Noam Chomsky, "Free Market Fantasies: Capitalism in the Real World": http://www.chomsky.info/talks/19960413.htm

This was implemented quite effectively and was largely based on legitimate economics. But it has a giant flaw in implementation: the state intervention part over time becomes a tool for those with power and not for the entire representative population, from where it draws power to intervene.

For example, take economic stimulation during recessions, which are often the only time direct economic corrections happens for the average person. The goal is to increase "consumer spending" during downward market trends. Meaning the continued purchase of things they don't really need (new cars, houses, and bank loans). Revenue keeps flowing to the large organizations who would often be hit the hardest during recessions. Plus a few special organizations get direct bailouts from a central bank.

We're told in the long run this is better than a complete recession/depression and we'll recover faster. If we just hold on and keep spending, things will get back to normal and everyone in the economy benefits. But if you look at it from a higher-level, the top-end of the market is easily the biggest beneficiary of this policy, while consumers are largely still left with very little ability for upward mobility.

The same trend exists in almost all state interventions. Those who come out on top as the result of the policy are almost always those already at the top. It is neither the invisible-hand of free markets nor equal-distribution of state power at work.

I don't deny that the government plays an important role in funding science and tech, which in turn is essential for silicon valley. But it is still completely wrong to characterize Silicon Valley as "state-sponsored investment". Take Google. The original algorithm was developed at Stanford, but it didn't involve any fancy math that required a DARPA grant. The founders came up with the idea of using commodity hardware for servers. All the other technologies they later built (MapReduce, BigTable, etc.) were the company's own inventions, involving no help from outside sources.

Similar things can be said for Apple, Microsoft and also much of the Open Source movement.

The fact that the government played some role does not mean all the value generated really belongs to the government.

And in case anyone was tempted to make some false assumptions about my viewpoint, I'm not arguing that there should be no redistribution of wealth. I'm just arguing that claiming that we don't live in a market economy is wrong, and a poor basis for arguing for redistribution of wealth.

This modern world has already invented the cheesegrater, what remains to be invented really is -for most part- too complex to be conceived from thin air with a stroke of inspiration.

I would have to study for a decade to have a chance at success in quantum physics, and I'd be relying on an enormous amount of gathered knowledge in doing so, much of it coming from state-sponsored work. That would be a tremendous effort on my part, but it pales to the effort of the society as a whole in making my future available to me. In such a light I have a hard time seeing how wealth distribution currently is "fair".

As a philosophical point, I agree that the fact that all of society is needed in order to produce our wealth, is a good argument for redistribution. But imagine that somehow this wasn't the case. I think the redistribution would still be justified on the grounds that the imposition on people's rights (paying taxes) is very small compared with the benefits. In fact, forcing people paying taxes is the least restrictive way for the government to implement any policy.

The Federal government also controls the Federal interest rate and its centralized currency directly. It extensively regulates every major financial industry; to the extent that this fails to produce sufficient "regulation" for a liberal's purposes, it is, generally speaking, not for lack of statutory power, and a concerned liberal should probably be looking at the (almost always) liberals exercising the statutory power, rather than complaining about the few people whose meager voices suggest that perhaps the power shouldn't exist at all, lost in the sea of those screaming for more.

Indeed, it extensively regulates every major industry. It produces thousands of pages of new regulations every year. It taxes nearly every economic transaction. You can't hardly do anything without the government being involved. It already engages in huge wealth transfers every which way (even some really crazy stupid ones, like Obamacare's transfers from the young and healthy to the on-average wealthier older crowd).

This is not necessarily and automatically a bad thing. I'm just mentioning this stuff to show that the idea that we live in some sort of libertarian nightmare is ludicrous nonsense. The state has the power already, today. It's not theoretical, it's a done deal. If you don't like the outcome we're experiencing, take it up with the State.

Personally I can't help but observe that we keep giving more power to fewer people under the rubric of "better government", and, lo and behold, our society has ever more power and wealth concentrating in fewer and fewer hands. Why, oh why ever could it be? Somehow some people manage to convince themselves this is all the libertarian's fault. I'd suggest looking at the people who keep putting more and more power in fewer and fewer people's hands and then acting all confused about the outcome where more power ends up in fewer people's hands. There might be a connection there. We might want to consider, you know, not doing that more if we don't like the outcome we're getting.

