Got a Pencil? You Didn't Build That

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From A. Barton Hinkle: http://reason.com/archives/2012/08/08/got-a-pencil-you-didnt-build-that

Example: In Leonard Read’s famous essay “I, Pencil” – later popularized by Friedman – Read demonstrates the miracle of the free market's invisible hand. Nobody, he explains, can make a pencil by himself. A pencil’s wood comes from cedar trees in California; can you make a saw or fell a tree? It is shipped by rail; can you run a railroad? It is dried in kilns; can you build a kiln? The graphite comes from mines in Ceylon; can you mine graphite? Each pencil is coated in lacquer; can you make lacquer? The brass ferrule – well, you get the point.

Read and Friedman use the pencil to show the folly of central planning: Nobody can possibly know enough to manage the production of pencils. And indeed, history has proven that when governments create Pencil Ministries (metaphorically speaking), they fail – inevitably and spectactularly.

Obama, by contrast, seems to draw the opposite lesson: that because “there are some things we do better together” (his words in Roanoke), those things should be done by, or at least managed by, central government – preferably with him at the helm. (“That’s the reason I’m running for president,” as he said.) Like another liberal heartthrob, Elizabeth Warren, Obama also concludes that entrepreneurs deserve less credit than they take – and less earnings than they keep. And that’s where he goes astray.

What we need here is a distinction between a necessary and sufficient condition. A complex society is necessary for the creation of business, but it is not sufficient. Countless people made modern computing and the Internet possible. But Elon Musk, not anybody else, made PayPal happen.

And even if that were not so – even if Musk’s contribution to the creation of PayPal were no greater than the contribution from Phil, the goateed baristo at Starbucks with the Occupy Everything sticker on his car – Obama’s approach leaves a crucial question unanswered: Why should Phil, rather than Elon, enjoy the proceeds from PayPal’s success?

Suppose you sell me a pencil. You didn’t make that. Still, I freely gave my dollar to you. How much right do you have to that dollar? That’s hard to say, but this is not: You have far more right to keep it than any third party has to take it away.

Coalage1
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Mar. 14, 2012 8:11 am

Comments

When the tax -man comes to take your blessed money, he'll ask if you kissed my ass.

Regardless, it will cost you the same, so I see no harm in telling you again, kiss my willing to help the poor ass.

anonymous green
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Jan. 5, 2012 11:47 am

I don't think that Obama has any misgivings about good businessmen and entrepeneurs. His point was aimed at the Megacorps that seem to think that their worldly wealth was built by themselves. He screwed up with his analogy. He offended many a small businessman that he wasn't meaning to offend. It's all about the creation of wealth, not the creation of a product or a business. Great wealth takes a lot of help, knowledge, work and luck to achieve.

By the way, I made my own pencils when I was a kid. They were crude but they worked. ;)

Bush_Wacker's picture
Bush_Wacker
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Jun. 25, 2011 7:53 am
Quote anonymous green:

When the tax -man comes to take your blessed money, he'll ask if you kissed my ass.

Regardless, it will cost you the same, so I see no harm in telling you again, kiss my willing to help the poor ass.

“Like Sergeant Rivera of the Holy Lake County Sheriff Department, who kidnapped me two years ago with his friend Officer K, lied to a doctor and told him I was insane”

Like I said, some people have been saying that for a long time.”

A better option

http://www.jillstein.org/

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Redwing
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Jun. 21, 2012 5:12 am
Quote Barton Hinkle:

Example: In Leonard Read’s famous essay “I, Pencil” – later popularized by Friedman – Read demonstrates the miracle of the free market's invisible hand. Nobody, he explains, can make a pencil by himself. A pencil’s wood comes from cedar trees in California; can you make a saw or fell a tree? It is shipped by rail; can you run a railroad? It is dried in kilns; can you build a kiln? The graphite comes from mines in Ceylon; can you mine graphite? Each pencil is coated in lacquer; can you make lacquer? The brass ferrule – well, you get the point.

We don't have a free market. We have a manipulated market, favorable to multinationals, bankers and hedge funds. That pretty much nullifies this whole piece.

Quote Barton Hinkle:

Read and Friedman use the pencil to show the folly of central planning: Nobody can possibly know enough to manage the production of pencils. And indeed, history has proven that when governments create Pencil Ministries (metaphorically speaking), they fail – inevitably and spectactularly.

Nobody pushes the idea of Pencil Ministries any more. That pretty much nullifies this whole piece.

Quote Barton Hinkle:

Obama, by contrast, seems to draw the opposite lesson: that because “there are some things we do better together” (his words in Roanoke), those things should be done by, or at least managed by, central government – preferably with him at the helm. (“That’s the reason I’m running for president,” as he said.) Like another liberal heartthrob, Elizabeth Warren, Obama also concludes that entrepreneurs deserve less credit than they take – and less earnings than they keep. And that’s where he goes astray.

