Saturday, September 03, 2005

A DiaLOG Focusing On "Participatory Economics"

10,000 people are estimated to have felt the full effects in Cuba after Hurricanes Isidore and Lili hit. Over 7,300 Red Cross volunteers were mobilized there.

I don't know that the number of people in need of emergency assistance in New Orleans and the rest of the devastated areas is, but it is definitely more than 10,000. As was reported today, "More than 50,000 people had been trapped for days at the two filthy, sweltering buildings [Superdome and Convention Center]..."

This needs to be taken into account anyone claims that a government with the ability to force people to OBEY its commands preferable to a government that exists only to protect the freedom of its citizens from being violated. Recently, I read in a leftist spam blog that "the mobilization of 1.7 million people on short notice" by Cuba, in response to a disaster that affected 10,000 people was evidence of the apparent "efficiency" and "social capital" of the benign dictatorship which takes common cause with the tyrannical regimes such as that of Iran and that which was recently toppled in Iraq.

For some reason, I'm not impressed when a dictator uses his fascistic antfarm-owner power to tell people what to do and what they are allowed to say and learn about. Even IF in SOME cases the result is immediately a good one i.e. a rescue effort.


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I like to give people that disagree with me one opportunity, at least, to demonstrate that they are either sincere or rational in doing so. Because I might learn something. When they turn out to be both, it is very encouraging.

But sometimes, they are not.

At that point you have to pick up your marbles and move on- after it becomes obvious that someone has lost theirs.

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I reproduced a debate that I joined in the comments thread of another blogger. See below.

Here's the link, if anyone wants to compare.

I've removed any typos that I may have made, and added links in some places. BTW, I wasn't interested in talking about the taste of American chocolates to some of those available in European or on any other continent. If Japanese seafood is better than Chinese seafood, or if Mexican food is better than Italian food, so what? The issue is not one about continental or regional "fashion" or "flavor." It is about the best way to "allow" people to discover the idiosyncracies of the world according to where their curiosity may lead, I think. Our disagreements regarding economic policy stem from the way that we define or understand the "participatory" nature of market-based and market-determined economics.

So here's the thread on this story on Venezuela that hopefully will be of some use to whoever is reading this blog right now.

I'll start at the 8th comment.

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SIRC_VALENCE:"Marivit Lopez, from the personnel department, explains that the workers are also drawing up a 'participatory budget' for 2006."

Can someone explain to me HOW that works? I mean, nevermind exactly how many of the workers get a say about how much they are payed, how does the process work? Does worker 1 say, "our salary will be $15 per hour comrades!" after which worker 2 says, "Niet, you capitalist tool of oppression! It shall be $30!" ..and so on.

The fact that no lefty can explain why worker 3 and the rest shouldn't agree on a $30,000 per hour wage rate is the proof that there is nothing "Modern" about what Chavez or Castro have been up to.

Calculation is only possible with cardinal numbers and free-market economics is the economic manifestation of a free nation. Prices are determined by the participants in the market economy

From what I've read, this "Modern socialism" or "participatory economics" is an offshoot and repackaging of what economists have called the "Zwangswirtschaft" type of Socialism. (http://www.mises.org/midroad/mr2.asp)

Because socialism, a doctrine ensconsed in economic ignorance, is inefficient and wasteful, it cannot possibly produce the same standard of living that a truly modern society can. And how does socialism threaten liberty?

No system of the social division of labor can do without a method that makes individuals responsible for their contributions to the joint productive effort. If this responsibility is not brought about by the price structure of the market and the inequality of wealth and income it begets, it must be enforced by the methods of direct compulsion as practiced by the police.

-Ludwig von Mises


If you are seriously interested in what is going on in Venezuela, you ought to read at least Pt III of Liberty and Property.

(http://www.mises.org/libprop/lpsec3.asp)

In the spirit of dialogue,

Sirc_Valence

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MONDO: Check out this clip of Chavez's speech where he addresses Robertson and Bush. It has English subtitles.

http://www.vheadline.com/audio/chavez_english.wmv

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JIM: An excellent system that started in the US in the 1930's is The Scanlon Plan. It has worked extremely well when labour and especially management have been willing to be open and honest. There is a ton of info on the net about it. Again it is about participation, responsibility and just compensation. Interestingly, the main opposition in companies converting to it comes from middle management who lose their power as gatekeepers because the shop floor workers demand they become facilitators rather than obstructors. As has been mentioned before on this blog? that the most accurate view of any organisation or society comes from below - the lower the better.

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SIRC_VALENCE: Mondo,

thanks for showing people video of this Chavez guy in action and letting them see his self-centered ranting and preaching to everyone how important HE is to them, and how they NEED him.

It was difficult for me not to laugh, watching this. But as comical as watching people act out a satire of themselves, that should not distract from the threat that they may pose.

