Seun:

I believe in reason and I believe in self-ownership. I believe in some things!

(emphasis mine)
Even though libertarian thought does have some appealing elements, it has the same flaw as all utopian systems (such as communism), they're based on unproven assumptions and show framing bias.

http://world.std.com/~mhuben/faq.html#intro

Finally, i got you interested. Yes, I'm interested in examining libertarianism, though I'm more concerned about how practical or useful the ideas are than about whether they constitute absolute truth or something. I expressed my own concerns about how a completely free market would affect people here: http:///g6quw

So I'm going to check your own link while you go through mine. Are you a liberal? (so I can google the objections against liberalism and supply you with a link)

Well, the link you supplied doesn't address my own beliefs or why I believe what I believe.

So, what do I believe? I believe that human beings exist to make themselves feel happy and fulfilled during their short lives. In the pursuit of this happiness, they need goods and services provided by others, who also need goods and services provided by yet others. Their wants are unlimited.

Free markets are intensely competitive, and in the absence of widespread fraud they tend to concentrate more resources in the hands of those who contribute more to the satisfaction of the desires of others within the market - the happiness of others. So I see the free market as being by far the most efficient system for getting as many goods and services produced to satisfy as many human needs or wants as possible to people.

Believing that, I want all providers of goods and services (or as many as possible) to be made to partcipate in efficient markets where they get compensated based on how well satisfy the needs of others. Since the government does not enjoy that sort of competition, I want as many services as possible to be moved into the private sector. I like free market systems because they give naturally selfish people an incentive to serve others.

Ok, that's some of what I believe. Any questions so far? Anything unreasonable so far? I have more to say!

Seun:

Free markets are intensely competitive, and in the absence of widespread fraud they tend to concentrate more resources in the hands of those who contribute more to the satisfaction of the desires of others within the market - the happiness of others. So I see the free market as being by far the most efficient system for getting as many goods and services produced to satisfy as many human needs or wants as possible to people.

Your're right but, free markets need to be heavily regulated and monitored as they tend to encourage corruption.

Seun:

Well, the link you supplied doesn't address my own beliefs or why I believe what I believe.

I could only imply things from what you wrote before, so sorry if I misrepresented your views. It was not my intention.

Seun:

So, what do I believe? I believe that human beings exist to make themselves feel happy and fulfilled during their short lives. In the pursuit of this happiness, they need goods and services provided by others, who also need goods and services provided by yet others. Their wants are unlimited.

Good so far

Seun:

Free markets are intensely competitive, and in the absence of widespread fraud they tend to concentrate more resources in the hands of those who contribute more to the satisfaction of the desires of others within the market - the happiness of others.

This could only be the case under the assumption that the cumulative effect of all actions of all people within a free market system really addresses happiness and that happiness can be seen as a function of value in a capitalistic system. Mind you, free markets do not equate a capitalist society or vice versa.

The biggest problems in this view are that:
* freedom can only be defined in relationship to others, there is no such thing as absolute freedom
* in a capitalist economic system, the main actors strive to elliminate the freedom that markets provide, there is a definite need of regulation in order for that not to happen
* freedom means nothing without opportunity. It is up to society to ensure that those opportunities exist, a laissez-faire capitalist society actually destroys these opportunities

Seun:

So I see the free market as being by far the most efficient system for getting as many goods and services produced to satisfy as many human needs or wants as possible to people.

I see three main problems here:
* how to handle externalities (e.g. pollution) in the absence of a regulating body
*to provide wants and needs in free market system, one assumes that economic actors behave rationally. This an absolutely ridiculous and ungrounded assumption.
* individual rational behaviour does not imply collective rational behaviour. Even when it is perfectly rational to do something as an individual, the collective consequences can be disastrous. Maximisation on an individual level does not automatically result in a maximisation on a societal level.

Seun:

Believing that, I want all providers of goods and services (or as many as possible) to be made to partcipate in efficient markets where they get compensated based on how well satisfy the needs of others.

I could more or less follow you in that, but there are a lot of ideologically biased terms you use there: what is efficiency, how do you define compensation, what is satisfaction of needs?

Seun:

Since the government does not enjoy that sort of competition, I want as many services as possible to be moved into the private sector. I like free market systems because they give naturally selfish people an incentive to serve others.

Government does enjoy competition, it's called elections. See how rational consumers behave in the electoral market?
People are not naturally selfish, we do all have a selfish component to our being, but we cannot e defined as selfish

Seun:

Ok, that's some of what I believe. Any questions so far? Anything unreasonable so far? I have more to say!

Looking forward to it.

Mariory: Your're right but, free markets need to be heavily regulated and monitored

Government regulations tends to favor big business because of corruption. The little guy always suffers more. Recently our senate approved a law that requires palm oil exporters to obtain a 6,000 euro license. In a free market, anyone who has palm oil would be free to export it. The biggest players tend to benefit from government 'regulations'. 6000 euros is nothing to them!

Mariory: as [free markets] tend to encourage corruption.

This is simply wrong. Can you give an example? I need examples to demonstrate why this is so wrong.

nferyn: freedom can only be defined in relationship to others, there is no such thing as absolute freedom

I agree with this, but we should try to maximise individual freedom. There are so many missed opportunities for this, partly because we rely on governments that have no incentive to promote individual liberty.

in a capitalist economic system, the main actors strive to eliminate the freedom that markets provide, there is a definite need of regulation in order for that not to happen

In practice, it takes the cooperation of the government or the use of force for markets to be made less free. In real life, the main actors strive to eliminate competition by pushing the government to 'protect' the market from their competitors. For example, our CBN governor is 'protecting' us from banks that seek to compete with the existing 25 banks by imposing an arbitrary capitalization rule. Labour unions 'protect' employed, highly educated workers against unemployed, less skilled workers by violently pushing in minimum wage legislation.

freedom means nothing without opportunity. It is up to society to ensure that those opportunities exist, a laissez-faire capitalist society actually destroys these opportunities

That is simply not true. A laissez-faire capitalist society makes it easy for people to start businesses. This way, even if you can't find a job that suits you, you can start your own businesses. In heavily regulated countries, it's very hard to start a business. This makes youths to be dependent on government to "secure jobs" for them. It also ensures that those who own large businesses will continue to control the economy.