The "You didn't build that" quote was taken out of context, so that pretty much nullifies this whole piece. At any rate, Obama isn't pushing Pencil Ministries or the like. Get real. Well, if entrepreneurs could get by without roads, bridges, airports, rule of law, court system, education system, military, and other infrastructure of a modern consumer society, maybe Obama was being a little rough on entrepreneurs.

Quote Barton Hinkle:

What we need here is a distinction between a necessary and sufficient condition. A complex society is necessary for the creation of business, but it is not sufficient. Countless people made modern computing and the Internet possible. But Elon Musk, not anybody else, made PayPal happen.

Not familiar with the PayPal story, but chances are someone else was right behind Musk with the same idea. These guys aren't Gods. Chances are there were other competitors working on the same idea, and all of them probably stood on the shoulders of others. Successful entrepreneures generally accept the "Cult of Genius" tag they get labelled with, but honestly there are probably many, many others and specific business conditons (ie CONSUMER DEMAND) that led to their success.

Quote Barton Hinkle:

And even if that were not so – even if Musk’s contribution to the creation of PayPal were no greater than the contribution from Phil, the goateed baristo at Starbucks with the Occupy Everything sticker on his car – Obama’s approach leaves a crucial question unanswered: Why should Phil, rather than Elon, enjoy the proceeds from PayPal’s success?

Well, I'm sure Elon tries to dodge U.S. taxes, while getting most of his revenues from the U.S., using U.S. business law and enforcement, using pretty much the social and business infrastructure that underpins consumer demand that fuels his business. Phil's calling him out on it, telling him to pay his fair share. I'll raise my cup of coffee to Phil.

Quote Barton Hinkle:

Suppose you sell me a pencil. You didn’t make that. Still, I freely gave my dollar to you. How much right do you have to that dollar? That’s hard to say, but this is not: You have far more right to keep it than any third party has to take it away.

No taxes? That only applies to a government-less, lawless, business and social infrastructure-less land that is imagined in the self-created, self-centered infantile fantasyland that rests in the bizarre wiring of libertarians' brains.

al3's picture
al3
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Jul. 31, 2007 4:01 pm
Quote anonymous green:

When the tax -man comes to take your blessed money, he'll ask if you kissed my ass.

Regardless, it will cost you the same, so I see no harm in telling you again, kiss my willing to help the poor ass.

I am beginning to wonder if you contribute anything meaningful to these conversations. Posts like these have no place here. This makes you (and us by association) just as bad as the Libertarian dead heads. Create a thoughtful response or remain silent.

ah2
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Dec. 13, 2010 10:00 pm

The Constitution grants the Feds their powers, then the Commerce Clause, Controlled Substance Ax and Patriot Ax expanded that. The states claiming 10th amendment rights can't by-pass the Bill of Rights on Individuals. As with Jim Crow and right to work crap. Or voting disenfranchisement or supplying the prison industrial complex. De centralizing is best for the individual today with the G-20 Wall St markets controlling most of Washington and the Pentagon. If not for the egomaniacs in politics circumventing citizens individual rights for profit. So the government is the lesser evil over the abuse of the corporation. If we all played nice nice we wouldn't have wealthy people and self imposed slaves and moralists begging for big brother or have an excuse for big brother. No one plays nice so the Band-Aids are necessary for the sake of humanity and living with ourselves. But it is also after centuries of record and decades of observations. That still proves true that an ounce of prevention is worth a pound of cure, or in todays illness commodity land, a pound of "treatment". What's a pencil? ☺

Quote of the Day: Mitt Romney Told Olympians They Didn’t Get There Alone

"you didn’t get here solely on your own”

Mitt Romney has criticized President Obama for his “you didn’t build that line,” when it came to businesses. The president was making an “it takes a village” argument, which the Romney campaign and conservatives have roundly panned.

But in 2002, during his speech at the Opening Ceremonies at the Winter Olympics — the games in which Romney was lauded for turning around the management of the event — Romney made a similar argument about Olympians.

There's Nobody in This Country Who Got Rich on His Own, Says Elizabeth Warren
This short clip is from part of Warren's speaking tour in Andover, Massachusetts. Impressed, Greg Sargent at the Washington Post had this to say about it:

Republicans are planning to paint Warren as a liberal Harvard elitist — they’re already referring to her as “Professor Warren” — because they believe that she will have trouble winning over the kind of blue collar whites from places like South Boston that helped power Scott Brown’s upset victory.

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there—good for you! But I want to be clear.

You moved your goods to market on the roads the rest of us paid for.

You hired workers the rest of us paid to educate.

