The Future of Laissez-Faire Capitalism

[Trieste]

I was personally looking into things like food stamps and whatnot to see if I could stretch my savings further, not knowing when I would next have a job. I can see both sides of the issue, but it was still pretty annoying to have my savings account held against me.

[RubySlippers]

There is a trick on that load the money over $2000 or whatever your states limit is on prepaid credit cards, its unlikely they will find the money and you will meet the limit, and the money is there. Or have a relative you trust hold it if you can like a parent. I do both.

Its better than getting stuck with thousands of dollars in extra billsyou would otherwise be stuck with. Also ask about the Hospitals Charity Care Program all of them are supposed to have one as far as I can tell.

[PhantomPistoleer]

I thought that this was pretty damning stuff from one of the leading cheerleaders of pure laissez-faire.

Along the way, Arianna quotes a recent New York Times piece that pretty solidly lays the blame on the current economic situation on the deregulatory policies of the Bush administration.

I wonder if the reports of the death of pure free-market capitalism are premature, but it does seem like we're heading in that direction.

Laissez-faire has not existed for a long time.  The government has instituted a number of socialist directives on capitalism to better suit the populace: the 40 hour work week, minimum wage, minor laws, vacation time, overtime, affirmative action, illegal immigrant reform, 401K plans, pensions, etc.  You also have licenses, tariffs, and environmental laws that curb, prohibit, make more competitive and propel businesses forward.  For example, Japanese cars are extremely cheap:  but if they sold them in the United States for how much they went in Japan, the American car would not be able to compete.  To compete, the U.S. places tariffs on Japanese imports so that American cars CAN compete (of course, this has not worked out so well: Japanese cars are more reliable, fuel efficient and cheaper, but maintaining a "false" competition hurt the American car industry later).

I want to talk about Greenspan (I read three of his biographies!, and actually enjoyed the Woodward one), but I'm tired now. :<

[RubySlippers]

I do feel we have too many regulations and they could cut much of that to help the economy, as for the government stimulus package I have seen some of the pork going in much of it seems rather useless. I would rather see the government give the money to the many smaller regional banks that have managed to stay out of the fray, use them to shore up the financial crisis and let the large banks fail after getting the decent debts out of them to these others. It may hurt but the government has to learn to live within its means and can't just be there for everyone. And states ,lets look at Florida, they cut everything except the one area that is the largest one that seems easiest the Highway and Road funds. Billions there and only in our case modest reductions could make up the losses in revenue. Not to mention no member of our government or the citizens want to raise taxes anywhere or expand the base in any way.

What don't people get you want a nanny state you have to pay for it and the massive red tape, if they don't have a nanny state it would likely offer lower taxes but far more personal responsibility and free market risks. Simple. I favor the latter maybe with some limited government over the Constitution powers where needed if its not a government long term burden in practice. I'd rather see that at the state not Federal level in any case.

[Zakharra]

Laissez-faire has not existed for a long time.  The government has instituted a number of socialist directives on capitalism to better suit the populace: the 40 hour work week, minimum wage, minor laws, vacation time, overtime, affirmative action, illegal immigrant reform, 401K plans, pensions, etc.  You also have licenses, tariffs, and environmental laws that curb, prohibit, make more competitive and propel businesses forward.  For example, Japanese cars are extremely cheap:  but if they sold them in the United States for how much they went in Japan, the American car would not be able to compete.  To compete, the U.S. places tariffs on Japanese imports so that American cars CAN compete (of course, this has not worked out so well: Japanese cars are more reliable, fuel efficient and cheaper, but maintaining a "false" competition hurt the American car industry later).

I want to talk about Greenspan (I read three of his biographies!, and actually enjoyed the Woodward one), but I'm tired now. :<

One huge reason Japanese cars are cheap to make is that the companies over there do not have to support the workers like the US comcpanies do. The government pays the retirement packages. At the Big 3 US automakers, about $1200-1600 of the cost of the car is for retired workers and such. For people that do not work anymore at the companies. Some haven't worked in many years. If you do that for some emplyees, a company can survive it, but over 4 decades or more... it's an economic disaster for the company to support so many unproductive people.

[PhantomPistoleer]

One huge reason Japanese cars are cheap to make is that the companies over there do not have to support the workers like the US comcpanies do. The government pays the retirement packages. At the Big 3 US automakers, about $1200-1600 of the cost of the car is for retired workers and such. For people that do not work anymore at the companies. Some haven't worked in many years. If you do that for some emplyees, a company can survive it, but over 4 decades or more... it's an economic disaster for the company to support so many unproductive people.

This is rubbish.  An American car sells, on average, $4,000 more than a comparative Japanese car before tariffs are applied.  Subtracting the amount for pensions (let's use $2000 instead of the max $1600) from the total cost of the car still puts it a couple thousand over the cost of a Japanese car.  It's not pensions that are killing the American car industry:  it's the fact that they have been handled sweetly by the American government at the expense of the American consumer.  Pensions don't even figure into it.  There is a standard of efficiency that is simply not being met.

If every American who purchased a Japanese car was returned the money he or she paid for tariffs on a Japanese import, we could pay every single person in Michigan $40,000 per year for 30 years to sit at home.  They wouldn't have to make us bad cars.

You might be wondering where I'm coming up with my numbers:  my source for this is a book called Naked Economics, http://www.amazon.com/Naked-Economics-Undressing-Dismal-Science/dp/0393049825 .  You should do yourself a favor and seriously read this.  It's a GREAT book.

[Zakharra]

This is rubbish.  An American car sells, on average, $4,000 more than a comparative Japanese car before tariffs are applied.  Subtracting the amount for pensions (let's use $2000 instead of the max $1600) from the total cost of the car still puts it a couple thousand over the cost of a Japanese car.  It's not pensions that are killing the American car industry:  it's the fact that they have been handled sweetly by the American government at the expense of the American consumer.  Pensions don't even figure into it.  There is a standard of efficiency that is simply not being met.

If every American who purchased a Japanese car was returned the money he or she paid for tariffs on a Japanese import, we could pay every single person in Michigan $40,000 per year for 30 years to sit at home.  They wouldn't have to make us bad cars.

You might be wondering where I'm coming up with my numbers:  my source for this is a book called Naked Economics, http://www.amazon.com/Naked-Economics-Undressing-Dismal-Science/dp/0393049825 .  You should do yourself a favor and seriously read this.  It's a GREAT book.

No. That IS a factor, not all of it for sure, but that is one factor that the US car companies had to deal with that the Japanese cocmpanies did not. Before the government took on that burdon from the car companies, it was dragging all of them down.  Now that they have shoved that burdon off onto the taxpayer, they can do other things to screw up their companies.

[RubySlippers]

I tend to agree that the fault is not the pensions or necessarily health care but the way the US automakers do business. Take Honda most of their assembly lines are robotic and can be rather quickly reconfigured for any vehicle they make, they pay lower salaries in the United States then the Union plants but still respectable for the work done and more importantly look ahead and develop cars people want to buy. And frankly we should be more worried about China they have electric vehicles planned that will likely be cheaper than any of the US companies are ready to put out by several thousand dollars.

The fact is the US automakers are too clumbsy, short sighted and low tech to really compete in a global marketplace and now are paying for it. Its simple market forces at work the other guys can do the same work cheaper, faster and they embrace technology faster. Just look at electric cars and hybrids WE could have been world leaders since the US started this line of technology in the 1990's but dropped it and the other countries maintained their research. And now we are going to lose jobs and market power.