Bolivia

[Master Zen]

Originally posted by Oerdin
We will happily take any hot Mexican women who would like to come north but I'm afraid the ugly ones must stay in Mexico.

To your dismay, the reverse is usually what actually happens.

[Master Zen]

Originally posted by VetLegion
I am interested in economic history, so I am familiar with Chile's troubled experiments under Pinochet, Argentina's crises and so on.

However, I still think hard core capitalism is the way to go.

What the Latin American countries need is responsible governments who won't go into debt to cover paychecks of overgrown bureaucracy (Argentina), nationalize industries (Chile, Bolivia) print money to cover expenses (practically everyone at some period).

Capitalism needs proper institutions and proper governance to work. Socialism encourages immoral behaviour, corruption, nepotism, free riding etc. It can only work in ethnically and culturally homogenous countries like Sweden, where 90% of population look the same, think the same, and are the same

In hetereogenous countries, the only way to get rid of corruption and power abuse is to remove the control of the economy from the state and give it to the market.

That's a pretty mediocre argument.

Free markets have in most countries caused the same degree of nepotism and corruption as any socialist country. In fact, laissez-faire capitalism is prone to probably more perverse twisting of its intentions than socialism in a country which lacks the proper institutions and government for the simple reason that both government AND private enterprise collude in corruption. There is nothing "free-market" about practically any Latin American country and if you actually knew about what actually goes on in them you'd realize it.

Ultimately it is in fact, institutions and good governance which separate the successful countries from the failures. But these institutions make ANY economic system become a success. Neoliberal Chile is a success because its institutions work. Social-democratic Sweden is a success because its institutions work. Should Chile turn social-democratic and Sweden turn neoliberal, I'll be willing to be they'll still work.

Your argument fails because you assume that "hard-core capitalism" is a panacea and that it works even when you lack institutions and good governance. I can tell you for a fact that such is not the case in Mexico, nor is it in most Latin countries with conservative governments. Neither is it in Brazil which is hardly the success story that Lord of the Mark claims because Brazil is just as corrupt as we are, and have practically the same degree of social inequality, legal uncertainty, etc.

In short: the market is not god as you claim. It needs to be regulated from the people that can take advantage of it and use to their own private benefit rather than social benefit.

[pchang]

Originally posted by Master Zen
To your dismay, the reverse is usually what actually happens.

You kept Frida Kahlo, we got Salma Hayek

[Dinner]

Originally posted by Master Zen


To your dismay, the reverse is usually what actually happens.

How true.

[Master Zen]

Originally posted by pchang
You kept Frida Kahlo, we got Salma Hayek

You need to go to a trendy Mexican nightclub one day...

[VetLegion]

Originally posted by Master Zen

That's a pretty mediocre argument.

Free markets have in most countries caused the same degree of nepotism and corruption as any socialist country.

Nonsense. Free markets don't cause corruption, unlike socialism, which actually encourages all sorts of immoral behaviour.

Ultimately it is in fact, institutions and good governance which separate the successful countries from the failures. But these institutions make ANY economic system become a success.

You seem to speak as if institutions are buildings or organizational processes. Institutions are people, who are high quality stuff in Sweden and not so good in Mexico. I hope you're not an adherent of the politically correct but meaningless "we're all the same" mantra? Can we agree that Mexican society isn't high quality and isn't going to get better very soon?

In that case, how do you propose to solve the corruption problem?

The obvious solution is - reduce the number of places and situations where corruption can occur. This means government getting out of business, reducing the number of permits, officials, bureaucracy, laws, and so on. If share of govt. spending in GDP goes down from 50% (about European average) to 30% (Japan), that means 20% of the products has been rescued from passing through possibly corrupt officials.

In short: the market is not god as you claim. It needs to be regulated from the people that can take advantage of it and use to their own private benefit rather than social benefit.

Market needs to be regulated if it can't do so itself. Such cases aren't that common. Take Bolivia and the famous water privatization problem. Some company (Bechtel?) acquired a monopoly and tripled the rates. Market failure? Hell no! Government failure.

