Good news for America (at least outside the beltway)

Even a casual student of history finds that in almost every period of our history contemporaries decried the dissension in the Senate or the House. (I recently read biographies of Lincoln, Coolidge and Lyndon Johnson - 50, 90 & 150 years ago seem very much like today.) But the strength of America comes from the bottom, not the top and most of the innovation comes from outside the Beltway.

The president and congress might sometimes suck, but they are not all there is to America. The "Economist" has a survey of the America that works - the states and the American people. Articles start at this link. States are the laboratories of democracy and their ability to experiment has been one of the open secrets of America's success for more than 200 years.

Others are indeed catching up, and this is good. It is about time those freeloaders started to pull their own weight, but biggest research nation in the world. We account for a full 31% of all the research done in the world. This is down from an astonishing 38% in 1999 and the absolute dollar amount of research dropped a little in the last five years, but we still are clearly #1 in research.

Research shows the effectiveness of the U.S. mixed system. Government supplies around 31% of research dollars. But the private-public interface is important. For example, one of the greatest innovations of recent decades is fracking for gas. This is a mixture of government-funded basic research, made practical business. The Department of Energy since the 1970s, it only started to work in the 1990s when the private sector made it work.

Shale gas is another big plus for America. The Marcellus already supports over 100,000 jobs in Pennsylvania and this expected to reach to over 220,000 in 2020. Shale gas gave the local economy a $14 billion boost in 2012. Economists at Citibank estimate that shale gas by itself will add a half percentage point to the U.S. GDP EACH year for the next couple of years. Unconventional oil and gas accounted for $238 billion in economic activity, 1.7m jobs and $62 billion in taxes in 2012. Now that is a true stimulus. link

We don't give up on the federal government, but we need to understand that it will usually be more the consumer than the creator of innovation or wealth. And the Feds can get in the way. The "Economist" has a way of making fun of things in very clever ways. I like this one:

"Proliferating red tape is causing tangles everywhere, from the 400 subsidiary regulations of the Dodd-Frank law on the financial sector to the 140,000 codes the federal government requires hospitals to use for the ailments they treat, including one for injuries from being hit by a turtle."

Good to know there is a protocol for man-turtle encounters, but imagine the time that went into writing and promulgating those regulations.

But America will go ahead. I have confidence that America will outlast the current hard times. We will be back ... again.

Posted by Christine & John at March 16, 2013 8:22 PM
Comment #362960

Christine & John; I know you write in the red column, but this comment: “But America will go ahead. I have confidence that America will outlast the current hard times. We will be back … again”, is wishful thinking. The goal of the left is to destroy America as we know it. They want gas prices to equal those of Europe; as of today, the price of gas in Italy is over $9 a gallon. They want to destroy capitalism. Obama and the left don’t care what laws are passed on the state level; they just ignore them. They don’t care what the courts say; they just ignore them too. As long as they can continue to bring illegal, illiterate people into the country with the promise of government handouts, they will continue to win national elections. There are a few liberal states and many liberal cities that are setting policy for the whole country. As long as Obama and the democrats can continue to pump taxpayer dollars into these failed liberal bastions, they will continue to set policy. The only hope for America are the conservatives who are fighting their own party to make a difference. It’s all about power and who controls the purse strings. What does it matter if it’s a liberal tax and spend democrat or a tax and spend republican, i.e. McCain, Graham, McConnell, or Boehner? Which of them really have conservative values. America is done for…we have no hope. Obama, with the help of socialist democrats and RINO’s have driven the last nail into the coffin. Our industry is gone, our national debt is choking us and yet means nothing to the politicians, and worst of all, our failing education system (even after pumping billions into it) have done nothing more than create a populace that is ignorant of how and why this nation was formed. It’s too late; Obamacare will destroy our medical system at a time when the baby boomers need it most. The only thing left is to disarm all Americans and rewrite the Constitution. We are headed for a civil war. Obama and the democrats know it and this is why they are determined to pass gun control. So far, they are wining and we have no one with the backbone to stand up for the Constitution. I see nothing bright in our future.

Posted by: DSP2195 at March 17, 2013 5:15 PM
Comment #362961

We are sitting on billions of $ worth of oil, coal, and gas, and yet it is the liberal left and the GW alarmist who are setting policy. We have the means to create wealth and industry; yet politicians are the worst enemy of industry. The left forces business to flee the country and yet they cry the loudest when companies leave. Cut the taxes, create inexpensive energy, and instill in people that industry s not the enemy, and America will rebound. But this will never happen; we have a dichotomy from the left: industry is evil and industry is needed for jobs. Solution: destroy industry and put the population on government welfare and food stamps.

Posted by: DSP2195 at March 17, 2013 5:35 PM
Comment #362962


The strength of America is in its people and in our states. I have confidence that will bring us out of the current trouble.

I also don’t share all of your pessimism. I have been reading a lot of U.S. history lately. IMO, the dangers from the radical left were worse in the 1930s and even the 1960s. I don’t believe Obama believes in free markets, but even he must pretend to do so.

