Free Market Reality vs. Theory

Free Market Reality vs. Theory
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Quite a few people seem to glorify the "free market" based on some old theoretical framework while giving little attention to how actual reality develops, which incidentally is very different.

The ever repeated (false) mantra is that a free market is good for the consumer because it lowers prices... which it does not (in the long run - or short run depending on circumstances). Nor does lead to higher quality.


When transitioning from a public service to a private "free market" or even the development of some "free markets", the general process tends to work along the following lines:

1) Public property is improved with significant investments to make it attractive to buy (incidentally at a loss to the public overall....)

2) Private business establishes itself

Now we have two options, A and B:

A 3) Prices do drop for a short term to gain customers.

Supported by wage drops (people now need social benefits to actually survive) as well as quality drops (cheaper) and "outsourcing" (who cares what the now unemployed do or how they buy things...)

A 4) The market condenses down to a couple of competitors - or even a single monopoly. People no longer have a choice, profit is everything, prices rise.

B 3) The private company has a dominant market position, prices increase right away because people have no alternative.


The so called "free market" mechanism and "capitalism" have in some ways worked during the cold war - not because it is inherently better but because "the west" wanted to show that it was better. As a result, the aim was to be better than the Soviets - to produce better goods, better services - and then come along to say "look we are better".

With the cold war over and no competition there is no need to improve services to try to be better - people have no other continent to point at where they could say "look how they live". Yes, some countries offer significantly higher quality of life, the Scandinavian countries as well as Switzerland, but few people for some reason look at them as role models. Ironically enough, some UK politicians or was it activists made a claim that the UK could mirror Norway if it left the EU... not really. Nor has the UK any source of wealth, nor has it a functioning society, social system or good education. (All are available in Norway.)

The key point is that the "choice" offered by a free market is a false choice - you get to chose between bad and bad. The same is true for our so-called "democracies". If a country only has two parties which have both disqualified themselves in one way or another, you can vote for bad or bad...

Officially you have a choice - and practice it is a non-choice.


In a free market, the customer is not the focus of a business - the focus is to maximize its reach and then to maximize profits, at any cost. (Which includes a disregard for human life - toxins in toys? Reducing service intervals? Why not...)

Having moved from (West) Germany I cannot find many positive things to say about the UK in a direct comparison. Incidentally, my observation in Europe is that "the bad stuff" spreads eastwards - what happens in the UK moves east and reaches Germany a few years later and also spreads through the rest of Europe.


Theory is one thing, practical reality another. Which is where I asked my question - "qui bono" - who benefits? In the free market it is the investor - always. The customer might benefit for a short time if he or she is lucky during a transition struggle, or just benefit not at all as if frequently the case.

In politics it is those who finance things  behind the scenes - big business, "investors".  (Across all parties.)


The worst part though is that we do not learn from the mistakes of others. Policy that has failed in one country is for some inexplicable reason seen as attractive in another - at a cost to the peoples. (PFI in the UK for example.)

The same goes for "free market policies". Privatizing the railway in the UK has cost the peoples billions, caused accidents. Bits were renationalized (the public paying the cost of fixing it again) and yet the government wants to sell it off again...


Detlev Conrad Mielczarek Added Jul 22, 2013 - 6:05am
Actually, the quality of most things has decreased significantly.
And your car does indeed need servicing - just as it always did. Changes in oil, oil filter - sparkplugs. The key difference is, that in the past you could fix them and if something breaks nowadays you have to replace expensive integrated components. (Even if the actual faulty component can be replaced on its own.)
This actually holds true for most items.

How many people can afford something is not a good measure of success of any economic system on its own. When did you last eat your PC? Nibble on your smartphone? The biggest question is quality of life. Being able to afford things is a part of it - but it is not the vital component.
Also, what good is it to you if you can "afford something" but then need to replace it every few years because it does not last...

As to the countries that "thrive" - well, your comment is, to be honest, worse than idiotic. Cuba has been subject to a US embargo on virtually everything for the lat 50 odd years just because they embraced Communism rather than being the US' gambling house.
It is a bit like shooting yourself and exclaiming "look, I am bleeding".
Cuba cannot be used as an example because the country has been denied access to the global market. (Which is in itself not the same as a free market economy.)

And when you look at China, you should ask the question "at what cost". If you look at all the pollution...
If you look at the social changes in China you will find further signifficant changes to the past. At the same time, the fact you conveniently ignore is that industries or infrastructure vital to national interests is still held by the state.
In response to regularly reoccuring scandals, regulations are also increasing and the Chinese government is waking up to the issue of pollution as well.
China has embraced free market principles for industries that produce for "the west" to bring money into the country. But it has not become a classical "free market economy". Incidentally, the industries plightened with labour exploitation as well as child labour are the "free market industrie" producing our electronic junk of tomorrow.
Detlev Conrad Mielczarek Added Jul 22, 2013 - 9:58am
If you can read any German, have a look here:
khalling Added Jul 22, 2013 - 5:00pm
You have set up a straw man where you control the variables and outcomes based on mixed (at best) or false premises. I have posted in here studies on economic freedom. those countries which practice closer to a free market do better than countries who don't. The evidence is overwhelming. Even Bono from U2 has changed his mind after years of work with the poor in Africa:
That was really an aside, but here is an economic freedom study:
Detlev Conrad Mielczarek Added Jul 22, 2013 - 6:21pm
Cars today are significantly more fragile than they used to be. This starts with the electronics (where the German cars are actually pretty bad) and continues over the components which are built to ever tighter tolerances with ever slimmer failure margins.
Cars have become safer - yes. They have received plenty of technological upgrades, but they are no longer as robust as they used to be.
A little bug in the engine will have significant consequences (for the engine) - in the past it just worked, you went to the next garage, tweaked it a bit and it worked.

Add to that, cars from the 1950ies and earlier still work. Not a lot of cars from the 1980ies are still about, nor from the 1990ies.
Cars were originally built to last a lifetime - as long as possible. Nowadays a car is built to last for a while and then break so that a person will buy a new one. Now that damage might be artificial - a nonsignificant component that is weaker than needed for whose repair the manufacturer will charge an arm and a leg to make it uneconomical to repair the damage.

