Public Works

[SirNitram]

I've poked around and found some numbers which might be useful. One of Moody's outfits top economists worked out the approximate amount you get back for each dollar spent on various schemes to boost the economy. Page 3 of this study, in PDF form.

Infrastructural spending is not the top(That's food stamp funding, at 1.73 dollars of economy for one government spending dollar), but is third, at 1.59, still comfortably positive. The methods proposed by conservative idealogues(Permenant Bush tax cuts, cut corporate rate, permenant the dividend tax cut..) never break fifty cents for every dollar spent. No-brainer, seems to me.

Second, I wish to bring up some numbers on the idea that the best thing a government can do is boost growth. Pew Research's preliminary numbers show an increase of the GDP from 9.8T to 11.7T, in 2000 dollars, since Bush came in. Yet the same period marks a decrease in the median income. Link

[HMS Vanguard]

I actually did not use the words you are putting into my mouth.

"Distortion" is a loaded term.

# To twist out of a proper or natural relation of parts; misshape.
# To give a false or misleading account of; misrepresent.
# To cause to work in a twisted or disorderly manner; pervert

To say that public spending 'distorts' the market economy is simply a truism. You may think it is a good thing the market economy is distorted because of your own ideology (socialism/mussolini-style corporate fascism?), but that is something else entirely.

Essentially my argument is this - by spending money on public works and employing people in working on them, you are taking away money from other enterprises, since they are funded from taxation (or debt which is delayed taxation). There is therefore no obvious case that this either reduces unemployment or 'stimulates' the economy.

Why should we assume that the enterprise that money is taken away from has greater utility than the public works project it is given to? That's something that has to be demonstrated.

Since people tend to spend their money on things they want, and only need to be forced to spend money on things they do not, there is a very strong prima facie case that this is so. Then add the enormous empirical evidence to that end - the USSR, Maoist China, British state enterprises, &c. and I do not think that this point is in general in dispute. Keynesians &c. do not disagree on this broad point, they tend to argue rather that in certain circumstances (recessions) it is better to force people to spend their savings.

To claim that government spending tends to be more productive than private spending is a very bold claim indeed. In fact, it would imply the total socialisation of the entire country would be an economically beneficial policy.

Indeed, as the state tends to allocate money badly at the best of times,

I dispute this assumption. People like to natter away about how the government wastes money on this or that as if it is a given. It isn't. The overwhelming majority of the US federal budget goes to support programs critical to the health and security of society, like national defense, social security, medicare, and so forth. Earmarking was constantly discussed during the recent presidential election, but as Obama pointed out, earmarking only accounts for .5% of the budget. Tempest in a teacup.

I don't think anybody "natters on" that healthcare or education is useless, just that the government is not very good at managing them. And your state school system is hardly brilliant now is it? The other big ticket item is defence - your views on whether this is too high or low probably varying depending on your views on other issues like Iraq, but either way defence is also famous for bloated and wasteful projects (Zumwalt, LCS, FCS, Stryker, F-22, Patriot, Seawolf, etc. all attracting varying degrees of controversy). Then we have quite frankly repugnant spending, such as farm subdisies (which impoverish the third world), debt interest (excepting a major war, a politician's honey-pot that allows the next guy's tax to pay for today's entitlements), pork barrel spending both overt and covert (vote buying), Etc.

and surely worse when its principle aim is to spend rather than to extract value, it is almost certain to reduce the total amount of value compared with otherwise.

Why?

Oh come now, you can't be serious?

As Sanchez also pointed out, this only really justifies direct welfare.

As I also pointed out, direct welfare is likely to result in idleness and the loss of self-regard, the avoidance of which is intangible but probably worth a substantial dollar value, often enough to justify inefficiencies in welfare via makework employment.

If you maintain people in a non-productive (ie. loss-making) work force indefinitely, you simply lock in the problems you are trying to get out of.

But it is also a very spurious concept. Diminishing returns almost certainly do exist, but why are they bad, and why is it better for the poor for them not to exist? If there is less incentive to spend, the rich invest. Investment is what drives economic growth.

Different areas of economic intercourse drive growth in different ways and investment is only one facet; consumer spending is another. Countries have to weigh the relationship between consumer spending. investment, and economic growth in determining whether their tax and social policies should favor rich or poor.

'Consumer spending' only allows businesses that already exist to expand existing operations. The leaps and bounds the West has made in the last decade or two have been a result of new businesses emerging in sectors that previously did not even exist. What's more, mandating consumer spending directly or indirectly creates the type of debt fuelled mess we are living through the consequences of now. The fact is, sub-prime mortgages made sense for the people who took out those loans when the government was still able to hold interest rates artificially low. Only now that interest rates have risen to correct for this has it caused all this misery.

Moreover, economic growth is not an absolute good because it can still fail to increase general utility. The US economy has grown steadily for decades but real income for most Americans has declined, so we essentially have an extremely stratified economy with obscenely divergent standards of living.

Real income for most Americans has not declined over the past few decades, it has increased:



That's a 30% rise since these statistics were first collated.

It very probably is better to be poor in a country that gives you other peoples' savings in the immediacy, but in 100 years? In 200? Economic growth compounds, so even a 1% difference in growth rate makes an enormous difference over time. Who is better off? A poor person in Mexico, or a poor person in the USA?

Are you trying to suggest that Keynesian economics are responsible for Mexico's economic position vis-a-vis the United States?

You seem to be arguing more for outright socialism, without any of the caveats the Keynesians apply. Mexico is indeed 'more socialist' according to eg. the Economic Freedom Index.

Either way, here's the thing--it is better for a poor person in Mexico today than it was 30 years ago; for a poor American it is worse. This in spite of substantial economic growth in America during that period.

See above, you need to check your stats.

It's very difficult to spend money and derive NO benefit from whatsoever, I grant that. The problem is, if people themselves valued whatever it is you're spending it on more than anything else they could buy they will do it anyway, and if they're actually going to do that, why bother taking it?

You're seriously asking this? Government operates on economies of scale that are unattainable by any private entity or even any coalition of private entities. The American National Parks system, for example, could never have been constructed or maintained by private initiative.

The US Parks Service has a significantly smaller budget than many companies. Whether, of course, people would want to pay privately is a different question, and personally I dont see forcing people to pay for things like that as morally acceptable.

Also, government is able to maintain fairly firm continuity over generations in a single project. It can undertake projects at a monetary loss, either temporarily, as in the case of the Interstate Highway System which did not pay for itself for years but eventually did so and more, or permanently, as in the case of the national parks. The government is also able to act as a guardian of the public trust and ignore potential quantifiable profits in favor of value to the community. Imagine the value of the land that Central Park in Manhattan occupies, if it could be offered for development; but the City of New York will never sell it, because its intangible value is incalculable.