You were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Little wonder then that Scott Brown doesn't want to talk about the polls in Massachusetts which now show Warren with a slight lead.

Strong corporate profits amid weak economy? = Outsourcing
Corporate Welfare Rats

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DdC
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Mar. 22, 2012 1:39 am

Just where is Obama pushing central planning for any company...dictating quantities produced by an individual company and their price?

However, we do have central planning. Zoning laws being just one example. A stench-filled pig farm can't go up next to your suburban home.

Hoover Dam was central planning. Without it, western states would still be dried up deserts/semi-deserts and have little electric power.

The transcontinental railroad was central planning. The details, with government support and land grants, were left up to the participants in the government-planned program.

Germany instituted solar power conversions...with large power feeds into the power grid. Central planning with the implimentation left up to individual businesses and individuals. So far, it has eliminated the need for 6 new nuclear power plants.

There is central planning...and central planning, Coalage. Don't confuse the two types. They are different in application and effect.

Retired Monk - 'Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
  • According to a 2008 Boston Globe article — one of a seven-part series on the former Massachusetts governor — it was revealed the offer to start the business (from Bill Bain, Romney’s employer who ran Bain and Company) came with the following terms: If the business failed, Romney would get his old job and salary back (plus raises), and a tidy “cover story” absolving him of any fault for the failure.
  • That would be a nice way to “start” a business, eh? If you fail, you get your old job back and no one knows you failed.
  • So did he start his own business? Sure. He did. But not like any of us. If he succeeded — which, granted, he did (not even going to get into the hows and whys of that) — he would become wealthy. And if he didn’t succeed, he would’ve become … somewhat less wealthy.
mittens made his company with other people's money, other people's risks, yet stll claims he started it.
  • His only innovation was to take all the money earned in the country it was earned in, from the country it was earned in, to out of the country from it was earned in..
  • douglaslee's picture
    douglaslee
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    Quote Coalage1:... Read and Friedman use the pencil to show the folly of central planning: Nobody can possibly know enough to manage the production of pencils. ... Obama, by contrast, seems to draw the opposite lesson: that because “there are some things we do better together”

    Well, the other answers here proved your wong - to such a great extent you cannot even manage a response.

    Of course we are not for central planning. Obviously. To argue against central planning is stupid. To think we want it is also very, very stupid.

    But note a few things - like Russia's space program. Central planning is an overall failure - but you cannot explain how successful it was for a time. It took Russia from a largely feudalistic state to a modern industrial giant that was first to launch a spaceship. You guys just can't handle it. You cannot understand it. Your minds think in black and white - yes or no - didactic. You can's see the shades of grey - it is physically impossible because it has been proven (several peer reviewed articles have shown) your (well, conservatives') brains are wired that way. It is a result of the fight or flight response. Everything is exaggerated into conflicting opposites - the preferred path is simple, clear and no other way is possible.

    But over and over again, many nations from China to South Korea to Japan have shown that in order to develop you need a massive effort to develop industry, technology and information.

    And note that you are writing this on the internet - a creation of DARPA by the government.

    Dr. Econ's picture
    Dr. Econ
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    Mitt's only innovation was to take the money earned in his own country to a place for tax dodgers. As a draft dodger he took himself out of his own country. The one thing he is consistant about is to dodge responsibility you have to take the responsible entity out of the country.

    edit from the palinese mess of my last post

    douglaslee's picture
    douglaslee
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    The logical corollary behind "You didn't build that" :

    If you have failed, somebody along the line ruined it for you. There was a lousy teacher somewhere in your life. Somebody helped to create this unfair American system that caused you to fail. Somebody benefitted from your demise. If you're a loser, it's not your fault. Somebody else made that happen. Your business didn't fail on its own. Banksters made a lot of money off of it, so they must be complicit. The point is, when we fail, we fail not only because of our individual shortcomings, but also because others have teamed up behind your back. Vote for me - I'll punish the guilty and give you what's rightfully yours.

    stwo's picture
    stwo
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    Quote stwo:

    The logical corollary behind "You didn't build that" :

    If you have failed, somebody along the line ruined it for you. There was a lousy teacher somewhere in your life. Somebody helped to create this unfair American system that caused you to fail. Somebody benefitted from your demise. If you're a loser, it's not your fault. Somebody else made that happen. Your business didn't fail on its own. Banksters made a lot of money off of it, so they must be complicit. The point is, when we fail, we fail not only because of our individual shortcomings, but also because others have teamed up behind your back. Vote for me - I'll punish the guilty and give you what's rightfully yours.

    Not really. Your life up to this point is made up of all your past influences. Good, bad and everything in between. Life is a journey and not a destination. In a social world, who you are and what you've done has always been influenced by others. There's no escaping that fact. The individual themselves however is still the main ingredient. Some people can overcome harsh diversity and others can't. Some people were born on third base and think that they hit a triple. Some people are unmotivated and lazy and some people are driven. There is no black and white answer to the motivation and lack there of in a person's life. It is what it is.