Much of the reason why I am a libertarian is that I actually think it's a good thing for society, in precisely the ways that David Simon is complaining about. With the bloated Federal government taking all the power, the government not only doesn't solve "the problem", for whatever problem we're talking about, but it also often prevents you from solving the problem. It can do this either legally, where it claims for itself exclusively the power to solve the problem, followed by it either doing nothing or doing the wrong thing, or perhaps more poisonously, it convinces you that it is its responsibility to solve the problem, followed again by not doing so or doing the wrong thing.

A couple of days ago I happened to flip by the Canadian Broadcasting Channel's news hour, and there was this guy standing in front of a children's playground, complaining that the city wasn't taking care of it. Scattered on the playground were about 30-40 bagged piles of doggy-doo-doo. It otherwise appeared to be a fine playground; it was modern, the paint was cared for, the swings were all there, it did not show obvious wear. He's standing there talking to the reporter and complaining that their part of the city needs more money. My crazy, socially-evil, society-hating, collective-despising libertarian anwser was "Dude, in the amount of time you spent complaining to the reporter, you could have just cleaned up the playground." Seriously, all that was wrong with it appeared to be scattered piles of, and again I emphasize, bagged doggie-doo. This is how the government can corrode away the very social consciousness that people so desparately try to use governments to create. Yeah, it's a small example, but it happens everywhere, for all kinds of things.

(Yes, I realize that cleaning it would then mean the guy couldn't complain, so he's putting on a show. I further realize that it's really quite likely that the doggie-doo receptable probably had all the doggie doo piled up in an somewhat unsanitary pile, and the guy probably deliberately scattered it before the video shoot, because really, scattered bagged doggie poo is a rather unlikely scenario. However, I'd suggest this just further emphasizes the point I was trying to make here. You can't create "social responsibility" by telling everyone that somebody in $GOVERNMENT is going to take care of "it". You create the exact opposite. If you want more social responsibility you need less government.)

It deserves mention that this game can be played in reverse just as easily.

The only way that I know to introduce an ounce of objectivity into the discussion is to pick a single topic and dive so deeply into it that you are no longer fooled by the false but plausible statements hurled around by either side. Unfortunately, this is a very difficult task. I don't know how to scale the approach.

Inflation has a compounding effect of screwing the poor and transferring that wealth to the rich. It shouldn't be surprising that in 1970 Nixon unpegged the dollar and let inflation float and since 1973 the income inequality in this country has gradually become unhinged.

we keep giving more power to fewer people under the rubric of "better government", and, lo and behold, our society has ever more power and wealth concentrating in fewer and fewer hands. Why, oh why ever could it be.

Rich and wealthy liberal economists keep prescribing more government(which they may or may not realize contributed to their cupidity) to 'help out the poor' with 'stimulus' (which gets subcontracted to politically connected, wealthy people - did we not just throw 650 millon dollars at already-rich people to build a broken healthcare website?), while stabbing them in the back with inflation

A person whose average cash balance is $100 is not vulnerable to inflation.

if a poor family is spending 90% of their income on day to day expenses, and a rich family is spending 20%, and there is 10% inflation, then the poor family will then be spending 99%, which is a 90% reduction in margin of safety/ability to invest. The rich family will then be spending 22% which is a 2.5% reduction in margin of safety/ability to invest.

Now, you might argue that wages catch up. For starters, many poor are on fixed incomes. BUT even for the employed, liberal economists routinely argue for screwing the poor out of their wages (of course they don't put it that way):

http://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hig...

It goes like this: even in the long run, it’s really, really hard to cut nominal wages. Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts.

Think very carefully about what that means.

Ironically, it was keynes himself that warned:

By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers,' who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat.

Libertarians whine about arbitrary confiscation of wealth by the government, but they have no problem when competition drives the price of labor down to (or below!) the price of survivability, even though from the point of view of the poor person both justifications for taking their money are equally arbitrary. The government promises to use the money to help people (translation: to fill rich peoples' pockets). The market promises to use the money to increase efficiency (translation: to fill rich peoples' pockets). The question is which party is better at delivering on their promise. You have noticed that the government isn't great at delivering on their part of the bargain. I would like to add that the market isn't stellar at this either. I believe the market tends to be worse (i.e. that "trickle down" is less realistic than "bubble up"), but I must admit that this belief is the product of my political beliefs rather than the other way around.

Again, it is worth also considering that the nordic countries, which have favorable income distributions, have had extremely low headline inflation rates over the last 50 years.

You make an false analogy: The government promises to use the money to help people (translation: to fill rich peoples' pockets). The market promises to use the money to increase efficiency (translation: to fill rich peoples' pockets)

But consider: Who is the market? It's everyone. Who is the government? A select few. So let's say indeed both systems are not "great" at delivering on their part of the bargain. Given that the market is everyone and the government is a select few, which one do you suppose will be a bigger failure at serving society's needs in a just fashion?

