Hugo Chavez is a tyrant. Don't tell that to U.S. liberals, who treat him the way, well, the way they've always treated left-wing tyrants. That is to say, they behave as if the tyrant is anything but. Chavez incorporated a state-run milk factory last year. He imposes price controls on milk. His draconian measures have created the problem of milk shortages. Now he threatens farmers with the expropriation of their farms should they sell their product abroad. Chavez calls the actions of farmers looking to sell at market-determined prices "treason." "I'm putting you on alert," Chavez announced. "If there's a producer that refuses to sell the product ... and sells it at a higher price abroad ... ministers, find me the proof so it can be expropriated." This is a classic case of a leftist creating a problem, milk shortages in this instance, by state action, and then calling for even more intrusive state action to "solve" the problem. This should be evidence that socialism doesn't work. Instead, it's a demonstration of how socialism works--government intervention begets more government intervention.

"His draconian measures have created the problem of milk shortages."

Its a very common problem all across the world where countries are starving, but they're producing food and selling it to other countries. So you end up with a large poverity stricken population without food. It doesn't make sense, but it happens. Money does not always mean prosperity for all. Money can't buy love. Sometimes all you have is democracy to save you. Democracy doesn't need capitalism, but capitalism needs democracy. There is more than enough food in the world to feed everyone, but the food doesn't always go where its most needed. In Vezezuela's case, it looks like the government is intervening rather than to depend on the free market - maybe they're too worried and need to chill. As long as its democratic, I'm ok with that. If Chavez is trully the tyrant that everyone says he is, then I must agree that it would be wrong. I'm ok with socialism so long as its democratic, not tyranical.

Socialism by its very nature is tyrannical. It may be a tyranny of the majority, but it is still tyranny. It places burdens on and obstacles before people. Socialism might function if people were interchangeable (think ants or bees), but it is not for individuals.

"I'm ok with socialism so long as its democratic"

That statement just made my top ten list as one of the stupidist things I've ever heard. Congrats.

How long before McCain starts to refer to Chavez as Joe Kennedy does and says 'my friends in Venezuela'?

"but the food doesn't always go where its most needed. In Vezezuela's case, it looks like the government is intervening rather than to depend on the free market - maybe they're too worried and need to chill." - Food Shortage

The price mechanism, by its very nature, always allocates a given product to where its most urgent demand is.

Dear Food Shortage. "Democracy" is one hell of an ambiguous word. Anyway, I think you missed the point of Dan's post, didn't you? Chevez created the problem that he is now aiming to fix with the same poison. Price ceilings (like on milk) create shortfalls, right? Price floors (like a minimim wage) create surpluses, right? Can you see how "socialism" -- in its very attempt to be nice to poor people -- could create the types of problems it blames "capitalism" for?

"The price mechanism, by its very nature, always allocates a given product to where its most urgent demand is." -Ben T.

Notice that the word "Demand" is equivocal here. "Food Shortage" is taking about the biological need of humans for food, and you are talking about a (related but not equivalent) concept in the study of economics. It is quite obvious that plenty of people could need food in the first sense but not be able to express their "demand" for it economically (i.e., through money or labor).

"Notice that the word "Demand" is equivocal here. "Food Shortage" is taking about the biological need of humans for food, and you are talking about a (related but not equivalent) concept in the study of economics. It is quite obvious that plenty of people could need food in the first sense but not be able to express their "demand" for it economically (i.e., through money or labor)." - Uberfrau

Yes, and how do you propose to measure how "urgent" someone's demand for food is? Since utility is a subjective notion, effective demand is the only way in which it is possible to do so.

Ben: Don't get locked so much into one way of thinking (economic ana1ysis) that you can't recognize the legitimacy of other ways. OF COURSE we can recognize someone's need for food independent of their economic expression of that demand through money or labor. And "subjectivity" has nothing to do with it. (I, for one, didn't use the word "utility.")

Notice, also, that even if everyone were able to express their need for food in such economic terms, this expression of "effective demand" (what the heck does that adjective add?) won't correlate strictly to biological need. E.g., a really fat rich dude in NYC may express his "demand" for a second steamed lobster at dinner by his willingness to pay 200$ for it -- even though he has no biological need for it whatsoever. While poor people with actual bioogical need for food may only be able to offer a few cents (because that is all they have). Expression of economic demand is not an accurate measure of need. QED.

And I am not advocating socialism, but if this is your argument (something like, 'we can't objectively recognize a person's need for anything apart from the demand they express in currency') for economic freedom, you aren't gonna convince anybody.

Effective demand, in economics, means demand which is "effective" because it is accompanied by the necessary purchasing power to express that demand on the market.