For example, it takes 50,000 euros to incorporate in Germany. How is a young person going to get that kind of money? Not to talk about what it will cost to maintain workers that can hardly be fired, will not work more than 40 hours a day, and whose health and retirement must be catered for? Free markets are best at providing opportunities for people who are ready to provide value to others. In a free market, even when jobs are not available, if you are willing to provide what others want you'll be able to gain wealth. In a heavily regulated market, its very hard for dependent people to gain economic independence from their 'masters' the right way: creating value.

how to handle externalities (e.g. pollution) in the absence of a regulating body

If no-one is willing to pay for something, it might not be so important. If someone's body or property is damaged by pollution by a class of industries, legal bodies can intervene to exact just compensation for the victims. If this is known by the industries beforehand, they would be very careful about how they pollute the environment.

to provide wants and needs in free market system, one assumes that economic actors behave rationally. This an absolutely ridiculous and ungrounded assumption.

Markets work quite well when most of the participants behave rationally. Those who don't behave rationally will likely lose money, which translates to loss on influence in the market. Example: people who participate in pyramid schemes even though they know how each one is likely to end. The minimal welfare government will keep them alive while they try to figure out a more rational way to make money so they can purchase life's pleasures.

individual rational behaviour does not imply collective rational behaviour. Even when it is perfectly rational to do something as an individual, the collective consequences can be disastrous. Maximisation on an individual level does not automatically result in a maximisation on a societal level.

I agree. I believe that the government should intervene to prevent economically disadvantaged individuals from death, serious illnesses, serious disabilities, and serious injuries. However, a lot of what real life governments do is very unfair and unecessary. They are not committed to efficiency in their redistribution of wealth. This is only natural because no competition within their territories (governments do compete with each other).

Government does enjoy competition, it's called elections.

Elections are not equivalent to government competition any more than elections within the board of directors of Microsoft would constitute competition in the PC market! Elections are about who controls that uncompetitive entity called Government.

Competition is more like people having the choice of which police unit to patronize and paying for their protection services. Competition is when a bad police unit is driven into bankruptcy because people refused to demand and pay for their consistently inferior service, while a rival unit with better performance prospers and grows.

People are not naturally selfish, we do all have a selfish component to our being, but we cannot e defined as selfish

Everything we do is done to benefit us in some way. Either by providing tangible benefits like wealth or power, or by making us feel better about ourselves. I think the right term to use is self-centered, not selfish. You can be primarily interested in what's best for yourself (as we all are) and still have the capacity to feel and act for others in order to feel good about yourself or get respect or future favors from those people.

Seun:

Government regulations tends to favor big business because of corruption. The little guy always suffers more. Recently our senate approved a law that requires palm oil exporters to obtain a 6,000 euro license. In a free market, anyone who has palm oil would be free to export it. The biggest players tend to benefit from government 'regulations'. 6000 euros is nothing to them!

In a free market system without regulation, you would have these same big corporations bribing their way to favourable deals and employing anti-trust policies anyways. There is always potential for abuse/misuse of the system. In the situation you highlighted, the little guy still has the means at least in principle to cause the senate to amend the law to a lower fee.

With regulatory institutions, smaller companies and indeed customers have someone to turn to should they feel wronged by the larger coporations.

I believe in pragmatic welfarism. Pragmatic welfarism basically proposes that basic healthcare and basic education should be provided for all citizens. A healthy and educated citizen will therefore, all things being equal, contribute to the growth and development of the nation. This works all over the world. It is not without its limitations.

There is no absolute free market and it is pratically impossible to have one! Except for the stock market. but in terms of governing a country's market/economy no such thing as absolute free market.

Leilata, I would take your comments a step further. There is no such thing as free.

In the situation you highlighted, the little guy still has the means at least in principle to cause the senate to amend the law to a lower fee.

Before he listens to the little guy, the senator going to listen to the large corporations that 'donated' their money towards his campaign. The little guy exporting palm oil from his farm is not likely to have donated any significant amount of money. The little guy is not likely to be able to influence his state to recall a senator that doesn't represent him properly. Theretically, the little guy has power, but in practice he has no power at all!

Interventionist governments provide large corporations and rich individuals with easy means of amplifying their dominance (getting richer at the expense of the small but enterprising businessmen and businesswomen) and maintaining the status quo (making it easy for the rich to remain rich and the poor to remain poor). 

If large corporations are not able to drive there competitors out of business by manipulating the government, they'll be forced to provide better services in order to retain their dominant position.  That is what competition is really about.  Competing to serve the customer better (Mr. Biggs?).  Competing to provide lower prices (Walmart).  Competing to create the coolest gizmo (Apple).

I believe in pragmatic welfarism. Pragmatic welfarism basically proposes that basic healthcare and basic education should be provided for all citizens. A healthy and educated citizen will therefore, all things being equal, contribute to the growth and development of the nation. This works all over the world. It is not without its limitations.

I don't disagree with you, but we may not necessarily agree about what's "basic".

There is no absolute free market and it is pratically impossible to have one! Except for the stock market. but in terms of governing a country's market/economy no such thing as absolute free market.

All I want is for markets to be made as free as possible, which no government is even attempting!  All they do is mount arbitrary roadblocks before us. Even the most well-intentioned proposals tend to limit competition.  Without fair competition in the marketplace, privatization and all that nonsense won't be beneficial. 

Politicians have no interest in freeing up markets for a simple reason: their power consists of the ability to interfere in our lives. Why should a politician go through all the trouble of campaigning to win expensive elections and maintaining an unrealistically clean image if she is not going to have power to do and undo when she finally gets there? Power corrupts, regardless of how it's obtained. Nobody ever wants to let go of it!