This is good or bad, depending on your PoV, even for each individual project. If roads had been built on a for-profit basis with turnpikes, there would probably be fewer cars arounds, and rail travel would probably be economically viable still and much more widely used. Is it good that this didn't happen? Ask a car driver, then ask an environmentalist. Similarly, is it better that Central Park is a park or paved over? Again, ask someone who lives next door to it and gets a free park, then ask someone who dreams of living in central New York but will never be able to because of property prices. Again, you're likely to get two different answers (no, Central Park does not have infinite value, as you are slyly implying). Which one of these answers is "correct" is totally unclear to me - I am not claiming that in a private system CP would be paved over and this would be good, or that the roads would be demolished and this would be good. What I am saying is that quite well-intentioned disagreements would be settled by private voluntary exchange, and not by government fiat, in a way that is likely to increase the utility of people in general, and of the particular people involved.

[Illuminatus Primus]

What a bunch of bullshit quoting the aggregate real income rather than the real income for earners in each of the first 3 quartiles, or shit, the bottom 80-90%. The economic growth of the last 8 years was almost totally if not completely lost on most of the middle class and basically all of the working class. If you have enough rich rich people who get even more really rich, GDP and overall development will go up. That doesn't mean its actually felt by most of the population.

Furthermore, you insist on qualitatively making mealy-mouthed loaded-term rhetorical remarks about the invasive nature of government "fiat" (like all libertarians, claiming that government in general, even a liberal democratic government, is some alien entity acting in only its own interest and benefiting only itself). You know perfectly well that economic theory and empirical data shows that purely private transactions lead to collective and minority externalities that can be extremely serious. Stuff like environmental degradation, capital flight, triage by ability to pay for survival necessities (health care, food, education), and many others; and you know it, too. You just handwave it like those things will get done by rational (what a joke) actors. Not to mention your claim is based intrinsically on the equitable distribution of economic growth (something not supported by empirical evidence) and that is both practical and desirable for it to continue indefinitely. Without amazing advances in technology, we will begin to encounter physical, ecological, and social barriers to indefinite growth. Ones that cannot simply be waved off with the laughable pseudoscientific assumption that human ingenuity just automatically will and must solve all difficulties (a common cornicopian assumption, unwarranted by evidence and reason).

[Surlethe]

Essentially my argument is this - by spending money on public works and employing people in working on them, you are taking away money from other enterprises, since they are funded from taxation (or debt which is delayed taxation). There is therefore no obvious case that this either reduces unemployment or 'stimulates' the economy.

The case is to be made is that the fiscal stimulus multiplier exceeds the crowding-out effect since deficit spending causes no short-run taxation contraction. It's really rather simple -- GDP is the sum of private consumption, investments, public sector spending, and exports minus imports. If public sector spending increases and taxation does not decrease private consumption, investments, or the trade balance, then GDP will increase. It will also stimulate an increase in consumption and investment -- as SirNitram posted, the marginal return in GDP is about $1.50 for every dollar (deficit)-spent by the government.

[HMS Vanguard]

What a bunch of bullshit quoting the aggregate real income rather than the real income for earners in each of the first 3 quartiles, or shit, the bottom 80-90%. The economic growth of the last 8 years was almost totally if not completely lost on most of the middle class and basically all of the working class. If you have enough rich rich people who get even more really rich, GDP and overall development will go up. That doesn't mean its actually felt by most of the population.

He actually said 'decades', not 'the past 8 years' (I'm not exactly a Bush fan either). If you think Americans are no richer than they were in 1968 or 1978 then ok, I probably can't convince you otherwise, but I'd like to see you present some evidence for such an outlandish claim.

Furthermore, you insist on qualitatively making mealy-mouthed loaded-term rhetorical remarks about the invasive nature of government "fiat"

While this doesn't make any difference to your argument it does get rather tiresome. If I repeatedly called you a stalinist, would you say I was approaching the debate with a scientific mindset? I rather think you'd call me a crackpot. Aside from which, "Government fiat" is merely a factual description. If you think government fiat is sometimes good, then fine, that's a perfectly reaosnable position, albeit one I disagree with, and I haven't said otherwise.

(like all libertarians, claiming that government in general, even a liberal democratic government, is some alien entity acting in only its own interest and benefiting only itself).

No-one said this, either, but it is plainly true that democratic governments can and do act against the interests of some people in society. The ultimate purpose of democracy is to impose conformity on certain issues against the wishes of the dissenting minority, hence for instance the constitution to prevent the more eggregious abuses of this power. This does not at all mean that government is an "alien entity" that never benefits any of its electors.

You know perfectly well that economic theory and empirical data shows that purely private transactions lead to collective and minority externalities that can be extremely serious. Stuff like environmental degradation, capital flight, triage by ability to pay for survival necessities (health care, food, education), and many others; and you know it, too.

I actually think environmental degradation would be handled a lot better in a libertarian society than in our present society (if I emit CO2 and flood your house, you can't sue or me, or make me cease and desist, in today's society). Capital flight is not a problem as such, but rather a symptom of other problems (most of which wouldn't exist in a libertarian society) and "triage by ability to pay for survivial necessities"? Who is being melodramatic now? This sort of thing had largely gone even by the twilight of Victorian capitalism.

You just handwave it like those things will get done by rational (what a joke) actors. Not to mention your claim is based intrinsically on the equitable distribution of economic growth (something not supported by empirical evidence) and that is both practical and desirable for it to continue indefinitely. Without amazing advances in technology, we will begin to encounter physical, ecological, and social barriers to indefinite growth. Ones that cannot simply be waved off with the laughable pseudoscientific assumption that human ingenuity just automatically will and must solve all difficulties (a common cornicopian assumption, unwarranted by evidence and reason).

None of these things are pre-requisites for favouring a free market economy.

The case is to be made is that the fiscal stimulus multiplier exceeds the crowding-out effect since deficit spending causes no short-run taxation contraction. It's really rather simple -- GDP is the sum of private consumption, investments, public sector spending, and exports minus imports. If public sector spending increases and taxation does not decrease private consumption, investments, or the trade balance, then GDP will increase. It will also stimulate an increase in consumption and investment -- as SirNitram posted, the marginal return in GDP is about $1.50 for every dollar (deficit)-spent by the government.

I accept that GDP is calculated like that - but it's a mathematical trick rather than real growth, because the negative value of the debt is not accounted for. Hence in countries where the government spends approaching 100% of national income, we don't actually see 50-80% annual GDP growth.

[Surlethe]

Vanguard, you want to debate libertarianism in the Coliseum?

I accept that GDP is calculated like that - but it's a mathematical trick rather than real growth, because the negative value of the debt is not accounted for. Hence in countries where the government spends approaching 100% of national income, we don't actually see 50-80% annual GDP growth.

I wonder -- which countries actually deficit-spend 100% of national income? Can you provide me some examples? The deficit spending part is important, because it permits us to neglect the contractionary effect of taxation on consumption and investment (and trade balance, in the case of tariffs and quotas).