It is possible to tell whether someone wants food independent of effective demand. It is not possible to measure that need independent of it.

"E.g., a really fat rich dude in NYC may express his "demand" for a second steamed lobster at dinner by his willingness to pay 200$ for it -- even though he has no biological need for it whatsoever. While poor people with actual bioogical need for food may only be able to offer a few cents (because that is all they have). Expression of economic demand is not an accurate measure of need. QED."

Why is biological need the only legitimate reason for wanting food? Does the fat man not gain pleasure from eating the lobster? When do you propose to determine, exactly, that biological need has been fulfilled and a given consumer has transferred himself into eating for pleasure alone and that his demand has thus become less important?

"And I am not advocating socialism, but if this is your argument (something like, 'we can't objectively recognize a person's need for anything apart from the demand they express in currency') for economic freedom, you aren't gonna convince anybody." - uberfrau

Meant to respond to this and forgot to. This is actually the crux of the problem with socialism. Without a price mechanism to express desires to firms, how do producers know WHAT to produce, how much of it to produce, whom to allocate it to, etc? There is an endless stream of economic questions that cannot be answered by a central committee because there is no price/profit/loss mechanism to feed information.

"It is not possible to measure that need [for food] independent of it."

Who is doing the measuring? C'mon Ben, Uberfrau is right. That isn't an argument against socialism that you are advocating, it is an argument to let babies starve b/c they express themselves in crying not currency. Economic thinking does have limitations.

The only limited thinking here is the kind that believes you can base economic policies off of such extremely vague notions.

Ben T: I don't think you argue effectively for anythuing denying the obvious -- e.g., that we cannot recognize need for food apart from an expression of "effective demand" for food. So you should probably find a better way to argue for economic freedom.

Moreover, economics is not the whole of human life, and economic goods must properly be subordinated to the good of the whole of life. Therefore, to say that we should determine economic policy in complete abstraction from "vague notions" about health and the good human life is worse than stupid, it is morally wrong. Now, I happen to believe that economic freedom does conduce to more economic goods for most individuals and for society as a whole, and that the subordination of economic goods to the good life is the job of individuals and families (economics = study of the art of keeping household). But this argument does not require saying that need or demand is just economically "effective" demand.

In fact, the best way to counter the threat to the free market mounted above is to say that the free market is great partly BECAUSE it tricks rich people into paying more for goods that are worth less to others, thus getting them to share more of their wealth with others. But it simply isn't the case that the fat rich man needs a second hamburger more than some starving child does.

"Moreover, economics is not the whole of human life, and economic goods must properly be subordinated to the good of the whole of life. Therefore, to say that we should determine economic policy in complete abstraction from "vague notions" about health and the good human life is worse than stupid, it is morally wrong. Now, I happen to believe that economic freedom does conduce to more economic goods for most individuals and for society as a whole, and that the subordination of economic goods to the good life is the job of individuals and families (economics = study of the art of keeping household). But this argument does not require saying that need or demand is just economically "effective" demand.

In fact, the best way to counter the threat to the free market mounted above is to say that the free market is great partly BECAUSE it tricks rich people into paying more for goods that are worth less to others, thus getting them to share more of their wealth with others. But it simply isn't the case that the fat rich man needs a second hamburger more than some starving child does." - Uberfrau

Firstly, proposing that a fat wealthy man needs a hamburger less t, biologically, than a starving child is not sufficient to support your argument. You must propose a system for allocating scarce resources based on this, or all you have supplied us with is an uninteresting truism. If the question was about biology, there would be no debate to be had. The point is how to measure demand as a means to the end of minimizing the negative effects of scarcity.

Secondly, in regards to your argument that capitalism is good because it tricks the rich into paying more. In my estimation there could not be a worse defense of the free market. It implicitly concedes to the socialists that the rich and the poor are enemies of one another, and that we should desire the free market because it subversively deceives the wealthy into granting the poor victory. If one seeks to defend capitalism, one must take the moral high ground away from the socialists, and assert without fear that society is built on the grounds of cooperative behavior, not antagonistic class warfare.

Thirdly, I will hold that it is actually ethically preferable for the wealthy to receive the use of resources before the poor in a free market. The reason being that in a market, the only way to increase one's wealth is to make a productive contribution to society. You will not gain more wealth if people are not willing to give you some of their own in exchange for some good or service (except in the case of those who receive wealth in the form of a gift). The unfettered market then, maximizes the incentive for production, and anything other than the unfettered market to some degree penalizes production and creates an incentive for non-production. The system which maximizes production is best for all members of society, because it minimizes, to the maximum possible degree, the negative effects of scarcity. Not only that, but the mass production the market creates helps the poor more than any others. The most successful firms in a market, like Wal Mart and Microsoft, are those that produce goods nearly everyone can afford, not those that cater to the rich. This is why, for example, in old feudal Europe, the vast majority of human society was constantly engaged in subsistence living, while today the biggest health problem among the American poor is obesity.

