I'm a newbie and I have some questions about free market capitalism
Submitted by dantheman on Thu, 10/08/2009 - 23:21
Can some of you experts here on dailypaul please do your best to explain some things about free market capitalism to me.
please explain how regulations and government interventions into business and the market stifle new entrepreneurs and empower large corporations.
also can you explain why in a true free market a giant corporation like Walmart or Monsanto could not exist?
please use good examples with your explanations if you could.
im trying to learn as much as i can about this topic, and would like to be able to debate some of my socialist professors and fellow class mates but need a solid base of knowledge before i attempt.
thank you
»
Don't debate your professors
I strongly urge you not to engage in the fruitless effort of debating your professors, especially when you're just starting out in accumulating your knowledge. You should not even be thinking about debating your professors right now. You should be reading and studying.
Naturally you should read the chapter on economics in Dr. Paul's book The Revolution: A Manifesto. You should look at the Education section of the Campaign for Liberty website. You should pose questions also at the Mises.com (not Mises.org) forums, where you can get lots of good answers.
Finally, I question the premise that large corporations could not exist in a free market; this, I believe, is a dead end.
There's other ways to plant a seed in a classroom than debate..
You can always take that third person point of view, and cite examples/opinions from other people. Using Dr. Ron Paul's opinions on things would be a very good start. You can also point to history and how historically the welfare and warfare state imploded on itself. History does repeat itself, but unfortunately, you have to take other classes to draw this conclusion. Oftentimes, the way education is structured, you can't easily connect the dots.
+...Pray for Your Enemies and Moral Courage for Righteous Leaders, so that Justice Will Be Delivered to the Innocent...+
+...Pray for Your Enemies and Moral Courage for Righteous Leaders, so that Justice Will Be Delivered to the Innocent...+
test
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
What the heck?
My comment was deleted.
What is up with that?
Can I get an explaination?
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
I know a guy ...
Who has invented a new manufacturing process.
The process produces a product that looks and acts exactly like the existing products.
The process reduces cost by 54%, reduces material requirements by 26%, and reduces lead time from 12 weeks to 48 hours.
In order for this process to be worth a dime, it has to be certified by the federal government.
In order for that to happen, it has to go through the certification process, which will take millions of dollars.
In order to raise that kind of money on an untested process, one needs to sell the idea to existing corporations that are already entrenched with the regulators.
Because of this, the guy will receive little or nothing for his idea.
So the guy gets lazy ... he considers his idea worthless .... and doesn't even mention his idea or actively tries to sell his idea.
I can say no more.
This is a true story.
How do I know?
Because this story is about me.
By the way ...
I have gone through the expense of getting the patent and the engineering analysis on this idea. The engineering firm claims this is a "home run".
This process constructs tapered metalic structrual poles.
Cell towers ....
Light poles ...
Flag poles ...
Wind mill foundations ...
etc., etc.
It cannot be done without colluding with the industry.
And the industry is small enough to collude against you.
A multi-billion market.
Imagine that.
WAHOR!!
http://www.dailypaul.com/node/48994
WAHOR!!
http://www.dailypaul.com/node/48994
Here is something Ron Pauls friend Walter Williams wrote:
{snip} : And it is important to remember what makes the free market work. Is it a desire we all have to do good for others? Do people in New York enjoy fresh steak for dinner at their favorite restaurant because cattle ranchers in Texas love to make New Yorkers happy? Of course not. It is in the interest of Texas ranchers to provide the steak. They benefit themselves and their families by doing so. This is the kind of enlightened self-interest discussed by Adam Smith in his Wealth of Nations, in which he argues that the social good is best served by pursuing private interests. The same principle explains why I take better care of my property than the government would. It explains as well why a large transfer or estate tax weakens the incentive a property owner has to care for his property and pass it along to his children in the best possible condition. It explains, in general, why free enterprise leads to prosperity......more at link.
http://www.hillsdale.edu/news/imprimis.asp
beesting
A good explanation---
And to enlarge upon the cattle rancher example: If government regulations and trade policies (such as NAFTA) make it impossible for the cattle rancher to make a living for his family, the cattle rancher will sell his property to the highest bidder (usually not a rancher) and the New Yorker will be forced to purchase his 'not so fresh' steak from a foreign country.
Bad news newbie
Economics is not a subject you will argue well after reading some replies on a forum. Please go to mises dot org .
There is a chapter from Von Mises at this link regarding socialism and it would be a great start.
http://mises.org/books/socialism/part2_ch11.aspx
Spend a few weeks reading at mises.org and you will not regret it though these professors you mention will.
rn
Liberty = Responsibility
Liberty = Responsibility
watch "Tucker, the Man and
watch "Tucker, the Man and His Dream"
http://www.youtube.com/watch?v=mL-AFSAIln0
Please Read...
