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« Competition and Level Playing Fields | Main | What is Wrong with The Austrian Economists Blog? »


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My first reaction is, why do we (the economics profession) even give this woman the time of day. Here's how my ideal conversation concerning her work would go. An interested person strikes up a conversation, "Oh you're an economist, have you read Naomi Klein's new book?"

The economist responds, "Who?"

"You know it's like a best seller."

"Where does she teach, where's her degree from, what school of thought does she subscribe to?"

"I don't know but she gives a devastating critique of Capitalism."

"I guess I should look for a new line of work."

If there's no real theory behind the work, it must be riding to success on some alternative content: it's plea to the public's bias against capitalism, Klein's emotional appeals, or her own form of shock doctrine.

If you just substitute the word "freedom" for "free markets" whenever Klein uses the term, you'll see the utter ludicrousness of the this thesis.

The question I would ask is "how is an un-free market better than a free market?" and maybe the follow up, "If individuals make their own decisions in a free market, who makes the decisions in a non-free market?"

I'm wondering if you actually read the book. If so, I'm surprised that you're unable to admit the fact that it changed your way of thinking.

Or are you completely blind to the human side of economics? Have you yet to realize that the entire idea of a market is based on *human* behavior? Why is it that economists have factored out the human impact?

I took Econ 101 and 102...and totally bought into the system of thought. Then I grew up.

And to respond to this post (I wouldn't have to id you had read the book):

If you just substitute the word "freedom" for "free markets" whenever Klein uses the term, you'll see the utter ludicrousness of the this thesis.

The question I would ask is "how is an un-free market better than a free market?" and maybe the follow up, "If individuals make their own decisions in a free market, who makes the decisions in a non-free market?"

1) Her entire thesis is that what you people call the "free market" isn't free at all. What she describes is the process whereby the shell government funnels tax money directly into the crony network to produce little in the way of results and a lot in the way of profit for themselves. Disaster Capitalism is the exact opposite of true free-market economics. That was her premise. I'd highly recommend reading the book.

2) To you second question: in Disaster Capitalism (that which Friedman stands for), the elite make the decisions and stifle dissent, oftentimes violently, the the simple reason that they cannot allow people to be free. If people were free, they would reject their policies.

Please read the book to avoid any further embarrassment.

To prevent democracy and to prevent personal freedom is to interfere with the free market

We live in a time of presumed consensus when it comes to economics. In recent decades, the logic of "free market capitalism" has been accepted without much debate. Indeed, the basic laws of supply-and-demand are elegant and true. We ought to allow people to trade freely so that market forces will allocate resources most appropriately. This will theoretically encourage innovation, create prosperity, and minimize waste. Besides, to allow people to trade freely agrees with our natural impulses which favor individual liberty.

Those who argue on behalf of the free market have baited us with pure logic. But there is a gap in their logic when we are told that the market must not be "interfered with" by governments. Governments, we are told, ought not regulate trade, create labor regulations, set minimum wages, and absolutely must not provide nationalized services such as health care. We are also told that labor unions are counter-productive because they "interfere with" the market, which will naturally provide the best deal for employees over the long-run.

What these free market economists fail to recognize is that economics cannot be separated from people. The market works when people trade products and money...not when products and money trade themselves. In fact, a market cannot exist at all without "interference" by people. Every transaction that takes place is a human reaction to the market.

When people organize a company to create a complex product, that product is a reaction to the market. Similarly, when people organize a trade union in order to fight inhumane working conditions, this too is a human reaction to the market. Therefore, the union is a product of the market. It is also true that, when people form a democratic government, then this government is a reaction to, and therefore a product of, the market. In fact, there would be no need for socialist policies if not for the reality of the market. So if people vote for nationalized health care, the establishment of trade policies, a minimum wage, or social security, then all of this is a product of the market itself. There is no conflict or inconsistency between any of this.

How can it be logically argued that people ought to be free to buy and sell, to hire and fire, but ought not be free to unite? We ought not be free to establish a democratic government to represent our collective interests? We ought not be free to decide, out of our own free will, to form a trade union? We ought not be free to create regulations and then abolish them if they prove ineffective? On what basis, and from who's perspective, can such an argument be made? Are those in positions of influence in just a bit of denial when they convince themselves that all things which interfere with what they want are interferences with the market?

The most brilliant economists are baffled when they observe economies which appear to conform more-or-less to their free market ideals, but then fail to deliver the results they logically expect. They are still baffled by all that which has gone wrong with those countless free market experiments launched in Latin America and the former U.S.S.R. over the past decades. They blame any and all problems on "market interference". Yet ironically they, themselves, are the only ones interfering. Only they -- those who stand in the way of personal freedom and authentic democracy -- are to blame for perceived market failures. When they handcuff market participants, unfairly favor the powerful, rig elections, and muzzle free speech, then they make it impossible for the market to function fully.

Countless free market economies have been brutally enforced by dictators who have been faithful to the idea of minimizing perceived interference with the market. When dictators brutally shut down unions, eliminate worker safety standards, remove trade tariffs, abolish minimum wages, and stifle dissent, they do so at least partially under the guise of letting the market function without interference. What they have failed to recognize is that when you eliminate personal freedom, take away free speech, make it impossible for workers to unite, and make it impossible for the collective voice of people to be heard in the form of a democratic government...well, it is only then that you have interfered with the market.

A free market cannot exist without freedom. It cannot exist without democracy. In fact, it is all part of the same thing.

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