Wednesday, January 19, 2011

Square Deal ?

Did classic liberalism work? By classic liberalism, I mean the type of political economy proposed and explained by Adam Smith and John Stuart Mill. In their theories, maximum economic freedom was supposed to work by an "invisible hand" to increase the wealth of all people, and increase their happiness. Total "utility" (implied to be happiness) was maximized in a system with this freedom; mathematical proofs of this exist and are the basis of much economic theory. I've seen versions of this proof in graduate school level textbooks and B-school classes.

The question is, though, DID it work? And IS it working? Putting theory into practice and testing under dynamic conditions could expose ERRORS and unrecognized assumptions. Astrophysicists in the 1970s found this out; they assumed that all matter and energy could be seen directly or indirectly in some manner or marker from emitted light or other electromagnetic radiation. But clear contradictions existed even then in the rotation curves of galaxies. Decades later, dark matter and dark energy were discovered. The theories were incomplete in the 1970s.
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Now, the Panic of 2008, the Great Recession and actual events since the 1970s seems to have exposed a flaw - a contradiction - in classic liberalism. Has the utility-happiness-wealth of the common man and woman increased since the 1970s? The "purported" deal - compact - of classic liberalism was that the hegemonic (Ruling) classes working with the political bureaucracy would cause GNP to increase on and on. But to the common man and woman, GNP is a meaningless number. They care about their personal happiness - their ability to make a living and raise their families and live comfortably throughout their lives.

From 1800 until at least the 1960s, it's rather obvious the Deal did work over the long term. By the 1950s and early 1960s in America a family could live, buy a home, send children to college or to a good job in the trades or a plant, and have a reasonable retirement. In 1800 or even 1900 that was a distance dream.

BUT now? And since then? Is there DATA that this "Deal" did not work and is not working, or is it still working? The 40-50 years since 1960-70 is long enough a baseline - that's almost two generations.

This is the question of the century. Has or is classic liberalism reached a range where it fails? Theories can work for awhile, but then breakdown.

My "gut" is that the answer is classic liberalism has been failing for decades, that the lives of the common man and woman has NOT been improving since the late 1960s and 1970s. One has to measure such a concept corrected for age and family composition. From my memories, the level that a family could do and how they could live in 1965 was really far better than now. A common American family must work much harder and longer to achieve the same standard of living.

Is my "gut" instinct correct?

I don't know. I am now researching this matter and will report on the results soon. Demographics, family composition and propensity to work for wages (i. e., women in the workforce) complicate the question, but I'm aware of those factors and will try to take them into account. Meanwhile, could you search your memories about this question with an open mind?

Word of the Day

"Heterodox" - adjective [$10]
Heterodox means (of a person, opinion, etc.) not orthodox.
Sentence: View from the Bunker provides heterodox opinions on investing, government and politics.

22 comments:

mfl59 said...

I'm reading a biography of Andrew Carnegie...please evaluate this statement Bunkerman..."Andrew Carnegie was a socialist"

Bud said...

Bman have you amended to 'panic of 2008' from 'rich man's panic 2008' ??

Bud said...

oil green.......gold green............silver green.............SPX 2k comin soon



dollar tankaroo

Spin-em said...

Patrick...are you going to take that???

Bunkerman said...

That statement about Carnegie is idiotic.

Bunkerman said...

no, in the Panic of 2008, almost everyone panicked.

uh ... I do know of two exceptions who were buying stocks at low prices.

:))

Bunkerman said...

lol, maybe Partrick feels beaten

:)

Spin-em said...

uh ... I do know of two exceptions who were buying stocks at low prices.

BAC...55,50,45,40,35,30,25,20

.............SOS!!!

... - - - ... ... - - - ...

MAYDAY....MAYDAY!!!!!

lol

Bunkerman said...

roflmao spin. ugh ....the pain of my stupidity then.

But I did load up even more in October 2008 on everything ... as did Warren Buffet. And in Jan 2009 with my small stock "return to normalcy" fund.

the only two real buyers left in existence - me & Warren.

:))

Bunkerman said...

GS numbers stink.

Uh ... I guess they really were preying on their clients.

pirahnas .. scum ... pirates

Spin-em said...

lool..I know bunk... you did make some great buy and holds.... you need a whack in the sack once in a while to keep you in reality and so your head fits through doors...loool

mfl59 said...

perhaps you need to read a bit more about Mr. Carnegie sir...your knowledge seems a bit elementary...

Spin-em said...

ohhhh jezzzzuz..here we goooo...lool

Frosty said...
This comment has been removed by the author.
Bud said...

the numbers stink means they were 'preyin on their clients' .............huh ??? what the F are u talkin about Bman ????




'view from the central committee'

Spin-em said...

handshake Bunk........

Frosty said...
This comment has been removed by the author.
Bunkerman said...

true, spin, a Cooney shot makes one wake up fast

:)

Spin-em said...

Cooney...lmaoooooooooooooooo...good one Bunk

Bunkerman said...

Hmmm Carnegie raped and crushed his workers.

Then in old age, decided to give away money to make amends. Which was very, good for the US common people

That doesn't sound like a socialist to me.

Why would he be called a socialist?

I read a bit about him in The Robber Barons and more in the other book you recommended, mfl, a year or two ago

Bunkerman said...

lol, I remember seeing that fight vs. larry Holmes on the big screen at Rockefellar center.

The crowd groaned when Cooney hit Holmes in the nuts .. then did it again.


lollol I still break up thinking about it .. a true roflmao

Bunkerman said...

jeez, Bud, GS just came out and ADMITTED they preyed on their clients.

Now the numbers show how big a raping they were giving .. a real prison gang banging.