Well, Libertarians, here's your chance to defend Enron

[Hoek]

Your labels are misguided. The fact is that socialism as preached by Marx and Engels has been thoroughly discredited. What you call "socialist" (the welfare state) doesn't come close to what Marx was advocating. The welfare state acts essentially as a safety net, as Reagan said.

My main beef with Libertarians is their insistence on doing away with income taxes and their aversion to environmental protections. At the very least, it makes lots of sense to heavily tax unearned income. In the 1800's, people would buy property near railroads just to see its value skyrocket later, without actually doing any work for it. When wealthy SOBs give their children their millions or billions, those kids don't have to work at all for their living. A reasonable libertarian should not oppose things such as heavy unearned income taxes.

I also don't see why there is this deep-seeded aversion to state power in America. Why do republicans so fear any federal government spending? We elected them, and we should have no problem with them doing things in the best interest of the country.

And in terms of the environment, libertarians should put down the ideology for just a minute and realize the consequences of failing to put environmental controls in. All I'm asking for is a little practical thinking instead of all the soap box speeches.

[Imran Siddiqui]

The fact is that socialism as preached by Marx and Engels has been thoroughly discredited. What you call "socialist" (the welfare state) doesn't come close to what Marx was advocating.

Socialism was around before Marx and will be around after he is forgotten (though he probably won't). You are mixing you terms it seems.

[Wraith]

--"Is Gates' work worth 40 billion dollars? I think not."

Aren't you being a bit disingenuous when you say you want a democratic economy and then go on to complain about where people have chosen to spend their money?

--" The fact is that socialism as preached by Marx and Engels has been thoroughly discredited"

Yes. There are several socialiasts on this board that have major disagreements with Marxism.

--"What you call "socialist" (the welfare state) doesn't come close to what Marx was advocating"

You might want to check over the manifesto again. It differs only in degree and in visibility.

--"My main beef with Libertarians is their insistence on doing away with income taxes"

Well, interesting you should say that. I've spent the past couple days looking over a several thousand page document detailing this argument. Now, I'm nowhere near finished, but everything I've checked has indeed been correct. There's a lot of interesting things in US tax law, and apparently even most Congressmen don't know them.
But, to hit a very basic level of the argument, the Federal government can only Constitutionally collect an income tax through state apportionment. It has absolutely no power whatsoever (even including a literal reading of the 16th amendment) to levy an individual income tax directly.

That said, the concept of taxing people based on their productivity is abhorrent, especially when you get into "progressive" taxes, which punish you more for being more productive.
Sorry, but you do not make the strong equal with the poor by weakening the strong, and you don't make the smart equal with the dumb by stupifying the smart.

--"without actually doing any work for it."

They invested in the land. Those who said "hey, this railroad thing is a great idea. Let's find out the best places to put them, and get that land because it's pretty worthless now, but won't be soon" are just being smart. It was a risk, because they had no guarantee it would pay off (for a number of reasons). So I can't see any real arguments that speculation is a less-valid form of income than any other.

--"A reasonable libertarian should not oppose things such as heavy unearned income taxes."

We certainly should. I am, however, assuming you parsed that sentence wrong, and actually mean "heavy taxes on unearned income". In which case the problem is your definition of "unearned", since no reasonable libertarian is going to support any involuntary tax, but at the same time would not support letting anyone keep illegally gained goods.

--"I also don't see why there is this deep-seeded aversion to state power in America."

Then you don't read enough history.

--"Why do republicans so fear any federal government spending?"

You're kidding, right? I recommend you take a look at the budgets put forward by Republicans. They have absolutely no problem with government spending, they just don't agree with Democrats on what they should be spending it.

--"We elected them, and we should have no problem with them doing things in the best interest of the country."

Er... I'd call you naive, but I'm start to suspect a troll.

--"and realize the consequences of failing to put environmental controls in."

I've always thought the rabid environmentalists should stop and consider the consequences of actually putting in the controls they ask for...
I have no problem with holding a company accountable for actual damage they do through pollution or whatever, I just disagree with mainstream (which is really extremist) environmentalism. The vast majority of their arguments are not supported by any actual science.

