Tired of RP Supporters' Economic BS

[ARealConservative]

thanks for the clarification!

And post more, seriously!

As opposed to others that should post more seriously!

 

[tmosley]

Yes, thanks for the well thought out and understandable explanation. I didn't really understand much about the business cycle before now. I'm glad you cleared it up.

People generally aren't stupid, they are just ignorant. The cure to ignorance is education. Thanks for the lesson.

 

[Conza88]

Wouldn't an economy with true inflation at 1-3% outperform an economy experiencing price deflation in the long run?

Dynamics regarding wealth accumulation and consumer spending patterns would seem certain change and I'm curious how you see the ramifications playing out.

I realize this is purely a hypothetical as allowing central planners to control the money supply does not allow for such precise control of inflationary oversight even if that was truly the goal of the fed.

Well not going on the entire economy, just thought I'd add this - it may help with comprehension for some people.

Take Zimbabwe's stock exchange for example. The ZSE is the best performing stock exchange in the world, with the key Zimbabwe Industrials Index up some 595% since the beginning of the year and 12,000% over twelve months. This jump in share prices is far in excess of increases in consumer prices.

Lol... kind of a whack point. It depends on what is meant by 'outperform', Zimbabwe's stock exchange is awesome (haha) and 'outperforming' all others - but much like would happen with comparing it to an economy experiencing price deflation (I'm assuming because of sound money) then the latter is obviously going to have a better standard of living.

 

[Kade]

Thanks Captain Obvious. Economic models do have competition.

No problem [Redacted by Moderator]. What Economic model do you think should be a competitor to the Free Market Model?

 

[CUnknown]

Let me respond to some of your points.

krazy kaju said:

2. Fractional Reserve Banking

What's bad with fractional reserve banking?

[...] The problem with this is that the bank just created money.

You just answered your own question. When banks are allowed to just create money out of thin air, and then charge interest on money that has no backing, that creates severe problems that can only be overcome by continuous exponential economic growth. When the exponential growth stalls out, you get the situation that we have now with the housing crisis -- massive deflation. At some undetermined point in the future, this problem will grow severe enough that the entire system will collapse. The collapse is inevitable.

3. Monopolies

Monopolies are not a problem in a free market. I often see many RP supporters not knowing what to say about monopolies.

If Ron Paul people complain about monopolies, it is because we do not have a true free market system in this country. Monopolies which are attached to the hip with government and the bankers pose a major problem for the American people. In a true free market system, in which there was a separation of business and state (in which the state left business completely alone and did not interfere), perhaps you are correct that monopolies would not be an issue.

However, with the system we have now, monopolies (and business excess/fraud in general, e.g. Enron, Haliburton) are a big issue and should be faught against.

4. Global Warming and the Environment

[...]the IPCC reported that the expected sea level rise in the 21st century will be 1 and a 1/2 feet. The sea level rise in the 20th century was one foot. In short: no big deal.

So what about pollution? Well, the market eliminates pollution better.[...] Secondly, normal tort law prevents pollution from occurring in free markets.

What you are saying here is tragically mistaken. The 1-2 foot rise, first of all, is a minimum. If there was a catastrophic positive-feedback climate changing event (odds being estimated at maybe 25-30%), the sea level would rise much higher than that, completely inundating many coastal areas, including, oh.... Florida, New York City, DC.

And even a 1 foot rise, by itself, is a huge deal. As you say, that is in combination with the previous 1 foot rise that has given us Katrina, as well as massive flooding throughout other parts of the world. Billions of dollars and hundreds of thousands of lives wasted, with millions more lives severely disrupted. Add another foot on top of that, and things will be still "managable", true, but it's far from being "no big deal."

"Tort law prevents pollution from occuring" in a free-market system. Yeah. Right. We'll all have to stop driving our cars, and coal power plants will have to go offline because Joe Blow might sue. If you believe this, you are severely deluded as to economic reality. The reality is that pollution must continue to occur to keep our economy afloat. Alternative energy will not be able to completely replace fossil fuels for many more years.

5. Health Care

Again, high health costs are not a result of the free market, but of government intervention. People who have free health care abuse it. For example, in France, it is not unknown for people to go doctor to doctor searching for the first one to provide them the prescription they want to fill their addiction.

