Free market fails victims of the recent storms.

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I have responded to and lived through several emergencies from hurricanes, floods, blizzard, and wind storms and it never fails that some entrepreneurs sees an opportunity to make immoral profit by gouging people who have survived the initial emergency.

I was thinking about this why I was clearing debris yesterday from the most recent storms and listening to different people talk about the price gouging they had run into. Fortunately this is rare, but it happens often enough to prove that an unregulated free market to benefit society as a whole or to maintain ethical conduct.

In thinking about humankinds history, in every instance where regulations of goods and services were developed it was in response to a few people cheating their customers whether be diluting beer and wine ( the first food regulations), or shorting people on weighed goods.

The nature of greed in some people, who do not see the problem with cheating their neighbors will require that society have some kind of regulatory mechanism until we can make sure that all greed has some ethical, limits i.e. perfect people (not going to happen) which is why all Utopian models ultimately fail is that they require perfect people including the libertarian philosophy.

For those of you with a short attention span, I will simply point out in the aftermath of a disaster, the market is as free as it possible can be and some people take advantage of it to the injury of neighbors which why there has to be regulation. If not regulation, what other proven successful remedy to people have? Are you willing to give people unlimited access to the courts, lawyers? Will you have a large enough police force to enforce the orders of the court?

If you continue to read, I am providing reference to the most recent price gouging and an interesting article on the failure to libertarianism, which will not convert the faithful few that inhabit this blog but before you respond you may want to jump down to “Libertarian responses to such lists are beyond amazing “and see if you responses are different

References

Reports of price gouging emerge in storm's aftermath

http://www.wtop.com/81/2928717/Reports-of-price-gouging-emerge-in-storms-aftermath

Consumer Protection Offices for Reporting Storm Price Gouging and Scams in Washington, Maryland, Virginia,

http://www.wusa9.com/news/dcnews/article/211270/187/Report-Storm-Ripoffs-Price-Gouging-And-Scams

Reports of price gouging emerge in storm's aftermath

http://www.bizjournals.com/washington/morning_call/2012/07/reports-of-price-gouging-emerge-in.html

West Virginia Investigates Price Gouging Reports

http://www.nacsonline.com/NACS/News/Daily/Pages/ND0703124.aspx

Price Gouging Complaints

http://www.wset.com/story/18958062/price-gouging-complaints

Additional information on why libertarianism is a failure

http://www.zompist.com/libertos.html

We tried it, and it failed

The libertarianism that has any effect in the world, then, has nothing to do with social liberty, and everything to do with removing all restrictions on business. So what's wrong with that?

Let's look at some cases that came within spitting distance of the libertarian ideal. Some libertarians won't like these, because they are not Spotless Instances of the Free Utopia; but as I've said, nothing is proved by science fiction. If complete economic freedom and absence of government is a cure-all, partial economic freedom and limited government should be a cure-some.

Pre-New Deal America

At the turn of the 20th century, business could do what it wanted-- and it did. The result was robber barons, monopolistic gouging, and management thugs attacking union organizers, filth in our food, a punishing business cycle, slavery and racial oppression, starvation among the elderly, gunboat diplomacy in support of business interests.

The New Deal itself was a response to crisis (though by no means an unprecedented one; it wasn't much worse than the Gilded Age depressions). A quarter of the population was out of work. Five thousand banks failed, destroying the savings of 9 million families. Steel plants were operating at 12% capacity. Banks foreclosed on a quarter of Mississippi's land. Wall Street was discredited by insider trading and collusion with banks at the expense of investors. Farmers were breaking out into open revolt; miners and jobless city workers were rioting.

Don't think, by the way, that if governments don't provide gunboats, no one else will. Corporations will build their own military if necessary: the East Indies Company did; Leopold did in the Congo; management did when fighting with labor.

Post-communist Russia

Or take Russia in the decade after the fall of Communism, as advised by free-market absolutists like Jeffrey Sachs. Russian GDP declined 50% in five years. The elite grabbed the assets they could and shuffled them out of Russia so fast that IMF loans couldn't compensate. In 1994 alone, 600 businessmen, journalists, and politicians were murdered by gangsters. Russia lacked a working road system, a banking system, anti-monopoly regulation, effective law enforcement, or any sort of safety net for the elderly and the jobless. Inflation reached 2250% in 1992. Central government authority effectively disappeared in many regions.

