The thinking for this post came from reading a book by Ayn Rand titled, "Atlas Shrugged". It's a novel in which the large companies of America are slowly regulated out of business. Operations managers found themselves in a position where they had to sneak past government regulations in order to meet the needs of their customers. In one instance a metal manufacturer was forced to ration his product according government mandates. The politicians actually were afraid that the metals company would put their supporters out of business, so they artificially limited his product by giving everyone rights to his production. The excuse was that his product was too important to America to be distributed by just one man. By giving every small manufacturer a right to a small amount of his metal, the large manufacturers were unable to get enough product to meet their needs.

That was a bit of fiction written in 1957. But Rand's point was as valid today as it was then. Politicians use their authority to meet their own needs first. Today we see a home-lenders bailout. And budgetary pork is manipulated to benefit friends, family, and political supporters. But what is worse, certain industries have been sentenced to death by regulation/taxation. We saw the fate of DDT and asbestos. Nuclear power is not viable due to environmental protection laws. Tobacco will soon follow.

The cross hairs are now squarely on the oil and power generation business. Haliburton saw the hand writing on the wall and moved to Dubai. That was one possible solution to the problem of an unfriendly governmental environment. But what of the rest of the energy industry? What if Exxon-Mobile, Chevron, Anadarko, Shell, BP, and the rest of the oil industry decided to "NOT" choose to further invest in American operations?

I can just hear a seasoned geologist and engineer reporting to the board of directors of all the risk involved in exploring for and developing new sources of oil. First, they have to bid for the lease to drill on. There is no guarantee that they will find any oil. Then they have to go through the permitting and legal gauntlet to get their drills working. If they do find oil, they have even more legal and regulatory hurtles before they can bring the product to market. And, to add insult to legal injury, the government will penalize them with windfall profits if their efforts are too successful.

Think about this for a moment. What if the public becomes incensed at energy prices and demand the government do something. And in response the Congress opens up leasing areas. Wouldn't it be interesting if the oil companies said,

"Thanks, but no thanks . We are making a nice profit with existing operations. And the more gasoline, diesel, and jet fuel we produce only serves to lower the price. In essence, we would be working more, spending more, taking more risk, only to lowering our return on investment."

Or, what if the companies decided to move to a more hospitable regulatory climate? Let's say Exxon moved to Brazil where they are actively developing their offshore resources? It definitely is an interesting thought!

RJ

Zero being equal to zero, that is true.

If they intended to do that, they wouldn't be lobbying so hard to open those areas to drilling. Nor would they assert that drilling there would lower the price, because they are experts in the field, and I am not, and yet even I know it would do nothing of the sort.

In general, the fallacy of Rand's position (and that of anyone else arguing for deregulation) may be seen by comparing the U.S. economy at the time she wrote with its predecessor prior to the Great Depression. The later economy was much more tightly regulated. It had ceased to be a laissez-faire capitalist economy and become a mixed capitalist-socialist economy (as every advanced economy in the world today is). According to free-market ideology, the earlier economy should have strongly outperformed the later one, proving what a bad idea government regulation of business is. In fact, however, the reverse is true, by every measure: GDP, growth rates, profits, standards of living, stability, and so on. And, although we have not returned to the laissez-faire standards of the pre-Depression economy yet, we may also compare the performance of today's economy with the one that we had from 1946 to 1980, as today's is less regulated. And today's underperforms by comparison.

So what does that tell us?

You're so friggin smart, maybe we should forget about debate and just annoint you king. That way you wouldn't have to worry about proving your point.

RJ

You're in kind of a catch-22 on this one. If oil prices were low, there's a good chance they Wouldn't drill in more difficult areas for precisely the reason you cite, but then we wouldn't be interested in having them do so either. As prices go up, the public is more interested in allowing drilling, and the companies more interested in actually doing it.