Wraith
"A high-ranking IRS official told me recently that if the Amerian people ever knew that ninety percent of what the IRS does is pure bluff, the entire system would collapse."
- Senator Henry Bellmon

[Hoek]

I know history, and I understand being skeptical of government, but it makes no sense to say things like "the people know how to use their money better" (that's what Bush said) when most taxes collected go to things that people can not provide for themselves (schools, roads, armies, police forces). Beyond that, this argument that since the rich pay the most taxes, they should get the biggest cut is silly too. It completely ignores the ability to pay. Rich people pay more taxes because they can pay more; they can afford it.

In terms of environmentalism, what exactly do you consider "main stream" environmentalism? I have lots of problems with a certain section of the environmentalist movement who focus on the wrong things. They complain loudest about animal rights, nuclear reactors, and the like, which end up often working against scientifically backed environmental policies. I consider myself a "mainstream" environmentalist in that I see our priorities as global climate change, pollution and energy, and protecting and reclaiming wildlands. These are the most important problems we face with the environment, and should be our priorities. Some environmentalists ***** about Norway killing whales, when the actual environmental impact is very minimal. I categorize the two groups as sentimentalists and realists. Sentimentalists are far more emotionally attached to the issues and have serious moral qualms with killing animals and stuff like that. Realists are more concerned with the practical impacts and with practical solutions. This is best illustrated by the dam-breaking controversy: realist environmentalists do not support breaking the hydroelectric dams in order to save some fish, while sentimentalists are so attatched to the fishes that they fail to see the true consequences of what they propose. People like me are concerned with, for instance, the fact that acid rain causes billions of dollars a year in damages. We are concerned with big-ass SUVs rolling around the suburbs, causing kids to have asthma. The way I see it, either you understand what we're facing in terms of the environment or you are burying your head in the sand. Sustainable development is the only long-term strategy that will ever be able to work.

[Wraith]

--"but it makes no sense to say things like "the people know how to use their money better""

The real point is contained in that statement. ie. "it's their money". Whether or not they spend it well is irrelevant (although I think history shows they spend it better than government will), the point is it's their money to spend.

Schools, by the way, are one of the main areas that desperately need privitization. This is one of the worst screwups of US governments, and we really need to get them out of the way so things can be fixed.

--"Beyond that, this argument that since the rich pay the most taxes, they should get the biggest cut is silly too."

It is hardly silly when you realize that what the Democrats consider a tax cut is actually using the IRS as a welfare office. It is entirely possible right now to get a "tax refund" without actually having paid any income tax. Increasing this amount is, by no definition other than a Democrats, a "tax cut".
If you want wealth redistribution, say so flat out. But robbing the minority of top wage earners to buy the votes of the rest of the country is a big no-no in my book.

--"In terms of environmentalism, what exactly do you consider "main stream" environmentalism?"

A lot of what you describe as supporting, it seems. Starting with this whole "global warming" charade. The wildlands bit is rather silly, too, and I very unhappy about the Federal government owning the majority of land in the western states. As for "sustainable developement" I've far too often seen that label put on "no developement whatsoever" plans to accept it.
Edit: I should add that the whole "sustainable developement" argument is based on a misunderstanding of capitalism. The whole point of capitalism is making the best use of scarce resources. As things get used up, their price goes up, encouraging the finding of alternate solutions. Pure capitalism is sustainable development.

This is only partially related to the topic, but I just have to quote Schlock mercenary.

Note: For those of you wondering why Earth's orbital defense net would be useful against ground targets, here is a quick exercise in semantics: 'Orbital defense net' COULD mean "the defense net that sits in orbit." It could ALSO mean "The net that defends Earth's orbit from things on the ground." See how easy that was?
For more semantic fun, practice this with common terms like "Food and Drug Administration" or "Microsoft Office" (and then ask yourself who you want administering food and drugs to you, and who REALLY owns your business.)