By the way, Russia is the answer to those testosterone-poisoned folks who think that guns will prevent oppression. The mafia will always outgun you.

Today's Russia is moving back toward authoritarianism under Putin. Again, this should dismay libertarians: apparently, given a little freedom, many people will demand less. You'd better be careful about setting up that utopia; ten years further on it may be taken over by authoritarians.

Pinochet's Chile

Or consider the darling of many an '80s conservative: Pinochet's Chile, installed by Nixon, praised by Jeanne Kirkpatrick, George Bush, and Paul Johnson. In twenty years, foreign debt quadrupled, natural resources were wasted, universal health care was abandoned (leading to epidemics of typhoid fever and hepatitis), unions were outlawed, military spending rose (for what? who the hell is going to attack Chile?), social security was "privatized" (with predictable results: ever-increasing government bailouts) and the poverty rate doubled, from 20% to 41%. Chile's growth rate from 1974 to 1982 was 1.5%; the Latin American average was 4.3%.

Pinochet was a dicator, of course, which makes some libertarians feel that they have nothing to learn here. Somehow Chile's experience (say) privatizing social security can tell us nothing about privatizing social security here, because Pinochet was a dictator. Presumably if you set up a business in Chile, the laws of supply and demand and perhaps those of gravity wouldn't apply, because Pinochet was a dictator.

When it's convenient, libertarians even trumpet their association with Chile's "free market" policies; self-gov.org (originators of that cute quiz) includes a page celebrating Milton Friedman, self-proclaimed libertarian, who helped form and advise the group of University of Chicago professors and graduates who implemented Pinochet's policies. The Cato Institute even named a prize for "Advancing Liberty" after this benefactor of the Chilean dictatorship. “

The article goes on

The problem with markets

Markets are very good at some things, like deciding what to produce and distributing it. But unrestricted markets don't produce general prosperity, and lawless business can and will abuse its power. Examples can be multiplied ad nauseam: read some history-- or the newspaper.

· Since natural resources are accounted as free gains and pollution isn't counted against the bottom line, business on its own will grab resources and pollute till an environment is destroyed.

· The food business, on its own, will put filth in our food and lie about what it's made of. The few industries which are exceptions to food and drug laws (e.g. providers of alcohol and supplements) fight hard to stay that way. The food industry resists even providing information to consumers.

· Business will lock minorities out of jobs and refuse to serve them, or serve them only in degrading ways.

· Business will create unsafe goods, endanger workers, profiteer in times of crisis, use violence to prevent unionization-- and spend millions on politicians who will remove the people's right to limit these abuses.

· Thanks to the libertarian business climate, companies are happily moving jobs abroad, lowering wages, worsening working conditions.

· The same libertarian climate encourages narcissists to pay themselves handsomely while ruling incompetently, and leads to false accounting, insider trading, and corruption.

· Businesses create monopolies and cartels when they can manage it; and the first thing monopolies do is raise prices.

· Businesses can create bureaucracies as impenetrable and money-wasting as any government. (The worst I've ever had to deal with are health insurers. And no, it's not "government regulation" that makes them that way; insurers have an interest in making the claims process as difficult as possible.)

· State-controlled media are vile; but business-controlled media are hardly better, especially given the consolidation of major media. Democracy needs a diversity of voices, and we're moving instead toward domination of the airwaves by a few conglomerates.

· The poor are ill-served even for basic services: they pay more for food; they pay through the nose for rotten apartments; they can't get loans even if they can get bank accounts; if they can get a job it's ill paid, with no health benefits. Poor areas are also highly polluted (in ways that cause massive health problems), while lacking such services as movie theaters.

Libertarian responses to such lists are beyond amazing.

· "Businesses would be stupid to do those things." Then they're stupid, because they do them. Private racial discrimination, for instance, lasted a hundred years; and it wasn't ended by businessmen changing their minds, but by blacks and liberals organizing. The Libertarian Party platform actually hopes to legally re-enable private discrimination.

