Asher Platts: ‘How much would a $15/hr minimum wage cost?’


Asher Platts

By Maine Green Party activist Asher Platts at Punk Patriot:

Why should we have a living wage? What is the cost of lifting workers out of poverty?

These are important questions that are on a lot of people’s minds right now, thanks to the Green Party’s campaign for a $15/hr minimum wage in Portland.

If we raise the minimum wage to a living wage, won’t it cause people to lose their jobs?
The short answer is no. Why?

If you are a businessperson, you don’t break even on the labor of your employees. (Or if you do, you are bad at business.) For successful businesses, hiring an employee is only done if the resulting value created by their labor is well above the cost of their labor. Why? Because that’s where profit comes from!

But won’t doubling the minimum wage cause the price to the consumer to double?

No. When you pay for a $5 cup of coffee, much of that $5 you pay is profit for the employer. Only a small fraction of that cup of coffee goes to pay overhead costs, which can be divided further into raw material costs, utility costs, and labor costs. So the cost of labor actually makes up a small proportion of the $5 that you’re paying. So if you were to double that small fraction of the cost, you will see a similarly small increase in the total cost to the consumer.

Perhaps that’s biting off too much to chew all at once. It’s easy to understand why people think that doubling the wage will result in doubling of prices. Employees are the people that you speak with on a daily basis, not the owners, and you put your money in the hands of employees, and so it feels correct that they keep most of it. But that’s not the case at all. A critical part of the equation is missing: employer profit.

Many people don’t realize that the labor that goes into producing a product is necessarily compensated far below productivity. Profit is the difference between the price of the product to the consumer and the cost to the employer to make that product. So the cost of labor needs to be less than the cost to the consumer minus raw materials.

Raw material costs vary from product to product, but generally are very low. Take a fast food meal that costs $8. With a large soda costing somewhere around $0.07 per cup in seltzer and syrup, and similarly low prices for fries and burgers purchased on massive scales, costs to the employer by way of material costs are very low, like $0.50 per meal. Labor is the magical ingredient that takes $0.50 of frozen meat patty and french fries, and turns it into an $8 fast food meal.

Now, if we were to reverse the model of compensation, and say that instead of getting a flat hourly wage, instead employees got paid piecework instead, and assuming there was no profit, a worker earning the federal minimum wage would only need to make roughly one meal every hour to pay their wage. Every additional meal that they make in that hour has only one cost to the employer– raw materials.

For the sake of making this argument more realistic, let’s say you’ve got a staff of 4 working in the fast food joint. You would only need to make one $8 meal every 15 minutes to pay the day’s wages.
Over the course of an 8 hour day, that’s only 32 meals per day to pay the labor cost of four employees.

As somebody who has worked in fast food, I can tell you first hand, that in the course of an 8 hour shift, one makes quite a bit more than 32 meals a day. Granted, it’s not steady, there are some busy times when one makes 100 meals in one hour, and other times where an hour can pass where not a single meal is sold, so given that, it’s safe to assume an average of 32 meals an hour, not 32 meals a day.

At $8 a meal, 32 meals an hour generates $256 per hour.

Accounting for the raw materials of those 32 meals, at $0.50 per meal, the cost is $16 an hour, leaving $240/hr left over for the employer. Pretty good so far.

So now we need to pay our workers. Those 32 meals an hour, remember that less than four meals pay the wage of the 4 employees. Together those four employees cost $30 per hour, leaving $210 an hour left over for the employer.

$210 an hour, over the course of an 8 hour workday, is $1680 a day in profit for the employer. Granted I’m not adding other costs like rent or utilities, but those costs are monthly not daily, so I’m going to ignore them for the sake of simplifying this hypothetical.

If you double the wages of the employees so that they are earning $15 an hour individually, or for the four of them together they would cost $60/hr. That would leave the employer with $180/hr in profit, or $1440 in profit per 8 hour shift each day.

That’s still quite good. The employer may take home $240 a day less in profit, but now those employees can afford to participate in the economy in ways that they would never have been able to earning $7.50/hr.

Let’s say though, hypothetically, that the employer must earn $1680 per shift in net profit, and thus would pass 100% this added labor cost on to the consumer. We can easily calculate that cost to the consumer by dividing the cost of labor over the average number of meals prepared in a day.
32meals per hour X 8hrs per shift = 256 meals a day.

The additional labor cost of $240 per day / by 256meals = an additional $0.93 per meal.
So you’d see your $8 meal increase to $8.93, and now the employees have been lifted out of poverty and are earning twice as much.

So the short answer is not noticeably, at least not if a business is following the pure economics of supply and demand and all that jazz. A business could double the prices to $16 per meal and say that it’s because of the minimum wage increase, but such an increase would not be a sound business decision– it would be a political move by a greedy business owner, who wants to turn their customers against doing the right thing.

If it costs an additional $1 per meal to double the wages of low income workers and raise an entire population out of poverty, why not do it?

128 thoughts on “Asher Platts: ‘How much would a $15/hr minimum wage cost?’

  1. George Phillies

    You are omitting the cost of all the equipment, the bricks and mortar, large numbers of taxes,…Your argument is not hopeless, but it needs polishing.

    Alternative, from tax data: How many people make the minimum wage? Not many.

  2. langa

    This article is a perfect example of how economically illiterate the average central planner really is. He seems completely oblivious to key concepts like marginal return and market equilibrium. Thus, he fails to grasp that wages are already at the optimal level determined by the market. Granted, the market suffers from numerous government-induced distortions, and therefore, wages are probably not truly optimal. But given that increasing the minimum wage would not reduce (and in fact would actually increase) the size of said distortions, his argument is still an epic fail. And that’s without even factoring in other problems, like the broken window fallacy…

  3. Austin Cassidy

    This analysis only holds up in a world where every business is wildly successful and generating huge profits. But there are many small businesses out there that are just struggling to get by as it is, and doubling the minimum wage would create a wave of chaos that would sharply spike unemployment among those least able to afford being unemployed.

    If running a restaurant is as lucrative as Mr. Platts suggests, why do the majority of new start-ups fail within their first 2 years? The failure rate rises to over 70% by year 10. I would venture to say, from some first-hand experience, that most restaurants aren’t printing money… they’re struggling to keep the lights on.

    Most people talking about raising the minimum wage are ignoring the reality of what’s going on in the economy at-large. Advancements in technology and improvements in automation have eliminated a huge number of jobs through increased efficiency. Those jobs are not coming back, period.

    The problem we face is that minimum wage jobs used to exist primarily for part-time workers, students, the unskilled, the semi-retired, etc. Now we have people with advanced degrees being forced to take lower-level jobs like working in call centers for $12 an hour.

    The people who, in the past, would have held those call center jobs are then squeezed down the food chain and wind up literally flipping burgers at McDonald’s for minimum wage. Historically, these jobs were never really held by people trying to “support a family” on that income. But times have changed, and the people taking those positions now are squeezing the very low end of the labor pool out of the job market entirely.

    Those people then figure out ways to scratch by, sometimes taking off-the-books work that’s paid in cash. Frequently, this meager income is combined with some sort of government assistance, either unemployment or actual welfare programs. More than ten million Americans have also suddenly found themselves disabled, legitimately or otherwise.

    This movement is also why we have massive unemployment among the young. And it’s part of the reason we have a monster student loan bubble building up, because 18 year-olds are just taking out an endless series of low-interest loans to finance 10 years of college before they even seriously attempt to enter the workforce.

    What can be done? How do you fight progress and the march of technology?

    I don’t have a clear solution for any of this, short of a massive reduction in population. But at least I can see the problem. And it can’t be solved by doubling the minimum wage. It will take something far more creative and aggressive to stabilize the economy in a sustainable, long-term fashion.

    Some in the tech world, and even some conservatives, have started making rumblings about a guaranteed minimum income. I don’t know enough about the various options, but I’ll admit that it’s an intriguing possibility.

    Here’s one recent article worth taking a look at:

    http://www.theatlantic.com/politics/archive/2014/08/why-arent-reformicons-pushing-a-guaranteed-basic-income/375600/

  4. Starchild

    “Minimum wage” laws are misleadingly named, because they give the false impression that simply by “raising the minimum wage”, government can guarantee that everyone will be paid at least $X per hour.

    In reality, the true minimum wage always remains $0 per hour, which is the amount you earn when you are unemployed — which many people already are, and which even more people will be, the higher that politicians raise the artificial bar over which employers must jump if they want to legally hire anyone.

    A better term, I think, is “wage control laws” — like “gun control” or “price control”, and about equally effective at addressing the problems they purport to solve, i.e. not at all.

    No, scratch that — if these laws merely accomplished nothing at all, that wouldn’t be so bad. The terrible truth about them is that they ultimately worsen conditions for the very populations in whose names they are adopted.

  5. Mike Kane

    The guy totally misses the point. Has he never read a basic economics book….namely the chapter called “Cost Pull Inflation”.

  6. ATBAFT

    I actually know a guy who owns a couple Burger King franchises. He says automation, first at the order station, is the way he will go, thus cutting a couple jobs. Also, he’ll now be able to attract a better skilled employee for those jobs he can’t cut. In other words, the kid bound for college, who speaks perfect English and is polite and industrious (but who won’t work for $8 per hour) will now be applying at $15. This will kick out the marginal employee who is only worth $8 or $9 per hour. He also expects to attract lots of well-experienced retirees who can be induced back into the work force at $15 to supplement their s.s. Sorry, high school dropout, the first and second rungs of the ladder have just been lopped off by Top. Men. in government.

  7. Bondurant

    As referenced in the above comment, it is almost unintentionally hilarious that most advocates of a $15 per hour minimum wage do not realize they would be pricing themselves out of a job, If not automation, fast food joints could require a college degree. Hell, for $15 per hour, I’d quit my current job to flip burgers.

  8. Green_w_o_Adjectives

    The minimum wage issue is mainly a way to get people’s attention and get them thinking critically about capitalism.

    The real issue is who owns the firms and enterprises in the United States. Who gets the profits from them? Where are these profits reinvested?

    What frustrates me about you Libertarians, and why people describe Libertarians as a “corporate party”, is you seem to have no problem with corporate ownership of most of the businesses and capital of this nation. In addition, you don’t seem to give a fuck about capitalism needing to maintain a legion of unemployed people in order to keep everyone’s wages low. In other words, your rhetoric directly favors the interests of the ruling class at the expense of the American people.

    Oh, I know, if wages are made artificially high because of laws, then capital reinvests overseas. But you never seem to question WHY the people should allow capital generated in the USA to be invested overseas when millions are out of work here in the USA. Capital flight is not in the interest of anyone except the capitalist….so why should ordinary citizens allow it to happen?

    My solution is fairly simple. Nationalization of a number of large corporations, particularly natural monopolies. Use the capital acquired as the basis for state banks to make loans to small businesses. The professionals making these loans would be democratically accountable to the people. Then use these banks to construct a small-business economy where it’s possible for individuals to own their own businesses and enjoy the fruits of their own labor.

  9. Andy

    “Green_w_o_Adjectives
    June 13, 2015 at 3:37 pm
    The minimum wage issue is mainly a way to get people’s attention and get them thinking critically about capitalism.

    The real issue is who owns the firms and enterprises in the United States. Who gets the profits from them? Where are these profits reinvested?”

    The biggest owner of corporate stocks and bonds in the USA is the US government (both domestic stocks and bonds and international stocks and bonds), or more specifically, a multitude of government entities. See government Comprehensive Annual Financial Reports (aka-CARFR’s) for more details ( http://www.CAFR1.com ).

  10. Davet41@comcast.net

    Asher Platts at Punk Patriot wrote: “If we raise the minimum wage to a living wage (ie $15 per hr.), won’t it cause people to lose their jobs? The short answer is no. Why?

    Because the SHORT answer only lasts an extremely SHORT time because ‘ceteris’ NEVER remains ‘paribus’!!!

    The current minimum wage in Maine, where Platt lives, is $7.50/hr. When those earning the minimum wage suddenly receive a 100% raise what happens to all their co-workers who earn much more than $7.50 but much less than $15.00/hr.???

    Does ANYONE seriously believe that those who are currently earning $10, $12, $15 per hour will sit by and settle for the same wage that the newest, less trained and experienced workers earn the same as them?

    The caveat here is that there will be a steep increase in unemployment as many of those who currently earn more than the new minimum wage are pressured to take a reduction or be replaced by the new minimum age employees, or replaced by more machinery or having their
    jobs farmed out to specialty firms who employ minimum wage workers.

