Is There Anything in the USA That Isn't Subsidized?

[thunderdownunder]

Re: Is There Anything in the USA That Isn't Subsidized?

The minimum wage - its a disgrace

[chr5648]

Re: Is There Anything in the USA That Isn't Subsidized?

IMO I believe the real problem is many writers, commentators, etc. try to masquerade the current problems of corruption, government interference, elites, media illegitimacy, etc. as free markets. It is then easier to create more of the bureaucracy/ideology to create more of the economic problems.

Most do not even distinguish between the productive and financial (FIRE) economies when talking about free markets, they just lump them together and take anecdotal examples of each to argue their points. There is so much amateurism out there. Its difficult to get to the truth.

[Rajiv]

Re: Is There Anything in the USA That Isn't Subsidized?

Most do not even distinguish between the productive and financial (FIRE) economies when talking about free markets, they just lump them together and take anecdotal examples of each to argue their points.

"Free Markets" are a purely theoretical construction, and in practice they do not exist. Can anyone answer the question I posed for Isa420?

Could you point me to one time and place in history, when "Free Markets" existed?

[lsa420]

Re: Is There Anything in the USA That Isn't Subsidized?

See my post above

You call the "Homestead Act", the subsidies for railroad development, the "Mexican American War", the "Indian Wars", the "Spanish American War", the "Alaska Purchase", the "Louisiana Purchase" acts of a free market?

Thanks Rajiv and I did read your post. No I don't call what you mention a free market. I said it was as close as we've been, but it definitely wasn't perfect. Perhaps closer to the founding - early 1800s was more free, ie, with less intervention by government for whatever reason.

For some more history on this interesting topic, check out the Panic of 1873 on Wikipedia - a bust followed by the speculative boom, caused by some of the government interference you speak of. From Wiki:

The American Civil War was followed by a boom in railroad construction. Fifty-six thousand miles (90,123 km) of new track were laid across the country between 1866 and 1873. Much of the craze in railroad investment was driven by government land grants and subsidies to the railroads. At that time, the railroad industry was the nation's largest employer outside of agriculture, and it involved large amounts of money and risk. A large infusion of cash from speculators caused abnormal growth in the industry as well as overbuilding of docks, factories and ancillary facilities. At the same time, too much capital was involved in projects offering no immediate or early returns

[Ghent12]

Re: Is There Anything in the USA That Isn't Subsidized?

"Free Markets" are a purely theoretical construction, and in practice they do not exist. Can anyone answer the question I posed for Isa420?

That question does beg the question: what is the definition of "Free Markets?" If you mean total anarchy, then potentially Somalia or parts of certain countries throughout time. However, the actual market economy is influenced and controlled by things other than government, so division and control of it by warlords or religious leaders is little different than by government.

In general, I think a definition of complete laissez-faire is the most accurate. I mean this from the perspectives of both a lack of interference from "governing institutions" (defined broadly enough to include things such as the Catholic Church, your friendly local Warlord, and etc.) and from lack of assistance or subsidy from those institutions as well. This has never occurred that I am aware of because humans always tend to set up institutions other than economic ones to create some kind of order. Therefore this is indeed a theoretical construct, but it happens to be a very convincing theory.

[Rajiv]

Re: Is There Anything in the USA That Isn't Subsidized?

I would recommend reading "An Anarchist FAQ"

In particular from there - Would laissez-faire capitalism be stable?

10.3 Was laissez-faire capitalism stable?

Firstly, we must state that a pure laissez-faire capitalist system has not existed. This means that any evidence we present in this section can be dismissed by right-libertarians for precisely this fact -- it was not "pure" enough. Of course, if they were consistent, you would expect them to shun all historical and current examples of capitalism or activity within capitalism, but this they do not. The logic is simple -- if X is good, then it is permissible to use it. If X is bad, the system is not pure enough.

However, as right-libertarians do use historical examples so shall we. According to Murray Rothbard, there was "quasi-laissez-faire industrialisation [in] the nineteenth century" [The Ethics of Liberty, p. 264] and so we will use the example of nineteenth century America -- as this is usually taken as being the closest to pure laissez-faire -- in order to see if laissez-faire is stable or not.