I suggest you have a look for the Arte production on planned obsolescence. Companies build upon things breaking. The free market needs to sell you junk to fullfill its own growth mantra.
Detlev Conrad Mielczarek Added Jul 22, 2013 - 6:26pm
Economic freedom and "free market" are not the same thing.
A "free market" does not imply you have economic freedom - which you actually do not have in most of Europe.
Want to take the train? It is free market, but you have no real choice (unless your time in a single day does not matter).
You would a water supply? There is a "free market supplier" - but only one per region. (Germany and UK.)
You need electricity or gas? Well, you either don't have a choice because the "big ones" own the infrastrture or if you have, they watch each other anyway keeping prices high (without officially forming a cartell, but acting as one).

Incidentally, the most "free market" country in Europe is the UK - which has some of the worse - if not worst - standard of living in Europe. The only countries worse off right now are those that have been hit by their own financial problems, specifically Greece, Portugal and Spain and possibly to some extent Ireland.
khalling Added Jul 22, 2013 - 7:36pm
you have not looked at the data completely. Economic freedom is the the definitiona of a free market. A free market does not mean one is free from reality. "one supplier per region" most often this occurs due to govt control. But it can happen-what if you are part of disruptive technology. Your competition in the future has to catch up today. Taking the train in Europe is not part of a free market. Trains are controlled by the government. "big ones own(ing) the industry" generally means a crony relationship to government. However, even after culling the abstract from the actual, the evidence is overwhelming that across markets, those countries that are most free do better. Incidentally, printing money to pay large federal debts is not practicing free market capitalism. It is a govt mechanism. a statist solution that has huge consequences for the majority of its population.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 8:27am
We can possibly agree that a free market does not exist. Though I will go further and say that even your small village won't have a free market either because you will often end up with situation where a service is provided by only one party which thus has a monopoly and is free to charge whatever price it wants or even blackmail you into paying for a non-service. (E.g. a plumber called to fix a problem which he/she did not fix, yet issued a bill for. If you do not pay the bill (the service you asked to be carried out has not been carried out and the fault not rectified) he or she would not respond the next time you called the service provider. And yes, this happened to a family friend in a smaller village.

A free market fails for the same reason that communism cannot work: Greed.
Incidentally, you're argument at least cracks in some points: Certain areas of the economy are initially not regulated by the government. For example certain job sectors in Germany have (or at least had) no minimum wage, some financial products are wholy unregulated. Incidentally, it is these markets that are the most exploitive of people and the most degrading to people that will quite happily strive to line the pockets of "management" or "investors" at the cost of the workers or the peoples in general.

Government regulation is absolutely necessary to allow a civilized society. BUT the regulation needs to be transparent and good, ideally directly supported by the peoples. There is a lot of stupid regulation - that is true, however deregulation has caused more long term problems than short term problems from excessive regulation.
Robin the red breasted songster Added Jul 23, 2013 - 8:29am
For a free market to work, you need a number of things: scale, genuine choice and an engaged consumer.
Even if you have the first two, getting the third is virtually impossible. In the UK most people get divorced more often than they change their bank. Why? It is easy enough to do thanks to recent Government regulation to remove barriers to switching. It's because people are not engaged with personal banking for the most part.
Life is far too short for most of us to make reasoned decisions about everything we buy. So most things are bought on habit or because someone you know buys them as well.
In some things, it is very difficult, and expensive, to introduce competition. Utilities are a classic example. Typically it is the "last mile" of connection to someone's house which causes the problem. It is expensive to provide this connection, you can't get away from it. Someone has to stop traffic, dig a trench and lay pipes or cable. A big cost by comparison with the typical value of what is being delivered. So any competition can only exist through heavyweight Government intervention e.g. forcing last mile "owners" to give access to competitors. And if you have Government intervention is it really a free market?
Robin the red breasted songster Added Jul 23, 2013 - 8:31am
I might add that, for some things, I find the application of the free market ideology offensive personally.
This includes for me things like health care, policing etc. These have to be collectively paid for and provided for the good of all in society. It is what defines a civilisation.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 8:38am
I might need to look at that document if I have the time, but you are throwing a lot of things together in your comment.
If you just take the summary cover graphic, then it would suggest that the Scandinavian countries, Germany, Switzerland, Austria and the UK are roughly equally free. (all coloured in blue) Given that all of these countries are western European countries, they form a comparable set.
At the same time time, the UK is one of the worse places to live in in Europe, with worse services, the worst housing in Europe and other problems as well. A TED talk from Richard Wilkinson gives a nice indication - and you can look up his frequenlty cited papers as well:
In just about any measure the UK does worse than Germany.
You will further find that there is significantly more regulation in Germany - and a lot of government owned industry in both Germany (less than there used to be) as well as Scandinavia.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 8:41am
Indeed - I fully agree with that sentiment. Aspects that provide a direct greater benefit to the peoples as a whole should not be commercialized.

I suppose the one area a free market actually works is "luxury goods", such as Swiss watches. Something that is not neccessay (cheap quarz watches are even more accurate), catering to the rich - who will either pay the price or can negotiate a lower price.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 8:51am
The "last mile" point is very important, thank you for mentioning it.
One of the points where the "last mile" makes a joke of market liberalisation is the mail service - who carries it the last mile? The national carrier - who does the long distance hub to hub transport? The private company...
It is easy to make a profit in most cities with many services - but if you want to offer a national service, the rural areas are generally covered at a loss (made up for by cities).
And eve in cities, competition for some things cannot exist because - as you corerctly point out - digging trenches costs money and there just is no space for every company to lay down their own water pipes, telecoms cables, etc. - So basically it either works off a national grid or it is a monopoly supplier in the area.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 10:41am
Trying to insult does not constitute an argument. Incidentally, you have not given any. Nor does your attack on government - where incidentally, a functioning government forms the best basis.

You also provide no argument as to why the free market should exist. If you are the only technician in a village and charge 10.000 Dollars?Euros?Pounds per hour, what do you do if your heating fails in the middle of winter? You either cough up the money or die of the cold...
You completely ignore the fact that what gets sold as "the free market" is (in rality) self centered on getting the best value for yourself - and never about the customer.

