It is worth noting that Britain no longer has an auto industry. In, I think, the 1970's, all of the minor makes MG, Triumph, etc were subsumed into BMC (British Motor Corporation), a government creation. Since then all of the "quality makes", Rolls Royce, Bentley, Rover etc. have been sold to foreign owners.

The lasting lesson of BMC is that a government entity cannot stand up to labor stikes.

I fear the same future for the AMerican auto industry.

As it was with NASA, if the auto industries shut down there will be an awful lot of very qualified people with nothing to do. Can they all be retrained for the "hospitality industy"? NASA had "heat shielding engineers" guiding bus tours.

Thanks for the analysis Warrington. But you've neglected to note the collapse of any private businesses and the subsequent unemployment caused by their mostly myopic failure to read the "free market".

How can this be? Oh yes, it was government interference and regulations that led to their collapse. I'm also overjoyed to learn that their failures have resulted in no layoffs, downsizing or redirection of the work force. Ah, if only we'd have given the captains of capitalism a freer hand. Alas!
OldTimeLefty

Lefty, if you had a point, I can't see it.

Are you saying that government bureaucrats can direct businesses better than business people can?

As you saying that government bureaucrats and politicians can do a better job of "reading the free market" and predicting the future?

Are you saying that government can prevent unemployment and stop changes in technology or society so that people never have to change once they are lucky enough to get a job at a government-sponsored enterprise?

Who are these "captains of capitalism"? What makes them different from ordinary entrepreneurs like Justin and me, other than their ability to channel large amounts of money to politicians? Is your objection to private business? Do you think government bureaucrats and politicians are morally superior to ordinary citizens?

My objection is to the mixing of government power, corporate money and corrupt politicians that pollutes the free market. Yes, that means that government interference leads to worse economic and social consequences than the natural forces of a free economy would.

And one of my main solutions is to decrease the scope and power of the government back within the confines of the Constitution. A government that does have the power to favor or threaten its citizens does not provide so many opportunities for corruption. This holds at both national and state levels.

OTL, I'd rather see everyone win sometimes and everyone lose sometimes in free market cycles than the system we have now in which government actively punishes winners and rewards losers which is morally reprehensible and economically unsustainable. Your interventionist policies are the epitome of letting perfection be the enemy of the good. The philosopher kings in government you want to lead us all to the promised land are false prophets.

I don't find Deneen's essay to be very convincing. The important question isn't whether material and social stratification exists -- only the most radical of utopians would claim that it's even possible to eliminate it -- it is how freely people are able to move between strata, should that be their desire.

The problem described by Justin in his GMAC example is that we have a government that is now dedicating a huge amount of its energies and resources towards preserving the existing economic strata, i.e. particular business models for big players at the top. But in paying for big bailouts with resources taken from the people lower down the economic ladder, it makes it that much harder for people to be able to move up.

There's no deal between stratification and equality in play there. In fact, it's just the opposite.

BobN,

1. I think OTL's point is very clear. In response to Warrington's claim that BMC wrecked the British motorcar industry, OTL notes that the operations of markets without regulation has resulted in major industry collapses and economic crises. The BMC example, even if accurate (I'm not in a position to judge) does not prove that government management of an industry is always bad, and the various historical crises, panics, market collapse, and failure of industry to provide labor's basic needs, show that unregulated free-markets are not always good.

2. OTL certainly did not say what you suggest: "government bureaucrats can direct businesses better than business people can". That strikes me as a nearly willful misreading of his point.

3. In another thread (on "affirmative action"), you attributed my (apparent) failure to understand Justin's point to my "intellectual dishonesty". I'll refrain from responding in kind. I left you a response there and look forward to yours.

"[V]arious historical crises, panics, market collapse, and failure of industry to provide labor's basic needs, show that unregulated free-markets are not always good."

Please tell me at precisely which point in American history the market has been "free" and "unregulated" without government intervention.

The late 1800's, perhaps?

http://www.npr.org/news/specials/democracy/money/bosses_900.jpg

First half of the 20th century? Time of the Great Depression?

http://www.woodrowwilson.org/usr_doc/cartoon1.jpg

Please retract your conclusions about free markets as lacking any historical evidence whatsoever. The fact of the matter is that big banking and corporate interests have ALWAYS used the coercive power of the state to their own benefit at the expense of the American people and less influential rivals. Nothing close to a free market has ever existed in this country, so we can't definitively say whether it works or not. Period.