We lack an incentive mechanism that rewards politicians for achieving more with less. Politicians are expected to do what's best out of the goodness of their hearts. What a joke! Representative democracy is flawed.

when u talk about free market i hope u mean commodity market or goods and services market, because a free labour market is not optimal in terms of the society's welfare!!!! free market and competition forces prices down and a free labour market means workers will not be paid according to what they contribute as value but in terms of the market price (wage)!!! there is nothing in the capitalism theory that attempts to compensate for real value contributed by each labourer. market autoregulation means u are paid as much as other labourers in your category irregardless of how much work u contribute. but still that is not the problem, the problem is people with very little skills and aptitude will be marginalized and will not be able to survive. now if u don't see a problem in that i don't know what else to say. am not even remotely an anti-capitalist or anti liberalist but i believe a bit of socialism will not do Nigeria any harm. i think a mixed economy is the key

I am a conservative freak !!!! Capitalist to the core, free market with regulations on countries like China that floods market with cheap stuff manufactured from slave labor, I love smaller, better yet smallest government,,,,,,I believe in the preservation of cultural identity and beliefs, most importantly the sanctity of marriage. I totally oppose gay marriage, even though I support civil unions and the rights of people to be in whatever kind of relationship they want. I want religion to be present in public places as one of the options available to people, especially if it is enshrined in the cultural roots of that country. I want creationism to be taught in schools alongside the theory of "the big band"/"evolution". Finally I think that ultra liberal left-wingers should be "wiped off the map"

I am a slight left of center liberal (American political term of liberal. I.e. Left wing, not libertarian). I believe in =

1. Same sex marriage
2. Progressive tax
3. Quotas to undo past discrimination
4. Heavy regulation of capitalism
5. Higher taxes in exchange for more and better social welfare programs
6. Support for Death penalty (this is where I break with some liberals)
7. Support for doctor assisted suicide
8. Ban on Alcohol
9. Pro choice (abortion rights)
10. Increased punishment for drug abusers and death penalty for large scale drug traffickers.
11. Mandatory military service (2 years or so in on army reserves for all able bodied male)
12. Ban on smoking
13. Ban on teaching religion in schools
14. Increased age for sexual consent to 21 years old.
15. Increased age to vote to 21 years old. (face it, most kids are stupid)
16. Taxes on Church (everyone should pay taxes. . . including God)
17. Death penalty for stealing of public funds/large scale stock market malpractice
18. Increased tariffs on foreign goods

Seun:

Your're right but, free markets need to be heavily regulated and monitored

Government regulations tends to favor big business because of corruption. The little guy always suffers more. Recently our senate approved a law that requires palm oil exporters to obtain a 6,000 euro license. In a free market, anyone who has palm oil would be free to export it. The biggest players tend to benefit from government 'regulations'. 6000 euros is nothing to them!

I don't know about the specificities of that law, but licences are usually introduced when:
1. one needs to prove a certain level of expertise to operate in a line of business (e.g. medical practitioners can only operate with the proper licenses. Companies that clean up polluted sites need 'proof' that they can handle hazardous materials safely). When these things do not constitute an immediate public danger, self regulation can work (e.g. ISO certification)
2. There are other needs to ascertain the continuance of business and engender trust in the parties involved. Capitalisation requirements for banks ensure that, when the markets get a little volatile, the banks don't go bankrupt.
I do agree thought that many regulations are unnecessary or out of date (as the legislative system works slow compared to changes in the marketplace)

Seun:

as [free markets] tend to encourage corruption.

This is simply wrong. Can you give an example? I need examples to demonstrate why this is so wrong.

Here I agree. This argument is a misrepresentation of the real situation. Free markets, without regulation, tend to evolve into oligopolies, which undermine the very freedom of these markets. Freedom is not a given, but needs to be protected and introduced by a body that has the power to ensure the continuance of freedom. Usually that body is the government, as it is the most legitimate representative of the people's interests.

Seun:

freedom can only be defined in relationship to others, there is no such thing as absolute freedom

I agree with this, but we should try to maximise individual freedom. There are so many missed opportunities for this, partly because we rely on governments that have no incentive to promote individual liberty.

I really don't see how you can claim that governments have no incentive to promote individual liberty. As long as a proper system of checks and balances can be set up between the different branches of government (executive, legislative, judiciary), government is the best agent to protect and promote that liberty. I do agree that such a thing is not the case for Nigeria, but that does not mean that it cannot be done, on the contrary.

Seun:

in a capitalist economic system, the main actors strive to eliminate the freedom that markets provide, there is a definite need of regulation in order for that not to happen

In practice, it takes the cooperation of the government or the use of force for markets to be made less free. In real life, the main actors strive to eliminate competition by pushing the government to 'protect' the market from their competitors. For example, our CBN governor is 'protecting' us from banks that seek to compete with the existing 25 banks by imposing an arbitrary capitalization rule. Labour unions 'protect' employed, highly educated workers against unemployed, less skilled workers by violently pushing in minimum wage legislation.

It does not. I would like to see some empirical proof for that assertion. The weaker and less representative the government, the more market freedom gets crushed. I think Nigeria could serve as a prime example with it's behaviour in the oil industry.
Your slur against labour unions is a joke. Without labour unions, there would not be a middle class in the western world. The British Empire, for all it's might, was only there to serve the interests of the upper class, at the height of the inductrial revolution, living conditions for the average Briton were probably far worse than those of the averag Nigerian.
It's only the complete collapse of laisser-faire capitalism after the Wall Street crash, that ensured that government intervention created the middle class. Only direct government intervention in the market could save capitalism. Without the application of Keynes' theories I would probably be suffering from a serious lung disease after having spent my days in the mines since my 12th birthday. I might still enjoy life 'till my 55th birthday, If I were very lucky.