And finally, in a market, the wealthy, because they have the most excess wealth, act as entrepreneurs of consumption, exploring new and more efficient or desirable ways to consume goods and services, which then are eventually passed on to the rest of society.

"If the question was [sic] about biology, there would be no debate to be had. The point is how to measure demand as a means to the end of minimizing the negative effects of scarcity." -Ben-T

In fact, "the end of minimizing the negative effects of scarcity" requires some reasonable consideration on the part of conscientious individuals regarding the biological needs of human beings. Social, familial, and even ecclesial pressures need to come to bear on the gluttonous fat man, to whose vice the market is simply indifferent. The point is neither that there is an exact calculus by which to determine the proper amount an individual should consume, nor that there is an exact amount calculable; rather, the point is that the market on its own is insufficient to determine any such amount.

I couldn't agree more that those pressures are needed, and social, familial, and ecclesiastical pressures are all things considered by human actors when making utility calculations. If we are defining "the market" here as voluntary human action, they all come wrapped up in it.

"Firstly, proposing that a fat wealthy man needs a hamburger less t, biologically, than a starving child is not sufficient to support your argument. You must propose a system for allocating scarce resources based on this, or all you have supplied us with is an uninteresting truism." Ben T.

Well I am glad that what you were before denying is now a "truism". And I'm not "proposing" it. Its obvious. Also, I am not arguing against the free market, as I have said repeatedly, I am arguing against your argument for the free market that denies the "truism" above.

I in no way suggested that the free market is based on class warfare or antagonism. Rather, it should be quite obvious that what leftists take as a sign of injustice in the free market (that the rich get more things because they can pay more for them) is in fact all part of the socially beneficial ciculation of capital that the free market encourages (the rich is paying more than for the some crap). Don't read leftist BS into what I say. This isn't about class warfare. And why do you conclude with chestpounding defense of the free market? I am not attacking the free market. I made that abundandly clear. I was encouraging you to argue for it more effectively.

Finally, BOTH you and "Invasor" are wrong to assume that the fat man needs any pressure whatsoever to not eat a second hamburger except for his own health. Economically, he does good and not bad by overeating. In fact, the issue here isn't really a zero-sum scarcity, in principle. The poor people in the world won't get the hamurger he doesn't eat. Their poverty is not caused by others' greed, but by economic and political institutions (such as Chavez's) that hamper the surplus of material goods from getting to them.

"Well I am glad that what you were before denying is now a "truism". And I'm not "proposing" it. Its obvious. Also, I am not arguing against the free market, as I have said repeatedly, I am arguing against your argument for the free market that denies the "truism" above." - Uberfrau

No I never denied that it was biologically the case that a fat man needed a hamburger less than a hungry child. I denied that this was a basis of measurement for a system to allocate goods and resources.

"Finally, BOTH you and "Invasor" are wrong to assume that the fat man needs any pressure whatsoever to not eat a second hamburger except for his own health. Economically, he does good and not bad by overeating. In fact, the issue here isn't really a zero-sum scarcity, in principle. The poor people in the world won't get the hamurger he doesn't eat. Their poverty is not caused by others' greed, but by economic and political institutions (such as Chavez's) that hamper the surplus of material goods from getting to them." - Uberfrau

If ethics is the study of how to live the good life, then to engage in gluttony is in and of itself unethical. So yes, there is a reason why it is good for him to receive societal pressures not to use his wealth on yet another hamburger.

"Finally, BOTH you and 'Invasor' are wrong to assume that the fat man needs any pressure whatsoever to not eat a second hamburger except for his own health. Economically, he does good and not bad by overeating. In fact, the issue here isn't really a zero-sum scarcity, in principle. ..." -Uberfrau

I'm not sure I get your point exactly. It is possible that a person can resolve to eat less just by reflecting on his own health and its economic ramifications. Agreed. But it’s also a fact that many people who need to eat less don’t reflect on or care about their own health. In these cases, the external pressures of society, family, and church may be useful, indeed necessary.

Society: the shame of being perceived as a fat slob…

Family: “If it were just me I wouldn’t care if I dropped dead from a heart attack at age 36, but when I think of my kids…”

Church: eat simpler and less food as a form of penance…

I’ve known fat people who have been motivated in each of these ways, none of which turns on a notion of zero-sum scarcity.

