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From: mcgeer@ucbvax.ARPA (Rick McGeer)
Newsgroups: net.politics.theory
Subject: Re: Health Care, Wonderful Market for
Message-ID: <10516@ucbvax.ARPA>
Date: Wed, 2-Oct-85 02:08:48 EDT
Article-I.D.: ucbvax.10516
Posted: Wed Oct  2 02:08:48 1985
Date-Received: Thu, 3-Oct-85 07:23:24 EDT
References: <204@gargoyle.UUCP>
Reply-To: mcgeer@ucbvax.UUCP (Rick McGeer)
Organization: University of California at Berkeley
Lines: 192

I really don't have time for this, but...

In article <204@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes:
>First some preliminaries:
>
>In article <10482@ucbvax.ARPA> mcgeer@ucbvax.UUCP (Rick McGeer) writes:
>
>> Standard sophomore text in the subject [sociology]?
>
>There is a short book by Peter Berger called *Invitation to
>Sociology*.  But I think it is more important to take a course in
>rigorous thinking.  I would suggest a course in analytical
>philosophy.
>
Physician, heal thyself....

>
>>Marxism is like smallpox: the only thing you want to
>>learn about it is how to stamp it out.  
>
>Let me rephrase that:  the only thing *you* want to learn about it is
>how to stamp it out.  People with open minds want to learn how a
>Marxist perspective in the social sciences might help one to
>understand history and society.

There is a difference between open-mindedness and airheadedness.  Marx's
predictions are manifestly false: the only Marxist revolutions in history
have been in poor, agricultural, feudal societies: not the industrial
societies that Marx predicted would rebel.  The difference is crucial, since
the central tenet of Marxism is that the major cause of revolution is the
alienation caused by industrialization.  It turns out that this is false:
Marxist revolutions occur in feudal societies, and the Marxist dictatorship
that replaces such a society is not measurably different from its predecessor.
Every Marxist "revolution" is merely a change of governing thugs.

>
>>As I dimly recall, Ireland in the 19th
>>Century was pretty much a colonial feudal aristocracy, which is close enough
>>to socialism that a simple hacker like me can't really tell the difference.
>>Anyone want to correct me?
>
>A new libertarian equivalency!  Feudalism = socialism.  I suggest you
>look up "feudalism" and "socialism" in an encyclopedia, preferably a
>scholarly work such as *The International Encyclopedia of the Social
>Sciences*.  If you want to learn about the Irish famine, read *The
>Great Hunger* by C. Woodham-Smith.

Damn right.  An economy is either competitive or command.  Feudalism and
socialism are both command economies, which means that the goodies are
passed out to political favourites.  If it quacks like a duck...
>
>On to the main topic:
>
>>Finally, whether you call them "needs" or "demands", you're still
>>talking about the allocation of scarce resources...which is done optimally
>>in a free market.
>
>This is well known to be false.  The Prisoner's Dilemma-type
>situations that have been mentioned are just the tip of the iceberg.

It is not well-known to be false.  See Alchian & Allen, or Hirschleifer.
Or read Smith, or Pareto, or Hume, or Mill, or Ricardo, or Friedman (either
one) or Stigler, or von Hayek.  Of all of history's great economists from
Smith on down, only a very few would not argue this.  I am more than a little
surprised that you would make this statement.  Most statist economists that
I know would argue that, though the market was optimal, it did not
address concerns of equity.

>se.  Let us take Brazil, where the peons starve while the cattle pig
>out because the peons have little money compared to the rich
>landowners.  This may well be Pareto-optimal in either the strong or
>weak (potential compensation) sense, but it is certainly arguable
>that it would be a more desirable outcome if the rural poor had more
>to eat at the expense of the wealthy.  I do not think one has to be a
>thoroughgoing utilitarian to make this argument.

Brazil is hardly a market economy.  I think 60% of gnp goes through the
state there, does it not?

>
>More fundamentally, libertarians cannot invoke the criterion of
>Pareto optimality and remain consistent libertarians.  The first
>reason is that, as Amartya Sen has shown in *Collective Choice and
>Social Welfare*, there is a potential conflict between libertarian
>principles and the principle of Pareto optimality (the Paradox of the
>Paretian Liberal), so that Libertaria would have to violate Pareto
>optimality now and then.

Examples?  I find this very odd, since Pareto was a Libertarian to the extent
that he advocated any political system at all.