Seun:

freedom means nothing without opportunity. It is up to society to ensure that those opportunities exist, a laissez-faire capitalist society actually destroys these opportunities

That is simply not true. A laissez-faire capitalist society makes it easy for people to start businesses. This way, even if you can't find a job that suits you, you can start your own businesses. In heavily regulated countries, it's very hard to start a business. This makes youths to be dependent on government to "secure jobs" for them. It also ensures that those who own large businesses will continue to control the economy.

A laisser-faire capitalists society leads to oligopolies, which lead to less choice in the market, which cannot be filled by smaller companies as they will be competed out of the market by dumping or other strategies that only the biggies can afford. Only an active agent with enough power can prevent that. In the EU, you have a DG that is just doing that in order for monopolies not to form and ensure freedom on the market. Without a big stick to protect it, freedom is empty.
I do agree though that starting up a business should be made easier and encouraged, but that is not going to protect you from the big boys. I know from experience that the financial muscle alone from the big boys is enough to effectively elliminate competition. Either you temporarily drive down margins so much that your smaller competitor goes bankrupt or you elliminate competition through mergers and acquisitions. There is
very little innovation in the big publicly traded companies as the eye on the next quarterly results prohibits long term investment (here you can see how rational behaviour by the stock holders prevents rational behaviour in the market)

Seun:

For example, it takes 50,000 euros to incorporate in Germany. How is a young person going to get that kind of money? Not to talk about what it will cost to maintain workers that can hardly be fired, will not work more than 40 hours a day, and whose health and retirement must be catered for?

No need to come up with straw men, Seun.
1. When you start up your business, full incorporation does not make sense at all, as the administrative and accounting requirements are too heavy
2. It's not all that difficult to begin as a self-employed person or start another type of company, where the administrative and accounting requirements can be met more easily
3. full incorporation offers some benefits (mainly trust) that need to be earned by proving that your business is sustainable in the long run. One cannot have it both ways
4. Health and retirement benefits are met by the government through taxation, this is not something the individual employer needs to worry about
5. The social protection in Western Europe applies mainly for full time employees after a testing period (usually 6 month), before that, they can be fired immediately. You also have contractor and temp contracts that work under different terms.

Seun:

Free markets are best at providing opportunities for people who are ready to provide value to others. In a free market, even when jobs are not available, if you are willing to provide what others want you'll be able to gain wealth. In a heavily regulated market, its very hard for dependent people to gain economic independence from their 'masters' the right way: creating value.

1. Value is only a function of market demand in your picture. Caring for the handicapped and elderly has little market value. Do you want to elliminate these and if not, how are you going to pay for it?
2. Please give me some empirical evidence for your assertion and define your terms properly, I cannot address your statement without that context.

Seun:

how to handle externalities (e.g. pollution) in the absence of a regulating body

If no-one is willing to pay for something, it might not be so important. If someone's body or property is damaged by pollution by a class of industries, legal bodies can intervene to exact just compensation for the victims. If this is known by the industries beforehand, they would be very careful about how they pollute the environment.

How convenient. Why don't you go ask the people in the Niger Delta how to redress the damage to their farm lands and health?
Industries will do what they can get away with. Without regulation, all costs and negative effects that can be handed to the common will be handed to the comon, that's exactly the problem.

Seun:

to provide wants and needs in free market system, one assumes that economic actors behave rationally. This an absolutely ridiculous and ungrounded assumption.

Markets work quite well when most of the participants behave rationally. Those who don't behave rationally will likely lose money, which translates to loss on influence in the market. Example: people who participate in pyramid schemes even though they know how each one is likely to end. The minimal welfare government will keep them alive while they try to figure out a more rational way to make money so they can purchase life's pleasures.

That's an easy way out, define everyhting in economic value and you solve the problem. People can subsist in the streets, but that's no problem, as they do not provide any value.
Have you ever wondered whether those people:
1. have the opportunities to enter the market?
2. have the marketable skills?
3. have the opportunities to get themselves marketable skills?
4. need to enter a system where value is solely determined by the market?

Seun:

individual rational behaviour does not imply collective rational behaviour. Even when it is perfectly rational to do something as an individual, the collective consequences can be disastrous. Maximisation on an individual level does not automatically result in a maximisation on a societal level.

I agree. I believe that the government should intervene to prevent economically disadvantaged individuals from death, serious illnesses, serious disabilities, and serious injuries. However, a lot of what real life governments do is very unfair and unecessary. They are not committed to efficiency in their redistribution of wealth. This is only natural because no competition within their territories (governments do compete with each other).

How do you know that governments (as if they are one entity) are a priori not commited to efficiency. The health system in Belgium is a prime example of a system that is far more eficent than any pure market system around: excellent healthcare, universal coverage at low costs. No market system comes even close (and especially not the abmyssal system that they have in the US)
There are political systems where governemtns on different levels compete and where different branches of the governments compete. A proper federal system with subsidiarity at it's core is very efficient and competitive. By the way, governements do compete with each other and other entities of representation.

Seun:

Government does enjoy competition, it's called elections.

Elections are not equivalent to government competition any more than elections within the board of directors of Microsoft would constitute competition in the PC market! Elections are about who controls that uncompetitive entity called Government.

And you can change the way that entity works through elections. If your views on how society should work are gaining ground in the political marketplace, the party representing those ideas will get control in that marketplace. If your customers are dissatisfied, they will elect another party with other ideas.
If you are dissatified with the overall functioning of that entity and feel you cannot operate under these conditions, you are free to choose another one with your feet (emmigrate), but you will never, ever get something for nothing, just as you won't get something for nothing on the marketplace of goods and services.

Seun:

Competition is more like people having the choice of which police unit to patronize and paying for their protection services. Competition is when a bad police unit is driven into bankruptcy because people refused to demand and pay for their consistently inferior service, while a rival unit with better performance prospers and grows.