Wraith
"75 to 90 percent of American Trial Lawyers are incompetent, dishonest, or both."
-- Chief Justice Warren Burger

[Roland]

Wraith:

"The whole idea of the corporation is inherently flawed I think." - "Many libertarians, including myself, agree."

What so you mean there ? What is this "idea", why is it flawed ?

"75 to 90 percent of American Trial Lawyers are incompetent, dishonest, or both."

What an optimist.

[Sikander]

Socialist Semantics

A lot of confusion centers around the use of the words Socialist and Socialism. AFAIK there are three basic definitions.

1) A late 19th century to the present political philosophy which argues for the government to use tax revenues to establish a floor level of various benefits to the population.

2) Marxist politico-economic philosophy, which differs mainly in that it has the state (aka the proletariate) directly control the economy rather than just drawing taxes from it.

3) A political party whose original ideals were as #1 above.

A lot of confusion comes about whenever people try to use the term Capitalism as an interchangeable idea with Socialism or Communism. Socialism in this instance refers to a theory of government, or a party within the government. Capitalism is really no more than a series of observations about economic behavior, and a belief about the best ways to accomodate that behavior in order to produce wealth. It says very little about government, and is not a philosphy of government, but one of non-governmental actors.

[Berzerker]

Hoek -

Well, Libertarians, here's your chance to defend Enron

Why would we do that?

I am waiting to see somebody defend Enron, and further more, the nature of our economic system that it seems Enron did nothing technically illegal.

I suggest you ask Democrats and Republicans, they run this system.

This is what happens when you give a corporation more rights than you or I.

"We" didn't give corporations "rights".

Defend the fact that Enron was paid 250 million dollars last year in taxes, which came out of your and my pockets.

Why? We oppose corporate welfare.

Defend your "laissez-faire" principles in the face of one of the worst cases of corporate greed wreaked havoc on thousands of lives.

No need, we don't have a laissez-faire system.

I really want you to come to terms with what you all have been preaching and defend yourselves.

We've been preaching legalized theft and fraud?

Laissez-faire libertarians seem to think that the government has no role in the economy, other than printing currency, guarunteeing contracts, and protecting private property.

And this "guaranteeing contracts" and "protecting private property" includes allowing fraud?

They would not in a million years consider that possibly the government should do something to prevent more abuse by corporations along these lines.

Since you've already made your judgement about what we believe, why ask us?

I am familiar with Libertarianism

Oh really? And this "familiar"ity led you to make numerous false assumptions and claims about us?

I toyed with being a libertarian myself for a while until I realized that its really just a bunch of guys who don't want to pay for taxes.

I have no problem with taxes, I just have a problem with using government to steal from others to pay for what I want and hope others will treat me with the same respect.

The general principles of libertarianism arise from Adam Smith's Wealth of Nations

Never read it, I just believe in freedom.

However, he wrote this in 1776, before the Information and Industrial revolutions.

Hmm...same year as the Declaration of Independence, is that also invalid now?

Both these developments have had significant effects on the economy, and modern economics is far more complex than Adam Smith's theories can absolutely applicable for.

But not too complex for a handful of people to run as opposed to millions of consumers?

In the modern world, the government does have a significant role to play, which indeed is to level the playing field.

"Level the playing field"? What does that mean?

Libertarians don't even support antitrust legislation to level the playing field.

Depends on how the "trust" was created. If government created the "trust" then I'm all for ripping it asunder.

An in terms of taxation, they support high tariffs as the only way government should fund its operations.

Not true either. Libertarians support several options for raising revenue that don't include legalized theft.

In terms of Enron, the government could have done a whole lot more to prevent this from happening.

Could have, would have, should have, but didn't. Quite an endorsement of big government...

American government is constitutionally mandated to look out for the general welfare of the populace, and in this instance, they did not.

Not true, the general welfare clause contains no power by itself (Madison - Federalist # 41). Why bother writing a Constitution if Congress had the power to "look out for the general welfare"?

Why is it that principles of democracy should not be extended to the economy?

They would be under a libertarian system, it's called voting with your dollars.