You also do not need governments for monopolies - nor do you need "croney capitalism" (which is another problem). Which comes back exactly to the plumber issue I mentioned in my previous post - the only one in the village, so you have no choice while at the same time there is no market for a second competitor in the village.

As to the free market being the antidote to monopolies - not really: The free market benefits the formation of monopolies of which we would have significantly more without government oversight. (And even with government oversight they form.)
So let me ask you a simple question: How many harddrive manufcaturers are there in the world? Where did governments come into it?
Answer: There are only three left, Seagate, Western Digital and Hitachi - governments played no role in that reducing down to three companies. Competitors were simply gobbled up...
Same goes for most industries by the way.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 2:10pm
You are not giving a reason, you are taking a standpoint.
Fixing things yourself is not always possible - also, it sometimes requires you to have spares, which at certain times can be hard to come by, while a dedicated "professional" will have some stock of often needed spares. You cannot have spares for everything at home - the reason should be obvious to you.
What you also ignore is the fact that some bigger jobs require specialist knowledge - or have requirements to ensure the results are safe.

A government provides the regulatory framework - which includes for example certification as well as consumer rights.

As to governments representing the public: The quickest way of getting some company to respond, especially if their non-response is in violation of the law, is to involve either a public office/authority (local MP, the mayor, government agency etc.) or the press.

As to harddrives: The price is actually artificially high. However there won't be any competition simply because the investment is too large and the expertise is also bundled in the three market dominating parties. There will not be a competitor - because nobody can afford it. The free market has effectively broken down. (Plus there are the volume discounts ordering materials, etc.)
And why is the price artificially high? Because production capacity is too low and people need harddrives - so they will pay the price, there is no alternative. (Except SSDs, but they are yet more expensive for now.)
Price is not dictated by supply and demand but by the desires of the supplier. (How it always is by the way.)
khalling Added Jul 23, 2013 - 4:18pm
I find it morally offensive that you believe slavery is acceptable when it comes to your personal healthcare. Not only is it immoral, it does not work in truth. "The good of all in society" always leads eventually to tyranny.
Theft and slavery are not my definition of a civil society.
khalling Added Jul 23, 2013 - 4:33pm
You are cherry picking the data to draw your conclusion. Between the two countries you have mentioned, there is virtually no difference. You must look at the macro-economic evidence. What about Hong Kong? In 40 years it has gone from the same standard of living as most african nations to one of the wealthiest "countries" in the world.
Robin the red breasted songster Added Jul 23, 2013 - 6:01pm
Rather that than the amount of money in their bank account deciding whether they live or die.
Robin the red breasted songster Added Jul 23, 2013 - 6:09pm
The more important point is that medical care is potentially a bottomless pit financially.

This means that there has to be rationing. The only question is whether that rationing is based solely upon how much cash someone has or upon some more humane basis. I have seen the footage of those tented communities around some US cities where people depend on charities for very basic health care. It does not look good at all... makes the US look like a banana republic.

You should realise that I spend some time working for the IFRC delivering health care support to people around the world who suffer from disasters (in our case natural or technological... the ICRC deal with conflict zones). I deal with mobile phone operators, persuading them to help us by providing air time for health care messages and operational messages (e.g. there will be an immunisation programme in your town next week etc)

Our fundamental approach is that all human beings are deserving of health care. I believe this to be true. I am also aware that the whole question of rationing is a moral maze. But it is far better to attempt to find a way through than to say that other people's health is none of my concern.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 6:54pm
I am picking a very comparable set.
Comparing North Korea or Cuba to say the UK is meaningless.

I am taking a set of countries that developped under similar conditions (Western Europe) with similar results in your study and point out the obvious difference between those countries which according to your definition should be very similar, BUT they are not.
In fact, one can even question how valid the conclusions from the data actually are. The US' favourite measurement is GDP or alternatively GDP per capita - BUT there is no correlation between socio-economic factors and GDP per capita - i.e. it is a meaningless measurement. Yes, many rich countries will overall do better than very poor countries, BUT there are no statistical trends, which do however show up when the measurement is income inequality (Richard Wilkinson, TED talk).

And this comes back to your study: Take countries that developped very similarly and look at other indicators and suddenly they become very different. Having said that, your study would make one believe that people were worse off in the Netherlands and Belgium - well, that is not neccessarily so. And the French generally live quite well, although they also have an issue with tension in the Banlieus which scars their otherwise overall comparatively pleasant way of life.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 6:56pm
Of course you can just get the equipment for a clean room to switch HDD disks or get the soldering machine to remove on chip components.
The best reply is "get real".
60 years ago, someone technically skilled could repair most things - if not close to everything, nowadays that is wishful thinking. The more we move to computers, the less we can repair things - ourselves but also to some extent the manufacturers.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 7:01pm
I was not the one who brought up the village - and the case I am aware off is a plumber charging for a nonservice as otherwise the customer would not be able to get any service in the future, even in the case of an emergency.
As to the reason why you might not have a second plumber: Living costs would be one. Moving to a village can be expensive - not so much if you own a house. If the demographics is predominantly old people you might not want to go their either, nor if there is no real future in the village.
Lastly, people in villages tend to form a very close knit community which is not neccessarily accepting of people moving in from the outside.

But even if there were a second plumber - the one who rectified the issue in the case known to me travelled 40 miles if I remember correctly - who is to guarantee that they will not collaborate on charging high fees?
You need laws and regulations to protect the consumer from extortion - there is no way around it. And even then it might not work - because while you can withhold payment (requested service not rendered), you are effectively blackmailed into paying through the risk of future issues.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 7:22pm
I believe I gave some examples in the qui bono question - but I shall address your points right away:
If you look at the UK, successive governments of both sides have used a scheme called PFI - private financier initiative - to fund projects, hospitals, schools, etc. The idea was a private investor pays for it, the government leases it - and this was supposed to save money.
As it turns out, the overall lifetime cost of PFI schemes is higher than the overall lifetime cost if the government would have carried the project out themselves. In addition, some buildings are even not fit for purpose with the government locked into a contract and forced to pay.
Despite both parties in the UK opposing the scheme when in opposition, they both employ it when in government.

In fact, PFI has benefitted nobody but the investor and has harmed the public. (Source: BBC Panorama some time ago.)

