Posts Tagged ‘free market’

It’s the Economy Stupid!

December 13, 2012

From far and wide it seems that all we hear is the hue and cry about how to fix the economy. I read about how we should be “fair” about taxing the “rich.”

That’s all fine and good if you are simply stuck on stupid. Think about it people. Who pays the lions share already when it comes to taxes? The upper middle class and the truly wealthy, that’s who. If everyone paid taxes at the same rate, yes, even welfare recipients, there would be no budget crisis. In fact though, taxes would probably drop to levels unheard of in modern times. Even on those of us that really are much better off than the rest of us.

But no, we would rather sit around and play the class warfare game. Answer me this socialist pundits. When was the last time that a poor person gave you a job? Any job, even a poor paying job? It’s called trickle down, or yes, up, economics. The system works, and yes, it is part and parcel of free market economic models. Before the lefty’s jump all over me about how we got into this mess through free market policies just remember that there has never, in all history been a true full economic system. From the Soviet Unions official Black Market to the unofficial black market there was a degree of capitalism at work there. Here in the United States we have onerous regulation that destroys most of what would be described as a free market. Leftest lawmakers dabbled in the free market, and guess what happened? You are living through it! Not to mention that we do indeed have a black market at work here as well. Drugs, weapons, and even tobacco products thrive in the era of taxation beyond the pale.

So what do we do? Turning over our own responsibilities to a bunch of elected officials that really are clueless is not the answer. Revolution, while quite attractive to many, would take generations to achieve the standard of living that we now enjoy to be achieved once again. Compromise, when addressing ones deepest held values is no virtue. In a nation so diverse as The United States those values may indeed be just as diverse. How do we address that Pandora’s box?

I submit that we should look to our own history for the answers to this all. Restore the original intent of The Declaration of Independence, The Constitution, and The Bill of Rights.

Here are just a few things that would get us headed back on the road to prosperity.

  • Reign in The Supreme Court. Rulings that serve only the interests of government and cronies have destroyed the actual owning of private property. The taking of civil rights for much less than true mental deficiency or felonious behaviors. Forcing the purchase of anything that is a private product that does not involve the safety of others are just a few examples.
  • End the drug war, period. All drugs, period. We could still have purity and efficiency laws for medicinals. Plus we would not be party to making thugs and murderers into millionaires. There will always be alcoholics and drug abusers and gangsters will always find some vehicle of prey but we will not be enablers to that on a national scale.
  • Develop a system whereby elected officials are subject to a performance evaluation that is more than simply winning an election.
  • End the barriers to new political persuasions entering the market of ideas. The Republicans and Democrats have had a free ride for way to long and have done little for anyone but themselves. As in the politicians themselves. Just look at how the Democrat Party has used and abused people of color, and how the Republicans have done the same to the working man.
  • Overhaul the education system here from top to bottom. I should not even begin to have to go into that issue!
  • Community Service: All people, unless gravely disabled, should be required to have spent some time in service to the nation. Be that as a volunteer in EMS, Firefighting, or Armed Forces or Police work. All persons I should reemphasize, no getting out of it because you are the son or daughter of a Senator such as happened all to often during the draft. I myself would like to see a two year mandatory period of service in the armed forces. Right out of High school, no deferments, no straight into any Officers program that includes basic training in Infantry skills. The national bonus to that is obvious. But that is just me.

I am sure that many will argue against what I just offered. Feel free to defend your positions. But, being a Marine Corps Brat, you had better have a better alternative to offer, and not just say that you don’t like this or that.

Keep the shiny side up!


Trying to make sense of bailouts and other such Socialist ideas

December 2, 2008

All over the internet I keep hearing things like, or along the lines of; Obama will save us from ourselves, and other such drivil. I hear on a near constant level that this is what free market economics gets for the people. When, in point of fact, the United States does not operate in a true free market economy, much less in a  laissez faire model. Which is actually what these very same people imply has been being used in recent memory. These are most often self appointed masters of economic thought. Picking and choosing bits and pieces of what they have learned, or just heard along the way. Never mind the basic tenets of Macroeconomics and Microeconomics, after all they have an agenda to pursue. That most often being the destruction of western society in general, and capatilism in particular. They are in fact usualy espousing Social Economics. However they do so based upon emotion, not upon reasoning and most often without any sense of logic.

Hence, I will post a bit about the Natural Laws of Economics. Please follow the link, as there is a wealth of information to be had there.

A natural law is a proposition that is universal to a subject matter. In science, a natural law consists of propositions describing and explaining observed regularities. There are in economics some basic regularities which have been designated as natural laws of economics. These include:

1. The law of demand. When the price of a good falls, the quantity demanded does not fall. Usually, the quantity demanded rises with a fall in price. Strictly, the law of demand applies to the substitution of cheaper goods for more expensive goods due to a relative change in price. The law of demand also applies to the whole economy: when the whole price level falls, with the amount of money remaining constant, a greater amount of goods will be purchased. 2. The law of supply. When the price of a good rises, the quantity produced does not fall. Usually, a higher price for a produced good results in a greater quantity produced.