Posted by: C&J at March 17, 2013 6:00 PM
Comment #362963

Does innovation come from the free market? Or does it come from centralized government? I’d argue that it has nothing to do with the free market, and mostly comes about as the result of a strong centralized government combined with the most important element of all: geography.

Geographic determinism clearly underlies the success of innovate societies.

The free market has been around a long time, and yet, the world is filled with examples of free market societies that innovate nothing. In modern times, just consider the examples of Somalia and Afghanistan. In these cases and others, societies with free markets and no government produce virtually no innovation whatsoever. Geography explains the situation much more thoroughly than government or free markets.

Governments have been around a long time too, but the relationship between government and innovation seems to be tentative, at best. There have been strong centralized governments- clans, kingdoms, and in modern time, countries like North Korea- which have that kind of government, and yet no innovation. There are other examples, like the USSR, which have strong centralized government and managed major innovatins, such as Sputnik and putting the first man in space. Another factor must be at work.

The most innovative societies generally come about as a result of strong, centralized government working in cooperation with industry to fuel innovation. Think of the Renaissance and the Enlightenment, with governments providing patronage; consider Nazi Germany and the Japanese War Machine, which were some of the most innovative in history.

Furthermore, not only is geographic determinism a far better explanation, a much more likely explanation, but there is another rather unpleasant aspect to it: the most innovative societies produce the most when threatened from without.

The idea that free market capitalism is particularly innovative is not just wrong, it’s ludicrous. Greed has been around a long, long time.

Posted by: phx8 at March 17, 2013 8:31 PM
Comment #362964

C&J, I don’t share in your confidence. If the strength of America is in its people, then we are certainly in a lot of trouble. The American people stood by and watched a racist socialist lead us into $5 trillion more debt, lie to us multiple times, and drive a wedge through the middle of America…and then vote him in for another 4 years with the hope that the results would be different the second time around. The difference between the 1930’s and the 1960’s was the morality of the American people. Even though times were hard, the American people still had a work ethic…a drive to work hard and get ahead. The radical left hippies of the 60’s are now the professors and teachers in our institutes of higher learning. So we now have several generations of students who share Obama’s hatred of the free market. If Obama does not believe in free markets, pray tell why he would have to pretend to do so in his second term? Do you honestly believe a business that started in the 30’s or 60’s could start today? The left may have had a socialist agenda, but today they are blocking corporations with federal red tape. We are in real trouble; the left is now boasting of a rebounded stock market, but it’s a ruse. Things are not right in this nation.

Posted by: DSP2195 at March 17, 2013 8:40 PM
Comment #362965

The only thing government can do for innovation is to get out of the way. The great experiment called the United States was a Constitution that created an atmosphere for free enterprise. Geography means nothing:

Somalia and Afghanistan: tribal warring factions, with no atmosphere for free enterprise.

“There are other examples, like the USSR, which have strong centralized government and managed major innovatins, such as Sputnik and putting the first man in space.”

The Soviet Union could not even distributed the food raised on their communal farms. There was nothing innovative about the USSR; what they did not steal from other countries, was developed by German scientist who were kidnapped after WWII. But the USSR is a good example of an imploding communist failure.

The German and Japanese war machines were successful as the result of national pride. To me or you, they may not have had anything to be prideful about, but to the people worshipping the Emperor or clinging to every word of the Furor…they would have done anything asked of them.

“The idea that free market capitalism is particularly innovative is not just wrong, it’s ludicrous. Greed has been around a long, long time.”

Why do corporations start? Why do people start businesses? Do they do it for the welfare of the populace, or do they do it for profit. Tell me phx8, do you have a job? Do you work for free, or do you work for a paycheck. As we once again visit the mentality of the free love hippies of the 60’s, when the term “stick it to the man” was first introduced. Who was the man? Government? Those who had authority? Corporations? The minds of little children have been filled with this anti-capitalist mush for the past 50 years. Greed???? The greed was the riches that were passed from generation to generation in Europe. It was a cast system that refused to allow a citizen of a country be his own man. America was that great experiment, where a lowly commoner or a black man raised in a ghetto could become a millionaire.

Posted by: DSP2195 at March 17, 2013 9:08 PM
Comment #362966


Geographic determinism works only in retrospect. Strong cultures and people tend to come to dominate good geography.

America is the most innovative country in the history of the world. We have had a relatively decentralized system, both politically and certainly culturally. I don’t know for sure why we have been so innovative, but I don’t think it is only because we came to dominate North America. I think we came to dominate North America in part because we were innovative.

Somalia and Afghanistan do not have free markets in the sense we Americans understand the term. They have anarchy. A free market requires rule of law and enforcement of agreements.

The free market has NOT been around a long time. Our type of free market began to emerge only around 1750. Property rights, ability to start businesses and relatively free exchange protected by rule of law did not exist consistently before that time.