Thomas, it was not at all clear to me and until Lefty answers, is still not. Perhaps you on the Left use some code to which ordinary citizens do not have the key. While it is chivalrous for you to rise to speak on his behalf, I can't assume that you wrote what he would say.

I suggested nothing. I merely asked OTL to clarify what he meant in his post. Since I made no assertion, I cannot be accused of misreading his post - unlike your comment above which misconstrues mine.

Can you provide an example in which government management of an industry has been an improvement over the private sector?

Dan,

I don't think I'll be retracting anything just yet, but I’m listening. Regulation is a relative thing, isn't it? There can be more or less of it. And, as you point out, there can be regulation in the public interest, and regulation in the interest of businesses.

I don't think I've ever heard anyone say that the market crash of 1929 was a consequence of over-regulation and, as for 2008, I’m with Richard Posner that this, too, was a market failure.

You say, "The fact of the matter is that big banking and corporate interests have ALWAYS used the coercive power of the state to their own benefit at the expense of the American people and less influential rivals."

I think we have a point of agreement here (though I would modify your statement to say that government has selectively used or refrained from using state power). The growth of the railroads in the late 19th century is my favorite example. That wonderful (and terrible) economic engine could not have been accomplished without state power.

I take it you’ll also agree that your concluding statement,

"Nothing close to a free market has ever existed in this country, so we can't definitively say whether it works or not. Period."

Means that the folks who call for a “return” to the unregulated capitalism of an earlier age are dreaming of a future that never was?

My analogy to the British BMC situation is not that the government ruined a going concern. The British auto industry was already in tatters. My point is that the government takeover only made matters worse. Shortly after the government takeover, union stikes began. The government was politically unable to stand up to them and, rather rapidly, the auto industry collapsed.

"The fact of the matter is that big banking and corporate interests have ALWAYS used the coercive power of the state to their own benefit at the expense of the American people and less influential rivals."

I don't know if it was "always", but it is a fact of long standing. It may not be the earliest example, but a large example was in the expansion of the railroads. Every coercive power of the government was used. This shows up in the early cowboy movies, when it was still a matter of living memory. I accept that it is impossible to change human nature, it seems more practical to restrict the coercive power of government. So long as government has powers to make men wealthy, it will happen. The wonder is that it is common knowledge and there is no real opposition to it.

"I take it you’ll also agree that your concluding statement...Means that the folks who call for a “return” to the unregulated capitalism of an earlier age are dreaming of a future that never was?"

That's precisely why I don't call myself a "conservative." As dissatisfied as I am with the present state of things, I recognize that, in many ways, the past was even worse!

Warrington,

I find it amusing that you and I both, within a minute of one another, came up with the railroad example.

For earlier examples of state control over, and state attempts to encourage industry and commerce, I suggest Stanley Kutler, "Privilege and Creative Destructon", which is about the Charles River Bridge case of 1837,

best,
Tom

BobN

Here are your remarks and my reply. I think that Tom Schmelling stated himself with his usual clariy, but since you also want to hear from me you are now doing so, although I am mindful of the difference between what is said and what is heard. So, best of ears to you:

Lefty, if you had a point, I can't see it.
Are you saying that government bureaucrats can direct businesses better than business people can?

As to your saying that government bureaucrats and politicians can do a better job of "reading the free market" and predicting the future?

Are you saying that government can prevent unemployment and stop changes in technology or society so that people never have to change once they are lucky enough to get a job at a government-sponsored enterprise?

Who are these "captains of capitalism"? What makes them different from ordinary entrepreneurs like Justin and me, other than their ability to channel large amounts of money to politicians? Is your objection to private business? Do you think government bureaucrats and politicians are morally superior to ordinary citizens?

My objection is to the mixing of government power, corporate money and corrupt politicians that pollutes the free market. Yes, that means that government interference leads to worse economic and social consequences than the natural forces of a free economy would.

And one of my main solutions is to decrease the scope and power of the government back within the confines of the Constitution.

A government that does have the power to favor or threaten its citizens does not provide so many opportunities for corruption.

