I was recently asked whether we couldn't find a 'market-based' road
to a more just society and the post below is my response to that query. In
addition, I've also been taken to task (final post, below) for supporting
microloans. My thoughts there are also reflected in my following post.
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
***************
A 'market-based' way to increase equality? Sure. Promote
entrepreneurship at the bottom (via, e.g., microloans, universal training in
entrepreneurial skills, and so on) and a hard-as-nails antimonopoly policy
at the top. The latter ruptures the flow of monopoly money into the coffers
of the rich--and the former launches the poor on the road to
self-sufficiency and higher incomes. (While not market-based, a steeply
progressive income tax--rising to, as in the U.S. prior to the 1980s, 90% on
the kind of obscene incomes we're seeing currently--could also quickly
reverse the present widening of the gap between the bottom and the top.)
But none of this is politically realistic. The right opposes all of
it for obvious reasons. But the left also opposes it--though for a quite
different reason. To the political left, anything that would make
capitalism more palatable to the masses is (correctly) seen as
postponing--if not blocking entirely--the coming of collectivism
(socialism). The term of denunciation is of course
'embourgeoisiement'--creating more capitalists by helping the poor become
middle-class owners of capital (and of their own jobs). It is this leftist
fear that makes it oppose capitalist REFORMS everywhere--including
antimonopoly policy.
So where's the political constituency for any market-based policy
that would promote equality? The right is against it, the left is against
it. And even if we assume that there's an open-minded majority in the
middle--one susceptible to persuasion on the point--where are the ADVOCATES
to come from, those who are to do the persuading?
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
******************
At 07:10 PM 12/29/97 -0500, you wrote:
>Dear Charles,
>
>Can't we come up with something a little more market-based than rationing?
>
>I was trying to think of something analogous to tradable pollution
>permits, but tradable consumption permits are basically ration cards.
>
>I like the idea of increasing the cost of things by increasing
>wages at the low end of the scale and therefore increase income equality.
>I think people have enough moral sense to buy into that. The pain that
>would result from reduced purchasing power would stimulate them to find
>ways to control for, and redistribute, concentrations of wealth. Maybe
>they'd even get interested in anti-monopoly legislation and its enforcement.
**********************
>
>THE TEXT OF YOUR MESSAGE FOLLOWS:
>>
>> Should we cut directly to the bottom line and debate the merits of
>> worldwide (or at least rich-country) rationing?
>>
>> Charles Mueller, Editor
>> ANTITRUST LAW & ECONOMICS REVIEW
>> http://webpages.metrolink.net/~cmueller
>>
**************
>
> At 06:09 PM 12/9/97 -0500, you wrote:
>> >Mason is absolutely right. The Earth has a finite carrying capacity.
>> >Herman Daly argues that there are limits to substituting more efficient
>> >technologies (diminishing marginal technical substitutability, or
>> >something like that). So economic growth will have to stop, and we will
>> >have to face up to questions of distribution. Voluntary simplicity is
>> >good practice.
>> >
>> >But impending limits to growth (recognized by my Principles text and
>> >treated with great respect) mean that the issue of recessions causes by
>> >the necessity to cut back on both the supply side and the demand side
>> >(does it matter?) needs to be faced.
>> >
>> >By way of encouragement, recall that the arguments of economists that
>> >environmental regulation will cause recessions proved to be unfounded
>> >(although they are still making them). After legislation was passed which
>> >forced companies like DuPont to clean up their production processes,
>> >Dupont and others found that production costs were LOWER, not HIGHER as
>> >the economists has assumed. This was because cleaning up environmental
>> >waste also meant reducing waste in general, which lowered costs. Inputs
>> >were used more completely and more efficiently.
>> >
>> >It's interesting that in this case economic theory says that increasing
>> >efficiency will expand supply because it reduces costs, but government
>> >regulation always decreases supply because it raises costs. One wonders
>> >why the economists are only looking at one side of their own story here.
>> >
>> >It's possible that reducing consumption could leave the economy
>> >unchanged. In Europe, people don't feel as compelled as Americans to have
>> >many, many changes of clothes. They have fewer different outfits, but
>> >they cost more. My French teacher in Paris seemed to buy one new designer
>> >outfit a year, which she wore every day. I think she spent more on that
>> >one outfit than I spend in a year on all my changes of clothes. But we
>> >both contributed the same to the GDPs of our respective countries.
>> >
>> >So in theory, we could reduce consumption and throughput, but buy higher
>> >quality stuff.
>> >
>> >Another example that might contribute to solving the income distribution
>> >problem at the same time... I read that an American businessman was
>> >complaining that haircuts cost so much in Switzerland. The Swiss person
>> >to whom he was complaining countered that the Swiss are of the opinion
>> >that barbers deserve to have a decent standard of living just like
>> >businessmen do.
>> >
>> >So increasing income equality would raise costs, reduce consumption,
>> >reduce output, but not necessarily reduce nominal GDP.