[Master Zen]

Originally posted by VetLegion
Nonsense. Free markets don't cause corruption, unlike socialism, which actually encourages all sorts of immoral behaviour.

What are you quoting, a first semester introduction to economics textbook?

Wake up and smell the real life VetLegion.

You seem to speak as if institutions are buildings or organizational processes. Institutions are people, who are high quality stuff in Sweden and not so good in Mexico. I hope you're not an adherent of the politically correct but meaningless "we're all the same" mantra? Can we agree that Mexican society isn't high quality and isn't going to get better very soon?

I'm also not an adherent to the racist or culturalist BS which you seem to be implying. In any case, institutional reform is at the heart of any country's road to progress for the simple reason that well crafted institutions go beyond men. That's the whole point of them existing. There's no such thing as better or worse socities, at least in the sense that society itself is to blame for the lack of rule of law.

The obvious solution is - reduce the number of places and situations where corruption can occur. This means government getting out of business, reducing the number of permits, officials, bureaucracy, laws, and so on. If share of govt. spending in GDP goes down from 50% (about European average) to 30% (Japan), that means 20% of the products has been rescued from passing through possibly corrupt officials.

Business doesn't need government to be corrupt. If anything a "free market" in which government doesn't intervene is prone to these businesses turning just as corrupt as the government that no longer operates them. You are also confusing means and ends. Free markets are not ends, they are means to the true end which is social benefit. A perfectly laissez-faire market in which every industry is competitive and prices are as low as possible is a pipe dream. It only exists in the first-semester introduction to economic textbooks which you seem to be quoting.

Again, you are simply reciting theory (and quite generic theory) and not offering empirical evidence to back it up. I suggest you read up the history of free market Britain in the late 19th century and compare it to the history of welfare and centralized Germany during the same period and see how their economies ended up comparing.

I repeat what I said in the last post: you think free markets are a panacea. That was the cornerstone of the Washington Consensus which has by now been all but debunked precisely because it failed to include institutional reform and social provisions among its postulates. Even John Williamson admits it.

Market needs to be regulated if it can't do so itself. Such cases aren't that common. Take Bolivia and the famous water privatization problem. Some company (Bechtel?) acquired a monopoly and tripled the rates. Market failure? Hell no! Government failure.

"Aren't that common"???

Man, seriously, look at practically every developed country in the world and there's no such thing as a true laissez-faire economy. The most successful economies in the last 10-20 years have been those which have large welfare-state oriented-governments. That does not impede capitalism from being successful and in fact leads to enviable levels of competitiveness, growth and social stability.

[Heresson]

Originally posted by Gangerolf
but, I love poland. even been there like 4 times.

Where?

Do You have any friends in Poznan, by a chance?

[LordShiva]

I think he's been to Malbork.

[VetLegion]

Originally posted by Master Zen

What are you quoting, a first semester introduction to economics textbook?

Wake up and smell the real life VetLegion.

I was born and raised in Yugoslavia. It wasn't just a socialist country, it was probably the best functioning socialist country ever. I also lived through its violent breakup and painful transition of Croatia into a market economy. My claim that socialism is deeply immoral is based on that expirience.

I'm also not an adherent to the racist or culturalist BS which you seem to be implying. In any case, institutional reform is at the heart of any country's road to progress for the simple reason that well crafted institutions go beyond men. That's the whole point of them existing. There's no such thing as better or worse socities, at least in the sense that society itself is to blame for the lack of rule of law.

Who, if not people, is to blame for lack of rule of law? Bad institutions? Bad laws? Nonsense. Social capital, mutual trust, social contract - there are many names for this, but nobody doubts that it's a property of the population. There is a serious scarcity of the stuff in Latin America.

I mean, if institutions weren't people, then you could copy/paste US Constitution, Supreme Court, FED and all other institutions into Mexico and it work like US. I don't think so.

Business doesn't need government to be corrupt.

Business, by definition, can't be corrupt. If you employ your cousin instead of the best man for the job, market will sort you out. If you conspire to raise prices, market will also sort you out in most cases. It won't always, but in the majority of cases, it will.