  11. Green_w_o_Adjectives

    “The biggest owner of corporate stocks and bonds in the USA is the US government (both domestic stocks and bonds and international stocks and bonds), or more specifically, a multitude of government entities. See government Comprehensive Annual Financial Reports (aka-CARFR’s) for more details ( http://www.CAFR1.com ).”

    That’s the big joke about Libertarians. They claim to be against government but in fact they strongly support an economy where everything is owned and determined by finance capital and multinational corporations. And these entities require government (in the form of education, regulations, government kickbacks, police, prisons, etc) in order to maintain their property and privileges. There is very little difference between corporate government and government (eg top government positions are typically occupied by corporate execs and vice versa–parliamentary represenatives typically become corporate lobbyists and lobbyists become representatives ). Libertarian ideology is all about further solidifying these relationships and de-legitimizing the power of any public institution to challenge the power of big finance over our lives. The inevitability of TPP is a good example of the triumph of libertarian/neoliberal ideology and the utter domination of multi-national corporations over both our governments and our daily economic lives.

  12. Green_w_o_Adjectives

    Or to put it another way….it’s absurd to imagine that a sharp distinction can be drawn between multi-national corporations and the US government. It’s evident that US government policy is oriented towards serving the interests of these multi-national corporations. So if you’re interested in curbing the power of government, then naturally you have to be interested in curbing the power of these corporations (eg making them accountable to people instead of further capital accumulation for their owners). But Libertarian ideology/policy is all about solidifying the hold of corporations over institutions by making institutions accountable to money instead of people. For Libertarians, the source of evil is public institutions that were once (in more radical and/or revolutionary times) held to be sovereign over corporations. So ultimately, Libertarian ideology is closely related to neoliberal ideology and the rising sovereignty of multi-national corporations over any kind of people-based public institution.

  13. Green_w_o_Adjectives

    “Corporations as we know them would not exist in a real libertarian society.”

    If that’s true, then Libertarian propaganda is doing a poor job of describing how corporations would cease to exist without government.

  14. Jill Pyeatt

    I’m thinking that the writer of the article learned math from the Common Core curriculum.

  15. Green_w_o_Adjectives

    “Some libertarians have done a poor job at explaining this, but others have not.”

    The thing is, most libertarian propaganda suggests that stuff works better if money, instead of people, is the determinant power behind economic and political decision-making. The only exception I can think of is some libertarians like juries and jury nullification, but then there are other libertarians who would take all power away from juries and entrust power to judges interpreting law.

    So unless libertarians are in favor of social ownership of capital (and only left-libertarians of the Carsonian variety seem to favor that) then ultimately they support the sovereignty of capital owners (whose property and capital is inevitably protected by governments or the equivalent of governments) over the rest of us.

  16. Davet41@comcast.net

    Andy: “Corporations as we know them would not exist in a real libertarian society.”

    I’m afraid that Andy is being a little vague in what he means by “corporations in a libertarian society”

    BY SOME NAME, there WILL be production enterprises and facilities. These entities, by whatever name they are called will be privately owned and operated by various combinations of
    entrepreneurs, financial entities and marketing companies.

    It is as senseless to posit a “libertarian society” sans what are loosely referred to as corporations
    as it was for Marx to suggest that “government” would cease to exist under communism.

    Blue and yellow without other additives:: “If that’s true, then Libertarian propaganda is doing a poor job of describing how corporations would cease to exist without government.”

    ALSO nonsensical! A given Libertarian might be in error on a specific fact or thesis; but it is alien to libertarianism to foster “propaganda”. We CANNOT profit from it, so there is no motive to deceive either ourselves OR others.

  17. Andy Craig

    Saying corporations wouldn’t exist in a libertarian society because we wouldn’t grant privileges to state-approved corporations, is like saying there wouldn’t be marriages in a libertarian society because there wouldn’t be state-approved civil marriage. It’s nonsense.

    Libertarian(ish) complaints about the current incorporation process also tend to be overblown, and overstate what the actual implications of incorporation are. Something akin to limited liability for example (typically the biggest objection), is something that could quite easily arranged by perfectly valid contractual means. And the much-misunderstood concept of legal personhood for corporate entities, isn’t going anywhere, unless you want to have to individually sue every shareholder in a company when they commit a tort against you.

    Rent-seeking and corporatism are a huge problem, and rightly a target of libertarian opposition. But that doesn’t mean the very concept of a group of people forming an organization, and that organization being able to own property and contract obligations, is somehow invalid or wrong.

  18. Andy Craig

    To state the obvious, the Green Party is a corporation, as are its state affiliates.

  19. Andy

    This is why I said, “Corporations AS WE KNOW THEM would not exist in a real libertarian society.”

  20. Chuck Moulton

    The difference between government and a large corporation is force. You can choose whether or not to do business with a corporation. You have no choice on whether to pay taxes and obey government edicts.

  21. Andy Craig

    What do you mean by “as we know them” though?

    Honestly, the differences I see would be fairly small. I think the idea of corporations as we know them would more or less stay the same. Freedom of association, property rights, and freedom of contract. If anything you could make the case that it’s like marriage: get the government out of the business of licensing the contracting of a corporation, and in the meantime make it as unrestricted as possible so that anybody can do it.

    What would change, is the rent-seeking, special interest subsidies, protectionism, etc., which would probably lead to a diversification of smaller firms and start-ups. But even that can be overstated. Either way, that’s a totally separate issue from the nature of all corporations, which basically cover any group of more than two people you can think of.

    I’m not saying you’re doing this, but I do see some Libertarians invoke a vague anti-corporation or anti-corp-personhood sentiment to join in the bashing of some unpopular private-sector business. Wal-Mart, Monsanto, Pharma, Newscorp, Koch Industries, whatever (setting aside companies that actually do mainly sell things to the gov’t). Not that there aren’t plenty example of government distortions and favoritism corruption you could point to with some of those, but sometimes I think it veers to close too outright illiberal anti-capitalism. Who’s to say those companies wouldn’t survive in some form in a free market of 100% voluntary exchange? And even as they exist, there’s a good case to be made that they’re still providing voluntary services at a market price, subject to government distortions which might help them in some cases but most certainly hold down economic activity and prosperity as a whole.

    That’s why statements to the effect of “In a libertarian society [insert unpopular corporation, or ‘corporations as we know them’] couldn’t exist” take it a bit too far I think. Sometimes it’s true for a particular corporation that mainly provides a government demand that wouldn’t otherwise exist, and that case can be made. But as a general proposition, it seems like trying to superficially position libertarianism as revolutionary anti-capitalism, instead of classical market liberalism, voluntary exchange, and property rights. That doesn’t seem right to me, and I don’t think it’s a winning strategy either.

  22. Green_w_o_Adjectives

    “Rent-seeking and corporatism are a huge problem, and rightly a target of libertarian opposition. But that doesn’t mean the very concept of a group of people forming an organization, and that organization being able to own property and contract obligations, is somehow invalid or wrong.”

    Issues with corporations revolve around 1) how they are organized 2) who they are accountable to. In circumstances where finance capital is concentrated in a few hands and which thus controls all regulatory authority, then corporations become a useful shield for greedy citizens to profit at the expense of the rest of us (who suffer from the externalities).

    In general I’m in favor of direct democracy so imho business enterprises should be accountable to their employees (1 person, 1 vote) as well as to the community at large if the community is affected by the enterprise.

    The corporation, by contrast, is accountable to shareholders whose stake is guarenteed by government force. As you’re probably aware, it is not possible to “own property” or perform “contract obligions” without government (or equivalent services) to maintain (and re-produce) property titles and/or enforce contracts.

    The capitalist ownership model requires a great deal more government force (and/or government services like police, prisons, etc) than the socialist ownership model…..which helps explain why anarchism has traditionally been a socialist movement.

    I’m not saying that real-world direct democracy and socialism wouldn’t require government services, I’m just saying it would be way less government (or at least way less oppression) than a capitalist society.

    The Soviet Union is often described as socialist, but in fact workers had very little control of how enterprises were run. Consequently, the Soviet Union needed a massive authoritarian spy state to maintain the privileges of the 1-party ruling class in power.

  23. Robert Capozzi

    Green: [Ls] don’t seem to give a fuck about capitalism needing to maintain a legion of unemployed people in order to keep everyone’s wages low.

    me: How did you come to this conclusion? Near as I can tell, capitalism needs a stable legal system to protect property rights, free trade, freedom to make transactions, freedom to raise and deploy capital, and free labor markets. Wages will rise or fall depending on the supply and abilities of labor, and the demand for that labor.

  24. Chuck Moulton

    It’s very possible to have a property system and a court system without government. See e.g. the writings of David Friedman.

    Socialism suffers from terrible incentive problems which socialists hand wave over. It’s completely unworkable, both in theory and in practice.

  25. Davet41@comcast.net

    With all due respect to Friedman, I fail to understand HOW “property rights can be upheld and the court system can enforce it’s decisions with the “force of law” (ie government)

    Can you explain????

  26. paulie Post author

    A better term, I think, is “wage control laws” — like “gun control” or “price control”, and about equally effective at addressing the problems they purport to solve, i.e. not at all.

    No, scratch that — if these laws merely accomplished nothing at all, that wouldn’t be so bad. The terrible truth about them is that they ultimately worsen conditions for the very populations in whose names they are adopted.

    Excellent point.

  27. paulie Post author

    What frustrates me about you Libertarians, and why people describe Libertarians as a “corporate party”, is you seem to have no problem with corporate ownership of most of the businesses and capital of this nation.

    That’s true of some Libertarians. However some of us oppose corporate personhood and noncontractual limited liability. Myself for example. Therefore, we have a serious problem with corporate ownership of anything, since we consider corporate status as it currently exists to be an unearned and unjust grant of privelege from the state at the expense of everyone else. Also known as privatiing profit while socializing risks and costs. And that is just barely scratching the surface of the tip of the iceberg of ways – big and small, obvious and hidden – that big government serves to concentrate wealth in the hands of big business and the super-wealthy, shields them from true competition, prevents small business and cooperative enterprises from coming to be, and stangles them in the crib when they do, prevents those stuck at the bottom and often those stuck in the middle from exercising both personal initiative and mutual aid to raise themselves up, etc.

    And even if there weren’t quite a few LP members who agree with me on this, it would still be misleading to label us as a corporate party. Major corporate money flows to establishment parties, not to the LP.

  28. paulie Post author

    In addition, you don’t seem to give a fuck about capitalism needing to maintain a legion of unemployed people in order to keep everyone’s wages low. In other words, your rhetoric directly favors the interests of the ruling class at the expense of the American people.

    I would level this criticism more at those who seek to spread unemployment through wage control (“mimimum wage” and/or maximum wage) laws, red tape, and many other means that come from government initiations of force and meddling in the economy both on behalf of well meaning but misguided progressives as well as on behalf of their corporate partners in robbing the wealth of the people. It is they who are responsible for unemployment and underemployment.

    In a truly freed market, it would be far more a case of business competing for employees than employees competing for jobs, and self-employment would be a much more common and realistic option for a lot more people. The economy would be far too turbulent for major accumulations of greatly unequal wealth to happen to any meaningful long-standing extent, and even the poorest people would in short order be far wealthier in absolute terms than the very wealthiest billionaires are today. Diseconomies of scale would far outweigh economies of scale without government-corporate control of the economy.

  29. paulie Post author

    Oh, I know, if wages are made artificially high because of laws, then capital reinvests overseas. But you never seem to question WHY the people should allow capital generated in the USA to be invested overseas when millions are out of work here in the USA. Capital flight is not in the interest of anyone except the capitalist….so why should ordinary citizens allow it to happen?

    Regime borders should have absolutely nothing to do with anything. If you limit trade, you will only succeed in making everyone poorer, especially those who are already poor.

    If you think that preventing capital flight between nation states would make us wealthier, how about between states? Cities? Neighborhoods? Blocks?

  30. paulie Post author

    My solution is fairly simple. Nationalization of a number of large corporations,

    So you would further empower the largest monopoly of all, the same organization responsible for police brutality, foreign wars of aggression, etc, etc? Brilliant!

    particularly natural monopolies.

    Are those sort of like unicorns, military intelligence, and jumbo shrimp?

    Use the capital acquired as the basis for state banks to make loans to small businesses. The professionals making these loans would be democratically accountable to the people. Then use these banks to construct a small-business economy where it’s possible for individuals to own their own businesses and enjoy the fruits of their own labor.

    Because central planning empowers small business? That’s not how it has worked anywhere that I know of.

  31. paulie Post author

    That’s the big joke about Libertarians. They claim to be against government but in fact they strongly support an economy where everything is owned and determined by finance capital and multinational corporations.

    Au contraire.