I would like to see an example where the privatisation of the legitimate use of force (police, army, , ) has worked to the benefit of the population. This is a very naive view on what power really means.

Seun:

People are not naturally selfish, we do all have a selfish component to our being, but we cannot e defined as selfish

Everything we do is done to benefit us in some way. Either by providing tangible benefits like wealth or power, or by making us feel better about ourselves. I think the right term to use is self-centered, not selfish. You can be primarily interested in what's best for yourself (as we all are) and still have the capacity to feel and act for others in order to feel good about yourself or get respect or future favors from those people.

Actually that's not even the level of analysis you should apply. Ultimately, we are only vehicles for the selfish interests of our genes, which can be against our own interests (e.g. why don't we all live indefinitely).
In reality, whatever the ultimate source of it, we are a social species that has got egoistical and altruistical elements. The realisation of self only happens within a social context. Wealth and success can only be defined in relation to others. That context is for a big part our making and can be steered by us a a collective. As I mentioned before, my vision of the future would be a Star Trek like society, but to achieve that, we rather need to curb our egoistical tendencies than encourage them.

Seun:

Are you a liberal? (so I can google the objections against liberalism and supply you with a link)

I don't really fall under the US political classification. I'm a social democrat at heart.

2. There are other needs to ascertain the continuance of business and engender trust in the parties involved. Capitalisation requirements for banks ensure that, when the markets get a little volatile, the banks don't go bankrupt.

I have studied the way banks work extensively, and you are absolutely wrong. Perhaps sincerely wrong.

Yes, there are day-to-day variations in volume of bank deposits vs withdrawals, but a larger bank will have larger customers and therefore experience a proportionally more volatility in that demand for cash.

Central banks all over the world deal with this problem by
1) Asking banks to keep a certain percentage of their deposits in reserve at all times, and
2) Facilitating inter-bank lending markets.

If, on a particular day, a small bank experiences a random increase in demand for cash, it can simply borrow from a larger bank that has excess deposits on that day. If a large bank experiences the same, it can borrow money overnight from several small banks. This system works very well against volatility. Nothing more is required.

Naive commentators might assume that larger banks are less likely to go bankrupt, but this is also false. No matter how large a bank is, it cannot survive the loss of public confidence without going bankrupt. All banks are bankrupt by nature. What matters is the confidence people have in the bank. That's all. Size doesn't matter.

Read http://en.wikipedia.org/wiki/Federal_funds and related topics.

It is true that some (not all) small banks were corrupt, but one shouldn't throw out the baby with the bathwater. Banks executives that engaged in illegal practices, whether big or small, should simply have been prosecuted; their banks only be need to be liquidated or acquired if the public has absolutely lost confidence in them. Small banks which have been serving their customers well should have been left alone. A wise man knows how to weed his garden without destroying his own plants. Would you use a gun to kill a fly on your head?

The US banks do not have any minimum capitalization requirements (en.wikipedia.org/wiki/Capital_requirement). They only have capitalization ratios. Are we saying we are smarter? Very funny!

So you see, our Central Bank's decision to eliminate smaller commercial banks was not necessary, and hence can only be regarded as an abuse of power. To a hammer, everything is a nail. To a politician, every challenge is an opportunity to intervene. The exercise of the central bank's power has turned the Nigerian banking sector into a 25 member oligopoly, which is the very thing you are saying is caused by a free market!

Mariory: In a free market system without regulation, you would have these same big corporations bribing their way to favourable deals and employing anti-trust policies anyways.

I challenge you to give me an example of a coercive monopoly or oligopoly that was established without the help of the government. Sometimes people make the mistake of classifying excellent companies who are extremely good at serving their customers as monopolies. That is not fair at all. In a free market, a competitor can jump in anytime and innovate your cash cow into obsolescence. In the real world, government regulations will force the small guy to sell his startup to a larger company. Example: Paypal having to sell their company to Ebay.

IBM was not able to prevent the rise of Microsoft, which couldn't prevent the rise of Yahoo, which couldn't prevent the rise of Google. Auction houses were not able to prevent the rise of Ebay, which couldn't compete effectively with Paypal in e-payments. Anti-trust laws are over-rated. Politicians always feel the need to flex their muscles.

"lieleta":
when u talk about free market i hope u mean commodity market or goods and services market, because a free labour market is not optimal in terms of the society's welfare! free market and competition forces prices down and a free labour market means workers will not be paid according to what they contribute as value but in terms of the market price (wage)!!!

This is wrong. The market price or wage in a free market is the most objective measure of "what they contribute as value". Would diamonds be valuable if people weren't willing to buy them at exorbitant prices? Would if be fair to force people to buy "bottled sand" at the same price as bottled water to support the "sand bottlers"? No, it wouldn't, because the low price of bottled sand signals to its producers that they should try something else. If you sell "bottled sand" and you're not making a profit, why not try bottled water?

In the labor market, for various reasons, some skills might be more abundant than others. Those who possess such skills will earn better salaries than those who do not. In a free market, people will rush to acquire the skills that are commanding better salaries, and eventually the salaries would fall to a lower, stable level that reflects the amount of time and money it takes to acquire that skill. If the wages in a profession are falling, this is also a signal to encourage those in that profession to go and acquire skills in a more lucrative one. When demand and supply for labor is well matched, there will be an abundance of goods and services available for purchase at the lowest possible prices. That is efficiency. In an efficient market, even the lowest class can afford luxuries.

market autoregulation means u are paid as much as other labourers in your category irregardless of how much work u contribute. but still that is not the problem

That's not true. If you are contributing a lot to the company, they will be reluctant to let you go when you ask for a raise. If you say you want to leave, they'll try to bribe you with a raise.

the problem is people with very little skills and aptitude will be marginalized and will not be able to survive. now if u don't see a problem in that i don't know what else to say.

Actually, I see a problem with that. The government should provide the basic services - food (synthetic balanced diet), shelter (bed space in a hostel), and health (free treatment from killer diseases) - to those who are incapable of making enough money to survive. But only as a last, last resort.