[Pablo Sanchez]

To say that public spending 'distorts' the market economy is simply a truism. You may think it is a good thing the market economy is distorted because of your own ideology (socialism/mussolini-style corporate fascism?), but that is something else entirely.

It is something else entirely, because I'm right. The market economy in itself does not care at all about human suffering, so government has to muscle it into a shape that will serve humanity more effectively.

Since people tend to spend their money on things they want, and only need to be forced to spend money on things they do not, there is a very strong prima facie case that this is so.

Government has a broader perspective which allows it to see value in large projects that private entities would find to be of dubious value, such as the 19th railroad and canal building that enabled the USA to become an economic powerhouse. These projects simply would never have happened without the government taking money in the form of taxes to pay for them.

Then add the enormous empirical evidence to that end - the USSR, Maoist China, British state enterprises, &c. and I do not think that this point is in general in dispute.

No, I dispute it and offer the counter-claim that the vast majority of government spending is necessary and useful.

To claim that government spending tends to be more productive than private spending is a very bold claim indeed. In fact, it would imply the total socialisation of the entire country would be an economically beneficial policy.

Black and white fallacy.

I don't think anybody "natters on" that healthcare or education is useless, just that the government is not very good at managing them. And your state school system is hardly brilliant now is it?

I think the problem with the American school system is due to the fact that it has less government direction than it's counterparts in other states. American schools have their curriculum and goals determined by state and local boards, instead of being directed on a large scale by the national government as in Germany or France. Also, the reason for inefficiencies present in medicare/medicaid is most likely due to the fact that they are operating as part of a mostly private health care system; socialized medicine as used in Europe is vastly more efficient than the American system.

The other big ticket item is defence - your views on whether this is too high or low probably varying depending on your views on other issues like Iraq, but either way defence is also famous for bloated and wasteful projects (Zumwalt, LCS, FCS, Stryker, F-22, Patriot, Seawolf, etc. all attracting varying degrees of controversy).

Again, inefficiency and corruption in the DoD probably doesn't make up more than a small fraction of its budget and it would be on you to prove otherwise.

Oh come now, you can't be serious?

Yes, I want you to justify that statement.

If you maintain people in a non-productive (ie. loss-making) work force indefinitely, you simply lock in the problems you are trying to get out of.

Or, as in the case with New Deal employment programs, you maintain people in a loss-making work force until the economy improves and they can be moved to private sector jobs.

'Consumer spending' only allows businesses that already exist to expand existing operations.

Yes. So? Where did I say that all investment capital needs to be confiscated? Oh, that's right, never, and in fact I explicitly said that sane economic policy was about finding the ideal balance between competing economic factors.

Real income for most Americans has not declined over the past few decades, it has increased:
That's a 30% rise since these statistics were first collated.

30% rise since 1965; I said 30 years, approximately coinciding with the Reagan economic revolution that we are only now beginning to exit. But, my bad, I guess real median household income has risen by about 10% (while GDP has grown by about 240%, which is kind of funny, huh), while people in the lower quartiles were progressively losing the value of Great Society programs, welfare, and other redistribution programs designed to help the poor. There's also the matter of the costs of things like education and health care, which tie up large portions of the income of people in the lower quartiles and have been increasing at a rate higher than inflation for quite a long time.

You seem to be arguing more for outright socialism, without any of the caveats the Keynesians apply.

Well, I'm not.

See above, you need to check your stats.

Median household income represents a person of average income, not the poor, whom you referenced specifically. It also does not represent the value of government programs dismantled or defunded during the last 30 years, such as state-funded mental health facilities and other programs designed to help the homeless. Finally, even if conditions for poor Americans have improved in the past 30 years, they have probably not improved as much as for poor Mexicans, who have improved conditions considerably, partially through the expedient of sending part of their labor force to the USA.

The US Parks Service has a significantly smaller budget than many companies.

It's operating budget is indeed only a couple billion, but because the national parks are free to all they operate at a dead loss, and there aren't many companies that could survive a dead loss of a couple billion each fiscal year to one of their divisions, and any responsible company would sell it off--and the national parks would be lost to this and all future generations. The free market works!

Whether, of course, people would want to pay privately is a different question, and personally I dont see forcing people to pay for things like that as morally acceptable.

Well, I do, because the national parks increase general utility.

If roads had been built on a for-profit basis with turnpikes, there would probably be fewer cars arounds, and rail travel would probably be economically viable still and much more widely used. Is it good that this didn't happen? Ask a car driver, then ask an environmentalist.

First off, the nation's railroads were built privately but were funded almost entirely by enormous government subsidies. Second, it is difficult to calculate the economic impact of America's well-serviced road network because it is so integral and so many industries were affected or created (e.g. trucking), but it was probably enormous.

Similarly, is it better that Central Park is a park or paved over? Again, ask someone who lives next door to it and gets a free park, then ask someone who dreams of living in central New York but will never be able to because of property prices.

Don't be retarded, Central Park can be accessed by anyone visiting or living in New York City. They can simply take the subway--another public works project that improves the lives of citizens.

Again, you're likely to get two different answers (no, Central Park does not have infinite value, as you are slyly implying).

I'm not implying that it has infinite value, that's stupid. I simply said that it's value was incalculable.

What I am saying is that quite well-intentioned disagreements would be settled by private voluntary exchange, and not by government fiat, in a way that is likely to increase the utility of people in general, and of the particular people involved.

Oh good, voluntaryism again.

[Surlethe]

30% rise since 1965; I said 30 years, approximately coinciding with the Reagan economic revolution that we are only now beginning to exit. But, my bad, I guess real median household income has risen by about 10% (while GDP has grown by about 240%, which is kind of funny, huh), while people in the lower quartiles were progressively losing the value of Great Society programs, welfare, and other redistribution programs designed to help the poor. There's also the matter of the costs of things like education and health care, which tie up large portions of the income of people in the lower quartiles and have been increasing at a rate higher than inflation for quite a long time. ...
Median household income represents a person of average income, not the poor, whom you referenced specifically.

Not necessarily; it represents a household of median income. Women have entered the workforce in the last thirty years. A quick google gives: this chart.

Oh good, voluntaryism again.

To be fair, there are varieties of libertarianism. Friedman used the term "voluntary" extensively, but he wasn't anarcho-libertarian like our friend Volleyball was.

[Pablo Sanchez]

Not necessarily; it represents a household of median income. Women have entered the workforce in the last thirty years. A quick google gives: this chart.

So you're saying it's fairly likely that the median individual earns less than in 1978, but because the number of dual-earner households has risen in the same period, household income has still managed to rise?

[Surlethe]

Not necessarily; it represents a household of median income. Women have entered the workforce in the last thirty years. A quick google gives: this chart.

