A consequence of capitalism?

Interesting distinction. I get your point. The next question is: How long can a free market be maintained without regulation i.e. the prohibition of coercion? This is more of a practical question than a question of mere definition.

With no policing force providing incentives against coercion it would be pretty impossible to run any large scale free market system at all. There would be no expectation that anyone sticks to contracts, so people only do business with who they know and trust. And there would be no safety from brute force. (That's why I think it's no coincidence that capitalism emerged in cultures with strong moral traditions, during the Islamic golden age and then in Christian Europe, it's easier to build a free market system when people just stick with contracts and pay their bills for moral reasons.)

The problem is that the police force is often employed to protect monopolies and oligopolies and with monopoly and oligopoly there arises economic coercion. Now, denying a person's desire for a flat screen TV or Macbook Air because they do not have enough money does not constitute coercion. However, denying a person's need for clean water and affordable health care because they don't have enough money does constitute economic coercion. Those with not enough money will die. Those with enough money will live. Thus we are all coerced into working at whatever job will take us so that we have enough money to survive or else we are among the few who can demand the work of others. This is the line in the sand. It could be argued that human beings just don't have incentive enough to work unless they have this threat to their survival looming over their heads but really that is a different question from the one that asks whether or not the system is coercive or not and which humans should be in control of that system. You mentioned honoring contracts. At some point we must get back to the contract that precedes all others: the social contract can be considered to have been dishonererd and broken. Is it at the point when some humans can effectively say to other humans "Work for my profit or die." (coercion) or is that line to be drawn somewhere else? When it comes to the labor market, when it comes to those who must sell their labor to survive the market is not free, I'm all for making that market free for all who are involved in it.

Talking about free markets does not mean the economy was being led by free markets. When the government steps in and has to set prices on goods or services, it means there is no longer a free market. Where has the government tried to set prices? The most well known price fixing is the interest rates. So many people believe that interest rates can not free float and they require government intervention. No, it is a lie, the only reason they want to control interest rates is so they can control the money supply and hide inflation. Meaning, they can inject money into the system and hide it. If interest rates were free floating, it would be a clear indication of just how much money the government was "printing".

Gas. The US tried to place price control onto gas in the 70s as an attempt to control the market. It failed and caused nothing but lines and angry people. They tried to write it off by saying there was a shortage, but it was a lie. The reason they wanted to control gas prices was again to hide inflation. They felt that if the prices of gas continuously rose that people would catch on to just how much inflation was present. They found another solution so they didn't have to price fix gas.

For a long time, they have slowly been picking away at capitalism and increasingly introducing socialist programs. Most of these programs are just ponzi schemes to funnel money from one group and inject it into another group.

Have you studied fractional reserve lending? Banks can lend money while holding only fraction of the amount in their reserves. What does that mean? Well let me try to simplify it.

You are a lender and holder of money, and Tom comes to you and says he wants to save one dollar and he gives it to you to hold. You say alright, and give Tom some interest for holding onto his dollar for him. The government comes in and says that you only need to hold ten percent of the money you have in savings accounts so you can lend out the rest. So you only need to keep ten cents of Tom's dollar and you can lend out the other ninety cents to someone else.

So you owe Tom a dollar still but Linda shows up to barrow some money and you lend her the ninety cents of Tom's dollar. Linda goes and purchases a new outfit with the ninety cents and the store, George comes to you to save the ninety cents he just got from selling some clothes to Linda. Now you still owe Tom one dollar, but now George shows up to save the ninety cents in which you say alright. Now you can lend out seventy nine cents George's ninety cents to someone else. Fred shows up to barrow that seventy nine cents and he too spends it on some ski equipment. That shop turns around and puts the seventy nine cents into savings. The process goes on and on repeating. Initially you still owe Tom the dollar, so if he showed up you don't actually have the dollar to give back to him because the government said you only need to have ten percent of reserve cash for savings accounts. Not only are banks creating money that does not exist but it also makes it impossible to repay savings to individuals who show up to get their money.

Tom you owe one dollar to.
George you owe ninety cents to.
Shop you owe seventy nine cents to.

A owe a grand total of two dollars and sixty nine cents. This money does not actually exist in your reserve account. So if all three of them were to show up to withdraw their money, you can't give them the money because you don't physically have it. This is referred to as being insolvent. So you created money where none exists. The reason why is because you have never actually had more than one dollar in your possession but you owe more than you lent out.

Free market banks wouldn't be allowed to operate like this, only government controlled banks would do such a thing. This is why the government has to prop up banks so they won't go bankrupt.

The FED.

I am not even sure what you mean with this question so I can't answer it.

The unregulated exchange of goods and or services not manipulated by the government unless there is fraud or force.

I hope you are aware that the ideas you are expressing, that there is some sort of a right to a base income, are pure communism. Hardcore. Like Lenin.