The government should not subsidize laziness. I know from personal experience that when people are poor but well fed and healthy, they will be forced to look for ways to make themselves assets to society. That's good!

----
The Case Of Employer Collusion:
For a short period of time, it is indeed possible for employers to collude to pay their workers lower wages than they are worth. However, such an arrangement cannot last because
1) The employees can simply drop their jobs, start their own companies and pay themselves their full value!
2) An industry that underpays its employees will be extremely profitable, which will attract new entrepreneurs into industry. Those entrepreneurs will entice the previously underpaid employees by offering better wages. As the entrepreneurs move into the market, the competition for employees will intensify and drive up wages!
3) If an industry underpays its workers, their best employees will go for retraining and end up working in a different industry. To prevent this from happening, they will have to offer more money.

----
The Case Of Discrimination Against Minorities:
In a free market, employers are free to hire only whites or hire only men. Assuming that women and blacks are as productive as white males, this simply means that employers who are no discriminatory will have access to cheap, high quality labor. They will be able to hire women and blakcks that are as productive as white men and pay less because there will be many women and black men in the labor pool. All other things being equal, such companies will make more money than the discriminatory companies, and expand faster. On the long run, the discriminatory companies will realise how stupid they have been and will start hiring the best candidates regardless of race. if not, they will grow out of business or become less relevant relative to the more progressive employers.

But that's not all. In an unregulated market, employees that are being discriminated against would be able to start their own companies and apply reverse discrimination in their own employee selection process. In heaviliy regulated economies, it is extremely hard for minorities who are capable but not rich to start their own companies.

---
So as you can see, there is a strong case for allowing labour markets to be as free as possible.

I think i am a US Liberal, with a pinch of conservatism. I always vote the person, never the party.

Protect the environment (Hate the EPA, i think Polluters should be Killed)

Government should stay out of people's bedroom (Pro Gay Marriage)

Support Affirmative Action and protection for minorities.

I Love my Guns, and will die to protect the right to bear arms (Pro second Amendment)

Love all the Government Social giveways (Medicare, Medicaid, Social Security, Public defenders ETC )

Support Abortion (It is s woman's right to Choose)

Pro Lesser penalty for drug Users and drug use. (I think people should be allowed to make foolish decisions)

Strongly against Illegal Immigration (I think it should be a felony to be here illegally)

Anti Religion in General (Government and Religion do not mix)

Pro Military ( Government should defend it citizens, as it's primary duty)

I love paying my Taxes. I think the rich(Over $500,000 per year ) should be taxed heavily. Big Corporations and their Windfall proffits should also be taxed heavily.

Government regulation on big companies. I.E Verizon,ExxonMobil,SBC,Walmart. ETC

I think the US congress and Senate should have term limits. Including state Governors, State reps ETC.

I support the death penalty and think it should be used more frequently.

I support the war in Iraq/Afghanistan (Even though i think both are run very badly)

I support Limits on Population growth. I think there are too many people on Earth already.

Those are Some of my Views, go ahead and and put me in a category.

I support your honesty. old glory for president 2007.

I am not against immigration illlegal or not man must survive

I love guns.

I am against burning of thieves in Nigeria, they should be executed by firing squad if need be.

I am not pro-gay. I don't think it even matters that much for it to be a national issue. Just ban it and lets move on

I'm anti-war in Iraq, but i am in support of war in Afghanistan, Iran, Sudan, Somalia.

I'm a capitalist because i have been conditioned to be one.

I'm against young kids below 18 engaging in sexual acts

I love George Bush but I hate the Republican Party. I think democrats Kiss to mush a$$.

I think Obasanjo should resign, and lets vote in gani fawehinmi, or pat utomi. let them run the country like a corporation.

There should be free public education in Nigeria

Oil Producing states should have more revenue than they have now.

Nigerian Government should apologize for killing Saro WIWA

There should be a census in Nigeria or better yet National ID card. I dont believe the Hausas are the biggest tribe. Its only in Nigeria that more people allegedly live in the desert North rather than a south which has lots of vegetation.

I support Afirmative Action.

Seun:

I have studied the way banks work extensively, and you are absolutely wrong. Perhaps sincerely wrong.

Well, maybe I could be wrong about the specific Nigerian case (and the motivations there), but I'm certainly not wrong on principle.

Seun:

Yes, there are day-to-day variations in volume of bank deposits vs withdrawals, but a larger bank will have larger customers and therefore experience a proportionally more volatility in that demand for cash.

Meaning?

Seun:

Central banks all over the world deal with this problem by
1) Asking banks to keep a certain percentage of their deposits in reserve at all times, and
2) Facilitating inter-bank lending markets.

All depends on access to both of these. I'm not entirely familiar with the Nigerian situation, but access to international lending markets may be less than ideal over there.
Capitalisation requirements indeed don't mean much if one is not properly insured against overall volatility. In Belgium, banks cannot, under any circumstance, use the money of their customers that is floating on their current or savings accounts. Only interests on that money and money that is put into more risky investments (loans, bonds, etc) can be used.
In a situation where this kind of regulation is not in place, capitalisation requirements may be a first, necessary, but not adequate measure to ensure smooth operations of the banking sector, as is well understood, a smooth functioning of the banking market is essential for an economy.
The US is really an odd case in this, as the USD functions in effect as the world reserve currency. The FED has far more muscle and influence than any other central bank and as such, they have adequate means to protect their banking sector.

Seun:

If, on a particular day, a small bank experiences a random increase in demand for cash, it can simply borrow from a larger bank that has excess deposits on that day. If a large bank experiences the same, it can borrow money overnight from several small banks. This system works very well against volatility. Nothing more is required.

No it doesn't. This does not protect people's investments in case of an outright market crash. I know for certain that my money on a Belgian bank is safe, which is not the case for e.g. the US or (probably) Nigeria.