And you're saying that this doesn't happen in the US?

In other countries, like the UK and Canada, people are forced onto long waiting lists because there are doctor shortages - the demand is just too high because health care is absolutely free.

This spills over into ER units as people with minor problems cannot find family doctors so they go to the ER for treatment.

Oh my gosh, if health care is cheap, people will want it! And you're saying this is a problem somehow?? Because the rich people have to wait in lines along with poor people? That is detestable.

You have it completely backwards regarding use of the ER. The people who use the ER for regular treatment are all in the US. They have no health care, so they are forced to use the ER. No one does that in France, buddy. Single-payer health care is much cheaper than the system of HMOs we have now. The cost per person, including taxes, is far lower in countries with socialized systems, for the same medical care. Yes, they have have to wait longer. I would love to wait, myself, if the price was cut in half. Lol.

 

[ARealConservative]

No problem [Redacted by Moderator] What Economic model do you think should be a competitor to the Free Market Model?

man are you one angry cat!

 

[Kade]

man are you one angry cat!

I didn't attack him personally in my first post... he started.

 

[ARealConservative]

I didn't attack him personally in my first post... he started.

I wouldn't mind the nickname Captain Obvious.

Caaptain ... though?

 

[Sandra]

I also have to chime in on environmental impact and free markets.

example:

Office Depot discovered their paper supplier was cutting further into the rain forests than the supplier was representing. Office Depot has a eco friendly policy that drives customers to buy their products. As a result Office Depot eliminated that supplier and replaced them with an eco friendly supplier.

Office Depot helped to save the rain forest even though the company may have to shell out a little bit more and pass it on to customers. Yet this action sparked sales at the store.

I have no idea if this was real or a PR stunt but it worked.

 

[Kade]

I also have to chime in on environmental impact and free markets.

example:

Office Depot discovered their paper supplier was cutting further into the rain forests than the supplier was representing. Office Depot has a eco friendly policy that drives customers to buy their products. As a result Office Depot eliminated that supplier and replaced them with an eco friendly supplier.

Office Depot helped to save the rain forest even though the company may have to shell out a little bit more and pass it on to customers. Yet this action sparked sales at the store.

I have no idea if this was real or a PR stunt but it worked.

It worked because the people beating the Climate Change drums!!

The scientists and others promoting awareness about Climate Change help change public opinion, so that they public can decide what it wants to do about it!

I don't understand why so many people are against the scientists in this... They are just promoting awareness... most of them don't have any idea about solutions beyond that... .

 

[Paul.Bearer.of.Injustice]

Joe D'Aleo, a Fellow in the American Meteorology Society, runs the IceCap site.

http://icecap.us/index.php/go/joes-blog/hansens_anniversary_testimony/


The "expert" that started it all in 1988....

On June 23, 1988 James Hansen, Astronomer by degree but climatologist by self appointment testified in front of congress. It was an orchestrated testimony coordinated by Senator Al Gore and a Senator from Colorado, Tim Wirth (now running Ted Turner’s UN Foundation) who admitted they picked the day after calling the National Weather Service to ensure it was a hot day. He admitted proudly later they opened all the windows the night before, making air conditioning ineffective and making sure all involved including Hansen would be seen mopping their brow for maximum effect. Hansen testified “Number one, the earth is warmer in 1988 than at any time in the history of instrumental measurements. Number two, the global warming is now large enough that we can ascribe, with a high degree of confidence, a cause-and-effect relationship to the greenhouse effect.”

See in the story below how hard Hansen has worked to try and make his prognostication verify by manipulating data. By his own comments to the UK Guardian “When you are in that kind of position, as the CEO of one the primary players who have been putting out misinformation even via organisations that affect what gets into school textbooks, then I think that’s a crime.” Well the disinformation that comprises the GISS data then by his own words is a crime, and in his own words he “should be put on trial for high crimes against humanity and nature”.

