Economics and snake oil

Sowell has a lot of excellent analysis on other subjects, but here he goes off the rails. Regardless of whether academics redefine words to serve their
own agendas, the fact remains that the "free" market is a vapid concept. Sowell dismisses the oligopolistic control exerted by a few corporations in mature
market sectors because consumers are supposedly free to shop elsewhere. His critique of Galbraith is beyond shallow. Oligopolies and monopolies do
wield real power over the market.

Take automobiles for example. All of them are made in similar categories and sell for similar prices in those categories. Their quality also moves in tune
across all producers. Yes, that's right, Toyota, Ford, etc. all make the same shit and cut corners like there is no tomorrow. Take a look at the engines made
by VW. So much for the vaunted German engineering. There is clear pressure on the producers in the car market to engage the same quality reductions
because consumers do not have any choice. Not cutting corners means less profit for any car company and there is no penalty for cutting corners. Sowell
is under the delusion that consumers will drive price reductions in this market. BS. They have no pricing control beyond what the oligopoly chooses to
afford them. Clearly, there is some basic control since consumers cannot afford million dollar cars. But consumers are not given the choice of paying 5,000
dollars for a 40,000 dollar car. There is no rapid turnover of car producers. The period of competition was early in the 1900s when cars started to be produced.
By the 1950s most car manufacturers were consumed by a few main players.

Free market koolaid drinkers are always in denial about the natural formation of oligopolies and even monopolies in their precious free market. They seem
to lack a basic understanding of species dynamics. They advocate the law of the jungle but then expect a harmonious orchestra of self-regulation. What
inanity. As in the jungle, the predators will dominate and in the case of real human markets, the predators consume all the less predatory species. The precious
market is an arena for power and politics. Consumers are just a substrate and do not steer the evolution of markets. Transitional periods such as the adoption
of new technology are not an example of consumer control. It is the loss of control by producers of outdated products. But as with cars, eventually new
or made-over old producers reestablish control.

Instead of romanticizing corporate power, the state power skeptics need to keep their eyes on the prize. The coercive power of government is real and
a serious problem. But it is not some nebulous force and it is their vaunted corporations that typically corrupt government to use its power. We see this
with Pfizer and Moderna and their insane profits generated through government coercion. Placing faith in unelected boards of directors while pissing on
elected government is simply moronic. Here Russia is a good example. Thanks to being the dominant force in the Russian economy, the Russian
government is able to crack the whip over the oligarchs instead of being their whore. By contrast, the US government is a used condom for the US
kleptocracy which puppet masters the deep state. Americans can vote until Hell freezes over and will exert no control over their economic fate.
Meanwhile, "oppressed" Russians will vote in a government that actually serves their interests. No matter the failings and limitations, this is on a whole
other plane compared to the "exceptional beacon of humanity" the USA.

kvs wrote:

Sowell has a lot of excellent analysis on other subjects, but here he goes off the rails.    Regardless of whether academics redefine words to serve their
own agendas, the fact remains that the "free" market is a vapid concept.   Sowell dismisses the oligopolistic control exerted by a few corporations in mature
market sectors because consumers are supposedly free to shop elsewhere.   His critique of Galbraith is beyond shallow.   Oligopolies and monopolies do
wield real power over the market.

Take automobiles for example.   All of them are made in similar categories and sell for similar prices in those categories.    Their quality also moves in tune
across all producers.   Yes, that's right, Toyota, Ford, etc. all make the same shit and cut corners like there is no tomorrow.   Take a look at the engines made
by VW.    So much for the vaunted German engineering.    There is clear pressure on the producers in the car market to engage the same quality reductions
because consumers do not have any choice.   Not cutting corners means less profit for any car company and there is no penalty for cutting corners.  Sowell
is under the delusion that consumers will drive price reductions in this market.   BS.   They have no pricing control beyond what the oligopoly chooses to
afford them.   Clearly, there is some basic control since consumers cannot afford million dollar cars.   But consumers are not given the choice of paying 5,000
dollars for a 40,000 dollar car.    There is no rapid turnover of car producers.   The period of competition was early in the 1900s when cars started to be produced.
By the 1950s most car manufacturers were consumed by a few main players.  

