On Liberalism and Capitalism

Or on liberalism and capitalism. I mostly don't care about capitalization, just thought the title would look better that way. More to the point, I am often intrigued by how different people arrive to entirely different conclusions with the same evidence. I operate on the assumption that I'm right because, to quote House (yes the TV series) "I find it difficult to function on the opposite assumption", I do prefer to base that in evidence though, and a thorough thought process.

So here's the reasoning behind my support of market liberalization and capitalism under constitutional democracy.

Even in constitutional democracy politicians don't really inform the public, since it is not in their best interest. In their best interest is to take whatever the majority thinks is better and regurgitate some version of it (more so under proportional representation). Yes, this means the system is disfunctional and yet it is the best we've come up with because under more authoritarian forms of government it is in the government's best interest to keep you uninformed and to suppress divergent opinions, but that is not the point here.

The point is even under the rule of law in a constitutional democracy politicians won't go out of their way to correct public misinformation. On the other hand, and assuming that no monopolies exist, any given company will try to provide you with as much information about their products and services and though skewed, there'll always be competition to offer the opposite viewpoint. Furthermore, the company cannot arrest you if you disagree, has no information about your income, and is only entitled to your money if you choose to buy its products or services.

Which is why state companies are also a bad solution, since mostly there won't be competition and you'll be forced to acquire from them or go without the product it offers. The public response to a companies unsafe product for example is inmediate either through the stockmarket or trhough shifts in demand to competitors. Politicians usually have fixed periods of gornment and are hard to kick off the job.

Don't get me wrong, it's not just government vs. companies, a lot of it is the public unwilling to assume responsibility. Starting with economic and historical illiteracy most people are likely to support whatever idea happens to be in vogue, like the 2008 crisiss heralding the failure of capitalism, or using Guy Fawke's mask to support a more socialist government (nonsensical since what he wanted was to blow up government not give it more power).

Some of the damaging consequences of the way in which politicians only repeat what the public wishes to hear are the ban on genetically modified organisms which has slowed the increase in agricultural production and is thus keeping people hungy. Another one is subsidies for biofuels, biofuels usually are more economically expensive and have to be subsidized, here's the joke though, them being more economically expensive is the result of them being more environmentally expensive (doing a well to wheel cost analysis really depends on where you set  the boundaries of your system, thus making it a rather arbitrary balance, while actual costs tend to be a more reliable measurement). The subsidies hide these costs, and end up coming from the taxpayer's pockets anyway.

So am I against biofuels? not precisely, I am rather against the government meddling with them. Do we need to reduce emissions? Most certainly, but biofuels might not be the best or fastest option at the time being, since their productions consumes so much fossil fuels and also drives food prices upwards. Are all companies good? not at all, they are as bad as any government or anyone with power, but we've made them accountable, which we haven't always achieved with government.

So the idea behind liberal capitalism is that the rule of law is a must have, yes government is required, specially to provide those things you don't want in the hands of companies like the police force, or an army. I also do not support irresponsible deregulation, but meddling with the markets through subsidies, or creating state owned companies is a bad idea,

So do you have to have a degree in environmental engineering, know how genitic engineering creates those mechanisms and have a deep understanding of economics and economic policy? Well if you really want to understand our world yes, and you should also be able to compare how constitutional democracies function in different countries and what effects different policies have had at different times but most people won't.

This is why information availability is important, with different viewpoints. Companies, provided there is competition and they function under the rule of law, are more likely to provide it than governments, not out of their inherent goodness but because it is in their best interest. There are of course issues of capitalism which must be addressed, but that merits another post.