You would be better off addressing your comment at refining than drilling. Zoning, EPA compliance, NIMBY opposition, taxes, proposed additonal taxes, subsidized alternatives, etc all make adding refining capacity a costly and/or risky investment, even when we really do need more capacity.

__________________
Today's forecast: Government corruption.

Tomorrow's forecast: 100% chance of more 'politics as usual'

Maybe it's finally time to vote Libertarian

I don't believe in monarchy but if we did have a king I'd be a good choice.

The point that more drilling would not lower the price of oil has already been proved. There are a lot of threads on that subject, 'cause it's kind of hot right now. Look around.

The pre-Depression era could not be, in any way, considered laissez-faire. I believe you're mistaking government intrusion on behalf of business with no government intrusion at all. Laissez-faire demands no government intrusion at all - neither on behalf of employees, nor on behalf of employers. When government refuses to protect the rights of its citizens to bargain collectively - e.g. by not punishing those who commit crimes against those who are trying to peaceably assemble - then government has intruded upon the market. When government uses the Federal Reserve to inflate credit, when it embarks upon public building projects, when it convinces employers to keep wages higher than the market demands (all things Hoover tried in order to avert a depression) - then government has intruded upon the market.

This country has never had free-markets, and has never practiced laissez-faire governance. However, history does show us that in periods where the intervention has been less growth has been more. Compare the 1919-1920 depression with the 1930-1941 depression. By any measure the earlier downturn was far more drastic than the latter yet lasted less than 2 years. Why? What was the difference? Why, even after 6 years of supposed economy liberating policies under FDR, were we still at 18% unemployment in 1939? Why did the 30s, with its decade of unbridled government control, wallow while the 50s, with its relatively free economy boom?

Not coincidentally, and contrary to your argument, we have a period of extreme government intrusion - a period of languid economic growth - sandwiched between two periods of relatively less government intrusion marked by such economic vitality that we've given them names: The Roaring Twenties, and the Booming Fifties.

As I've pointed out in earlier discussions, strictly speaking that's an impossibility. When people speak of "laissez-faire," they usually mean not literally NO intrusion, but minimal intrusion. One defines what circumstances entail "the free operation of the market," ask the government to intrude to protect those circumstances, and disallow intrusion beyond that point.

And that is what you do as well:

Here, you are not decrying government action but rather government inaction. It has failed to intrude upon the market to protect what you consider to be an essential feature of its free operation, namely the right of labor to bargain collectively.

(BTW, this has nothing to do with the "right of the people to peaceably assemble" protected in the First Amendment. That right has never extended to unlimited assembly on someone else's private property for the purpose of disrupting their business.)

Now, I agree with you that collective bargaining is an important part of the market's functioning, and so I, too, want the government to intrude to protect that right, but the laissez-faire advocates of the time disagreed with us. To them, labor had no such right. As such, from their point of view, the government was acting properly, and so were the companies that hired Pinkerton goons to thump strikers' heads or, on occasion, shoot them. They were simply protecting their property rights, like a homeowner shooting a burglar.

No matter how you look at it, it's a fact that the pre-Depression economy was less regulated than any post-Depression economy, and that the period which saw the greatest performance was also the period when government intrusion was highest, from the end of World War II until the election of Ronald Reagan.

Now, one can take that observation to false lengths. The economy CAN be over-regulated and over-managed. The poor performance of the Soviet economy surely demonstrates this. But to say that it performs best when regulated least is observably false as well. And so is the argument (which you have not made, or I don't remember you making it, but supply-side advocates do) that the economy performs best when the accumulation of private wealth is maximized.

I'm always a bit leery of using the Great Depression as an example of anything. It was a unique situation. Panics similar to it in severity (or even worse) happened on a regular basis, but, as you said, they usually didn't last as long. But Roosevelt's (and Hoover's) attempts to solve the problem were not the only anomalous factor in the Depression. There was also the global scope of the collapse, making it impossible for foreign trade to pick up the slack in domestic consumer purchases and restore investor confidence. The Depression looks to me very much like a "perfect storm" situation.