Free market koolaid drinkers are always in denial about the natural formation of oligopolies and even monopolies in their precious free market.   They seem
to lack a basic understanding of species dynamics.   They advocate the law of the jungle but then expect a harmonious orchestra of self-regulation.   What
inanity.   As in the jungle, the predators will dominate and in the case of real human markets, the predators consume all the less predatory species.   The precious
market is an arena for power and politics.   Consumers are just a substrate and do not steer the evolution of markets.    Transitional periods such as the adoption
of new technology are not an example of consumer control.   It is the loss of control by producers of outdated products.   But as with cars, eventually new
or made-over old producers reestablish control.  

Instead of romanticizing corporate power, the state power skeptics need to keep their eyes on the prize.   The coercive power of government is real and
a serious problem.   But it is not some nebulous force and it is their vaunted corporations that typically corrupt government to use its power.   We see this
with Pfizer and Moderna and their insane profits generated through government coercion.   Placing faith in unelected boards of directors while pissing on
elected government is simply moronic.    Here Russia is a good example.    Thanks to being the dominant force in the Russian economy, the Russian
government is able to crack the whip over the oligarchs instead of being their whore.    By contrast, the US government is a used condom for the US
kleptocracy which puppet masters the deep state.    Americans can vote until Hell freezes over and will exert no control over their economic fate.  
Meanwhile, "oppressed" Russians will vote in a government that actually serves their interests.    No matter the failings and limitations, this is on a whole
other plane compared to the "exceptional beacon of humanity" the USA.  

I strongly agree and moreover, libertarians like Sowell will never address the root cause of the problems of the US economy and that is usury.  The Federal Reserve is not owned by the government but is a private bank.  Libertarian ideologues like Sowell simply ignore that money power:

http://entityart.co.uk/usury-the-root-cause-of-all-problems-on-the-planet-debt-slavery-central-banks-wars-assassinations-nwo-solutions-caesar-napoleon-hitler-jfk-lincoln-gaddafi-zionism-federal-reserve/

Indeed, we have an international bank mafia. That may be the go to for tin foil hat paranoiacs, but is reality. Controlling the money means having the
strings of control over any company and even governments. This is possible because a political climate is created where politicians put banks on a pedestal.
We saw this in the wake of the 2008 financial crisis and how banks were treated like privileged entities "too big to fail". Taxpayers were used to bail out
rotten banks and financial companies. All of the sudden the free market was not a consideration, in particular the cleaning mechanism of bankruptcy
that is always invoked to show what a great thing it is.

It is interesting in the case of Russia that the banks are weak and not capitalized like in the west. This is a weakness but may also be a strength since
these banks don't have the resources to manipulate political parties and oligarchs. Idiots spazz about Putin, but he is above board. So much of
real world power and economics operates in the shadows.

This is another good post about the subject:

https://www.facts-are-facts.com/news/the-federal-reserve-is-privately-owned#.W9XuUDFlBdh


This is a good short review of Sowell on quora:

https://www.quora.com/What-did-Thomas-Sowell-get-wrong-in-Basic-economics


I saw this review on Amazon of his book: "Intellectuals and Society" which is pretty accurate in my opinion:

Thomas Sowell is a gifted applied economist with much of importance to say about the larger issues in social policy and government regulation of economic affairs. I have reviewed several of his books and recommend them to the reader.

Sowell, however, has two failings. First, he has no heart for the plight of the poor, so his work in this area is illuminating for the false ideas he debunks, but does not contribute in any way to dealing with the problem of poverty. Second, he is a thorough-going right-wing ideologue, who is often cogent in his critique of liberal ideas, but is blind to similar, indeed often parallel, problems with conservative ideas. This book suffers especially from the second of these weaknesses. The book endlessly repeats the errors of left-wing intellectuals (especially in the Cold War era, when many embraced some form of socialism, with totalitarian forms of Communism heavily represented), but says nothing about the errors of right-wing intellectuals (many of whom embraced fascism and even Nazism, and argued in favor of tolerating racial segregation and gender discrimination, as well as the abolition of government regulation of food and drug quality).