Nope. Suppose a robber puts a gun to your head and demands your wallet. You give it to him because you value your life more than your wallet. According to naive market theory, this is a positive sum transaction with consent from both parties! Obviously you didn't consent to getting held up, but it wasn't a market transaction. Restricting your attention to market transactions is the ridiculous simplification that allows markets to trivially triumph in thought experiments.

Generally speaking, "create the sickness, sell the cure" is a perfectly good business model. We make the obvious ones illegal (pointing guns and demanding money), but more sophisticated versions riddle our economy. For instance, the Goldman Sachs Artificial Aluminum Shortage applies the same basic principle.

> markets tend to flatten [power] out in the long run.

Are you kidding me? This is almost objectively untrue (unless you cherry pick "long run" or invoke timescales over which attribution to democracy vs capitalism is impossible). Are you sure you didn't mean to make the "rising tide lifts all boats" argument instead? It's a base rate fallacy, but at least it sounds reasonable.

> Who is the market? It's everyone. Who is the government? A select few.

The market is "everyone" in name only, just like a democratic government. The reality is that the biggest players get to make the rules. Sometimes they do it via regulatory capture, which you can correctly blame on the government. Sometimes they do it by collusion, undercutting, or some other anti-competitive practice that must be attributed to market failure. Sometimes they do it by taking advantage of arbitrary existential facts (we have an excess of workers -> workers can, collectively, be paid less). Nobody consented to their need to eat, breathe, and house themselves, nobody consented to have a certain amount of competition, yet the market has historically had no problem exploiting these facts to extract obscene concessions from people, even when the fundamental resources were abundant. Whatever the market does represent, it's certainly not the free will of the people.

Look, I generally agree with you that markets are usually more flexible and better at self-regulating. I think that most sectors of the economy function better under market control than state control. But I also think there are glaring exceptions (healthcare) and that libertarians jump too quickly and eagerly to the point of view that deregulation is the answer, even in the presence of abundant historical or comparative evidence to the contrary. They like to pretend the free market's shit doesn't stink (it's a feature, not a bug that unskilled labor consistently gets the crap beaten out of it at the negotiation table due to the fact a single person creates marginally more labor supply than demand). They don't take responsibility for messes the market creates (they are convinced it's not the market's fault our healthcare is 2x as expensive as in single-payer countries), and instead of basing their decisions on comparing strengths and weaknesses of different systems (markets are good at X, bad at Y, governments are good at Y, bad at X) they trumpet facile arguments from the rooftops.

"[The socialists declare] that the State owes subsistence, well-being, and education to all its citizens; that it should be generous, charitable, involved in everything, devoted to everybody; ...that it should intervene directly to relieve all suffering, satisfy and anticipate all wants, furnish capital to all enterprises, enlightenment to all minds, balm for all wounds, asylums for all the unfortunate, and even aid to the point of shedding French blood, for all oppressed people on the face of the earth. Who would not like to see all these benefits flow forth upon the world from the law, as from an inexhaustible source? ... But is it possible? ... Whence does [the State] draw those resources that it is urged to dispense by way of benefits to individuals? Is it not from the individuals themselves? How, then, can these resources be increased by passing through the hands of a parasitic and voracious intermediary? ...Finally...we shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State. The public treasury will be literally pillaged.

And here is the clincher (think very hard about the last sentence):

Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: "Let me have the benefits, and let others pay the costs." Everyone's effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success."

In other words. It's perfectly reasonable for society to want to do things that go against the precept of "profit first". But if society should want to do such a thing, it should do it through private charity and not through the coffers of the state.

I practice what I preach. I volunteer every week feeding sick people and personally run a non-profit scientific corporation.

Maybe in the US but it's not a fundamental of governments generally.

With unemployment low, people would switch to jobs with more favorable conditions. That's one of the reasons Ford paid (relatively) much more than other employers. In a world with high unemployment, the employers dictate the conditions.

See more: http://www.nytimes.com/2013/10/27/business/economy/in-fed-an...

Key quote: "Rising prices allows companies to increase profit margins quietly, by not raising wages"

The change in inflation would impart no change to the balance of power, so there's zero reason to believe that employers would become more generous in the alternate condition.

We already see employers trimming employee wages even today. It would simply be more common in a zero-interest environment.