Bent -- you said that (1) the ONLY way to measure someone's need (e.g., for food) is to measure their economically expressed "effective demand." You also said that (2) the expression of effective deamnd in a free market always allocates food where it is most needed.

_Now_ you admit that there is significant human need for economical goods that may not be expressed or expressible economically in "effective demand" and even when it is so expressed its economic expression may be inadequate to the real need/demand. (Whether this "real need/demand" is measurable in dollars is not an interesting question, and is not relevant, actually. The only question is whether we have ways of recognizing it.) Right? It is important to the argument that you tell me hether you grant this or not.

Do you still hold that the free market always allocates economical goods where the most urgent need is? It allocates it where its most urgent "effective demand" is, but that isn't the question (The latter is in fact a tautology made true by your definition of "effective" demand, so your statement (2) above is very uninteresting, and not even a praise of the market.)

Statement (2) becomes a praise of the free market only if "effective demand" (economically powerful expression of need) actually gets close to real human need. Only then is your argument an argument for the free market. But you have basically denied this. By saying that only "effective demand" is and should be economically significant, you have cut off effective demand from real need, and thus cut off your ability to argue that the free market does any good for human beings.

"the ONLY way to measure someone's need (e.g., for food) is to measure their economically expressed "effective demand." You also said that (2) the expression of effective deamnd in a free market always allocates food where it is most needed." - Uberfrau

Yes, because I was asserting that there is a difference between biological need for food and measuring need as it applies to economics. Because utility is a subjective notion, it is not the case that biological need for food and economic demand for food always match up exactly.

What if I am fasting? Should food be allocated to me that could be given to someone else that, though I biologically have a greater NEED for food, obviously has a greater DEMAND for food?

And I have already provided an ethical argument why the person with the greatest effective demand should receive first use of scarce goods and resources. You characterized it as a "chest thumping defense of the free market" and then dismissed it.

BenT: Why didn't you answer my queston?

Again, I'm not attacking the free market (so the fasting question is really besides the point). Rather, I am pointing out that your argument for the free market doesn't work unless you assume that somehow effective demand actually approximates human needs/goods. This is a huge hole in your argument.

So is effective demand somehow a measure of some more fundamental type of demand, or isn't it? If you say "yes," then your way of arguing for the free market can work by asserting that the market really does serve human demand for goods, but you have seemed to cut off this answer. If you say "no," then you argument for the free market doesn't work, because there would be no positive connection between the human good and the goods that the market produces. Moreover, your phrase of "effective" demand becomes rather empty -- in order to know what the phrase means we need to know what ineffective demand is, and what its connection to effective demand is.

If you want to give up the discussion, then go ahead, but if you answer the question 'yes' or 'no' then we might actually be able to, together, make some head way and, perhaps, craft a good argument against people like "food shortage" for the free market.

"If you say "no," then you argument for the free market doesn't work, because there would be no positive connection between the human good and the goods that the market produces." - Uberfrau

Why? I already provided an ethical argument as to why effective demand is what matters.

In any event, there is nothing of value to be said about "demand" absent any qualifiers. Since human desires are infinite, everybody has the same level of demand for every good/service: Infinite. Since demand refers to desire for a given good, certainly having a greater level of biological need for say, food, is not the same thing as having a greater level of demand for food. I'm not sure whether you would consider that a "yes" or "no" answer.

Bent: my desires are not infinite. I'm not even sure what that means. And I certainly don't have the same amount of desire for all goods and services. That is just factually false. Anyhow, I don't see the relevance.

So I am still very unclear about your answer. Tell me if this is correct: You say "no" -- there is no connection between effective demand and some more fundamental type of human need, but that's ok, because effective demands is more important than any other type of human need. Now, is that your position? Could you tell me how you argue that effective demand "is what matters" even if it has no connection whatsoever to the human good? Matters to whom? Humans? Why? I've been assuming that effective demand is a measure of something, and that it matters only because it measure something better than other other thing does -- but maybe you don't think so. Is effective demand a measure of anything, or is it really what matters _in itself_?

So I am still very unclear about your answer. Tell me if this is correct: You say "no" -- there is no connection between effective demand and some more fundamental type of human need, but that's ok, because effective demands is more important than any other type of human need. Now, is that your position? Could you tell me how you argue that effective demand "is what matters" even if it has no connection whatsoever to the human good? Matters to whom? Humans? Why? I've been assuming that effective demand is a measure of something, and that it matters only because it measure something better than other other thing does -- but maybe you don't think so. Is effective demand a measure of anything, or is it really what matters _in itself_

Something screwed up happened there, my post was lost. And it just put up your quote. Guess I'll have to write it all over again.

