Well, sure. Many dissimilar things have something or other in common. Comprehensive insurance and government health care payments both weaken the link between supply and demand. The government payments are worse, because they are universal, whereas only a fraction of the patient population will carry insurance. If most charges are being paid out-of-pocket then suppliers will have to set prices for those patients. Also, there is still some competition among insurers, who therefore must try to keep payouts down. With a government monopoly there is none, and the bureaucrats have no incentive to control costs. The money is not coming out of their pockets. On the contrary --- their incentive is to spend all that they can, in order to argue for a bigger budget next year. (This is the "public choice economics" phenomenon).Steve3007 wrote:So here you seem to be agreeing that there is at least a sense in which insurance and "socialism" (as I defined it earlier simply as services funded by taxation) are comparable. That sense is that they both damage the link between supply and demand. As you've said, if we're not paying for something directly, and/or we're spending from a collective pot of money, then we tend to shop less prudently.
Yes, for the reasons just mentioned.Here you say that the socialism (taxation to fund public services) aspect of it accelerated the cost spiral, presumably because you regard the severing of that link as more severe for socialism (as I'm calling it) than for insurance.
Huh? I think you're misunderstanding the "tragedy of the commons." The market is not a common (in the relevant sense), i.e., a limited resource with no restrictions or conditions on use.Yes, I agree that this is one of the problems with funding from a collective pot of money and making services free at the point of delivery. As I've said previously, I think that the competitive free-market system is a very useful tool in many circumstances because it often promotes efficiency. But not always. One of its downsides, just like Evolution, of which it is a close analogue, is that it tends not to be forward-looking. It's not always the best tool to use for solving long-term problems where individual players in the market have no immediate incentive. Often referred to as the "tragedy of the commons".
There are examples from Evolution of "bad design" due to the fact that we're not actually designed at all. For these examples, we perhaps might wish that there was a designer who could have foreseen problems before they arose and headed them off, without the need for every individual step to be beneficial to survival. Likewise, I suggest, there are some problems in society that cannot be entirely solved by a system in which it is necessary to make a profit at every step and where those who don't do so, and who do things for the benefit of wider or long term gain, are out-competed by those who don't, and go bust.
There are persuasive arguments that that is impossible in principle. Biosopheres and economies are complex adaptive systems (CAS's), and future states of those systems cannot be predicted in advance, except in the very short term. There are too many variables --- billions, many of which are unknown or imperfectly understood --- and their interactions yield astronomical numbers of possibilities. A small change in one variable can have huge consequences in the long term (the "butterfly effect"). Such systems evolve in response to external stimuli impacting them from moment to moment.
http://web.mit.edu/esd.83/www/notebook/ ... ystems.pdf
That was indeed part of the problem. That itself was a consequence of two government actions. The first was a rule requiring many securities to be rated by a "Nationally Recognized Statistical Rating Organization" (NRSRO). This rule put the rating services into the employ of the issuer, rather than the buyer, because now the issuer had to obtain a rating before it could market its bonds. The rating services, of course, were motivated to give their customers, the issuers, the rating they wanted, lest they lose their business. The second action was to ignore warnings from analysts in the SEC and other oversight agencies that those mortgage bonds were risky, and new rules were needed. Those warnings were dismissed by both the Clinton and Bush administrations, because they did not want to throw cold water on the housing boom then underway. Some of those bond issuers were major originators of "affordable housing" loans sold to Fannie Mae and Freddie Mac, which had been ordered under the Clinton adminstration to increase the fraction of "affordable housing" loans in their portfolios to 50%. Fannie Mae's Director once cited Countrywide Mortgage, later found liable for fraud, as "a paragon of affordable housing lending."That's not my understanding of the principle cause of the 2008 recession. I thought that was caused by the repackaging of mortgage debts into investment vehicles that were sold as being a lot lower risk than they really were. Fraud, essentially. (On a massive scale. So massive that the fraudsters were deemed too big to fail.)(Similar cost spirals have occurred in college tuition costs and housing costs, which latter led to the 2008 recession, after government began paying those bills, through guaranteed student loans and Pell grants, and the "affordable housing" policies adopted in the early '90s).
Yes, the wolves and vultures came out to feed. But only because the government had thrown raw meat on the trail.
Another reason for spiraling housing costs in the US are "smart growth" policies adopted in the last 20 years or so by many municipalities. These policies confine developments to specific areas, which, of course, limits the supply of housing and hence drives prices for homes and land in the allowable areas sky high.In the UK, the principle reason for spiralling housing costs appears to simply be too few houses, a small country and a rising population. i.e. supply and demand. Plus cheap money - low interest rates. Perhaps a bit different in the US.
No (relevant) part of it actually changed. But two provisions were essentially re-written by the Supreme Court in the 1930s and '40s. The "general welfare" clause was re-interpreted to allow the government to do whatever it decided would promote the "general welfare," despite the express rejection of that interpretation by both Madison (who wrote the Constitution) and Jefferson (who wrote the Declaration of Independence). The second ruling re-wrote the commerce clause, giving the government power, not only to "regulate commerce . . . among the States," as the document actually reads, but to regulate anything that affects interstate commerce. That, of course, is nearly everything. So a farmer may be forbidden to grow wheat for his own consumption, because then he will not buy wheat, which would affect the interstate wheat market.My lack of knowledge of US political history may be showing again here, but presumably if this "constitutional restriction" existed originally it must still exist? What part of the US constitution changed?
Any government with no structural limits on its powers is, or will become, totalitarian, by definition. Tyrannies of majorities are no less oppressive, and no more justifable, than any other tyrannies. Nor is "the public" any wiser or any more noble than most of history's despots. There is nothing wrong with democracy, provided majority decision-making is circumscribed by moral constraints. How to enforce those constraints is problematic. No approach tried so far has been successful; megalomaniacs and demagogues always devise ways to evade them.If you think it's a good idea to live in a democracy, I don't see how you can design that democracy to remove the danger of this happening. This problem with democracy has been recognised since Plato's parable of the ship. How do you stop politicians from taking this populist route to electoral success? Are you saying that you arrange things such that politicians are constitutionally barred from offering any options to the electorate? Wouldn't that essentially mean that you're proposing an end to democracy and a society which is, instead, dictated by an unchangeable "written in stone" constitution, and nothing else?
-- Updated October 21st, 2017, 2:42 pm to add the following --
Not a "law of Nature." It is just the sort of economy which arises spontaneously among people in a social setting (so situated as to be able to interact) when no third-party interference occurs (i.e., before politicians get involved). It is the sort of economic system observed in traditional agoras all over the world, and in flea markets today --- craftsmen, farmers, traders bring their wares and produce to the market, or offer their services there, and willing buyers compare goods and prices from different vendors and buy or not, depending on their personal interests, needs, and budgets.Steve3007 wrote:Is this because you regard free-trade capitalism as closer to a discovered law of nature than it is to an aritificially created law of human behaviour? i.e. more of a description than a prescription?
Yes. Biospheres and economies are both Complex Adaptive Systems (CAS's). See previous comment.If so, I presume the usual analogies with Evolutionary Biology and Physics would be made. The actions of bureaucrats in re-distributing wealth (mentioned near the end of your post) would perhaps be analagous to friction in a mechanical system. As I said earlier, the operation of markets has obvious parallels with Evolutionary Biology. etc.