Here is the plot of actual NASA global satellite monthly temperatures since June 1988. Note the anomaly in May 2008 was lower than in June 1988 by nearly 0.3C. Of course, we don’t have June 2008 numbers yet. Please note I am not saying that cooling began in 1988. Satellites show clearly that since 1979 there was a moderate warming which peaked in 1998. A cooling has taken place the last 6 to 7 years. Global station and ocean data with all its warts shows the warming from the early 1900s to the 1930s, cooling from the 1940s to the 1970s then warming again peaking in 1998. I am just making an observation that it is ironic that 20 years after his first testimony about global warming, it is half a degree F oooler globally, not supporting the drastic measure he advocates. Also we can explain not only the trends but each spike or dip with some natural phenomena as we have shown in recent posts.

 

[krazy kaju]

I think Kade has a stick up his ass. First, he insults a rather well known economist and dismisses his work simply because he was wrong about oil prices, even though Armentano's work Kade dismissed had nothing to do with oil prices and many economic and financial "experts" predicted the fall of oil prices.

I showed how Kade's example of De Beers was just plain wrong and I showed how a true monopoly is theoretically impossible and impossible in practice.

I hope Kade can get his head out of the sand and post something useful.

Anyways, off to responding to some points:

Yes, thanks for the well thought out and understandable explanation. I didn't really understand much about the business cycle before now. I'm glad you cleared it up.

Thanks!

I noticed that a lot of people have trouble with ABCT, even on the Austrian forums over at mises.com.

What you are saying here is tragically mistaken. The 1-2 foot rise, first of all, is a minimum. If there was a catastrophic positive-feedback climate changing event (odds being estimated at maybe 25-30%), the sea level would rise much higher than that, completely inundating many coastal areas, including, oh.... Florida, New York City, DC.

And even a 1 foot rise, by itself, is a huge deal. As you say, that is in combination with the previous 1 foot rise that has given us Katrina, as well as massive flooding throughout other parts of the world. Billions of dollars and hundreds of thousands of lives wasted, with millions more lives severely disrupted. Add another foot on top of that, and things will be still "manageable", true, but it's far from being "no big deal."

First, let me start with a big LOL. I wasn't asking about fractional reserve banking, it was a rhetorical question. Haha, but thanks for the explanation anyways.

Now, let's get to the bone of the subject here. The one and a half foot increase is what is predicted by an assembly of the world's most knowledgeable meteorologists, geologists, climatologists, and others who study the subject professionally. Worrying about huge ice chunks breaking off like Al Gore did isn't actually a big issue.

Also, the one foot rise in the last century didn't give us Katrina or any other disasters. The fact of the matter is that government insurance of people living near coastlines and other dangerous areas (think: San Francisco) gives an incentive to people to move closer to these areas. Katrina wouldn't have been a big problem had it not been for this government policy and the government's failure to monitor the levees in New Orleans.

"Tort law prevents pollution from occuring" in a free-market system. Yeah. Right. We'll all have to stop driving our cars, and coal power plants will have to go offline because Joe Blow might sue. If you believe this, you are severely deluded as to economic reality. The reality is that pollution must continue to occur to keep our economy afloat. Alternative energy will not be able to completely replace fossil fuels for many more years.

I was referring to property rights. Nobody has property rights over the particles of air, so it'd be unlikely that anyone who brings a suit against a major carbon emitter would actually win. Furthermore, everyone emits carbon, end of story.

Pollution in the air isn't as big of a problem as claimed. With peak oil and cheaper and cheaper alternative fuels, the problem will work itself out. This, paired with the fact that carbon caps and taxes would destroy our economy, leaves us no option but to embrace free market capitalism.

Let me also bring something else into the argument. Bastiat famously stated that one should look beyond the first effects of an action and into the secondary "hidden" effects. Had it not been for years of monetary and fiscal mismanagement by governments around the world, we probably would have cheap, alternative, and low-polluting fuels and energy.

And you're saying that this doesn't happen in the US?

That's a problem in the US, especially with Medicaid beneficiaries. The proper way to resolve the problem would be to deregulate drugs and end Medicaid.

In countries with national health care programs, this problem is on a much, much larger scale.

Oh my gosh, if health care is cheap, people will want it! And you're saying this is a problem somehow?? Because the rich people have to wait in lines along with poor people? That is detestable.

I don't want to insult anyone but...

