A challange to Libertarians - Dr Albert Ellis

Jimmy,

I'm still waiting for your second part of your rebuttal so I can post my response.

Don't go too far until the second part is finished. I have gone through it, but want to think more about it. I really wanted to do more on the first part, but its a good start.

First some definitional notes:
There are no “the” definitions. All definitions are either defined/agreed to before hand such as in the first part of any written law, or they are debatable in their details and are personal preferences to some extent. When you argue that anyone’s preference is “the definition” without such an agreement, you are, in effect, asserting that some preference is religious in nature, that it comes from some god, nature, or god-like source, e.g. “Natural law”. No god, nature, or god-like entity has written a single word. It is men, again, telling others that they know the mind of god, nature, etc. If, on the other hand, you have facts and logic to support your definition and want to argue the details with historical evidence of systems that have actually existed and scientific studies of human nature that prove that man would be better off having the government protect those “rights”, then you are talking scientifically, not “religiously”. You will also not use the term “the” with your definitions

Ellis argues against “pure” capitalism, that is, capitalism without any regulation or state competition, with or without the courts. He argues for a mixed economy. Therefore, whatever your “the” definition of “capitalism” is, for that definition to make a difference in this discussion, it must require public regulation or ownership of mature, essential industries.

The current economic crisis proves that capitalism corrupts capitalists into corporatists, or whatever other term you wish to use. Greenspan was in “shocked disbelief” that they did not act as he, Rand, et. al., have predicted. The many major capitalists did not look for the long run but just until they collected their bonuses and cashed their stock options. They were so addicted to success that many couldn’t get out of the game and went down with it. They failed and yet many are clamoring for still historically outrageous bonuses. We can argue what is outrageous, but to be relevant to this discussion, regulation is the key difference – if you don’t regulate, we’re talking about your form.

Neither Ellis nor I advocate state ownership of all or micro-management, particularly of small, non-essential industries. We do advocate enforced health and safety standards of all. “An ounce of prevention is worth a pound of cure.”
“There is no justice in or out of court,” Clarence Darrow. History shows that the courts seldom have corrected the abuses of capitalists or governments from Tobacco to Enron to Katrina. It is fantasy that the courts will right all or even most of the wrongs. I have been to court on small and super big corporate cases. The courts today are a single ring circus where three clowns speaking a foreign language try to get 12 people not smart enough to get out of jury duty to decide who will lose more. The public, defendant and plaintiff all lose huge amounts of time and attention, frustration, and money - the winner just loses less. Every major company must spend millions to billions on lawyers and shape what they do around these sharks. Yes, there are the some cases that go right and many sensationalized cases that go wrong, but in most cases, the poorer client loses and the “winner” never gets back what they lost. Where and how will these miraculously improved courts come into being?
These courts are another utopian claim, false to the facts of history and the courts as they really exist today. Today’s patent, copyright, and fraud cases are a farce of lawyers playing lawyer games where mega-corporations like Disney change the laws and send in teams of lawyers to overwhelm their smaller opponents. Where are these super human lawyers that won’t defend the outrageous? Pay a lawyer and he will argue that you are a god that never did wrong and your opponents are the devil. The judges are picked by the administration for agreeing with the administration’s philosophy. The bottom line is that “The law is what the judge says it is.” Until there are supermen judges, the law will not solve the problems with “pure”, unregulated capitalism. And again, “An ounce of prevention is worth a pound of cure.”

Socialism is often equated with Communism without the ideology. My preferred definition of “a mixed economy”: a system with a mixture of communal programs and capitalism where mature, essential industries are heavily regulated and/or possibly state owned. There is a universal, real health care option and real social security, “cradle to grave”. Under my personal system definition, capitalists are allowed to compete with state enterprises and programs and includes the essence of capitalism: incentives for all managers and employees.
Incentives/rewards are the operant mechanism within capitalism. Capitalism is really a form of Behaviorism, not an “unknown ideal.” Incentives can be applied by the state. Unfortunately they ones that they have employed work counterproductively or rather poorly so far. Corporations already use rational incentives* based on their individual and group’s performance successfully. Under such a system for government there would be incentives for lower costs, better service, and social objectives. Costs are important, but not the only factor. Any long term successful corporation/business owner will tell you that service is important. So there will be three incentive groups for the three objectives. *(millions/billions of dollars are not necessary to motivate one person. Only a very few get those amounts. Capitalist pay the overwhelming majority the minimum wage. Why isn’t it necessary to give them million dollar incentives? It isn’t! It isn’t necessary for the CEO either! There are plenty of ex-CEO’s looking for work!)

