Socialism is great?

[Fletch]

Asserting that the transportation industry has helped aid economic growth is not the same as asserting that smoking is healthy.

We are not arguing over the contribution of the transportation industry. We are arguing over the government subsidization of road building, which has a definite effect on the present shape and nature of the transportation industry. If the government had not built all the highways, the transportation industry would still be a strong determining factor in our economic condition. It would be larger in some ways, smaller in others.

Economics cannot tell us what the transportation industry would look like without the government-built interstate highway system. It can give us ways to make educated guesses, but that's about it. What it can tell us is that we would be wealthier, and that the transportation industry would be different from what it is now.

As dross noted, part of the problem is that you can't see what you can't see. With all these semi trucks rolling around, you can't see what innovations might have been made in private roads, or rail travel, or air travel, or whatever. Those innovations were aborted when the government decided to pick a winner. People used to travel by passenger train on for-profit lines. The interstate highway system killed that and now the government has to prop up Amtrak because the cost of operating a line is prohibitive. This illustrates another principle: every intervention necessitates a second intervention.

Politicians like to talk about high-speed bullet trains and how they'd like to see one built. The problem is that it can't be built by the free market anymore because of the interstate highway system. It drastically reduced the cost of one form of travel below market prices so that other forms of travel can't compete with it.

The free market is a laboratory where all ideas can be examined, tried, and adopted or discarded based on whether they make economic sense. When the government enters the scene, what it does is randomly pick some experiments and say "these will win, so we will throw everything into their support", while other experiments are told "these will not win, so we will inhibit or prohibit them".

The assertion that the economic policies a country enacts does not attribute to their economic success is unreasonable.

I nowhere made that assertion. My assertion is that policies in the direction of socialism slow economic progress relative to what it would be without the policy in place.

China applies more socialistic policies to their market than many large industrialized countries. Considering the population of China, it is reasonable to say that they do not fall into the category of "small" countries... Yet their market growth is "in spite" of their market policies? Maybe biased is not the best phrase... maybe double standard fits the mold better.

China's growth can be attributed to its coming the other direction. They started with near-total socialism, and in many ways they still have it. But they have been loosening the chains ever-so-gradually, over the course of decades, and it is their movement toward the free market end of the scale, powered by their massive workforce, that creates their growth. Had they stayed stubbornly insistent on socialist economic policies, they would look more like North Korea right now.

 

[IncendiaryGunner]

I still have a hard time buying the idea that a transportation system would have been enacted anywhere near the scale it was if it was not implemented and maintained by the government. The scale of our transportation system in many ways directly stimulates our economy, and the cost associated with business. Maybe I am not understanding some profit model businesses would adhere to enabling them to profit creating the roads - but I just do not think it would reasonably be near the same scale. Private roads were enacted before the interstate system - but the scale of transit was nowhere near what it was after the highway system was built, and there was no indicator that would lead me to believe it would have grown at that pace.

The reason trains were easily built by the free market, was because the cost associated with transport was much higher. Before interstate transport, the free market could charge more for transport. Increasing the supply of transport options - lowered the cost.... The free market has a hard time competing by building mass transportation, because people don't like using that method. The demand for trains and public transportation does not exist, because people choose to buy a car and transverse the highways. Any new transportation method that has high demand, can come to be. To this point, convenience has also been a large factor. If I can save a few dollars riding a bike to the bus stop and then riding a bus, I will still drive my car.

Incentive for designing better cars, and different types of transportation still exists, and is still done mostly by the private sector. We have not created a transportation system that is technologically superior, while remaining as convenient. The first person who is able to invent a passenger vehicle that runs on hopes and dreams will become a wealthy individual.

I see what you mean by the "what if" that we "can't see"... I just do not agree that the "what if" scenario would always lead to more market stimulation and wealth. In most industries, I believe it does... but in a some instances, like transportation, I do not view it as a clear winner.

When businesses thrive, production can increase. If a socialist program (subsidizing roads) leads to more business prosperity and production, the free market gains.

Wealth is the abundance of valuable resources, or material possessions. Enabling a society to create more resources, contributes to more wealth. Wealth is not the paper in someone's pocket, it is the resources produced by a society, and how much of that you can obtain in trade for the work you do.

