The Merchant Exchange?

[CEO Aaron]

Sammy: Paragraphs. I'm begging you.

So I really don't see how a free-market economy can persist for more than a couple hundred years.

A Free Market, being defined as unrestricted trade without excessive government oversight, has operated more or less intact since the dawn of civilization. The first time our earliest forbears traded barley to a neighboring tribe for the pelts of animals was the dawn of what we now call the Free Market.

Many of the more uninformed ranks of the collectivist/socialist counterculter frequently confuse the effects of industrialization with the effects of a free market. Free trade doesn't create pollution or waste, nor does socialism. They are, quite frankly, competely unrelated.

Under sway of the Soviet Union, eastern europe has become horribly polluted, far more, considering their GDP, than any western nation. Likewise, China is now a tremendous polluter, having a new, booming industrial economy and a large population.

If we do wind up drowning in our own filth (We won't, more on that later...), it will be because people concerned with the effects of industrialization on out environment are too distracted with outmoded economic models and the distribution of wealth to take effective action to control pollution. To be sure, mass industry creates a lot of waste, but only because we BUY the products that create that waste. Cars, cigarettes, styrofoam packaging, crappy plastic trinkets, you name it, we buy it.

You can't put the genie back in the bottle, so an industrialized market is here to stay, but that doesn't mean that the current state of affairs will go on indefinitely. Pollution reduces the amount of arable land, which reduces food availability. The availability of fossil fuels is finite, and as the supply runs out, the food supply generated by any particular area of arable land is also adversely affected. Fertilizers are made of ammonia (made form natural gas) and tractors are run on petroleum. Trucks are used to transport food from where it's grown to where it's sold. So... too much pollution, food prices increase and people starve. Population drops, pollution drops, and balance is restored. In all likelihood, starvation is accompanied by war and war's second cousin, disease, and so we'll probably experience even more dropping population than we need.

[Enigma_Nova]

If Pollution were a local problem, those who are less conscientious about their future would outbreed those who are not.

Once the next population drop happens, it's the conscientious people who will be outbred.
Likewise, as countries compete, it will be the ones with better traits that cope better with the current situation.

All in all, we're headed for a more educated and conscientious people - and once that happens, we don't need to buy all those crappy plastic trinkets.
Problem solved!

Eugenics in action... it's pretty damn good.

[Santiago_Claus]

It's no accident Mad Max was from Australia.

The U.S. biotech industry has developed industrial-scale processes for converting cellulose to ethanol, but to convert a quantity equivalent to a gallon of gasoline costs around 50 cents more.

50 cents ... that's the difference between OPEC's oil and Iowa corn farmers' "White Lightning". Oil's days in the United States are numbered.

Maybe there's a "global killer" shortage looming for the human race, but it certainly isn't going to be oil ... not in the U.S., anyway. Heck, we've been moonshining since back when "oil" was something that came out of whales and "coal tar" was something that was bad for the fish ... (it's still bad for the fish, btw)

[smacksim]

Originally posted by sammy1339
Someone eventually will have to put strict impositions on the growth of industry, which means moving away from a free market economy. (...) Restrictions on the kind or quantity of ecological damage that industries can cause just won't do it.

Sammy1339, I generally agree with you. Especially in feeling. We need to work on our arguments, however. Many would say that we already have strict impositions on the growth of industry, and the argument is sunk. I agree that free market is at odds with long term environmental protection and if it's possible to say, 'environmental growth'. However, how can we keep the best of free market and take a longer view? Roadrash and others have rightly pointed the finger at Planned economies as being consistently mishandled and even more guilty of short term resource abuse. Similarily, Socialism and all it's relatives have demonstrated that they are delicate idealisms, subject to many of the pitfalls of Planned and Free Market, without truly counterbalancing benfits, other than more equitable and human sharing of wealth.

On the other hand, you make an excellent point with:

Already we have oxymorons like "clean coal," and people really believe that the technology exists to take coal smoke and make it eco-friendly. It will take a disaster before politicians really start to do anything about it, but the destruction of the environment can't be stopped just by placing restrictions on how much of each chemical you can make per factory, because there is alot of political nonsense involved in those restrictions so that mostly they just end up being for show.