So you're saying it's fairly likely that the median individual earns less than in 1978, but because the number of dual-earner households has risen in the same period, household income has still managed to rise?

That's pretty much correct, with one caveat. I don't know enough about the subject to say whether it's likely or not, but it is certainly a complicating factor. It's another reason you can't point to the median wage chart and say "poverty is diminishing!"

There's also the fact that the median measures only the person right in the middle (if you line everybody up according to income). If his income doesn't change or rises, and he stays in the middle, then median wage will rise even if everybody poorer than him actually loses wealth over the same period of time.

[Coyote]

The chart also neglects to take into effects inflationary effects on the dollar; it assumes that the dollar still has the same buying power and has remained unchanged.

Sigh. More lolbertarians.


FREEEE MARRKET... UUHHHNNN... PRIVATE INITIATIVE...

[Surlethe]

The chart also neglects to take into effects inflationary effects on the dollar; it assumes that the dollar still has the same buying power and has remained unchanged.

No, it's real median wage. That means it's been corrected for inflation.

[Coyote]

Damn. Well, I feel the same way about the zombies, though. There is absolutely no reason whatsoever for, say, a National Park System style private initiative to form that would charge people to use a forest when someone could go to a forest for free a few miles away; and of course we've seen how much "initative" the Big Three carmakers showed in the US when they insisted that they built SUVs and minivans almost exclusively because "the market demanded it"-- as if no economical Japanese cars had been sold at all over the last 40 years.

Libertarianism... Communism run by businesses.

[Surlethe]

There are several basic ideas that underlie libertarianism. The first is the goal of utility maximization. The second is that utility corresponds to value, and thus can be measured by the choices people make: out of the possible options, a person will choose the course of action that he values most and thus will benefit him most. The third is a corollary to the second: the value of a good to a person is measured by how much a person is willing to pay for it (put your money where your mouth is!). These are generally accompanied by an intrinsic value assigned to freedom, although in light of the second axiom the emphasis on freedom can be derived.

If you subscribe to these ideas, then the classic "soft" libertarian point of view -- that markets should generally be free, and government should be minimal -- is readily deducible by examining the classic free market supply-demand chart. (I may extend this discussion for the Library in SLAM.)

So, Coyote, regarding national parks: a libertarian would argue that no, we shouldn't have national parks if people aren't willing to pay for them. If they're not willing to pay for them, then obviously they value other things more highly, and thus society derives more benefit from these other things than from national parks.

[Count Chocula]

Coyote, SUVs and minivans were focused on by the Big 3 automakers for two reasons:

1) Since they were classified as "trucks" they were not subject to the CAFE standard, which meant the Big 3 could delay their development expenses for small cars, which kinda sucked. Remember the Mustang II, Chevette and K-Car? It was pretty clear case of government regulation introducing market distortion.

2) The Japanese were kicking Detroit's ass on small cars, especially little gems like the first generation Civics and Celicas. The only halfway decent US car in their class, IIRC, was the Mercury Capri which was a Ford of Europe design. Detroit's solution: build stuff the other guys ain't! It's a viable strategy, and indeed worked for almost 30 years.

Heck, who knows: perhaps if there had been no CAFE standard, Detroit would have been forced to make their cars better, faster, or face bankruptcy in the 1980s instead of now.

A similar analogy to the OT's premise, but with legislation as the example.

[Coyote]

So, Coyote, regarding national parks: a libertarian would argue that no, we shouldn't have national parks if people aren't willing to pay for them. If they're not willing to pay for them, then obviously they value other things more highly, and thus society derives more benefit from these other things than from national parks.

Or, they'd end up in a state of reaction and spin-control-- people would just let the forests be, and only step in when there was a perceived need, such as logging or as a handy place to dump waste. After awhile, people would start to complain about how the beautiful forest nearby has gone to hell, and an entrepeneur would say "I'll incorporate a land management company!" and become Park Rangers for Hire to protect the forest.

So of course, the damage would simply be exported somewhere else.

But then there's another interesting development, a more "direct action" as it were, and it involves the police. Libertarians always say "the community will hire police if they perceive the need" but in a Libertarian society, the forest have no police since the deers, bears, and trees have no economic power. Only motivated volunteers, such as ELF or Earth First, would step in to defend the forest... and with no government regulatory agency, nothing stops them from going hog-wild and monkeywrenching, tree-spiking, or even shooting loggers willy-nilly.

Sure, the loggers and waste-dumpers can hire bounty hunters to go into the forest and fight the ELF, but the end result is you'll just end up with an ever-simmering guerrilla war between ELF and Loggers. It's not like ELF would just let the Loggers go elsewhere to ruin anotehr forest, after all.

[Turin]

Real income for most Americans has not declined over the past few decades, it has increased:
That's a 30% rise since these statistics were first collated.

30% rise since 1965; I said 30 years, approximately coinciding with the Reagan economic revolution that we are only now beginning to exit. But, my bad, I guess real median household income has risen by about 10% (while GDP has grown by about 240%, which is kind of funny, huh), while people in the lower quartiles were progressively losing the value of Great Society programs, welfare, and other redistribution programs designed to help the poor. There's also the matter of the costs of things like education and health care, which tie up large portions of the income of people in the lower quartiles and have been increasing at a rate higher than inflation for quite a long time.

Not to chime in from the peanut gallery, but his little chart looked familiar and I did a little digging. It comes from Wikipedia on US Household Income. What he neglected to mentioned / decided to ignore is the chart right above it:


(Original source here: http://www.census.gov/prod/2004pubs/p60-226.pdf)
Which surprise surprise shows nearly flat median increase in household income for the bottom half of the workforce (even after adding all the women into the household incomes!), and skyrocketing increases for the top 10%. That's some pretty dishonest debating, HSMV.

[Coyote]

Coyote, SUVs and minivans were focused on by the Big 3 automakers for two reasons:

1) Since they were classified as "trucks" they were not subject to the CAFE standard, which meant the Big 3 could delay their development expenses for small cars, which kinda sucked. Remember the Mustang II, Chevette and K-Car? It was pretty clear case of government regulation introducing market distortion.

But the government should have moved to force upgrades in the car makers' standards-- this wasn't the market or regulations, it was the Big 3 stepping in and saying "don't force us to increase our standards! It'll be too expensive, and we'll have to shut down plants. It would sure be a shame if we had to shut down that very car plant in your home district, Senator."

2) The Japanese were kicking Detroit's ass on small cars, especially little gems like the first generation Civics and Celicas. The only halfway decent US car in their class, IIRC, was the Mercury Capri which was a Ford of Europe design. Detroit's solution: build stuff the other guys ain't! It's a viable strategy, and indeed worked for almost 30 years.