Another nice example of failed "Private service" are the hospitals that are privatized in Germany. Lower wages for staff, worse care - and higher costs.

The train service in the UK is the most expensive in Europe yet has some of the older if not the oldest rolling stock - and is the slowest high speed network in Europe too.
Water supply in the UK is a similar story. Energy supply as well in Germany and the UK...

You asked why the government is selling of state assests - the answer is, I don't know. It turns out that the government selld profitable (!!) companies and to add insult to injury even pumps in a lot of money before privatization to make the company yet more appealing. I would guess corruption in the form of seat on company boards are to blame - because there is no rational reason for such stupidity. Or some of the politicians are "free market prophets" who cannot analyze the situation for themselves.
(The failed privatization of the British rail infrastructure that has cost the taxpayer several billion and required nationalization to ensure public safety is a nice example of "profits first".)
But even when you ask the question as to why something is sold off, just looking at the operating costs is not sufficient. The bigger question is, what is the final cost. So far, private involvement has always increases the overall long term cost to the public.
A government owned company can be run at a loss if it is for the greater public good - e.g. the police or fire department to use some non-controversial topics. A private company will either not take over a loss making business, or cut services - including reducing spending on safety relevant aspects.

On a final note, one should also consider who is writing legislation and compiling reports. The British railways were reduced significantly int eh 1960ies - apparently the author of the report recommending this destruction owned a company that built motorways via his wife. (Note, apparently!!). What can be observed a lot is that government policy has the unhealthy habit of favouring industry - even when there are perfectly good arguments against it.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 7:25pm
I should turn this around and would say it is morally offensive to believe that people should be left to suffer/die if they cannot affords healthcare. How many people are juggling multiple jobs in the US just to survive? (Without healthcare bills.)
There is not slavery in it - nor is it theft. But from your comment I gather that human life (and health) has absolutely zero value to you.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 7:27pm
I can can only agree with you. Thanks for contributing to the debate.
Detlev Conrad Mielczarek Added Jul 23, 2013 - 7:31pm
I am just being a realist.
I can happily change say RAM in a laptop - I cannot diagnose a faulty transistor and replace it. Incidentally, neither can the manufacturer, but the manufacturer will charge you a fortune for a new mainboard. (In the laptop world.)

It has nothing to do with being helpless. Add to that, the repairability of things is constantly declining with only a few bright sparks (BlackBerry is good for repairability).

As to personal wellbeing - that is a relative thing. It is not society's job to entertain humans, but it is the society's job (mainly via the government) to provide a framework that supports humane living conditions.
Robin the red breasted songster Added Jul 23, 2013 - 7:56pm
I would further add that some aspects of health care are carried out purely for the good of the community. Immunisation is a classic example. You need to develop "herd immunity". It would be no good just immunising those who can afford to pay.

Don't forget that, even if you feel no moral imperative to help your fellow but poorer man, you still rely on him to take away your rubbish, to serve you in shops and to clean your streets. No man is an island. We are all interconnected.
Detlev Conrad Mielczarek Added Jul 24, 2013 - 8:30am
Except that you are not entirely right: Technically, government agencies have to answer to the public - and you have public interest groups that criticise government waste.
What you also completely ignore is that any profits from a government run operation have a direct benefit for the peoples whil with private infrastructure any profits get squirreled away by socalled "investors" - often evading taxes along the way.

The fact that privatization has NOT lead to any benefits, not has market freedom in many industries is proof that is cannot work (there).
You can actually extend the list of services that have decreased in quality after privatisation quite significantly - trains are one of them, mail services another, water a third, energy a fourth. Housing is another failure - when the state does not participate it gets worse (see housing shortages in the UK and potentially coming up in Germany). Infrastructure work funded by private companies also does not work (privately owned motorway construction sites are more dangerous for drivers and it takes more time for the work to be completed).
And lastly, there is the age old issue of privatizing profits and nationalizing losses or risks - the connection for the new wind park off the German coast? A private consortium was supposed to build the connection, except that they will only do so after the government takes over responsebility for the risks...

The peoples have ZERO leverage over private companies. (Side note: Incidentally no private individual can afford to take a company to court because of legal costs. Either you have the millions or hundreds of thousands it takes or "justice" does not apply to you...)
With a state owned company people have a say - on the one hand in regular elections but also in the form of protest or petitions.

Just looking at the conditions before is insufficient - you need to look at the effect as well, and that has been rather disastrous.
Detlev Conrad Mielczarek Added Jul 24, 2013 - 8:41am
Hard drive prices increased between 2010 and 2012 - by at least around 30% and then dropped back to 2010 levels despite higher density platters (fewer material costs) and improvements in manufacturing processes. At the same time, the warranty given was significantly reduced - from 5 years to 2 or 3 years.
Why? Flooding in Thailand and the knowledge that there just were not enough harddrives on the market.

As to "shareholders" - the vampires of the world, extracting their money of the work of others.
A company should price items to cover actual costs (materials, salaries, research and development) plus a little profit to cover price fluctuations, provide a financial buffer for bad times and to provide capital for future expansion where appropriate.
Something known as morality.
As to apple - I don't use them - and never will (though there is a probability I will move to Linux in the future). They are a good example of the effect of a free market... May I remind you of the suicides at Foxconn? The aluminium dust explosion? Apple was the company demanding the lowest manufacturing prices... - While of course pocketing a nice return along the way on their overpriced mid range fashion items... As the saying goes, "money does not smell"....

Just a side note: Incidentally, many if not most of companies producing the highest quality items are not publicly traded - they are either owned by foundations or owned privately by individuals/a small number of individuals - by people who associate their name and livelyhood with quality instead of an anoymous mass crying for returns.
Detlev Conrad Mielczarek Added Jul 24, 2013 - 6:54pm
Government corruption exxisrts - yes, but it is corruption bowing down to the interests of private companies for personal gains.
Corruption in government agencies that offer a direct public service is not a major issue. Besides, corruption is significantly worse in private industry - I might just point out at Siemens. Corruption most often involves a situation where the benefitting side is a private company.
As to profits and tax evasion: Covering the cost of wear and tear - i.e. operating costs and paying for obscene profits are two different things. UK railways are a fun thing - signficant subsidies to run the thing yet the private companies collect a ncie profit for themselves despite it being the most expensive and one of the worst if not the worst service in Europe.
There is a nice entry in the German constituiton: "Eigentum verpflichtet" - not sure how to best translate it but the idea is that property gives you an obligation, and obligation to use it for the greater benefit of society. That is not aimed at the person saving money to have a bit extra in their pension but at people like "investors" who just operate for the sake of profit - not for the greater good. Unfortunately it is not a law (guess it is a law by being in the constitution) that finds any practical application - plus there is the difficulty of applying it fairly if one wanted to do so.

