[gmorin]

Jeff, could you elaborate a bit on your remark “The monetary inflation and credit expansion of the Fed found outlets around the world during this time, which permitted American companies to earn profits (and stock markets to soar) while price inflation at home was kept in check”

If I understand, it sounds like you are saying basically the fed created money but it shipped it all overseas so we did not see the result of the inflation here? Is that correct, if so how did they do that? If I had to guess I’d say maybe that the Fed was buying government debt of foreign governments? So those countries now had all these dollars and it permitted them to print up their own fiat and exchange it with themselves – because the US dollar is the world reserve the only way they can inflate their own currency is if we inflate ours? Correct? So all that government spending overseas drove buying of American goods during the 80s and 90s… ? but I thought our trade deficit got bigger during that time frame… or is that really irrelevant in that although the gap got bigger the overall amount of goods and services flowing grew substantially as well? Sorry for all the questions, just trying to build a thumbnail sketch of what the fed was doing to quickly debunk the Clinton apologists.

[gmorin]

You bring up a salient point that is often overlooked. Many people presume “capitalism” is bad because it is all about profit and profit can only be achieved by cutting costs (wages) or quality to the bone in order to undercut everyone else and sell the cheapest item possible. They overlook the fact that not everyone competes on price, they can also compete on quality and service. I think there is a saying that is something like this. “You can have it cheap, you can have it of high quality, you can have it quickly – pick any two”.

These are the 3 basic areas of competition, price, quality, service (speed of service here). So since any given company can only delivery on two of those at the most, then a competitor can avoid direct competition by competing in two other arenas. So if say Walmart provides the cheap goods of high quality with crappy service, then you can provide expensive goods of high quality with high service, or cheap goods of low quality with high service… some consumers will be desirous of the different combinations. Now you might not put Walmart out of business, but given there are enough people that will pay more for better service Walmart will simply never capture those customers without changing their business model, and when they do, they’ll lose the customers that liked their former business model. This is a big reason Apple has done so well, maybe their products cost a bit more but the quality/experience is so much better there is a certain set of consumers that are willing to pay more for the experience.

[gmorin]

Well I was just considering the semantic definition of the word “monopoly” ie mono meaning one…thus strictly speaking it means only one supplier. The courts can label whatever they want as a monopoly but that doesn’t make it so…ie the whole notion of predatory pricing is a bit silly…they charge too low to benefit consumers and harm competitors…but why is this type of harm considered bad? I mean, the only reason they are able to sell at a loss (predatory pricing) is that they can fall back on their capital reserves (savings) to get through the period they make no money…so if instead they use this massive capital reserves to innovate and out compete the competition with better products, then that is considered ok – both represent a use of disproportionate resource (resources which were lawfully acquired). My point is that neither are wrong or bad and govt has no business getting involved.

You ask the question: how would nascent competition emerge given the presence of dominant market presence? I would say the same way it has in the past. Look at Microsoft, they were once considered this impenetrable monopoly such that Doj was going to break them up. Now look where they are…they are still big but certainly not dominant, Apple, Google and others have made them somewhat irrelevant. Look at Kodak, once the king of the film industry, now they are in bankruptcy. But more to your direct question I might imagine an online advertising competitor would figure out some new approach to accessing consumers eyes, like Facebook, they took a totally different approach then google (speaking of which I just experimented with a Facebook ad run…their approach is genius, now I see why all these “likes” matter). So just because we cannot today in our armchairs imagine what that next angle might be (who knows maybe free movies with ads, or free music with ads) doesn’t mean it’s not possible such that we need the helping hand of, as Tom is fond of saying, our wise overlords. The issue though is as I mentioned in my first post is time, most do not want to wait the 10 or 20 years it might take the market to find solutions. But impatience is no justification for a loss of liberty.