They voluntarily ceded the battlefield to their rivals. It is, I admit, one of the few libertarian arguments I can agree with; companies that cannot or will not adapt to market needs will be left to wither on their own. But companies' refusal to address realistic concerns and have viable market plans for future possibilities becomes everyone else's problems when the markets collapse and millions are threatened with joblessness. All society now pays for their poor management principles, although the bosses still escape with billion-dollar "bonuses".

Heck, who knows: perhaps if there had been no CAFE standard, Detroit would have been forced to make their cars better, faster, or face bankruptcy in the 1980s instead of now.

A similar analogy to the OT's premise, but with legislation as the example.

I see what you mean, but at the same time, as regulation on the housing markets decreased, and loans were allowed to anyone with a pulse, the companies abandoned fiscal responsibility and rushed in throwing all sorts of money around without making the needed judgement calls. It's hard to argue that the situation would have been mitigated with less regulations.

[Surlethe]

Or, they'd end up in a state of reaction and spin-control-- people would just let the forests be, and only step in when there was a perceived need, such as logging or as a handy place to dump waste. After awhile, people would start to complain about how the beautiful forest nearby has gone to hell, and an entrepeneur would say "I'll incorporate a land management company!" and become Park Rangers for Hire to protect the forest.

So of course, the damage would simply be exported somewhere else.

Well, right. That is the libertarian idea. You're accurate, since it's a rather idealistic point of view, since it's based on a static description of the economy and a couple of idealistic assumptions about decision-making.

But then there's another interesting development, a more "direct action" as it were, and it involves the police. Libertarians always say "the community will hire police if they perceive the need" but in a Libertarian society, the forest have no police since the deers, bears, and trees have no economic power. Only motivated volunteers, such as ELF or Earth First, would step in to defend the forest... and with no government regulatory agency, nothing stops them from going hog-wild and monkeywrenching, tree-spiking, or even shooting loggers willy-nilly.

Sure, the loggers and waste-dumpers can hire bounty hunters to go into the forest and fight the ELF, but the end result is you'll just end up with an ever-simmering guerrilla war between ELF and Loggers. It's not like ELF would just let the Loggers go elsewhere to ruin anotehr forest, after all.

Whether or not police should exist as a state-funded force depends on the libertarian you talk to. Friedman would say yes, I think; but an Austrian like Hayek, or an anarcho-libertarian like the late lamented Voluntaryist would say no. After all, in the libertarian conception, if ELF is not able to outbid the logging company, then clearly society values the cut lumber more than the beautiful parkland, and so utility is maximized by logging. A classic liberal would thus say that it sucks to be ELF, but the police need to be there to enforce the rules and keep ELF from spiking trees or shooting loggers.

[HMS Vanguard]

To say that public spending 'distorts' the market economy is simply a truism. You may think it is a good thing the market economy is distorted because of your own ideology (socialism/mussolini-style corporate fascism?), but that is something else entirely.

It is something else entirely, because I'm right. The market economy in itself does not care at all about human suffering, so government has to muscle it into a shape that will serve humanity more effectively.

That isn't an argument, it's just an assertion.

Since people tend to spend their money on things they want, and only need to be forced to spend money on things they do not, there is a very strong prima facie case that this is so.

Government has a broader perspective which allows it to see value in large projects that private entities would find to be of dubious value, such as the 19th railroad and canal building that enabled the USA to become an economic powerhouse. These projects simply would never have happened without the government taking money in the form of taxes to pay for them.

I don't know much about the history of US canals, but the first US railways were private ventures and made a profit. It is of course quite possible that the subsidised railways may have been built later, or smaller, or not at all, but you haven't presented a valid justification for this being a bad thing. You assert that the US's economic growth is (entirely?) down to the state subsidises railways, but provide no evidence for this. In fact, if money is more believed to be more profitably employed elsewhere then this would result in higher economic growth than otherwise.

Then add the enormous empirical evidence to that end - the USSR, Maoist China, British state enterprises, &c. and I do not think that this point is in general in dispute.

No, I dispute it and offer the counter-claim that the vast majority of government spending is necessary and useful.

I didn't offer just a claim, I also offered several examples of your own claims failing in practice, which you have not responded to.

To claim that government spending tends to be more productive than private spending is a very bold claim indeed. In fact, it would imply the total socialisation of the entire country would be an economically beneficial policy.

Black and white fallacy.

Not at all - if money tends to be spent better by the state than by markets, this does indeed imply we would be better off overall if all money were spent by the state, even if some (smaller) amounts of money are spent less well. Indeed, people used to argue this before it became very obviously wrong. Your position is actually a lot more extreme than that of the Keynesians you purport to defend.

I don't think anybody "natters on" that healthcare or education is useless, just that the government is not very good at managing them. And your state school system is hardly brilliant now is it?

I think the problem with the American school system is due to the fact that it has less government direction than it's counterparts in other states. American schools have their curriculum and goals determined by state and local boards, instead of being directed on a large scale by the national government as in Germany or France.

Wow, you really do think the state is the answer to everything. You are like an anti-libertarian! I'd be interested to hear why you think the national government directing curricula would fix the problem, especially as some US states are the same size as France or Germany (which dont top the OECD rankings, btw).

Also, the reason for inefficiencies present in medicare/medicaid is most likely due to the fact that they are operating as part of a mostly private health care system; socialized medicine as used in Europe is vastly more efficient than the American system.

Medicare and medicaid aren't private - thats the point. Somehow the US state manages to spend more per capita on health than supposedly health-care socialist Britain.

The other big ticket item is defence - your views on whether this is too high or low probably varying depending on your views on other issues like Iraq, but either way defence is also famous for bloated and wasteful projects (Zumwalt, LCS, FCS, Stryker, F-22, Patriot, Seawolf, etc. all attracting varying degrees of controversy).

Again, inefficiency and corruption in the DoD probably doesn't make up more than a small fraction of its budget and it would be on you to prove otherwise.

I just rolled out a list of wasteful projects, so go right ahead and respond.

Oh come now, you can't be serious?

Yes, I want you to justify that statement.

You want me to tell you why an actor attempting to primarily spend money rather than extract value is likely to extract less value than otherwise? I'm not sure I can say much more than 1+1=2.

If you maintain people in a non-productive (ie. loss-making) work force indefinitely, you simply lock in the problems you are trying to get out of.

Or, as in the case with New Deal employment programs, you maintain people in a loss-making work force until the economy improves and they can be moved to private sector jobs.

Errr, 'until there is a world war that makes us ditch most of these programmes, and draft everyone into the army'.

'Consumer spending' only allows businesses that already exist to expand existing operations.

Yes. So?

If you hadn't deleted the bit where I explained why this is bad, you would know.

Where did I say that all investment capital needs to be confiscated? Oh, that's right, never, and in fact I explicitly said that sane economic policy was about finding the ideal balance between competing economic factors.

But you don't explain why the market balance is flawed, or why the state can find a better one.

Real income for most Americans has not declined over the past few decades, it has increased:
That's a 30% rise since these statistics were first collated.