The USSR had very few innovations. They achieved scientific success in limited areas, mostly because they threw lots of money at it and used captured German scientist. Innovation is not the same an invention.

Re greed - greed is not only part of a free market system. In fact, a free market system allows lots more choices. It encourages the useful deployment of capital rather than its mere accumulation.

In any case, the U.S. remains the world’s most innovative country and few of those innovations are currently coming from Washington. Political innovation is coming from states and innovation in culture and economics is coming from the people.


I think we go through cycles on this. We have indeed become more bureaucratic in recent times. I do also worry about too many freeloaders. It is poignant that the left used to seek to represent the working class, but now represents mostly the non-working class. The bright part is that the non-working class cannot go on strike. If they do, what do they do? Work?

Posted by: C&J at March 17, 2013 9:10 PM
Comment #362968

Another historical example of socialism/communism gone awry is Jamestown in the 1600’s. The communal gathering and redistribution of goods was the cause of the death of many. It wasn’t until the settlers were allowed to work by the sweat of their own brows and keep what they produced, did they succeed.

This is what the liberal left wants to do today. To gather what people work to produce and share with those who produce nothing.They say the definition of stupid is when you keep doing the same thing over and over and expect a different results.

Posted by: DSP2195 at March 17, 2013 9:28 PM
Comment #362969

We also have several natural experiments of free market and less free.

We had East and West Germany. Before the war, East Germany was the more industrial part per square mile. After a generation of communism, it was horrible compared to the West with its freer markets.

The Koreas are an even starker example.

I saw a time example in Poland. Under communism, Poland was dirty, poor and backward. A few years after the free market came in, environmental pollution was drastically reduced, people started to be more prosperous and there were even more flowers, since new restaurants opened on the squares and planted trees and flowers.

The free market has long ago won the prize for prosperity and innovation. The only criticism really left is that some people think it is unfair. It does make for more income disparity.

Take an example. In North Korea today almost everybody lives in near abject poverty and oppression. A free market would raise all living standards, but some people would do better. This upsets leftists.

Posted by: C&J at March 17, 2013 9:51 PM
Comment #362970
Does innovation come from the free market? Or does it come from centralized government? I’d argue that it has nothing to do with the free market, and mostly comes about as the result of a strong centralized government combined with the most important element of all: geography.


I would recommend you watch the “Men Who Built America” on History Channel 2…

Did ‘centralized government’ create the rail system that modernized the US? Brought stable kerosene oil to the majority of the US so that we could have good light at night? Invented the way we develop steel for the type of manufacturing we needed to grow? Did it invent the light bulb, electricity delivery systems, radio, television, etc?

No, we were a very innovative country up until recently, at which time we stopped building things and creating things as much as we used to because we are bent on penalizing those people who see needs and fill them instead of holding them up for the respect they deserve.

I find it incredulous that you have to ask the question, let alone answer it in the way you did.

Posted by: Rhinehold at March 17, 2013 10:06 PM
Comment #362971

We could argue about the definition of ‘innovation,’ but I think most of us would agree, the US is one of the most innovative countries in history. But is it uniquely innovative? And is that innovativeness due to a free market and limited government, or some other factor?

What are other examples of the most innovative cultures in history? I would cite Athens, Rome, the Maya & Aztecs, the Muslim cultures of a thousand years ago, Renaissance Europe, Enlightenment Europe, Spain through its conquest of the New World, Colonial Europe, and Nazi Germany. I’m sure I’m doing a gross disservice to a lot of cultures, esp China, but let’s move on.

Most of those innovative cultures had strong, centralized governments. Most prospered due to foreign trade. Most spread their rule through the technological superiority of their weaponry. (A cynic could say the ones that stole the most, the fastest, are the ones that prospered). Almost all are located in a narrow geographical band of latitude, and that is important, because that latitudinal band allowed for the cultivation of crops and the availability of domesticatable animals, as well as the development of immunity to the diseases carried by those animals, such as plague, smallpox, and other stuff- possibly the most important factor of all.

Hopefully I’m making my point. There are virtually no historic examples of innovation occurring with weak or decentralized governments, and free markets have no correlation either.

“The free market has NOT been around a long time. Our type of free market began to emerge only around 1750. Property rights, ability to start businesses and relatively free exchange protected by rule of law did not exist consistently before that time.”

Not so. Feudalism was all about property rights. Every society has exhibited its own version of property rights. Even the Ten Commandments exhort people not to cover other’s property, female property, or slave property. Businesses have been ‘protected’ by the rule of law as long as there have been taxes. Even a barter society could be loosely defined as a free market. The laws of supply and demand still function regardless of whether the system is capitalist or not. Free markets can be warped by government intervention, or by malfunctions due to booms and busts, in the natural maturation of those markets themselves, as they develop into monopolies and oligopolies.

Perhaps you mean laissez-faire capitalism, rather than ‘free market’?