3. The law of diminishing returns (law of decreasing marginal productivity). Given a fixed amount of some input, when ever more amounts of the variable input are added, eventually, the marginal product (the last unit’s contribution to output) declines.

4. The law of one price. In an efficient market, a financial asset will tend to have one equilibrium price, because of arbitrage.

5. Gresham’s law. Bad money drives out good money when the bad money is legal tender.

6. The law of reflux. In competitive free-market banking, there cannot be a permanent over issue of banknotes, since any issued in excess of the quantity demanded will be redeemed.

7. Law of supply and demand. In a free market, the equilibrium price of a good is that at which the quantity supplied equals the quantity demanded.

8. The law of diminishing marginal utility. As one obtains more and more of a particular good, eventually the marginal utility (value from one more unit) declines.

9. The law of unintended consequences. Human actions, and especially governmental acts, have consequences which were not intended and not anticipated by the actors.

10. The law of iterated expectations. One cannot use the limited information at some previous time in order to predict the forecast error one would make if one had better information later.

11. Engel’s law. The proportion of income spent on food in an economy is inversely proportional to the general welfare of the society in that economy.

12. Wagner’s law. As an economy grows, government spending has increased by a greater proportion.

13. Foldvary’s law of inequality. Inequality equals the concentration of a distribution times the number of units (I=CN).

14. Say’s law of markets. The supply of goods will pay the factors of production such that the payments are equal to the value of the product, and therefore aggregate quantity supplied equals aggregate quantity demanded.

15. Law of time preference. People tend to prefer to obtain goods sooner rather than later, and will pay a premium (i.e. interest) to shift buying from the future to the present.

16. Law of the market. Statements made by market participants are assumed to be truthful, and products are presumed to be safe and effective unless stated otherwise.

17. Pareto’s law of distribution. There is a general tendency for 80 percent of the consequences to result from 20 percent of the causes, which often applies to property, 80 percent of the wealth owned by 20 percent of the population.

18. Law of cost. All costs are opportunity costs, the true cost being what is given up to get something.

19. Law of comparative advantage. Trade takes place because parties specialize in the products which have a lower opportunity cost, rather than merely a lower physical cost.

20. The law of wages. The wage level of an economy, where labor is mobile and competitive, is determined by the marginal productivity of labor at the margin of production, i.e. the least productive land in use.

21. The law of rent. The economic rent of a plot of land equals the difference between its output and the output at the margin of production, i.e. the least productive land in use, using the same quality of labor and capital goods.

22. The law of capital goods. Investment in capital goods and human capital expand until the expected return on investment, adjusted for risk, equals that of the long-term real interest rate.

23. Walras’ law. If there is an excess quantity supplied in one market, there must be a matching excess quantity demanded in another market.

24. The law of economizing. People tend to economize, maximizing gains for a given cost, and minimizing costs for a given gain.

25. The law of economic rationality. Human action is economically rational if one’s preferences are consistent and if one economizes.

26. The Gaffney effect. The public collection of rent equalizes the discount rate for land usage, since otherwise people would have different credit costs for purchasing land.

Fred Foldvary

Gold Rush! Cash in while you can!

November 14, 2008

The continuing debate over the current financial crisis aside the dash for the latest government gold rush appears to be in full swing. Government policy started the crisis, not the so-called free market. Now, the government seeks to make matters worse while appearing to make life better. At least for those that have the ability to contribute the millions that it takes to stay in elected office.

When governments attempt to “fix” economies by meddling with the free markets that power them, these would-be market-driven economies become political footballs. Economic decisions that would have been fairly and justly arbitrated by unbiased, natural laws of economics become decided on purely political grounds. Markets lose stability in direct proportion to the extent of such meddling. This is certainly the case with the government “fix” known as TARP, or Troubled Asset Relief Program. The bailout package was originally crafted to relieve banks so that they would remain solvent, preventing further meltdown of the U.S. economy. But with $700 billion up for grabs, TARP’s original purpose was thrown under the bus in the gold rush that ensued. Now everyone wants in on the government’s largess, and markets have reacted accordingly. And why not? Why shouldn’t we all line up to “get ours” if the government is giving away “free” money? Sadly, this seems to be the new American corporate mindset.

Insurance giant AIG, for instance, is now slated to receive more than $150 billion in the largest single bailout allotment from TARP thus far. The government effectively nationalized AIG in the process, establishing a $40 billion stake in the world’s largest insurer. Eager to get in on the TARP lottery, American Express — that’s right, the credit card company — is apparently also now a “bank,” having been so blessed by the Federal Reserve. Evidently unaware of AMEX’s subtle approach, one draping the hat-in-hand recipient in “bank-like” trappings, U.S. automakers are pursuing more blunt-instrument strategies. Their game plan? Simply demand funds from Washington on the basis that, well, they need the cash, and everyone else seems to be getting an awful lot of it lately. Perfect.

The government has committed $290 billion so far without any oversight because Congress has yet to fill the positions it created. Somewhere in all of this thrash for cash is a lesson about the proper role of government in a free market economy. We just hope that this lesson hits home before The Great Depression, Part II does.

source: Patriot Post

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