· "The market will correct those problems." In a few cases it will-- if you wait long enough. But very often it's simply impossible: e.g., the monopolist has made sure no alternatives exist. (One of the railroad tycoons, for instance, was careful to buy up steamship lines.) And though it was sometimes possible to break a monopoly by starting a well-bankrolled competing business, that was no consolation to (say) an oil producer who saw Rockefeller consolidating all the refineries. He could hardly start up his own refinery, and he'd be bankrupt before anyone succeeded in doing so.)

Slavery is another example: though some hoped that the market would eventually make it unprofitable, it sure was taking its time, and neither the slave nor the abolitionist had any non-governmental leverage over the slaveowners.

(Libertarians usually claim to oppose slavery... but that's awfully easy to say on this side of Civil War and the civil rights movement. The slaveowners thought they were defending their sacred rights to property and self-government.)

· "We believe in laws too." And they do, rather touchingly; they just don't believe in enforcing them. Enforcement of the laws passed by democratic legislatures is called "men with guns" or "initiating force" in libertarian ideology. And without enforcement, laws are just pretty words. You can see this today in Latin America, which often has very progressive laws. The business and landowning elite just ignores them.

· "So what do you want, state-run movie theaters?" The single-villain ideology is so strong that the only response some people can make to a market failure is to invent a statist response and criticize that. Sometimes the best solution to these problems is to use the market-- once it gets a good liberal kick in the pants to go find one.

And those are the better responses. Often enough the only response is explain how nothing bad can happen in the libertarian utopia. But libertarian dogma can't be buttressed by libertarian doctrine-- that's begging the question.

Or it's simply denied that these things are problems. One correspondent suggested that the poor shouldn't "complain" about not getting loans-- "I wouldn't make a loan if I didn't think I'd get paid back." This is not only hard-hearted but ignorant. Who says the poor are bad credit risks? It often takes prodding from community organizations, but banks can serve low-income areas well-- both making money and fostering home ownership. Institutions like the Grameen Bank have found that micro-loans work very well, and are profitable, in the poorest countries on Earth, such as Bangladesh. “

“The bottom line

"The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little." --Franklin D. Roosevelt

I have my own articles of faith. I think a political philosophy should

· benefit the entire population, not an elite of whatever flavor

· offer a positive vision, not just hatred for another philosophy

· rest on the best science and history can teach us, rather than science fiction

· be modified in the light of what works and what doesn't

· produce greater freedom and prosperity the closer a nation comes to it.

On all these counts, libertarianism simply doesn't stack up. Once people are able to be rational about politics, I expect them to toss it out as a practical failure and a moral mess.

Additional articles

http://www.huffingtonpost.com/stephen-menendian/why-libertarians-and-rand_b_591682.html

http://mcplanck.blogspot.com/2012/06/why-libertarians-are-wrong.html

Recovering conservative2's picture
Recovering cons...
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Feb. 14, 2011 10:01 am

Comments

An excellent analysis!

I think the best form of government is one that has a mixed economy as in the case of India with a clear statement in the constitution.

India has a better government with "socialism" and "fraternity" added and "pursuit of happiness" deleted. I copy the preamble from the wiki:

WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and of opportunity;

and to promote among them all

FRATERNITY assuring the dignity of the individual and the unity and integrity of the Nation;

IN OUR CONSTITUENT ASSEMBLY this twenty-sixth day of November, 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION.

http://en.wikipedia.org/w/index.php?title=File:Preamble_to_Constitution_of_India.pdf&page=1

India supports the commons well, low taxes to the agriculture sector, free university education, rural employment for infrastructure development, funding for science and technology development etc. Its banking is mostly government owned and operated by well qualified civil servants (from the Indian Administrative Service) and the plutocracy is kept away. The treasury and fed are combined into a central bank and money creation is not restricted by "debt limits". It offers T bills for sale but is not required to do so. It is left to the banking department.

There are more parties. In general, coalitions govern better than a two party bought-and- paid- for government as in USA. At present 33% of the lower house of parliament is reserved for women. The idea "government is your enemy" will never fly in India.

The wealth inequality in India is similar to that of Canada and Australia. Of course India is much poorer than western democracies but is doing the right things for the future of the country.

pshakkottai's picture
pshakkottai
Joined:
Jul. 11, 2011 10:27 am

Thank you, India has successfully eliminated the caste system; it appears the US may be developing one.

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