My only caution on Antony Davies' lecture: It is true that people who
get rich without arm-twisting the government are
probably contributing something positive to society. Yet, would you say that that is true of whiskey and other distilled spirits? But even granting his premise -- recall that Prohibition failed -- I ask:
Of course, we do not have a Smithian laissez faire system. We have a bank-ridden system of the sort decried by Smith. In particular, we have a central bank system with its associated personal federal income tax that was designed by a powerful clique of financiers and bankers who hoped to "flatten the curves" of the unfettered market system's boom-bust cycle. The Federal Reserve almost makes mandatory "plunder" (Davies' term) of society by powerful elites influencing the government at high levels.
Also, unfettered competition is not necessarily good. Without some regulation it leads to long hours, pitiful wages and sweatshop horrors of every type. In fact, it can also put American business at a disadvantage. John D. Rockefeller expressed contempt for Smithian competition, arguing that oil market control was necessary. In his day, oversea buyers "played" the American oil sellers so adroitly that it was hard to make a real profit. Rockefeller's consolidation of oil sales certainly put a stop to that. And, despite criticism, he could easily argue that competition in those days included devising schemes to shut out or take over one's rivals.
Yet, I certainly favor anti-trust, or anti-cartel rules to prevent too much power from accumulating in anyone's hands. Agreed, that is a tall order in today's society.
These remarks don't take into account the fact that a brief lecture cannot cover all points in an economist's armamentarium. In any case, I regard Davies' lecture as well-presented and stimulating. Its message is worth respectful consideration.
get rich without arm-twisting the government are
probably contributing something positive to society. Yet, would you say that that is true of whiskey and other distilled spirits? But even granting his premise -- recall that Prohibition failed -- I ask:
What, beyond their own ethical code, prevents these high-dollar entrepreneurs from translating high profit into power, power that is easily abused?Yes, such cartelism implies "plunder," the professor notes. But how do we head off or counteract this recurrent problem? The fact that Marxists are quick to point out this internal systemic contradiction does not mean that it doesn't exist -- though we see that the Marxist solution has never worked.
What prevents them from forming powerful cliques that effectively run governments? When that happens, the market economy tends to defeat itself, since the Smithian market system thrives on individual initiative and competition, which require that ordinary people not be so disadvantaged that they are shut out off from opportunity by a cartel system in league with the government.
Of course, we do not have a Smithian laissez faire system. We have a bank-ridden system of the sort decried by Smith. In particular, we have a central bank system with its associated personal federal income tax that was designed by a powerful clique of financiers and bankers who hoped to "flatten the curves" of the unfettered market system's boom-bust cycle. The Federal Reserve almost makes mandatory "plunder" (Davies' term) of society by powerful elites influencing the government at high levels.
Also, unfettered competition is not necessarily good. Without some regulation it leads to long hours, pitiful wages and sweatshop horrors of every type. In fact, it can also put American business at a disadvantage. John D. Rockefeller expressed contempt for Smithian competition, arguing that oil market control was necessary. In his day, oversea buyers "played" the American oil sellers so adroitly that it was hard to make a real profit. Rockefeller's consolidation of oil sales certainly put a stop to that. And, despite criticism, he could easily argue that competition in those days included devising schemes to shut out or take over one's rivals.
Yet, I certainly favor anti-trust, or anti-cartel rules to prevent too much power from accumulating in anyone's hands. Agreed, that is a tall order in today's society.
These remarks don't take into account the fact that a brief lecture cannot cover all points in an economist's armamentarium. In any case, I regard Davies' lecture as well-presented and stimulating. Its message is worth respectful consideration.
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