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The idea that government management of the economy can do better than private management and allocation of capital is utterly preposterous. This has been proven

by javert 4y ago

The idea that government management of the economy can do better than private management and allocation of capital is utterly preposterous. This has been proven many times over by 20th century history, and is also immediately obvious if you've ever been to the DMV. Or if you know anything about the inner workings of a complex modern state apparatus, such as the US federal government. You might as well be calling the sky red. (And I know that's what you're advocating from a different comment you just made about the New Deal.) In a free market, the best allocators of resources are rewarded with more resources to continue allocating; the worse allocators are punished by losing their capacity to allocate. This is called capitalism. Contrast that to a system where goverment eliminates inequality: Government allocates resources, meaning the worst people, people who are best at graft and pull, are rewarded. This is a disaster. We can already see this happening in the US. One egregious offender is the Dept. of Homeland Security which is siphoning off more and more national resources and growing like a cancer. The university system (which is in reality Federally managed) is an egregious offender. The medical system (which is Federally managed but run for profit through graft) is an egregious offender. The latter system---the system of "government management," where the government doesn't let people receive unequal rewards for unequal success---is a path straight to the butcher's block.

GeneralMayhem 4y ago
The idea that private management and allocation of capital can do better than government management of the economy is utterly preposterous. This has been proven many times over by 21st century history, and is also immediately obvious if you've ever been to the airport. Or if you know anything about the inner workings of a complex modern commercial apparatus, such as any investment bank, or Enron. My local DMV provides dramatically better customer service than most private companies I've interacted with lately. Government entities are also required to at least pretend to account for efficiency, whereas private companies have an unknown - but known to be massive - amount of waste, corruption, and outright fraud. In any case, nobody is seriously advocating for a full socialist/government-planned economy. Looking at basic workers' rights and throwing a fit about OMG SOCIALISM is such a ludicrous level of libertarian delusion it borders on self-parody. In reality, it is very well known - by psychology, by statistics, and by empiricism - that societies that don't allow the most powerful to make unchecked decisions based on their current level of resources do better than those who do. There are a few pretty obvious reasons why this is true. First, "currently having resources" is not a good indicator of skill in resource allocation. Second, there are problems of misaligned value functions - what is "efficient" for one actor may be extremely inefficient for society as a whole, requiring action by a government (or some equivalently collective entity) to properly account for externalities. Third, mismatched negotiating power (because employees must agree to some employment or else starve) mean that even those actually party to any given agreement might not be maximizing their own resource allocation by doing so. And fourth (not finally, but finally off the top of my head), there are problems of diversification in the face of uncertainty - resource-havers can take maximum-expected-value actions even when they have low probability of payoff (e.g., risky business ventures that will pay off 10x 20% of the time but go bankrupt the other 80% of the time), because they can afford to make those bets enough times to even out the variance; non-resource-havers must settle for lower-expected-value but lower-variance options, which limits their success even with perfectly skillful allocation.
- javert 4y ago
  I just wanted to say, I really don't appreciate the sarcasm in the first couple of paragraphs. Anybody can take someone's comment and negate each of the sentences. It's only clever and cute if the new version is kind of self-evidently true or somehow insightful. In this case, it's not. You're also setting up a straw man with the comment about workers' rights. A call for the government to "fix inequality" with something like the New Deal is not a call for workers' rights. It's implicitly a call for the government to run much more of the economy than it already does. There is no other way to achieve the stated objective in the stated way. Playing the old "fit about socialism" card is not impressive. I never used the word "socialism" because it's a slippery word that leads to low quality discussion. It's beside the point. Is every argument against government management magically defeated by the "OMG SOCIALISM" sarcasm that left wing people always trot out like this? Also, probably needless to say, I disagree with your analysis. edit: I will respond to the following: > In reality, it is very well known - by psychology, by statistics, and by empiricism - that societies that don't allow the most powerful to make unchecked decisions based on their current level of resources do better than those who do. That's simply not true that this is "very well known." And you are conflating political power (which is what we call "power") with economic power (which isn't what we normally call "power"). The power of Bill Gates or Warren Buffet is limited mostly to doing good or just losing their money. That has nothing to do with the power weilded by, say, the Dept. of Homeland Security, or the American medical insurance industry (which gets its power through regulatory graft backed by political power and ultimately force). Forceful power, i.e. "power," is just not comparable to the "power" one gets by voluntarily trading with others. It's silly to say your non sequitur is "well known" by "psychology" or "statistics" (what do those have to do with it, anyway) or "empiricism." That's nothing like my saying that something is "well known" to history. 20th century history is straightforward and direct (and relevant) in a way that psychology and statistics are not. We have tried big government management many times and it always fails. Look at the many communist countries that actually stayed communist (i.e. China doesn't count, but it's a shit show anyway). Look at fascist-nationalist command economies like the Nazis and today's Russians. Those societies and economies evidently do not work. (I would add, look at the outcome of the New Deal, but that is more nuanced.) There is no way a psychology paper could have that kind of evidentiary power.
smolder 4y ago
Government management of the economy can do better than private management. Private management can do better than government management. The idea that either thing has been disproven is what is preposterous. These mechanisms don't predict success or failure by themselves.
- javert 4y ago
  The free economy self-regulates. That's why it works. What I mean is, people won't buy your good or service if it sucks, or a better one is available. Companies that are mismanaged lose out to their competitors and go out of business. Any weakness or rot is self-contained. The government doesn't have a mechanism to self-regulate. Democracy was supposed to regulate the government, and probably can in small societies, or perhaps if formulated the correct way. American democracy definitely doesn't regulate government, and it doesn't self-regulate, so it's a system that's out of control. You see the same mechanisms (plus others) in many societies in the 20th century. I don't see any evidence or reason to think the government can manage the economy. And a big part of the causal explanation is what I've stated above. Another is that the government isn't omniscient; it doesn't have enough information. Market solutions don't need to be omniscient and price serves to carry information. As an aside, fun fact: Did you know that in the US, price controls are used by a government committee to set the price of the fundamental good, which is the US dollar? That does a lot to disrupt price as a signal of information. People think in the US we don't have government price fixing, and they are wrong. (I use the US as a pet example but I guess the above is basically true everywhere.)
  - smolder 4y ago
    The so-called free market doesn't self regulate enough to be hands off, and would fail without centrally planned lever pulling on interest rates, the banning certain practices, and tight regulation of others. Why? The big shortcoming is it doesn't solve tragedy of the commons problems like global warming, destructive pollution, etc. It also breaks down if you don't have proper limits on consolidation and collusion in order to maintain competition. It's not perfect. The free market is an ideal that we base our real pragmatic system on, one that has only mostly worked for us, and only so far. China, on the other hand, as compared to the west, likes centrally planning things, but they can only lean on that opposing ideal so hard before they'd fail too, for reasons you have pointed out. Both approaches have yielded different mixes of central planning and bottom-up self-organization, and they're both necessarily mixes.