Re the USSR and captured Nazi scientists. Pardon me for pointing this out, but the US captured many of those scientists too, including Werner Von Braun, the father of the American rocket program. The development of jet aircraft owed a great deal to those Nazis, and in the years following WWII, the USSR MiG’s were far superior to American jet fighters.

Posted by: phx8 at March 17, 2013 10:10 PM
Comment #362972

BTW, it is interesting to note what has happened in Canada since the US started its ‘war on poverty’ that has failed miserably…

Canada went into a period of ‘austerity’ and have come out of it a more free and more stable country than the US… The US on the other hand has gone the other direction.

The Canadian government cut defense, unemployment insurance, transportation, business subsidies, aid to provincial governments, and many other items. After the first two years of cuts, the government held spending growth to about 2 percent for the next three years. With this restraint, federal spending as a share of GDP plunged from 22 percent in 1995 to 17 percent by 2000. The spending share kept falling during the 2000s to reach 15 percent by 2006, which was the lowest level since the 1940s.

The nearby chart contrasts the fall of federal spending in Canada since the 1990s with the rise of federal spending in the United States. In recent years, spending spiked upward in both countries because of the recession, but while U.S. spending remains at elevated levels, Canadian spending is now back down to 15.9 percent of GDP and is expected to fall further in the government’s current forecast.

Posted by: Rhinehold at March 17, 2013 10:14 PM
Comment #362974
Pardon me for pointing this out, but the US captured many of those scientists too, including Werner Von Braun, the father of the American rocket program.

Werner, and his group, surrendered to the US (and took great pains to do so) because he trusted the US to use his discoveries more than the USSR. He was not ‘captured’ and kept against his will, he willingly emigrated to the US…

The USSR captured scientists were NOT held of their own accord but kept against their will.

To be honest, your grasp on history is frankly disturbing, comparing feudal states with what the founders of the US created is … interesting.

Posted by: Rhinehold at March 17, 2013 10:24 PM
Comment #362975
In fact, the World Bank has completed a study that puts a cash value on liberty. It turns out that the vast majority of the world’s wealth is embodied in liberal institutions and human brains. The report titled The Changing Wealth of Nations [PDF] shows that the average American has access to about $734,000 in wealth. However, most of it—85 percent—is intangible. In fact, the United States was first in the world in the amount of its intangible wealth, at $628,000 per person. In comparison, despite a couple of decades of unprecedented economic growth, the average Chinese person has access to just $19,000 in per capita wealth, of which $9,000 is intangible.

What is intangible wealth? The World Bank study defines it as “human capital, social, and institutional capital which includes factors such as the rule of law and governance that contribute to an efficient economy.” Note that this is a pretty good summary of the 12 essential institutions of liberty listed by Shermer. The study goes on to point out that free societies are the ones that encourage the accumulation of human capital—they educate their people—and also allow for its effective use.

Effective use is the key. Russians average nearly $340,000 in human capital, but the effects of the country’s bad institutions—corruption and squelched speech—more than offset the benefits of Russian human capital by a negative $350,000. The bottom line is that the intangible wealth of living in free countries with honest governments surrounded by educated people dramatically boosts a person’s ability to earn income and create wealth.

The arc of history must be on the side of liberty, right? After all, don’t groups discovering and using successful institutions eventually out-compete groups with less successful institutions? Friedrich Hayek identified a significant problem—human nature brings with it human hubris.

Surely Shermer is right that the values that undergird the love of liberty are “part of our evolved nature.” They would have to be; otherwise relatively free societies like ours would never have arisen. But the slow progress of institutional innovation shows that the countervailing values of tribalism have been dominant over most of history. As Shermer shows in his excellent new book, The Believing Brain, humans are a conservative species. And why not? Most experiments don’t work out, and in the Paleolithic era, a failed experiment (like eating the wrong fruit or grub) took the experimenter out of the lottery to become an ancestor.

In his last book, The Fatal Conceit, Hayek persuasively argued that “an atavistic longing after the life of the noble savage is the main source of the collectivist tradition.” Tribal instincts once helped roving bands of primitive people to survive and are still the bases of the bonds of intimacy we share with our families and friends. However, the more recently evolved institutions of individual liberty—contracts, the rule of law, private property, profit—strike modern tribalists as cold and unfair. This sentiment was well captured in The Communist Manifesto, in which Karl Marx and Friedrich Engels declared that the avatar of “Free Trade,” the bourgeoisie, “has left remaining no other nexus between man and man than naked self-interest, than callous ‘cash payment.’ It has drowned the most heavenly ecstasies of religious fervor, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation.”

Modern progressives are motivated by an old instinct to restore the primitive egalitarianism that characterized human social relations when people lived in intimate hunter-gatherer bands, corresponding to the Marxian notion of primitive pre-state communism. For their part, modern conservatives intuitively dislike the socially disruptive character of markets and free speech and want to protect their group from outside competition and cultural corruption. These atavistic longings are part of the bio-psychological heritage of humanity and must be constantly resisted if the ambit of liberty is to thrive and expand. Liberalism (libertarianism) rises above and rejects the primitive moralities embodied in the universalist collectivism of progressives and the tribalist collectivism of conservatives. In doing so, it made the rule of law, freedom of speech, religious tolerance, and modern prosperity possible.