China still has an extremely socialist slanted market system... their market is slanted more socialist than free market still.. yet they prosper... To attribute all of their economic prosperity only to their free market policies would be overlooking a vast majority of their market practices.

 

[dross]

I still have a hard time buying the idea that a transportation system would have been enacted anywhere near the scale it was if it was not implemented and maintained by the government. The scale of our transportation system in many ways directly stimulates our economy, and the cost associated with business. Maybe I am not understanding some profit model businesses would adhere to enabling them to profit creating the roads - but I just do not think it would reasonably be near the same scale. Private roads were enacted before the interstate system - but the scale of transit was nowhere near what it was after the highway system was built, and there was no indicator that would lead me to believe it would have grown at that pace.

When businesses thrive, production can increase. If a socialist program (subsidizing roads) leads to more business prosperity and production, the free market gains.

Wealth is the abundance of valuable resources, or material possessions. Enabling a society to create more resources, contributes to more wealth.

China still has an extremely socialist slanted market system... their market is slanted more socialist than free market still.. yet they prosper... To attribute all of their economic prosperity only to their free market policies would be overlooking a vast majority of their market practices.

Follow out the logic. What would have happened with the transportation system without government intervention? We don't know exactly, but we know two things: People wanted to be able to travel across the country quickly and easily, and other people want to make money from selling that ability to them. Between them, they would have come up with a system of transportation.

If we study history and look for examples that were more private or more public, we find in every case that the private option was cheaper and provided better service.

That you can't imagine how the highway system could have been built without government intervention doesn't change that.

 

[ArmedProgrammer]

...

China still has an extremely socialist slanted market system... their market is slanted more socialist than free market still.. yet they prosper... To attribute all of their economic prosperity only to their free market policies would be overlooking a vast majority of their market practices.

"Prosperity" is a relative thing. They appear to be prospering because of two things. 1) Where they are coming from 2) Where they are going to. They have resources on their side and are coming out of the dark ages of Mao-style communism/totalitarian socialism. Remember that in the late '80's it was Japan that everyone said was the darling of the business world. And look where they are now.

The OP is right. Socialism LOOKS great, Until they run out of money - (typically yours). It IS efficient in the short run. But horribly wrong in the long run. Every time.

 

[dross]

Also, China is prospering in SPITE of its socialism.

 

[IncendiaryGunner]

Follow out the logic. What would have happened with the transportation system without government intervention? We don't know exactly, but we know two things: People wanted to be able to travel across the country quickly and easily, and other people want to make money from selling that ability to them. Between them, they would have come up with a system of transportation.

If we study history and look for examples that were more private or more public, we find in every case that the private option was cheaper and provided better service.

That you can't imagine how the highway system could have been built without government intervention doesn't change that.

It would have cost more. That cost would have been carried by every industry that requires transportation. Every product would have a higher distribution cost... Every product would cost more to produce... Everyone would spend more money getting from place to place.

Transportation is not the type of business that is undertaken by small business. Over time, like in early free market transportation - a few players would own the majority of transportation. The demand would exist, but the supply could be manipulated by a select few.

Competition only drives prices down when competition exists. Transportation became cheaper when the international highways were built, even once you include the taxes involved in building them.

If we look at history, most systems of free market provide better service and better cost. Every system that provides better service and cost, is directly related to competition.

 

[Fletch]

I still have a hard time buying the idea that a transportation system would have been enacted anywhere near the scale it was if it was not implemented and maintained by the government. The scale of our transportation system in many ways directly stimulates our economy, and the cost associated with business. Maybe I am not understanding some profit model businesses would adhere to enabling them to profit creating the roads - but I just do not think it would reasonably be near the same scale. Private roads were enacted before the interstate system - but the scale of transit was nowhere near what it was after the highway system was built, and there was no indicator that would lead me to believe it would have grown at that pace.

Before 1840, there were 3,750 miles of private road in operation in New England alone.

In the late 1800's the Great Northern Railway was built as a private enterprise.

There's absolutely nothing to suggest that this would not have continued, expanded, and grown ever more sophisticated had the government not mucked things up.

 

[Fletch]

The demand for trains and public transportation does not exist, because people choose to buy a car and transverse the highways.