[gmorin]

Google and Facebook aren’t actually monopolies. There are other competing search & mail products as well as competing social media. Yes they may be dominant in those areas, but technically to be a monopoly there would have to be NO competitors at all. But even this point is not so relevant. They provide these consumer services for free (mail, search, etc)… so even if they were monopolies it is a distinction without a difference, the reason monopolies are supposed to be “bad” is they can gouge the consumer… well you can’t beat free! There is no sense in which the consumer is harmed if provided something for free (assuming it is not injurious in some latent way of course). But even this is not relevant to the monopoly question. We’re evaluating the wrong part of what they provide. The question we need to ask is: What are they selling? In other words, what service do they provide that they actually receive money for? It’s not email or search or what have you, rather it is advertising. These companies are simply selling ad space. They give stuff away in order to increase eyes on their ads… it is simply a means to an end, to enhance what they can charge for ads in the market owing to the number of eyes on their ads. So the relevant question is this: Are Google and Facebook monopolistic within the market of selling ad space? I don’t know, perhaps on the internet they are the 800 pound gorillas… but in the wider market of ads they are not monopolistic. They have to compete with other ad venues such as: magazines, newspaper, TV, radio, billboards, etc. The price they can charge still has to be constrained by what other advertisers are charging in other media. It can vary, but only to a degree, it is not unrestrained, which is what a true monopoly would be.

Also, the point has been made before that in a truly free market no monopoly can ever exist in the sense that even an apparent industry dominant company that is monopolistic within that industry, they are still competing with vendors of all the other goods in society. A monopolist gas company can’t charge $10,000/gallon of gas… at some point people just aren’t going to pay because they have to eat, they have to clothe themselves, they have to put a roof over their head. So the market still exerts restraint on prices even in these apparent monopolist situations. And of course if prices are high enough it will attract competitors who will drive prices down. It’s a process, it takes time. I think that is why people turn to government, they want a solution NOW… so with the swirl of a pen we can have a law and outlaw bad behavior X overnight… people don’t want to wait the few months or few years it might take the market to correct these sorts of things.

[gmorin]

@XulChris: they are not “owned” per se, rather they are like a “no mans land” that is put under the stewardship of the states or the federal government. Rivers that cross state boundaries are regulated under the commerce clause. And I quote from Wikipedia “The commerce clause provides comprehensive powers to the United States over navigable waters.” read more here -> http://goo.gl/HAkxw

Even when rivers abut land that one owns you do not own that part of the river, rather you are required to grant an easement to it and thus lose all rights to it (like homeowners that must grant an easement to the government for any road that passes by their property – so that homeowners can not erect tolls or otherwise obstruct passage. The only way I think a private person could own a river is if it went in a circle within a single state and you own all the surrounding land. Is it impossible that there are any privately own rivers (as in not required to grant easement rights to the state)… no… but given the power of the federal government with respect to its authority over navigable waters I highly doubt it.

[gmorin]

Xulchris – you will likely not find any “free market” rivers or othe public spaces that have not been polluted because that is an oxymoron. You can’t have a free market of public space, it is either private or public…and as we have seen public spaces become public dumping grounds all too often because the public stewards are poor executors of their duties. If you want to find an example of a non-polluted river with out government involvement I’d suggest looking to see if there has ever been anywhere a completely privately owned river or lake…I don’t know if such a thing exists but if it does that’s where you’ll find evidence of a private sphere unpolluted natural resource…or if polluted then remedied through private party suits.

[gmorin]

Well, I’m not familiar with the specifics on that river, but my general understanding is that these sort of things (pollution) occur when you have “tragedy of the commons” scenario.

If the river is communally “owned” then everybody owns it and nobody owns it. Companies pollute it but no one has a legal basis to do anything about it because they have no legal standing. Local government’s should do something but don’t more often than not due to either incompetence or cronyism (being paid off to look the other way).

If landowners could also own part of the river they would each have an incentive to see that their property is not violated through pollution and would have legal standing to sue any polluter.

Well defined and enforced property rights pretty much solves every single environmental issue. Pollution is only a problem because our current system allows for “public” spaces that have no protection, those public spaces then become public dumping grounds and we then act surprised that some people would shift cost burdens from themselves to society at large (polluters) so the statists see no other solution than to give the government more power to fix the very problem they created in the first place by not enforcing property rights.

[gmorin]

Well I’m certainly no “expert” in Austrian economics, but I have studied it for awhile and think I have a reasonable grasp on the concepts. I would say the mode of operation you have outlined is correct, there is nothing wrong with depositors freely depositing funds for reasons they find beneficial and for banks to lend said funds out for reasons beneficial to them and their depositors. The problem with fractional reserve lending is not the “fractionality” per se but rather the fact that the funds lent out are not then also restricted from withdrawal by the depositors… which ultimately causes all the lending to become an inflationary bubble. For example, under the current system if I deposit $100 into the bank, the bank can then lend out $90 of that… however I can also come and withdraw all $100 as well… so now you have two actors in the economy spending $100 and $90… the $90 being created out of thin air.