    And these entities require government (in the form of education, regulations, government kickbacks, police, prisons, etc) in order to maintain their property and privileges.

    I agree, which is why I oppose them. Likewise, government requires them to keep the economy at least somewhat afloat; otherwise you get something akin to the economic collapse of the Soviet peoples republics, but much faster because there would be no West to help keep them afloat longer.

    The real question is why you or anyone would want to make either of them stronger. It’s true that to some extent they wrestle for control between each other, but to a much greater extent they are in a partnership against all the rest of us.

    There is very little difference between corporate government and government (eg top government positions are typically occupied by corporate execs and vice versa–parliamentary represenatives typically become corporate lobbyists and lobbyists become representatives ).

    Good point. So why do you want to make big government even bigger? It’s like monopoly capital, only more so.

    Libertarian ideology is all about further solidifying these relationships

    Exactly the opposite. We seek to break the wheel.

    de-legitimizing the power of any public institution to challenge the power of big finance over our lives.

    The word public is much abused. The regime is a very, very poor proxy of the public – far worse than a hen guarding a chicken coop.

    The inevitability of TPP is a good example of the triumph of libertarian/neoliberal ideology and the utter domination of multi-national corporations over both our governments and our daily economic lives.

    You appear to massively misunderstand libertarian ideology.

  32. paulie Post author

    Or to put it another way….it’s absurd to imagine that a sharp distinction can be drawn between multi-national corporations and the US government.

    And that’s why you want to put more power in the hands of the government?

    So if you’re interested in curbing the power of government, then naturally you have to be interested in curbing the power of these corporations

    I agree, but I also believe that the converse is also true – if you’re interested in curbing the power of these corporations then naturally you have to be interested in curbing the power of the regime. Do you disagree? If so why?

    making them accountable to people instead of further capital accumulation for their owners

    The regime is not the people. Far from it.

  33. paulie Post author

    If that’s true, then Libertarian propaganda is doing a poor job of describing how corporations would cease to exist without government.

    There are different kinds of (L)ibertarians.

  34. paulie Post author

    I’m thinking that the writer of the article learned math from the Common Core curriculum.

    Very unlikely. He looks relatively young for a political candidate (though looks can be deceiving), but he can’t possibly be that young.

  35. paulie Post author

    The thing is, most libertarian propaganda suggests that stuff works better if money, instead of people, is the determinant power behind economic and political decision-making.

    There’s no economic arrangement that is necessarily the correct one in libertarian terms. Anything that is fully voluntary among all participants, whether it’s a business or a cooperative, would be OK. However, neither the regime nor non-cotractually limited liability corporations are voluntary among all participants, and the two in tandem are even worse. Instead of today’s perversely mixed economy based on public and private aggression in parasitic partnership, we could have a mixed economy of voluntary exchange/competition and voluntary cooperation coexisting peacefully.

  36. paulie Post author

    Saying corporations wouldn’t exist in a libertarian society because we wouldn’t grant privileges to state-approved corporations, is like saying there wouldn’t be marriages in a libertarian society because there wouldn’t be state-approved civil marriage. It’s nonsense.

    Something called corporations may or may not exist, but they would be nothing like today’s corporations and would lack the negative features that opponents of corporatism incorrectly ascribe to freed markets with the intentionally deceptive term “capitalism.”

  37. paulie Post author

    Libertarian(ish) complaints about the current incorporation process also tend to be overblown, and overstate what the actual implications of incorporation are.

    I don’t agree. If anything, vastly understates and underblown (is that a word?)

    Something akin to limited liability for example (typically the biggest objection), is something that could quite easily arranged by perfectly valid contractual means.

    Please explain how we could get noncontractual limited liability through contractual means. Contractual limited liability isn’t the problem, only noncontractual.

    But that doesn’t mean the very concept of a group of people forming an organization, and that organization being able to own property and contract obligations, is somehow invalid or wrong.

    It’s not inherently wrong. It should just bear all its own costs and risks, and not allow its owners to escape responsibility, say by dissolving a corporation and forming a new one. If that means that you would have a lot more sole proprietorships, very small partnerships and small businesses, and a lot fewer megacorps and big businesses (or even none at all), I see that as much more of a feature than a bug.

  38. paulie Post author

    To state the obvious, the Green Party is a corporation, as are its state affiliates.

    Assuming that’s true, so what? Libertarians also drive on government roads, or walk on government streets, even those of us who don’t think government should own streets or roads. Like us, Greens have to function in the existing system; that doesn’t automatically make their criticisms of it or their plans to change it automatically invalid. I believe their proposed reforms are faulty, and in many ways would make things worse rather than better, but not because they have to live in the real world as it exists in the meantime, just as we do.

  39. paulie Post author

    The difference between government and a large corporation is force. You can choose whether or not to do business with a corporation. You have no choice on whether to pay taxes and obey government edicts.

    I doubt many, or even any, big corporations would survive for very long without government force.

  40. paulie Post author

    I think the idea of corporations as we know them would more or less stay the same.

    I don’t.

    Freedom of association, property rights, and freedom of contract. If anything you could make the case that it’s like marriage: get the government out of the business of licensing the contracting of a corporation, and in the meantime make it as unrestricted as possible so that anybody can do it.

    Fine by me, if they don’t get to socialize risks and costs.

    What would change, is the rent-seeking, special interest subsidies, protectionism, etc., which would probably lead to a diversification of smaller firms and start-ups.

    Correct.

    But even that can be overstated.

    I think it can’t be stated enough. That may be a slight exaggeration, but it may not be.

  41. paulie Post author

    I do see some Libertarians invoke a vague anti-corporation or anti-corp-personhood sentiment to join in the bashing of some unpopular private-sector business. Wal-Mart, Monsanto, Pharma, Newscorp, Koch Industries

    I deeply resemble that remark; I’ll bash them all day every day. I’m not sure I would really call them private sector though. They are propped up, and in many cases co-owned, by government in so many ways that I tend to see them as more like tentacles of the same octopus with the regime monopoly being its malevolent brain.

    Not that there aren’t plenty example of government distortions and favoritism corruption you could point to with some of those

    Some?

    Who’s to say those companies wouldn’t survive in some form in a free market of 100% voluntary exchange?

    Me, among others.

    And even as they exist, there’s a good case to be made that they’re still providing voluntary services at a market price

    There is?

    subject to government distortions which might help them in some cases but most certainly hold down economic activity and prosperity as a whole.

    Help them in more ways than a human mind can conceive – and yes, absolutely, it holds down economic activity and prosperity as a whole.

  42. paulie Post author

    That’s why statements to the effect of “In a libertarian society [insert unpopular corporation, or ‘corporations as we know them’] couldn’t exist” take it a bit too far I think.

    I don’t.

    it seems like trying to superficially position libertarianism as revolutionary anti-capitalism

    You say that like it’s a bad thing.

    That doesn’t seem right to me, and I don’t think it’s a winning strategy either.

    I have to disagree, on both counts.

  43. paulie Post author

    Issues with corporations revolve around 1) how they are organized 2) who they are accountable to. In circumstances where finance capital is concentrated in a few hands and which thus controls all regulatory authority, then corporations become a useful shield for greedy citizens to profit at the expense of the rest of us (who suffer from the externalities).

    I agree. And big government serves primarily to intensify that concentration. Even more so when the regime gets rid of its corporate tentacles and attempts to take over their function itself.

    The Soviet Union is often described as socialist, but in fact workers had very little control of how enterprises were run. Consequently, the Soviet Union needed a massive authoritarian spy state to maintain the privileges of the 1-party ruling class in power.

    Yes, that’s what happens when a regime monopoly is presumed to be a legitimate proxy for the interests of the workers.

  44. paulie Post author

    It’s very possible to have a property system and a court system without government.

    I agree. However, I see far less possibility for the existence of noncontractual limited liability, megacorporations, or massive accumulations of power and wealth vis a vis others in general.

  45. Andy Craig

    “Please explain how we could get noncontractual limited liability through contractual means. Contractual limited liability isn’t the problem, only noncontractual.”

    Xcorp hires Dave to be their CEO (or whatever other employee). Part of the contract between Dave and Xcorp is that Xcorp assumes any liability for Dave’s action taken in the course of his employment, and purchases liability insurance to cover that. This is something that already happens. Yes, that would impose on the company the cost of that liability, but that’s exactly what noncontractual limited liability already does.

    I don’t see how this forces any radical change in the corporate structure as we know it, or makes it harder for large corporations to exist. I don’t disagree we could do away with noncontractual limited liability, and should, but so far as things the government does that favor big business interests and distort the market, it’s pretty far down on the list.

    Which is my overall point: conflating the very idea of organizations being recognized as such, with big business special interests and cronyism. Attacking corporate personhood (which is a much broader concept than just LL), is a poor vehicle for attacking crony capitalism, big business rent-seeking, protectionism, etc. All of those things could exist without limited liability.

    It isn’t even clear that limited liability favors bigger firms over smaller firms or startups. If anything, it’s the latter that probably lack the resources to cover possible personal liabilities that would exist in the absence of limited liability. Any megacorp would have no problem purchasing that sort of insurance. How would you ban them from doing so? (Talking about civil liability here. Criminal liability is a different question, but then that gets into the whole question of how crimes should be punished, restitution vs. incarceration, what constitutes a legitimate crime, etc.)

    “Assuming that’s true, so what? Libertarians also drive on government roads, or walk on government streets, even those of us who don’t think government should own streets or roads.”

    Libertarians don’t argue that roads and streets shouldn’t exist. That’s the difference. Without “corporate personhood” in some form, the entity known as the Green Party couldn’t own property, couldn’t engage in contracts, couldn’t own or spend funds in its own treasury. What would be the alternative? The national chair has personal ownership of all party assets, and bears personal liability for all party debts? Anything more than that and you’re getting into “corporate personhood” territory where Green National Committee, Inc. is the party to whatever action is at stake.

    “It’s not inherently wrong. It should just bear all its own costs and risks, and not allow its owners to escape responsibility, say by dissolving a corporation and forming a new one. If that means that you would have a lot more sole proprietorships, very small partnerships and small businesses, and a lot fewer megacorps and big businesses (or even none at all), I see that as much more of a feature than a bug”

    I don’t disagree that those are desirable things, nor that there should be full liability. I’m opposed to liability caps period, not just in the context of corporate personhood. In that regard I agree with Ralph Nader (!) and Judge Nap when they rip on “tort deform.”

    I’m just questioning how getting rid of limited liability would actually do those things, vs. other free-market property-rights freedom-of-contract reforms that would have a much bigger effect along those lines. What you’re talking about is also more a function of bankruptcy law (which applies to individuals, too) than limiting personal liability for corporate obligations. I agree bankruptcy is a lot harder to justify in a libertarian framework.

    I disagree with Woods on plenty of things, but this podcast with Steven Kinsella does a pretty good job of laying out how he came around on this topic, looking at it from what I think is a fairly orthodox NAP-based libertarian perspective:

    http://tomwoods.com/podcast/ep-325-are-corporations-un-libertarian/

  46. paulie Post author

    Xcorp hires Dave to be their CEO (or whatever other employee). Part of the contract between Dave and Xcorp is that Xcorp assumes any liability for Dave’s action taken in the course of his employment, and purchases liability insurance to cover that. This is something that already happens. Yes, that would impose on the company the cost of that liability, but that’s exactly what noncontractual limited liability already does.

    That’s contractual limited liability. Noncontractual means that those who haven’t made any agreement with them can’t get recourse. Under the scenario you describe, they can, just assumed by someone other than Dave. From the perspective of the agrieved part(ies) what matters is that they get compensation (or better yet preventive action to preclude the need for or risk of compensation); not so much who bears that cost.

  47. Bondurant

    “Oh, I know, if wages are made artificially high because of laws, then capital reinvests overseas. But you never seem to question WHY the people should allow capital generated in the USA to be invested overseas when millions are out of work here in the USA. Capital flight is not in the interest of anyone except the capitalist….so why should ordinary citizens allow it to happen?”

    Because what you do with your money (your property) is none of my business and what I do with my money (my property) is none of your business.

  48. paulie Post author

    I don’t see how this forces any radical change in the corporate structure as we know it, or makes it harder for large corporations to exist. I don’t disagree we could do away with noncontractual limited liability, and should, but so far as things the government does that favor big business interests and distort the market, it’s pretty far down on the list.

    If so, I don’t think you have thought the consequences through fully.

  49. paulie Post author

    Which is my overall point: conflating the very idea of organizations being recognized as such, with big business special interests and cronyism. Attacking corporate personhood (which is a much broader concept than just LL), is a poor vehicle for attacking crony capitalism, big business rent-seeking, protectionism, etc. All of those things could exist without limited liability.