"Bent: my desires are not infinite. I'm not even sure what that means. And I certainly don't have the same amount of desire for all goods and services. That is just factually false. Anyhow, I don't see the relevance." - uberfrau

You are correct here, I worded my argument poorly. I was thinking of capital goods when I said it but failed to account for that in the writing. What I should have said is that humans have unlimited desires. Assuming a world of infinite resources, there would be no end to our consumption. But back in the real world, where resources are scarce, every consumer's good is made up of capital goods that came before it. How should the question of production be handled, when everybody wants to consume SOMETHING at some given time? "Demand" has nothing of value to say about real human experience because it fails to account for the scarcity of resources.

"So I am still very unclear about your answer. Tell me if this is correct: You say "no" -- there is no connection between effective demand and some more fundamental type of human need, but that's ok, because effective demands is more important than any other type of human need. Now, is that your position? Could you tell me how you argue that effective demand "is what matters" even if it has no connection whatsoever to the human good? Matters to whom? Humans? Why? I've been assuming that effective demand is a measure of something, and that it matters only because it measure something better than other other thing does -- but maybe you don't think so. Is effective demand a measure of anything, or is it really what matters _in itself_?" - Uberfrau

Yes, I believe that effective demand is what matters in and of itself. The reason being that, as I stated above, the price mechanism, using effective demand, maximizes the incentive to produce, and so better than any other economic system it minimizes the negative effects of scarcity.

With effective demand, if you desire to consume a hamburger at a cost of X, you will not be able to do so unless you have produced X wealth for society. Otherwise, you will lack the ability to express your desire for the hamburger in the marketplace. So then, effective demand, in an unfettered market, allocates resources in an ordinal manner according to who has produced the most wealth, always linking consumption with production.

Now consider attempting to base a system of allocating resources simply off of trying to figure out who desires the hamburger the most, absent any qualifiers concerning production. We would be thrown into a sea of economic chaos, and likely would soon return to subsistence living.

Economics is the science of how to minimize the negative effects of scarce resources. The price mechanism and effective demand do this better than anything else.

Ben T: I actually think you are overdoing the "scarcity" stuff plus "unlimite desires," etc etc. -- after all, the very success of the free market has made the scarcity of consumer goods nothing compared to what it was even a few hundred years ago. Think about how much food rots each year -- not because "capitalist" owners of it are evil, but just because no one wants it enough to pay a few bucks for it. And are my desires "unlimited" -- well if they are it is my problem, my desires for a good life are unlimited, but thay doesn't mean my desires for consumable products are unlimited.

Secondly, I agree that the mechanism of free prices is better than any other mechanism for allocating goods, because (1) it always encourages people to produce at least as much as they consume, (2) it forces paricular people to order their preferences keeping in mind the cost that those preferences have to others, (3) it is only way to measure relative scarcity of consumer goods. (4) Even though individuals are not infallible about what is good for them, as a rule, they are more expert in judging what will contribute to their good life than others are.

Now, I agree with you on a whole lot, but again what you are missing is the link between effective demand and actual human good (I have provided my answer to this with (4)). You could say that the human good doesn't matter to you, but then you take away any incentive for people to buy your argument, since clearly economic goods are in themselves subordinate to good human living. Rather, what you want to do is simply point out (and I think this is true) that _for the most part_ effective demand really is the best measure of how much something will contribute to the buyer's good life -- not because the idea of a more real need/demand is incoherent, but because the person who is expressing effective demand is also the person who is usually most knowledgable about the more fundamental need/demand. (The "usually" matters here -- because it is not true of the unusually stupid, of the insane, of children, of the mentally incapacitated, etc.)

But it does not merely measure the person's desires -- it measures it relative to the cost that the buyer's getting the good has for others and in such a way that it forces the buyer to recompense that cost to others. So poor people who cannot afford food even in our food-rich market, what are we to say of them? That in the short term they deserve charity and in the long-term they need to figure out how to contribute their share to pay their way, but that it would be throwing the baby out with the bathwater to get rid of free pricing for anything else. But one must really think hard about the free pricing mechanism to look past t he seeming "meaning" of the free market, to its ultimate beauty -- e.g., we should look at someone who dies a millionaire (assuming he played fair) as someone who did a lot more good for others than they did for him. But in order to get anti-market people to see this, I think it is important that you don't go around denying the obvious, viz., that some people have needs that they cannot express in effective demand, and that sometimes those needs are much more urgent and serious than the desires that rich people can express through effective demand.