>> >
>> >Somebody argue with me. Could we say that a lower quantity of stuff
>> >that is priced higher because we've lowered income inequality would have a
>> >neutral effect on GDP? (using, perhaps, the Monetarist equation of
>> >exchange: MV=PQ, if we don't mind introducing some humor into the
>> >discussion!). Please don't talk about European unemployment levels.
>> >Figure out some way we can redistribute income and have full employment
>> >without a massive government sector. This German lady I stayed with in
>> >Germany bought Demeter macrobiotic food at high prices and argued that
>> >there was no way farmers could make a decent living selling flour at
>> >supermarket prices. According to her, as a matter of principle prices
>> >should be HIGHER, not lower as the free traders argue, in order to assure
>> >the producers of basic goods a decent living. To me, these kinds of
>> >considerations have to factor into any discussion of voluntary
>> >simplicity, which is too often confused with living on a very low wage.
>> >
>> >-- Susan Hunt
>> >
**************
>> >THE TEXT OF YOUR MESSAGE FOLLOWS:
>> >>
>> >> You write:
>> >>
>> >> if consumption isn't good for you, the
>> >> >recession Mueller is talking about is.
>> >>
>> >>
>> >> This is assuming the conclusion the demand-side spending
drives the
>> >> macro-economy; but that is what is being disputed.
>> >>
>> >>
>> >> Was the 1980-2 recession good for
>> >> >you and yours? 1990-91? Those are baby recessions compared to what
>> >> >reducing consumption by 10% would do.
>> >>
>> >> Ditto.
>> >>
>> >>
>> >> The overconsumption trap we are in springs from having
rejected the
>> >> old Norman Thomas dictum, "The problem is not production, but
distribution."
>> >> In the Reagan trap, we tolerate our fantastically unequal distribution of
>> >> wealth and income, and say that "A rising tide lifts all boats."
Thus, for
>> >> the poorest people to avoid starvation, we must have more yachts, private
>> >> jets, and million-acre ranches for those at the tiptop. Walter Annenberg
>> >> has a private golf course near Palm Springs, in a natural desert,
sopping up
>> >> a huge share of scarce Colo. River water. The Bass brothers own 45,000
>> >> acres of land in the Imperial Valley; the Newhall Family has over 100,000
>> >> acres in the Sta. Clara Valley of the south. How much land does a man
need?
>> >> Tolstoy answered that question beautifully in his story of that title. So
>> >> long as we are required to "lift those boats" by, say, 20%, in order to
>> >> raise the feed ration of a starving welfare case by 20%, we are going to
>> >> push on the limits of the earth.
>> >>
>> >> Demand-side economics, which you seem to accept, bids us overlook
>> >> all that and solve all problems by printing money. It should be so
simple!
>> >> Actually, that's its great allure; but once you ask some hard
questions, the
>> >> allure and the simplicity vanish.
>> >>
>> >> Rather, how about tapping rentier income to support government,
>> >> untaxing labor, and removing all the subsidies and abatements presently
>> >> offered to advertising? May I also suggest revisiting Veblen, *Theory of
>> >> the Leisure Class*.
>> >> Mason Gaffne
*************
At 05:41 PM 1/1/98 +0300, you wrote:
>First off, I appreciate your dogged concern about the problem of
>monopoly. The info. you sent out about Center for Law and Economics
>from George Mason Univ. was very interesting, that they exclusively
>promote the Chicago School approach. It made me want to hold a regular
>vigil or protest of some sort there. Or to work to find ways to get
>Centers for Law and Economics, which I understand are in other places
>as well, to offer alternative perspectives to judges.
>
>Re. microloans, I grow weary of suggestions for improving financial
>mechanisms which ignore the land problem. All wealth comes from the
>earth's land and resources, money after all is just a symbol. It is
>the second tier of the concentration of wealth game. The first tier is
>our distorted land tenure system. I just really would like
>"progressives" to speak of land tenure and monetary problems in the
>same breath.
>
>If there was no extortion from land speculation and profiteering,
>labor could accumulate capital more readily to finance capital
>improvements. If there was always direct access to land, "excess"
>labor could always find self-employment. Being able to "take this job
>and shove it" would give labor the advantage over wage-slave
>capitalism. The form of capital ownership would become that of
>decentralized cooperatives/ASOPs and enhanced social control of
>"natural monopolies" such as some utilities, transportation, and such.
>
>End of micro-lecture.
>
>charles mueller wrote:
>>
>> What do you recommend?
>>
>> At 04:10 PM 12/31/97 +0300, you wrote:
>> >By all means, let us find other ways to loan the poor money so that
>> >they can afford to purchase land at inflated values from landlords and
>> >speculators.
>> >
>> >charles mueller wrote:
>> >>
>> >> Lary Martin suggests that we opt for 'investment strategies that
>> >> provide $ to rural cooperative banks that give microloans to indigenous
>> >> people - not carpet baggers intent on their damned profits.'
>> >> Bravo. Nurture entrepreneurship at the bottom, apply a tough
>> >> antimonopoly policy at the top.
>> >>
>> >> Charles Mueller, Editor
>> >> ANTITRUST LAW & ECONOMICS REVIEW
>> >> http://webpages.metrolink.net/~cmueller
>> >
>