Neither I nor Ellis want to live under either “pure” communism or “pure” capitalism.

Abraham states:
“What you, Ellis, and his "school of thought" need to ask yourselves is am I greater than a 5 on the 1-10 scale of a "mixed economy" or am I less than 5? If you are less than 5 you might as well call yourselves moderate libertarians and give up on trying to refute it but begin to embrace it and find ways to better it, restore it, and protect it.”

Reply: We are glad to call ourselves moderate libertarians who believe in the regulation of business, particularly big business. We are glad to call ourselves very moderate communists who believe in capitalism and private ownership of property at a personal and small business level. What we repudiate is extremism, i.e. the pure forms of either. We could live under either, but prefer the Libertarian side of 5.
This brings us to my reason for doing this and the major points of Chapter 3, Capitalism’s Utopianism and Unrealism.
Neither pure Communism nor Capitalism has ever existed, according to their supporters. Yet both sides claim that the “pure” forms would work. Both are unproven, extremist theories advocating we risk all that we have on a untested, prototype. Both claim they are not harmful, but that the other one is. Both have valid examples of harm done by the other position to people while they are in denial about their own failings. Both are wishful thinking.
Even more to the point, as they say in Vermont, “You can’t get there from here.” How would you get to this ideal system? The majority of the people has never and will never agree to it. After a century or so of examples and debate, a huge percentage of the world won’t have your ideal system. The current collapse is blamed on capitalism by the majority. All your attempts to differentiate your form will be even more fruitless with them. How are you going to convince them into voting for your extreme when in their eyes it caused this crisis? It won’t be by vote in our lifetime. If you have a plan, let me know how it will work to bring this about.
Therefore, a major reason for my and Dr Ellis’ effort is in effect, as Abraham exhorts us, to “embrace [Libertarianism] and find ways to better it, restore it, and protect it.”

If you want to win, to get Libertarianism into the mainstream, you need to change. At this point in time, the majority is not going to believe that unregulated capitalism or that some variation will work. The Republicans and Democrats are not going to change. The Greens have the man-made global warming fantasy hung around their necks and they are not going to change. No one has a realistic plan on how to get us out of the crises. Change or the Libertarians and Greens will continue to be called spoilers by the Democrats and Republicans. Continue as you are and will have no effect on the disasters befalling our country and the world. Change and you become our best bet to oust the criminals in power. Or stay marginalized.

Now on to my responses to Abraham’s Point by Point, point by point:

"Ellis: "Moreover, it seems that a mixed economy is the only possible economic state. The more extreme a state is, either capitalist or collective, the less likely it is to last."
Wrong, he is implying the more free a market the less likely it is to last.

Reply: No, he is talking about the totally free market which capitalism advocates. He plainly states that there is always a market that is somewhat free, even under communism, e.g. the black market.

"I gather if we put a society, not a state, on a scale of 1 being purely libertarian and 10 being purely communist then he's saying that a 5 is the best suited for an economy. Anything below or above a 5 is more extreme in either direction. So, having not defined what 5 is (the perfect mix), I'm going to use history as my guide for what economic structure is the most productive. It just so happens that the most productive economic structure is also the most fair, logical, and realistic.

Reply: [So you think Communism is a “10” on a scale of 1 to 10? Sorry, I could not resist. Mea Culpa.] Your number system is slightly flawed. 5 is not the middle of 1 to 10 since there are 5 numbers higher than 5 but only 4 numbers less than 5. So I will use 0 to 10. Extreme would be past some threshold that I would somewhat arbitrarily set at 3 and 7, so that 0, 1, 2, 8, 9, and 10 would be “extreme” in my view. Levels 3 to 7 are not extreme, just greater or less than 5.

Ellis never said 5 was “perfect”. You have created a Strawman here. In fact, a significant number of Ellis’ books are on how to fight perfectionism. He knew that “perfect” never exists except by personal assertion. His states/implies that 0 and 10 are not possible at all. His second implication/statement is that for a system to be stable that is has to be somewhere in between 3 and 7. Our observations show that when the market approaches being totally free, forces within it take actions to restrict that freedom so that those same forces make more profit, e.g. cartels, secret price rigging, supporting politicians that will pass laws in their favor, etc. The Reagan, Bush I, Clinton and Bush II administrations are prime examples of how capitalists used money to control elections and get laws favoring them passed (unfavorable repealed), regardless of party. If you try to argue that these were not really capitalists, you ignore the fact that their philosophy was capitalistic. Therefore, like Brandon and his institute, capitalism corrupted even them. Regardless, it was they who argued and got for less regulation which the majority blame for the crisis. Tthe general population will yawn, smirk, or shake their heads in disbelief at your attempted differentiation.

