It's come to my attention that some participants in the diaries of bobswern, gjohnsit, Badabing, Meteor Blades, NBBooks, and many other great diarists don't really get the passion for economics. If you view the government as a somewhat passive player in the work place then it is very understandable to see these diaries as interesting but ... meh. In response to this view gjohnsit had a diary recently to the effect of your election is interesting but meh.
The disconnect between political watchers and economics watchers is artificial and unfortunate. Economics = politics and we live in a time in America when this is more evident then ever. Follow me over the bump and I will show you why what you might consider a dry topic is actually the most interesting debate America has ever or will ever have.
You might think that in its job as creator of markets the government is mostly responsible for infrastructure and preventing bodily harm, prejudice, fraud etc. This is not the case. The government has another job that isn't talked about as often.
The government decides what is a legitimate business.
And this function of the government is the most fascinating, most political game in existence. Its the understanding of this role that, on a fundamental level, separates the average Democrat from the average Republican.
For instance in England some people had an idea that owning colonies could be a legitimate business. In order to make this a business they needed support from the English government
- They needed to control the trade of their colonies.
- They needed to control the defense of their colonies.
The English government tried to legitimize the business of colonization by supporting these two requirements
American merchants were not allowed to trade with the French, Dutch or Spanish empires. Britain implemented mercantilism through the Navigation Acts, which Americans avoided as often as they could. The royal officials responded to smuggling with open-ended search warrants (Writs of Assistance). In 1761, Boston lawyer James Otis argued that the writs violated the constitutional rights of the colonists. He lost the case, but John Adams later wrote, "Then and there the child Independence was born."
The colonists did not object to the principle of contributing to the cost of their defense (colonial legislatures spent large sums raising and outfitting militias during the French and Indian War), but they disputed the need for the Crown to station regular British troops in North America. In the absence of a French threat, colonists believed the colonial militias (which were funded by taxes raised by colonial legislatures) to be sufficient. Officer positions were in high demand among the British aristocracy—the rank of captain or major sold for thousands of pounds, and could be resold once an officer purchased an even higher rank. The British wanted all the commissions for themselves, and were unwilling to commission colonial officers who would pay nothing for their commissions, nor would they recognize colonial commissions, effectively negating the will or the legal authority of the colonies to contribute to defense in that sort of way.
The new American government was soon asked to legitimize another business - owning people. Plantation owners needed these laws
- Owning people to be legal.
- Continued expansion of slavery into new territories.
The reason for the 2. is that
Industrialization meant that seven European immigrants out of eight settled in the North. The movement of twice as many whites leaving the South for the North as vice versa contributed to the South's defensive-aggressive political behavior.
Without the constant new acquisition of slave states to the union the south was facing a withering voting bloc.
And is the creation and sale of segregated neighborhoods a business? The entrepreneurs pushing this industry needed
- Segregated neighborhoods to be able to keep their tax money to themselves.
- Laws allowing control of the sale of real estate in segregated neighborhoods by race.
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) introduced meaningful federal enforcement mechanisms. It outlawed:
Refusal to sell or rent a dwelling to any person because of race, color, religion or national origin.
Discrimination based on race, color, religion or national origin in the terms, conditions or privilege of the sale or rental of a dwelling.
Advertising the sale or rental of a dwelling indicating preference of discrimination based on race, color, religion or national origin.
Coercing, threatening, intimidating, or interfering with a person's enjoyment or exercise of housing rights based on discriminatory reasons or retaliating against a person or organization that aids or encourages the exercise or enjoyment of fair housing rights.
Is selling alcohol a legitimate business? How about selling marijuana? Casino style gambling? How about gambling in the stock market? Is for profit health care a legitimate business? Some banksters want profiting from a real estate bubble to be legitimized. They need
- Very low interest rates
- The government to step in on any, even reasonable, crash
- Ignoring property law so that foreclosures can be processed faster
Then there is an industry that would like to profit from peak oil. They need
- No national industrial policy for breaking from oil
- Relaxing environmental laws to go after the most difficult to drill "peak" oil deposits
There is another industry that would like to profit from war. From government they require
- War conducted that has little bearing on national defense
- Near colonization of other nations
And there are many who want the full legitimization of using the cheap labor of one nation to sell products to another nation. To accomplish this they need a lot from the government
- Removal of all normal trade regulation preventing pure labor arbitrage (alternatively massive immigration where the granting of citizenship is delayed or denied)
- An artificially strong currency in the nation they are selling into
Now for those that are meh because they believe in "free markets", whatever that is, let me just point out what a truly free market America means. Americans would still serve a foreign monarch, be taxed for their own defense, have all trade go through the foreign monarch, allow slavery, allow enforcement of housing segregation, have all financial transactions conducted through one super monopoly, probably global, bank and allow people who couldn't afford health care to die. Americans would also have perpetual war whose only chance of ending is intervention by the horrors of an unmitigated peak oil. But on the bright side I guess pot would be legal.