    I don’t think they could, although it is true there are many other things big government does to prop up big business, shield it from risk, and protect it from upstart competition rising up.

  50. paulie Post author

    It isn’t even clear that limited liability favors bigger firms over smaller firms or startups. If anything, it’s the latter that probably lack the resources to cover possible personal liabilities that would exist in the absence of limited liability. Any megacorp would have no problem purchasing that sort of insurance.

    Bigger business means more liability so the costs and risks would scale up along with the ability to pay. However, because there’s far less ability for business owners to know everything their business is up to as it scales up – the diseconomies of scale I referred to earlier, due to imperfect information flows of all sorts – the risk and costs scale up exponentially faster than the ability to pay, providing a natural check on unnatural accumulations of wealth and power. That’s where the government steps in with various small, big, obvious and hidden ways to outweigh that check and balance and preserve their corporate partners and benefactors.

    How would you ban them from doing so?

    Natural economic consequences as alluded above.

  51. Andy Craig

    “You say that like it’s a bad thing.”

    I don’t see that selling the libertarian message in the language of Marxist propaganda is likely to either win over the left, or grow the libertarian movement or party. And I don’t toss that out casually, when I say “revolutionary anti-capitalism” of the sort peddled by left-wing minor parties and the hyper-progressive activist base, I think Marxist propaganda is an entirely accurate description. Nor would I assert, in effect, that economies of scale and large business and international trade wouldn’t still exist under libertarianism.

    I believe fully in working with the left on issues of agreement – the two party system, personal and civil liberties, foreign policy. I just don’t think this is an area of agreement, it’s an area where libertarian defense of the free market, freedom of contract, global free trade, and voluntary exchange conflicts head-on with the far-left’s anti-market, anti-property, anti-trade, anti-economic-freedom positions. These are not people who want Walmart or Ford or Disney to face its competition on a level playing ground, they want them to be either nationalized and run by the state (as GwoA would have it) or at least run under arbitrary state directive whenever it suits their whim. They are not, in this regard, any kind of natural libertarian ally or a constituency that can help us move in a more libertarian direction. I’d rather respect that difference of opinion and work on what we do have in common, and present the counter-argument on what we disagree on.

  52. paulie Post author

    Libertarians don’t argue that roads and streets shouldn’t exist. That’s the difference. Without “corporate personhood” in some form, the entity known as the Green Party couldn’t own property, couldn’t engage in contracts, couldn’t own or spend funds in its own treasury. What would be the alternative? The national chair has personal ownership of all party assets, and bears personal liability for all party debts? Anything more than that and you’re getting into “corporate personhood” territory where Green National Committee, Inc. is the party to whatever action is at stake.

    Assuming that there would still be a need for a Green Party (highly doubtful) it would assume the form of local autonomous cooperatives, and its members would buy insurance to cover risks and costs associated with their association membership and/or take actions to minimize those risks and costs; most likely more of the latter. However, I think it would be more like “green social clubs” and “green advocacy associations” and “green educational foundations” and “green cooperative living and work environments” than Green Party per se at that point.

  53. paulie Post author

    I agree with Ralph Nader (!) and Judge Nap when they rip on “tort deform.”

    I do too. HBO (I think) had a good documentary about that.

  54. paulie Post author

    I’m just questioning how getting rid of limited liability would actually do those things, vs. other free-market property-rights freedom-of-contract reforms that would have a much bigger effect along those lines.

    That would be the definition of getting rid of non-contractual limited liability; making them actually assume their own costs and risks instead of having a regime fiat socialize them on their behalf.

  55. paulie Post author

    I don’t see that selling the libertarian message in the language of Marxist propaganda is likely to either win over the left, or grow the libertarian movement or party. And I don’t toss that out casually, when I say “revolutionary anti-capitalism” of the sort peddled by left-wing minor parties and the hyper-progressive activist base, I think Marxist propaganda is an entirely accurate description.

    I know it’s rather long (hah!) but see https://mises.org/library/rothbards-left-and-right-forty-years-later on this; if you still have time after that also read http://aaeblog.com/2006/11/24/greensleeves-was-all-my-joy/ .. both highly recommended for all readers of this thread.

    Nor would I assert, in effect, that economies of scale and large business and international trade wouldn’t still exist under libertarianism.

    They would still exist, but would be far, far outweighed by https://en.wikipedia.org/wiki/Diseconomies_of_scale .. which is the balance that regime intervention into an economy tips (towards the big side, since large pyramid of power institutions have a natural affinity for each other).

  56. Andy Craig

    “That’s contractual limited liability. Noncontractual means that those who haven’t made any agreement with them can’t get recourse. Under the scenario you describe, they can, just assumed by someone other than Dave. From the perspective of the agrieved part(ies) what matters is that they get compensation (or better yet preventive action to preclude the need for or risk of compensation); not so much who bears that cost.”

    Limited liability in this sense we’re talking about does exactly that. Liabilities that can’t attach to the individuals because of it, attach to the corporation. It doesn’t make the liability go away or erase it. Other laws like liability caps might (that’s also a form of “limited liability” so the nomenclature can get confusing), but not the part that says liability for actions taken by individuals acting on the corporation’s behalf attach to the corporation.

    In either scenario, you sue Dave for something he did as an Xcorp employee, and Xcorp bears that liability. The only difference is whether the law compels that result or a contract between Dave and Xcorp does.

    For example, you sue McDonalds for burning you with their coffee. In what scenario does McDonald’s have to reach into the personal assets of its shareholders to satisfy that liability? And why is it invalid for McDonalds to have an agreement with its shareholders that indemnifies them from any such liability? “I’ll give you $100 for a 1% stake in your business, but if somebody sues you and wins anything beyond that $100 is your obligation.” What’s wrong with that? Those sorts of agreements were being made long before the government started regulating and licensing the process. It doesn’t eliminate any liability, it just specifies whose liability it is. Also, how would it be worse for McDonalds if instead of suing them, you had to sue the individual employee(s) who had overheated the coffee?

  57. paulie Post author

    I believe fully in working with the left on issues of agreement – the two party system, personal and civil liberties, foreign policy

    Me too.

    I just don’t think this is an area of agreement, it’s an area where libertarian defense of the free market, freedom of contract, global free trade, and voluntary exchange conflicts head-on with the far-left’s anti-market, anti-property, anti-trade, anti-economic-freedom positions.

    IMO, in many cases – I would say most cases – only because the two sides don’t understand each other and need to do a better job of learning each other’s “language”. See Long, cited in prior comment, on that point as well.

    These are not people who want Walmart or Ford or Disney to face its competition on a level playing ground, they want them to be either nationalized and run by the state (as GwoA would have it) or at least run under arbitrary state directive whenever it suits their whim.

    True, but I think that is mainly because they don’t understand how a market can police and regulate them much better than the monopoly government can.

    They are not, in this regard, any kind of natural libertarian ally or a constituency that can help us move in a more libertarian direction.

    They could be, if we learn to effectively communicate the points I have been trying to make in this thread. I’m not contending that I am very effective at communicating them, though; I could certainly stand to improve a good deal in that regard.

  58. paulie Post author

    but not the part that says liability for actions taken by individuals acting on the corporation’s behalf attach to the corporation.

    The question I am concerned with is whether the victims or those endangered by a company’s actions can get full compensation and whether there is enough incentive for the company’s owners and managers to minimize those costs and risks as a result. Under the current system, I don’t believe there is, due to a government distortion of what can naturally exist in a market, so diseconomies of scale are outweighed by economies of scale which they would not be otherwise.

    For example, you sue McDonalds for burning you with their coffee. In what scenario does McDonald’s have to reach into the personal assets of its shareholders to satisfy that liability? And why is it invalid for McDonalds to have an agreement with its shareholders that indemnifies them from any such liability?

    Because otherwise McDonalds has relatively little incentive to keep that from happening. Its main function is to make its shareholders wealthy, whatever costs and risks that may impose on anyone and everyone else.

    Also, how would it be worse for McDonalds if instead of suing them, you had to sue the individual employee(s) who had overheated the coffee?

    I think you would be suing the owners, not the employees. And those owners would have insurance to make up for it, and also would insure that there would be proper incentives to minimize them in place, unlike now. It seems unlikely that sufficient information would flow to make that manageable on the scale of McDonalds, so businesses of that scale may not exist anymore.

  59. Andy Craig

    What’s the practical difference between suing 500 million McDonald’s stockholders (and then what, sending them all a bill for 25 cents?) and suing “McDonalds” as such and being paid out of their corporate treasury? Note also that the managers or executives are not the owners, that’s how a joint-stock company works. So if the idea is that you go after the owners and not the employees, then you wouldn’t be going after management either.

    The incentive problem you speak of only applies to corporation who somehow incurs liability exceeding its total corporate assets, at which point they’re bankrupt. But that’s a lot more likely for a smaller company than a mega-business, if we’re talking about tort liabilities from harming third parties. And a company doesn’t make its shareholders wealthier by recklessly harming people and incurring liabilities.They make their shareholders wealthier by offering a product or service for voluntary purchase, that people want and at a price they’re willing to pay.

    ” And those owners would have insurance to make up for it, and also would insure that there would be proper incentives to minimize them in place, unlike now. It seems unlikely that sufficient information would flow to make that manageable on the scale of McDonalds, so businesses of that scale may not exist anymore.”

    I don’t know why you think this couldn’t be done. What insufficient information flow would hamper it? That they couldn’t keep the record of who their stockholders are and what the terms of their agreement with them are?

    And why would the insurance have to be purchased by the individual stockholders, instead of purchased by the corporation on their behalf?

    So far as the proper or ideal size of any given company in any given market, that’s something for the dispersed knowledge of voluntary transactions to decide. That’s beyond the Hayekian limits of individual knowledge, so we can only offer at best informed speculation about how large companies could grow in a free market. But I don’t see any justification to assert that that natural limit, the point where economies and diseconomies of scale would balance out, would per se be radically smaller than what we see today, or that large international businesses with large numbers of employees and a lot of assets couldn’t still exist.

  60. langa

    What frustrates me about you Libertarians, and why people describe Libertarians as a “corporate party”, is you seem to have no problem with corporate ownership of most of the businesses and capital of this nation. In addition, you don’t seem to give a fuck about capitalism needing to maintain a legion of unemployed people in order to keep everyone’s wages low. In other words, your rhetoric directly favors the interests of the ruling class at the expense of the American people.

    What frustrates me about you Leftists (among other things) is your economic myopia. You seem to be operating under the assumption that the sole purpose of a business is to do what’s best for its employees, whereas, in reality, the primary purpose of a business is to serve its customers, i.e. to supply what is in demand as efficiently as possible.

    For example, a Leftist (it may have been you, GwoA, I can’t remember) commented on another thread here recently about how big business creates “monopolies” by using “price wars” to drive their smaller competitors out of business. This argument is deeply flawed, on multiple levels. First, “price wars” have nothing to do with monopolies. In fact, just the opposite — they are literally the epitome of competition. Second, the idea that lower prices somehow benefit the rich at the expense of everyone else is truly bizarre. Do you think only the rich buy things?

    I understand that some Leftists are genuinely interested in helping the poor (although others seem to be driven purely by resentment of the rich), but they will never be able to effectively do so as long as they cling to their Marxist fallacies about how the free market works. If you (or anyone else) is interested in the actual libertarian view (rather than the “corporatist” straw men that you like to bash), I highly recommend this essay: https://en.wikisource.org/wiki/Essays_on_Political_Economy/That_Which_Is_Seen,_and_That_Which_Is_Not_Seen — yes, it’s over 150 years old, but it is still just as relevant today as when it was written. If you can truly grasp the underlying logic of Bastiat’s arguments, you should be able to see past virtually all of the fallacious foundations on which Marxist economics are based.

  61. langa

    Something akin to limited liability for example (typically the biggest objection), is something that could quite easily arranged by perfectly valid contractual means.

    AC, based on your later comments, I think we are probably in agreement on this, but I do feel the need to point out, as I did on another thread here recently, that no one can be bound by a contract that they didn’t sign. I’m not sure if you are saying they can, or if it is simply a case of a semantic misunderstanding.

  62. Andy Craig

    We’re in agreement on that point. A owes B, C has a contract with A saying they’ll pay whatever A owes B. B is not being bound by that contract, only A and C are.

  63. langa

    I know it’s rather long (hah!) but see https://mises.org/library/rothbards-left-and-right-forty-years-later on this; if you still have time after that also read http://aaeblog.com/2006/11/24/greensleeves-was-all-my-joy/ .. both highly recommended for all readers of this thread.