>
>The second reason is that libertarians are committed to judging
>outcomes by the *process* through which the outcome was reached, not
>by the outcome itself.  For example, if you are poor in Libertaria
>and no rich person offers you any charity, and no fraud or initiation
>of coercion has taken place, then tough on you, according to
>libertarians.  You can rail against fate or beg for money, but you
>have no legitimate grounds to complain that the situation is unjust.
>All the rules have been followed, hence the outcome is just.  Now, an
>individual libertarian may *prefer*, for whatever reason, a social
>state that is Pareto-optimal to one that is not, but she has no
>objective basis for saying that a Pareto-optimal outcome must be
>better than a suboptimal outcome.  Hence, whether the free market
>leads to some kind of optimality or is horribly inefficient, the
>*outcome* of the market process is irrelevant to the libertarian
>judgment on the free market.

You are confusing the two issues.  My moral judgement on the worth of man
the individual is not at issue: I cannot hope to persuade those who find
coercion legitimate on moral grounds.  At issue is the optimal allocation
and production of scarce resources.  This is subject to theoretical and
empirical analysis.  Over the past 200 years there has been no shortage of
either.  The judgement of history is clear: the free market yields such
an allocation.  Those who wish proof should not take my word for it,
but consult any of the authors I cited above.

>
>>Your concern seems to be that such allocation is
>>inequitable.  But that word itself is almost meaningless, since I think that
>>any means of organizing the world in any way where I don't get what
>>I want is inequitable.  And you know damned well that that's a pretty 
>>universal definition of inequity.
>
>This is bizarre.  I don't know of anyone who thinks that equity or
>justice means "getting whatever I want."

I do.  Do you think it any coincidence that Claude Pepper, representing the
congressional district with the oldest population in the US, finds it "just"
that the young be bankrupted to subsidize the old?  Do you not find it
coincidental that Jesse Helms feels that it is just that American taxpayers
subsidize lung cancer?  Tell me, then: which American politician, in the
interests of justice, votes against the interest of his constituents?  And
how long does he remain in office?  Do you still find that definition bizarre?

>
>>The trouble with your "needs" is that someone has to decide which are
>>valid, and which are not -- which in turn involves cultural value
>>judgements.  The great thing about demand as a measure is that you
>>don't make judgements on the relative worth of A's vs B's demand --
>>it all comes out in the wash.  More to the point, demand measure may
>>be optimized automatically without examining the nature of the
>>demand, whereas -- by definition -- that's not true of "needs".
>
>The trouble with your "demand" is twofold:
>
>First, you are talking about *effective* demand.  A person who has
>little or no money has little or no demand in your scheme.  So the
>Brazilian peon has much less demand for grain than the wealthy cattle
>rancher, and it just automatically comes out in the wash that he is
>malnourished.  Thank goodness we don't have to bother with any
>cultural value judgments, such as that people should not starve to
>death in the midst of plenty. 

I still haven't seen evidence of this...your 20% figure was *completely*
anecdotal...

>
>Second, Arrow's Theorem proves that not all social decisions can be
>rationally based on individual preferences alone.  Try doing it for
>Condorcet's voting paradox.  So inevitably someone will have to
>decide, either dictatorially or through the dreaded value judgment.
>You can't escape the problem of "Who decides?" by means of the free
>market.

Reference?
>
>>And, better put, who prevents the market from acting as
>>it will?  When needs are allocated "so that the poor can receive them" -- as,
>>for example, certain "staple" foods are in Mexico, or as almost everything is
>>in the USSR -- the inevitable result is black markets and shortages.  *The
>>market reality always makes itself felt*; when you try to prevent the market
>>from working -- and I'll concede your motives -- all you manage to do is
>>bollix things up terribly and hurt the people you were trying to help.
>
>If you would carefully study Nicaragua, Cuba, and China, I think you
>would be less likely to make dogmatic statements like this.  I don't
>believe any of these countries is a workers' paradise, but they have
>made significant improvements in the well-being of their people.  By
>your logic there should be mass starvation in these countries.  Ask
>the Nicaraguans themselves whether they have generally been hurt or
>helped by their government's socialist policies.  Markets, BTW, have
>not been abolished in these countries, nor should they be.  

Cuba is kept afloat by $18 billion a year in sugar subsidies. Nicaragua,
last I heard, suffered shortages in many staples -- and there have been
anti-government demonstrations.  (early September, if memory serves).
And China's revolution did so well by the people that their first move
when the Great Helmsman died was to steer the ship for a free market
economy.

					Rick.