Re: Will the free market solve everything?
Mon, 24 Feb 1997 23:18:09 +0000

> From: Michael Lorrey <>
> J. de Lyser wrote:
> >
> > At 01:37 23-02-97 +0000, william kitchen wrote:
> > >The standard Libertarian (and Republican) belief is that free
> > >market economies inherently favor the smartest, hardest working
> > >entrepreneurs and best products. This is true. But they also
> > >hold a belief that this principle causes free market economies to
> > >be inherently stable and fair. This is not true. There are
> > >other
> It is not true that they hold this beleif. Libertarians beleive in
> equality of opportunity, NOT equality of result. Libertarians
> beleive in economic forces unleashed to allow natural selection to
> proceed unimpeded to improve the human condition.

An equally irrational belief. It is doubtful that you can show a
case in which a pure free market economy has actually improved the
human condition for more than few decades before producing a
condition in which the wealth becomes so severely imbalanced that
those who are not already amongst the wealthy elite have little
opportunity for advancement regardless of their ability or
willingness to work. A situation that does not produce equality of
opportunity, and that does not improve the human condition.

An op-amp circuit with strong positive feedback will tend not
towards balance, but to lockup in either an extreme positive or
extreme negative state. Ungoverned free market economies also have
strong positive feedback, and share this same characteristic.
Imagine each individual as an op-amp. Those who are wealthy
(positive) beyond a certain admittedly fuzzy threshold will tend to
become more wealthy (extraordinary stupidity can change that, but
I'm talking about a tendency, not an outcome that is certain in
every case), while those below that threshold will tend to lose
ground. The further you are from either side of that threshold, the
less likely it is that you can cross it by your intelligence and
effort alone (or lack thereof, in the case of crossing the threshold
in the negative direction).

> THis is why
> libertarians tend to be highly intelligent, educated, and average
> high incomes, as they practice what they preach. THis unfortunately
> limits the growth of the party, as the principles of libertarianism
> tend to disfavor those with deficiencies which inhibit economic
> excellence.

Your superiority complex is unimpressive. I will be happy to discuss
and debate issues with you since you are intelligent enough to have
ideas worth thinking about, and to present an intellectual challenge
for those matters on which we disagree. But I have no interest in
watching you stroke your ego.

> I personally tend to think that children should be raised in equal
> social circumstances, to allow as close to an equal level of
> opportunity as possible, but once they reach whatever is considered
> "adulthood", they live by TANSTAAFL.

Hmm... That is an interesting idea. I'm not sure whether I can
agree with it or not. It seems like something that would be a good
thing if it could be made to happen, but might be extremely difficult
to realize. Perhaps you have thought of some way to bring this
about? Would this be an area where the traditional a-c opposition to
welfare might be relaxed?

This gets back to that issue of equality of opportunity vs. equality
of result. I think we are in at least partial agreement on the
concept, just not on how to achieve it.

Society does not owe anyone a living, but it does owe everyone an
opportunity to be productive and to be fairly rewarded for that
productivity. Proposing the idea that society "owes" anyone
anything will probably ruffle some feathers, but consider: There is
little purpose in constructing a society of any kind if not for the
benefit of the members of that society. I construct machines to be
my slaves, not to be enslaved by them. The same should be true of
anything we construct.

> As libertarian as I tend to be, I still have had enough personal
> experience with people I call "trust fund babies" to consider huge
> inheritances as a net evolutionary disadvantage.

Then perhaps we are not as much in disagreement as it might appear
on the surface. I simply propose that such problems are too often
glossed over, and that avoiding such issues cannot come to any
productive end.

> > >forces than can operate within such an economy that can defeat
> > >the built-in self-correcting mechanisms. When you begin with a
> > >scenario in which wealth is distributed fairly evenly, then a
> > >free market economy will work very well and will result in high
> > >productivity, with clear benefits for those who produce and
> > >denial of those benefits for those who do not.
> This is a decent idea so long as you don't propose taking wealth
> away from people.

My point was only that free markets produce beneficial results when
they start with a reasonably flat distribution of wealth. I do not
propose that it would be beneficial to force them into that

However, I cannot say that taking wealth away is unacceptable in
every possible case. If an economy becomes so imbalanced that one
man owns everything, do the rest of us simply starve to death? Such
a situation would most likely be corrected by a violent revolution.
Probably well before it became that extreme. So when should the
killing start? 20% with 80% of the wealth? 10% with 90%? 1% with
99%? One guy with everything?

Economic polarization cannot go indefinately without some kind of
corrective measure. If not by application of law, then by collapse
into depression or by violence. But by some means it will end. Just
like the op-amp with positive feedback, extreme polarization is the
natural tendency of a pure free market economy. Then it destroys
itself and everything must start all over. An endless oscillation
that starts by building up from nothing, a period of prosperity with
a large middle class, a period of increasing polarization and
increasing unrest, then collapse into depression (or bloody
revolution) and it all begins again.

This is my model of what would happen with an economy that has zero
governmental regulation. I am not accusing the rich of being evil.
The victors don't have to be monsters (though there is no reason
they can't be). It does not require any criminal wrong doing. No
one has to be forced or deceived into making a spending decision.
Just successful business practices carried to their ultimate
conclusion. The inevitable outcome of any successful implementation
of the anarcho-capitalistic ideal. Maybe I'm wrong. I'm sure many
will disagree with my model. I doubt that there is any historical
precedent that can confirm or disprove since such a system will
likely not complete a single cycle of the oscillation without being
altered in some way during the period of unrest (i.e. government
regulation and/or introduction of some element of socialism) making
it impossible to fully isolate the cause even if it does follow
through to a revolution or a collapse into a depression. Many would
blame the increasing governmental regulation for the collapse. I
tend more to blame the impending collapse for the increasing
government regulation. Last resort measures in an attempt to save a
sinking ship. I'd be happy to hear any alternative models you might
want to offer. And any reasons that you think my model is wrong or
that some other one is more accurate.

> Making everyone start at zero once they reach
> adulthood is what I would call equality of opportunity, but
> redistributing the wealth isn't, its penalizing success.

This reminds me of an interesting idea that was proposed as a thought
experiment by a man I used to work with. Put aside your distaste for
taxation for a moment and contemplate the outcome of this: A 100%
post-mortem tax, but no other. It all goes to the state when you
die. Attempts to cheat the system by giving substantial gifts will
result in having the tax applied early, effectively pressing the
reset button on your life. You are entitled to keep and enjoy
whatever you rightfully earn (outright theft and fraud would still be
illegal) within your own life, but are entitled to nothing that was
earned by anyone else regardless of relation, except perhaps that the
revenue from the post-mortem tax might be used to provide education
prior to going out on your own, and perhaps a few other public
services that would have to stay entirely within budget.

I realize that the possibility of extended lifespans screws up this
scenario, but it is interesting to think about none the less.

William Kitchen

The future is ours to create.