30% rise since 1965; I said 30 years, approximately coinciding with the Reagan economic revolution that we are only now beginning to exit.

You said, and I quote "The US economy has grown steadily for decades but real income for most Americans has declined, so we essentially have an extremely stratified economy with obscenely divergent standards of living." not 'approximately 30 years' or anything about Reagan.

But, my bad, I guess real median household income has risen by about 10% (while GDP has grown by about 240%, which is kind of funny, huh), while people in the lower quartiles were progressively losing the value of Great Society programs, welfare, and other redistribution programs designed to help the poor. There's also the matter of the costs of things like education and health care, which tie up large portions of the income of people in the lower quartiles and have been increasing at a rate higher than inflation for quite a long time.

As the stats show, median household income rose 31% over the period of the statistics being collated,* not 10%. I am not sure why you want to use (seemingly random?) guesswork over the only two solid figures the source provides. I certainly can't see any reason for this except that it massages the figures in your favoured direction. You may well be right that economic growth has proceeded more quickly than the increase in median income, but that was not your original contention - your original contention was that it had actually decreased! Clearly it hasn't, and in fact has substantially increased - your contention was wrong. If you want to back-peddle and change your argument to there being a disparity between GDP growth and household median income growth then fine (although you should state this plainly!), but you would have to explain why this disparity is a bad thing. If, for instance, state action reducing such a disparity would cause a lowering both GDP growth and median household income growth, then it certainly would not be a bad thing.

Healthcare actually works in the opposite direction. While costs have increased significantly, the vast majority of Americans have it paid either through their employer or through medicaid, and neither of these things show up as household income even though the value of the service does go to the people concerned. Education is public in the US so neither here nor there. There are also other factors, such as the diminishing size of the family since 1967, but I'd guess this is off-set by more women in the workforce.

*In the meantime I found an updated graph with 2007's stats, that show a 36% increase including the extra year - http://www.powerlineblog.com/HouseholdI ... -thumb.jpg .

See above, you need to check your stats.

Median household income represents a person of average income, not the poor, whom you referenced specifically.

[Will deal with this later, with Turin's post.]

It also does not represent the value of government programs dismantled or defunded during the last 30 years, such as state-funded mental health facilities and other programs designed to help the homeless. Finally, even if conditions for poor Americans have improved in the past 30 years, they have probably not improved as much as for poor Mexicans, who have improved conditions considerably, partially through the expedient of sending part of their labor force to the USA.

Except that the US has not defunded welfare. Welfare spending has been rising significant even under Reagan:



And you've not presented any evidence of supposedly greater Mexican household income growth (as an aside, 'coming to work in America, and sending the money home' is hardly a ringing endorsement of Mexico).

The US Parks Service has a significantly smaller budget than many companies.

It's operating budget is indeed only a couple billion, but because the national parks are free to all they operate at a dead loss, and there aren't many companies that could survive a dead loss of a couple billion each fiscal year to one of their divisions, and any responsible company would sell it off--and the national parks would be lost to this and all future generations. The free market works!

Firstly, you've again conceded the actual point you were arguing (that national parks are so huge the private sector can't possibly match the scale), disguising it by making another, completely different point in its place. Ok, whatever. There's actually no reason such a company has to operate at a loss, or even be a company at all. The English National Trust for instance is a non-profit private charity that spends several hundred million dollars each year raised from private sources - http://en.wikipedia.org/wiki/National_T ... ty#Funding But, as I've tried to explain, it is not clear that money should be spent maintaining parks in the first place. I'm not necessarily saying they wouldn't or shouldn't be, but if people are only willing to donate $1bn instead of $2.3bn, then so be it. If people would rather spend their money on beer, who are you to say otherwise?

Whether, of course, people would want to pay privately is a different question, and personally I dont see forcing people to pay for things like that as morally acceptable.

Well, I do, because the national parks increase general utility.

Ah, you're the mystical arbiter of General Utility. Well, there is no such thing. Parks are great, if you like parks. If you don't, they're not. For Person A, who doesn't like parks, no utility is being imparted by being forced to pay for Person B's park hobby. The utility isn't 'general', it falls on Person B, while the cost is shared equally.

If roads had been built on a for-profit basis with turnpikes, there would probably be fewer cars arounds, and rail travel would probably be economically viable still and much more widely used. Is it good that this didn't happen? Ask a car driver, then ask an environmentalist.

First off, the nation's railroads were built privately but were funded almost entirely by enormous government subsidies.

No, only some of them were. The first were not. In Britain, the entire railway network until WWI was built privately and without subsidy.

Second, it is difficult to calculate the economic impact of America's well-serviced road network because it is so integral and so many industries were affected or created (e.g. trucking), but it was probably enormous.

This argument is total nonsense. The market price mechanism doesn't break down into a heap once something becomes important enough or sufficiently infrastructural. Oil is pretty damned important (indeed, without it you may as well have no roads or railways* at all!), yet the oil infrastructure was privately constructed. I agree that you personally cannot calculate any of these relative 'utilities', but the market incentives - profits for building roads that allow one to charge more in turnpike fees than construction and maintenance costs, losses for building roads to nowhere or that cannot compete in terms of cost with other modes of transportation - work just the same as everywhere else.

You have also failed to make any contact at all with the substantive point - subsidising roads means you will have more roads than otherwise. Like with parks, this benefits some interest groups (people who use the interstates a lot) at the expense of others (environmentalists, the railways, people who don't drive so much, &c.). It is not just a win-win scenario, because if you hadn't built lots of roads artificially, people would have spent the money on something else that they value more.


* I presume. In Britain, trains are primarily diesel.

Similarly, is it better that Central Park is a park or paved over? Again, ask someone who lives next door to it and gets a free park, then ask someone who dreams of living in central New York but will never be able to because of property prices.

Don't be retarded, Central Park can be accessed by anyone visiting or living in New York City. They can simply take the subway--another public works project that improves the lives of citizens.

Clearly anyone can go to Central Park if they are willing to pay and wait enough, even someone in the Australian outback. That doesn't at all mean that someone in the Australian outback would actually value the existance of the park more than being able to afford a flat in NY, if building over it reduced house prices enough for him to afford it where before he couldn't. Note that I'm not necessarily saying that the Australian is in the right and we should always favour demolishing parks. I'm saying that far from always being some kind of public calamity, this sort of thing is just one set of peoples' preferences competing with those of others.

Again, you're likely to get two different answers (no, Central Park does not have infinite value, as you are slyly implying).

I'm not implying that it has infinite value, that's stupid. I simply said that it's value was incalculable.

The value isn't incalculable. Put it up for auction, and the value will be calculated. But since you will likely react violently to the suggestion that such a thing would accurately calculate its value, might I ask in advance what theory of value you adhere to?