by javert 4y ago

GeneralMayhem 4y ago

The idea that private management and allocation of capital can do better than government management of the economy is utterly preposterous. This has been proven many times over by 21st century history, and is also immediately obvious if you've ever been to the airport. Or if you know anything about the inner workings of a complex modern commercial apparatus, such as any investment bank, or Enron. My local DMV provides dramatically better customer service than most private companies I've interacted with lately. Government entities are also required to at least pretend to account for efficiency, whereas private companies have an unknown - but known to be massive - amount of waste, corruption, and outright fraud. In any case, nobody is seriously advocating for a full socialist/government-planned economy. Looking at basic workers' rights and throwing a fit about OMG SOCIALISM is such a ludicrous level of libertarian delusion it borders on self-parody. In reality, it is very well known - by psychology, by statistics, and by empiricism - that societies that don't allow the most powerful to make unchecked decisions based on their current level of resources do better than those who do. There are a few pretty obvious reasons why this is true. First, "currently having resources" is not a good indicator of skill in resource allocation. Second, there are problems of misaligned value functions - what is "efficient" for one actor may be extremely inefficient for society as a whole, requiring action by a government (or some equivalently collective entity) to properly account for externalities. Third, mismatched negotiating power (because employees must agree to some employment or else starve) mean that even those actually party to any given agreement might not be maximizing their own resource allocation by doing so. And fourth (not finally, but finally off the top of my head), there are problems of diversification in the face of uncertainty - resource-havers can take maximum-expected-value actions even when they have low probability of payoff (e.g., risky business ventures that will pay off 10x 20% of the time but go bankrupt the other 80% of the time), because they can afford to make those bets enough times to even out the variance; non-resource-havers must settle for lower-expected-value but lower-variance options, which limits their success even with perfectly skillful allocation.