[1] http://en.wikipedia.org/wiki/Keynesian_economics#Wages_and_s...

My point is that if giving the government more power was going to solve all of our problems, it should have by now. We've been giving it more power. Us libertarian types are thoroughly outnumbered by conventional rightists and leftists, who both agree that the government should have more power, they just disagree what it should use it on and who should use it, but when it comes down to the compromise vote, the government almost always ends up with more power. It has been a monotonic ratchet since at least the New Deal.

We've been promised nirvana if they just have more power, and yet, lo, we've given them all this power and apparently the situation is worse than ever, if you listen to them. Is it really such a crazy idea that these two things might be connected? Is it really such a crazy idea that maybe the fact that we keep centralizing power so we can experience a less centralized power structure is a completely nonfunctional solution? One that requires a rather extensive propaganda campaign to make sure people think in the Right Way so as to avoid noticing this rather simple question?

(I note I've now posed it on HN three or four times, and I'm yet to get even a smidge of a response to it. I find this often Means Something.)

I'd suggest the sheer opprobrium shot at libertarians is itself just the dominant power structure trying to prevent you from being exposed to ideas that may result in them having less power.

(I am simplifying a bit such that power == money; it's a pretty decent approximation.)

Nobody's responding to you because, most likely, if you're going to have silly notions like this, then what's the point? You've already chosen a side, presenting rational for that decision based on arguments that nobody is making.

Binary thinking does not make for even the slightest bit interesting of a debate.

But we've given our "tribal leader" (government) more power than any single entity has ever had in history, and our problems are getting worse, not better. If you prefer a less binary argument, if giving more power to the government is going to improve the problem of inequality, inequality already ought to be getting better, not worse. If inequality is getting worse, and we've been giving more and more power to our government for decades, it seems irrational to conclude that the only way to "fix" inequality is to keep giving the government more power.

This number seems to shock my conservative and liberal friends alike.

Blithely hoping voluntary donations by the greedy will eliminate the systemic Apartheid of class is the worst kind of snake oil medicine. He needs a straw man to burn to hide his elephant in the room.

> The 2012 Federal government expenditures were 3.54 trillion. Right off the top, the Federal government accounts for 22.6%

We thankfully have a canonical example that exposes just how bad government can be: Obamacare.

Government is the only organization on the planet that can take a website that could not possibly cost more than one to five million (as a ridiculous maximum) and turn it into a disaster costing upwards of a billion dollars. Think about THAT for a moment. It took government A BILLION DOLLARS just to make a website that the private sector could have delivered for A THOUSAND TIMES less money and in a third of the time. And, of course, it would have worked as required on day one.

I am not going to propose government money utilization is a thousand times less efficient than in the private sector across all domains. If I had to guess, based on my direct experience selling to various government agencies and seeing just how convoluted the process can become, I'd say the private sector is 50 to 100 times more efficient at everything. The exception, of course, is killing people and spying on the population.

I'll go with 100 times for easy numbers. This means whatever government accomplished with 3.54 trillion could have been done privately for a mere 35 billion. Even if I am off by a factor of ten this is still a major difference.

This means that this 22.6% participation is mostly money being burned. The actual real impact of government is probably somewhere in the the 2% or less range.

To use the lovely Obamacare canonical government-incompetence-and-waste example. Ask yourself this question: What could we have done with a billion dollars if instead of letting government burn it to try to build a website we had given five million of that to a qualified private entity to build the site and devoted $995 billion to, say, medical research or other massively valuable causes? Right. They just burned money that could have funded the discovery of a cure for Cancer and who knows what else.

You have to consider this:

http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY...

and then this:

http://nationalpriorities.org/budget-basics/federal-budget-1...

Hard to argue that the money is being spent with both discretion and intelligence. I point you to the 57% in military spending our many wars, pointless foreign aid, Solyndra and the inability to even manage the development of a website as proof.

No. Less government is better for all of us.

Well, I don't know.

The private sectors seems willing to pay 3 BILLION DOLLARS for a BS message/photo sharing app (Snapchat) that one could have built in 6 months with 2-3 man years of effort.

Compared to the trivialness of that, the healthcare website is rocket science.

Anyone can build a Snapchat, but not anyone can have millions of active users.

Sorry, just had to point out my opinion that that argument isn't too relevant to the discussion.

Source? AFAIK not even the craziest right-wing conspiracy blog out there claims healthcare.gov cost a billion dollars to create.