Sowell's book adds fuel to a right vs. left dialog that is petty, vituperative, Manichean, and unilluminating. The social division between left and right persists throughout democratic societies and will doubtless continue to do so. The reason is that both types of political world-views have strong positive contributions to make, but both are deadly and destructive when pushed too far. Sowell encourages pushing the right too far by his lack of insight into the virtues of liberalism.

Sowell knows applied economic theory quite well, but he never presents the balanced model of government-market interaction that has been taught to graduate students of economics for half a century, and has no serious critiques in the professional literature. This is because this model of "public economics" does not fit the conservative free market ideology. This ideology has no scientific validity and cannot even be formulated in an intellectually rigorous form. It is simply wrong.
Sowell has no understanding of information economics. He follows Hayek on the distributed nature of information, but he never confronts the literature that deals with the transformation of private information into public information. The importance of public information, central for instance to Durkheim and Aumann, is completely ignored in his treatment of government regulation.

This book preachs to a right-wing choir, a wordy version of the radio talk-show hucksters I so regularly avoid. There are many factual gems and cogent insights in this book, but they are smothered in invective. If you want to be preached to, this is the book for you. If you want insight, look elsewhere.

https://www.amazon.com/review/R1NX9L84XFXFY2

Ideology is inferior theorizing. A real theory admits empirical data without bias. But all ideologies filter empirical data to promote their
own dogma. I personally cannot stand listening to political type arguments in the science realm. Science is not about opinions and nobody
has any "right" to cherry pick the data that suits their agenda. So I find myself disagreeing with hysterical global warming amateurs and
the denier drones who ultimately serve Exxon, the Koch brothers and other corporate interests. If you listen to the US right, they just
have to assume that global warming is a leftist hoax. Politics and ideology will never deliver on the truth.

This is a good article on the influence of Economist James Buchanan on the libertarian worldview:

https://evonomics.com/how-to-disguise-racism-and-oligarchy-use-the-language-of-economics/

Henry George and the land value tax needs to be revisited:

https://americanaffairsjournal.org/2018/02/henry-georges-land-value-tax-idea-whose-time-come/

https://www.facebook.com/permalink.php?story_fbid=6611030535588598&id=925340197491022

Michael Roberts wrote:Comment from Laurie Macfarlane.

Many of the world’s biggest polluters are not nation states, but multinational corporations. Just 20 fossil fuel companies are responsible for 35% of all carbon dioxide and methane worldwide since 1965. Many have deliberately downplayed the risks in order to protect profits.

They should take a look at all those unneccessary wars the west started since 1945.

By the way... good article from Mr. Feierstein at RT about Tesla.
https://www.rt.com/op-ed/538833-elon-musk-tesla-valuation/

These graphs explain it all.

Great post of great charts!

Tesla and SpaceX are US government laundering operations.

Michael Roberts wrote:
Comment from Laurie Macfarlane.

Amusing trying to position blame on the companies extracting and selling oil and gas and coal, instead of the users of that energy that powered their economies with that energy.

Those rich western companies could have gone for improved efficiency engines and power generation systems that minimised or even eliminated emissions of carbon gas into the atmosphere... but it was cheaper not to.

In fact in the case of emissions control some of those companies chose to lie about the amount of C emissions their cars and vehicles and engines produced so how can we trust their numbers anyway?

kvs wrote:Great post of great charts!

Tesla and SpaceX are US government laundering operations.

Tesla is a typical western oligarch financial voodoo operation, funded by taxpayer money and boosted by the hard earned money of tiny "investors" (= normal people), that is funneled to it by large banks.

SpaceX belongs to the american military. And NASA. That´s why the company will never go pupblic. In that case Musk would have to show where the money comes from and the real cost of a launch.

It is like the US military outsourcing soldier work to mercenaries... they probably don't work out cheaper because they likely get very well paid but the important thing is they can do things the way the military cant and the public have no right to find out how they did things in 5 or 10 or 20 years time, and of course they are expendable, but their numbers are not mentioned on the news.