I know that Adam Smith supports certain roles for government, namely enterprises that are unsuitable for marketplace mechanics (things like road-building, education).

Marketplace mechanics preclude me from building a road or educating your child for a fee?

However, the idea that "let the cards fall where they may" can not be applied to modern economies.

Can you be specific? Your use of subjective and vague "slogans" doesn't leave much to address.

In our system, a company may bar employees from selling company stock while they cash their own options out.

Maybe in your system, not in a libertarian system unless the employees agree to such insanity when they hire on.

In our system, corporations don't end up contributing anything to society and act like leeches.

Hmm...didn't a corporation sell you your computer?

The whole idea of the corporation is inherently flawed I think.

I'm no expert on "corporations", but they seem to be associations of people and I have no problem with that. Furthermore, I lack the moral authority to hurt others for forming an association as long as they don't hurt others.

I believe in capitalism, but I support a "people's capitalism," where a "corporation" would be owned entirely by the employees so that the management wouldn't ass-rape them at the end of it.

And what if I own a corporation and don't want to sell it to my employees? Would you then use violence against me because someone else committed fraud?

The principle of letting everyone pursue their own economic goals without some kind of controls (such as worker ownership of corporations or government oversight of earnings reports) ends up making a few very big winners and many losers.

Forcing people to hand over their property to you to dispose of as you please is quite a "control".

That's enough for now, maybe later...

[Libertarian]

I am familiar with Libertarianism, and I toyed with being a libertarian myself for a while until I realized that its really just a bunch of guys who don't want to pay for taxes.

Uh huh. I toyed with being a brain surgeon until I realized that it's really just a bunch of guys who don't want to trust prayer.

[Hoek]

The corporation is essentially a legally recognized association that is created essentially to minimize liability to everyone involved in it. The idea is the benefits of investing without the responsibility.

I admit that I was not thoroughly aware of all the details of libertarianism, but the main idea being that the government has no place fiddling with the economy.

I have yet to hear what kind of revenue-raising y'all libertarians would support in place of taxes. Would you, for instance, support "environmental taxes" that require payment to the government if you own an SUV or leave the water running while you brush your teeth?

And "corporatism" is not what you described it as at all. It just means that there is official interest-group participation in decision-making. For instance, in formulating minimum wage laws, a union representative and a business representative would work with the chief executive, and when they came to an agreement, the agreement would be binding on them to follow. Germany has this and it works out pretty well.

This idea of "voting with your dollars" is BS too. That is the same mistake the Supreme Court made when it called money free speech in overturning campaign finance laws. The current finance system is extremely undemocratic and ends up creating a system of legalized bribery.

Environment: just keep telling yourself that it's not going to be a problem, but the truth is that these environmental problems will be real and will be a real threat to humanity. Did you realize that there are strong indications that in ten years, Europe will be in a sort of ice age? Global Warming is no joke, and regardless of the debate over its sources, there are things that we can do to try to avoid some of the damage.

The problem with capitalism is that it can not be applied to everything. HMO's, Airline security, and hyper-polluting companies are all clear examples of the limitations of the good capitalism can do for a society. Any time you privatize something (health care, education), immediately, you inject a profit motive into it. The idea that privatization makes everything better is erroneous. You can't expect good health care when those who provide it are primarily concerned with making money. You can't expect kids to be adequately educated if a school's motive is to profit. Where capitalism fails to do good for society, government must do it.

Basically, we have been corrupted to think that this notion of "what's good for the company is good for everyone" is true. Once we start realizing that a CEO will put his or her interests ahead of everyone else's interests, people will understand the havoc corporate America is wreaking on society.

[Vanguard]

It doesn't matter whether we have a laissez-faire system or not. Whether we do or we don't, Enron remains a failure of laissez-faire theory, which argues that ending government enforcement of leveling mechanisms will end poverty and want and will make things generally wonderful. Since libertarians believe in this theory, Hoek is perfectly right to ask libertarians why this failure doesn't invalidate their world view and their prescriptions for economic policy.