Like the first great depression, this crisis is causing a backlash that will leading again to a wave of regulations and socialist laws changes to bring back a less free market. Additionally, remember how a pendulum works – the higher it goes one way, the higher it goes the other: this collapse and the resulting laws have a long way to go yet. A recent Newsweek article reveals this when it says it was the Congress’s fault for reducing supervision of capitalists under Greenspan, Bush and Clinton.

The opposite is equally true as the breakup of the Soviet Union and today’s China show: Their extremism resulted in society breakdowns resulting in both of them now having capitalist components. I lived in China when the conversion to capitalism started in the mid 80’s. Most loved the transition to capitalism – it gave them incentives, lifestyles and toys they had never had. However, they all kept their government owned, communal housing just in case their capitalism failed (but didn’t actually live there anymore). The Chinese now have a dual system, that I would put somewhere around a 7 to 8 on a scale of 0 to 10; the US has around a 2 to 3. We can argue the exact numbers ad infinitum.

"Certainly the history of the American Industrial Revolution and various other capitalist societies has shown that the freer the markets the better off the people are.

Reply: The industrial revolution, though capitalist inspired, is a physical process separate involving specialisation/division of labor and planing that is really from free markets. There was an industrial revolution in Russia/USSR and China. It provided them with great benefits. Since they had the benefit of the accumulated knowledge from other societies, it took place faster there, though it eventually ran into a wall created by their extreme philosophy: Ellis writes:
The famous motto: “From each according to his ability, to each according to his needs,” might work when an entire society lives on the borderline of survival, since the individuals accept that the survival of others in that society directly affects their own survival. However, once there is enough for the necessities, most will feel taken advantage of by those who do not work as hard or as much. In their pure forms, which are extremist, both systems demand an extreme, a society of super-humans, for their systems to work."

Back to Abraham:
Ellis: “Since people depend on their community for support and the enhanced wealth and health that living in that community brings, it seems that people will be better off if they do think of the community as a close second.”

What is preventing people from believing that a community is a close second in a purely free market system? [Did you leave the answer to this question out by oversight?]
Is he really suggesting that the power of force through the state is a better alternative than private charity? Let’s look at the track record of government welfare programs compared to private welfare. Hurricane Katrina is an excellent example of how millions of Americans donated more money and time to helping those afflicted than the government could hope to.

Reply: How could private charity have prevented or prepared for that disaster? Moreover, the relief private charity provided, while greater than the government, has been pitifully short of solving the problems, before or after. In fact, in no case that I have ever heard of has private charity adequately solved or prevented a problem.
The first governments of Egypt were formed at least partially to control the flooding of the Nile since no individual was capable of doing it. In regards to Katrina and the nation’s crumbling infrastructure, instead of all those tax cuts which help create the bubbles that are still collapsing, they should have used the money to rebuild the country’s infrastructure, including the levies and other systems around New Orleans. If Capitalists are so forethoughtful and able, why did they not start a large advertising campaign for fixing the levies like they have against universal health care? Why didn’t the capitalist insurance companies step up and demand legislation/action to prevent the catastrophic losses they and everyone else there incurred? Only government could and has (well and poorly) support and do such things. Hurricane Katrina is the poster child of those who advocate government beyond the courts and military and has shown that private charity and planning hasn’t ever gotten the job done well.
Social Security, Medicare, Medicaid, Government Housing (Fannie Mae and Freddie Mac) are going broke, while various private charities are very much productive and profitable; I contend that they’d be even more productive if the citizens had more of their own money to donate.
reply: Charities do not earn a profit. Brandon’s for profit charity ended when he applied for subsidies. The social programs you mention are going broke under capitalist administrations, whose motto is “Starve the Beast.” When you set the FOX (pun intended) to guard the chicken coop (pun not intended), you can’t blame the chicken coop for its failure to protect your property! All of your factually correct statements above are not a repudiation of government, but of bad government. Ellis nor I advocate bad government. Rational incentives for government managers would greatly improve performance of the government. (My ASSERTION, unproven, but I think likely since it works for capitalists). As for SS, it is under-funded by congressional mandate, but it is the most efficient retirement plan ever devised. The cost of administration and return on investment to the beneficiary beats anything done by the private sector. (Insurance is just a savings plan – capitalist competition is not needed here – just the loss tables and investing the “premiums” securely, not in the stock market obviously.)