javert 4y ago
I just wanted to say, I really don't appreciate the sarcasm in the first couple of paragraphs. Anybody can take someone's comment and negate each of the sentences. It's only clever and cute if the new version is kind of self-evidently true or somehow insightful. In this case, it's not. You're also setting up a straw man with the comment about workers' rights. A call for the government to "fix inequality" with something like the New Deal is not a call for workers' rights. It's implicitly a call for the government to run much more of the economy than it already does. There is no other way to achieve the stated objective in the stated way. Playing the old "fit about socialism" card is not impressive. I never used the word "socialism" because it's a slippery word that leads to low quality discussion. It's beside the point. Is every argument against government management magically defeated by the "OMG SOCIALISM" sarcasm that left wing people always trot out like this? Also, probably needless to say, I disagree with your analysis. edit: I will respond to the following: > In reality, it is very well known - by psychology, by statistics, and by empiricism - that societies that don't allow the most powerful to make unchecked decisions based on their current level of resources do better than those who do. That's simply not true that this is "very well known." And you are conflating political power (which is what we call "power") with economic power (which isn't what we normally call "power"). The power of Bill Gates or Warren Buffet is limited mostly to doing good or just losing their money. That has nothing to do with the power weilded by, say, the Dept. of Homeland Security, or the American medical insurance industry (which gets its power through regulatory graft backed by political power and ultimately force). Forceful power, i.e. "power," is just not comparable to the "power" one gets by voluntarily trading with others. It's silly to say your non sequitur is "well known" by "psychology" or "statistics" (what do those have to do with it, anyway) or "empiricism." That's nothing like my saying that something is "well known" to history. 20th century history is straightforward and direct (and relevant) in a way that psychology and statistics are not. We have tried big government management many times and it always fails. Look at the many communist countries that actually stayed communist (i.e. China doesn't count, but it's a shit show anyway). Look at fascist-nationalist command economies like the Nazis and today's Russians. Those societies and economies evidently do not work. (I would add, look at the outcome of the New Deal, but that is more nuanced.) There is no way a psychology paper could have that kind of evidentiary power.

smolder 4y ago

Government management of the economy can do better than private management. Private management can do better than government management. The idea that either thing has been disproven is what is preposterous. These mechanisms don't predict success or failure by themselves.

javert 4y ago
The free economy self-regulates. That's why it works. What I mean is, people won't buy your good or service if it sucks, or a better one is available. Companies that are mismanaged lose out to their competitors and go out of business. Any weakness or rot is self-contained. The government doesn't have a mechanism to self-regulate. Democracy was supposed to regulate the government, and probably can in small societies, or perhaps if formulated the correct way. American democracy definitely doesn't regulate government, and it doesn't self-regulate, so it's a system that's out of control. You see the same mechanisms (plus others) in many societies in the 20th century. I don't see any evidence or reason to think the government can manage the economy. And a big part of the causal explanation is what I've stated above. Another is that the government isn't omniscient; it doesn't have enough information. Market solutions don't need to be omniscient and price serves to carry information. As an aside, fun fact: Did you know that in the US, price controls are used by a government committee to set the price of the fundamental good, which is the US dollar? That does a lot to disrupt price as a signal of information. People think in the US we don't have government price fixing, and they are wrong. (I use the US as a pet example but I guess the above is basically true everywhere.)
- smolder 4y ago
  The so-called free market doesn't self regulate enough to be hands off, and would fail without centrally planned lever pulling on interest rates, the banning certain practices, and tight regulation of others. Why? The big shortcoming is it doesn't solve tragedy of the commons problems like global warming, destructive pollution, etc. It also breaks down if you don't have proper limits on consolidation and collusion in order to maintain competition. It's not perfect. The free market is an ideal that we base our real pragmatic system on, one that has only mostly worked for us, and only so far. China, on the other hand, as compared to the west, likes centrally planning things, but they can only lean on that opposing ideal so hard before they'd fail too, for reasons you have pointed out. Both approaches have yielded different mixes of central planning and bottom-up self-organization, and they're both necessarily mixes.