The only thing FDR did that clearly hurt the economy was the introduction of the Social Security payroll tax in 1937. This resulted in the economic decline (from an already low point) in 1938-39. And that was predictable. The problem the economy suffered from was poor consumer demand, and obviously hitting the working class with a regressive tax would make that problem worse. Otherwise, while some of his efforts were bizarre and probably didn't help much, I can't see any of them that would actually hurt.

I would say that the economy in the 1930s was like a car with a dead battery, that also had some severe tuning problems. It badly needed a tune-up and to have its timing adjusted, but on top of that, it also needed a jump-start, and this Roosevelt was reluctant to give it (although it might have been politically impossible anyway). Hitler did give the German economy a jump-start with his public-works and rearmament programs, and it worked well, so there was an example to go by. (Of course, in some other, non-economic ways Hitler was a very BAD example, so perhaps it's for the best . . .)

What finally ended the Depression was World War II, which required the kind of massive government spending that could have been done much earlier if the political will had been there. This gave the economy's dead battery the jump-start it needed. Afterwards, if no reforms had happened, the old economy with its periodic panics and uncertain booms would have been restored. Instead, we got the very different postwar economy. Roosevelt's reforms (more the second New Deal than the first) created that postwar economy. They could not end the Depression itself, because the economy needed not merely a tune-up but also a jump-start, and he was unwilling to provide that until the war forced his hand.

Also, to say that the postwar economy was less regulated than the Depression economy is incorrect. There was a relaxation of regulations in the late 1940s, but it was a decline from the wartime regulations, not those of the Depression. All of the New Deal programs except those struck down by the Supreme Court remained in effect in the '50s, and President Eisenhower refused to challenge them. In any case, the proper comparison is between the two periods of affluence, the 1920s and 1950s, leaving the Depression in between as the anomaly it was.

In any discussion, there should be one fact always considered >
The oil companies are not going to solve our energy problems....period.
It is in their best interest to not solve the problems, and remain dependent on fossil fuels...wherever they come from.

I thought your argument was that markets couldn't exist without governments? Regardless, it is entirely possible for the government to be completely absent in the market. You're mistaking negative action for positive action. If I don't do anything to stop you from eating, can it be said I was involved in you actually eating? No rational person would contend so. Likewise, if the government does nothing to actively involve itself in the market then it is taking a laissez-faire attitude.
Then most people are using the term incorrectly, as have you. "Laissez-faire" does not mean "minimal intrusion", it means no intrusion.

However, this makes a great many of your arguments much clearer to me. You began with, "... the fallacy of Rand's position (and that of anyone else arguing for deregulation) may be seen by comparing the U.S. economy at the time she wrote with its predecessor prior to the Great Depression." But you're not addressing Ms. Rand's position. What you're doing is redefining terms so they fit with your argument. You're making the incorrect assumption that Ms. Rand defines laissez-faire as you do, when in fact she uses the literal, objective, and actual definition. Ms. Rand's position is that interferrence of any sort is a distortion of the market. She doesn't argue for any form of limited regulation. Therefore, any comparison between the (regulated) economy of 1957 and the (regulated) economy before the Great Depression is in no way a refutation of her position (or of anyone else arguing for deregulation).