Again, government created this, not the market.

I see what you mean by the "what if" that we "can't see"... I just do not agree that the "what if" scenario would always lead to more market stimulation and wealth. In most industries, I believe it does... but in a some instances, like transportation, I do not view it as a clear winner.

You're still not seeing the bigger picture. It is not the transportation industry in and of itself that changed. It is the whole American economy. In a nation where government did not undertake to subsidize transportation, transportation would be weighed against every other option available in the marketplace.

People come on here all the time and ***** and moan and cry about how American industry is shuttering factories all over the place. Why can they do this? Subsidized transportation. If freight were dictated by market prices, it might turn out that it's cheaper to keep that factory open instead of shipping it to Mexico.

When businesses thrive, production can increase. If a socialist program (subsidizing roads) leads to more business prosperity and production, the free market gains.

It does not. It can not. The government cannot create wealth without first destroying it, and it must necessarily destroy more than it creates. Some wealth is used up in the process, and accounts must balance.

Wealth is the abundance of valuable resources, or material possessions. Enabling a society to create more resources, contributes to more wealth. Wealth is not the paper in someone's pocket, it is the resources produced by a society, and how much of that you can obtain in trade for the work you do.

On this we can agree.

China still has an extremely socialist slanted market system... their market is slanted more socialist than free market still.. yet they prosper... To attribute all of their economic prosperity only to their free market policies would be overlooking a vast majority of their market practices.

No, it's taking them all into account. Government intervention into the market is a weight that drags on economic progress. The more intervention, the bigger the weight. The government cannot do a single proactive thing without on net destroying wealth and value.

 

[IncendiaryGunner]

Before 1840, there were 3,750 miles of private road in operation in New England alone.

In the late 1800's the Great Northern Railway was built as a private enterprise.

There's absolutely nothing to suggest that this would not have continued, expanded, and grown ever more sophisticated had the government not mucked things up.

The Great Northern Railway will not transport goods through New England cheaper than the trucking industry.

If something stimulates production, it does not matter where it came from. If more goods can be produced and distributed to the population - people have more things. If the free market brings this about, like most cases - that is awesome. When social policy brings that about - that is also a great thing.

Making it more expensive to transport things, and therefore stifling supply, is not always a beneficial way to stimulate business - no matter which spectrum it comes from.

 

[Fletch]

It would have cost more. That cost would have been carried by every industry that requires transportation. Every product would have a higher distribution cost... Every product would cost more to produce... Everyone would spend more money getting from place to place.

As opposed to now, where all of that cost is hidden by the government, and is in real terms greater than the cost it would be in the free market. If it costs $100 to ship an item from A to B in the free market, but government says "we'll make it so you can do it for free", what government then does is confiscate $100 + X, where X is the cost of government itself, and then pay the shipping bill. It's not that hard to understand.

Transportation is not the type of business that is undertaken by small business. Over time, like in early free market transportation - a few players would own the majority of transportation. The demand would exist, but the supply could be manipulated by a select few.

No, anyone with a vehicle appropriate to material transportation would be able to compete, whether that vehicle traveled by road, rail, air, water, or the Force.

Competition only drives prices down when competition exists. Transportation became cheaper when the international highways were built, even once you include the taxes involved in building them.

Once you include the taxes and other gimmicks the government used, the destruction of wealth is necessarily greater than what it would otherwise be.

 

[Fletch]

The Great Northern Railway will not transport goods through New England cheaper than the trucking industry.

Nice non sequitur.

 

[IncendiaryGunner]

When looking at the cost, you look at what it costs us to build the roads.

That hidden X is not really a hidden factor. We still pay it...

I understand that by hidden cost you mean it is not factored into the transportation decision by the consumer... But my point is, the consumer pays it either way. If the overall cost is going to cost more one way, I as a consumer will choose that way. If a privately owned company becomes a member of a cartel, the cost will be higher than if a government entity built it. Automobiles were not magically chosen by the government... They were the emerging technology that was catching on, and was the likely transportation to be chosen by consumers. Government intervention made the transportation cheaper, once you look at the overall picture including that hidden factor. I agree that changes the dynamics of the consumer decision - but the dynamics of the consumer decision being changed does not always mean production is stifled.