The Washington Post has the best reporting on it so far. It puts the figure for the website development and support itself at $174M and casts doubt on the wildest one out there ($600M). Also, there are significant costs on the IRS side of things that by definition couldn't be delivered by the private sector.

http://www.washingtonpost.com/blogs/fact-checker/wp/2013/10/...

http://www.washingtonpost.com/blogs/fact-checker/wp/2013/11/...

For the last year, I have been working with a team of 20+ to accomplish only half of a task that would have been absolutely trivial in comparison with my last job in the fully private sector. It could have been accomplished by one person working for 6 months, or perhaps 2 working for 4 months.

The government pays for 20 times the personnel, quadruple the required time, and gets a quarter the quality in return. And this team is rated very highly by the government's idiotic metrics.

Since the contractor companies also skim off the difference between what the government pays them for the labor and what they actually pay their employees, I can easily believe from my anecdotal experience that government is capable of wasting 99% of everything that it spends.

While waste does not disappear entirely from the economy, it is not directed into useful production, which is the basis of a healthy economy. What it does is build a human ecosystem around absolute fraud and purchasing political favors and influence.

That doesn't account at all for the things that government does to destroy the wealth-building activities of others, such as requiring barbers to spend thousands of dollars to get licensed to cut hair for $10 a pop, or demanding that 8-year-old kids selling lemonade buy business licenses.

It would appear the Federal site project was poorly managed.

This is not a failure of ideology, and it's definitely not limited to the public sector.

My conclusion is supported by fact, data and experience beyond what could be covered in a twenty line HN post. Government, as currently devolved in the US, is very much the problem. The solution is less of it. Radically less. Everywhere.

[0]http://en.m.wikipedia.org/wiki/Opium_production_in_Afghanist...

The only "data" you've attempted to provide so far was off by a factor of around 7.

If Nock is correct, there is a darker thesis that follows. Over the generations, dependent thinking becomes ingrained. It becomes impossible to think otherwise, as the examples we have of civil society solving problems fade into the past. In short, we become domesticated humans.

It was also the thesis of Marx that for socialism to succeed, a new Socialist Man would have to be raised, that human nature would have to be changed. This began in America with the reign of FDR, which coincided with the birth of the third American Republic - the Bureaucratic Superstate.

And yet if you look to the past you see that when government does nothing people die in the streets because charity in no way covers what government can now. Particularly for those on the fringes of society, those considered immoral or sinners in some way.

Private social activity absolutely does not do all we need it to.

FWIW I don't disagree with the premise, state intervention may well crowd out social activity.

But you'd have to be deliberately blind to hundreds of years of human history to make the claim that the social activity did anything like the job our current welfare models (for all their masses of imperfections) do.

It's one thing to think it inappropriate for the state to ensure that disaster relief happens (even clumsily), but the idea that the private sector would otherwise be picking up the slack is unprecedented and and far from plausible. Charity has always been more a symbolic gesture than a real influence.

My house was ruined by Hurricane Sandy, I am grateful that our Republican governor went against the grain and backed a relief fund program.

Fuck you and your advocacy of disaster capitalism. Towns were wiped off the map, if you think the solution is a bunch of vultures looking to profit from a tragedy and not government intervention, you've been blinded by your ideology.

Here's a hint: despite locals' efforts to help one another out, all of our shit was wrecked, but we still did it. Everyone's everything was gone, we can only help ourselves so much given the fact most people didn't have a home, electricity, or running water.

We must be the domesticated humans you're going on about. What does that make you? Who benefits from such an disgusting ideology? Only people who are infinitely more wealthy than you'll ever be.

Secondly, why do you assume that the only two institutions in the world are the government and the market? That itself is emblematic of the erosion of the social fabric in America.

These were tremendous gifts to private companies to induce investment in what was one of the high tech industries of the time.

Why don't we go back to funding moonshot projects instead, then? Let's see Apollo Program/Human Genome Project-level spending on Next-generation sequencing (protein and RNA included), novel propulsion engines for deep space probes, battery research, materials, etc. If we spent the same money on pressing problems, we could support the science and tech sectors all the while doing incredible societal good.

Corporatism (the current system) is neither socialism nor capitalism. It's designed to give a well-connected elite the best of both systems and the rest of society the worst of both. It's like suburbia, which delivers the best of both worlds (urban and rural) for the rich and the worst of both to the poor.

The truth is that the elite of our society do not meaningfully compete. They serve on each others' corporate boards, arrange jobs for one another in event of adverse circumstances, and have generally set up their own private welfare system (see: EIR gigs). The competition rhetoric exists because they intend for us to compete-- against each other, thus ignoring them.