In the past, you've argued (and I'm paraphrasing) that those who argue for free-markets are actually arguing for some different form of regulation. If one subverts the definition of terms, then you have a point. This is what you do in order to make your point. You change the definition of those who believe in free markets from "those who believe any government intrusion is undesireable" to "those who believe some government intrusion is undesirable". If we use the real definition of free marketers, you don't have a point. It would be like arguing, "People who like the color blue are the same people who like the color blue." Free-marketers advocate free markets. They don't advocate regulated markets. People who advocate regulated markets, even slightly regulated, are not people who believe in free-markets. People who believe in laissez-faire capitalism advocate letting people do as they wish. They don't advocate letting people do as they wish unless there's some reason not to. That would be someone who does not believe in laissez-faire capitalism.
You're neglecting to understand time as a factor. The government does not step in unless, and until, some action which prevents free markets from operating has occured. This is government protecting free markets, not government interfering with an existing free market. If someone initiates the use of force, the market ceases to be free. It is now a coerced market - a distorted market. If the government acts (as it should), it would be retributive, not proactive; and it would be intruding not in an existing free market but in an existing distorted market.
I never argued that it did. Are you suggesting strike busting, union busting, and all other forms employer activities meant to discourage unions was performed only on company property?
They were not laissez-faire advocates. They were business advocates - specifically their own businesses and their own interests. They were advocates of government intrusion to ensure a market beneficial to them - not a free market.
That's a valid point, despite the fact that FDR's programs served to prolong the depression. But your point about the Great Depression not occurring in a vacuum is true - there were certainly contributing factors to FDR's mismanagement. To argue one could compare the 1950s to the 1920s and use that as a basis for claiming a fallacy in laissez-faire capitalism not only fails on the fact that neither experienced laissez-faire capitalism, but it also neglects the fact that the two periods cannot be compared because the conditions surrounding their respective economies were so vastly different. In short, the fallacy of Rand's position (and that of anyone else arguing for deregulation) may not be seen by comparing the U.S. economy at the time she wrote with its predecessor prior to the Great Depression. The two are not comparable, and certainly not on the basis of laissez-faire capitalism.
Simply not true. The RFC ended in 1954, the CCC ended in 1942, the PWA ended in 1941, and the WPA ended in 1943 - all enacted during the depression and none struck down by the SCOTUS. Moreover, as I pointed out, many interventionist laws were put into place by Hoover in an attempt to prevent further degredation yet only served to make the situation worse. Intervention which wasn't enacted during any of the other previous downturns - downturns which turned out to be much shorter lived.

Yet you called for the government to actively protect the right of labor to bargain collectively. Note that what the government does (or would if our laws were being enforced) is not simply to punish violence, but also to punish firing an employee for trying to organize a union, and other nonviolent (but arguably unfair) actions. Anti-union violence these days is very rare in this country.

What I've said in the past is that a market cannot exist without government action, yes -- not in a complicated society like ours. (In a very simple society, it can exist without formal government, but not without collective decision-making. In a complex society, an actual formal government is required.) The government "intervenes in the economy" when it protects property rights, contracts, and personal safety, and those three things are the bare minimum for any market to exist; in all real-world situations the government also issues currency, and while this is not an absolute necessity for a market (which can operate on barter), it facilitates things greatly and laissez-faire advocates take it for granted. (In fact, they seem to take ALL of these state actions for granted and refuse to recognize them as government involvement in the economy.)

So, in reality, as I've been saying, there is no such thing as government non-intervention in the market, except in the case of anarchy, and then there is no such thing as a market. One draws an arbitrary line, in all cases, and says that the government should intervene in ways inside the line and not in ways outside it. I do this, too, because I don't want the government to set prices or micro-manage business decisions about what to produce. I don't believe full-fledged centrally planned socialism works well. But I don't call myself a laissez-faire advocate.

Then it means something that exists only in fantasyland. And also, if you get down to the details of what laissez-faire advocates want, it means what I've said it means. They only SAY they want no intrusion; in fact, they want something else.

I'm going to pass by your accusations of redefining words as unworthy of a response and skip to the next real point.

We do not allow ex post facto laws in this country. The government must pass legislation making something a crime before that crime can be punished. This legislation is passed before the crime is committed. If crimes defined by the law have been committed before it was passed, they go unpunished, as they were not crimes when they were committed. This applies to all laws and regulations, to product-safety laws (which you don't approve of, I believe) as much as to laws protecting collective bargaining rights (which apparently you do).