Back to Abraham:
Ellis: “In fact, Rand keeps claiming that the pure and entirely uncontrolled capitalist if it ever existed would invariably help all people by its productive drives and would rarely harm anyone. There is no evidence that this would be true. There is considerable historical evidence and reason for believing it would not.”

On the contrary, it most probably would not hurt anyone if there was a constitutional government to protect our natural rights and property rights.

reply: 1st, “Natural rights” is a religious type claim. Nature cannot write rights. Natural rights are just someone's assertion.

2nd Let us take the “property rights” of a few industries. Take the newspapers/media. If their property rights are fully protected, then they can have monopolies/oligopolies and say anything want since the newspaper/transmitter is their property, truth be damned, ala FOX news, NY Times, etc. They already claim that their property rights and their right to free speech allow them to say what they like and to ignore and not present any other views. Since capitalists are the only ones with the money to buy such, especially when the companies get to international size, those Capitalists’ property rights definitely can be used to harm the majority for the benefit of the few. Ron Paul suffered them in his campaign.
Or take the Automobile Industries property right not to put in seat belts. They resisted until 1959 in Ford. They shut down a company that did it first, the Tucker. Same with their attacks on Nader over his exposure of their deadly “unsafe at any speed” car. Their property rights allowed them to spend their money on people to defame him. You can call them Corporatists, but lack of regulation allowed them to do it!
Goldman Sachs, CIT, any of the big financial failures today plainly show that when your property rights start to wag the dog, it must be regulated – that your property rights come second. This interaction is covered in the book will see that your property interacts and is a part of the web of society.
If all capitalists were the super heroes that Rand and Greenspan claim they are, who would argue with being ruled by such gods – they would be far superior to anyone I see in the Congress. But they are not, as the current collapse and massive fraud by capitalists show.

Back to Abraham:
There are thousands of examples of how individuals pursuing their own self-interests benefit all of humankind. Toilet paper, the car, the world wide web, plumbing, electric, the light bulb, the toaster, microwave, the oven, the refrigerator, the airplane, are all the result of individuals pursuing their own self-interests.
Reply: You have brought up the “irrelevant” “self-interest” argument.. We agree with Rand, et. al., that no one does anything that is not in their perceived self-interest, including pleasure. I get pleasure out of debating and helping society. Do I profit? No? Do I do it to the point of masochism or suicide? No! My priority is pleasant survival. It is in my self-interest to feel good – if you only felt bad, why live? I can only wear one pair of pants, live in one house, drive one car, or make love to one woman at a time – and after enough time the grandest view (of a person or thing) becomes mere background, hardly noticed. It is my self-interest to see that society survives and does not go through a cataclysm. No one does anything that they don’t perceive as in their self-interest or for better feelings. The self-interest argument is circular and irrelevant.

I and Ellis advocate capitalism for many things. Capitalism has produced great things. But the capitalists who really exist so far must be regulated so that they do not harm the public the public. Their harming of the people, environment, and economies is well documented (as well as their benefits – which is why Ellis and I don’t want to get rid of capitalism – we just know that it must be regulated to prevent its abuses while retaining its benefits).

Back to Abraham:
This quote is so utterly economically fallacious that even the most sympathetic "left" economists would disagree. The free market-- a system in which individuals are pursuing their own self interests --has been shown time and time again to be the most efficient way to pull a down-ridden society back on its feet.

reply: Yes, the limited “free markets” that have really existed so far have created great wealth and great crashes. You have not proven “Most efficient” as well as what "time and time again" precisouly means. The tribal communities and kingdoms of old, and communist governments of Russia and China have created great things. Like capitalism,
they have also caused great harm.

Back to Abraham:
I offer you, Ellis, or everyone from Ellis's "school of thought" the challenge of naming for me advancements to the human race that have come from a command economy. For every advancement that you can name, I will name ten more that came from individuals pursuing their own self interests.

Reply: Since you use the term command economy, one could include anyone living in a kingdom or tribe which is the vast majority in the past. Rand and Libertarians abhor the tribe or group oriented societies so do you include the tribes as command economies? As stated above, there are not any totally command economies or totally free capitalist economies: never has and there never will be.

As an archetypical example, Archimedes principal was discovered only after the king threatened to kill him if he didn’t solve the problem of counterfit gold coins. That principal is the basis for many inventions, including many capitalist ones, and essential to their favorite one: money. Archimedes principal is what made gold coins “real money” since it was the only way to verify that they were real gold.