OldTimeLefty

"I notice that you mention government power and fail to mention corporate power. You mention corporate money and corrupt politicians, but fail to see that it is corporate money that buys the politicians in the first place. Your wording of the questions reveals the prejudices you bring with you to the argument."

Putting aside that corporations themselves are creations of government, and that it is precisely the limited liability and privileges that government affords these "legal persons" that causes many of the problems we are talking about in the first place, there is one big distinction you gloss over and that is the basis upon which people deal with private entities, and the government. People deal with companies on a consensual basis and if they don't want to buy their services, they don't have to. When people are dealing with government, there is always a "gun in the room" as the government accomplishes everything it does through the threat of violent coercion ("do what we say...or else"). Nobody can choose not to buy the government's services, whether they want them or not. However bad you think Walmart is, I'm guessing they never threatened to steal from you or kidnap you if you didn't buy the Die Hard Compilation DVD set from their bargain bin. This is not a trivial difference, and it is precisely why we should be so much more concerned with government power over the market than corporate power of the market. It's a stretch to even compare the two.

OTL-the biggest military-industrial complex in history:China(People's Republic).I'm not just making an empty phrase here.The Chinese military actually "owns" a lot of major industry there.So much for your socialist model.
The Glass-Stegall Act was repealed by bought off legislators,and yes,it was a Republican controlled Congress to their shame.However,it(the repeal) was signed by a bought off Democrat President.
You don't really believe that conservatives are in love with the bankers and insurance companies,do you?
People like myself have no financial interest in their profits.
I know some regulation is good-workplace safety;toxic waste disposal,etc.
The problem is when government gets incestuous with private industry and you can't tell where one begins and the other ends.

Tom,

"I find it amusing that you and I both, within a minute of one another, came up with the railroad example."

Actually, my favorite example is the FTC. There is no doubt that Mr. Marconi invented radio, and therefore "owned it". If you watch the movie Titanic, you will notice that all of the radio operators wear "Marconi" uniforms. Governments recognized the power of radio, and I assume their constituents saw the potential profits. It became a necessity to seize radio. To do this, they dtermined that "radio waves" travelled on "air waves" and that "air waves" were owned by the public. (Google "air waves", "not used in technical or scientific discourse"). They then were able to issue exclusive licenses for use of the "air waves". These licenses created the possibility for wealth. To this day, you will only hear government employees using the term "air waves". That is because they don't exist.

Warrington

Sorry, I meant FCC, not FTC, in the post above.

joe,
You said, "So much for your socialist model." What socialist model did I mention? To what are you referring, or are you putting words in my mouth and then arguing against them?
You mentioned that the Glass-Steagall Act was repealed by the effort of both Republicans and Democrats. I agree. What argument are we having about its repeal?

You do admit that government controls and regulations are necessary regarding workplace safety and toxic waste disposal so we are in agreement there. You also said that problems arise when government and private industry get too chummy. I agree. It's what to do about it where we differ.
OldTimeLefty

Prof. Schmeling: "[That] does not prove that government management of an industry is always bad, and the various historical crises, panics, market collapse, and failure of industry to provide labor's basic needs, show that unregulated free-markets are not always good."

I think it's a pretty fair statement that government management of an industry is always bad, even if that wasn't what BobN was saying. Ultimately, if we were to accept government provision of a non-public good, we would also have to accept all that comes along with that, which inevitably includes monopoly power. If we can't reject the public provision of what would otherwise be a competitive good on its face, we would be back to accepting the superiority of a benevolent dictator over democracy.

It's fair to point out the occasional failures of market mechanisms over time, but it isn't fair to ignore far more numerous, and far more devastating, failures of government. Every organization is prone to these types of problems, and they always will be as long as humans remain human. Since the size of the failure is highly correlated with the size of the entity failing, doesn't it make sense that we should take steps to limit the size, power, and reach of all institutions, including government? That's what this comes down to; we can't fix the failures of industry by growing the government unless we first understand the purpose of industry and the limitations of government power. If you think that it is a failure of industry that it does not "provide labor's basic needs," I fear that you may not understand either.

Warrington: "There is no doubt that Mr. Marconi invented radio..."

Tell that to Tesla. Other than that, I liked your comment.

When it comes to Glass-Steagall, I have to point out, yet again, that its repeal had absolutely no impact on the origin of the banking crisis, and was in many ways a boon when it came to resolving it.