Regarding a few specifics - here is a German blog post on the motorway issue which references one of the public TV stations:

But then again, why not go to an English speaking country and look at the UK:
(And I am not sure if I agree with the tiny "good" points in article 4.)
The biggest issue is not so much that the idea of privatization has failed, but that it fails over and over again and nobody learns.

To address the mail system, which has been liberalised in Europe, I can only tell you it is a disaster. In the UK mail prices have increased from 35p (I think it was even less when I moved to the UK in 2006) to 60p now - at the same time, the service has not gotten any better. TNT, the Durch carrier will ferry letters between hubs to then pass them on to Royal Mail for the last mile...
Incidentally, when you talk to people very few are nowadays happy with Royal Mail's service compared to how it was - then again, a postman can only walk so far so quickly on a daily basis which has resulted in some places getting mail only every second day. I prefer to avoid sending letters in the UK nowadays - though obviously that is not always possible.
In Germany, the liberalisation of the postal market has lead to an increase in work for the main provider, while the "free market competition" pays wages that people cannot live on so that the state has to top up the income with social benefits. Apparently according to a family member there is also no Saturday delivery of mail any more - however I have not confirmed that.
In both countries local post offices are becoming sparse, making it difficult or even impossible (due to opening hours) to post items that you do not know the postage of.
In every way, the service has gotten worse and more expensive.

Couriers existed before as well - they charge extra for a guaranteed quick delivery - especially across national borders. Deutsche Post and Royal Mail were reliable services, with every steps towards privatization they both get worse.

On the housing topic: As it happens, very few people build houses - as nobody can afford them. You would be surprised at the slums you can find in the UK in some places. It has even become a business for some to rent out inhospitable houses to people on social beenfits and let the state pick up the bill. (BBC panorama reported on it.)
And people won't build houses - why should they when they can charge more and more for existing properties which in the best case are mortage free as well and thus a license to print money.
I also never said the state should provide free housing. The state needs to provide accomodation for rent - or accomodation that can be bought after a certain time of renting it. The "free market" does not supply sufficient housing, nor does it supply good housing nor affordable housing.
Detlev Conrad Mielczarek Added Jul 24, 2013 - 7:07pm
On the topic of privatizing profits and nationalizing losses:
The company is Tennet if I am not mistaken - the wind park Alpha Ventus. Tennet signed the contract to build the connection but then said we won't build it because we won't accept the risks.
The issue is, that if the government or the peoples take the risk, they should also be able to reap the benefits. Privatizing profitvs while nationalizing risks is a crime.
Yes, you can make some profit from a risk (a reasonable profit, not an obscene extortionate profit) but then you MUST take the risk as well.

Lastly, you often don't have a choice. Don't take the train - and do what? Walk 50km every day? (Driving is more expensive - insurance in the UK is extortion compared to Germany and around three to four times as expensive - before fuel, wear and tear plus the vehicle cost.)
When it comes to luxuries, one can chose to pass, with many things this is not possible. What about food? You cannot not eat. Junk food is an even worse choice because it will cause long term damage - in the form of destroyed personal health and health bills to the public. Or do you expect people to commit mass suicide?

As to the cost of justice: If justice costs, life in the state is no longer just but injust because it allows those with money to abuse their position. If money is the deciding factor in the legal system you might as well dispose of it because it has become worthless.
And if you are a lawyer - explain how that agrees with Article 6 and 7 on the universal declaration of human rights: (A cost to the legal system discriminates against those who cannot afford it. "Justice" for money...)
Here is a nice article from the UK to make a point:
Detlev Conrad Mielczarek Added Jul 25, 2013 - 8:26am
You are right that one can question using mercury - I believe it is used during storage.
You are also right that in some cases vaccines are rushed out without proper testing, "swine flu" being a classic example or even contain components of questionable benefit ("swine flu" again).

However, vaccines have also been an upralleled success story in the western world and it turns out that in some cases no longer vaccinating people has caused issue - I believe it is measels in English - being one the illnesses with a recent outbreak in Germany being a small issue precisely because people are no longer vaccinated against it.
Incidentally, those opposing a vaccine without a scientific basis are a threat to the population, as the outbreak of illnesses believed eradicated shows. Please do yourself a favour and educate yourself a bit on the topic.
Detlev Conrad Mielczarek Added Jul 25, 2013 - 8:30am
The solution is a more transparent more democratic state.
We have most of the legislation one needs for it. It also has to do nothing with Fascism.

The Scandinavian countries are amongst the best countries to live in in the world for everything: A lot of regulation, high taxes, good social systems, high social mobility etc. But also, high transparency.
It is impressive that people will argue against something proven to work (Scandinavian policy) and advokate something that has failed (the msiery of "free market/capitalism everywhere UK).
(By the way, Switzerland also has very high taxes.)

Of course just copying laws would be a disaster - also because of economic differences, however a gradual change towards a proven system can only bring benefits.
One should learn from those who ae successful, not from those who have failed. The common theme in "western politicvs" is to use the same methods that have not worked over and over again, hoping for a different outcome (e.g. PFI in the UK).
Detlev Conrad Mielczarek Added Jul 25, 2013 - 8:48am
Alpha Ventus is supposed to be the first high sea wind park - and in this respect a demonstration proecjt (at full scale).
It still does not justify that the state and the peoples bear the risk while a couple of private people get to collect the profits.
One cannot have either in a just society - you want the profit, you take the risk. And just to make matters even worse, it is in many ways a political project because private industry would prefer to pollute the environment rather than invest in new (actually long term cheaper!!) technologies.

(That opens up another debate... private industry tends to have a nasty habit of thinking in terms of 6 month returns or 5 year plans with absolutely no regard as to what happens later...)