Without going into the merits of your Exposition, it is addressing a minuscule issue of free market. There is hardly any country where interest rates is not regulated. Floating interest rates are practised in maximum countries today. The issue of monetary policies have always been scrutinised and subject to review time after time. You are harping on an ideal free market conditions which never was nor is existing anywhere.

Are you talking of the past episodes........ Selective arguments.????
But anyway, if the US govt wants gas prices to be controlled in a crisis situation they are damn right on that.

In the last 30 years, only 9 years effectively was ruled by democrats - the so called liberals of USA..... You mean to say, the conservative Republicans messed the Capitalist economy?????

Ponzi schemes are run by unscrupulous cunning lazy men who have initial capital (mostly illearned) and wanting to earn quick bucks - only possible in capitalist free market societies.

Thanks for the simplification,.......... But what is it you want to tell?
Which country are you talking about....... Does the US government hold any investment bank?............... Which bankrupt Bank which was bailed out was owned by US Govt.??????

Whats FED?........... I checked the web, and found nothing substantive, except Federal Reserve Bank......... So you mean to say the FED if it means FRB has overriding powers over US Govt.
Or you are saying that the FED 'allowed' the banks to lend money where none existed. Don't you say 'this is a cop out', i think it is. Need to do more research on the federal lending system. I think you are excessively relying on Newspaper articles, and you have little knowldge about the role of US Government, specifically the administration.

I think you got it wrong.... or you are twisting the issue by saying that my grapes are sour because i got cheap loans, which were given by banks, and which were allowed by FED/US government.

What kind of a Logic is this?????......... Take a break.

The meaning was clearly implied. You really think that the Bankers are innocent bystanders, and the US Government is to be blamed for being one who allows 'free' (defining free is your discretion) market economy to run.

It is really sad to see there are still people who believes that an utopia may exist where everything is 'free'. Have you ever heard of Supreme Court rulings and legal concepts known as 'reasonable restrictions', 'national security' and 'national interest'. These doesn't come 'free'.

The real issue is what?....... Are you suggesting that if it was a 'TRULY' free market economy...... the American consumer will not be fat, obese, lazy, polluting, and everything will be just like in paradise. Please let us not deceive ourselves. Please wake up from your slumber.

bsfree
Withdraw from all forms of political activity except that which relates directly to your family.
Withdraw from all forms of monetary economic activity except that which provides for yourself and your family.
Seek ways to become self sufficient through the land at your feet. This will be the hardest part, as who do you know that even has access to land? Let alone yourself!

Yes, I am aware of this. I lean more towards an anarchistic socialism than Marx and Lenin did. I don't agree with the over dependence on centralized planning structures advocated by Lenin and Marx. But yes both Marx and Lenin are worth reading and their ideas are worth considering and not just through the filter of someone like Hayek. Yes, I am for breaking the despotism of physical want. Yes, I am for a right to a base income. But no, I'm not exactly for "pure communism" but more for a libertarian socialism. But yes, it's a very red flag.

That's your right.
Check out the idea of a negative income tax.

PS. But the most important thing for you to know is that your idea of economics is a little warped. Workers are not more explored because they have to work or starve. If that were so, then the employer would have paid those who are in no danger of starving more than he has to by supply and demand, why would he do that?

Also, it was Lenin who coined the phrase "work or starve". So even in communism there is no free lunch. Which is - quite literally - what you want.

Wikipedia says negative income tax was advocated by Milton Friedman. Is this correct?

In the USA we do have some protection through minimum wage laws and other regulations brought to us by the labor movement during the last century. In the 19th century things were not so pleasant.
Also we must consider the workers in other parts of the world where things are again not so pleasant. Supply and demand alone doesn't/didn't help much in these not so pleasant cases.

Yes. Does that make it bad? It would actually do exactly what you want. Give people a base income for necessities. Just without the economic distortions of a base income or the current welfare systems. It incrementally gives people below a certain income a payout, the less they earn the more they get. Those with exactly that income pay nothing. And those above that income pay an increasing amount.

That is not how it works. You can't build a sustainable system in which people get more than they are worth by supply and demand. It leads to all sorts of economic distortions. Unions and regulations can't improve the overall wealth of society. It can only shift it from those outside looking in to those in privileged jobs. That's why Europe has so much employment and jobs move to other nations. And it creates a permanent underclass.
Minimum Wage Escalation

Can we build a sustainable system by the negative income tax? Are there any economic distortions that arise from the negative income tax? For example a nation that has the negative income tax vs. a nation that does not? It would seem employers would go to the nation where the workers are more desperate. Global negative income tax would solve this problem.

You are right, there are no countries with large scale free markets. There is a reason for this. Governments know that if they control the money supply they can inject capital into their economies to use to pay off debts or to spend on policies or pocket outright. By controlling the markets you can basically set up forms of taxation where none existed in a true free market. These are things like requiring operating licenses and permits or some kind of insurance policy before any labor can be done.