Today zero soldiers died in Afghanistan.... but 10 mercs were injured or killed doing essential work for the military, but we don't mention those... makes us look like we know what we are doing. They are not military so they can open fire when they please... in a largely lawless region how many were held to account... and of those that went to jail most got pardoned anyway.

The "best" thing NATO did in Afghanistan was to privatize the replenishment of their forces. Either the Taliban didn´t attack convois because they consisted of afghan and pakistani drivers or the west could just ignore the killed drivers even if they were from western countries.

The best thing HATO did in Afghanistan is the same best thing that everyone does in Afghanistan.... leave.

I heard recently that economic students are best to  study modern sciences , such as system dynamics and forget about classical economics . Because the old models do not reflect reality in the world .

A part of this world is about employer / employee law , when it comes to strikes over wages and conditions . Namely what are  the right wages for a particular type of work . And what if both sides can not agree on the right wages ? Does employer have the right to sack an employee , if the said employee goes on strike ?

My initial idea , if both sides can not agree , depends on three existing conditions :

( 1 )  Neither can find alternate economic partners .

( 2 ) Only one side can find alternate economic partners .

( 3 ) Both can find alternate economic partners .

The state need not take any action , in cases one and three . But in cases two , the state may be obliged to intervene on behalf of the party left without economic partner . In that case a compensatory mechanism through  economic assistance should be provided . Here I have said nothing about employment law or  payment of the right wages or time allowed to stay on strike , with pay and without termination of work contract . What you think ?

I agree that economics has to be treated as a physical science. This includes accepting that it is subject to the laws of thermodynamics even if
economists came up with a Mickey Mouse ad hoc replacement for it. It also means dealing with the fact that it is a nonlinear dynamical system
and is not clockwork repeatable.

I think economics is prevented from shaping up because it serves the owner class. They do not want a science to be interfering with their chase
for filthy lucre. Giving the proles solid arguments to argue for wages and benefits instead of abiding with trickle down is a no-no. Marxism was
an attempt to analyze capitalism from outside the box. But it is strange for the only non-obedient analysis to be a competing ideology. Science
is about digging up the facts and not pushing a narrative.

It is 2021 and the planet is still in the dark ages.

Old article , but interesting . Pointing to the " Islamic capitalism " and " Hezbollah" supporters , being used to put down opposition . Nowadays the Iranian opposition is not even permitted the title of people ! They may even be called MKO or ISIS supporters with fake doctored images , holding guns etc . Deserving to be shot , when they protest ! The Iranian right wing , under the Shah or now , the same class in power , the same economics .


https://www.forbes.com/global/2003/0721/024.html?sh=3a5a76144108

It is wrong to believe that economic prosperity , be it a result of fortuitous natural events or planned or deliberate action by the state , at the cost of loss of democratic rights and freedoms is preferable to the existence of a democratic state , with or without economic prosperity .

Only in a truly democratic state , can economic prosperity be maximised according to a national plan . However in a non-democratic state , economic prosperity can only come about accidentally , due to a fortuitous event .

It is therefore a non-sequitur to say that democratic rights and change are somewhat secondary to economic prosperity under dictatorial rule . And that democratic change must be suppressed and sacrificed at the altar of economic prosperity under dictatorial rule .

The availability of cheap labour or mineral resources , an accidental and fortuitous event for a nation , despite non-democratic rule , may bring temporary prosperity . But conditions change , and these nations can not adapt and organise the economy according to a national plan , based on collective will .

The problem is that "democracy" does not exist and is nothing but theater. Here in the west, I can vote for this and that. But
I have zero power. This placebo voting process shows me that I do not live in a democracy.

1) The mental deficiency of the electorate is a critical factor that cannot be ignored. The people vote like sheep and keep
supporting the same two parties even when both of them totally betray their trust and lie about their policies. I have never
seen a protest vote where people select the obscure parties and candidates on the ballot. Never.