    Bush_Wacker's picture
    Bush_Wacker
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    Quote stwo: The logical corollary behind "You didn't build that" : If you have failed, somebody along the line ruined it for you...

    Conservatives and Libertarians are unable to see behind the black and white world.

    If Obama said that businesses are helped by bridges built by the government, then Obama must want central planning. This was the actual beginning of this thread - someone actually arguing this point.

    And now you are taking the direct opposite - Obama is saying that you are not responsible if you fail.

    This is argument by...exaggeration.

    Why? Because you cannot make an argument against a very simple point - there is no other feasible political system than a mixed economy. In such a system, the government does welfare, health, education, regulations in the marketplace, and the private sector produces most goods and services. These systems have been shown the world over to produce the most output for the most people. In fact, you would be hard pressed to find anyone in an elected office anywhere that disagrees with most of it.

    So, unable to argue this point, Libertarians and Conservatives must argue by exaggeration.

    It is rather pathetic, actually.

    Dr. Econ's picture
    Dr. Econ
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    Quote Bush_Wacker:

    I don't think that Obama has any misgivings about good businessmen and entrepeneurs. His point was aimed at the Megacorps that seem to think that their worldly wealth was built by themselves.

    He says he was referring to small businesses.

    ..the Obama campaign — facing an uproar over Barack Obama’s comment about businesses ending in ‘you didn’t build that’ — released an ad where Obama said, “Those ads taking my words about small business out of context; they’re flat out wrong. Of course Americans build their own business.”
    ....Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that.
    Grammatically, the word that refers to the noun business in the second sentence, but in the larger context of the speech, I think it's believable that his intention was to refer to the roads and bridges in the previous sentence. Too bad for him on that grammatical flub. Serves him right as far as I am concerned though because even in the broader context he's raising a straw man (thereby doing the actual exaggeration- likewise with Dr. Econ) in that neither small business people nor conservatives assert that zero taxes should be paid and the government doesn't have a valid role in infrastructure.

    I suppose his words could have been transcribed to read: Somebody invested in roads and bridges (if you’ve got a business) you didn’t build that. Had he used the word those or them, it would have been difficult to claim his words referred to "a business".

    I'd argue my failure statement was argumentum ad absurdum, not exaggeration, but then I'm biased by my intention. Dr. Econ clearly exaggerates the conservatives' disagreement with how large a role the federal government should play into claiming conservatives want the government to play no role at all.

    It is rather ironic, actually.

    stwo's picture
    stwo
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    Quote ah2:
    Quote anonymous green:

    When the tax -man comes to take your blessed money, he'll ask if you kissed my ass.

    Regardless, it will cost you the same, so I see no harm in telling you again, kiss my willing to help the poor ass.

    I am beginning to wonder if you contribute anything meaningful to these conversations. Posts like these have no place here. This makes you (and us by association) just as bad as the Libertarian dead heads. Create a thoughtful response or remain silent.

    AH2, I admire your meticulous attention to detail and facts. Your ability to thoroughly rebuke complex subjects with academic reverence without getting caught up in the hyperbole that so often surrounds “discussions” here, is a thing of beauty.

    HOWEVER, sometimes the absurdity of the notions tossed out there by so many who frequent here are not deserving of any respect and reverence. Treating those absurdities with more reverence than they deserve is only elevating them up to an intellectual level that they do not belong.

    I appreciate Anonymous Green’s method of meeting these absurd notions head on with a level of absurdity and lack of reverence that they rightfully deserve. Aside from that, AG offers much value (IMO) to these discussions in spite of his method of delivery. I’ve rather enjoyed his “kiss my ass” mantra of late.

    Hopefully my hare-brained analysis does not offend either of you. You both strike me as having your finger deftly on the pulse of our world and I hope you both continue to offer up your distinct flavor of improving our world exactly in your distinctly different ways.

    I do have a pencil reference that I would like to offer up in a separate post to keep with the original absurd notion offered up in the original post. I didn't want to muddy up this post with my ass kissin' of AH2 and AG. It's funny how ass kissin' can have a completely different connotation depending on the perspective.

    Laborisgood's picture
    Laborisgood
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    Quote Bush_Wacker:Not really. Your life up to this point is made up of all your past influences. Good, bad and everything in between. Life is a journey and not a destination. In a social world, who you are and what you've done has always been influenced by others. There's no escaping that fact. The individual themselves however is still the main ingredient. Some people can overcome harsh diversity and others can't. Some people were born on third base and think that they hit a triple. Some people are unmotivated and lazy and some people are driven. There is no black and white answer to the motivation and lack there of in a person's life. It is what it is.