Posted by: Rhinehold at March 17, 2013 10:39 PM
Comment #362976


“I would cite Athens, Rome, the Maya & Aztecs, the Muslim cultures of a thousand years ago, Renaissance Europe, Enlightenment Europe, Spain through its conquest of the New World, Colonial Europe, and Nazi Germany. I’m sure I’m doing a gross disservice to a lot of cultures, esp China, but let’s move on.”

It took Athens generations to innovate. Spain didn’t innovate at all. That was their problem. They used borrowed tech. In fact, the Chinese were known for their stagnation in recent centuries.

The fact is that innovation has sped up vastly and the U.S. has been the dominate innovator for at least a century and one of the great innovators since 1787.

We lead the world in Nobel prizes, patents and new products & firms. The interesting thing is that many of these things are done by foreigners who leave their own countries to do their good work in the U.S. This is more proof of the greatness of our system.

Re free market - read a little more re feudalism. Nobody held his land in freehold as we do today. NOBODY. Everybody held property in relation to the obligations to the king or other lords. Beyond that, merchants could not start businesses w/o special permission. It was not a free market in any particular way.

When I say free market that is what I mean. Both words - free and market. You did not have both together until recently.

Innovation mostly come from small units with competition. You mentioned Athens, Renaissance Italy & Enlightenment Europe. What all these had in common was a proliferation of competing states and authorities.

Posted by: C&J at March 17, 2013 10:44 PM
Comment #362977

There are 3 things that are needed for innovation.

1) Vision (seeing a need or advance that can be made)
2) Determination (working through failure and adversity to see a solution arise)
3) Bravery (willing to take a chance instead of playing things safe)

Vision and Determination are two things we can tangentially push to the forefront with education and work ethic reinforcements. However, willingness to take chances can be easily enhanced by allowing for a person to reap the rewards of overcoming their fears and take huge personal gambles to see them through those times.

Progressives want to take that reward model out of play as much as they can, which ends up lowering the rate of innovation that can occur.

Innovation will continue, because of the driving factors that people have to meet those challenges with innovating, but not at nearly the rate or benefit to all as if those who do take those chances are allowed to reap some reward for the chances they take in doing so.

As the examples I explained before, society was greatly improved by the railroad system that Vanderbilt and Scott put together, Rockefeller because rich because he saw a need to develop a standard of kerosene oil that was safe and could be guaranteed as such, Carnegie pushed forward the development of improved steel processes so he could build bridges and then ‘skyscrapers’ that benefited society immensely. They did these things partially because they needed to be done but mainly to fill a need that they saw and profit from it.

Posted by: Rhinehold at March 17, 2013 10:57 PM
Comment #362978

BTW, what we have in the US now is not free market capitalism, it is crony capitalism.

Posted by: Rhinehold at March 17, 2013 11:11 PM
Comment #362979

It all boils down to fairness; the left despises prosperity that creates jobs and raises the standard of living; because it’s not “Fair” that the investors of the business gain more wealth. The liberal wants a person to invest their own time and money and when it is successful, divide the spoils with those who never invested a cent. It’s hypocritical of the left to have a problem with gaining wealth; unless it’s a liberal gaining wealth. Odd that you never hear the left complain about John Kerry’s wealth gained from the Heinz empire, who has overseas holdings, or the wealth gained by the liberal leftist of Hollywood. For once I would like to see a liberal apply the same rules to all people.

Posted by: DSP2195 at March 17, 2013 11:13 PM
Comment #362981

“Progressives want to take that reward model out of play as much as they can,”

One of the most significant achievements of the progressive era was anti-trust legislation which enhanced free trade and fair competition in the market place. Just saying.

Posted by: Rich at March 17, 2013 11:19 PM
Comment #362982

An example; during the OWS protests, when they were protesting the evil Wall Street Bankers, Alec Baldwin (a rich Hollywood type) was sympathizing with the protestors and at the same time making advertisements for Capital One Credit Cards. The ignorant OWS protestor puppets were not able to perceive that one.

Posted by: DSP2195 at March 17, 2013 11:20 PM
Comment #362983

Some facts:

“Free market economist Milton Friedman states that he initially agreed with the underlying principles of antitrust laws (breaking up monopolies and oligopolies and promoting more competition), but that he came to the conclusion that they do more harm than good.[11]

Critics also argue that the empirical evidence shows that “predatory pricing” does not work in practice and is better defeated by a truly free market than by antitrust laws (see Criticism of the theory of predatory pricing).