This is so true. Environmental and ecological policy (in the U.S.) boils down to this, unfortunately: 'Gee, how can we ravage the earth more efficiently so that we can really really be quite thorough?'. This is not the government's fault. They are merely reflecting the will of the people.

'Clean cars' enable more people to drive longer, for cheaper, thus accellerating oil/coal use. 'Recycling' enables an increase in production/canning. Timber management allows forests to be savaged several times, rather than just once. Etc.. There are a few cases where perfectly good resources get set aside, but these are 'cute fuzzy endangered animal' cases, and are miniscule in terms of land use overall.

To address a completely different question, the ideal economic system is the one where the robots do all the work and everything is free. And so long as we are talking centuries ahead that is a perfectly viable solution.

I think your vision of the robotic future isn't all that unrealistic, but would things then really be free, or would people, in their natural quest for power, still hoard resources and deny them to others? As many have said, it would be quite possible for the world to feed and house all the people right now, but we don't.

-Smack

-And thanks for the growth lesson Impaler. This is how I'd imagine economic growth could/does occur, but it's nice to confirm. -S

[smacksim]

Originally posted by RoadRash
Anyone remember the phrase "population explosion"? Several decades ago people were saying that the world would be standing-room-only by the year 2000. Whoops.

Well, the famous paper indicated 2021 as 1 square meter per person. The point of the paper was: Obviously this cannot be true, so what will happen?

Nonetheless, the media took it to mean: 'Our population will be this high, or so say the scientists.' Typical. Non-critical thinkers either gasped in fear, or called the scientists crazy. Very few studied the model or projected either it's implications or the manner in which we would divert from the model. As far as policy is concerned, we let nature and culture take it's course, with the exception of China. It was just too huge to take action in a democracy.

As it turns out, culture is slowing down the rate of growth, but it's still growth, and it's still rapid. We are consistenly pushing our carrying capacity upwards by growing more food, using more resources, etc.. There IS NO POINT to doing this, other than that it's convenient, and it's perfectly natural. Considering that there is no world government to enforce population controls, what would we do anyways?

In my opinion, we are at standing room only, as far as our population pressure is concerned.

Why grow anymore at all? Yeah, it would be crazy to make some world restriction on children right this minute. Governments would go bannanas. There would be revolution. But this is a very good short term goal for all environmentalists, and all humanists. Or we could let nature take it's course. This is the argument I hear from the economists. The economists in the crowd defend arguments about the environment with things like:

Originally posted by Ceo Aaron You can't put the genie back in the bottle, so an industrialized market is here to stay, but that doesn't mean that the current state of affairs will go on indefinitely. Pollution reduces the amount of arable land, which reduces food availability. The availability of fossil fuels is finite, and as the supply runs out, the food supply generated by any particular area of arable land is also adversely affected. Fertilizers are made of ammonia (made form natural gas) and tractors are run on petroleum. Trucks are used to transport food from where it's grown to where it's sold. So... too much pollution, food prices increase and people starve. Population drops, pollution drops, and balance is restored. In all likelihood, starvation is accompanied by war and war's second cousin, disease, and so we'll probably experience even more dropping population than we need.

Yes, populations fluctuate. Yes we are oil dependent. No, war and starvation aren't as linked as are starvation and 'modernization' of nations. The agri-boom in Africa, for instance. Dense populations promote disease, rather than starvation.

But, as fun as it is for markets to go up and down, it's not so fun on a population of organisms. Considering that we've already left the 'natural' model of population rise and fall and have parted ways with the localized process of natural selection to some degree, why should we then adhere to allowing our own population pressure to cause starvation or resource exhaustion?

What I hear is that it's just too hard for people to imagine taking another step, in a positive way, that wouldn't curtail our freedoms in a devastating way. I disagree.

