Shock Doctrine

[AdamA]

I saw some good posts on this book earlier, but wanted to discuss further, if anyone is interested.

I agree with MT in that I thought I would hate the book, but found it to be very eye opening and at the very least feel that Klein plays a very compelling devil's advocate.

The take-away seems to be that unbridled free market economics don't work because, although the theory is great on paper, human greed and corruption always undermine the system. 

I agree with this entirely, and feel that this is why any economic or political system that is applied unchecked doesn't work. 

Thoughts?

[Coffee]

... Whereas government works so well, because it's impervious to corruption?  LOL.

I haven't read her book, so take the following with a grain of salt:  Most Lefties make a straw man argument by claiming that those of us who advocate for free markets want no government.  When in fact, we want limited goverment.  There's a difference.

I think the strength of the original U.S. Constitution was that it strove to prevent a monopoly on power.  I just saw a documentary on Jack Abramoff, called "Casino Jack".  I'm not sure how well the Founders ultimately succeeded or not.  The documentary interviewed Klein.

[Lone Wolf]

I've never read the book (and won't be after reading Tyler Cowen's review of it.)  However, the first thing I'd have to dispense with is the notion that we have at any time in the last 90 years had anything resembling an "unbridled free market".  If you stack up all the business and tax regulations that exist in the United States, you could stand on top of them and change any light bulb in any house in your neighborhood.

The real problem that we should be fighting is the use of force and coercion.  It is government's role (and, in my opinion, only proper role) to serve as a guardian against force, fraud and coercion.  Unfortunately, government instead so often becomes an agent of these things rather than a guardian against them.

Remember that a businessman can't legally use force.  The businessman has to capture some function of government if he wishes to apply force.  Remember that -- there is a reason that Jack Abramoff was a lobbyist.  Access to a very large, powerful government is an asset that's unparalleled in its attractiveness.

A free market economy is the only market system in which someone doesn't have a gun to someone else's head.  If you're holding a gun to someone's head, you're doing it wrong.    If Klein can't figure out the difference between quasi-fascistic crony "capitalism" (which can only exist with the aid of a too-powerful government) and a true free market economy, I think she is completely missing the boat.

As a wise man once said: "The government that's strong enough to give you what you want by taking it from someone else is strong enough to take everything you have and give it to someone else."  -Harry Browne

[MediumTex]

The best analogy I can think of to summarize Klein's case is that of a bunch of idealistic animal lovers who broke into a zoo and released all the animals into the wild.

What would happen to most of the animals who had been born and raised in the zoo?  They would die very quickly after being placed in a foreign environment with no skills or experience to help them survive, especially against other members of their species who did have these skills.

This is what happens when you take a formerly state run economy and try to turn it into a free market, open borders kind of arrangement overnight.  For the people who are accustomed to a socialist approach to government and the economy, this quick transition often results in disaster.

I do not read her argument as being anti-capitalist--rather, I read it as suggesting that you can't go from one system to another without a period of transition and acclimation.  The same is true of going from dictatorship to democracy--if you try to do it overnight often all you get is chaos.

[AdamA]

As a wise man once said: "The government that's strong enough to give you what you want by taking it from someone else is strong enough to take everything you have and give it to someone else."  -Harry Browne

I think that this is actually one of the central points of her book. 

[Lone Wolf]

The best analogy I can think of to summarize Klein's case is that of a bunch of idealistic animal lovers who broke into a zoo and released all the animals into the wild.

That's an interesting analogy.  In my view, the idea of a free market wouldn't be as hard to grasp as would the institutions and government that accompany a free market system.  You need political stability and (relative) freedom from corrupt governmental power.  Government also must be (IMO) limited.  I don't know how you bottle that particular bit of magic.

Since it was a pack of wild-eyed, idealistic free marketeers that let the zoo animals out and not the zoo animals themselves, it's doubtful that the animals have signed on to the whole enterprise.  The zoo animals are going to want to go back into captivity, so to speak, particularly if they didn't concoct the escape plan themselves.  It seems that they would tend to let their societies sag back toward socialist dictatorships.

And even when driven by the citizens, a revolution is a darn difficult thing to get right.  When I reflect on the success of the American Revolution, I almost can't believe how fortunate we were to have men like George Washington, James Madison, and Alexander Hamilton dealing with the ideas of governance.  So many leaders that no doubt seemed great at one time (Robespierre comes to mind as a good example) wound up placing their fledgling societies on the road to ruin.

Sadly, I just don't believe that great leaders like the founding fathers of the United States can be "synthetically" created like some kind of android.  This is kind of the central issue of why nation-building is such terribly, terribly hard, bloody and expensive work.

[AdamA]

The best analogy I can think of to summarize Klein's case is that of a bunch of idealistic animal lovers who broke into a zoo and released all the animals into the wild.

To an extent, but I think she was more or less being critical of the attempt to apply a very extreme form of an economic philosophy.  I think her basic message boils down to extremes of anything don't usually work very well. 

[moda0306]

To an extent, but I think she was more or less being critical of the attempt to apply a very extreme form of an economic philosophy.  I think her basic message boils down to extremes of anything don't usually work very well. 

I tend to think the same way.... but then I ponder the following:

I tend to think European/Canadian healthcare systems work pretty when you compare actual results of the health of the populace and the cost.  They are much more centrally controlled than the U.S. healthcare system, which is a mix of public and private insurance, and is heavily regulated, yet our expenses are high, our people are unhealthy, and the inflation of the costs is very high every year.  I can definitely understand the argument that government meddling in the market is what's causing the cost increases.  So it almost seems like this is a "choose one side or the other, but don't try to combine the two" type scenario.

I see the same thing in education.  Our education system is much less centralized (and more privatized) than most countries, but they're kicking our butts from what are arguably extremely centralized, government-controlled enterprises.

I can't reconcile these inconsistencies with my general philosophy that both market and regulatory forces, when combined in the right amounts, should lead to the most favorable results.

[AdamA]

The real problem that we should be fighting is the use of force and coercion.  It is government's role (and, in my opinion, only proper role) to serve as a guardian against force, fraud and coercion.  Unfortunately, government instead so often becomes an agent of these things rather than a guardian against them.

In my opinion, this is exactly the problem.  Governments are always corruptable, and it only gets worse when we try to rigorously apply theories of government and economics that look good on paper, but fail to take into the account the problems that human beings tend to have following the rules.  

[MediumTex]

I see the same thing in education.  Our education system is much less centralized (and more privatized) than most countries, but they're kicking our butts from what are arguably extremely centralized, government-controlled enterprises.

I can't reconcile these inconsistencies with my general philosophy that both market and regulatory forces, when combined in the right amounts, should lead to the most favorable results.

there may be some cultural and possibly market forces that we don't see, that are having an effect in education, here many (most?) parents dump there kids into the system and expect it to do the whole job and all the work, in china they have dragon parents that push the kids very hard, pay for extra tutoring and view failure as unacceptable, this plus the large population may create a culture of extreme competition that pushes their success rate up... 

I would like to see more data about how some of these borderline Third World countries are performing with respect to education.  Which kids are being included in those groups?  Just the city kids?  Just the kids above a certain socioeconomic level?

It appears to me that a large percentage of children in rural India and China are more concerned about getting enough to eat than in about whether they are going to ace their chemistry exam.

I also wonder what the participation rate for primary education is in some of these countries.  I wonder how many young people don't attend school at all (especially in countries with large immigrant populations brought in to do work that the natives don't want to do).