    I completely agree with you Bush_Wacker and from first hand experience. I've gone from lower middle class upbringing to self funded college education, to entrepenuer/successful business founder/owner to devastating stress and thousands of days in hospital and dozens of staredowns with the grim reaper with two children with very rare life threatening illness and developmental disability to miraculous improvement by each of them recieving liver transplants (talk about not going it alone). The journey has seriously knocked me down a few notches in terms of my productivity and executive fuction. My philiosophy is and always has been: persist, and don't judge or blame others.

    stwo's picture
    stwo
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    Roads and bridges are largely paid for by taxes on gas, so you essentially pay for as much as you use.

    WorkerBee's picture
    WorkerBee
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    Apr. 28, 2012 12:22 pm
    Quote WorkerBee:

    Roads and bridges are largely paid for by taxes on gas, so you essentially pay for as much as you use.

    But you may have noticed, some people's roads and bridges are nice, and some need to be dug up, torn down, and done again, even though everyone 'paid the same amount'.

    anonymous green
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    Jan. 5, 2012 11:47 am
    Quote Bush_Wacker:Not really. Your life up to this point is made up of all your past influences. Good, bad and everything in between. Life is a journey and not a destination. In a social world, who you are and what you've done has always been influenced by others. There's no escaping that fact. The individual themselves however is still the main ingredient. Some people can overcome harsh diversity and others can't. Some people were born on third base and think that they hit a triple. Some people are unmotivated and lazy and some people are driven. There is no black and white answer to the motivation and lack there of in a person's life. It is what it is.

    A great post.

    From my point of view the question is not about whether or not government should help people as much as it is about can government help people. Publicly funded education, a court system, law enforcement, environmental regulations and defense are certainly core services that can only be done by the government.

    When you start going beyond that I would submit that government can do more harm then good. I see it as government providing avenues for and access to the tools of what is needed to be successful. I see many progressives supporting programs that attempt to give people success. Programs that breed dependency, that effectively remove any sense of self responsibility can do more harm then good.

    Progressives look at conservatives as heartless, selfish people. This is simply not true, the reality is that conservatives view is that our society provides all the tools necessary to be able to provide for your own needs. When government steps in and takes something from others and give it to you is it really helping you? Does that not tend to breed a sense of self entitlement and rob you of your sense of pride?

    There will always be those who truly lack the ability to provide for themselves, conservatism is not about leaving these people in the dust or saying that private charity alone will be able to do the job.

    WorkerBee's picture
    WorkerBee
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    Quote stwo:
    Quote Bush_Wacker:Not really. Your life up to this point is made up of all your past influences. Good, bad and everything in between. Life is a journey and not a destination. In a social world, who you are and what you've done has always been influenced by others. There's no escaping that fact. The individual themselves however is still the main ingredient. Some people can overcome harsh diversity and others can't. Some people were born on third base and think that they hit a triple. Some people are unmotivated and lazy and some people are driven. There is no black and white answer to the motivation and lack there of in a person's life. It is what it is.

    I completely agree with you Bush_Wacker and from first hand experience. I've gone from lower middle class upbringing to self funded college education, to entrepenuer/successful business founder/owner to devastating stress and thousands of days in hospital and dozens of staredowns with the grim reaper with two children with very rare life threatening illness and developmental disability to miraculous improvement by each of them recieving liver transplants (talk about not going it alone). The journey has seriously knocked me down a few notches in terms of my productivity and executive fuction. My philiosophy is and always has been: persist, and don't judge or blame others.

    It sounds like your journey has been a long and difficult one compared to many. We all get knocked down many times but not all of us keep getting back up. I admire those of you that keep getting back up over and over again. I'm just the kind of person who believes that if you see someone currently on the ground you go over and help them get back up. It's the right thing to do. I don't believe in walking on by and letting them get back up on their own whether they can or not. It doesn't really matter if they can or can't. What matters is my hand is always out if they need it. I am constantly belittled and badgered for having such an attitude but I refuse to stop caring for my fellow man. I don't understand why thinking that we should all help take care of one another is considered evil by some.

    Bush_Wacker's picture
    Bush_Wacker
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    Jun. 25, 2011 7:53 am
    Quote Bush_Wacker: I don't understand why thinking that we should all help take care of one another is considered evil by some.
    In my limited experience i find very very few consider taking care of one another to be evil. In working with the homeless for many years I have learned that taking care of another can be tricky business. Personally, I don't mind folks simply taking care of themselves if they are unable or unwilling to spend the effort to really understand what is the best way to assist another. Our most successful "graduates" of the jobs program I am involved with were quite hostile to the process of learning how to be employed when they began and dropped out and rejoined numerous times.

    stwo's picture
    stwo
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    Quote stwo:... Dr. Econ clearly exaggerates the conservatives' disagreement with how large a role the federal government should play into claiming conservatives want the government to play no role at all.