*******************************************

Preface: I say that it doesn't matter about grim predictions about limited resources. Either we will, or we will not, be able to keep expanding around these barriers. History demonstrates that we have made it past many resource hurdles in surprising ways. So there is hope that we will always continue to do so. There is no point to continuing this trend if the only point is to burst our population and/or exploit all resources the their fullest extent...

Why do grim projections about limited resources always end in the same punch line - "we need more control"? Ask who is gaining that control.

This is a very good point. It speaks volumes to the environmental movement, and it's image as being a bunch of disenfranchised hippies who just want some power of their own. It speaks to the fact that power corrupts, and that environmentalists, while occasionally making great proscriptions for happiness, do often fail to see them realistically.

It speaks to human nature. It speaks to politics and economics. Well, it's a damned good point.

Here's what I say. I say we would do ourselves a favor if were to create a system with more control. Population control, resource control, environmental control. That these issues have little to do with a free market system is debatable. All I know is that it will take some sort of collective effort if we are to properly address these issues. And that means government or culture. We work to change both. Perhaps it doesn't even mean more control, but merely a different attitude that we can now afford, thanks to the wealth our free market has provided.

-Smack

[Enigma_Nova]

Change of attitude will only happen after the fact, and if you try to apply a system to an incompatible attitude then it will fall flat on its face.

[smacksim]

Originally posted by Enigma_Nova
Change of attitude will only happen after the fact, and if you try to apply a system to an incompatible attitude then it will fall flat on its face.

Another paradox. Change only happens when we're ready, but we're not ready until things change.

-S

[sammy1339]

Originally posted by CEO Aaron
Sammy: Paragraphs. I'm begging you.



A Free Market, being defined as unrestricted trade without excessive government oversight, has operated more or less intact since the dawn of civilization. The first time our earliest forbears traded barley to a neighboring tribe for the pelts of animals was the dawn of what we now call the Free Market.

Many of the more uninformed ranks of the collectivist/socialist counterculter frequently confuse the effects of industrialization with the effects of a free market. Free trade doesn't create pollution or waste, nor does socialism. They are, quite frankly, competely unrelated.

... The availability of fossil fuels is finite, and as the supply runs out, the food supply generated by any particular area of arable land is also adversely affected. Fertilizers are made of ammonia (made form natural gas) and tractors are run on petroleum. Trucks are used to transport food from where it's grown to where it's sold. So... too much pollution, food prices increase and people starve. Population drops, pollution drops, and balance is restored. In all likelihood, starvation is accompanied by war and war's second cousin, disease, and so we'll probably experience even more dropping population than we need.

I can't say I agree with your assertion that free-market economies have been predominant throughout history. Do you recall a thing called feudalism? And even before that, almost all governments put very strict regulations on trade and on what industries operate. The first time our forbears traded barley to a neighboring tribe for the pelts of animals I'll bet the chief was involved. You seem to be equating a free-market system with trade, so that we now get into an argument about how much govenrment involvement it takes before the economy is no longer deemed "free-market." However, the specific idea of a free market economy didn't arise until the 18th century, which makes it pretty new. (That is, the idea.) I do not find it to be pertinent to argue whether people before the 18th century actually had free-market systems even if they didn't know it. The idea of "free-market" that I know is deeply tied to industrialisation.

I am not advocating socialism, nor do I disagree with you (and/or your coarguerater-people-type-things-who-agree-with-you-I-think) when you point out that planned economies have failed due to basic flaws. I do disagree with RoadRash when he says

The new power will devolve upon those experts called upon to define government policy. Concidentally, these are the very people who are calling for more controls. Consider the consequences. Top economic decisions will be made by individuals who have no greater understanding of economics than the guy scrubbing the floor at burger king.

Do you think that a couple economists might be included on those committees? Do you think that the guy scrubbing the floor at Burger King actually knows as much about economics as a scientist working on an economic issue. I know there are dumb scientists, but even they are, by and large, more knowledgable than the average fast-food custodian.
I do think that the govenrment would do well to take control of some industries - energy for example. What about free-market economics is helping the energy industry? In the energy industry almost all overproduction is waste, and price competition is unlikely to produce as desirable an effect for consumers as having the industry run by a government that does not take a profit. If the government would take control of the energy industry, it could also be better regulated to protect against pollution and corporate **** **** ******** ** ****** **** ******** ***** **** *** **** ******** ** **** **** ***** ******* *** ******* ******* **** ******* * ******** *** ***** ****!!!!!!!!!!!!!!!!!