A non-inflationary lending scenario would be one whereby I agree to deposit the $100 for x period and I understand I may not withdraw those funds. Period. Which is basically what we have with CD’s (time deposits)… that would be an example of “proper” non-inflationary lending. The bank earns interest and the depositor earns interest as well, the only tradeoff is they can’t use the funds. In a sense, the depositor is lending the funds and using the bank as broker to handle all the messy details and for the service of handling the messy details the bank gets to take a cut of the interest rate paid to the depositor (the actual lender of funds).

There are different ways this could be structured, say I want to deposit $10,000 but only commit half of it to such lending, that way I could have some of my money pay me income to cover the costs of having the bank store the other $5000 for me so I can use it as I need to whenever I need to.

Without any lending being done then depositors would pay the bank for the services provided (store-housing, check clearing, etc). It’s all up to the individual to decide whether they want to pay for the service or get it for “free” by committing some set amount of funds to be tied up for some set period of time.

[gmorin]

This is a conundrum for the ideal non-interventionist libertarian state… would such a state have any moral duty to intervene in the affairs of another state if that state were carrying out genocide on its own people or enslaving a certain group that lived within its territorial boundaries? The problem is that we keep considering the state as a group of people, but it becomes clearer I think as to the proper course of action if we break it down to 3 people. If I happen to come upon Person A beating Person B and clearly Person B is the weaker person and is not able to defend themselves, do I have (a) a moral duty to help person B or a (b) civil duty to help person B. Most people would probably say yes to (a), however for (b) the correct response I think is “no”… because in so doing you could be endangering yourself, you don’t know what person A is carrying as a weapon or what they are capable of, and you do not know if person B even wants your help, maybe he doesn’t, maybe it’s all part of his master plan before he counter attacks, who knows, the point is you would be interfering and there is no non-arbitrary way to know if that interference is welcome or not… even asking might be interference… in other words one is not obligated to put themselves in harms way from a civil standpoint (morally however I think if we see someone at the point of death we’re going to do something as we would expect the same were we in that position).

Now, the situation changes if person B requests of me assistance, I now have become involved in the altercation and clearly person B is desirous of assistance. Because I have been asked it is necessary for me to make a choice and civilly either choice is acceptable… so from a civil standpoint we move from a definite “no” to new options of “yes” or “no” if asked. If asked and accepted then it is completely keeping with the non-aggression principal because I would not be aggressing… I have a right of association as does person B, and we are choosing to associate and participate in shared defense… just as a family defending their home… any member may defend against an aggressor if that aggressor attacks any member of the family not only if they happen to be under attack themselves (i.e. I would not let someone attack my son just because they aren’t aggressing me and say “well it’s up to him to defend himself”).

So, if we now extend this from 3 people to thousand or millions, we can argue that if the Jews during the holocaust had asked for US assistance the US government could have legitimately considered the request and chosen to help or not. But strictly the makeup of the military would have to be different, it would have to be all volunteer and before every mission it is explained what the purpose of the mission is and only those soldiers wishing to engage in that mission would go. If it is a genuine attack on US soil you would not find one soldier not opting to join… but a situation like Vietnam you would have had far fewer.

So that is my long winded explanation of how I see libertarian principals being applied to the riddle of state non-interventionism. Right of association applied to co-defense and individual voluntary ascent to the request allows for groups of individuals to crush “evil”… since as we saw in WWII and in other arenas (killing fields of Cambodia) evil does unfortunately still exist and we libertarians don’t want to get mischaracterized as uncaring because we would have just allowed such atrocities to occur while painting ourselves into the “non-agression/non-interventionist” corner.

[gmorin]

I think the possibility that people work harder after destruction makes sense and only reinforces the validity of the broken window fallacy: namely that in order to get back to where you would have been otherwise absent the destruction you literally have to work twice as hard. So this gives the appearance of great industry however the motivation is simply to quickly restore what you lost and then recoup what you would have been producing during the time you wasted restoring what you lost… you’re always a bit behind but eventually you asymptotically approach where you would have been absent the destruction, but it takes many years and is certainly not a reason to promote destruction. I suppose the only value that lies in destruction is in demonstrating to people what they truly are capable of, i.e. we all could probably be twice as productive as we are now, but we choose not too because we consider the cost to be too great relative to what we have already (cost in time not spent in leisure).

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