Thomas Sowell argues that, even if a superior business drives out a competitor, it does not follow that competition has ended:
In short, the financial demise of a competitor is not the same as getting rid of competition. The courts have long paid lip service to the distinction that economists make between competition—a set of economic conditions—and existing competitors, though it is hard to see how much difference that has made in judicial decisions. Too often, it seems, if you have hurt competitors, then you have hurt competition, as far as the judges are concerned.[12]
Alan Greenspan argues that the very existence of antitrust laws discourages businessmen from some activities that might be socially useful out of fear that their business actions will be determined illegal and dismantled by government. In his essay entitled Antitrust, he says: “No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born. No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible.” Those, like Greenspan, who oppose antitrust tend not to support competition as an end in itself but for its results—low prices. As long as a monopoly is not a coercive monopoly where a firm is securely insulated from potential competition, it is argued that the firm must keep prices low in order to discourage competition from arising. Hence, legal action is uncalled for and wrongly harms the firm and consumers.[13]

Thomas DiLorenzo, an adherent of the Austrian school of economics, found that the “trusts” of the late 19th century were dropping their prices faster than the rest of the economy, and he holds that they were not monopolists at all.[14]

Ayn Rand, the American writer, provides a moral argument against antitrust laws. She holds that these laws in principle criminalize any person engaged in making a business successful, and, thus, are gross violations of their individual expectations.[15]”

It’s fine to talk about Federal anti-trust laws, when the Federal Government is the one violating the laws. As Rhinehold pointed out in his link to Crony Capitalism. Is it okay for the Feds to bail out one company and not another?

Posted by: DSP2195 at March 17, 2013 11:31 PM
Comment #362985

Rich, antitrust laws came out of the results of the monopolies actions, specifically Standard Oil, and the resulting economic impacts of them. Before Standard Oil, there were almost no monopolies of that size that could cause so much damage with the power that they wielded.

The Sherman Act of 1890 was supported by both parties at the time.

BTW, an interesting note, progressive views during that era were not limited to Democrat Parties…

The national political leaders included Theodore Roosevelt, Robert M. La Follette, Sr., Charles Evans Hughes and Herbert Hoover on the Republican side, and William Jennings Bryan, Woodrow Wilson and Al Smith on the Democratic side.

Further of note is how those progressive views led to economic depressions which sparked the notion that to prevent them in the future we needed MORE progressive policies, never dawning on them that what we needed in reality was less…

Progressives were the leaders of the Prohibition movement that created the mobs and violence from them, similar to the drug prohibition we are seeing today.

Posted by: Rhinehold at March 18, 2013 12:04 AM
Comment #362986

More information on Canada/US

One of Canada’s strengths is that it is a decentralized federation. The provinces compete with each other over fiscal and economic matters, and they have wide latitude to pursue different policies. Federalism has allowed for healthy policy diversity in Canada, and it has promoted government restraint. Government spending has become much more centralized in the United States than it has in Canada. In the United States, 71 percent of total government spending is federal and 29 percent is state-local. In Canada it’s the reverse—38 percent is federal and 62 percent is provincial-local.

The federalism difference between the countries is striking with regards to K-12 education. While federal control over U.S. schools has increased in recent decades, Canada has no federal department of education. School funding is left to the provinces, which seems to work: Canadian school kids routinely score higher on international comparison tests than do U.S. kids.

The countries also differ with regards to the amount of top-down control exerted on subnational governments through federal aid programs. The United States has a complex array of more than 1,000 aid-to-state programs for such things as highways and education. Each of these aid programs comes with a pile of regulations that micromanage state and local affairs.

By contrast, Canada mainly has just three large aid programs for provincial governments, and they are structured as fixed block grants. It is true, however, that one of these grants helps to fund the universal health care system, which is a big exception to the country’s generally decentralized policy approach. Nonetheless, having just a few large block grants is superior to the U.S. system of a vast number of grants, each with separate rules and regulations.

Posted by: Rhinehold at March 18, 2013 12:29 AM
Comment #362988

Rhinehold & C&J,
Virtually every society displays vision, determination, and bravery. It’s really no more than a function of a society providing for the basic survival needs of its upper class, in order for that group to have the energy to be visionary, determined, and brave. The US is hardly unique in that respect, nor are those aspects of innovation any more or less prominent here than elsewhere, present or past.

The difference is that enough of American society has been lifted from poverty so that it can expend energy on innovation, rather than mere survival, and with one of the largest populations in the world, it’s hardly surprising that the US would lead in traditional measures of innovation.

Applying the traits of vision, determination, and bravery to one historical example would suggest the Spanish conquest of the New World was one of the most remarkable periods of innovation in history. We might condemn their motives- greed and religious mania- and we might disapprove of their methods- intentional brutality and unintentional genocide through spread of disease- yet that Spanish vision, determination, and bravery has resulted in much of the world today speaking Spanish and being Catholic.

As for property rights… We may not approve of all property ownership being concentrated in a king the way it was in feudalism, or in an aristocracy, but nevertheless, property rights existed in those earlier societies.