To address a different issue, I simply find it necessary to point out that ammonia-based fertilizer is not a natural resource. Ammonia is not, and cannot (short of nuclear reactions or magic) be made from natural gas, which consists of short-chain alkanes that contain no nitrogen. Ammonia is made from air. Specifically, it is made by the addition of free hydrogen radicals to nitrogen at very high temperature and pressure. The nitrogen is obtained from air, the hydrogen can come from various sources. I am not sure whether the last step of the reaction proceeds as an elimination or a condensation, but I can assure you, there is no natural gas involved. Nitric acid, the other ingredient in most fertilizers, is made by oxidizing ammonia (with oxygen) under similar conditions. So there will never be a shortage of ammonium nitrate unless there is a shortage of air.

But to address the more salient issue in the paragraph from CEO Aaron's post to which I was referring, why would you endorse a system that you think will lead to global disaster? Don't you think there is any hope of correcting these problems without resorting to mass starvation? I thought I was the pessimist here. And if you go in with the attitude that we'd be better off if most people starved, why not just kill them now and avoid the trouble of disorganization? If we use your plan who's to say that the population won't drop all the way to zero? Are you literally going with the phrase "Better dead than Red?"

[Sikander]

Originally posted by sammy1339

I can't say I agree with your assertion that free-market economies have been predominant throughout history. Do you recall a thing called feudalism? And even before that, almost all governments put very strict regulations on trade and on what industries operate. The first time our forbears traded barley to a neighboring tribe for the pelts of animals I'll bet the chief was involved. You seem to be equating a free-market system with trade, so that we now get into an argument about how much govenrment involvement it takes before the economy is no longer deemed "free-market." However, the specific idea of a free market economy didn't arise until the 18th century, which makes it pretty new. (That is, the idea.) I do not find it to be pertinent to argue whether people before the 18th century actually had free-market systems even if they didn't know it. The idea of "free-market" that I know is deeply tied to industrialisation.

I think what the CEO was referring to regarding FM is that it is a natural state of being for human beings, restrictions on it (for whatever reason) being the more recent development. Perhaps a useful like example would be the concept of self-defense, something that has been in existence since the first humanoid had a brother. In contrast the right of self-defense was developed much later in response to the development of legal systems and laws against homocide. In much the same way free market economics have always existed and have been discovered independently by peoples throughout history and before. But the formalized principle of allowing people to trade freely as a matter of course came only after restrictions were placed upon this activity.

Trade within kinship groups of course is incredibly ancient. One could argue that gender based economic differentiation is trade, which would make it far older than the species itself. Certainly good hunters or gatherers traded their excess production for various considerations, which made both parties involved more productive. I doubt there was much in the way of formal restriction to this sort of endeavor in very ancient times, as the sort of restrictions on trade you are talking about came about after the development of agriculture, and with it formalized and more or less permanent class structures where predictable food surpluses, permanent military establishments and slavery came into existence.

Trade on a massive scale to the extent that it in some cases supported almost complete specialization and permanent settlements is older than agriculture. Archeological sites from the early stone ages show that at least two activities, tool making and salt mining, were profitable enough to support permanent specialist communities before agriculture was invented. These peoples were thus not only witnesses to the efficiencies of the marketplaces long before writing, they bet their lives on those efficiencies and won. In fact these peoples may well be considered to be the first industrialists, which would nicely agree with your idea that free market economics and industrialization are closely related.

What happened in the interim between these pre-agricultural trading societies (and the less specialized societies they traded with) and Adam Smith was of course the agricultural revolution. Many things changed for those who adopted this way of life, and eventually even for those who didn't. The salient points were of course a predictable food surplus, which allowed a much greater degree of specialization as well as a good deal more attention from other groups who were suffering from temporary food shortages. This meant that one of the most important of these specializations was a permanent military class, whether home grown in the first instance or intrusive. Slaves may have come about first by conquest or by peoples in desperation volunteering in order to spare themselves from starvation. In either event, both have been known to have happened historically.