Watching a Chavez or a Castro is like being in a time machine and watching Mussolini rally his anti-captialist Blackshirts again - or perhaps more like the early stages of Hitler's Nationalsozialistische Deutsche Arbeiterpartei (National Socialist German Workers Party)... Anti-capitalists speak a good game "for the worker", but actually deliver a few or all of the following: tyranny, poverty, misery. Mainly there are two reasons for this;] they don't understand economics or recognize that as the power of the state expands into the realm of private enterprise (the voluntary association or disassociation of the citizen conducting a vast array of economic decisions), it alters the nature of government, making it become a nanny-state.

Regardless of how well-intentioned the uninformed dreamers are, reality catches up. Because men are no angels, as America's founders knew, the power that the socialists put into the hands of big brother to "make people good" naturally falls into the hands of devils, who having no restraints will say anything and do anything to be at the top. And when they get there, the law is no longer the guard of the oppressed, but the instrument of oppression. That's the way it works. America's founders were much wiser than they are portrayed to have been. The pee-ons who presume that they are the true revolutionaries, after taking for granted the gains made in the tradition of the founders, simply have no clue. Capitalism allows individuals to channel their energies in a positive way, whereas socialism, with it's blindness to many economic discoveries, creates the conditions for disaster and stagnation.

(George Reisman, notes the limitations placed on the extremely selfish and wicked by a system of law that knows its place and contrasts it well to one that doesn't; "The Gestapo and the KGB, for example, make private criminal gangs like the Mafia or the Capone mob look not only tame by comparison, but almost kind and friendly—so utterly and massively vicious can governments be.")

Mondo, are you sure that Venezuela needs a man which has passed a law censoring the citizens from insulting him? It seems like a bit much don't you think? Or is he following in the footsteps of "Dear Leader" Kim Jong Il, or Fidel? He is, but I pray that he doesn't follow them too far along that road.. because that path, unabated, would inevitably lead to a river of blood in South America. We have seen it before in other parts of the world.

I do not see that the left is really producing "social justice" and "liberation." This Chavez is a guy who likes to visit Iran (a terrorist exporter) where the "government" will even ban women from entering a soccer stadium. For what purpose ?

(Despite his repeated claims, the U.S. is not trying to assasinate that megalomaniac that calls the U.S. "the grand destroyer of the world, and the greatest threat". I can see no rational explanation for why Chavez has claimed a Bush conspiracy against his life except as agitprop so that the left can excuse this "Progressive" Venezuelan's support for a very brutal terrorist-supporting state with ambitions to develop a nuclear bomb.)

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ROWAN BERKELEY:Sirc_Valence (what kind of sophomoric name is that anyhoo), let me repeat, no gold, no Mises

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PARALLAX: Sometimes a little inefficiency is a good thing if it keeps people working....

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SIRC_VALENCE: That's the second shot that you've taken at the Gold Standard,

Rowwy.

So, are you eventually gonna get to saying something knowledgeable about it?

And Parallax, in a free-market economy, nobody is unemployed that doesn't [choose] to be.

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SIRC_VALENCE [Again]: Do you want to argue that moving to a 100% Reserve Gold Standard would be a bad move? If so, you should be prepared to argue against the empirical data that has been gathered. Not everyone has been ignoring it. And I know that not everyone has been doing so on purpose.

Let's move the argument foreward, since after seeing you bring up a pertinent matter twice, there was obviously more to say. OK. Since the argument has already been posed and answered, elsewhere, it would be a good time to go ahead and see what has been learned. Hopefully you will identify the answers even before you are able to come up with the questions.

With the Supply and Demand Diagram that Prof. Joseph Salerno illustrates the dynamic between market directed prices and the the nature of the means of exchange (money), with, we can demonstrate what the basis of a sound economy is.

Quote, "if you pay $10 dollars for a compact disc, then the value of money in terms of a compact disc is one-tenth of a compact disc. If a computer has a price of $1,000 dollars, then the value of a dollar in terms of personal computers is one-one thousandth of a personal computer... The purchasing power of money is an array of alternative quantities of goods that can be purchased by a unit of money; our case, the dollar.

"So let's say the amount of gold at a given quantity is fixed, so we draw a verticle line (MS) representing the Money Supply, and we have a certain Demand for Money, there's a certain amount that people wish to hold, and wish to purchase with their labor and other goods that they're selling. And let's say that the money supply, in billions of dollars, is $100-billion dollars.

"Now what would happen if we suddenly have a 10% increase in the supplies of goods and services produced in this economy? In effect, the sellers of those goods would want to sell those goods at going prices. That would mean you would need 10% more money for the economy to be able to absorb those goods.