    I have read both of these, and I wasn’t particularly impressed with either of them. To make a long story short, I think Rothbard’s attempts to pander to the far left in the late ’60s and early ’70s were just as misguided as his attempts to pander to the far right in the late ’80s and early ’90s. Neither of those groups strikes me as a fruitful source for potential libertarian converts.

  64. langa

    So far as the proper or ideal size of any given company in any given market, that’s something for the dispersed knowledge of voluntary transactions to decide. That’s beyond the Hayekian limits of individual knowledge, so we can only offer at best informed speculation about how large companies could grow in a free market. But I don’t see any justification to assert that that natural limit, the point where economies and diseconomies of scale would balance out, would per se be radically smaller than what we see today, or that large international businesses with large numbers of employees and a lot of assets couldn’t still exist.

    I agree with all of this. many left-libertarians seem to have a lot of confidence in their ability to predict the outcomes of a true free market, but I am skeptical of those claims.

    Furthermore, I don’t think that largeness of firms, economies of scale, or large inequalities of wealth are necessarily bad things, as long as they are achieved without the use of aggression.

    In fact, income inequality seems to me to be, at least to some extent, inevitable in a free society, as illustrated by Nozick’s famous “Wilt Chamberlain” example.

  65. langa

    So, even if I just quote another comment that contains more than one link, my comment still gets held up by the spam filter?

    Talk about a dumb spam filter. If the comment I’m quoting has already been deemed not to be spam, how can simply quoting it make my comment be spam?

    Sheesh.

  66. paulie Post author

    So, even if I just quote another comment that contains more than one link, my comment still gets held up by the spam filter?

    Talk about a dumb spam filter. If the comment I’m quoting has already been deemed not to be spam, how can simply quoting it make my comment be spam?

    Sheesh.

    Yes, it’s dumb. Unfortunately there is nothing I can do about it anymore, other than approve comments retroactively. You’ll have to ask Warren and Steve Redlich, since they removed me as an admin in 2013. They don’t usually read these comments, so you’d probably want to email them.

    When I was an admin I could adjust the settings frequently on an as needed basis, based on what happened on the site in near real time, since I am on here so much. Now…well, it is what it is.

  67. paulie Post author

    What’s the practical difference between suing 500 million McDonald’s stockholders (and then what, sending them all a bill for 25 cents?) and suing “McDonalds” as such and being paid out of their corporate treasury?

    McDonalds could be dissolved and all its assets acquired by another company with the same owners? Well, probably not McDonalds. I guess one difference is that the liability could exceed the value of the company, or the value to keep it incorporated.

    Note also that the managers or executives are not the owners, that’s how a joint-stock company works. So if the idea is that you go after the owners and not the employees, then you wouldn’t be going after management either.

    The managers would probably have some responsibility to the owners on that account if they want to become or remain managers.

    And a company doesn’t make its shareholders wealthier by recklessly harming people and incurring liabilities.They make their shareholders wealthier by offering a product or service for voluntary purchase, that people want and at a price they’re willing to pay.

    A company can cut costs by being marginally more reckless, and thus make its shareholders marginally wealthier. Add up all those margins and it’s a lot of lives, limbs, homes, etc.

    What insufficient information flow would hamper it?

    All sorts of insufficient information flows (see diseconomies of scale link above for starters). The bigger an organization gets, the less the left hand knows what the right hand is doing.


    In the beginning was the plan.
    And then came the Assumptions.
    And the Assumptions were without form.
    And the Plan was without substance.
    And darkness was upon the face of the Workers.
    And they spoke among themselves, saying,
    “It is a crock of shit, and it stinketh.”
    And the Workers went unto their Supervisors and said,
    “It is a pail of dung, and none may abide the odor thereof.”
    And the Supervisors went unto their Managers, saying,
    “It is a container of excrement, and it is very strong,
    such that none may abide by it.”
    And the Managers went unto their Directors, saying,
    “It is a vessel of fertilizer, and none may abide its strength.”
    And the Directors spoke amongst themselves, saying one to another,
    “It contains that which aids plant growth, and it is very strong.”
    And the Directors then went unto the Vice-Presidents, saying unto them,
    “It promotes growth, and it is very powerful.”
    And the Vice-Presidents went unto the President, saying unto him,
    “This new plan will actively promote the growth and vigor
    of the company, with powerful effects.”
    And the President Looked upon the Plan, and saw that it was good.
    And the Plan became Policy.

    This is how Shit Happens

    And when you don’t know what your costs and risks even are, you can’t effectively manage them. But it’s OK, because you’re too big to fail, and you know how to navigate the oceans of red tape. Hell, the regulators are former and future employees of yours, the law has custom loopholes written by your retained lobbyists, and there’s more than enough petty cash on hand just in case you do have to pay some little fine somewhere now and then. It’s just a cost of doing business. No need to worry about your employees striking out on their own either; they won’t even be able to pay their own health insurance, thanks to the bizarre price spiral that comes from insurance being tied to employment and used to pay for routine care among other things… much less navigate all that red tape.

    That they couldn’t keep the record of who their stockholders are and what the terms of their agreement with them are?

    No, that was not what I meant. See above.

  68. paulie Post author

    And why would the insurance have to be purchased by the individual stockholders, instead of purchased by the corporation on their behalf?

    To make sure they have a personal stake in minimizing costs and risks to non-cotracting parties. Corporations can die, and their owners can still reap profits in the meantime. In fact they could do it repeatedly.

    So far as the proper or ideal size of any given company in any given market, that’s something for the dispersed knowledge of voluntary transactions to decide.

    Well, yeah, but that doesn’t mean we can’t hazard a guess.

    That’s beyond the Hayekian limits of individual knowledge, so we can only offer at best informed speculation about how large companies could grow in a free market.

    I offered mine.

    But I don’t see any justification to assert that that natural limit, the point where economies and diseconomies of scale would balance out, would per se be radically smaller than what we see today, or that large international businesses with large numbers of employees and a lot of assets couldn’t still exist.

    I think you haven’t thought through all the different ways that big government unnaturally props up big business then.

  69. paulie Post author

    For example, a Leftist (it may have been you, GwoA, I can’t remember) commented on another thread here recently about how big business creates “monopolies” by using “price wars” to drive their smaller competitors out of business. This argument is deeply flawed, on multiple levels. First, “price wars” have nothing to do with monopolies. In fact, just the opposite — they are literally the epitome of competition. Second, the idea that lower prices somehow benefit the rich at the expense of everyone else is truly bizarre. Do you think only the rich buy things?

    The theory there is that big businesses would intentionally lower prices temporarily, even incur a loss they can absorb, just to drive smaller competitors who can’t afford such a loss out of business, and then jack the prices up sky high to where they would have lost the business to those competitors had they done so while they still had some, before they killed them off.

    The problem with this theory is that those big businesses have to compete against not only existing competitors but also potential ones. Thus, they would really have to permanently cut their prices to an unprofitable level to prevent new competitors from forming. This obviously wouldn’t work. That is, of course, unless they could use government to make it a lot harder to start a new competitor and get it off the ground. Once you got that, well, now you can really cook with gas.

  70. paulie Post author

    I have read both of these, and I wasn’t particularly impressed with either of them. To make a long story short, I think Rothbard’s attempts to pander to the far left in the late ’60s and early ’70s were just as misguided as his attempts to pander to the far right in the late ’80s and early ’90s. Neither of those groups strikes me as a fruitful source for potential libertarian converts.

    In case others who didn’t read them are confused I was linking Long, not Rothbard per se, although the first piece is a discussion of themes first touched on by Rothbard. As for Rothbard himself, I think he was at his best when he tried to reach out to the left and at his worst when he tried to play to the right, and rather venomous throughout.

    The far left itself isn’t a great source for libertarian recruitment, with some exceptions. I see the best target market as left-center-libertarian and primarily (but not exclusively) young, with a strong emphasis on peace and civil liberties/socially liberal issues, and less well formed or strongly held economic views.. but a susceptibility to leftist rhetoric on those economic issues because of an inclination towards social justice, fairness, helping out the underdogs, giving everyone a fair chance, etc. I beliee those same people are also eminently persuadable by libertarian economic arguments, but if and only if they are presented as means towards those same goals that modern leftists claim their policies are intended to achieve (but as libertarians point out, our policies achieve those same ends much better than theirs do; indeed, theirs only get us further from the goals and create a vicious cycle). So, our primary challenge should be to show that our policies achieve the goals they claim, and that theirs don’t. We will pick up some people from the far left this way, but a lot more from left-center-libertarians such as I was around age 19-20.

    Coincidentally, on the quiz my last holdout issue was minimum wage, although there were others that didn’t make the WSPQ.

  71. paulie Post author

    I don’t think that largeness of firms, economies of scale, or large inequalities of wealth are necessarily bad things, as long as they are achieved without the use of aggression.

    I don’t think they can be achieved without the use of aggression. They certainly aren’t now.

    In fact, income inequality seems to me to be, at least to some extent, inevitable in a free societ

    To some extent, yes. I never claimed we would, could or should have perfect equality. However, I believe we would have a lot less inequality, that the large inequalities that would still happen would be a lot more temporary, and that all this would be a good thing.

  72. paulie Post author

    And with that, I’ll try my best to bow out of this one. Not because I can’t hold up my end of the argument, but because I can very easily fall in a trap of endless replies sucking up my time and leaving me completely unproductive. Been there, done that way too many times.

    In fact I am concerned I won’t be able to hold myself from continuing to reply here, but I’ll try.

  73. langa

    The problem with this theory is that those big businesses have to compete against not only existing competitors but also potential ones. Thus, they would really have to permanently cut their prices to an unprofitable level to prevent new competitors from forming. This obviously wouldn’t work. That is, of course, unless they could use government to make it a lot harder to start a new competitor and get it off the ground. Once you got that, well, now you can really cook with gas.

    Yes, this was the point I was trying to make, although I suppose I could have spelled it out a bit more explicitly. More generally, it is literally impossible to have a monopoly without artificial (i.e. government-erected) barriers to prevent new firms from entering the market. Even in the case of an industry that consists of a single firm, as long as there are no barriers to entry, it is not really a monopoly. It is simply an indication that the sole firm is currently serving the market in an optimal fashion (or that it is at least perceived to be doing so by any potential competitors).

  74. langa

    In case others who didn’t read them are confused I was linking Long, not Rothbard per se, although the first piece is a discussion of themes first touched on by Rothbard.

    My comment about making “a long story short” was supposed to be a play on words, but I forgot to capitalize the L. It should have been, “To make a Long story short…”

  75. Robert Capozzi

    L: More generally, it is literally impossible to have a monopoly without artificial (i.e. government-erected) barriers to prevent new firms from entering the market.

    me: Impossible is a strong word made stronger with “literally.” I’d suggest softening that.

    It is probably not impossible to have a monopoly in the short term.

  76. Andy Craig

    Whether or not a monopoly exists, depends entirely on how you choose to define the market.

    Apple has a monopoly on iPhones, but is the relevant market “iPhones” or is it “smartphones” or “cell phones” or even “communications devices” or “consumer electronics”? At the broadest level, Apple is competing with every other possible thing I could spend my money on. This is why anti-trust law is so arbitrary and subjective. Define it narrowly enough, and every company has a monopoly on its own products. That doesn’t mean they don’t face competition, or that they can jack up prices at whim without crossing a point of diminishing returns.

  77. paulie Post author

    My comment about making “a long story short” was supposed to be a play on words, but I forgot to capitalize the L. It should have been, “To make a Long story short…”

    Fair enough. I still highly recommend them for those who haven’t read them.

  78. Davet41@comcast.net

    langa; “Furthermore, I don’t think that largeness of firms, economies of scale, or large inequalities of wealth are necessarily bad things, as long as they are achieved without the use of aggression.”

    I don’t recall the original source of this comment, but can anyone envision manufacturing 747’s
    in a blacksmith’s shop?

  79. Green_w_o_Adjectives

    RC says

    “Green: [Ls] don’t seem to give a fuck about capitalism needing to maintain a legion of unemployed people in order to keep everyone’s wages low.

    me: How did you come to this conclusion? Near as I can tell, capitalism needs a stable legal system to protect property rights, free trade, freedom to make transactions, freedom to raise and deploy capital, and free labor markets. Wages will rise or fall depending on the supply and abilities of labor, and the demand for that labor.”

    It’s pretty standard economics that a capitalist system requires a class of unemployed people (approx 5%) to help keep everyone else disciplined and fearing unemployment.

    http://www.truth-out.org/news/item/20015-capitalism-and-unemployment#
    http://c4ss.org/content/30264

  80. Green_w_o_Adjectives

    “The problem with this theory is that those big businesses have to compete against not only existing competitors but also potential ones. Thus, they would really have to permanently cut their prices to an unprofitable level to prevent new competitors from forming. This obviously wouldn’t work.”