If anything a "free market" in which government doesn't intervene is prone to these businesses turning just as corrupt as the government that no longer operates them.

If you knew your business history, you'd know that most abuses of the "free market" have been a result of (usually big) business seeking and getting government protection. From bribing judges to getting favourable laws passed. This is not a failure of markets, but of governments.

You are also confusing means and ends. Free markets are not ends, they are means to the true end which is social benefit.

That is what I am saying the whole time, pay attention

Latin America is economically suffering. It's governments are more or less crap. Reduce them and let the markets work.

(Of course that courts and such need to remain, I'm not an anarcho-capitalist.)

A perfectly laissez-faire market in which every industry is competitive and prices are as low as possible is a pipe dream.

That doesn't justify socialism.

Again, you are simply reciting theory (and quite generic theory) and not offering empirical evidence to back it up.

China. You are so PWNED mister.

I suggest you read up the history of free market Britain in the late 19th century and compare it to the history of welfare and centralized Germany during the same period and see how their economies ended up comparing.

I don't have to read up. What do you want to know?

I repeat what I said in the last post: you think free markets are a panacea.

No, they're not a panacea. But because they can't be corrupted in the way government can, they are a better solution wherever possible.

Man, seriously, look at practically every developed country in the world and there's no such thing as a true laissez-faire economy. The most successful economies in the last 10-20 years have been those which have large welfare-state oriented-governments.

Oh yeah? Hong Kong, Singapore, Taiwan, South Korea, China. Estonia? Ireland? Pick one please.

[LordShiva]

China is hardly a laissez-faire economy. But I agree with you otherwise.

[VetLegion]

China's rapid growth coincides with market reforms. It's in no way near being laissez-faire, of course.

[lord of the mark]

MZ, Im confused, when i cited Lula in Brazil as a model, you dismissed what he is doing, and said socialism does as well as capitalism. Most of the successful examples you give, from Sweden, Germany etc were mixed economies, with the major internationally competive industries in private hands, a market system, private property, etc. But with an extensive welfare state. Are we discussing the impact of the welfare state? Saying a welfare state can add to capitalism is something rather different than saying capitalism isnt the best approach to development. Which is what I was trying to get at by citing Lula. Now sure, Brazil doesnt have the gini coefficient of Sweden - aside from a very short experience of a welfare state, its a very different society, demographically, geographically, etc. Other than the fact that right likes him, cause hes more moderate than expected, and respects the same third way "neoliberal" approach that Sweden pretty much does, Im not sure what your beef with him is.

We're talking about Bolivia and Morales. My strong impression is that Morales is NOT focusing on capitalism with a welfare state. He seems more hostile to capitalism and trade in natural resources as a whole. Certainly Sweden when it was industrializing exported natural resources, and still does.

[Master Zen]

Originally posted by VetLegion
I was born and raised in Yugoslavia. It wasn't just a socialist country, it was probably the best functioning socialist country ever. I also lived through its violent breakup and painful transition of Croatia into a market economy. My claim that socialism is deeply immoral is based on that expirience.

You are talking about communism, not socialism. There's a big difference. Socialism is present in various degrees in capitalist countries and the examples I've been pointing out are clearly of the social-democractic capitalist type.

Who, if not people, is to blame for lack of rule of law? Bad institutions? Bad laws? Nonsense. Social capital, mutual trust, social contract - there are many names for this, but nobody doubts that it's a property of the population. There is a serious scarcity of the stuff in Latin America.

Then I wonder why the crime rate among Mexicans in the US is nowhere near as big as in Mexico...

I have never bought the social capital argument. Sure, it definitely exists, but not to the degree its adherents believe it to exist. I've lived in too many countries to know for a fact that people change the moment they step into a foreign border. Social capital theory does not explain that.

I mean, if institutions weren't people, then you could copy/paste US Constitution, Supreme Court, FED and all other institutions into Mexico and it work like US. I don't think so.