As to walking: I am not sure what you are saying. Are you seriously suggesting I walk 50km one way every day twice?
And no, that has little to do with modern needs. I have a habit of walking the final distance train station to university every day - which is between 20-30 minutes depending on the direction and weather.
Incidentally, train travel used to be cheaper - when it didn't fund so-called "investors" that bleed the population dry. (Add to that, all the "managers" who consider their non-job so important.)
As to the question what would happen if the fuel price were to tripple or go up 10 times - life would collapse in Europe. The "free market" has made mobility so important that without mobility people can either live of social benefits that you cannot live on or end their existance yet quicker. (And no, moving house is not an option if you are aware of the disastrous housing market in the UK - precisely because the state does not participate in it.)

As to growing your own food: Beside the space issue in cities, no normal person with a full time occupation has the time to tend to a garden. You get up, have breakfest, scuttle off, spend time in the office, get home, eat a bit and head off to bed. (With bits of news and/or comments such as these in between.)

As to the matter what goods one is entitled to as a matter of human rights: Those that are required for a humane existance.
A cheap pay as you go cellphone might be such an article given today's demand of 24/7 availability. Some countries have declared internet access a human right.
Incidentally, that is where social benefits come in, which are supposed to enable people a humane existance until they can obtain a better paying job. As it happens, the "free market" has lead to a situation where employers see this as an excuse to pay wages that are insufficient for people to live at all.

As to the UN: There is always some utopia in a grand plan - at the same time, most countries of the world have signed up to the universal declaration of human rights. Countries should strive towards implementing those rights as much as is possible - this does not happen overnight, nor in a few year, but over decades to centuries, a gradual change is very much possible. Unfortunately, it is going the other way with human rights being considered ever more often as disposable by "western governments".
Robin the red breasted songster Added Jul 25, 2013 - 10:42am
So you do have some form of free public health programme then, albeit a very limited one.
Robin the red breasted songster Added Jul 25, 2013 - 10:47am
You are quite right Detlev. Unfounded scares about vaccinations have caused a great deal of harm. In the case of measles, part of the compound NMR vaccination which some people linked to autism (unfounded), the consequent reduction of herd immunity has led to outbreaks and even some deaths.

Usually these scares are fanned by the sensationalist press. In the UK the classic example is the Daily Mail. According to that ridiculous paper just about everything in daily live causes cancer.
Robin the red breasted songster Added Jul 26, 2013 - 12:43pm
A lot of this is to do with the absence of animal passports. A few years ago we had a problem with so called "mad cow disease. In response the Government instituted a system of animal passports.

The US does not have such a system... hence many meat products are blocked from import to the EU. It does not mean that the food is bad... just not traceable.

There is also an issue with growth hormone injections.
Detlev Conrad Mielczarek Added Jul 26, 2013 - 7:00pm
Oh, meat can make you fat as well.
I would rather go and look at sugar as the primary culprit though - second in line, fat.

As with everything in the food chain, it depends on the amount you consume.
khalling Added Jul 26, 2013 - 11:15pm
Human life has a ton of value to me, which is why I do not support slavery. Speaking of people dying, let's look at the UK universal healthcare program. State making decisions for elderly care, long waits for time sensitive operations, etc. how is your position humane? Frankly, people come from all over the world for US healthcare. Most ground breaking technologies in technology come from the US and UK and Europe steal our technologies, forcing the US citizens to bear the cost of some of your healthcare. Theft, straight up
Robin the red breasted songster Added Jul 27, 2013 - 3:21pm
Fair enough to let you buy private medicine if you want it. But as a society we should provide a basic level and everyone should contribute based upon their means (yes their wealth!!... the rich should pay more). I don't think anyone would disagree, even if the level is just public immunisation programmes. The argument is where to draw the line.
Robin the red breasted songster Added Jul 27, 2013 - 3:21pm
Fair enough to let you buy private medicine if you want it. But as a society we should provide a basic level and everyone should contribute based upon their means (yes their wealth!!... the rich should pay more). I don't think anyone would disagree, even if the level is just public immunisation programmes. The argument is where to draw the line.
Detlev Conrad Mielczarek Added Jul 27, 2013 - 3:29pm
You can always go and pay for it yourself if you want in the UK. At least you have access to healthcare for free rather than being told to go off and die.
Incidentally, healthcare in the UK gets worse in an area every time that part is privatized.

As to ground breaking technologies: Take off your rosé tinted glasses, as all the US does is buy in foreign talent. (I suppose that is something I could call theft of intellect given that other countries have invested to educate those people.) Europe does not steal form the US - it has no need to. And the slew of pharmaceutical patens don't count if you want to look at real breaktthroughs, as many patent minor variations with questionable if any benefits over older medicine. Breakthroughs occur every now and then - but they are neither restricted to an individual country nor occur on a very regular basis.
Detlev Conrad Mielczarek Added Jul 27, 2013 - 7:36pm
What you are looking at are breakdown statistics for a few years - I believe they even end after 10 to 15 years.
However this needs to be contrated with the question as to what the average age of vehicles used by people is - it is either fairly new or very old. There is little middle ground.
At least in the case of Germany, the statistic is also very deceptive - as some companies (notably high end German companies) offer their own repair service allowing them to drop out of the statistic.

The most simple obeservation one can make: The odd person drives a 30 years or older Mercedes - and they work perfecly fine.
How many cars does one see from the 1990ies to 2005 era? Not a lot.
A part of the reason are all the little things that constantly go wrong with a newer vehicle that are eitehr impossible to fix or need expensive spares.

The other point I should possibly raise: Roads used to be in worse shape than they are now in many places (though some allow their infrastructure to decay). Older vehicles have surviced the constant abuse - while modern vehicles fare worse, partially because everything is built to work just within a reasonably narrow tolerance.

Lastly, how do you define better? More comfortable? More assistance systems? In that respect they are better. In actual longevity not so much.
Stephan Breban Added Jul 27, 2013 - 10:43pm
I've noticed more than a little improvement in consumer products since 1990, even since 2000. From vacuum cleaners to washing machines to cars (including electric and hybrid) to phones to computers and tablets (that didn't even exist) all from the free market capitalist system. My choise between iPhone and Smasung is bad and bad?