2) It is clear that we have, in the west, an oligarchy and it runs the political parties. In Canada, corporate vendors can sell
you box cutters and knives which are illegal and they see no punishment but you do. Politicians systematically whore for
corporate interests even though they are elected in a "democracy". This demonstrates where the real power lies and it
is not in the hands of the masses.

I agree that state/corporate coercion is bad.

The reason the so called " democracies " do not function , as you said , is that they do not represent the interests of the people in a proportionate way . But I believe that legal safeguards can ensure that it does . some of these are :

( 1 ) That there are no professional politicians . Only actual members of the public , who are elected .

( 2 ) That during their membership at least , their income does not change and their jobs are saved for them to return to .

Just because a system is democratic , it does not mean that it will always make the right decisions . But it will always make a better decision than dictatorships . Another problem is that , testing the truthfulness of some laws , needs extended periods , longer than lifespan of most parliamentary terms . In this way new arrangements may be needed , to resolve social issues . Since in a proportional system , the result of elections is always known , then the only reason to replace an MP , may be a challenge to him by a political rival . In this case no need for national General elections . Only local election , if the need arises . Ultimately elected parliaments may be replaced by an automated online system . Where every individual is an MP ! I think already democratic states , can try this system , and let the state wither away .......

I used to think that even faux democracies like the in the west still raised the bar compared to capricious dictatorships.
But I see in progress exactly the capricious dictatorship behaviour today.

In Russia, the system change has resulted in substantial improvement but it is not because it is mimicking the west.
It has a government that is ensuring its real popularity by delivering on the improvement of people's lives and
properly developing the economy. It pursues legitimate interests of the Russian state and not imperial meddling
called "interests" by Washington. The pain of the transition has been offset by the counter-coup by the silovki
who made sure that the Washington sponsored oligarchy did not establish itself like Ukraine. Russians should
be thankful they got Putin soon enough to undo Yeltsin's damage and to establish a power that serves their
interests vastly better than the people of western countries get served by their politicians.

I am not sure how the long term situation in Russia will play out. The law is nothing but pieces of used tissue
paper. It is the judges and their string pullers that ultimately decide. The US is good example of judicial abuse
in many instances. The 2020 election should have been nullified but the Supreme Court judges bent to the
will of the deep state. In Russia, there may be a US style oligarchy emerging in the long run. The fault lies
with the voters because they are not aware and fickle. When things get soft and easy, they will take things
for granted. Just like Americans.

I think democracy is basically an unreachable ideal. We can strive for it, but we are just too flawed to reach it.
Hierarchy always emerges and is a fixed feature of social dynamics. Delegation of decisions is not avoidable
and over time the "system" emerges that abuses this arrangement. In this regard, the western "democracies"
are a good example.

I tend to agree with you . I think that the ideal democracy may be out of reach , but better democracy is possible . I think there are even democratic index now in the world for most and least democratic systems . In nature , the system dynamics is such that , if an organism ( a class ) extends to more and greater environments , then it either adapts and becomes a new species or dies . But if an organism exists in balance with others , then it neither has to change , nor will it die .

The whole idea behind democracy , is to allow a balance to exist in a co-operative environment for different humans in society . But say humans are not able to co-exist with each other or nature ( The idea of co-existence should extend to nature and other species ) . Then unable to adapt , in a very short time , they will die . If we look at the evolutionary tree , then few organisms have remained unchanged over long term and these are the true democrats . Most organisms have a short life span on this Earth . Either dying out or changing into new forms or species .


https://m.youtube.com/watch?v=5_S4eGrczdQ


If we are lucky and adapt ?!

This is a good article about the difference between earned and unearned income.  

the income tax should spare the earnings of the working person
and productive entrepreneur, and fall on unearned gains that arose from land and resources or the
exercise of monopoly power in all its subtle forms.


https://peter-barnes.org/article/earned-vs-unearned-income/?fbclid=IwAR26DiwOqtvO-NKq30wnR_y3BZRCQNd0TJ5WtaGTF9VWmgi53R3JoL49ZjQ

This is a very interesting essay about how the income tax became a tax on labor here in America.  While the essay talks about the United States; I think the insights and good thinking could be applied to other countries tax systems as well.  










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