This is one reason health care is so expensive in the US. Because there are very few corporations that are allowed to operate. So they sell medical equipment for far more than they are worth. If the market was unregulated the cost of health care would be so cheap that anyone could afford it without needing to take out an insurance policy or invest their money for years. The government is the cause for high health care costs and they are the ones trying to sell you back their plan to solve the problem THEY created.

Well now I know you have never taken any economic courses. One of the things price controls causes is a bloat in the market itself. Imagine you own your own store. You sell a variety of products. Let's say you sell this one product called a "EveryoneWantsOne". This product is hugely popular and your business prospers off selling these items because you can produce them very cheap and sell them at a high profit margin. Now consider this for a moment. What if the government came in and said, hey Jack, um we know it costs you ten dollars to produce the EveryoneWantsOne product, well we want you to sell them for only five dollars from now on. If you continued to sell them you would lose money. If it costs you ten dollars to produce them and the government is forcing you to sell them for five dollars, you lose five dollars for every one you sell. This is called price control. This is what happens when you impose price control onto products. You call it fair? No, it hurts businesess.

It has been a slow progression for over ninety years. No one person is to blame specifically, it first started just before the 1920s. The economy was slumping and slow, there were some ideas for the government to control banking institutions which were mostly privately owned during that time. The politicians wanted to boost economic growth somehow and they discovered a way to do it. First they needed to take over control of the money supply. Next they could inject capital into political policies to create temporary jobs. Which initially was good for people who were looking for work. But this only is a first step in the process. Essentially all governments given enough time want to control everything. It's the fault of power itself.

Every socialist program we have is a ponzi scheme. Social security, medicare, are both ponzi schemes and socialist programs. These types of things do not come from free markets or capitalism. They are policies to funnel money from the poor and into the pockets of the rich. They cleverly disguise themselves as helping out the less fortunate when all they really are doing is making the wealthy wealthier.

It does not matter who owned the banks. The government has allowed for banks to be predatory and have lending practices that will ultimately lead to those banks being insolvent and eventually bankrupt. That is when the government steps in and takes them over. They take them over so that people won't get worried, but the same problem persists. Now that they are in control, which is what they wanted in the first place, they can hide these failures more easily.

Like I said, it has been a gradual process over the last seventy years. Each time someone else comes along and makes it just a little bit worse. They do this because it gives them more power, and more control. Not to mention they make incredible amounts of money off doing these things. They don't care about the people, but they will make speeches saying they are doing it for the people. It's double talk to ease the concern while behind the scenes reaching into the money jar and putting handfuls of cash into theirs and their affiliate's pockets. I know that sounds conspiracy but it is what has and is happening.

Where do you get this "cheap" loans bit from? What the heck is a cheap loan anyways? Well you do know that there are no banks anymore that hold their own loans. They give them but as soon as they give them, the government pays the bank back immediately and then the loan gets handed over to the government. Tax money basically backs every loan these days. Banks love it because they are no longer worried about people repaying their loans. So they offer them like candy to school children. "Who cares it's not our money?"

After I read this, I realized you are probably not worth continuing this discussion with. Clearly you do not understand the word "free" as it has been used in this case. We are not talking about a cost or price here. We are talking about the ability to "operate" or "act". There is a difference and obviously you can't tell what "free" is referred when people talk about free markets.

No, did I ever make the claim that people wouldn't be fat, or lazy (I don't find them lazy at all, I think it is another fallacy.) I also don't think it would solve all pollution problems, it would some, but to be honest, not all would be solved. I don't think we would be singing and dancing in the streets either, so no need to be snide with your statements. I can tell you are using them because you have no other argument so you are trying to straw man me. It's alright, I don't mind be straw maned because it's just a compliment as far as I am concerned.

Hello,

I only wish to interject myself into this conversation to ask a question...

I do not believe in a Communist utopia, nor a Capitalist one. I do not think human nature can tolerate nor support the perfection needed for either system.

I may be wrong. I agree, however, that greed is definitely a guilty party in this banking mess. However, is that to be unexpected? In which case, I wonder, can you trust the government to not partake in that greed anymore than the bankers we lay the blame on?

Both are guilty, IMHO. Did the government not know what it was doing with Fannie Mae and Freddie Mac institutions, or other entities which had public support if need be? Or the "Community Reinvestment Act" which, admittedly, tried to solve a real problem of discrimination, but maybe got taken advantage of by said capitalists? Or, especially, the Glass Steagal Repeal Act under Clinton.

Maybe the government didn't have the foresight in any of those cases, and maybe they aren't to blame, but I don't know if they are as innocent as that makes them seem.

My question is, you want capitalists regulated by government (or so it seems, at least in the banking industry, which makes sense) but is there a problem with the government? Do those people, especially being from the business world, and being lobbied and paid by the business world, have the same potential for greed to circumvent ethics?

What is the solution?