It is? But as I said, the only government action absolutely required for a market to exist is to protect property rights, contracts, and personal safety. And we can throw in the issuing of currency, since most laissez-faire advocates agree this should be done. As long as the state does those things, we have a market, and if a market is "free" when the state does not interfere more than it must, surely that would be the freest market of all? If the government does more, such as protect the right of labor to bargain collectively, doesn't the freedom of the market diminish?

Ah, but what about nonviolent union-busting by a business, such as firing people for trying to organize? That isn't "initiation of force," is it? And that and hiring strikebreakers constitutes the biggest part of anti-union activity; violence is the tip of the iceberg. It gets the headlines, but it's not the main deal.

Oh, I absolutely agree! But you see, that's the hidden meaning of "laissez-faire" every time the phrase has been used. And it's your meaning, too. You just have a little different perspective than John D. Rockefeller or J.P. Morgan did; their interests are not necessarily yours.

Were they? In what ways? As far as I can see, there were only two significant changes between the two periods that were not the result of changed U.S. government policy. One was the decline of the British Empire and the rise of the United States and the Soviet Union to fill that power vacuum. The other was the advance of technology. (For a few years after the war you also had the devastation of most industrial countries, but by the mid 1950s that was no longer true.) The superpower status of the U.S. actually hurt the U.S. economy by requiring increased peacetime military spending, which is always a drain on the economy. The main technological advances before the 1980s were plastics and television. Important, especially plastics, but not enough to explain what happened.

Excuse me, I didn't make myself clear. I was referring to New Deal regulations of the economy, which none of those was. The RFC did not end except as an independent agency, rather, its functions were merged with the FDIC. The CCC, PWA, and WPA were all Depression-era work-relief programs, not intended as permanent reforms of the economy but rather as ways to relieve unemployment during the bad times. The FDIC, the Wagner Act, Social Security, FHA, and the SEC are still with us. The AAA is gone, but its functions remain, and that is also true of most of the New Deal alphabet soup, such as REA and the FSA. (Actually the AAA was ruled unconstitutional but was replaced by a similar agency that survived due to the Supreme Court's sea change.) The only agency, other than relief agencies (and actually even those are still with us in the form of welfare and unemployment insurance) which is flat-out gone, is the NRA (National Recovery Administration, not National Rifle Association). Or at least, I can't think of another. So again, the economy of the 1950s was every bit as regulated as that of the 1930s (although less so than that of the war).

And yet those same interventionist laws remained with us after the Depression was over, and since then we have seen no recurrence of the panics that used to strike the economy with miserable regularity, let alone of the Depression itself. There have been recessions since then, but they have been mild, and no longer than the far more severe downturns that used to occur. If the interventions of Hoover and Roosevelt were what caused the Depression to last so long, wouldn't we see the bad effects from continuing to apply the same policies?

No, that doesn't make any sense. I don't think the length of the Depression had anything to do with anything done under either Hoover or Roosevelt. There were some policies that hurt, notably the Smoot-Hawley tariff and the Social Security tax, but I don't think either of those was causative, either. The whole world was depressed, and so while Smoot-Hawley surely made things worse, I can't see international trade pulling the economy up without it. And while the Social Security tax did cause an economic nosedive, without it things would still have been bad, just not AS bad. It was a perfect storm, something that had to happen sooner or later. That it happened when it did, instead of earlier or later, is just the way the dice rolled.

I think you are confusing markets with the conditions neccesary for markets. Not even the most ardent supporters of laissez-faire deny that the rule of law, respect for property rights and enforcement of those rights are an absolutely essential precursor to vibrant markets. But that is where it ends.

The next stage of regulation, which all but the most ardent laissez-faire advocates recognize a need for are those regulations which are designed to protect the functioning of markets. These basically include anti-monopoly and anti-collusion laws.

What supporters of laissez-faire all oppose is laws designed to "fix" what those who would pass the laws view as the wrong OUTCOME of markets by placing the finger of the government on one side of the scales or the other.

