch of reasons. This helped out the U.S in it's geopolitical strategy against the USSR in the short term. As far as the IMF is concerned, well I will let the links about it speak for themselves. I will also provide you with the links of the neoliberal government programs I spoke of.
IMF:
http://www.mises.org/story/280
http://www.cato.org/subtopic_display_new.php?topic_id=34&ra_id=8 (this one is a link to a bunch of articles about the IMF)
Overseas Private Investment Corporation:
http://www.opic.gov/
http://www.cato.org/pub_display.php?pub_id=1602
http://blog.mises.org/archives/005532.asp
Export-Import Bank:
http://www.exim.gov/
http://www.cato.org/testimony/ct-iv050801.html
http://www.mises.org/story/273
This post was tagged as spam, probably becuase of the number of URLs, which is one indicator that the system has for culling out spam posts. I posted this elsewhere, but could everyone please refrain from impugning the integrity of forum owners when there is a slight delay in posts? There is no way anyone can personally go through all over these. The Mises Institute is a tiny operation in terms of its employees. We have no one who has time to censor anyone.Just be patient please.
Publisher, Laissez-Faire Books
Basically my problem with Neoliberalism is the following. When you have a free market it's easy to decide what the state should do about it: nothing. But when you already have a nationalized or regulated system, there is no natural, organic solution. Because if you privatize or deregulate, it is the state that does so. And all the usual problems with decisions by the state apply - even more strongly, because privatization is probably the most important decision the state does with an asset it owns, therefore the most dangerous one. For example, if they just sell it to the highest briber that can be worse than just running it. Deregulation can also have negative effects when the state distorts the businesses by other means. Deregulation means more competition, and for example when the state keeps a few business well fed by their purchases (Crony Capitalism), deregulation for the rest of the business is bad.
Basically what I'm driving at is when you already have heavy state control, you have to be careful and smart in removing it, it's not a simple arithmetical "the less state, the better" stuff. You have to emulate the workings of the market first and then slowly mix this emulated market into the real market until they are indistinguishable. Basically, you have to undo the effects of the previous nationalization or regulation in a way that results in a situation as if that nationalization or regulation had never happened. It's similar when zoo parks re-habitate some animals to the wilderness and then gradually release it.
That's more or less the difference between creating a free market by privatization/deregulation and creating an oligarchy by privatization/deregulation.
I don't recall sending in any complaints on the matter because when I first sent that post out I had a message saying it just needed to be looked over properly.
I think I posted on the wrong thread and should have deleted. My apologies (I seem to be doing a lot of that today)
Haha no problem I am having one of those days too.
Miklos Hollender:Basically what I'm driving at is when you already have heavy state control, you have to be careful and smart in removing it, it's not a simple arithmetical "the less state, the better" stuff. You have to emulate the workings of the market first and then slowly mix this emulated market into the real market until they are indistinguishable. Basically, you have to undo the effects of the previous nationalization or regulation in a way that results in a situation as if that nationalization or regulation had never happened. It's similar when zoo parks re-habitate some animals to the wilderness and then gradually release it.
I understand where your coming from and I also hate neoliberalism for all the same reasons but I think it would be very hard for the government to determine how it would have been without the nationalization or regulation for the same reason that presently existing nationalized/regulated industries cannot determine their proper function and production in the market. I guess the best policy I would support is just denationalize completely and then let the market gradually fix the former problem.
Maybe. But in the long run we are all dead :) So it is also important how is it done.
There was a lot of debate about Chile and generally it revolved around the which is better, to produce more even if the distribution - in the statistical sense of the word - is quite equal, or produce less and distribute it - in the political sense of the word - more equally. I think neither. My point of view is the Aristotelean one: happiness is much more based on virtue, than circumstance. For me the most important thing about a political-economical system is to get the incentives right, to incentive people to engage in productive behaviour and to try to do it well. Basically, it's something along the lines that usually the first incentive is a "consumptionary" one: one engages in productive work because one has desires to get, buy, acquire some nice things. But in the longer run, one discovers that excellence - even if it's just that prosaic kind of excellence that of a factory worker, whose excellence lies in dutifully putting up with tedius, boring tasks and yet never ceasing to do it right, to it in a way he can be proud of his work - is a reward in itself, that producing, creating something of value is a great satisfaction in itself.