    I could understand that, I"m sure I would disagree.

    Dr. Econ's picture
    Dr. Econ
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    You know Dr.Econ- Upon re-reading your posts, I can't justify my statement based on what you wrote- I could say I suspect it, but you didn't write what I wrote was "clear". I beg your pardon.

    stwo's picture
    stwo
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    Back in the days when technical drawings were drawn with pencils, I was interviewing for a job as a draftsman. The old guy interviewing me used a pencil as a reference to illustrate the concept of perspective. He showed me that looking directly at the tip, you would see a small hexagon with an even smaller black dot in the middle of it. From the side you would see a long, thin rectangle with a point on one end and an eraser on the other. Not to mention, an infinite number of other perspectives.

    I’m sure his point was to illustrate how different something looks from different perspectives in terms of drawing it with a pencil on paper. However, I’ve always looked back on that simple lesson as one with far deeper meaning beyond just seeing a pencil and drawing it on paper. I saw it a lesson about walking a mile in another man’s moccasins.

    The original post’s perspective is that of a series of selfish actions guided ideally by an unregulated invisible hand of the market that culminates in the production of the pencil in the most efficient means possible. That is a false perspective.

    That invisible hand will stab many production participants in the back along the way if that hand is not sufficiently regulated. That hand will also strangle many non-production participants in the poisoning of their land, air, water and depletion of the earth’s resources.

    The invisible hand is not friendly by nature. That hand needs rules and regulations to keep it from harming most of those in it’s path on it’s journey to help create something as simple as a pencil. That is an honest perspective on that pencil.

    Obama's clumsy statement about the communal nature of the business world was right on the money, even if he said it in way that gave his enemies so much fodder to use against him. The actions of many are required to make that pencil, but those actions need to be guided by much more than just an unregulated invisible hand of the market to keep the playing field level.

    Laborisgood's picture
    Laborisgood
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    Quote Dr. Econ:
    Quote stwo: The logical corollary behind "You didn't build that" : If you have failed, somebody along the line ruined it for you...

    Conservatives and Libertarians are unable to see behind the black and white world.

    If Obama said that businesses are helped by bridges built by the government, then Obama must want central planning. This was the actual beginning of this thread - someone actually arguing this point.

    And now you are taking the direct opposite - Obama is saying that you are not responsible if you fail.

    This is argument by...exaggeration.

    Why? Because you cannot make an argument against a very simple point - there is no other feasible political system than a mixed economy. In such a system, the government does welfare, health, education, regulations in the marketplace, and the private sector produces most goods and services. These systems have been shown the world over to produce the most output for the most people. In fact, you would be hard pressed to find anyone in an elected office anywhere that disagrees with most of it.

    So, unable to argue this point, Libertarians and Conservatives must argue by exaggeration.

    It is rather pathetic, actually.

    As Ludwig von Mises pointed out years ago, a mixed economy leads to socialism. Why? Because, the interventions by the government lead to the opposite result that the one purported. At that point, the government has two options: repeal the first intervention or add more interventions to correct the first. Invariably, government chooses the latter path.

    How Price Control Leads to Socialism

    The government believes that the price of a definite commodity, e.g., milk, is too high. It wants to make it possible for the poor to give their children more milk. Thus it resorts to a price ceiling and fixes the price of milk at a lower rate than that prevailing on the free market. The result is that the marginal producers of milk, those producing at the highest cost, now incur losses. As no individual farmer or businessman can go on producing at a loss, these marginal producers stop producing and selling milk on the market. They will use their cows and their skill for other more profitable purposes. They will, for example, produce butter, cheese or meat. There will be less milk available for the consumers, not more. This, or course, is contrary to the intentions of the government. It wanted to make it easier for some people to buy more milk. But, as an outcome of its interference, the supply available drops. The measure proves abortive from the very point of view of the government and the groups it was eager to favor. It brings about a state of affairs, which?again from the point of view of the government?is even less desirable than the previous state of affairs which it was designed to improve.