Take labor laws. I have no problem with laws protecting the rights of individuals to engage in collective bargaining. I DO have a problem with laws FAVORING collective bargaining, such as compulsory dues for those who choose to exercise their freedom not to participate in collective bargaining.

__________________
"It's a good feeling to shoot a bad guy. Something you democrats would never understand. Americans are homesteaders, we want a safe home, keep the money we make, and shoot bad guys!"

----Denny Crane

Because I want the government to intervene in markets that are not free. If the market is free, then I want the government to stay out of it.
Patently and demonstrably not true, but we'll continue to get nowhere on this so I'll just register my disagreement.
No, they are not the bare minimum for any market to exist. They might be required for a free market to exist, but just because there is a market doesn't mean it's free.
Then they are not laissez-faire advocates. To claim they are is to redefine the meaning of "laissez-faire advocate" to mean, "someone who does not believe in laissez-faire governance"; which would be a contradictory and ridiculous statement.
It means what it means, and nothing else. If you're going to redefine the language then you'll have to at least let the rest of us know what that language is so we can come to an understanding about what we disagree upon.

I'll write it again: To argue laissez-faire advocates want government intrusion is the complete antonym of the term "laissez-faire". Simply because someone walks up to you and claims to be an advocate of laissez-faire capitalism doesn't mean they actually are.
C'mon, TS. It's not an "accusation", it's an observable fact. You claim a laissez-faire advocate wants government intrusion, yet no definition of the term would even come close to such an assertion. You claim a market in which force is used is a free-market, when again no definition of free markets would even come close to such an assertion.

Look, we're working in a very poor debate medium. We have to at least use a common language. That common language has problems enough with its nuanced terminology. Let's not make things worse by redefining words to interpret them as their own antonyms.
All true, but does nothing to address the point. A law does not interfere in a market until it is applied. It will not be applied before a crime is committed. If a crime has been committed, then the market in which that crime was committed is not a free-market. If government then intervenes it would not be intervening in a free-market.
We have markets when the government does nothing. We might even have free markets if the government does nothing. If the government must use its retributive force then it must be doing so for a reason. That reason indicates the market in which the government uses its force is not a free market.

For example: labor rights. Every human on the planet has the right to use their own body and mind as they choose. In using their body and mind, each person has the right to perform work that others may choose, using their own bodies and minds, to trade with them. Every human has the right to exchange their production with others to their own greatest benefit. Every human has the right to voluntarily organize with others in order to maximize their production and compensation. These are rights the Federal government was formed to protect.

If these rights, of all individuals, are observed then a free market exists. No government is necessary for this to happen - it merely requires individuals who respect the rights of others. If these rights are abridged the market for labor would no longer be free. Prior to the labor movement of the late 19th and early 20th century, the labor market in this country was not free (indeed, it's not free now, but for purposes of this discussion, let's assume it is). Therefore, the government was required to interfere in the labor market. The government was not interfering in a free-market, it was interfering in a coerced market. No other legislation was required in order to effect this. The only necessary action was to protect the aforementioned rights and punish retributively those who abridged those rights.

Once employers respect the rights of their employees (and government respects the rights of employers) the labor market would be free and no more government interference would be necessary. The government would have no reason for interfering in the market because no crime is committed, no rights have been abridged, and the market is free.
Force does not always mean physical force. Force can be any form of coercion.
No, laissez-faire never had some "hidden meaning". People have their own self-interests and they will seek to achieve them. Sometimes they'll seek to achieve them by confusing others. Are you confused by J.P.'s use of the term "laissez-faire"? Or do you see through his redefining of the term in order to serve his own interests? Would it be correct to say Bush is an advocate of the Constitution because he denies U.S. citizens the right of habeus corpus?
That's a kind of funny paragraph you've got there, TS. You act as if what I wrote was completely false, that the two periods were remarkably similar, then go through a litany of major, major differences. So, I'll just answer your questions: Yes, they were. In all the way