Meltdown by Thomas Woods
Economics in One Lesson by Henry Hazlitt
There are many others that are good. Personally one thing I find important to remember is that a sound (not elastic) currency would protect the people from manipulation. Also inflation always hurts the poor and middle class more as their assets are not as protected from inflation.
Ron Paul 2012
www.josiahgarber.com/blog
www.heirloomgardenpro.com
www.mennonitesforronpaul.com
The fed is privately owned
they control the markets. Any other questions?
Unify
On the face value of your question
Tax incentives and perks to get business to a state are unfair. An example of this is when a business says it will bring 1,200 jobs to an area or a small business will bring 25 jobs. Free market principles say the playing field should be even and every one should pay their own way.
How much do you think it would cost the company bring 1,200 jobs for the land they need, parking places, plumbing, electrical - yadda, yadda? And how much do you think the business with 25 jobs will need to pay?
That is where the fairness comes in - the company bringing 25 jobs has the same expenses and the company bringing 1,200 but because they are smaller, they pay less and it offers competition. Get it?
Detective Krum Investigates:
http://victory1project.wordpress.com/
http://politicaltrackingnetwork.wordpress.com/
Detective Krum Investigates:
http://victory1project.wordpress.com/
Walmart might exist
In a system of free market capitalism it is possible for large companies to exist. There is nothing wrong with that as long as they are large because a large number of people voluntarily choose to do business with them and not because the government eliminates competition.
Have you read Ron Paul's book, Revolution: A Manifesto?
Also try lewrockwell.com. There are a lot of interesting articles about free market capitalism there. Here's one on roads that might help you understand the topic from a different perspective.
Why is it that the
Why is it that the industries themselves support the calls for further regulation?
Does more regulation make it easier for competition to enter the market or harder?
Why, if regulation makes it more difficult for large corporations, do they continue to donate substantial amounts to the very candidates that implement them, why not support the free market candidates?
This is a simple video explanation that I think covers your questions:
http://www.youtube.com/watch?v=LQms0-jSYqM
More videos:
I loved this one; it's from 1983 with a very young looking Ron Paul (just as relevant now as it was then).
Anti-Trust and Monopoly (with Ron Paul) 1983
http://www.youtube.com/watch?v=8C4gRRk2i-M
Monopoly and Competition - Presented by Thomas DiLorenzo at the 2009 Mises University. Recorded 28 July 2009 at the Ludwig von Mises Institute; Auburn, Alabama.
http://www.youtube.com/watch?v=mwH8unDcdMY
--------------------------------------------------
The Law
by Frédéric Bastiat
http://www.pleasereadthelaw.com/
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The Law
by Frédéric Bastiat
http://bastiat.org/en/the_law.html#SECTION_G001
Why?
It's called "Rent Seeking". See Tullock.
http://goldsteinrepublic.com
great interviews ~
~
Scarborough says Ron Paul was ALWAYS RIGHT! _MSNBC
Arianna Huffington joins the economic discussion
http://www.youtube.com/watch?v=Ilcr6akrwoE
__________
Bull! Not Bull ~ Turn off the TV and Think!
Ron Paul on the US Economy: Following Bin Laden's Wishes_CNN
http://bullnotbull.blogspot.com/2009/01/ron-paul-on-us-econo...
newbie fun ~
~
Terminology Primer for those new to the Ron Paul movement
http://www.dailypaul.com/node/35738
Be careful
that you don't spend a lot of time defending the terms "capitalism" or "free market" to a socialist. In the socialist's mind, those terms carry unspoken connotations that you would be very uncomfortable defending.
Be clear you are talking about a system in which individuals are free to control their own life and their own property. Corporations would have no more rights than an individual.
The question will become: how do you get to that ideal? The socialist is likely to argue for more state control of business enterprises, contracts, labor relations, etc. Your counter argument is that the concentration of such power in the state provides a convenient and efficient lever by which the rich and powerful can bend society to their own purposes. In other words, the socialist ideal almost guarantees the success of what they term, derogatorily, "capitalism." That is what we have today.
Your solution is to dismantle the power of the state and thus take away the levers of power from the elite.
knockout argument!
.
This is well stated
.
Because
regulations always benefit big business and squeeze out the small business man
great questions
I need answers too.
Capitalism
Q) "explain how regulations and government interventions into business and the market, stifle new entrepreneurs and empower large corporations."