Also from command and tribal/group oriented economies:
(most from: http://www.edinformatics.com/inventions_inventors)
Alphabet
Archimedes Principal
astrolabe
Astromony
Balloon
Beer/wine
Boomerang
Button
Calendar
Candle
cards, playing
Chess
Chocolate
Coins
Compass
dentures
Encyclopedia
Fire
Flashlight battery
glass
gunpowder
Helicopter
Holography
Ice skates
ink
lock and key
longbow
mirror, glass
nail, construction
paper
Periodic Table
Playihg cards
Satellite
ski, snow
Television
thermometer
toothbrush
vending machine
Wheel
Windmill

Back to Abraham:

Ellis: "there is considerable historical evidence and reason for believing it would not" shows fundamental gaps in his economic/historical studies.
The economist Ludwig Von Mises sums up the power of the free market to increase the lively-hood of all citizens in the following quote:
Mises: "Every advance first comes into being as the luxury of a few rich people, only to become, after a time, the indispensable necessity taken for granted by everyone."

Reply: Again absolutist and extremist. For example: Flood control, sputnik, wheel, etc., (see list above) were not luxuries for the rich

Back to Abraham:
Ellis: “For example, until the 1920’s the utilities in the United States operated under little constraint. Their rates corresponded to the maximum amount that could be extorted from the community, and their service was usually poor. Many communities had to take over, or at least regulate, these utilities in order to provide a decent level of service to consumers. The recent Enron utility scandal has confirmed that capitalists have not changed, and still need regulation.”

The first part of this piece lacks fundamental sources and logic. Furthermore, which “utilities” in particular is he speaking of; Electric, water, gas? He doesn’t name any, he merely names utilities. Clearly the utility companies where just getting on their feet during this time period and given time, if it is indeed true that their services were poor, I’m sure they would improve. Advocating the monopolization [regulation, not monopoly] of these utilities as a better alternative is not backed up… by simply saying the market didn’t work.

My reply:
http://www.answers.com/topic/public-utility
US History Encyclopedia: Public Utilities
In the United States, public utilities supply consumers with electricity, natural gas, water, telecommunications, and other essential services. Government regulation of these utilities considered vital to the "public interest" has waxed and waned. In the nineteenth century, canals, ferries, inns, gristmills, docks, and many other entities were regulated. However, in the early twentieth century, emerging electric companies initially avoided regulation These rapidly growing power companies often merged, creating monopolies that controlled the generation, transmission, and distribution of electric power. By 1907, entrepreneur Samuel Insull of Chicago Edison had acquired twenty other utility companies. He and others argued that building multiple transmission and distribution systems would be costly and inefficient. Nevertheless, reformers clamored for state regulation of the monopolies. By 1914, forty-three states had established regulatory polices governing electric utilities. Insull and other electric power "barons" found a way past regulation by restructuring their firms as holding companies. A Holding Company is a corporate entity that partly or completely controls interest in another (operating) company. Throughout the 1920s, holding companies bought smaller utilities, sometimes to the point that a holding company was as many as ten times removed from the operating company. Operating companies were subject to state regulation, holding companies were not. Holding companies could issue new stock and bonds without state oversight. This pyramid structure allowed holding companies to inflate the value of utility securities. Consolidation of utilities continued until, by the end of the 1920s, ten utility systems controlled three-fourths of the electric power in the United States. Utility stocks, considered relatively secure, were held by millions of investors, many of whom lost their total investment in the stock market crash of 1929.

Back to Abraham:
The Enron statement is unbelievably ludicrous. The Enron scandal has practically nothing to do with capitalism. This has to do with fraud and corporatism. Fraud is protected against in a capitalist society since it is the theft of another’s private property.

Reply: Enron has to do with not regulating business, regulating capitalists. Your claim that they are not capitalists is the ludicrous claim. They are corporatists as well. Good regulation would have prevented this disaster from happening. The courts have not righted this wrong. Everyone ended up losing except for those that got our early, like the financial officer.

Back to Abraham:
If we are going to look at history as an example of a free market vs. command market approach to economics look no further than the study of the “intercontinental railroads” and the productivity of the government vs. private industry.

Reply: “One swallow does not a spring make.” The railroads are a good and bad point for you. Society as whole benefited greatly. One has to support the results of what the capitalists did. We can second guess them on how it could have been done better, but that is hindsight and supposition. I am sure that it all “seemed like a good idea at the time”. Moreover, they pass my test for non-regulation: it was a new, innovative, far from mature industry.

However, they are also an example of the worst of capitalism in the skullduggery that went on, the lives lost without compensation, and excessive destruction of the environment.
End of reply

That's it for today. Second half tomorrow or the next day, depending on what I have to do otherwise. I won't reply to replies to this until that is done, I ask you to wait to reply to today's post until you have read it all.

Again, Abraham, thank you for this opportunity.