Market Economy: Crash Course Government and Politics #46

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1. So a government sells protection to business and industry, or better, steals protection money form everyone to protect business and industry.
2. Thanks
3. I love the double standard of libertarians and neoliberals when it comes to free-market capitalism.
   
   On one hand, they promote the free-market and capitalism as being the most succesful economic system that mankind has ever encountered. Then when things don't go there way, they say its corporatism or that it wasn't a true "free market".
   
   By their standards, a true free market has never existed, and probably will never exist. There have always been some barriers to the free market, that are either imposed by the government, or competitors.
   
   Yet how can they brag about the success of a system that by their own standards has never existed?
   
   Serious discussions about economic policy and what serious, responsible role the government should play in the economy are completely obstructed in the U.S. by the fantasies of free-market cheerleading neoliberals like milton friedman, peter schiff, and ron paul.
4. This guy cracks me up so much. XD
5. there should be a scene where the eagle punches craig
6. well it is true that the market would not be nearly as productive it is possible
7. I know I'm a bit late to the party, but for the honour of Friedmanites everywhere, a rebuttal of Craig's eight points seems called for.
   1. Law and order can be provided privately; a system of private protection agencies, private courts and insurance companies produces a stable and peaceful society in which no institution or organisation has a monopoly on the licit use of force. And those objections you've just thought of? They've been answered; read The Machinery of Freedom.
   2. The rules of property in the anarchic system are defined by the (private) courts, and the rules those courts define are a major part of their value proposition to customers. Consequently, good law (which is a public good under the current system, thus underproduced) becomes a private good, produced efficiently. Moreover, the initial allocation of property rights (by which I mean, the definition of what rights are included in the bundle known as 'property') turns out not to matter directly, because those rights can be separately traded and (like any good) will end up wherever they are most valued. Instead, the aim when defining property rights is to minimise the transaction costs involved in getting them to that most-valued use; the reason for this will become clear when I get to Coase's Theorem.
   3. To even think that "governing rules of exchange" is a good thing, you have to already be stuck in a statist mindset: if you don't arrive with the assumption that governments are necessary and free market R bad, then freedom of contract is obviously preferable to any restrictions thereof: a contract is only signed if both parties believe it benefits them, while any negative effects on third parties (e.g. hiring an assassin) should be handled, not by outlawing the contract, but by outlawing its performance (or, more precisely, by making the act a tort; I'll get on to the importance of tort later).
   4. Market standards are something that free markets manage to set all by themselves. The classic example is Underwriters' Laboratories, but there are many others. If standardisation of a product, weight, measure, service, or even currency(!) is something of value to consumers, then producers will find a way to standardise it, because the increased demand that drives will in turn raise their profits.
   5. Public goods generally turn out to be easy to make private. This is why, for instance, national post offices generally have laws prohibiting competition: the things that supposedly no entrepreneur could do at a profit turn out to be doable at a lower price than the government can manage, even when the government operation is subsidised by taxes or borrowing. The public good argument essentially underestimates the innovative capacity of free markets: just because one theorist or bureaucrat can't see a way to sell something profitably, doesn't mean there can't be someone out there who finds a way — and it only takes one. Oh, and since Craig mentions air travel, I should probably bring up the history of US airline regulation, and how the (regulated) interstate carriers charged twice the fares of the (intrastate, hence unregulated) PSA — because the regulator set minimum fares, thereby maintaining a cartelisation of the regulated airlines.
   6. I would have thought anyone based in the US, of all places, would know just how bad governments are at schooling. In any case, the demonstrated success of private schools — some of which manage to charge high prices despite competing with a free product — shows that, once again, private enterprise is just better at doing stuff than government agencies are. Then there's the fact that the political content of state education is likely to be, shall we say, not entirely unbiased. And to top it all off, Crash Course is itself an example of the free market outperforming government — think of all the commenters who have (rightly) said that CC is way better than the classes they get at school.
   7. Ahh, externalities, the last refuge of the statist scoundrel. There are two prongs to the anarchist's solution here; one is the tort system. Imposing an externality on someone is a tort, and that tort can be litigated. (Remember that, as I explained above, law and courts would still exist in this system; anarchy is not chaos.) Of course, a small tort against a large number of people (e.g. pollution) is hard to litigate under the present system (class action suits suck); but this is easily solved by making a tort claim a piece of transferable property. The other prong is Coase's Theorem, a mathematical result showing that, given low enough transaction costs, all externalities can be internalised (transformed into contractual arrangements between the affected parties). This is why I said earlier that reducing transaction costs is the proper objective of property law. The Coasian analysis of externalities shows that previous solutions like Pigouvian taxation are not only unnecessary but actively harmful, because sometimes (for instance) the polluter is not the lowest-cost avoider, so it's more efficient to pay the affected people to move somewhere else than it is to stop polluting. In short, Coase shows that many of our intuitions about 'justice' and 'fairness' simply don't work when applied to externality problems.
   8. Monopolies and cartels are frequently creatures of government fiat or regulation (see also: Regulatory Capture), and only very rarely do they manage to arise in a free market environment. Moreover, a regulatory monopoly tends to last a long time, whereas a "natural monopoly" will, if it makes monopoly profits, create an incentive for technological or social changes that disrupt the monopoly by reducing economies of scale; the half-life of monopolies that fail to get their industry regulated is far, far shorter than that of those that succeed in doing so. As so often in free market economics, the cure for a high price is a high price. The really funny (or sad) part is that anti-trust laws are actually one of the tools governments use to regulate and cartelise industries. For instance, the FCC, who will proudly boast of how the "breakup of the Bell System" busted AT&T's monopoly, is directly responsible for the US's current cell carrier oligarchy. And as for the Commerce Clause... since 1937, the SCOTUS has been only too willing to define more or less anything as "interstate commerce" in order to permit Congress to regulate it, including growing corn to feed your own hogs (on the theory that you could have sold that corn across state lines!)
   
   tl;dr: there are NO proper functions of government, and we really aren't getting anything in return for the huge deadweight costs it imposes upon us. Every item in Craig's apologia for market regulation is wrong.
8. Це відео змінило мій світогляд. Те, що вільний ринок це система яка підтримується державою це важливо.
9. is this john green
10. You don't need a government to have an economy. Withut the government there is lawlessness, and the only way to own anything is through survival of the fittest and by force. You don't need people over you deciding a unifying currency, a group of trade partners decide the currency. Some people would consider a government a Group of people who set standards on trade and use brute force to protect their property and the people under them. So essentially government is brute force and laws are only applicable if enforced, and if they weren't it wouldn't be a law.
11. What about bitcoin? Who governs that? That is certainly an independant market without a government.
12. you should go through the mixed economic system since you used a market economy and a mixed economy is in a market economy.
13. Oh I see, the government "creates a labour force"! In other words, we weren't conceived by our parents, but instead we're all children of our governments!
    
    No wonder so many people want Big Daddy Government to take care of them!
    
    Dude, you sound like a government shill, pretty much. You even know some people (with a clue!) would object to what you're saying here, but you'll just go ahead and say it anyway, seemingly without bothering to try and find out what you're talking about!
14. This guy should be one of my country's financial advisers
15. cute breaking bad reference
16. Im still waiting for someone to give me an example of a crash caused by Free Market economies.
17. Im still waiting for someone to give me an example of a crash caused by Free Market economies.
18. I d have to disagree, because people could protect themselves from being robbed with a gun or sword, there would always be a market for stuff. It would just be less civilized
19. Very well put. Educated without trying to venerate any socioeconomic system as absolute or perfect.
20. this market economy thing was started in England in the late 1700s when consumer goods were being mass produced.