Institutions are based on history and culture among a gazillion other things. You can't copy them because no two countries are the same. You don't think of the insititution first, you think about the purpose that institution is to have, then you design it in accordance to the country's peculiarities.

In any case, you already shot down your previous argument. If you can't copy institutions (which are made of people as you claim), why are you so confident that you can copy an economic model... which is also built around people and expect it to work just because it worked elsewhere?

Business, by definition, can't be corrupt. If you employ your cousin instead of the best man for the job, market will sort you out. If you conspire to raise prices, market will also sort you out in most cases. It won't always, but in the majority of cases, it will.

I'm starting to get intrigued. What is the introduction to economics textbook which you are quoting? Who knows, might have been the same one I used 8 years ago when I started my major.

If you knew your business history, you'd know that most abuses of the "free market" have been a result of (usually big) business seeking and getting government protection. From bribing judges to getting favourable laws passed. This is not a failure of markets, but of governments.

And if you knew your business history you'd know that the incientive to generate monopoly profits is at the core of every industry, perfect competition is desirable to consumers but completely undesirable to producers. The tendency therfore is for markets to generate monopoly profits insofar as legal regulation allows it. Ultimately there is no such thing as a perfectly competitive industry and the close you can approximate to that point never lasts.

Latin America is economically suffering. It's governments are more or less crap. Reduce them and let the markets work.

We HAVE reduced them, we have an even lower percentage of government spending than Japan compared to your previous post. Goes to show how much you know about Latin American economis (not much). Heck, Mexico has one of the lowest government spending rates in the region... pretty much throws your argument into the dustbin.

China. You are so PWNED mister.

China... laissez-faire????

China has one of the most centralized economies in the world.

PWNED.

No, they're not a panacea. But because they can't be corrupted in the way government can, they are a better solution wherever possible.

Again you are quoting neo-classical economics straight from a textbook. Empirical reality is otherwise.

Oh yeah? Hong Kong, Singapore, Taiwan, South Korea, China. Estonia? Ireland? Pick one please.

Already mentioned China. Hong Kong and Singapor are city-states based on trade, they have no other hope of creating markets than opening themselves to trade. Taiwan and South Korea were actually VERY protectionist in certain industries after WW2. They would protect vital industries for a time, then open them once they were competitive. You should read up on their economic history too.

As for Estonia and Ireland, again, small internal markets force the need for them to open them up. I dare you to give me an example of one single large country (i.e. Mexico-sized) which has not used protectionist or centralized measures in the course of their development.

-MZ

[Master Zen]

Originally posted by lord of the mark
MZ, Im confused, when i cited Lula in Brazil as a model, you dismissed what he is doing, and said socialism does as well as capitalism. Most of the successful examples you give, from Sweden, Germany etc were mixed economies, with the major internationally competive industries in private hands, a market system, private property, etc. But with an extensive welfare state. Are we discussing the impact of the welfare state? Saying a welfare state can add to capitalism is something rather different than saying capitalism isnt the best approach to development. Which is what I was trying to get at by citing Lula. Now sure, Brazil doesnt have the gini coefficient of Sweden - aside from a very short experience of a welfare state, its a very different society, demographically, geographically, etc. Other than the fact that right likes him, cause hes more moderate than expected, and respects the same third way "neoliberal" approach that Sweden pretty much does, Im not sure what your beef with him is.

We're talking about Bolivia and Morales. My strong impression is that Morales is NOT focusing on capitalism with a welfare state. He seems more hostile to capitalism and trade in natural resources as a whole. Certainly Sweden when it was industrializing exported natural resources, and still does.

I have no beef with Lula, in fact I would very much wish we had someone like him here. I simply disagree with your assessment that Brazil is arguably the most successful Latin American nation because I really don't see it that way. The most successful countries in the region right now are Chile and Costa Rica... neoliberal economies but which actually do have respectable institutional frameworks. Just look at how they rank in most corruption rankings and Chile actually beats many European countries in this regard...

.. which ultimately reinforces my point that it's not the economic model that matters, it's the institutional framework in a country which does.