    Now, the government is faced with an alternative. It can abrogate its decree and refrain from any further endeavors to control the price of milk. But if it insists upon its intention to keep the price of milk below the rate the unhampered market would have determined and wants nonetheless to avoid a drop in the supply of milk, it must try to eliminate the causes that render the marginal producers' business unremunerative. It must add to the first decree concerning only the price of milk a second decree fixing the prices of the factors of production necessary for the production of milk at such a low rate that the marginal producers of milk will no longer suffer losses and will therefore abstain from restricting output. But then the same story repeats itself on a remoter plane. The supply of the factors of production required for the production of milk drops, and again the government is back where it started. If it does not want to admit defeat and to abstain from any meddling with prices, it must push further and fix the prices of those factors of production which are needed for the production of the factors necessary for the production of milk. Thus the government is forced to go further and further, fixing step by step the prices of all consumers' goods and of all factors of production?both human, i.e., labor, and material?and to order every entrepreneur and every worker to continue work at these prices and wages. No branch of industry can be omitted from this all-round fixing of prices and wages and from this obligation to produce those quantities which the government wants to see produced. If some branches were to be left free out of regard for the fact that they produce only goods qualified as non-vital or even as luxuries, capital and labor would tend to flow into them and the result would be a drop in the supply of those goods, the prices of which government has fixed precisely because it considers them as indispensable for the satisfaction of the needs of the masses.

    But when this state of all-round control of business is attained, there can no longer be any question of a market economy. No longer do the citizens by their buying and abstention from buying determine what should be produced and how. The power to decide these matters has devolved upon the government. This is no longer capitalism; it is all-round planning by the government, it is socialism."

    LysanderSpooner's picture
    LysanderSpooner
    Joined:
    Jul. 31, 2007 4:01 pm

    Being human leads to socialism. Caring for your fellow man leads to socialism. Being social leads to socialism. Anything other than socialism is tyranny. We have been a socialistic country from it's inception. Deal with it. If you don't like it then you can move to a country that makes being social illegal, if you can find one.

    Bush_Wacker's picture
    Bush_Wacker
    Joined:
    Jun. 25, 2011 7:53 am

    As if we suffer from the ills of central planning and over-regulation. We suffer from the ills of a lack of a centralized plan that benefits the majority and far too little regulation. Available data does not support this false perspective of this creeping socialism. In fact a creeping fascism is more in line with the data. The only central planning to be alarmed about is that planned by the fascists through there influence in our government.

    Laborisgood's picture
    Laborisgood
    Joined:
    Jul. 31, 2007 4:01 pm
    Quote LysanderSpooner:
    Quote Dr. Econ:
    Quote stwo: The logical corollary behind "You didn't build that" : If you have failed, somebody along the line ruined it for you...

    Conservatives and Libertarians are unable to see behind the black and white world.

    If Obama said that businesses are helped by bridges built by the government, then Obama must want central planning. This was the actual beginning of this thread - someone actually arguing this point.

    And now you are taking the direct opposite - Obama is saying that you are not responsible if you fail.

    This is argument by...exaggeration.

    Why? Because you cannot make an argument against a very simple point - there is no other feasible political system than a mixed economy. In such a system, the government does welfare, health, education, regulations in the marketplace, and the private sector produces most goods and services. These systems have been shown the world over to produce the most output for the most people. In fact, you would be hard pressed to find anyone in an elected office anywhere that disagrees with most of it.

    So, unable to argue this point, Libertarians and Conservatives must argue by exaggeration.

    It is rather pathetic, actually.

    As Ludwig von Mises pointed out years ago, a mixed economy leads to socialism.

    I just got through debating this point by saying the collapse of the Communist bloc, China and reforms in Cuba, and the social democracies in Europe all prove that wrong. Note also that Soviet Union, Communist China, North Korea and Cuba all came from fuedalism to Communist/socialist. Mises theory is simply argument by...exaggeration.

    The mixed economies are still mixed. There is no other feasible political system than a mixed economy. In such a system, the government does welfare, health, education, regulations in the marketplace, and the private sector produces most goods and services. These systems have been shown the world over to produce the most output for the most people. In fact, you would be hard pressed to find anyone in an elected office anywhere that disagrees with most of it.

    Perhaps I will address the problems with Misses' Price Control arguement later. Let me just say it is obvious that in a competitive market with no rents artificially reducing the price can reduce output. But in an economy market concentration and rents - or if reduction in output is not great - then price controls can be a fairer way to distribute output. There are, however, more efficient ways, such as ration cards.

    Dr. Econ's picture
    Dr. Econ
    Joined:
    Jul. 31, 2007 4:01 pm

    LysanderSpooner says that Von MIses says that price controls lead to reductions in output and shortages. This then leads to socialism because people want more of the goods.

    Price controls, however, are rarely advocated by Liberals. Thus, Von Mises's point is irrelevent.

    However, there are times when price controls can produce a situation where although there is less output, more people are able to afford what output there is. Thus, the different distribution can be considered a preferred distribution than before.

    The cost of the price control depends on the degree to which when costs fall with output. If the change in costs to a change in output is small, then a price control will reduce prices but hardly effect output at all.

    But this is all in a competitive market. If you have market concentration, the prices are not set at costs anyway, so a price control that could reduce prices to extra cost can be efficient.