Finally, innovation is a tricky term. In a sense, every innovator stands on the shoulders of someone else.

Ok, I can’t resist… The success of most societies comes, not so much from their innovation, but their willingness and ability to steal the most, the fastest. That ability comes from technological superiority, a superiority usually spurred through conflicts with competitors, and then applied against unsuspecting neighbors. It almost invariably originates in a strong central government working in partnership with business.

Not a pretty or pleasant observation. We like to think things are much nicer than they really are. We like to think we are special. Almost every society in history thinks it is special and exceptional.

Posted by: phx8 at March 18, 2013 12:53 AM
Comment #362989

Phx8, sorry, but there is a difference in the US. Before the US was created, rights were granted to individuals from the government. The US was the first country to say, and put into their basic structure and laws, that people had rights that didn’t exists because of government. Property was one of these rights, as well as life and liberty.

There *IS* a huge difference between a king or lord deciding to grant some of his citizens some private property rights and acknowledging and putting into law that everyone has those rights outside of governmental providing them…

I’m still missing how this all happens because of a ‘strong central government’, Canada doesn’t have a very strong central government, are you saying that they are therefore not very innovative? The US didn’t have a ‘strong central government’ (like we have now) for around 200 years, when most of the innovations that citizens in the US developed, how was that possible?

We don’t have poverty like many in the world because of the innovations of individuals, like Vanderbilt, Rockefeller, Carnegie, Edison, Tesla, Westinghouse, etc. It was inventions and innovations by these people that allowed the whole of society to develop and build upon those ideas and further innovation. A ‘strong central government’ had little to do with them.

You are going to have to do a better job of defending centralized government being the innovator here, perhaps provide an example or two?

Posted by: Rhinehold at March 18, 2013 1:13 AM
Comment #362991

An obvious example of centralized government spurring innovation would be the patent office.

By divine right, a king used to possess all property. It was private property- just concentrated to the point that it was restricted to only one owner.

With all due respect to the Canadians, the country is really not substantially different from the US. Most of its population lives near the US border, the Canadian culture strongly resembles American culture in most regards, and while we Americans are aware of differences in, say, the health care system, those would be lost on foreigner when asked to distinguish differences between the two countries. I’d be hard pressed to say whether Canada was more or less innovative than the US. I’d be inclined to say the US is more innovative, mostly because big investments in the military have resulted in so much innovation, which once again points to the role of aggressiveness- oh, pardon me, ‘defense’!- in the fortunes of a country.

There are cases where a ‘great man’ has single-handedly changed the fortunes of a culture and sparked innovations: Napoleon, Julius Caesar, and the like. The Robber Barons could hardly be put in the same category. They profited to an extraordinary degree, but most of them had little to do with any actual innovation. True inventors, like Edison, Tesla, and Westinghouse, would be good examples.

Posted by: phx8 at March 18, 2013 2:09 AM
Comment #363002

phx8, you have continued an argument that makes no sense. You have contradicted yourself several times. When it comes to the experiment of the American government; the founders plainly stated that our rights come from our creator. It might also be noted that no other nation has included that as part of their government.

Posted by: DSP2195 at March 18, 2013 8:31 AM
Comment #363010
An obvious example of centralized government spurring innovation would be the patent office.

How does the patent office ‘spur innovation’ exactly? It could be argued that it protects the people who innovate and invent so that they can be rewarded for that, but it also retards innovation as well. In fact, in today’s patent environment which is predatory we now have copyright infringement suites upon suites, companies created just to sue others and make money off of patents, patent givers who don’t understand the technology they are awarding patents for, etc. We’ve extended the 7 year patent protection to basically lifetime because of Disney and it is costing us more than it is helping.

For example, Jefferson on the issue:

“Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.

Considering the exclusive right to invention as given not of natural right, but for the benefit of society, I know well the difficulty of drawing a line between the things which are worth to the public the embarrassment of an exclusive patent, and those which are not. As a member of the patent board for several years, while the law authorized a board to grant or refuse patents, I saw with what slow progress a system of general rules could be matured.”

For what is a ‘copyright’ or ‘patent’ if not a monopoly? It was a necessary evil at best. In fact, Jefferson at one point suggested this article to the Constitution:

“Thomas Jefferson, who strongly advocated the ability of the public to share and build upon the works of others, proposed as part of the Bill of Rights that a short timespan be protected:

Art. 9. Monopolies may be allowed to persons for their own productions in literature and their own inventions in the arts for a term not exceeding — years but for no longer term and no other purpose.”

This was to ensure that no patent or copyright lasted too long, as it (like most Monopolies) retard innovation more than assisting it.

With all due respect to the Canadians, the country is really not substantially different from the US.

Yet, they are able to do it with a decentralized government, spending less allowing for more freedom that we currently have. Interesting…

I’d be hard pressed to say whether Canada was more or less innovative than the US. I’d be inclined to say the US is more innovative, mostly because big investments in the military have resulted in so much innovation, which once again points to the role of aggressiveness- oh, pardon me, ‘defense’!- in the fortunes of a country.