Sorry, I meant FCC, not FTC, in the post above.

"Warrington: "There is no doubt that Mr. Marconi invented radio..."

"Tell that to Tesla. Other than that, I liked your comment."

Sometimes I am unable to constrain the impetuousity of my thoughts.

Lefty, thanks for the good-faith reply. There is a wide gulf between some of our fundamental beliefs on the responsibility of businesspeople and the role of government. I believe I trust free people more than you do to make their own decisions about life, and I trust government less.

No matter how big, honest companies became big and wealthy by offering people value for which they willingly gave their money. I don't hear anyone complaining about the evils of Apple, Microsoft and Hewlett-Packard. On the other hand, Jeff Immelt has done terrible damage to GE's reputation by cozying up to the government and agitating for the global warming hoax. No matter how small, dishonest companies lie, cheat, and use the political process to take money regardless of the wishes of people. You and I together could draw up a long list of such companies here in little Rhode Island. Unions fit into that category, too.

I also disagree with Mario's point about market mechanisms failing from time to time. Left to their own natural forces, free markets do undergo cycles. That is a fact of life and it is foolish arrogance to think that anyone can prevent them. The awful, extreme consequences such as we have had in the past two years, however, are not effects of normal business cycles; they are effects of government policies distorting those markets.

I have been in the banking industry since 1977 and have also worked for the Treasury Dept. as a bank regulator. I can say from experience that the repeal of Glass-Steagall had no effect whatsoever on the financial crisis of 2008. I can also say from experience that the "affordable home ownership" dictates by Congress, led by Barney Frank and Chris Dodd has heads of the banking committees in their respective houses, had a great deal to do with it. A key fact in evidence is that the GSEs (Fannie and Freddie) now own 51% of all the home mortgages in the country and the government announced quietly on Christmas eve that it was providing unlimited guarantees on their debt. The development of subprime mortgages was directly driven by Congressional mandates to lend to unqualified borrowers, and enabled by encouraging the GSEs to buy such paper.

As to beneficial effects of government involvement, there is a valid argument that the radio spectrum is a common good. The most recent trend of auctioning spectrum makes sense, except for the corrupt political manipulation of the rules of those auctions.

Moreover, I believe the Nobel for economics was won this year by an economist who has demonstrated that self-regulating systems almost always work better than government-imposed regulation. So the practical argument as to the value of government involvement in any markets at all is highly debatable and not by any means "settled science".

I keep thinking that I should step out of this, but things keep popping up to keep me in:

BobN says, Moreover, I believe the Nobel for economics was won this year by an economist who has demonstrated that self-regulating systems almost always work better than government-imposed regulation.

The Nobel for Economics was not won by an Economist, but by a Political Scientist: Eleanor Ostrom of Indiana University.

Ostrom’s work demonstrates that, at least under some circumstances, neither government regulation nor “free market” solutions produce optimal results. A significant part of her work shows how free markets work less well than other arrangements.

However, I will fully agree with you that:

.. the practical argument as to the value of government involvement in any markets at all is highly debatable and not by any means "settled science".

OTL-are you kidding?You have said you don't think this administration is far enough left.What else can I think but that you see socialism,or at least significant parts of it as the cure?

Joe said,

"OTL-are you kidding? You have said you don't think this administration is far enough left.What else can I think but that you see socialism,or at least significant parts of it as the cure?"

Well, Joe, it depends on what you mean by "socialism", doesn't it?

I know some folks who think that FDIC, Social Security, minimum wage laws, workman's comp., unemployment insurance, the interstate highway system, Amtrak and the Post Office are all "socialism"

BobN

"As to beneficial effects of government involvement, there is a valid argument that the radio spectrum is a common good. The most recent trend of auctioning spectrum makes sense, except for the corrupt political manipulation of the rules of those auctions."

It is a common mistake to assume that if certain events in history did not occur as they did, that they would not have occurred at all. There is no good reason to assume that Marconi would have retained a monopoly. Do we all assume that Microsoft will enjoy a virtual monopoly forever?

Simiarly it is not safe to assume that labor standards would not have changed without union action, or that slavery would not have ended without the Civil War. Because they did happen the way they happened, we cease thinking about alternatives. Their very happening foreclosed all alternatives.