Seun:

Naive commentators might assume that larger banks are less likely to go bankrupt, but this is also false.

All depends on the allocation of their funds. Regulation can ensure the protection of these funds in case of a market crash, but capitalisation requirements are indeed not a sufficient measure

Seun:

No matter how large a bank is, it cannot survive the loss of public confidence without going bankrupt. All banks are bankrupt by nature. What matters is the confidence people have in the bank. That's all. Size doesn't matter.

Bull, Belgian banks may go bankrupt, but all money on savings accounts and current accounts is insured and secured. But indeed, it's not size that matters. If you're not big enough, you cannot operate profitably under the strict Belgian guidelines.

Seun:

Read http://en.wikipedia.org/wiki/Federal_funds and related topics.

Well, I can always learn more, but what's the specific point here?

Seun:

It is true that some (not all) small banks were corrupt, but one shouldn't throw out the baby with the bathwater. Banks executives that engaged in illegal practices, whether big or small, should simply have been prosecuted; their banks only be need to be liquidated or acquired if the public has absolutely lost confidence in them.

Maybe it should have been handled differently, but public confidence is no guarantee. Too many times the markets went belly up when no adequate insurance measure were taken. Capital markets are anything but rational. That's what the public should be protected against. Capitalisation requirements are only one way of doing that, other additional regulation is necessary

Seun:

Small banks which have been serving their customers well should have been left alone. A wise man knows how to weed his garden without destroying his own plants. Would you use a gun to kill a fly on your head?

Well, I wouldn't use a knife to kill a bacterial infection if that's what you mean. Antibiotics are more appropriate. Maybe that was the case in the banking reform in Nigeria, I don't have sufficient information. Anyway, only recently can Nigerian banks operate properly on the international markets. Would the reforms have something to do with that, I don't know

Seun:

The US banks do not have any minimum capitalization requirements (en.wikipedia.org/wiki/Capital_requirement). They only have capitalization ratios. Are we saying we are smarter? Very funny!

As I mentioned, the US is an odd case out.

Seun:

So you see, our Central Bank's decision to eliminate smaller commercial banks was not necessary, and hence can only be regarded as an abuse of power.

Possibly, but I don't have sufficient information to judge and the previous discussions didn't give me enough info either.

Seun:

To a hammer, everything is a nail. To a politician, every challenge is an opportunity to intervene.

You project the Nigerian situation on the rest of the world

Seun:

The exercise of the central bank's power has turned the Nigerian banking sector into a 25 member oligopoly, which is the very thing you are saying is caused by a free market!

I have never heard a situation with 25 competing market players being described as an oligopoly. Anyway, Belgium doesn't have more than 10 non-specialised banks that are licenced to offer the full range of banking services. Some players only target niche markets, because they don't meet the criteria for everything or because that's their target market.

I don't have the energy to give a point by point response to nferyn's posts today. Sorry.

Seun:

I challenge you to give me an example of a coercive monopoly or oligopoly that was established without the help of the government. Sometimes people make the mistake of classifying excellent companies who are extremely good at serving their customers as monopolies.

Microsoft (late 80's & early-mid 90's) were in near total control of the software market with a sub-standard product. Now in this situation Windows dominated not because it was a superior product, but because consumers had no order choice because IBM PCs came bundled with Windows. Microsoft actively employed bullying, plagirism, and anti-trust policies to eliminate competition.

Microsoft (late 80's & early-mid 90's) were in near total control of the software market with a sub-standard product.

Which product was better than MS-DOS? It wasn't perfect, but it did the job at an attractive price! Which product was better than MS Windows? It wasn't perfect, but it ran on cheap 16-bit computers, was compatible with MS-DOS programs, and was relatively inexpensive. MS Excel and MS Word? They were very good, and compatible with existing products like Lotus 123 and Wordperfect

Now in this situation Windows dominated not because it was a superior product, but because consumers had no order choice because IBM PCs came bundled with Windows.

That's very false. IBM tried to create their own OS to run on their PCs, but failed. the bundling only served to introduce customers to the Microsoft product. they got hooked on their own. People use Windows because Microsoft has worked with hardware and software engineers to make sure their products work perfectly with Windows. other products promise imaginary benefits, but Windows delivers immediate productivity.

Microsoft actively employed bullying, plagirism, and anti-trust policies to eliminate competition.

Fraudulent practices like lying and decieving people are wrong, but bundling is perfectly legitimate. Linux OS providers bundle lots of software with their OS, but no one accuses them of "antitrust" practices.

Microsoft was a company that was always on its toes. They weren't settling down to enjoy their "monopoly", but they were sitting tight trying to avoid being "destroyed" by the next Microsoft. By working hard to useful stuff at low prices, bundling new products with existing ones for much the same price, offering free security upgrades, etc. hard work deserves reward.

Case in point: Netscape failed because their profitability relied on server software sales, which in turn relied on the sidespread adoption of their browser. When Microsoft released a browser that was better than Netscape's browser, they lost the browser war, which meant they couldn't sell overpriced server software anymore. Look at firefox: it has succeeded where Netscape did not, despite having to face the same Microsoft!

So this is not a case of a coercive monopoly. Microsoft was mostly just a market leader. It is definitely beatable.

Update: http://www.capitalismcenter.org/Advocacy/Antitrust/Microsoft/Antitrust_FAQ/default.htm

Seun:

In a free market system without regulation, you would have these same big corporations bribing their way to favourable deals and employing anti-trust policies anyways.

I challenge you to give me an example of a coercive monopoly or oligopoly that was established without the help of the government.

There are no examples of a completely free market without government intervention, so in each and every case, the government will be involved, if only by enforcing the law. Could you tell me what in a completely free market prohibits the formation of coercive monopolies or oligopolies? Do I have to accept that on faith alone, maybe?

Seun:

Sometimes people make the mistake of classifying excellent companies who are extremely good at serving their customers as monopolies.