"..So now the quantity of money demanded, at the given purchasing power of money, (PPM1) would be at $110-billion dollars. But there's no Fed to create this additional $10-billion dollars that we need. So how does the Gold Standard handle that?

"Very simply.

"Let's direct our attention to the high-tech industry for the last 20-30 years. How did they handle the fact that the supply of PCs, and software and so on, was increasing so rapidly that it was outstripping even the inflationary rate of growth of the money supply caused by the Fed in the 80s and 80s? How did those additional computers get sold?

"The point is that because of the technological advances and the increase in investment in those industries, costs fell. So that when the supplies of computers increased on the market, their prices fell.

"To get an idea of the magnitude of this fall, we can go back to recent history and see that a mainframe computer sold for $4.7-million dollars in 1970 while today one can purchase a personal computer that is 20-times faster for less than $1,000 dollars.

"So we had substantial price deflation in high-tech industries, and that did not impair the growth in those industries because it corresponded to falling costs due to technological advances. We could point out that there was an enormous expansion of profits, productivity and output in these industries. This is reflecting the fact that in 1980, computer firms shipped a total of just about one-half million PCs, while in 1999 their shipments exceeded 43 million units to an increased 86-times. And that's despite the fact that quality-adjusted prices had fallen by over 90%

"...as prices begin to fall, each dollar will be able to purchase more of that particular good than it did before... What happens is that as the value of each dollar increases, we move up along the Demand Curve to this point so that at the end of the process, prices are roughly, 10% lower and the purchasing power of money is, roughly, 10% higher.... if we have a situation where the good was originally $10 dollars, and not it's $9 dollars, the dollar could purchase approximately 10% more.

"So if we take this particular good; initially we had a money supply of $100-billion dollars, and we had a price of $10. So the number of units that could be purchased by that money supply was 10 billion. But as the price falls to $9, the same $100-billion dollars of gold which hasn't changed, THERE'S NO FED INCREASING THE MONEY SUPPLY, could now purchase over or around 11 billion units of the good.

"So the market process will adjust the purchasing power of money so as to enable the additional goods and services to be sold on the market and they will be sold profitably on the market because costs are also falling. That is the reason for ecnomic growth [and the economic dimension of innovation and progress]."

I believe that this is a great little lesson on the dynamic of how the free-market adjusts the purchasing power of money. Of course there is so much more that can be addressed, but if you want to learn more, I hope that you do. I would recommend Murray N. Rothbard's The Great Depression, it had some real eye-openers for me when I opened that book up.

I'm going to be gone for some time, so I stayed up to do this post in order that I don't later regret that I didn't. I'm throwing this link in, hoping that people here will read about the best way that civilization should proceed from post-colonialism: http://www.reason.com/0312/fe.ng.poor.shtml(it's in there, just dig a bit)

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ERLENDA: I guess that Mises guy was a false prophet or America would not live of the rest of the world right now with debts sky high.

The computer industry is the only profitable one and its getting more outsourced, for of course the workers have no say in the matter.

Bill Gates thinks the Chinese are better educated than the Americans, watch him to outsource Microsoft to China.
I think you are so blind by your ideolgy, you cannot even see it, when it stares in your eyes, that American capitalism is a failed system, profiting nobody in the end, but a tiny oligarchy who more or less might even outsource their places of residence to the Barmudas or such places pretty soon.

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SIRC_VALENCE: erlenda: I guess you didn't read the Reason interview that I linked at the bottom of my post. If you didn't do that you definitely are beyond your league in talking about what "that Mises guy" accurately predicted would happen and why. Almost as if to demonstrate his economic findings, people made the mistakes that he warned them not to. And here you are demonstrating for all what I'm talking about when I speak of people continuing to ignore the truth and choosing instead worn out slogans.

The say in the matter that "the workers" have, regarding outsourced jobs in the computer industry, is, the say that they have as consumers, which is "we want cheaper products and services." And if some Indians can provide the same services that some Americans do, at a lower cost to the consumer, that is a win-win situation. And the reason that third world countries can usually provide cheaper labor and products is because their demand for work, and to better their own situation is much greater than ours. They want to compete in the global market so that their nations can catch up with the rest of the world. People don't like to go hungry, or depend on stone-age technologies for their well-being. Some countries are very much behind where they could be, they are "the developing world." We all are.

It is ludicrous to refuse people in other countries the opportunity to try to compete in the modern economy until their countries catch up to those that are thriving in the marketplace.