A) 2 part. First, regulations and interventions stimulate "rent-seeking" http://en.wikipedia.org/wiki/Rent_seeking . Corporations will find it easier to hire lobbyists and bribe politicians to pass regulations that hurt their competitors or get them subsidies than it is to just develop better products or more efficient methods. Second, "economies of scale" means large corporations have an easier time absorbing the costs of legal payroll and accounting overhead than smaller companies.
Q) "can you explain why in a true free market a giant corporation like Walmart or Monsanto could not exist?"
A) They COULD exist, but it would be difficult due to the "law of subsidiarity" which causes inefficiency in large, centralized organizations. Walmart and Monsanto are beneficiaries of tax abatements and subsidies so they are poor examples.
http://goldsteinrepublic.com
The 14th amendment
The Fourteenth Amendment offered an opportunity to advance corporate interests, and the corporate attorneys set out to exploit it.
Of the 150 cases involving the Fourteenth Amendment heard by the Supreme Court up to the Plessy v. Ferguson case in 1896 that established the legal standing of “separate but equal,” 15 involved blacks and 135 involved business entities. The scope of the Fourteenth amendment to secure the political rights of former slaves was so restricted by the Supreme Court that blacks won only one case. The expansive view of the Fourteenth Amendment that comes down to
Constitutional Law classes today is the result of corporations using the Fourteenth Amendment as a shield against regulation. Ultimately the Plessy decision left Jim Crow laws, state laws discriminating against blacks, in place because of doctrines developed in those corporate shield cases.
Without government, corporations would not have the same rights as people. They actually have more rights than people now.
And I dare say that close to 100% of the laws that get passed are actually written by attorneys from the industry that the law is proposing to regulate. Probably the only exception to this is any legislation brought forward by Ron Paul.
The corruption of our leaders is right up there with Russian Oligarchs, the Ruling Familias Mexicanas, or the Al Sadds from Saudi Arabia. We just have a better system of propaganda and lies for their cover up.
ooh
nice points!
short answers
"please explain how regulations and government interventions into business and the market, stifle new entrepreneurs and empower large corporations."
if you ever have the opportunity to run a business, you'll find you spend a great deal of your time dealing with taxes, filing forms, and making sure you comply with whatever regulations apply to your business. this last item could be anything as simple as carrying the right insurance to having inspections of your facilities and legal review of everything you do. this is a drain on your time and your business's finances. large corporations do better with this because they can lobby to have the regulations written in their favor and they have access to more labor and capital to perform this sort of compliance work.
"also can you explain why in a true free market a giant corporation like Walmart or Monsanto could not exist?"
there's no reason a giant corporation could not exist in a true free market. it is true, however, that many large corporations in the US today became monopolies because the government helped them get that way.
My Try ! Sorry for the length.
First of all capital means money where I grew up. So free market capitalism must mean money that is chosen by people that are free to choose.
Thus, free trade started over 6,000 years ago when traders from different areas chose the best medium of exchange for their bartering activities, although no one was forced to accept it Gold evolved as the best medium of exchange.
Most of the U.S. founders realized that Gold used as money in the hands of the people would promote prosperity for the largest number of people, so they demanded that only Gold/Silver be used freely as money by Constitutional decree. In the U.S. Placer Gold was money in the Gold rush days. { Free Gold }
The bankers fought this tooth and nail because they were determined to control the money. In 1913 when the Fed was first formed. The Fed promised to redeem all dollars in Gold, so the public went along with the new central bank.
Many historians agree that the Fed policies of the 1920's caused the great depression by issuing way more dollars than there was Gold to back them. By 1933 Roosevelt confiscated Americans Gold to cover the amount of dollars that were in circulation.
This action essentially killed free market capitalism, except for barter, in the U.S. because now Americans were forced to use federal reserve issued notes which were essentially I.O.U. notes.
But the bankers were not done !
Gold was still the international settlement money until 1971 when Nixon took the U.S. off of it. Very quickly the bankers { Not a government } declared that the dollar would still be the international settlement money.
They devised a scheme where each type of paper currency in the world had a different value, and only the central banks could set this value.
Trouble soon began as the value of currency in one country made production in that country much cheaper than production in a country with a much more valuable currency { I.O.U.note }
You asked for an example:
Lets say you represent a country and I represent a different country.
My net worth is say $100,000.
Your net worth is $1,000,000.
We both write I.O.U. notes in the amount of $10.00.
Normally they would have equal value to any third party,,,however this is where it gets tricky,,, The banks decide your $10.00 is worth 10 times or more { 50 times or more } as much as mine, when really they're both I.O.U. notes that are only backed by a promise.
This is why there is no free trade because the medium {s} of exchange { paper currencies } are strongly controlled in value by international bankers, which in turn controls the pricing in labor,services, and products worldwide.