    Of course it would work, and it does work, if capital is concentrated in the hands of the few. They can cut their prices to unprofitable levels for as long as it takes to drive out the competitor and then raise their prices again. Oil price wars (waged against, for example, Russia or Venezuela) are a fairly humdrum example.

    “That is, of course, unless they could use government to make it a lot harder to start a new competitor and get it off the ground. Once you got that, well, now you can really cook with gas.”

    This is another means to do that. But unlike an idealist Libertarian, who imagines a free-market fantasy world, I acknowledge that this kind of thing will always happen as long as capital is concentrated in the hands of the few, because in capitalism money=power. The drive for profits will always influence these corporations (with the benefit of concentrated capital) to exert pressure on regulatory bodies to help them extract rent. I think it’s highly unrealistic to imagine you can have massive companies and huge concentrations of capital and not have a government to protect and reproduce their interests. As does the bulk of the anarchist movement.

  81. Green_w_o_Adjectives

    “Yes, this was the point I was trying to make, although I suppose I could have spelled it out a bit more explicitly. More generally, it is literally impossible to have a monopoly without artificial (i.e. government-erected) barriers to prevent new firms from entering the market. Even in the case of an industry that consists of a single firm, as long as there are no barriers to entry, it is not really a monopoly. It is simply an indication that the sole firm is currently serving the market in an optimal fashion (or that it is at least perceived to be doing so by any potential competitors).”

    It’s possible for a network of corporations (let’s just call this “concentrated capital”) to control all of the firms in a market and use its reserve capital to ensure that no new competitor can get off the ground. Government regulation is a handy way to erect artificial barriers, but it is not the only way. Monopolies on land and capital are another way to extract rent. If competitors have no access to land or capital except through predatory loans, then that indicates market barriers, and it indicates that there isn’t perfect competition (ie, concentrated capital is extracting rent).

  82. Green_w_o_Adjectives

    “These are not people who want Walmart or Ford or Disney to face its competition on a level playing ground, they want them to be either nationalized and run by the state (as GwoA would have it) or at least run under arbitrary state directive whenever it suits their whim.”

    Totally wrong. I’m not sure if these companies would continue to exist if I had my way, but if they did exist, they would be run by their employees, 1 person, 1 vote. It is capitalism/imperialism and the capitalist ownership structure that requires a massive police state to enforce it, not the market socialism that I favor..

  83. Green_w_o_Adjectives

    Paulie writes

    “And that is just barely scratching the surface of the tip of the iceberg of ways – big and small, obvious and hidden – that big government serves to concentrate wealth in the hands of big business and the super-wealthy, shields them from true competition, prevents small business and cooperative enterprises from coming to be, and strangles them in the crib when they do, prevents those stuck at the bottom and often those stuck in the middle from exercising both personal initiative and mutual aid to raise themselves up, etc.”

    The point I keep trying to emphasize is that as long as there are massive privately owned companies, based on enormous concentrations of capital, then there will always be the sort of government that you criticize. Money=power. That is, power over others. As long as some people are super-wealthy and others are super-poor, then there will always overwhelming pressure on these rich to use all means at their disposal, including force (government) to maintain their property and privilege. So as the anarchists argue, the root of government is the (government-granted) privilege of private property ownership—-exclusive access to capital granted to a few individuals at the expense of the many. Capitalism as we know it needs a big and oppressive government and imperialism is closely bound up with capitalism/government.

  84. Green_w_o_Adjectives

    “In a truly freed market, it would be far more a case of business competing for employees than employees competing for jobs, and self-employment would be a much more common and realistic option for a lot more people. The economy would be far too turbulent for major accumulations of greatly unequal wealth to happen to any meaningful long-standing extent, and even the poorest people would in short order be far wealthier in absolute terms than the very wealthiest billionaires are today. Diseconomies of scale would far outweigh economies of scale without government-corporate control of the economy.”

    The truly freed market you are talking about would only be possible if land and capital were cheap enough or free enough to be accessible. But in the capitalism we know, and in the capitalism the Libertarian Party defends, land and property and monopolized in the hands of the few (concentrated finance capital exercising its control via ownership of private property and control of institutions). If you really desire the state of affairs you describe above I suggest you check out market socialism–David Schweikart’s “After Capitalism” is a good introduction.

  85. paulie Post author

    Just when I thought I was out…they pull me back in. I was afraid I was going to get sucked in like this. Need to pull myself out soon…

    It’s pretty standard economics that a capitalist system requires a class of unemployed people (approx 5%) to help keep everyone else disciplined and fearing unemployment.

    Wouldn’t be possible without big government concentrating and keeping concetrated wealth in the hands of the wealthy and keeping new businesses from getting off the ground.

    And once again, capitalism is an intentionally deceptive term designed to blur the difference between two very different economic systems. See Roderick Long article linked above, section 6.

  86. paulie Post author

    Of course it would work, and it does work, if capital is concentrated in the hands of the few.

    Which can only happen when government intervenes.

    They can cut their prices to unprofitable levels for as long as it takes to drive out the competitor and then raise their prices again. Oil price wars (waged against, for example, Russia or Venezuela) are a fairly humdrum example.

    So how do they keep competitors from jumping back in when they raise the prices again? If they are keeping them unprofitable permanently, how do they themselves not go bankrupt? And if they are somehow keeping them low permanently doesn’t the consumer benefit as a result?

  87. paulie Post author

    But unlike an idealist Libertarian, who imagines a free-market fantasy world, I acknowledge that this kind of thing will always happen as long as capital is concentrated in the hands of the few

    Which it can’t be unless government intervenes to make it so.

    The drive for profits will always influence these corporations (with the benefit of concentrated capital) to exert pressure on regulatory bodies to help them extract rent.

    Only if those regulatory bodies exist, which will hopefully and probably not be too much longer.

    I think it’s highly unrealistic to imagine you can have massive companies and huge concentrations of capital and not have a government to protect and reproduce their interests.

    I agree. Without government to protect them, these lumbering dinosaurs would soon lose the race to smaller, more nimble, quicker moving firms. And soon, like the dinosaurs of yore, they would become history. Only that other dinosaur, big government, props them up through force and fraud (propaganda, miseducation, etc).

  88. paulie Post author

    It’s possible for a network of corporations (let’s just call this “concentrated capital”) to control all of the firms in a market and use its reserve capital to ensure that no new competitor can get off the ground.

    I don’t think it is. Apparently I am the only one in this discussion who really even comes close to grasping all the diseconomies of scale that would naturally exist and all the ways big government props up big business which would otherwise be too big to succeed. Which is unfortunate, because I’ll need to get back to work and I wish someone else would take over on this point for me.

    If competitors have no access to land or capital except through predatory loans

    You lack imagination here. Mutual aid societies come to mind. And venture capitalists. If they can make money off lower rate loans than their competitors in the market for loans offer, by helping businesses that wouldn’t otherwise be able to get off the ground, who’s going to stop them and how? What about businesses that don’t require a lot of land or capital… anyone with a car could be a taxi, any woman (or man) could watch other people’s kids while they go to work, there are numerous skills that can be made into businesses, a small amount of purchased goods can be sold at a profit and used to buy more, and on and on and on.

    Access to land is not really needed for a business run out of a car, or many businesses can be run out of one’s own home or apartment. Etc.

  89. paulie Post author

    The truly freed market you are talking about would only be possible if land and capital were cheap enough or free enough to be accessible.

    Disagreed. See above.

    But in the capitalism we know, and in the capitalism the Libertarian Party defends,

    Two very different things, the difference being obscured by the intentionally deceptive term capitalism (intentionally deceptive on the part of the Marxists who popularized the concept, not necessarily on your part; I am presuming you are also a victim of this pyramid scheme of deception of perpetuating this error, not just a perpetrator).

    land and property and monopolized in the hands of the few (concentrated finance capital exercising its control via ownership of private property and control of institutions

    To the extent this is even true, it’s only thanks to big government overstepping its bounds in numerous ways all the time.

    If you really desire the state of affairs you describe above I suggest you check out market socialism

    I have no problem with voluntary free association cooperatives, and I don’t necessarily presume it would be rare in a freed society. Freed market is a term of convenience; I don’t presume that competition/exchange would necessarily be the predominant freely chosen way to organize economically in a freed society.

  90. paulie Post author

    The point I keep trying to emphasize is that as long as there are massive privately owned companies, based on enormous concentrations of capital, then there will always be the sort of government that you criticize.

    And vice versa. I’m for getting rid of both of them.

    As long as some people are super-wealthy and others are super-poor, then there will always overwhelming pressure on these rich to use all means at their disposal, including force (government) to maintain their property and privilege.

    I agree. And as long as monopoly government exists they will be able to. When monopoy government goes away, so does the massive wealth disparity.

    So as the anarchists argue, the root of government is the (government-granted) privilege of private property ownership—-exclusive access to capital granted to a few individuals at the expense of the many.

    As an anarchist myself, I might quibble to which part is the tail and which part is the dog, but I agree that they are inextricably linked.

    Capitalism as we know it needs a big and oppressive government and imperialism is closely bound up with capitalism/government.

    Good reason not to seek to empower government further.

  91. paulie Post author

    It is capitalism/imperialism and the capitalist ownership structure that requires a massive police state to enforce it, not the market socialism that I favor..

    Great. Then I think we have come to an agreement at last. Get government out of the way, and we’ll see if market socialism will outorganize/outcompete voluntary exchange in a world of free choices. Deal?

  92. Robert Capozzi

    green: It’s pretty standard economics that a capitalist system requires a class of unemployed people (approx 5%) to help keep everyone else disciplined and fearing unemployment.

    me: Your sources are HARDLY standard ones. IIRC, it’s assumed there will always be SOME unemployment, but that’s because people leave jobs, companies fail, etc.

    It sounds like you ascribe a motive to some cabal of capitalists who scheme to keep some out of the labor force as a way to “discipline” workers. Is there any evidence for this, any at all?

    Likely not, but I am open to hearing justification for your conspiracy theory.

    If a business needs more labor to meet demand profitably, they will keep hiring, regardless of what your imagined cabal might wish.

  93. Robert Capozzi

    green: The truly freed market you are talking about would only be possible if land and capital were cheap enough or free enough to be accessible.

    me: Many, many businesses need virtually no land and many don’t need much capital. The barriers to entry into many enterprises is quite low.

  94. Davet41@comcast.net

    green>: “It’s pretty standard economics that a capitalist system requires a class of unemployed people (approx 5%) to help keep everyone else disciplined and fearing unemployment.

    Capozzi> “Your sources are HARDLY standard ones. IIRC, it’s assumed there will always be SOME unemployment, but that’s because people leave jobs, companies fail, etc.

    Apparently the only books on economics he has read were ‘Das Kapital” and “The Communist
    Manifesto” There is absolutely NO rational evidence to support the theory that a “Capitalist System REQUIRES a permanent class of unemployed to “keep the rest of us fearfully compliant”

    On the Contrary, it only because of the increased productivity and wealth generated by free enterprise that individuals can and have reached a level of wealth that an extended period of leisure can be realized.

  95. Green_w_o_Adjectives

    “Get government out of the way, and we’ll see if market socialism will outorganize/outcompete voluntary exchange in a world of free choices. Deal?”

    If by “get government out of the way” you mean “dont use government to enforce the present government’s ownership titles over means of production” or “don’t use force to maintain command and control property regimes” we might be in agreement. But I doubt that’s what you mean because the Libertarian Party as we know it is dedicated to maintaining private titles and extending privatization (eg, monopolization) as far as possible.

    We will only have “voluntary exchange in a world of free choices” when the mode of property ownership is just, grounded in the mutual consent of people, and not based on violence and coercion.

  96. Green_w_o_Adjectives

    “It sounds like you ascribe a motive to some cabal of capitalists who scheme to keep some out of the labor force as a way to “discipline” workers. Is there any evidence for this, any at all?”

    There’s no conspiracy or intentionality to it. The labor market disciplines the choices that workers make, and the structure and nature of that labor market is closely related to the actions of capitalists and the investments they make. The main divide between capitalists and socialists on this point is socialists want a democratically accountable investment process (eg they want to give people a voice in decisions that effect them) while capitalists prefer to command and control the investment process via authoritarian ownership structures. The latter is of course far more compatible with the authoritarian spy state we live in.

    There are always a certain number of people, in capitalism, who want work but can’t find it. To get work they must either acquire the skills the capitalist demands, or try to start their own business (difficult given the entry barriers and corporate monopolies).