What I am saying is that quite well-intentioned disagreements would be settled by private voluntary exchange, and not by government fiat, in a way that is likely to increase the utility of people in general, and of the particular people involved.

Oh good, voluntaryism again.

'Voluntary exchange' covers a much wider range than "voluntaryism" (volunteerism?). Buying something is voluntary exchange, for instance.

Not to chime in from the peanut gallery, but his little chart looked familiar and I did a little digging. It comes from Wikipedia on US Household Income. What he neglected to mentioned / decided to ignore is the chart right above it:

Image
(Original source here: http://www.census.gov/prod/2004pubs/p60-226.pdf)
Which surprise surprise shows nearly flat median increase in household income for the bottom half of the workforce (even after adding all the women into the household incomes!), and skyrocketing increases for the top 10%. That's some pretty dishonest debating, HSMV.

Hi,

Actually I got it from google images but thanks for a good ad-hominem from the peanut gallery , I'm starting to see these are in very short supply when libertarians are debating on this site! Anyway, you've made some pretty basic data interpretation errors here but I'll assume it's an honest mistake or I'd look like a bit of a hypocrit.

The increasing steepness of the graph is misleading because the numbers themselves are larger as income increases. A 5% increase on $10,000 is only $500, whereas a 5% increase in $100,000 is $5,000. They are the same proportion, but the latter is a lot more visible on a linearly scaled graph. Thankfully, the graph actually provides its data - http://en.wikipedia.org/wiki/File:Unite ... 7-2003.svg Your first claim (that growth was flat for the bottom 50%) is still bizarre because the stats I already gave were for the 50% percentile.

Anyway, your second claim broader claim that incomes are flat or decreasing for the very poor still needs to be addressed. These are the actual growth percentages:

10th percentile - 10536/7790 = 35.3% - actually GREATER than the 50th percentile increase!
20th percentile - 17984/14002 = 28.4% - 1.5ppts less than the 50th percentile
50th percentile - 43318/33338 = 29.9% - lower than my other figure, because these stats only go up to 2003
80th percentile - 86867/55265 = 57.2% - very significantly above 50th percentile
90th percentile - 118200/70443 = 67.8% - somewhat above that again
95% percentile - 154120/88678 = 73.8% - somewhat above that again

Conclusions: Everyone is getting richer. The rich are getting richest fastest, followed by the very poorest. The slowest growing group are actually the lower middle classes, not the very poor.

[K. A. Pital]

It is not just a win-win scenario, because if you hadn't built lots of roads artificially, people would have spent the money on something else that they value more.

People are short-sighted. Let's imagine where people spend the same value on gambling, not roads. The result is a gambler's paradise, but with a Third World infrastructure. The people made a choice. Does it mean they are better off?

There are issues which are far more far-reaching than an individual can grasp. How can an individual adequately consider that a nationwide healthcare system would increase life expectancy and decrease infant mortality in his nation, and fund it to a necessary extent? He is not an expert in the field; he knows jack shit about it.

In time, there's a group of people who invested in infrastructure and industry (Group A) and a second group, who invested in short-term "valuable" goods, or worse yet, have annihilated capital assets for the sake of today's higher consumption.

The first group will rise and be technically dominant; the latter will fall, and become a dependent state, it's life standards gap from the "Group A" steadily falling behind more and more until you get "First World" and "Third World" correspondingly.

The collective choice is not always the wisest; collective smoking is a prime example.

That isn't an argument, it's just an assertion.

No, it's not. He is right, because there's no such economic category as "suffering". There is price, which is utility. There is no suffering, neither any considerations of utility beyond the price. Price is value, value is price - end of story. Unless, of course, you would argue that every economic choice made by a person considers the suffering of another. But that is impossible. It's not so, plain and simple.

When I buy over 3000 calories of food, I do not think that by sending say 1000 of these calories to extremely suffering people in, say, nearby Tajikistan, I could've averted their hunger, suffering or even death. I make a callous economic choice, and so does everyone else. The greater the value of the economic operation, the more potential for extreme callousness, suffering caused by neglect, or even a direct cause of suffering on large scale.

[HMS Vanguard]

It is not just a win-win scenario, because if you hadn't built lots of roads artificially, people would have spent the money on something else that they value more.

People are short-sighted. Let's imagine where people spend the same value on gambling, not roads. The result is a gambler's paradise, but with a Third World infrastructure. The people made a choice. Does it mean they are better off?

This is an unanswerable question, because whether or not any one individual is better off is subjective. That is the principal virtue of the market economy. People are more likely to meet their own subjective wants if they have a free choice in the matter. People make mistakes - of course they do - but the government is not run by infallible Philosopher Kings either, but the same fallible humans. Fallible governments allow far less room for trial by experimentation, and hurt people who never wanted to be involved in the first place when they go wrong.

There are issues which are far more far-reaching than an individual can grasp. How can an individual adequately consider that a nationwide healthcare system would increase life expectancy and decrease infant mortality in his nation, and fund it to a necessary extent? He is not an expert in the field; he knows jack shit about it.

This is far more of an argument against central planning than against liberty. It's extremely difficult to centrally manage everything going on in an enormously complex system, and ultimately impossible to make subjective value judgements on other peoples' behalf. On the other hand, it is quite easy to reason that as an individual that they don't want their child to die, and so buy what they perceive to be the best child care, or to reason they don't want other peoples' children to die, and fund charities. The complex order required is spontaneously generated in the market and largely self-correcting.

In time, there's a group of people who invested in infrastructure and industry (Group A) and a second group, who invested in short-term "valuable" goods, or worse yet, have annihilated capital assets for the sake of today's higher consumption.

The first group will rise and be technically dominant; the latter will fall, and become a dependent state, it's life standards gap from the "Group A" steadily falling behind more and more until you get "First World" and "Third World" correspondingly.

And this, I just find bizarre, because you have just described competition, which is precisely how selection in a market economy tends to move money to the most efficient managers of it.

The collective choice is not always the wisest; collective smoking is a prime example.

Yet again... it doesn't seem to occur to people here that others may differ in their value judgements from you. Some people value smoking more than the health benefits of not smoking or the economic benefits of not buying cigarettes.

That isn't an argument, it's just an assertion.

No, it's not. He is right, because there's no such economic category as "suffering". There is price, which is utility. There is no suffering, neither any considerations of utility beyond the price. Price is value, value is price - end of story. Unless, of course, you would argue that every economic choice made by a person considers the suffering of another. But that is impossible. It's not so, plain and simple.

When I buy over 3000 calories of food, I do not think that by sending say 1000 of these calories to extremely suffering people in, say, nearby Tajikistan, I could've averted their hunger, suffering or even death. I make a callous economic choice, and so does everyone else. The greater the value of the economic operation, the more potential for extreme callousness, suffering caused by neglect, or even a direct cause of suffering on large scale.