Why is Enron a failure of laissez-faire theory? Because allowing Enron (or any company) the freedom to choose whatever accounting scheme it likes is equivalent to allowing it to state whatever earnings, or other ledger entries it wants. This is a license for those hiding information to take money from those who believe the false information that is released. Decreased government supervision in this regard does not increase freedom and wealth, it decreases it, by decreasing information freedom and thus market efficiency.

Roland argues that, in a true laissez-faire economy, once the false aura of security cast by the SEC and accounting rules is dispelled, the market will automatically adjust to figure in the chance of fraud into stock price calculations.

But this is self-contradictory. If markets automatically adjust prices for information unreliability, then why didn't the market do so here? After all, Enron argues that it did nothing illegal, it just exploited loopholes and exceptions in the accounting rules. Surely the market must know what the rules are. How come they didn't figure out what Enron might or might not be doing, and continuously adjust its stock price for the chance that it might, in fact, not have any net assets?

And how would eliminating all rules of any kind possibly improve this situation? Information is probably easier to hide than it is to find out. All laissez-faire would do would be to eliminate most of the deterents to false accounting. Since there are plenty of incentives to lie (Vanguard's Law: Bad accounting tends to drive out good), letting the boys play would only result in chaos. Which is the fundamental problem with libertarianism generally.

[Hoek]

I have yet to see a decent libertarian solution to the airline security problem.

[Wraith]

--"What so you mean there ? What is this "idea", why is it flawed ?"

Well, it's more the current implementation, I suppose. Although if I'm remembering correctly, a corporation does require a government charter to exist, in which case it's pretty much outside the ideals of a free market in the first place.
However, the current limited-liability laws on corporations is disturbing to me. No one should be able to hide behind something like this to avoid responsibility of their actions.
As for the optomist... check the current tagline

--"I have yet to hear what kind of revenue-raising y'all libertarians would support in place of taxes."

Largely voluntary donations rather than taxes. Things like the contract insurance I mentioned, where you pay a small fee on contracts to be able to prosecute violations in civil (note: criminal prosecutions would happen with or without payment) court. Excises taxes aren't that offensive, since they can be fairly easily avoided if you want, but are further down the acceptable scale.
Interesting thing, if this file I'm reading is correct (and I haven't been able to find any errors in their references yet), the current US income tax is actually a voluntary tax for the majority of the people in the country, and the IRS and government are lying in most of their claims.
It's also interesting that they claim (one I haven't checked yet) that the income tax (on individuals) is not the main source of federal revenue. Keeping corporate income taxes on the "other sources" column probably bears this out. So getting rid of the income tax really wouldn't be that big a problem.

--"Would you, for instance, support "environmental taxes" that require payment to the government if you own an SUV or leave the water running while you brush your teeth?"

I would support environmental taxes, but not on those conditions. There would have to be a lot of restrictions, namely that they only be spent on cleaning up the problems caused. We'd also have to get down into definitions of pollutants (since CO2 is an essential trace gas; life requires it, so don't call it pollution). It'd also probably be easier to tax gasoline (as we do now) rather than the vehicle, since if it's just sitting quitely on blocks it isn't a major pollution problem.

--"Germany has this and it works out pretty well."

What you described sounds more like an arbitration system than any over-all economic system.

--"The current finance system is extremely undemocratic and ends up creating a system of legalized bribery."

The current finance system is messed up. Gropus (such as PACs and unions) should not be allowed to make campaign contributions at all. Individuals should have no restrictions on their contributions. That's the only way compatible with the first amendment.

--"Did you realize that there are strong indications that in ten years, Europe will be in a sort of ice age?"

Okay, you're talking 70s "the ice age is coming", not current "we're all gonna melt".
You have to understand that the environment is dynamic, not static, and is also cyclical. We're still on our way out of the little ice age. Eventually we will be heading back into an ice age. This is how nature functioned long before humans came around.
And yes, global warming is a big joke. It is a massive hoax, backed up only by faulty computer models and no empirical evidence whatsoever. The people making the most noise about global warming fail to consider the single most important greenhouse gas -- water vapor -- in their calculations. This is a political issue, not a scientific one.