From this point of view a statist/socialist system is a great disincentive, but "crony capitalism", an artificially created oligarchy is one too.
And when a bunch of young economist are endowed with practically unlimited power over the economy by a dictator, the incentive to cronysm becomes quite big.
Though one could argue that they are different kinds of the same coin: there isn't really much difference between de jure legal robbery (socialism) and de facto legal robbery (crony capitalism). Agreed. What I am driving at is that liberty doesn't really "scale". Basically what I mean that, as a rough example, if socialism is a system with 10% liberty and crony capitalism is a system with 40%, it does not mean that crony capitalism is better. It might be that the shape of the curve is something like above 70% it's increasingly better, under 70% it gets radically worse, it hits the bottom at 30% and actually at 10% it's slightly better. (Of course these are just numbers pulled out of my backside, without any real meaning.) On the lower end of the liberty scale you might get better results with slightly less, than more liberty.
Or, for example, American healthcare. As far as see from this side of the pond it seems the state does a lot to drive up the cost of healthcare. Costly FDA licencing procedures, and even more importantly, doctors have to protect their backsides from predatory litigation therefore they do and bill a lot of unnecessary treatments that the patient does not really need, it's just the doctor's protection against frivolous lawsuits. When everything that's not absolutely perfect and bleeding edge high tech, the absolutely latest and best , is considered a professional mistake and therefore grounds for litigation, you get and get to pay for, the best and latest. Logical enough. So probably we can agree that it would be best if the state would haul it's fat backside out of the whole thing and would not drive up the costs. OK. But if it does not happen then maybe a partially socialized healthcare could be a lesser evil than this system, because this one is imbalanced: the state practically determines the costs, but you pick up the tab, they, from the point of view of their budget, don't have to worry about the costs, don't feel the consequences of it. That's a clear moral hazard - if the state would get to pay for it (i.e. patients/taxpayers would pay for it indirectly, as opposed to directly) they would be incentived to stop driving up the costs.
It's all a system of incentives, I think, and although liberty gives the best incentives, an imbalanced semi-liberty can given even worse incentives than a balanced lack of it.
Now it might sound weird, but let's think about it. If I get to decide about my own matters: no moral hazard. State decides about the costs and state pays them from your taxes: there is a clear moral hazard, but still there are some semblance of sane initiatives, because they have to strike a balance between not making it too costly and not making it too low quality. Both extremes would cost votes. State decides about the costs but you pay for it directly: a huge moral hazard: in such a case why would they worry about the costs?
Something else. I have still not decided yet whether I should read up on Austrian or Chicago economics. My time is limited, probably can't do both in the short run. What I like to do is this kind of "incentives analysis" I did above. It might be completely wrong but I think the method itself isn't wrong. Is it closer to the Austrian or to the Chicago view?
Both schools focus on incentives. The Austrian School bolsters its analysis with further considerations though. I know that if I had to choose between studying the one or the other, I'd definitely go with the Austrian School.
That is an interesting argument but I have yet to see an example of a move from Crony Capitalism to full blown socialism actually improving the standard of living. Cronyism might restrict supply and cause market distortions but they still will at least allow for some diversity and quality control on the given industries. And the more power and responsibilty the Government has the more Croynism will increase. Just because something is socialistic does not mean cronyism goes away, it only gets worse.
For instance in some socialized health care (in this case Canada) there will be a serious glut of medical supplies to deal with specific types of Cancer but they will have surplus of common cold medication. This is a more benign form of cronyism but it is still cronyism towards a larger group of voters vs a smaller group. On top of that whole industries will be subsidized by a socialist industry. Just think of what medical attention is "listed" or covered by the national health care. Once again in Canada certain types of dentistry is not covered yet other parts of the medical economy are. Also to try and work your way through some of the red tape the government puts up on types of coverage, hinders and restricts the poor much more than the upper classes which is a major issue right now in Canada. So in this case, socializing medical care did not make the system more equitable AND it lowered the quality of the product.