It is within the context of slavery that restrictions on trade become common. Before that no one could easily conceive of having the sort of concentrated power which would both allow them to make such demands and enforce them. But to the new elite and the slaves who they ruled this quickly became second nature. The medieval feudalism you mention is a great example of this very relationship, where every man except the king has some or all of his labor owned by another. In this sort of environment trade can be sometimes seen as disruptive to the social order, as the implications of upward mobility could be dangerous (and in any event letting ones slaves gallavant about the countryside was dangerous for such valuable property). The same sort of restrictions can be seen for military service, which were also intended to limit upward mobility.

These restrictions of course were tempered by the need nonetheless to survive, and there have been many times throughout the ages where those in power allowed and even encouraged more or less free trade as well as more or less removed the class restrictions on military service due to desperate circumstances. Certainly the Roman Empire did both.

Of course many societies in ancient as well as medieval times relied heavily upon trade, and their example has been in constant view to most of civilization throughout history and for some time before. These groups usually developed naval power and not only engaged in direct trade (say wood from Lebanon in exchange for grain from Egypt) but also served as middlemen between other groups. These peoples were well aware of the principles of market economies thousands of years before Adam Smith in some cases.

Indeed Adam Smith simply put forth these principles in as complete and logical a fashion as he could in order to argue against mercantilism, which was an economic theory based upon the dubious assumption that bullion was itself inherently valuable rather than as a means of easing transactions.

[CEO Aaron]

Sammy, my point was that the concepts of an unchecked free market and unchecked industrialization are independent. You don't need a free economy to create the ecological and resulting sociological disasters I predict in the closing paragraphs of my earlier post. My view is that the system we call the free market isn't a system at all, but the immutable laws of commerce. You can legislate all you want, but market dynamics and human nature DO NOT CHANGE. Drugs have been outlawed, yet drug trafficing and addiction persist in our culture. The aftermath of years of the USSR's repression of free trade is that Russia is overrun with criminal syndicates, whose births were fueled by the very socialist system that was attempting to stamp them out.

So you see I don't think that endorsing a Free Market and endorsing unchecked Industrialization are one and the same. Pollution and energy conservation are significant problems, but they aren't economic problems. They're social and political problems, and if there's a problem with our economic system fuelling those problems, it's because we have a political system which is fuelled by money, rather than consent of the governed, as it was originally envisioned.

[Santiago_Claus]

I agree with CEO Aaron. What an excellent, thought-provoking essay!

Laws protecting the environment are as necessary as laws against murder -- and as outside the scope of a political or economic discussion.

How things get traded around is less important than how they are constructed -- and disposed of.

"It was never the streets that were evil."
-- Sister Miriam

[RoadRash]

Yes, nice post indeed Aaron.

Do you think that a couple economists might be included on those committees?"

If economists were consulted the committees wouldn't be formed to begin with. So no, I don't think economists would be included in significant numbers.

Do you think that the guy scrubbing the floor at Burger King actually knows as much about economics as a scientist working on an economic issue.

Yes, if the scientist has no background in economics. Zero equals zero.

I know there are dumb scientists, but even they are, by and large, more knowledgable than the average fast-food custodian.

They are more knowledgable within their own specialty. Outside that field they must be regarded as utterly incompetent. Environmentalists have no business dabbling in economics. Yet some use their credentials to give advice on subjects outside their expertise. This is a deceptive and outrageous practise.

Obviously people can become experts in two fields. But the doomsayers aren't even trying. They don't even seem to recognize the fact that they're in over their heads. A janitor would at least be aware of their own ignorance of economics.

....and price competition is unlikely to produce as desirable an effect for consumers as having the industry run by a government that does not take a profit. If the government would take control of the energy industry, it could also be better regulated to protect against pollution and corporate....