Why are you even posting on the Ron Paul forums if you disagree with his policies? My post was made specifically for your kinds of people.

Universal health care is not "cheap" health care. It is much, much more expensive health care that comes out of your income and consumption via income, corporate, payroll, and sales taxes.

The problem with universal health care isn't that it's free. It's that health care is a scarce resource and you need a price system to treat it as such. If prices rise, then demand is limited, shortages are eliminated, and surpluses begin as high profits bring in more and more entrepreneurs into the business. Prices fall and then everybody can benefit.

The problem isn't that rich and poor receive equal treatment, at least according to your idealistic Obama-suck-up world view. The problem is that national health care is far more expensive, destructive, and very low quality than in a free market system.

Let the free market work and prices will plummet while quality rises.

Also, I'd like to point out that it isn't the rich and poor who stand in line. It's the poor and middle class, while the rich can afford to go to other countries to get quality health care.

You have it completely backwards regarding use of the ER. The people who use the ER for regular treatment are all in the US. They have no health care, so they are forced to use the ER. No one does that in France, buddy. Single-payer health care is much cheaper than the system of HMOs we have now. The cost per person, including taxes, is far lower in countries with socialized systems, for the same medical care. Yes, they have have to wait longer. I would love to wait, myself, if the price was cut in half. Lol.

Errrr, wrong.

Moral hazard dictates that health care in countries with universal systems will be more expensive. Empirical studies show that it is. Taxes and regulations have a huge destructive force on many economies with universal health care.

Here, don't let me debate you. Let me compile a reading list for you:

The Grass Is Not Always Greener by Michael D. Tanner

How to Fix Health Care Delivery by Arnold Kling

Why McCain's Plan Bests Obama's by Michael D. Tanner

A Blueprint for Health Care Freedom by Michael F. Cannon

I also suggest you watch this series by John Stossel:
http://www.youtube.com/watch?v=aEXFUbSbg1I
http://www.youtube.com/watch?v=BpsEAVbCkMM
http://www.youtube.com/watch?v=refrYKq9tZQ
http://www.youtube.com/watch?v=QzhiG0dcwN8
http://www.youtube.com/watch?v=Xsp_Jh5EIT0
http://www.youtube.com/watch?v=E_KCLm9cekU

 

[CUnknown]

krazy kaju -

I misunderstood your point about fractional reserve banking. I thought you were saying that most Ron Paul people don't like it, but that it's actually not bad. In fact you were saying that most Ron Paul people don't understand why it's bad. Agreed on this point, sorry for the confusion.

Now on to Global Warming:

The 1' rise in sea level certainly contributed to the damage that hurricane Katrina caused. I'm sure you agree with that. How much it contributed, it's hard to say, but surely global warming has caused billions of dollars in damage, and we are only in the early stages so far.

So, a paraphrase of your opinion: "People just shouldn't live in areas that might be affected by climate change." The government shouldn't be encouraging people to live in the most dangerous areas, I agree. But, the fact is, that a huge chunk of the globe will potentially be seriously affected by climate change. Just about every coastal area, for example. All areas along the Mississippi -- are you saying people shouldn't live in Iowa, too?

The sheer number of people on the planet, combined with the huge global surface area where potentially catastrophic events could be occuring, points to the ludicrous nature of your opinion on climate change. People can't just move to safer areas, that isn't realistic.

so it'd be unlikely that anyone who brings a suit against a major carbon emitter would actually win

So, you're admitting that the free market can't handle the carbon-emission pollution problem? I see no other way to interpret this statement. Oh, yes, you can get around this by stating "Pollution in the air isn't as big of a problem as claimed." But, you have to admit, that if it was a big problem (as it demonstrably is), that the free market would be unable to solve it.

Had it not been for years of monetary and fiscal mismanagement by governments around the world, we probably would have cheap, alternative, and low-polluting fuels and energy.

This one really takes the cake as far as rediculous proclamations. And you know this... how? Sounds like blind faith in the free market to me.

Universal health care is not "cheap" health care. It is much, much more expensive health care that comes out of your income and consumption via income, corporate, payroll, and sales taxes.