--"HMO's, Airline security, and hyper-polluting companies are all clear examples of the limitations of the good capitalism can do for a society."

AAARRRGGGHHH! (We need a screaming smiley...)
Why do people always bring up HMOs as failures of capitalism? HMOs are an artifact of government interference in the economy! The HMO act of 1974, to be specific. The government made it effectively impossible for any other kind of health-insurance company to survive. This is a government problem, not a free-market one.
Airline security is another government failure, something controlled by the FAA, who routinely rigged tests to make it easy for screeners to pass. Keep in mind that it is the government that owns nearly every airfield in this country. The only real solution to this is to allow the market to set the level of security. There would be the bargain-basement no-security airlines for the penny-pinchers, and the high-dollar high-security airlines for the patient worry-warts. The most I could see government doing here is to regulate cockpit access and step up the air marshall program.
Hyper-polluting companies are another government failure. Any company that is actually polluting is causing damage to other people's property. In a libertarian court system, this would be a major no-no (since private property rights are a major part of it). It is not the market's fault that the government is not protecting private property rights.

--"You can't expect good health care when those who provide it are primarily concerned with making money."

We had better healt care when that was the case. There's a simple reason for this. They didn't get the money unless they provided good health care...

--" You can't expect kids to be adequately educated if a school's motive is to profit."

Then why do private schools (and even religious schools) totally out-class public ones today? Milton Friedman claims (and I've yet to see anyone dispute this other than on a "nuh-uh!" level) that the literacy rate was higher before public schooling. There is no way you can possibly look at the results of public schooling over the last three decades and claim it's a good thing, much less over the entire history of schooling in this country.

--"Enron remains a failure of laissez-faire theory"

Enron committed fraud. It would be heavily punished under a true free-market system. Far more heavily than the execs are going to be under this system.
Stop blaming this on the free market.

--"If markets automatically adjust prices for information unreliability, then why didn't the market do so here?"

Because of government promises that it was doing oversight. The same reason the S&Ls over-extended rather ludicrously on the promise of government backing for their actions regardless of outcome. When you have government promising to clean up after the failures you're going to get a lot of them.

--"And how would eliminating all rules of any kind possibly improve this situation?"

That would be anarchy, not libertarianism, which tends to call for minarchy.

Wraith
"99 percent of lawyers give the rest a bad name."
-- Steven Wright

[chequita guevara]

Originally posted by Wraith
--" The fact is that socialism as preached by Marx and Engels has been thoroughly discredited"

Yes. There are several socialiasts on this board that have major disagreements with Marxism.

Not all of us do.

[Hoek]

No, you libertarians still don't get it. Even with huge fines against the airport security company, it still didn't get it right. There are certain jobs that belong in the government's hands, airline security being one of them. The idea of "voting with your dollars" doesn't work with airline security...especially considering that 70 percent of Americans wanted the security officers federalized. There are certain things the government must do (monopoly on the legitimate use of force) to protect us. Protection from death, protection from environmental ruin, protection from extreme poverty, protection from poor health coverage. The essential role of government is to protect, and there are definitely times when the people need to be protected from market forces.

In terms of Europe becoming frozen in 10 years, this is not "the coming iceage" idea...it will be a product of global warming. Dramatic climactic shifts have happened in the past (the last ice age reversed in the course of about 25 years), and there is considerable evidence pointing to a dramatic cooling in the next ten years. This will result from the gulf currents stopping. The currents operate like this: Cold Water from the north atlantic moves down the U.S. coast to the caribbean, where the water is warmed. It then goes up past africa and vaporizes around europe, which keeps the continent warm. The water that remains has high salinity levels, which causes it to drop to the bottom of the ocean, below the cooler North atlantic waters. This causes the convections that result in the gulf currents. If the currents would stop, as a result of excess fresh water (from ice melting)diluting the high salinity water coming away from europe, that would mean that the warm waters from the Gulf would no longer move towards Europe, and the continent would experience dramatic cooling in a short period of time. I will provide my bibliographic source as soon as I get off work.