Capital flowing out of a nation, to other areas where its more productive, to the third world countries, enormously develops the productivity of labor in such countries while increasing the market for our goods (with the development of spending power that wasn't there before in the hands of those countries) while raising wages and profits in the export industry; Free-market economics gets resources going into their most value productive employments. I'm just describing the science of economics here. From that you should figure out that a few layed off employees or unemployed college grads will just have to learn to adjust to the situation when more needy people compete with them and win in the marketplace of the buying public (which coincidentally happens to include such employees and grads and their relatives). Look at it this way, there is less pain for us, overall, when a company that is started up ignores what the rest of the world is doing, or can offer, and is taken "by surprise" and outcompeted than there is for a country and people if they don't get the chance to participate in a modern economy because some ideologues are hanging on to old worn and disproven ideological concepts.

Bye.

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PARALLAX: Sirc_Valence,

So where is this free market economy?
The USA you say?

Think, before you reply.

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SIRC_VALENCE: The United States would serve as the best model, to answer your question.

Now, the fact that it is possible to move away from it, or for that matter, to reenforce it, does not negate the proposition.

I don't mean to criticize every single individual here, or pass judgement on their value as individuals, because people are more than what they know.

BUT, the problem in the U.S., regarding betrayals to the American civilization, such as the recent Supreme Court ruling by its most left-leaning Justices in the Kilo case encroaching upon Americans' property rights- can be traced to the alien ideology of the left.

In 1933, 3 years into the Great Depression (and that started out shortly following the creation of the Fed), "Progressive" President Franklin Roosevelt was sworn into office. Yet before and since, there hasn't been a longer depression (9 years) in the United States of America. At the time, one of FDR's economic advisors, a member of his "Brain Trust", asked whether or not we were going to continue on a capitalist basis! Massive human disasters such as Mao's "Great Leap Foreward" and "Cultural Revolution" are not without without their causes.

An education in harmony with America's values would not have produced the Bureaus and officials that aligned themselves with the Communists in China's Civil War, leaving them the mainland; forcing those more likely to produce progress and freedom to retreat into the Island of Taiwan. And there, they may not be totally safe. The good news is that there have been reforms in China, in the direction of the free market. China is still ruled and dominated by Communist partisans, but the country is not so Communist anymore (though still a potential powderkeg). Then there's Kim Jong Il's whose father fought side by side with Mao's "Progressives."

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This is what I was talking about before when I pointed out that Mises accurately predicted what would happen, even before WWII, as the assault on free-market economics continued (1927):

"The program of antiliberalism unleashed the forces that gave rise to the great World War and, by virtue of import and export quotas, tariffs, migration barriers, and similar measures, has brought the nations of the world to the point of mutual isolation. Within each nation it has led to socialist experiments whose result has been a reduction in the productivity of labor and a concomitant increase in want and misery. Whoever does not deliberately close his eyes to the facts must recognize everywhere the signs of an approaching catastrophe in world economy. Antiliberalism is heading toward a general collapse of civilization."


The classical understanding of liberal civilization, incorporates free-market economics. And that's why, if we want to promote civilization in the world, as well as defend our own, we must also understand the economic manifestation of liberty, that which we call Capitalism.

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ROWAN BERKELEY: I don' wanna argue that moving back from fractional reserve banking to a 100% reserve system would be bad (though obviously the deflation would be ferocious and would require precisely central economic planning to manage it) - what I am telling you, o voluble and pretentious one of incomprehensible nickname, is that the USA HAS NO GOLD ANY MORE: http://www.gata.org/

SIRC_VALENCE: Hmm.

It wasn't obvious to me that the Gold Standard caused ferocious deflation. I mean, throughout the 19th Century up until WWII there was a mild deflationary trend - even with the rapid growth caused by the general expansion of industry with a Gold Standard in place. There was both growth and falling prices, somehow.

Maybe it would help me see how obvious these things were if you told me a little more. I do appreciate the link, though.

Later alligator

3 Comments:

Blogger Sirc_Valence said...

CORRECTION:

The second paragraph should read "I don't know what.." instead of "I don't know that.."

Maybe I'm being pretentious, but I don't want to edit any posts once published.

6:11 PM  
Blogger Sirc_Valence said...

A couple of clarifications.

The 3rd paragraph should begin with: "Some claim that a government with the ability to force people to OBEY its commands is preferable to..",

not with: "This needs to be taken into account [when] anyone claims that a government with the ability to force people to OBEY its commands preferable to..."

There was so much to say so I didn't pay so much attention to the beginning of it. I thought I did. There are other small typos here and there, but not as many this bad.

On the 10th paragraph, speaking of typos, where it should say "I wasn't interested in [arguing with German Blogger Erlenda] about the taste of American chocolates [and comparing them] to some of those available...", you can see the correction there.

I don't think there's anything else.

This is what happens when you treat your blog like a chatroom. Alright, that's it. Unless someone has something to add.

9:21 PM  
Blogger Joe Visionary said...

Participatory Economics, as in 'grab that cash with both hands and make a dash? (shamelessly cribbed from the song Money by Pink Floyd).

Visit my take on this matter.

12:48 PM  

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