    This is all very silly when we live in a nation with crumbling infrastructure–where in every urban area there is tons of work to be done but there is insufficient capital to get the work done, because there is no immediate profit in it.

  97. paulie Post author

    If by “get government out of the way” you mean “dont use government to enforce the present government’s ownership titles over means of production” or “don’t use force to maintain command and control property regimes” we might be in agreement.

    Yes, that’s exactly what I mean.

    We will only have “voluntary exchange in a world of free choices” when the mode of property ownership is just, grounded in the mutual consent of people, and not based on violence and coercion.

    We agree!

  98. Davet41@comcast.net

    Unfortunately, “anarchism” is lot more than simply removing nuisance controls and micromanagement. Anarchy is NO FUCKING GOVERNMENT AT ALL! If that’s NOT
    what you mean, use another word!!!!!!!!

    Picture a group of babies sitting on the floor in their diapers. One by one each baby becomes a pariah to the others until all of the babies are sitting as far away from each other as space allows

    Clearly, through the cries, screams and howls; one can clearly make out the clear, if unspoken
    question, WHO IS GOING TO CHANGE OUR FREAK’N DIAPERS??????????????

  99. Davet41@comcast.net

    WALLY June 14, 2015 at 11:25 pm
    “That’s quite enough about Dave Terry’s sexual fantasies!

    But Wally, how can you say such things; after I saved your life last week?

  100. langa

    Of course it would work, and it does work, if capital is concentrated in the hands of the few. They can cut their prices to unprofitable levels for as long as it takes to drive out the competitor and then raise their prices again.

    I think you may have spent too much time playing a certain board game, as you seem to think that businesses are primarily motivated by a desire to drive their competitors out of business, regardless of the costs of doing so. In fact, businesses are driven by a desire to maximize their own profit. In many cases, lowering their prices to whatever extent would be necessary to drive out their competitors is neither a necessary nor sufficient strategy to maximize their own profit.

    Furthermore, as Paulie points out, a business would have to repeatedly employ this strategy every time a new firm arose to compete with them. And even if they managed to do so, why would that be bad? These constant “price wars” would keep prices low, benefiting consumers.

  101. langa

    Monopolies on land and capital are another way to extract rent. If competitors have no access to land or capital except through predatory loans, then that indicates market barriers, and it indicates that there isn’t perfect competition (ie, concentrated capital is extracting rent).

    No, it simply indicates that land and capital are very valuable and very scarce resources, and therefore they are in very high demand. It is therefore very important to make sure that they are utilized wisely. In the long run, the only way to ensure that is to make sure that anyone who chooses to utilize them in an unwise manner pays a stiff penalty for doing so. Thus, the high prices that are required to gain access to land and capital serve a crucially important function, by disincentivizing malinvestment.

    Remember when the Fed kept interest rates artificially low and caused the housing bubble that ultimately burst and plunged us into a depression? Well, if the leftist fantasies about rent-free land and zero-interest loans were ever implemented on a large scale, the result would be the same, except about a thousand times worse, as vast amounts of land and capital would be squandered on just about every harebrained scheme imaginable. It would make the Great Depression seem like paradise.

  102. langa

    …I suggest you check out market socialism–David Schweikart’s “After Capitalism” is a good introduction.

    I’m not familiar with Schweikart, but if his brand of “market socialism” is anything like most, it is a misnomer, and suffers from many of the same problems as traditional socialism. While many people, including many libertarians, believe that the biggest problem with socialism is the issue with incentives, there are actually much more intractable difficulties, owing to the impossibility of making accurate economic calculations outside the context of a market system.

    So-called “market socialism” is an attempt to circumvent this problem by creating a pseudo-market system that attempts to mimic the characteristics of a market system (such as prices, profit, and so forth). Unfortunately, since this pseudo-market is created by, and is ultimately subject to, central planning (whether by an individual, a small group, or “society” as a whole), it subjects decision makers to constraints imposed by the central planners and thus loses the dynamic qualities of the market that are essential to its proper functioning. Put another way, it does not allow for true entrepreneurship, and thus, cannot overcome the calculation problem.

    Here is an excellent article explaining why “market socialism” fails: https://mises.org/sites/default/files/qjae10_4_1.pdf

  103. Robert Capozzi

    green: The main divide between capitalists and socialists on this point is socialists want a democratically accountable investment process (eg they want to give people a voice in decisions that effect them) while capitalists prefer to command and control the investment process via authoritarian ownership structures.

    me: Capital flows where CONSUMERS want it to. Apple was pretty much an afterthought in the 90s, then came the iPod. Capital flowed toward that, as consumers wanted one. Then came the iPhone, and more capital flowed. Then, the iPad with the same result.

    Capitalism is MORE “democratic” than democracy. We vote every day in the marketplace, versus once a year in a highly authoritarian voting process.

  104. Green_w_o_Adjectives

    “So-called “market socialism” is an attempt to circumvent this problem by creating a pseudo-market system that attempts to mimic the characteristics of a market system (such as prices, profit, and so forth). Unfortunately, since this pseudo-market is created by, and is ultimately subject to, central planning (whether by an individual, a small group, or “society” as a whole), it subjects decision makers to constraints imposed by the central planners and thus loses the dynamic qualities of the market that are essential to its proper functioning. Put another way, it does not allow for true entrepreneurship, and thus, cannot overcome the calculation problem.”

    No, you don’t understand how market socialism works, at least not how Schweikart’s system works. Goods and services would be allocated accorded to market mechanisms–there would be no price fixing. The “socialist calcuation debate” is widely misunderstood by libertarians…at the time most of the participants agreed that the socialist side had won the debate, but the problem was the mode of socialism being defended (Langean market socialism) was still just an untested theory (kind of like anarcho-capitalism). But given the 40+ year neoliberal ideological offensive undertaken by the Koch brothers and their allies, libertarian propaganda assures that the “socialist calculation debate” refuted socialism and that “the labor theory of value” is pure bunk. It was only really possible for me to get past the propaganda when I started reading anarchism and really began to commit to looking at economic issues from the perspective of a working-class person and not from the perspective of a middle class person trying to get a share of the imperial loot. It’s been an ethical/spiritual journey as well as an intellectual one. If you are really serious about these issues, I suggest you take a look at Schweikart’s “After Capitalism” and leave biases and preconceptions at the door.

    Schwiekart gives a number of reasons in the book to reconsider capitalism, but I’ll briefly get into one, which is related to that pesky “labor theory of value”. That is, what is the maxim of justice behind remuneration in capitalism?

    Capitalism’s maxim=To Each According to the Value of the Contribution of Physical and Human Capital

    Socialism’s maxim=To Each According to the Value of the Contribution of Human Capital

    The first maxim depends on a large government which alots what physical capital belongs to who (necessarily via force and indoctrination). The 2nd maxim rests on the principle of socialized capital–that is the means of production and investment capital are socially owned and is allocated according to democratically accountable processes.

    When you really think it through, it becomes clear that the true origin of value is actually labor (and nature), and not land/capital. This was clear to Murray Rothbard, who argued that property can only be said to be yours if you mix your labor with it (though of course his model of property ownership remains throughly statist and authoritarian). But in capitalism, the owner of the land/capital (which can only be upheld via force) gets to dictate the terms of production and monopolize the proceeds of production. But what does the owner (not the manager, not the entrepeneuer, the owner) actually contribute to the production process? His role is in fact parasitical and depends on government force. His role is an outgrowth of the feudal lord or landlord who collected tribute from the peasants.

    When we consider that it is possible for the investment process to be socialized, then we find that the owner (otherwise known as the investor, or stockholder) is actually not necessary for the production process, and that the owner using leverage to extract rent from workers can only be based on force and coercion.

    Another way to get at these ethical issues is the anarchist route. I would reccomend checkign out the anarchist faq (carefully read the sections on anarcho-capitalism and libertarianism) for another perspective that is, in terms of moral and ethical principles, quite close to my own.

  105. Green_w_o_Adjectives

    Re. socialism being characterized by “central planning” while capitalism involves the “market”….this is another fallacy foisted on us by our billionaire overlords and their propaganda. The truth is that western corporate capitalism makes use of central planning and coordination just as much as state capitalism did. But what both systems deny people is autonomy–the ability to control the decisions that effect them to the extent that they effected. In an economy where the vast majority of wealth and capital is controlled by a small amount of people, there is very little autonomy. So if you really think it through, capitalism is in fact a far more collectivist, top-down, authoritarian system than socialism as I’m defending it. Capitalism takes decision-making power away from workers and (via legal means) entrusts all power to owners, claiming that this dynamic is the “best of all possible worlds” and “the means justify the ends”. What I mean, by socialism, is putting decision-making and/or managerial power into the hands of workers at the enterprise. That means workers get a voice in the decision-making to the extent that those decisions effect them. That is, we demand authentic autonomy and authentic freedom for living breathing individual humans. Capitalism’s hostility to this real autonomy and freedom (after all, it threatens the position of the ruling class) is why they will use their puppet governments to crush any and all authentic popular and/or anarchist revolutions, whether it is the Spanish revolution of 36-39 or the YPG today.

  106. Green_w_o_Adjectives

    “Capitalism is MORE “democratic” than democracy. We vote every day in the marketplace, versus once a year in a highly authoritarian voting process.”

    Maybe this should become the Libertarian Party slogan–at least then it would be clear to all what the Libertarian Party stands for. ALL POWER TO THE BILLIONAIRES!

    Seriously, I don’t think you are taking into account how concentrated capital is and to what extent many of our large corporations are now entwined with government agencies. You gave the example of Apple, but do you really think that there was some kind of market in technology development where Apple was competing on a level playing field with many competitors? I submit to you that when capital is concentrated to the extent that it is, then the top capitalists have the ability to manipulate the outcomes of markets, and if our billionaire overlords have any brains, then that’s exactly what they are doing. I don’t know which scenario is more frightening–the idea that there really is a free market and these billionaires aren’t trying to control outcomes, or that there isn’t a free market and these billionaires are determining outcomes. The answer is somewhere in the middle. Either way, these billionaires have too much power over not only the market, not only the government, but the entire culture and world as a whole. I don’t need a conspiracy theory to assert that the free market is largely a smokescreen behind which the corporate government is pulling our strings and determining our destiny—the existence of Empire and the Spy State are more than enough evidence that the government as we know it, and institutions like the CIA, have to a large extent merged with private companies and become a public-private power, whose scope is larger than what most people understand as ‘government’. Which is why we need to understand ‘government’ as both ‘public’ and ‘private’ power in order to understand it and combat its evils.

  107. Robert Capozzi

    green: do you really think that there was some kind of market in technology development where Apple was competing on a level playing field with many competitors?

    me: Yes. There were several other digital music player, cell phone, and tablet manufacturers. I do believe the iPod is now gone, since cell phones incorporate the tech into them. That’s the way markets work, where a multiplicity of vendors vie for market share until a particular market is made obsolete by an intervening technology.

    And, no, I don’t worry about billionaires running my life. But, then, I’m not a materialist. Peace can be found in any circumstance, although it’s my experience that coercion is an obstacle to peace. The next sensible step is to enhance and support peace, as I see it.

    There are many former billionaires, btw, and among existing billionaires the level of their influence varies widely. Control of capital is NOT the only factor in a person being influential.

    Yes, there is much injustice, but my view is the most sustainable means of undoing injustice is to remove obstacles to peaceful social interactions, not to force a new construct onto the existing social order.

  108. Chuck Moulton

    I’ve long since realized there is no educating some people who don’t want to learn.

    Socialists of his ilk are never going to understand that the world is better off when capital goes to its highest valued use through the market process and that capitalism benefits consumers just as much as producers through voluntary trade. Democracy is 3 wolves and a sheep voting on what’s for dinner… socialists believe voting on things like that leads to good outcomes because they will never admit that they could be the sheep — they assume their system will create perfection even though all of the incentives are wrong.

    Lamenting market failure, then proposing government as the solution is like a judge of a singing contest hearing the first contestant, then immediately declaring that the second contestant wins. We libertarians think it might be a good idea to hear the second contestant, and the third contestant, etc. There is such a thing as government failure too… and invariably it is even worse the market failure it aims to fix.

    You all are wasting your time.

  109. NewFederalist

    Well said, Chuck. If a $15.00 “minimum wage” is good then a $25.00 “minimum wage” is better. Where does it end?

  110. Robert Capozzi

    cm: I’ve long since realized there is no educating some people who don’t want to learn.

    me: Willful ignorance and doctrinaire thinking is QUITE the defense mechanism, agreed. There may be some value in asking questions of the indoctrinated and exposing the weaknesses and logic disconnects, as everyone has their precious biases that often go un-examined.