What is the point in destroying monopolies and cartels in a free market? But... that's not a free market... that's socialistic policy... Does that stifle competition?

If the government "destroys wealth" to build roads, would the private sector building roads be "destroying wealth" ?

 

[dross]

I want to add to this, but Fletch has argued it perfectly, and is spot on in every instance.

One thing, though. When the government pays for something, several things happen, almost all bad:

1. It takes money from one person to give to another based on a political calculation, not a productive calculation.
2. The money taken distorts the market.
3. The money spent distorts the market.
4. It always costs more for the government to implement a solution than for the market to implement the solution.

In terms of productivity, efficiency, and delivery of services, a government solution is always inferior.

 

[Fletch]

When looking at the cost, you look at what it costs us to build the roads.

Which is not just the dollar cost, but also the opportunity cost.

That hidden X is not really a hidden factor. We still pay it...

I understand that by hidden cost you mean it is not factored into the transportation decision by the consumer... But my point is, the consumer pays it either way.

Except that now the cost is socialized, and the consumer has no choice but to pay it. A consumer cannot, for example, defer his own consumption in order to invest it in some other technology or industry. The ability to choose how one's money will be spent has been abrogated by those who simply assume away the alternatives as being unworthy of discussion. This is how wealth is destroyed, and it is not a trivial consideration.

Automobiles were not magically chosen by the government... They were the emerging technology that was catching on, and was the likely transportation to be chosen by consumers. Government intervention made the transportation cheaper, once you look at the overall picture including that hidden factor. I agree that changes the dynamics of the consumer decision - but the dynamics of the consumer decision being changed does not always mean production is stifled.

Production of what? Cars? Probably not. Wealth? Absolutely it is stifled. The measure of wealth, its value, is subjective to every person. When my ability to choose what form of wealth I will pursue is abrogated by virtue of the government seizing my money and "giving" me a particular form of wealth that IT values, wealth has been destroyed. It cannot be otherwise.

The long and short of this is that government cannot alter economic reality. It does not have magical powers.

What is the point in destroying monopolies and cartels in a free market? But... that's not a free market... that's socialistic policy... Does that stifle competition?

Monopolies cannot exist in perpetuity in a free market. It takes government or some other form of force/violence to form or protect a lasting monopoly. Government "protects" us from monopolies by creating them.

If the government "destroys wealth" to build roads, would the private sector building roads be "destroying wealth" ?

No. Private sector roads arise out of the free choices of individuals allocating their dollars to that which they value most out of all choices available. If folks value roads, roads will be built. If folks value iPods, iPods will be built. Imagine for a moment that government decided iPods were more valuable than roads, and forced you to pay for something which you might not want or might not use as much as the road that you would otherwise choose for yourself. Your choice has been abrogated, and your wealth thus destroyed.

 

[dross]

Cheering Section: Go Fletch!!! Go Fletch!!!!

Seriously, you're on a roll and hitting it perfectly. It's a mini-treatise.

 

[ArmedProgrammer]

Which is not just the dollar cost, but also the opportunity cost.

....
No. Private sector roads arise out of the free choices of individuals allocating their dollars to that which they value most out of all choices available. If folks value roads, roads will be built. If folks value iPods, iPods will be built. Imagine for a moment that government decided iPods were more valuable than roads, and forced you to pay for something which you might not want or might not use as much as the road that you would otherwise choose for yourself. Your choice has been abrogated, and your wealth thus destroyed.

Kind of like forcing us to buy ummmm.... health insurance, no???

Just to give an example in support of Fletch here.

 

[gvbcraig]

Understand your history.

The interstate highway system was install after WW2 for defensive purposes.

During WW2 Eisenhower was able to crutail the movement of German aromant and troops by concentrating the attacks on the rail system.

Realizing the reliance the US had on rail and that this could also happen to the US if we were ever attacked, he encouraged the interstate highway system as an alternate routing of armmonent from east to west and north to south. The bi-product of that was the interstate commerce that took advantage of what was in place and expanded the need.

 

[IncendiaryGunner]

If I gain more opportunity due to the policy, is my opportunity stifled?

If I value what is created ... Wealth is created?