We celebrate the men who gave their lives in these large events, we do not waste time considering if another road should have been taken. For instance, it is very likely that mechanization would have destroyed slavery by making it diseconomic. Would this have spared us Jim Crow? Hard to say.

BobN,

If you think that auctioning common goods, such as the radio spectrum, is a good idea, are you at all concerned about those who cannot afford the purchase price? Are you concerned that their ideas will be excluded from the "marketplace of ideas"?

Tom-do you support the so-called "fairness doctrine"?
It's a barely concealed attempt to silence right wing talk radio and in effect subsidize failed left wing projects like Air America.
Pelosi and her crew of jackals got scared after talk radio played a large part in the defeat of the Kennedy-McCain immigration capitulation(I mean amnesty)bill.
Now with the tea party movement allying itself with talk radio,they must be having fits.
Left wing talk radio might raise some eyebrows in the academic bubbles across the nation,but otherwise has little currency.

No, Thomas, I am not. Who says that ownership of radio spectrum is a necessary condition to participate in the marketplace of ideas?

The only reason I can think of for government to be involved in the administration of spectrum is that some enforcement may be required to prevent operators from jamming each other's signals. Otherwise I'd view it much as medical standards of practice or the IEEE standards of computer engineering - both self-regulating bodies of private users with no government interference.

As to use of proceeds, I prefer the Alaskan concept that common good resources belong to the people, not to the government, and any revenues from them should be distributed to the citizens.

On the other hand, forcing me to fund with my taxes the overbearing Leftist propaganda of NPR and CPB is extortion.

BobN

"As to use of proceeds, I prefer the Alaskan concept that common good resources belong to the people, not to the government, and any revenues from them should be distributed to the citizens."

I wonder if this is "socialism" as opposed to what I understand is the case in Texas, the oil below belongs to the owner of the surface. As would be the case in a salt mine.

It may be changing times. When the law was developed in Texas it may have been thought that oil existed in sealed "bubbles". Now we understand that oil (petroleum) flows underground.

Even with that being the case, why do we impose state lines on it? Why aren't the Alaskans "sharing" with the "lower 48". For that matter, why not Canada?

If petroleum is a "common good", why should I not be required to share out the water I draw from my backyard well? Surely it draws from a larger acquifer.

This seems in conflict with the settled law for surface water. On the other hand, at least in Massachusetts, public access to "great ponds" is required by law.

I think the better view is that the oil belongs to those who invest the time, money and effort to extract it.

I suspect that the Alaskan view was strongly influenced by the poverty of the state. I would expect a similar view if oil was discovered in another impoverished state, such as Vermont.

tom-i see your point and I don't consider the things you mentioned socialism.Some,like Amtrak, are just government boondoggles.I've seen excellent state run railways and those railways are good because there is a committment to running them well.Amtrak is a halfway measure,and like most halfway measures,is doomed to failure.
When I speak of socialism,I am really referring to the "social"aspects.
I am dead set against indoctrination of youth in grade school with what are essentially political positions.
I guess that "social engineering" is what I'm really talking about.I'm not put off by unemployment insurance,minimum wage,or workemen's comp,for example,although the latter,like Medicare, is riddled with fraud.
I'm concerned about the assault on peoples' minds,particularly the young and impressionable by the hordes of advocates for abortion rights,same sex marriage and the promotion of homosexuality as a normal lifestyle,the crusade against firearms rights,extending to such things as cap pistols,the promotion of a one world society,the mantra of global warming and "green" mandates which are not proven to even work.The recent deification of Obama reminds me of the 'cult of personality'seen in so many dictatorships.I am also disturbed by the attempt of the present administration to suppress dissent by demonizing it as incipient terrorism.If that sh*t keeps up,it will turn into a self-fulfilling prophecy.
I also resent the promotion of a mass guilt complex on the part of the American people by such people as Howard Zinn,and even the president,who keeps apologizing for us-why does he want to lead a nation he thinks has done so much wrong?
Most of all,there is the "newspeak" that Orwell so presciently warned of.
One example:"colored person"is considered an insult and "person of color"is sooo correct,now does that make any sense at all?
Hey,I've been on a rant so I better stop.

Joe, do those "excellent state run railways" turn a profit or do they suck up taxpayer money in subsidies? If a business is not self-reliant, it is either not well run or it is a bad idea, usually a Socialist one, in the first place.