The bankers know their fraudulent system has reached it's end line but still want to continue their dominance over money or capital.
However Ron Paul, a free market advocate,wants a free people to decide the best medium of exchange once again and recommends different types of competing currencies to compete against each other.....naturally left to itself Gold would more than likely prevail as it has again and again over time, and it would be Constitutional.
beesting
Hey, could you explain
Hey, could you explain further your example of how the banks determine the value one countries 100,000 iou vs. anothers 1,000,000 iou. I haven't explored that aspect of the central banks yet and find those implications intriguing. It would sure explain a lot of what's going on in the world if I'm understanding you correctly, but I could use some explanation. Thanks!
Every country has different currency exchange rates.
These rates are determined by the central bank of each country.
http://finance.yahoo.com/currency-converter/#from=USD;to=EUR...
The FOREX markets were originally only for central banks to buy and sell currencies among themselves. Small players now can trade currencies, but all the currencies are actually I.O.U. notes issued by their respective central banks. Supply and demand of currencies apparently only plays a small role in value.
Of course the central banks deny this and say currency is valued by a wide variety of local economic factors, but the central bank determines what these factors are and how much financial weight each factor holds.
Example:
Mexico in 1993 {?} was about to default on an IMF loan. The Peso through out Mexico, was devalued a great deal, I forget the actual amount, but why should a Mexican farmer coming to Texas with the old Peso that he worked hard to save, be penalized by a default on an international loan that he had nothing to do with?
Workers in other countries do the same jobs as Americans but because of the currency difference in other countries can produce everything much cheaper, in fact so much cheaper that the U.S.has lost it's manufacturing base.
On the true old Gold standard, if a worker in Timbucktoo was a skilled carpenter he should make approximately the same amount as a skilled carpenter anywhere in the world, in Gold the universal money.
Hope this helps.
P.S. The word note in federal reserve note means borrowed or in my words an I.O.U.
beesting
I'm new fairly new too, but
I'm new fairly new too, but I suspect you understand more than you let on, judging by the nature of the questions you're asking.
1. As to your first question about how regulations stifle small business, I like to use the example of Home Depot, most everyone is familiar with it. Its big and successful now but I remember watching a segment where one of the founders explained how under the current regulations he never could have started his business. Regulations like Sarbanes-Oxley, ( which btw Ron Paul voted against in another 423-3 near lone vote) would have been too restrictive and would have cost way too much, he simply couldn't have started up. Such regulations stifled entrepreneurship and new business startups in the years following their enactment. They also moved other businesses out of the country and discouraged investment, while neither preventing fraud nor instituting the fairness the regulations intended. Government meddling cost the US businesses billions, eliminated potential jobs, shipped others overseas, allowed large corporations to expand without any upstart competition to get in the way
and contributed to the many joys of our modern day economy...Hooray!
I couldn't find the exact video but here's an interview where the home depot cofounders say pretty much the same thing:
http://www.cnbc.com/id/15840232?video=800342525&play=1
Check out the criticism section of Sarbanes for some good arguments there as well, starts off with Ron Paul's feelings on the matter
http://en.wikipedia.org/wiki/Sarbanes-Oxley_Act
2. As to the second part of your question, about the mega corps, without government regulations and/or subsidies these would not exist or at least would not last very long in a real free market in their current form. Ron Paul has stated many times, there's nothing inherently wrong with natural occurring monopolies determined by the free market, but when they are created or supported by the government then there's a problem.
Regulations eliminate smaller competition because only the bigs can afford comply with them. Subsidies also give an unfair advantage to the big corps that the smaller ones, who may be better (faster, cheaper, higher quality) just can't compete with thereby wiping them out. Lack of competition breeds lower quality, higher prices, lackluster service, wanton arrogance and disregard for their customers and little to no innovation.
Take telecoms for example, a very restrictive market dominated by lumbering giants. If a new Telecom company was out there getting the job done, hooking up the last mile, providing great service at a great cost, don't you think the big telecoms would take notice and improve their mediocre service? As it stands, they don't have to. There is no real competition. Telecoms and internet providers stake their claims and your either left with them or nothing in many areas. Why doesn't someone create a competing service? Telecom regulations are near impenetrable. Its down to about 5 corps left all chomping at the bit to resurrect the old ATT.
My prediction, government will try to label this as greedy capitalism, break up the behemoth for the good of the people, mourn the fact that they all go out of business and then swiftly take the whole thing over in the guise of a temporary bailout or some kind of public right. Heck with the whole wiretapping business going on and the government immunity deals, they're halfway there. Sigh...
Well, good luck blowing your professors' and classmates' minds! With enough people we may finally be able to turn things around.