A bit of a quibble here, some of the innovation was funded by the defense department, but most of the innovations were done by private companies or individuals. There was a need and ‘someone’ decided we needed to fill it. That the people who say that need and filled it worked for the government doesn’t mean we need the government to innovate, so your argument doesn’t hold water.

There are cases where a ‘great man’ has single-handedly changed the fortunes of a culture and sparked innovations: Napoleon, Julius Caesar, and the like. The Robber Barons could hardly be put in the same category. They profited to an extraordinary degree, but most of them had little to do with any actual innovation. True inventors, like Edison, Tesla, and Westinghouse, would be good examples.

Your inability to understand what an impact Vanderbilt, Rockefeller and Carnegie did to singlehandledly change the fortunes of the US is remarkable and IMO most likely on purpose. You give them the ‘robber baron’ name as if it were a slight against them…

They were truly innovators, not inventors. Are you confusing the two? For example, Rockefeller saw a way to deliver oil more efficiently through pipelines rather than using the rail system (it saved fuel expenses and ecological damages from train derailments, etc). Carnegie pushed the processing of steel to be more efficient, financed it and again pushed for that steel to be used in buildings (which were made of out of wood, brick, iron and stone at the time), building a bridge to cross the Mississippi river truly uniting the country in a way that was once not possible…

You may not like some of the things they did and how the accomplished them, but to try and defer what they did is simply putting your political views ahead of facts…

“while Rockefeller may have engaged in some unethical and illegal business practices, this should not overshadow his bringing order to industrial chaos of the day. Gilded Age capitalists, according to Nevins, sought to impose order and stability on competitive business, and that their work made the United States the foremost economy by the 20th century.”

Posted by: Rhinehold at March 18, 2013 12:41 PM
Comment #363020

Re your idea that socieities get rich by stealing from others.

If you took all the wealth available to people in 1750 and concentrated ALL of it into the hands of the current U.S. population, we would all of us be poor and miserable. Clearly, there has been an increase in wealth available to people. Even the poorest people today have higher material standards of living than ordinary people had in 1750. The interesting fact is that if you went to the countryside in Roman Gaul in AD 1 and returned to the same place in France in 1750, you would notice few improvements in the material standard of living. But if you came back 100 years later it would be very different. Fifty years later even more. We have made more progress in the last 250 years than most of history before that. AND it came almost exclusively in the West and then in countries that used Western techniques. I understand that we all stand on the shoulders of others. But we need to explain the fantastic inflection the occurred a few centuries ago. Why in the West and why when it did after thousands of years of slow and fitful improvement?

RE private property – you must be trying to get this wrong because you could not be that misinformed. If you refer to the government authority controlling everything as the king’s private property, you have a definition that includes everything.

When informed people talk about private property in the modern sense they mean that individuals have reasonable expectation that they are secure in what they own. In the Middle Ages, you had no real private property in big thing like land or buildings.

Everything was owned based on your political relationships. This was very explicit and also could be arbitrary. I lord who did not support the kings would lose his property and probably his head. A new king could drastically change the relationships. A Lord could not freely sell his land, nor could he buy more without explicit permission from the king. In fact, landed estates had no monetary value in the sense we understand it. The incumbent could not freely sell his land. He could not give it away freely or have a choice about who could acquire it after his death.

Private property implies that you have control over it independent of your political beliefs or connections, that you cannot be deprived of it w/o due process.

Posted by: C&J at March 18, 2013 7:19 PM
Comment #363021


You apparently oppose anti-trust actions. Why? The gobbledygook of Friedman and others that you cite make little sense. Competition and free trade can be good but are not inherently good. Monopolies are actually good unless they completely throttle any competition. It is not competition and free trade but the potential threat of competition. There are no objective standards at all. Their arguments are an affront to the very idea that competition and free trade are the cornerstone of a free market economy.

Lets take a modern example, the breakup of AT&T. Whats been the result? It has been an extraordinary expansion of communication options at substantially lower prices.

One current issue deserving attention is the TBTF Bank issue. Over the past few decades, the financial services industry has increasingly been consolidated within a few major banking giants. They have become not only TBTF but also too big to prosecute. Do they have a stranglehold not only on competition but on the American economy?

Posted by: Rich at March 18, 2013 8:12 PM
Comment #363022

Rich, I do not have a problem anti-trust laws. I simply present the comments of people whose field is economics. What I do have a problem with is a government who picks and chooses which companies or corporations to go after. The Obama administration has chosen to decide which companies are too big to fail, rather than let the law settle the case.

As Rhinehold pointed out, may of the anti-trust laws originated with Republicans.

What really disturbs me is the left’s attacks on wealth and free enterprise and yet completely ignores the wealth accumulated by leftist, i.e. Kerry, Baldwin, or even Gore.

Posted by: DSP2195 at March 18, 2013 9:13 PM
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