The fact is, that we spend far more on health care per capita in the US than they do in countries with socialized systems, and get inferior results as measured by the health of the population. Single-payer health care is a more efficient way to run things. Please do your homework and get the facts before making claims of this type.

I will grant that our system is not completely a free market system for healthcare. I think one thing we can agree on is that we need change, however, I would prefer change along proven lines -- all other industrialized countries have better healthcare systems than we do, we should craft our system to be more like theirs (i.e. single-payer), imo. However, I would rather have change in your direction than no change at all, so we do agree at some level.

Why are you even posting on the Ron Paul forums if you disagree with his policies?

Sure, I disagree with some of Ron Paul's policies (environment and health care are the biggies). But, I agree with Ron Paul more than any other candidate, with the possible exception of Kucinich or Nader.

You seem to think I would prefer Obama to Ron Paul, and that's totally untrue. I disagree with Obama about almost everything, including the environment and healthcare (Obama has never been for single-payer, and his stance on the environment is not nearly strong enough for me).

I would rather claw my eyes out with a rusty, dull spoon than vote for Obama. I voted for Ron Paul in the primaries, of course. I'm probably going to vote Libertarian in the general (I don't think the Greens will be on the ballot in Georgia, where I live). I realize that the Libertarians aren't for single-payer healthcare or a carbon tax, but they have many other positions which I agree with them on. And, more importantly, voting for them will help break the 2-party duopoly, which is of critical importance for me.

 

[Alex Libman]

Excellent points, all of them.

 

[Danke]

I realize that the Libertarians aren't for single-payer healthcare or a carbon tax, but they have many other positions which I agree with them on. And, more importantly, voting for them will help break the 2-party duopoly, which is of critical importance for me.

Amen! I'd even vote for Nader if he was the only 3rd party choice.

 

[Kade]

I hope Kade can get his head out of the sand and post something useful.

I asked you which economic model would you recommend in competing with the Free Market?

 

[brandon]

2. Fractional Reserve Banking

What's bad with fractional reserve banking?

Well first, you need to understand what fractional reserve banking is. Fractional reserve banking is when you deposit money in an irregular deposit in a bank, and that bank takes some of your money and loans it out. The problem with this is that the bank just created money.

Use this example:
You deposit $100
The bank loans out $90
You take out $40
100-90-40 = -30

The bank was just forced to create $30. Since money cannot be created by banks under a gold standard, fractional reserve banking is impossible, furthermore, any bank that engages in fractional reserve banking in a free market is bound to fail when it runs out of reserves in a panic.

No, this is wrong. Fractional Reserve Banking does not create money, It creates the illusion that there is more money, but it doesn't actually create more.

Using your example: Only two people do business at a bank. One person deposits 100 into a checking account. Another person gets a $90 loan. When the original person tries to withdraw their money, the bank does not and cannot create it. They simply are forced to say "Sorry, we don't have it." This is called insolvency. On a larger scale scenario, a Bank Run usually causes this. Often times the federal reserve will step in and actually create money to bail that bank out though.

And fractional reserve banking can exist under the gold standard. It would actually be exactly the same as it is today. The only difference would be that the fed couldn't bail them out when they've loaned out too much of their reserves.

Pay attention man, I don't want dummies going around and giving RP supporters a bad name!

 

[Danke]

If you don't think the Federal Reserve creates money, read "The Two Faces of Debt" put out by the Chicago Branch of the Federal Reserve.

Now if you have a different definition of what most people consider money, I can agree, they don't create anything of value.

 

[brandon]

I agree the fed creates "money." The other banks do not though. There is a difference. Wachovia isn't running printing presses.

 

[aravoth]

Let me respond to some of your points.

Oh my gosh, if health care is cheap, people will want it! And you're saying this is a problem somehow?? Because the rich people have to wait in lines along with poor people? That is detestable.

You have it completely backwards regarding use of the ER. The people who use the ER for regular treatment are all in the US. They have no health care, so they are forced to use the ER. No one does that in France, buddy. Single-payer health care is much cheaper than the system of HMOs we have now. The cost per person, including taxes, is far lower in countries with socialized systems, for the same medical care. Yes, they have have to wait longer. I would love to wait, myself, if the price was cut in half. Lol.

I don't think you understand they way our healthcare system works.