Yes, we are well aware that 19th century USA was far from laissez-faire -- there was a state, protectionism, government economic activity and so on -- but as this example has been often used by right-Libertarians' themselves (for example, Ayn Rand) we think that we can gain a lot from looking at this imperfect approximation of "pure" capitalism (and as we argued in section 8, it is the "quasi" aspects of the system that counted in industrialisation, not the laissez-faire ones).

So, was 19th century America stable? No, it most definitely was not.

Firstly, throughout that century there were a continual economic booms and slumps. The last third of the 19th century (often considered as a heyday of private enterprise) was a period of profound instability and anxiety. Between 1867 and 1900 there were 8 complete business cycles. Over these 396 months, the economy expanded during 199 months and contracted during 197. Hardly a sign of great stability (since the end of world war II, only about a fifth of the time has spent in periods of recession or depression, by way of comparison). Overall, the economy went into a slump, panic or crisis in 1807, 1817, 1828, 1834, 1837, 1854, 1857, 1873, 1882, and 1893 (in addition, 1903 and 1907 were also crisis years).

Part of this instability came from the eras banking system. "Lack of a central banking system," writes Richard Du Boff, "until the Federal Reserve act of 1913 made financial panics worse and business cycle swings more severe" [Accumulation and Power, p. 177] It was in response to this instability that the Federal Reserve system was created; and as Doug Henwood notes "the campaign for a more rational system of money and credit was not a movement of Wall Street vs. industry or regional finance, but a broad movement of elite bankers and the managers of the new corporations as well as academics and business journalists. The emergence of the Fed was the culmination of attempts to define a standard of value that began in the 1890s with the emergence of the modern professionally managed corporation owned not by its managers but dispersed public shareholders." [Wall Street, p. 93] Indeed, the Bank of England was often forced to act as lender of last resort to the US, which had no central bank.

In the decentralised banking system of the 19th century, during panics thousands of banks would hoard resources, so starving the system for liquidity precisely at the moment it was most badly needed. The creation of trusts was one way in which capitalists tried to manage the system's instabilities (at the expense of consumers) and the corporation was a response to the outlawing of trusts. "By internalising lots of the competitive system's gaps -- by bring more transactions within the same institutional walls -- corporations greatly stabilised the economy." [Henwood, Op. Cit., p. 94]

All during the hey-day of laissez faire we also find popular protests against the money system used, namely specie (in particular gold), which was considered as a hindrance to economic activity and expansion (as well as being a tool for the rich). The Individualist Anarchists, for example, considered the money monopoly (which included the use of specie as money) as the means by which capitalists ensured that "the labourers . . . [are] kept in the condition of wage labourers," and reduced "to the conditions of servants; and subject to all such extortions as their employers . . . may choose to practice upon them", indeed they became the "mere tools and machines in the hands of their employers". With the end of this monopoly, "[t]he amount of money, capable of being furnished . . . [would assure that all would] be under no necessity to act as a servant, or sell his or her labour to others." [Lysander Spooner, A Letter to Grover Cleveland, p. 47, p. 39, p. 50, p. 41] In other words, a specie based system (as desired by many "anarcho"-capitalists) was considered a key way of maintaining wage labour and exploitation.

Interestingly, since the end of the era of the Gold Standard (and so commodity money) popular debate, protest and concern about money has disappeared. The debate and protest was in response to the effects of commodity money on the economy -- with many people correctly viewing the seriously restrictive monetary regime of the time responsible for economic problems and crisis as well as increasing inequalities. Instead radicals across the political spectrum urged a more flexible regime, one that did not cause wage slavery and crisis by reducing the amount of money in circulation when it could be used to expand production and reduce the impact of slumps. Needless to say, the Federal Reserve system in the USA was far from the institution these populists wanted (after all, it is run by and for the elite interests who desired its creation).

That the laissez-faire system was so volatile and panic-ridden suggests that "anarcho"-capitalist dreams of privatising everything, including banking, and everything will be fine are very optimistic at best (and, ironically, it was members of the capitalist class who lead the movement towards state-managed capitalism in the name of "sound money").