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Saturday, February 4, 2012

Counterbalancing Free Market Fog

Barry, My Liege:

It seems an appropriate time to discuss the purpose of this column: the philosophy and method which underlie my comments in this space.

My intent here, My Liege, is to produce an alternate structure of ideas which will lead to conclusions opposite to the current fog of ideas. Since this different structure is opposed to the current Free Market Fog of ideas, on occasion this fundamental, basal structure of ideas has to be presented in a dramatic manner in order to produce any reaction. On other occasions, parts of that structure can be presented more or less straightforwardly.

Be aware that some of the ideas herein are extrapolations from current real world events while other ideas are designed to create a response in folks who have endured the Free Market Fog of rhetoric for many years.

This space does not purport to present scientific, evidence based discussions of real world events; it is instead a political discussion of ideas which affect the national security of the United States of America.

In the USA today there is a constant outpouring of a Free Market Fog of wrong ideas about how the world works and the best methods to secure peace and stability. But, the current discussion is heavily one sided - much of the political discourse leads to a predetermined political conclusion.

And, My Liege, that conclusion is RUBBISH.

Make no mistake, much of the received wisdom in the United States about how the economy works and the proper role of government in the economy is demonstrably incorrect inasmuch as it produces real world results opposite to what it predicts.

The purpose of this space is to provide a counter weight of ideas based on economic theory so that the received, conventional wisdom has another challenger to its hegemony. While there are such counterweights provided already, the field is vastly under-populated as compared to the Free Market Fog of ideas we see today.

Even more disturbing to me personally is that my discipline of economics provides much of the rhetoric which supports these WRONG ideas.

Here is a specific example of how economic thought is distorted for political ends: traditional economic thought proposes the idea that the laws of supply and demand, when they are left to operate without interference, will provide the best outcome for society. Buyers will buy the quantity of products they want at the price they want to pay and suppliers will supply the quantity of products they wish to sell at that price. With this principle, the Invisible Hand ensures that both parties receive the maximum benefit possible and society at large is well served.

This idea is used to support an economic theory where any action of government which affects the laws of supply and demand reduces the welfare of society. Therefore, under this misguided philosophy, that government is best which governs least.

My Liege, you may have heard that canard before.

John Maynard Keynes effectively refuted that idea in the 1930's with a detailed critique of how that economic philosophy gave us the Great Depression and intolerable levels of human misery.

This space is inadequate to reproduce Keynes' critiques in detail, but there is one criticism which bears repeating here.

That is this: When markets are left to their own devices with little or no controls, they inevitably produce winners and losers. The winners then change the rules so that the laws of supply and demand can no longer operate effectively and the losers are destroyed.

In effect then, any call for free markets with no regulation becomes a smokescreen for allowing the winners to rewrite the rules and ensuring that the losers stay poor.

And that is precisely the fog of ideas which permeates American thinking about the proper role of government.

This fog is perpetuated by a loosely organized band of pundits and politicians who, wittingly or not, serve the interests of the moneyed elite and harm the interests of the general population.

My positioning among all the counter balancing efforts is that this particular effort is rooted in economic theory and that many of the alternate ideas presented in this space will resonate with people's perceptions of everyday experience: they will just 'feel' right because they correspond closely to reality. The Free Market Fog, on the other hand, produces ideas which resonate primarily because they are familiar and for those who benefit monetarily from them.

My goal is to stand against the volume of intellectual, Free Market Fog rhetoric to the best of my ability; by so standing, perhaps I can help change the direction of public policy toward more realistic policies and more even handed results.

I pray that you will find these musings helpful.

Your faithful servant,

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