    Or, if there are fixed factors, then extra cost is zero and the price control will have no efficiency loss. This is the idea of rent control, where the rent is on land, which is a fixed factor. Unforttunatley, land is not really a 'fixed' factor since it depreciates and requires maintence. Also, new land can be taken and put into use. But some amount of rent control - that allows for upkeep and inflation, is probably a good idea and one of the few that liberals may support.

    Dr. Econ's picture
    Dr. Econ
    Joined:
    Jul. 31, 2007 4:01 pm

    This page from The Economist contains clips of an Elizabeth Warren speech last September ... in it she explains (1st) where most of the recent federal debt came from, and (2nd) she makes the argument about businesses being built on the public infrastructure ... I think this is where the Obama team got the idea for that recent speech, the one Romney referenced ...

    http://stage.economist.com/blogs/democracyinamerica/2011/09/elizabeth-warren

    miksilvr
    Joined:
    Jul. 7, 2011 12:13 pm

    ... "I am constantly belittled and badgered for having such an attitude but I refuse to stop caring for my fellow man. I don't understand why thinking that we should all help take care of one another is considered evil by some. "...

    I like your postings 'Bush-Wacker'...You are a cool guy...We need more people like you in the world. I have been quite disturbed, to see rising attitudes in this country, of mean-spiritedness, selfishness, and all around cruel attitudes toward others. Very sad...

    snake's picture
    snake
    Joined:
    Jul. 31, 2007 4:01 pm
    Quote Dr. Econ:

    LysanderSpooner says that Von MIses says that price controls lead to reductions in output and shortages. This then leads to socialism because people want more of the goods.

    Price controls, however, are rarely advocated by Liberals. Thus, Von Mises's point is irrelevent.

    Minimum wage laws, usury laws, Northeast Interstate Dairy compact (1997-2001), rent controls are examples of price controls favor by liberals, but not exclusively by liberals.

    Luckily, liberals generally don't support price controls. In a relatively free economy, people can work around the price controls we have.

    Price Controls are Back by Murray Rothbard (1994) He talks about Truman, Nixon (liberal Republican) and Clinton supporting price controls. Enjoy!

    LysanderSpooner's picture
    LysanderSpooner
    Joined:
    Jul. 31, 2007 4:01 pm
    Quote LysanderSpooner:

    Minimum wage laws, usury laws, Northeast Interstate Dairy compact (1997-2001), rent controls are examples of price controls favor by liberals, but not exclusively by liberals.

    "You found a very complex way of saying absolutely nothing."

    The Thesaurus of Useful Responses To Right Wing Manchurian Americans

    anonymous green
    Joined:
    Jan. 5, 2012 11:47 am
    Quote LysanderSpooner:
    Quote Dr. Econ:

    LysanderSpooner says that Von MIses says that price controls lead to reductions in output and shortages. This then leads to socialism because people want more of the goods.

    Price controls, however, are rarely advocated by Liberals. Thus, Von Mises's point is irrelevent.

    Minimum wage laws, usury laws, Northeast Interstate Dairy compact (1997-2001), rent controls are examples of price controls favor by liberals, but not exclusively by liberals.

    Luckily, liberals generally don't support price controls. In a relatively free economy, people can work around the price controls we have.

    I didn't bother mentioning the minimum wage, because we covered all that before, and economists don't usually find the minimum wage to significantly impact employment. And I think we agree that "liberals generally don't support price controls", which proves my point that Von Mises is full of pieces.

    Dr. Econ's picture
    Dr. Econ
    Joined:
    Jul. 31, 2007 4:01 pm

    Can I get a congregational vote on whether posting any more Von Mises or Hayek deserves a banning? Seriously, we have had reams of bull that has been thoroughly discredited in both theory and practice, and deserve some respect for Thom's site as a place for good conversation. This crap is just a bit better than Scientology, but both are about how smart people can be fools.

    I watched and listened as the best brains at Stanford Biz School fell in love with Uncle Miltie and his Economic Man and Magic Markets of Rationalism. I knew it was bad pop theology and that we were in for a tough ride. He was Ronnie's Economic policy guy.

    Many Bible College faculty are brilliant intellectuals who just happen to be working a closed system of dogma rather than open-ended inquiry. Sometimes you have to be incredibly smart to come up with ideas that are incredibly stupid.

    drc2
    Joined:
    Apr. 26, 2012 12:15 pm

    You think the Libertarians would be embarrassed to admit they are unable to debate you.

    Dr. Econ's picture
    Dr. Econ
    Joined:
    Jul. 31, 2007 4:01 pm

    Currently Chatting

    Time for America to dump "homeland"...

    It’s time to do away with the word “homeland." As the situation with ISIS continues to escalate, and as worries about terrorist attacks on American soil continue to spread, we’re hearing the term “homeland” mentioned more and more.

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