Can you explain me the pricing policy of microsoft and how that relates to free markets? That alone should make some bells ring. It's not because Microsoft does not fit the ideal category of a monopoly that they were no acting like one.

Seun:

That is not fair at all. In a free market, a competitor can jump in anytime and innovate your cash cow into obsolescence.

You mean, just like Netscape did with their browser? The first versions of IE were an extremely bad implementation of Mosaic, while Netscape untill version 2 was far better the IE. It's only the bundling that allowed IE to get a foothold in the market.

Seun:

In the real world, government regulations will force the small guy to sell his startup to a larger company. Example: Paypal having to sell their company to Ebay.

I would be very interested to hear that story and how it relates to the government

Seun:

IBM was not able to prevent the rise of Microsoft, which couldn't prevent the rise of Yahoo, which couldn't prevent the rise of Google. Auction houses were not able to prevent the rise of Ebay, which couldn't compete effectively with Paypal in e-payments.

Irrelevant.
Yahoo, Google and Microsoft never directly competed. Ebay is not in direct competition with auction houses, because they tapped a non-existant market.

Seun:

Anti-trust laws are over-rated. Politicians always feel the need to flex their muscles.

And you base that feeling on what observations exactly? The problem with politics is that politicians tend to project an image of ability that they can never live up to. Because of the further progressing movement to a fully integrated world economy, those politicians have less and less muscle to flex.

^{**walks back in in virtual reality**}

How can you use a yardstick to measure the weight of a chicken?

The family is a small social unit that can be observed easily unlike a country. If your parents were completely liberal(giving you 100% freedom) where would you be today?

There is nothing really libertarian its all a lie because by definition it means you can be free as long as your freedom does not infringe on others. How can your freedom not infringe on others? You are free to drive your car and cause pollution and deprive me of fresh air?

We need laws; and that in itself is an infringement on my freedom.

This thread is a fallacy and any post I make is as such.

We need laws; and that in itself is an infringement on my freedom.

Practical libertarians believe that those laws should be the barest minimum that are necessary and nothing more.

Read this please:

It just occured to me that two of the government-enforced crappy systems that I’ve noticed lately are due to exactly the same incentive problem.

Case 1: Housing prices. Studies have indicated that high housing prices are mostly due to regulation restricting supply. And it should be no suprise why. If most voters in a region are homeowners, then they will tend to vote for regulations and officials who will make it hard to build new homes, as this will increase the value of their homes. This is especially true if demand in the area is inelastic, perhaps due to unique features - say: LA, Silicon Valley, Manhattan and Hawaii, which means prospective buyers can’t just substitute homes in other areas.

Case 2: Health care costs. There are many contributers to this problem (see Arnold Kling’s new book to learn more), but one of them is restriction of supply by the AMA. The AMA gets to certify medical schools and decide who gets to be a doctor. The AMA consists of doctors. If the AMA let many people become doctors, they would reduce their own salaries. Hence they make the bar much higher than is necessary simply to ensure competence, restricting supply, and (since demand for many types of health care is inelastic) boosting their own salaries.

The problem is exactly the same in both cases: the providers of an inelastic good have the power to restrict its supply, driving up prices and profiting from their power. Regulation is involved, since to restrict the supply, you must bar competition (there are very rare exceptions). Unlike the competitive gasoline market, this is what I call price gouging!

Can you think of other examples of this? (Besides the obvious generalization of case 2 to licensing requirements for any profession)

Source: http://catallarchy.net/blog/archives/2006/05/02/two-poor-incentive-systems/#comments

There are no examples of a completely free market without government intervention, so in each and every case, the government will be involved, if only by enforcing the law. Could you tell me what in a completely free market prohibits the formation of coercive monopolies or oligopolies? Do I have to accept that on faith alone, maybe?

Nferyn, I'm following your debate with interest - but could you explain what a 'coercive monopoly or oligopoly is, just so that I'm clear?

It all depends on the size of your pocket.

different strokes for different folks in the same hood.

A state is liberal if you are richer than it. (You can get away with murder there).

It becomes oligarchy if you are the church rat.

Anarchy, if the size of your pocket is almost the size of the other man's (usually everyone is bankrupt)

Capitalist, if nobody questions the bulge in your pocket

Communist, if you only have "pocket money" from the government irrespective of your input


All we are saying, give us a government.

_{. . I don't care what sort of government it is as long as we have peace and can enjoy the life. I don't believe in living to work or working to live. I simply believe in living. I will support any government that can afford to give me a good standard of living while I make positive contributions to it.}

""""There is nothing really libertarian its all a lie because by definition it means you can be free as long as your freedom does not infringe on others. How can your freedom not infringe on others? You are free to drive your car and cause pollution and deprive me of fresh air?""""

food4tot,

You make a good point. The idea that your freedom can not infringe on mine in a technological society is not true.

For instance, originally, a car was an oddity. People who still used horse and carriages were given the preferences.

Yet as more people bought cars, those who used horse and buggy's were pushed off the road and eventually forced to stop using the roads all together.

The same happenned for those who walked.

Now most are forced to live far away from conveniences because it is assumed that you have a car. All of society has been rewritten to give way to the dominance of the car.

A simple product that originally only the rich could enjoy.

A more recent case:

Your freedom may allow you to enjoy HDTV but what about the freedom of the others who do not own HDTV's?

Well now digital TV is the law of the land and all broadcasters must change over to digital TV.

Those who can not afford or just do not believe they should have to throw away perfectly good TV SETS, are being forced to do so. Or pay for converters that will allow old TV's to get the new digital signals.

Think of education and how it started in this country. It was initially started as a way for christians to have one place where their children could learn to read, so they could read the bible.

Now you will be put in jail if you do not make your child go to school.

My point is this, no matter how innocent and harmless your right to freely enjoy may seem when it first starts, it will in the end infringe upon my freedom in a technological society.

The Unabomber Letter actually explains this very well.