If I am hungry, and someone gives me a piece of bread... that bread has great value, even if someone handed it to me.

Arguing that wealth is not produced, because you do not subjectively value it as much, is not the same thing as showing production is decreased.

There is demand for transportation. That demand is not stifled, the supply is increased, and therefore wealth is not destroyed. The government subsidizing roads does not make people decide they do not value transportation. Actually, we travel more than ever - so it would seem it has created more subjective "wealth" by your definition.

If the government were magically able to always produce more food with less labor, cheaper than the private sector... you are saying that it would be destroying wealth?

Monopolies can exist in a realistic free market... they may not last forever, but they can exist.

 

[Fletch]

If I gain more opportunity due to the policy, is my opportunity stifled?

This is not what is meant by opportunity cost. Opportunity cost is what other things would have been bought had the government not forced a particular choice.

If I value what is created ... Wealth is created?

I have already said that wealth is created, but it follows the destruction of even more wealth. This is the broken window fallacy writ large. If I come over to your house and burn it to the ground, then give you an RV to live in, you have new opportunities that you did not previously have by virtue of the fact that your house was immobile. Would you thank me for these new opportunities, or curse me for burning your house to the ground?

Arguing that wealth is not produced, because you do not subjectively value it as much, is not the same thing as showing production is decreased.

I have never argued that wealth is not produced. I am arguing that wealth is being destroyed in greater amounts than what is being produced by virtue of the fact that choices are being taken away.

There is demand for transportation. That demand is not stifled, the supply is increased, and therefore wealth is not destroyed.

Wealth is destroyed to create the subsidized supply. I seriously cannot believe you don't understand this. If demand exists, factors of production (ie, capital) will be drawn to the sector until demand and supply reach a relatively stable equilibrium.

The government subsidizing roads does not make people decide they do not value transportation. Actually, we travel more than ever - so it would seem it has created more subjective "wealth" by your definition.

Again, that wealth comes at a cost that you stubbornly refuse to see.

If the government were magically able to always produce more food with less labor, cheaper than the private sector... you are saying that it would be destroying wealth?

Magic cannot exist. I think we covered this back in 2nd grade.

Monopolies can exist in a free market... they may not last forever, but they can exist.

I didn't say they couldn't exist. I said they couldn't exist in perpetuity. A business may come to temporarily dominate a market, but a competitor will always arise and knock them down a peg. The existence of fat profits in an industry will draw new capital to that industry, and new competitors will have the advantage of being able to study the dominant player and look for weaknesses they can exploit. People demanding a product will rarely pass up the chance to get it faster, cheaper, have it last longer, etc. Any of our relatively free market sectors (software, porn, etc.) will provide endless examples of this.

 

[dross]

If I gain more opportunity due to the policy, is my opportunity stifled?

You personally? Your personal opportunity might be increased immensely - but at the expense of someone else's opportunity.

If I value what is created ... Wealth is created?

Your wealth, at the expense of someone elses.

If I am hungry, and someone gives me a piece of bread... that bread has great value, even if someone handed it to me.

Yes, but if they took it from someone else to give to you, they are lessened by the same amount of value.

Arguing that wealth is not produced, because you do not subjectively value it as much, is not the same thing as showing production is decreased.

Straw man. The argument isn't who values it more, the argument is that it is taken from one and given to another without a thought of its value to, or its productive use by the one from whom it was taken.

There is demand for transportation. That demand is not stifled, the supply is increased, and therefore wealth is not destroyed. The government subsidizing roads does not make people decide they do not value transportation. Actually, we travel more than ever - so it would seem it has created more subjective "wealth" by your definition.

At the expense of what would have been created without the government interference. We can't see what didn't happen. History tells us that what didn't happen would have been more productive than what did.

If the government were magically able to always produce more food with less labor, cheaper than the private sector... you are saying that it would be destroying wealth?

No, but that is an alternative universe. In this one, the government can NEVER do anything as efficiently as the private sector, period.

Monopolies can exist in a realistic free market... they may not last forever, but they can exist.

If a "monopoly" exists for a few years before the market defeats it, to call it a monopoly is to stretch the term beyond its meaning. Monopolies are only sustainable with government interference. Again, history has proven.