Bob-I'm not sure how self-sustaining the railways in the Netherlands and Belgium(the places I was referring to)are,but they certainly help the economy,providing freight haulage,tourism support,and commuting facilitation at a reasonable,but not giveaway prices.
The local public transport is just as good.I think the high cost of petroleum encouraged this a long time ago.
The taxpayers in those countries pay more taxes,but they actually get something back,unlike SUV's for rich lawyers running the state legislature.
Our problem is waste of taxpayers' money on nonsense.
Both those countries have completely free enterprise,except certain things are government run,like the utilities.
I have to wonder if private utilities are better,because they run a moopoly here,and they are always shaking the public down-and actually how is a monopoly better than socialism? The utility monopolies don't promote a free market in any way.
What they have in the Netherlands is state run television,which is potentially dangerous.Of course satellite provides free exchange of ideas,so it's not that bad.Still,state run tv and radio is not in any way good for this country.
I'll say this-those countries are REALLY small.The problems can't be solved the same way in a country the size of the USA.
I'm glad you brought this up,because I had to think about it.

Joe, I used to live in a suburb of Rotterdam, so I am very familiar with the system there.

The key question is, would the people not get a similar level of service, possibly even better, at a lower cost if these businesses were not run by the state?

Having seen state-run TV in many European countries, I would definitely say it's a bad thing. Fortunately, TV is only one medium and people have many ways of getting news and analysis.

Suppose there were not a monopoly in the electric power business. Perhaps the service would be better and cheaper with competition spurring innovation as it does in every non-regulated industry. It hasn't been tried on a large scale - utilities being among the first businesses to use politics as a strategy.

There are two cultural differences that have helped the smaller European countries operate well despite their socialism.

One is, ironically, that they have always had Statism and so most people accept their position in society and do their best within it. As long as the .gov is not too oppressive, many folks can take pride in their professionalism within the system and they honor each other for it. However, in America, Statism had to be imposed on a previously free people, using "revolutionary" and subversive tactics like those espoused by Cloward-Piven and Alinsky. Thus the severe conflict we have in our society today.

Second, until recently, each country had a great homogeneity of both cultural and actual DNA. Over the past 200 years, many of the bolder, more independent people left for America, to our great benefit. However, the demographic invasion of Islamic people, many of whom are radical jihadists, is overwhelming the wimpy, "politically correct" welfare states of Europe and many of those countries will be subsumed under the Caliphate if the trend is not turn around quickly. For reference I recommend to you "America Alone" by Mark Steyn.

Bob-I have seen firsthand the Islamic bullying of the societies of both the countries I've mentioned.It seemed to be progressing faster as time passed.This is true what you say about the resurrection of the Caliphate.It will end in surrender of the Western Europeans or a battle to the death,while the Eastern Europeans won't tolerate it-not after the nightmare of communism.
Saul Alinsky is the virtual mentor of this President and many of his closest advisors.They are abetted by political whores like Pelosi and Reid.
I think the college campuses of this country are the equivalent of an incubator for Alinskyism.Alinsky was smart-he never actually joined the feckless Communist Party USA run by jokes llike Earl Browder and William Foster.He was however,a more effective communist than they could ever hope to be.I have to look up Cloward-Piven.
the utilities have thoroughly corrupted out politicians.In this state,they've bought off the Democrats.John Loughlin,a Republican, is in the forefront of the fight against abuse of the consumer by the utilities,yet the leftist fools on RIF and Kmareka would never acknowledge such a thing.

RE: Statism

This is basically I comment I heard once, I cannot verify the statistics but it made sense to me.

Sweden is successful as a statist society because the population was 99% blue eyed protestants. Without diversity a number of petty envies did not exist.

I understand that with higher rates of immigration part of the social fabric is being rendered. I am not a student of these matters and only catch the occaisional news story. The stories do seem to indicate that things are not going well.

I know that Germany is undergoing some trouble related to the high number of garstworkers.

We may have some advantage here. Although the "melting pot" has never boiled we have long experience with mixing ethnic groups. The only way it seems to work is that the various groups move up the ladder and end up living side by side in a subdivison. It wasn't so long ago that a Italian marrying an Irish was a "mixed marriage".