Monopolies are invariably bad for consumers. Governments are essentially giant monopolistic corporations armed with guns. Every possible insult you could hurl at big business applies doubly to governments, since they routinely use guns to enforce their monopoly.

We like to believe that governments are more accountable than "private" corporations. After all, government stockholders comprise the entire voting population. But how accountable are democratically elected representatives? The vast majority of voters have utterly no idea what's going on behind those closed doors.

Voters rarely understand the issues, and are easily manipulated by the press. Many voters are totally clueless about the consequences of their vote. They realize that their vote is a drop in the bucket anyway, so it hardly matters if they goof here or there. People put far more attention toward shopping for a house, for example. In other words, vital matters of national interest are decided at the last minute by half-interested semi-educated people of mediocre intelligence. If I'm wrong, then explain to me how moronicaly simplistic political ads can be so effective. Or why it's practically law that the US president must be a "tall dark and handsome" white male?

So how do we make the best of the situation without scrapping democracy? Answer: limit the scope and complexity of government to fundamental issues that ordinary people can easily understand.

[CEO Aaron]

Thanks for the feedback on my posts, guys. Even when I get opposing viewpoints, one of the reasons I continue to frequent these boards is you get as high (and occasionally as low) level of discussion on politics as I could ask for. A few comments:

In other words, vital matters of national interest are decided at the last minute by half-interested semi-educated people of mediocre intelligence.

Do bear in mind that the US (the only nation whose politics I'm qualified to discuss), we have a representative democracy, so we're not really deciding policy so much as choosing our representatives who will decide what's best on our behalf. It's to be hoped that while the average voter won't understand the repercussions of a change in zoning regulations that the representatives should.

The problem, to my mind is this: Voters a) do not vote, essentially forgoing any say in who will best represent their interests, and b) the voters who do vote are shouted down by private and corporate contributors, whose campaign contributions make an election campaign possible. In other words, as important as it is to answer to your constituency, it's far more important for ANY candidate to answer to his political campaign contributors.

If I'm wrong, then explain to me how moronicaly simplistic political ads can be so effective. Or why it's practically law that the US president must be a "tall dark and handsome" white male?

Politicians and pollsters have made a science of diverting the basics of the electoral process into an exercise in hatemongering and vote splitting. By pitting opposing ideologies and differing demographical groups against each other, they divert the voters from issues that actually affect them (taxation, budgetary and military policy) to one that merely make them angry (abortion, gay rights, welfare spending).

PS: I'm not saying the hotbutton issues don't affect ANYONE, just not the overbearing majority of voters. Oh, and RR, I _absolutely_ agree with your characterization of goverment as the biggest and baddest monopoly.

[Enigma_Nova]

Originally posted by RoadRash
So how do we make the best of the situation without scrapping democracy? Answer: limit the scope and complexity of government to fundamental issues that ordinary people can easily understand.

Democracy involves trusting the judgements of others.
I wouldn't even trust them to make fundamental decisions.
Of course, anyone with a lot of power will decide so as to further their own power.

I don't see how we'll prevent both incompetant government and corrupt government unless we let the naturally intelligent and altruistic make decisions.
As above, we have bugger all chance of changing the system where the corrupt people in power see this as undermining them, and the ignorant masses don't want a new idea to think about.

The only way to solve this is to exclude the selfish and supress those without strong opinions. That's the only option short of waiting for 95% of the world to kill itself off.

[Santiago_Claus]

Ahh, the "wedge issue".

If anything stands in the way of good policy it is the need to soak an issue in gasoline to "energize the base". What a crock.

Do these idiots really want Mumia freed in their neighborhood? Would they really want their daughter to die rather than have an abortion? Would they rather have been killed by an emboldened Al Qaeda than remove the Taliban from power in Afghanistan?

Would they really want to live out their bizarre dogmatic fantasies? I doubt it. It's just "energizing the base", pushing people into that strange self-righteous extasy that knows no boundaries of reason.

The irony of "energizing the base" is that it ultimately undermines the underlying philosophy being promoted as the increasingly extreme rhetoric is called to task by the opposing party.

I guess in a perverted way "checks and balances" are at work.