I know plenty of people who send money abroad to try to avert hunger (including members of my own family). Just because you're a heartless bastard doesn't mean everyone else is.

[SirNitram]

The 'The market system moves money to the most efficient managers' would require the theory to be utter fact. But it's not. You can tell, because the US hasn't collapsed yet.

Do you know what a non-recourse mortgage or home loan is? It means if you default, the worst the bank can do is take the house. For the millions whose loans and mortgages are 'under water'.. They owe more than the building is worth.. The 'Rational Economic Actor' of free market theory would dump the house and go rent. This would, of course, make everything present worse, but more importantly, it proves the theory behind it wrong.

[Turin]

Not to chime in from the peanut gallery, but his little chart looked familiar and I did a little digging. It comes from Wikipedia on US Household Income. What he neglected to mentioned / decided to ignore is the chart right above it:

Image
(Original source here: http://www.census.gov/prod/2004pubs/p60-226.pdf)
Which surprise surprise shows nearly flat median increase in household income for the bottom half of the workforce (even after adding all the women into the household incomes!), and skyrocketing increases for the top 10%. That's some pretty dishonest debating, HSMV.

Actually I got it from google images but thanks for a good ad-hominem from the peanut gallery , I'm starting to see these are in very short supply when libertarians are debating on this site!

So in other words, you grabbed an image that you found that you thought backed up your argument without bothering to find its source first. Calling your argument dishonest isn't an ad-hominem, dumbass. Of course, I should have been more generous -- using that image could represent you being a) dishonest, b) blind, or c) stupid.

The increasing steepness of the graph is misleading because the numbers themselves are larger as income increases. A 5% increase on $10,000 is only $500, whereas a 5% increase in $100,000 is $5,000. They are the same proportion, but the latter is a lot more visible on a linearly scaled graph.

So in otherwords, a 5% increase on a 10K income is virtually nothing. Thanks for proving my point for me. Percentage increase is a meaningless measure if not connected to the actual value associated with those increases.

Anyway, your second claim broader claim that incomes are flat or decreasing for the very poor still needs to be addressed. These are the actual growth percentages:

10th percentile - 10536/7790 = 35.3% - actually GREATER than the 50th percentile increase!
20th percentile - 17984/14002 = 28.4% - 1.5ppts less than the 50th percentile
50th percentile - 43318/33338 = 29.9% - lower than my other figure, because these stats only go up to 2003
80th percentile - 86867/55265 = 57.2% - very significantly above 50th percentile
90th percentile - 118200/70443 = 67.8% - somewhat above that again
95% percentile - 154120/88678 = 73.8% - somewhat above that again

Conclusions: Everyone is getting richer. The rich are getting richest fastest, followed by the very poorest. The slowest growing group are actually the lower middle classes, not the very poor.

Lower middle classes? The group at the 20th percentile is well below the federal poverty line for a family of four. What alternate universe do you live in where that's "lower middle class?" Please tell me your not trying to define "middle class" as "median income" -- class position is much more strongly correlated with relationship to capital, which easily places a dual-income middle-class family in the 80th percentile range on this table (ex. a married pair of high school teachers). That is, there's a shrinking middle-class.

While technically the growth isn't flat (whoo-hoo, you won a minor point because I used imprecise language), it's flat when compared to overall economic growth in that period. The US GDP has increased at a far faster rate than that increase in real income. In other words, the original argument you were trying to refute by putting up that graph -- that economic growth has been accompanied by a widening gulf between the rich and poor -- was dead on.

[K. A. Pital]

This is an unanswerable question, because whether or not any one individual is better off is subjective.

No, it's not. When one individual is alive, and the other is dead, it's clear the one who is alive is better. We go on from that way. It's not "subjective" unless you want to tell me that it's "subjective" whether a person eating several times more than a starving peasant is better or worse off. Your falsehood is clear for all to see - it's not entirely subjective, and therefore your argument falls apart.

People make mistakes - of course they do - but the government is not run by infallible Philosopher Kings either, but the same fallible humans.

Of course. The whole point is to determine which decision benefits society the most. Not some individual person within this society. An individual person can easily bask in wealth while around him people are in hunger, and it wouldn't mean any of the people are acting irrationaly. It would only mean the wealth got distributed in such a fashion. The distribution of wealth is Pareto-optimal so as long as we can't give anyone more unless we extort it from someone else; meaning a person who is basking in wealth and another one who is starving are in an optimal economic distribution; the economic science does not make ethical statements on whether it is right or wrong.

The government is not perfect, but neither is any given human. If the humans in the government are not perfect, neither are the buyers. Nor the corporate heads. Neither the workers, nor the bosses.

On the other hand, it is quite easy to reason that as an individual that they don't want their child to die, and so buy what they perceive to be the best child care, or to reason they don't want other peoples' children to die, and fund charities. The complex order required is spontaneously generated in the market and largely self-correcting.

Yes, but this is not generated in a situation of anarchy; therefore, we must conclude - must, since experimental proof is there - that automatically, people would not find the lives of other children important, only their own. This would establish an equilibria, where only the children of those people rich enough to be able to access the "service" of healthcare would survive; those who fail to pass the price test, those who cannot buy those services - are destined to death.

The economy is in equilibrium. Those who can buy, do so. Those who can't, die.

I just find bizarre, because you have just described competition, which is precisely how selection in a market economy tends to move money to the most efficient managers of it

So then, if someone has lost in a market competition, he deserves suffering and death, moreso than the winner. Thank you, oh social darwinist. Tell me then again how is that different from "the successful deserve the pleasure, the losers deserve the suffering"? Is that a maxim you would agree with? Do you think, say, the failure of a large company in the 1930s, where the bosses of such companies could still survive even if lose the wealth, but a worker could starve, should have been blamed on the workers? Was their suffering, which was greater than the respective suffering of owners and managers, earned by their guilt? Guilt in what?

You then think it's perfectly ethical to kill a person and take his belongings, so as long as you don't get caught? Since it's, well, a form of competition, plain and simple. After all, laws are also just mere government constructs which enroach upon the liberty of a human to take the property from someone who cannot "manage it well" and put it in the hands of a most efficient manager? The one who stole the most is the most efficient then, since those whom he robbed could not hold their property!

Some people value smoking more than the health benefits of not smoking

Really? People value death and disease more than they do life and healthiness? Or perhaps their psyche is too short-sighted, and sometimes even chemically addicted, to make a better judgement?

I know plenty of people who send money abroad to try to avert hunger (including members of my own family). Just because you're a heartless bastard doesn't mean everyone else is.

No, moron boy. Not "send as much money as I see fit". Send as much money to ensure the other person is not dying, since you won't die from sending 1000 calories each day to another person. His suffering is greater than yours. How do you justify that you don't give 1000 calories, every day, from your diet of 3500 to 3700 calories (most commonly for First World), to a dying person? Clearly you are a callous fuck, aren't you?