Pure unbriddled capitalism was tried and tested in Victorian Britain. It wasn't pretty. Since then most free market societies have introduced strong, and ever increasing, limits to free markets.

China's move to more of a free market system, embracing capitalism if not democracy, seems to have had a major impact on the growth.
Detlev Conrad Mielczarek Added Jul 28, 2013 - 11:56am
I think you should clarify improvement:
If you bought a computer 40 years ago, it would work pretty much indefinitely and with a bit of electrics skill you could repair any issues.
If you buy a computer nowadays, its lifespan is very much finite - on two laptops in the family, 6 years seems to be the cutoff date to some extent. (Not sure what went wrong on one and the other has the graphics card going bad.) If something finnally breaks completely, you pretty much need to replace it - because parts can either not be repaired, are no longer available or require specialist equipment.

On the other hand, computing performance has grown exponentially and in this respect, they have become significantly better.

The term "better" or "improvement" needs to be defined more clearly. In the past, the lightbulb manufacturing companies formed a cartell, limiting bulb life and claiming it was "best" as to brightness - though before they used to sell bulbs advertising long life. Whether the cartell still exists is unknown.
Some things improve, others get worse - longevity is generally the first casuality in many modern products - because if things work forever, they will not be replaced esopecially when there is no other incentive for the customer to replace an item.
(Look at the old Leica cameras - they still work, no M9 will live as long and some had issues with the sensor early on...)
Detlev Conrad Mielczarek Added Aug 3, 2013 - 10:12am
I agree to some extent with the first part of your comment - and disagree with the second.

Firs of all, many Central Banks are officially and in every legal way independent from the government. They do however still feel a responsebility towards society/the government which influences their decisions which casts doubt on their independence. As to private banks protecting money, the recent financial crash has show that this is not the case - some of the worst offenders were privately owned banks.

As to privatization: You assume that companise compete with each other, reality shows that this is not a continuous state and in a free market cartells form to the detriment of the consumer. Government interference is crucial to maintaining a free market because without it, the market tends towards being non-free.
Having said that, there is stupid regulation and there is good regulation and unfortunately in some cases it is only possible to assess the impact "after the fact".
Detlev Conrad Mielczarek Added Aug 3, 2013 - 12:51pm
I think you are confusing a few things and mixing things in ways that they should not be mixed.

What difference does it make whether the mint/central bank is private or state owned? The answer is none because they will act in the same way - in fact, a national central bank will have limits set as to what it can do. For example direct financial help for states in Europe. Now for all intents an purposes that rule has been broken, though in the fine print of legalese it was upheld...
A private central bank or mint would act in exactly the same way.

Having more than one mint or "central bank" would not help either: Why should I accept your currency? In fact, if someone for example came to me (in the UK) and offered me Dollars for something, why should I accept them? I consider Euros or Pounds to be a "better" currency. The same peoblem would occur if you had more than one organization issuing currency. It would not cause issues on a local level as regions in Europe have in the past and do at current experiment with alternative currecies, but the very moment you want to buy something from more than a few tens of kilometres away you need a central system to ensure that a currency is universally accepted.
There is no practical way around centralization - unless you opt for a system like bitcoin where it might work.

As to the topic of jobs and satisfying customers: I think if you look closely, you will find lots of industries work more to further their own profits than to benefit the customer. Look at laptop monitors: Everybody switched to 16:9 over the, for work, better suited 16:1o. What is worse, the monitors are then sold to customers based on a lie - because the 16:9 get branded as "HD" or "full HD" despite the fact that a 16:10 monitor offered exactly the same video experience plus some extra vertical resolution, great for work. (A whole debate in that...)
You cannot easily, if at all buy a new laptop with a 16:10 monitor. Where is my choice?
If I buy a desktop monitor I am charged exorbitant amount for 16:10 - my monitor was a good 30% more expensive because it is 16:10 instead of 16:9. Apparently it is cheaper to make 16:9 panels, BUT on the same screen size the difference is not THAT big.
Look at the quality of many items - few last as long as they used to do. If your laptop still works after 6 years, you are lucky.
Look at the way journals are sold: It is a crime against society. Public property is privatized and then sold back to the public...
Industry does not work towards satisfying the consumer but towards maximizing their own profit. If there is competition, there will be some advances in some areas for the customer - e.g. ever increasing performance for example. BUT the customer is not the key - profit is the key, the customer is just a means to an end to business, that is the issue.

As to the topic of jobs: Companies should supply jobs, the issue is they don't. Companies like to pay the absolute minimum wage or wages that then require social benefits for people to be able to survive, but then they whinge that nobody buys their products, how can they?
Incidentally, Europe's industry was based around companies paying good, high wages where people were proud of their work - and could afford to live.
Nowadays industry aims to cut costs at every corner, including staff. A common cry from companies in Germany is that they need trained staff from "abroad" - not because there are no people in Germany who need work or are not qualified, but because the people in Germany cost to much.
The only option here is for governments to intervene - the big question is how. (Because one easily ends up in a nasty economic spiral.)

AS to currency: Hard currency can be an option though it brings up its own problems. Why should a government hoard gold? It can put a highly successful country at a disadvatage because it has no gold.
As to inflation, it would even exist with a hard currency. Today I want one gold coin for bread, tomorrow two - unless you have a choice you will pay it. Inflation exists for hard currencies equally well as it does for our "paper money". Incidentally, Spain raided South America bringing "home" a lot of gold - it did not do the country any good.

As to money being taken from your pockets: Of course private banks can do that. If you earn interests, the bank will deduct the taxes for you. If every bank runs their own monetary system you will have a fee to hold an account with them.

Finally, you are right that we are shifting to a new form of feudalism - where money rules the world. I don't see capitalism as being the answer because it is not irresponsible for the mess we are getting into. As to people paying for things: Is that good? You need money to live - and in this respect you need to be paid, BUT one should not have one's live ruled by money. Mo
Detlev Conrad Mielczarek Added Aug 3, 2013 - 1:28pm
Bit got cut off:
Money should be something you get that allows you to live while doing something you enjoy. Incidentally, money has been shown to be a very bad motivator.
Detlev Conrad Mielczarek Added Aug 4, 2013 - 11:44am
While you are corretctly identifying issues, I faill to see any answers in your proposals.