    Green keeps repeating his/her conclusions, but I do note SOME open mindedness. There is potential there to consider another possibility.

    Then there are those onlookers who have bought into a dogma who’ve never heard a more durable alternative. That, too, makes engaging a dogmatist in a public forum.

  111. langa

    No, you don’t understand how market socialism works, at least not how Schweikart’s system works. Goods and services would be allocated accorded to market mechanisms–there would be no price fixing. The “socialist calcuation debate” is widely misunderstood by libertarians…at the time most of the participants agreed that the socialist side had won the debate, but the problem was the mode of socialism being defended (Langean market socialism) was still just an untested theory (kind of like anarcho-capitalism).

    You should read the article I linked to. It addresses exactly what you are describing — the attempt to simulate “market mechanisms” in the absence of an actual market. You need more than just prices. You need independent entrepreneurs with the ability to determine how capital is to be directed, i.e. with the ability to take risks without having their hands tied by artificially imposed constraints. In short, you need owners competing with each other, not a single owner trying to simulate competition. To draw an analogy, market socialism is like solitaire, while a true market economy is like poker. In solitaire, you make your decisions strictly on the basis of the cards, whereas in poker, your decisions are influenced not only by the cards themselves, but also by the actions of your opponents. Similarly, in market socialism, decisions are based strictly on feedback from the actions of consumers, whereas in a true market economy, decisions are based not only on feedback from the actions of consumers, but feedback from the actions of other producers as well. Different producers are free to try radically different strategies, to “think outside the box” in a way that they are simply unable to do in a simulated market. In short, they are free to take risks, and the competition that results is what drives the progress that results in a higher standard of living for society as a whole. In their zeal to “fix” the market, socialists destroy what makes it successful in the first place. They throw the proverbial baby out with the bath water. This is all explained in the article linked above.

    It was only really possible for me to get past the propaganda when I started reading anarchism and really began to commit to looking at economic issues from the perspective of a working-class person and not from the perspective of a middle class person trying to get a share of the imperial loot.

    The laws of economics are what they are. They do not change depending on the perspective of the person investigating them.

    When you really think it through, it becomes clear that the true origin of value is actually labor (and nature), and not land/capital. This was clear to Murray Rothbard…

    No. Rothbard thoroughly and emphatically rejected the labor theory of value, as he understood that the true source of value lies in the subjective preferences of individuals (a point originally made by Carl Menger, generally considered the founder of the Austrian School). In fact, neither capital nor labor have any intrinsic value at all — their value is purely instrumental, being derived from their potential to satisfy demand. For example, I am a terrible artist. I can barely draw a stick figure. Thus, if I were to create a painting, no matter how much work or money I poured into it, it would have essentially no value, because no one would want it.

    …the owner of the land/capital (which can only be upheld via force) gets to dictate the terms of production and monopolize the proceeds of production. But what does the owner (not the manager, not the entrepeneuer, the owner) actually contribute to the production process?

    You have answered your own question. When you speak of “dictating the terms of production”, I assume you are referring to the decisions of how (and, in fact, whether) capital is to be allocated to a particular project. This is a crucially important function, and its absence is one of the main reasons “market socialism” is doomed to fail. As for “monopolizing the proceeds of production”, I assume you mean he gets the profit. And why shouldn’t he? He is assuming the risk if the project turns out to be a failure, so why shouldn’t he be entitled to the reward if it turns out to be a success?

  112. Green_w_o_Adjectives

    Langa,

    I’m busy at work today so I can’t get into much detail, but there are rebuttals to many of the arguments you are making (including the argument that the captialist is entitled to value derived from labor because of “risk”) can be found in the section on “Captialist Myths” in the anarchist faq. Again, imho the best book on this subject is Schweikart’s “After Capitalism”–if I remember correctly he addresses every criticism you make above.

    http://www.infoshop.org/AnarchistFAQSectionC

  113. Green_w_o_Adjectives

    “Unfortunately, “anarchism” is lot more than simply removing nuisance controls and micromanagement. Anarchy is NO FUCKING GOVERNMENT AT ALL! If that’s NOT
    what you mean, use another word!!!!!!!!”

    For my part I’m willing to settle for a “more just” or “better” government…otherwise I wouldn’t dabble in green party politics and would simply be an outright anarchist. But ultimately, it is not so much “government” that needs to change–what needs to change are our norms of exchange and interaction. And this is the big joke about those who associate liberty with capitalism–capitalism is the antithesis of liberty. Capitalism trains us to be obiedient workers following the orders of a boss. Production and reproduction in capitalist society does not train us in the skills we need to be self-managing, self-governing individuals in control of our own destiny. Instead, the capitalist system is reinforces with the pyramidal scheme of government and ownership from above. Defenders of capitalism believe that capitalism is associated with liberty, but in reality capitalism is just another system of indoctrination, control, and slavery.

    Schweikart’s “market socialism” is a good example of a type of radical reform program that I would want the Green Party to publicize, but for the time being the Green Party is not there yet (though the Green Party is trending socialist so maybe we’ll get there soon).

    However, I believe that the anarchist critique of capitalism is essentially correct, from a moral/ethical/consequentialist perspective. It was anarchism, not Marxism, that convinced me to become an anti-capitalist. I believe it’s pretty clear from history that statism and imperialism as we know it are closely related to private property and the capitalist mode of production. On the historical relation between capitalism, private property enclosure, joint-stock companies, and statism, see f.e. Polyani’s “The Great Transformation”.

  114. Green_w_o_Adjectives

    ” he understood that the true source of value lies in the subjective preferences of individuals”

    This is a common semantic misunderstanding. The true source of ‘price’ is the subjective preference of individuals. But the true source of ‘value’ (understood as something real and material and embued in material objects) is labor and nature (that is, natural material). All human wealth originates from this ‘value’.

    So I agree with Kevin Carson that there isn’t really much conflict between the subjective and labor theories of value if you understand what both theories are referring to.

  115. Robert Capozzi

    green: Capitalism trains us to be obiedient workers following the orders of a boss.

    me: There may well be a different word that would work better, but capitalism does “train” us in anything. Capitalism allows, it doesn’t “train.” If you want to work in a corporation, you can. If you want to be self-employed, you can.

    Maybe you mean something like “corporatism.”

  116. Davet41@comcast.net

    Green_w_o_Objectivity>: “Capitalism trains us to be obiedient workers following the orders of a boss. Production and reproduction in capitalist society does not train us in the skills we need to be self-managing, self-governing individuals in control of our own destiny

    G_w_o_O>: “I’m busy at work today so I can’t get into much detail,

    LOL!!! What is the reason for this? Are you fearful that your boss will find another employee
    less miserly than you? OR are you ALREADY fearful that your boss will find out how much you dislike and fear him?

    A Buddhist Proverb

    Sushil was a miser. Though his treasure house was full, he was too stingy to give away even the smallest coin. And since food cost money, he ate almost nothing, and starved his family and servants besides.
    One morning, as Sushil took his daily walk through town, he saw a young boy eating a sweet rice dumpling. Sushil’s mouth watered as he made his way home.
    “If only I could ask my wife to make me a sweet dumpling,” he said to himself. “But if I wanted one, so would my wife. And if my wife wanted one, so would the children. And if the children wanted one, so would the servants. So I had better just keep quiet.”
    When Sushil arrived home, he said nothing about a dumpling. But he wanted one so badly, he felt weak. His legs shook, and he had to go to bed.
    His wife, Nirmala, came to him. She asked, “What is wrong, my husband?”
    Sushil lay groaning and clenched his teeth.
    “Is there something you want?” said Nirmala.
    Sushil’s face grew red, then purple. At last he squeaked, “I would like a sweet rice dumpling.”
    “That is no problem,” said Nirmala. “We are wealthy enough. Why, I will make sweet dumplings for the whole town!”
    Sushil gasped in horror. “You will make a pauper of me!”
    “Well then,” said Nirmala, “I will make dumplings for our family and servants.”
    “Why would the servants need any?” said Sushil.
    “Then I will make them for us and the children.”
    “I am sure the children can do without.”
    “Then I will make one for you and one for me.”
    “Why would you want one?” said Sushil.
    Nirmala sighed and went out, and returned after a while with a single sweet dumpling. Then she looked on as Sushil, moaning with delight, devoured every crumb.
    Now, it happened that all this was seen by Sakka, the King of Heaven, who was sitting on his marble throne in his thousand-mile-high palace. “Not in seventy-seven millennia,” he declared, “have I ever seen such a miser. I will teach this fellow not to be so stingy.”
    So the god waited till the next day, when Sushil left on his morning walk. Then he made himself look just like Sushil and came down to earth.
    Sakka walked into Sushil’s house as if he were Sushil himself. In Sushil’s own voice he told a servant, “Run through the town and invite everyone you see. Today Sushil will share his wealth!”
    When Nirmala heard these words, she cried, “Husband, can this be true? Heaven be praised for your change of heart!” Then she helped him open the treasure house.
    Soon the people of the town arrived. “Take what you will!” said the pretend Sushil. “And if anyone who looks like me tries to stop you, drive away the scoundrel!”
    “Thanks to Lord Sushil!” cried the townspeople. “The most generous man alive!” They rushed into the treasure house and loaded themselves with gold, silver, diamonds, and pearls.
    Just then, the real Sushil came home. When he saw his treasure being carried out the gate, he screamed, “Robbers! Thieves! Put that back! How dare you!”
    But the townspeople said, “This must be the one that Lord Sushil warned us about.” And they chased Sushil halfway across town.
    Sushil rushed on to the Rajah’s court. “Your Majesty,” he declared, “the people of the town are taking all I own!”
    “But your own servant invited them!” said the Rajah. “I heard him myself. Did you not give the order?”
    “Never!” said Sushil. “If the order was given, I beg you to bring the one who gave it!”
    So the Rajah sent a messenger. Soon came Sakka, still pretending to be Sushil, along with Nirmala and the children. The children stared wide-eyed at the two Sushils, and Nirmala nearly fainted.
    “Impostor!” screamed Sushil.
    “Deceiver!” screamed Sakka.
    “I cannot tell the difference between you,” said the bewildered Rajah. He turned to Nirmala. “Can you say which is the true Sushil?”
    Nirmala looked at both men. “Your Majesty,” she said, “may I ask them a question?”
    “Certainly,” said the Rajah.
    Nirmala turned to Sakka. “Is it better to be generous to yourself, to your family, to your servants, or to your neighbors?”
    “It is best to be generous to all!” answered Sakka. “When you are generous, others also grow generous, and everyone is wealthier.”
    Then Nirmala turned to Sushil. “Is it better to be generous to yourself, to your family, to your servants, or to your neighbors?”
    “To none!” shrieked Sushil. “It is a waste of wealth that can never be regained!”
    Nirmala took a deep breath, gathered the children, then drew close to Sakka. She said, “This is the true Sushil, Your Majesty.”
    “But, Nirmala!” cried Sushil. “My wife! My children!”
    At that, the god stepped forward, and with a blinding flash of light changed back to his own shape. “Your Majesty, I am not Sushil but Sakka. I came down from Heaven to teach this man a lesson.”
    He turned to the trembling and downcast Sushil. “Do you see? You are so stingy, even your wife and children deny you.”
    Sushil moaned.
    “There is but one hope for you,” said Sakka. “Will you stop being such a miser?”
    “Well,” said Sushil, “maybe I could be a little more generous.”
    “A little more?” demanded Sakka.
    “Well, maybe a little more than a little more,” said Sushil.
    “You had better be a lot more generous,” said Sakka. “Or I’ll be back!”
    And with another flash of light, he vanished.
    “Well!” said the Rajah to Sushil. “It seems you indeed have been taught a good lesson!”
    “I suppose so, Your Majesty,” said Sushil. He turned shyly to Nirmala. “Wife?” he said, holding out his hand.
    “Husband!” she said, taking it. “Oh, husband, let us celebrate! I have an idea. Let us make sweet rice dumplings for the entire town!”
    Sushil gasped in horror. His legs shook. He groaned and clenched his teeth. His face grew red, then purple. Then he squeaked—
    “All right!”

  117. paulie Post author

    This is a common semantic misunderstanding. The true source of ‘price’ is the subjective preference of individuals. But the true source of ‘value’ (understood as something real and material and embued in material objects) is labor and nature (that is, natural material). All human wealth originates from this ‘value’.

    I that were true, labor saving devices would have negative value. We’d be better off if all farming was done by hand, for example, without machines or animals or even hand tools. The same for all other crafts. Digging a hole and filling it back up would count as something of real value, because it involves labor. And so on.

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