Economics Questions

Re: When is an economy command and when is it free market?

ricarpe — Wed, 13 Oct 2010 18:59:59 GMT

It sounds like he's assuming that the governing institutions are horizontal. Government institutions are vertical organizations, hence the multiple layers of beaucracy that one would have to "fight through the red tape of" in order to start their own business.

Re: When is an economy command and when is it free market?

Autolykos — Wed, 13 Oct 2010 18:57:05 GMT

Daniel Muffinburg:
Yes, I am referring to national economies. And yes, you make a great point; a point which I tried making to my classmates as well, but forgot to mention here. (To the extent that I have tried, I haven't been able to figure which logical fallacy is being committed when one thinks of economies as national economies.) How would you argue the point that we're both making?

If by "the point that we're both making" you mean the continuum problem of delineating "economies" (and "societies"), I'd say that the fallacy being employed is equivocation. The reasoning goes like this: if the term "economy" is necessarily tied to the term "nation" or "nation-state", then one cannot logically speak of a "global economy", "local economies", "regional economies", etc. Furthermore, it would mean that the very term "national economy" is a pleonasm (i.e. redundant).

Giant_Joe:
Borders are arbitrary. What's the difference between a state economy, a municipal economy, or a national economy? Why aren't there tariffs between states or cities?

Also this.

Re: When is an economy command and when is it free market?

Giant_Joe — Wed, 13 Oct 2010 18:53:59 GMT

Borders are arbitrary. What's the difference between a state economy, a municipal economy, or a national economy? Why aren't there tariffs between states or cities?

Re: When is an economy command and when is it free market?

DanielMuff — Wed, 13 Oct 2010 18:49:57 GMT

Daniel Muffinburg:
When is an economy command and when is it free market?
Is the professor's "burden of proof" method flawed and, if so, how so?
Given that USA economy is not free market, by definition, how would my classmates be convinced that the USA economy is not free market?

First I have to ask whether there's a single "right" way to delineate one "economy" from another. You're probably going to reply that you're implicitly talking about "national economies", but I hope you can see my point. It's the same kind of problem that one has in delineating "societies".

Yes, I am referring to national economies. And yes, you make a great point; a point which I tried making to my classmates as well, but forgot to mention here. (To the extent that I have tried, I haven't been able to figure which logical fallacy is being committed when one thinks of economies as national economies.) How would you argue the point that we're both making?

Re: When is an economy command and when is it free market?

Autolykos — Wed, 13 Oct 2010 18:44:31 GMT

Daniel Muffinburg:
When is an economy command and when is it free market?
Is the professor's "burden of proof" method flawed and, if so, how so?
Given that USA economy is not free market, by definition, how would my classmates be convinced that the USA economy is not free market?

First I have to ask whether there's a single "right" way to delineate one "economy" from another. You're probably going to reply that you're implicitly talking about "national economies", but I hope you can see my point. It's the same kind of problem that one has in delineating "societies".

When is an economy command and when is it free market?

DanielMuff — Wed, 13 Oct 2010 18:40:26 GMT

According to my International Business professor, the way to determine whether an economy whether an economy is command of free market is by using the burden of proof method. That is, you aggregate the amount of free market "institutions" and the amount of command institutions in the economy and determine whether the burden of proof lies towards free market or command.

Furthermore, he mentioned that there are a couple of types of economies that lie within the command/free market spectrum. For example, mixed economy, where the state own many companies/industries, but where the other institutions are free market; state-directed economy, where the state directs the economy by subsidies and regulations.

So, I've tried explaining to classmates that the USA economy is free market only to the extend that it is not state-directed nor state-owned. That is, that state either owns or directs every single industry and company. Furthermore, I have tried to explain that it is mislead to only focus on the federal government to determine whether an economy is free market, command or anything in between.

I've shown how state and local governments either own or direct every company and industry within their borders. For example, they own parks, forests, lakes, rivers, roads, bridges, transit systems, hospitals, automobile driver licensing companies, fire departments, courts, police, housing, etc. Furthermore, they direct almost every aspect of business via regulation, codes, laws, and subsidies, which include: zoning laws, evironmental laws, fire codes, taxes, subsidies to industries and companies.

I made the point that, in America, you can't run business without the permission of the government. So I asked, how can an economy be free when you can't run a business without having permission from the government to do so?

And regarding the federal government, there are the FTC, the FDA, the SEC, the FAA, the DOJ antitrust division, the EPA, etc. So, my questions are:

When is an economy command and when is it free market?
Is the professor's "burden of proof" method flawed and, if so, how so?
Given that USA economy is not free market, by definition, how would my classmates be convinced that the USA economy is not free market?