So let me address the first issue of exchange rates: If you travel within Europe there is no need to exchange money unless you live on a certain Island. -> The Euro takes care of that.
BUT assuming you have to exchange money, you can decide when to exchange at which rate. If we had say gold coins (as you would suggest), there is no reason why I should accept an English gold coin. I could demand two English gold coins (at a certain purity and weight) in Exchange for say one German gold coind. Currency is not inherently universal, currency is universal by consensus.
If you wanted to give me a bar of gold for a loaf of bread I could tell you to go away and give me a Euro banknote - why not? Conversely, I could donate a loaf of bread to you as well if I have too much.
Gold is also subject to price variation - when it is in demand its value rises, when nobody needs it, its value drops. There is no inherent value in gold. In fact, I rather dislike gold and prefer the silvery tone of paltinum, but for currency terms it would again be the same issue, there is no inherent value in it.
Currencies work based on consensus - what they are made off is irrelevant. Be it paper, gold, other precious metals or jewels. You might point out that the amount of gold is limited but there is still a lot of it on this planets. Then there is the issue of hoarding - if I hoard gold coins, I get to raise prices for everybody by making the actual money scarce.

Inflation in itself is also not so much taxation but devaluation. But what causes real life inflation? Not the government printing money but an increase in price. Official inflation using all measures bounces around 1.4 to 2 percent in the Eurozone and the UK. However inflation based on the cost of essnetial goods (a specficied sets of articles bought in hops) is around 3 percent. Inflation can be caused by governments printing money, but it can also occur in the market itself - if wages rise people have more money which enables higher prices for example. Or vice versa, prices rise people demand higher wages to survive and once again you have inflation - without government internvention. You might also want to consider that the Japanese currency has been subject to deflation for several years - with the government now desperately trying to achieve inflation.
There is more to money than just central banks or governments printing money.

But let me get back to your points about the ECB, IMF and central banks. I do agree that the effects of policies have been very questionable.
As you mention Cyprus, I can assure you that the Eurozone could lend 10.000 million (To avoid confusion about the different billions in English) to Cyprus but there was no will to do it, partially because a not insignficant amount of money in the banks stems from foreign nationals, some of which have evaded taxes in the first place. As - I believe it was Medvede - put it, "how can you justify saving something that was stolen in the first place"?
Incidentally, a "free market solution" would have been to let those banks defauls and to let all people loose all their savings. It was have caused yet worse havoc.
If you look at the history of European banks, you will see that the volatility in the banking market increases every time regulation is reduced. When banks were tightly regulated, their actions were far more prudent and less risky.

As to the topic of private companies: You fail to consider that real life shows us there is no competition and hence no free market. The water I get at home is not great - but what can I do? Nothing. I can only take trains along one route for the same price, one fast one slow - do I have a choice, no.
Free markets do not work in most industries, instead they turn to monopolies where the consumer suffers.
As to the UK and water, have a look here for how a "free market" water supply works:
(And yes I know in practice it is not a free market and it never will be.)
Detlev Conrad Mielczarek Added Aug 4, 2013 - 12:37pm
OK, now we are getting somewhere:
You are right, there are plenty of other tax paradises - and in fact, there are some moves made towards reducing them. Unfortunately, I do think they will always exist to some extent because unfortunately those who benefit the most have a disproportionate say in our current governments.
Liechtenstein and Luxemburg are two - Switzerland is getting better but is still one, and one of the Baltic countries (Estonia, Latvia, Lithuania) is aimining to become a "financial paradise". I suppose Irealand can be named as well due to its low taxation of industries...
And yes it is a global problem.

As to the culprit being who let Cyprus join the EU, may I inquire what you would have envisaged for the country otherwise?

However on the big topic of money, what do you suggest then? Even basing a currency on actual gold will allow for inflation.
Currency is not static - if you create a legally static currency, supply and demand will dictate its price - alternatively you regulate the currency to keep its value steady or support the economy by reducing its value. (Based on the notion that this makes exports cheaper which only works if youhave a customer.)
Our currencies are not flawless - and the way they are managed are with dsignificant faults, BUT there is no realistic alternative in sight, or at least none that will not offer yet bigger problems.
Detlev Conrad Mielczarek Added Aug 4, 2013 - 1:03pm
But for how long?
One could say the same of Spain, Portugaly, Ireland, Italy and Greece before the joined the Euro or the European Union.
It is undeniable that mistakes are being made by the EU - as do national governments.
And mistakes were made in the design of the Eurozone.

I think what you are referring to, as the issues of Greece is more an effect of the economic diffences between European countries that were not accounted for when the Euro was introduced. The Euro allowed countries with weak currencies and high interests to have access to a strong currency with low interest which supported excessive borrowing. (It should be said that Germany was also one of the first if not the first to break the Maastricht Treaty regarding increases in debt.)
Then you have the issue of industry - Spain, Greece and Cyprus have a significant tourist industry which has pretty much collapsed after the banking crisis.
Mike Haluska Added Oct 18, 2013 - 11:45am
There is one major flaw with your assertions/conclusions about Free Market Capitalism (FMC):
They don't come close to matching reality!  Under FMC (not the "Crony Capitalism largely practiced today in the USA) the US emerged from a backward frontier to become the wealthiest nation with the highest standard of living and only Super Power.  Despite a 2,000 year head start, in less than 200 years the US blew past established powers like France, Germany and Great Britain.
How did this happen?  Let Dr. Friedman explain:
Mike Haluska Added Oct 18, 2013 - 11:56am
I couldn't resist replying to
"Money should be something you get that allows you to live while doing something you enjoy. Incidentally, money has been shown to be a very bad motivator."
All money is a medium of exchange - what people do with it is a different matter.  In FMC, money is evidence that you served your fellow man is some capacity.  It is a much more moral practice than brute force administered by government bureaucrats. 
In FMC, both parties in a transaction benefit - otherwise it wouldn't take place!  No force is necessary, people cooperate out of mutual self-interest!  Compare that to Obamacare, where you get fined, wages confiscated, jailed, etc if you don't participate - which do think is a more "moral" system? 

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