What a breath of fresh air to have a writer who challenges the current philosophies so eloquently.
Agricultural industry has been struggling for some time to articulate the institutionalised problems it is facing only to be dismissed as a whinging rabble who are acting in their own self interest.
Government would rather listen to a handful of very comfortable armchair experts with secure jobs than the people on the ground who often struggle to express their frustration.
Some of us have been saying for some time now that food security (and profitability) is an issue but the bodies charged with producing the statistics on the industry look only at production and declare unreservedly that all is well.
Ben Rees you have come up with some of the other measures that need to be looked at but I fear that the voices of reason are too few.
Even our new Minister for Agriculture is up against a hostile press and the free marketeers in Government and the Public Service who do not understand that we have over-reached the initial efficiencies created by a free market and are now in decline for all of the above reasons and some more as well.
Please continue to shed light on the issue.

I totally agree with Ben Rees comments on the failed economic philosophy as practised by successive Australian governments since Hawke/Keating, as it relates to Australian agriculture.
Each government since the Hawke Keating era has been influenced by the 'free trade zealots' and has lost sight that profitability, not scale lead to succesful enterprises, growth in production and therefore become sustainable in the long term.

The neoclassical economic theory in vogue for the past few decades fails to properly account for the distortions in the market caused by the concentration of market power in ever dimishing number of corporations and economies.

We have been sold the myth of the 'level playing field' espoused by the fanatical world traders. It simply does not exist and is exemplified by the decline in agricultural output/profitablity as shown by Mr. Rees table. This myth has been blindly accepted together with the equally mythical proposal that; big agriculture is more efficient and therefore profitable that smaller the agricultural units, the family farm.

Time and again we have seen major aggregations into huge production units, in all sectors of agriculture, fail due to huge debt burdens, high overheads, lack of dedicated management and many other constraints not generally found in the smaller family run efficient farms. So long as they don't gear up too highly.

Good on you Ben Rees. Keep it up!

The author has obviously failed to understand, or even to read, the Austrian school’s critique of both neo-classical and Keynesian theories, which completely invalidates his argument numerous times over, for the following reasons.

“…neoclassical rural policy has failed to deliver a profitable farm sector for over three decades”

Contradiction in terms. How can you blame free market theory for the failure of government interventions intended to deliver profits to a politically favoured sub-group of the population? That’s socialism that’s failed and which you should be blaming, not free markets. Complete refutation number 1.

If the lack of profitability is the result of government interventions, then it’s just mere economic ignorance to blame that on free markets. Furthermore, obviously there are extensive and intensive government interventions in all farm sector markets. It is simply factually incorrect to allege that these are “free markets”. The author fails to consider the extent to which the lack of profitability is because of interventions by government: complete refutation 2.

Even if the lack of profitability were the result of free markets, that would not necessarily show that there is something wrong with free markets, because the purpose of everyone in the world is not necessarily to deliver profits to Australian farmers. The only way you could conclude the lack of Australian farm profitability is the fault of free markets, is if you knew better than all the people in the world, what wants they are trying to satisfy by their actions in buying and selling. Needless to say, that is a false pretension of knowledge that Ben does not have, and is not capable of having. Complete refutation 3.

“The evidence is indisputable.”

The statistical methodology you have provided only proves, at best, correlation. But that's not good enough. To be logical, you need to prove causation. Your *assumption* that you have demonstrated causation, or anything significant, would only be valid if all the other factors in the world remained constant. Needless to say, they don’t. It is not okay for you to make an argument *as if* logic doesn’t matter.

(cont.)

That illogical assumption in Ben's methodology invalidates his entire argument. Complete refutation 4.

“Banks chasing market share ignored a long standing financial fundamental: capacity to repay debt form income.”

Notice how Ben takes no account of governmental manipulation of the money supply, in particular the Keynesian policy of chronically multiplying money substitutes increasingly out of proportion to money in specie on deposit? This is a fatal flaw because it’s not okay to just baldly assume that monetary policy has no relevant effect on banking practices or risk assessment. (Ben in effect assumes that only good comes from government interventions, and any undesirable outcomes must be down to (non-existent) free markets.)

“The change in output can be just as easily cash negative as it can be cash positive.”

This seems to be a non sequitur. Cash is also a different concept from productivity and profitability.

“This discussion has shown that assumptions underwriting contemporary orthodox economics are defective relative to the real world.”

No it doesn’t (although it’s true that they are defective). It shows that government failed in its stated purpose in interfering in an attempt to cause one favoured group to get higher profits. At no time has the author attempted to justify such interference for such aims. Nor has he considered whether the downside to farmers was outweighed by a greater benefit to the rest of society.

There is no need to resolve the issue of Say’s law to conclude that:
a) it is not a proper function of governments to try to manipulate the economy to “deliver” profits to a politically favoured sub-group of the population
b) there is not necessarily any reason knowable to governments why any given farm should be profitable or not, let alone a whole sector. This can only be known on an enterprise by enterprise basis, on the basis of market performance in the real world. It cannot be known in the abstract based on statistical correlations and boffin “equilibrium” modelling.
c) The assumption that government has superior knowledge, capacity and virtue to manage the economy has no basis in reality or rationality.

The tariff board was altered to become the Industries Assistance Commission (IAC), subsequently the Industries Commission (IC) and now the Productivity Commission (PC), this is a progression along a path toward unfettered free markets, this direction was completed via the Hilmer review into competition policy and its enactment.

Ben your description is how on ground farmers see the real world with their daily inputs to business getting dearer and dearer each year, their ability to operate removed over time and scale makes little difference.

It seems to me that you Ben, deal in empirical data while the free marketers deal in models, we are sold the deal "because the model says it will be better on the other side" yet we never test the reality, and to be frank I doubt any model has any way of accurately predicting the future, take a look at the whether blokes, I doubt they get one in ten accurate, and this compared to empirical data based on real outcomes.

I notice in one of the later posts an effort at personal denigration, I can only assume the author is rather out on a limb with a failed ideology, we should simply chop the limb off so the tree can live.

Further a suggestion government is intervening all over the place in rural Australia verifies to me that not only does this writer have no knowledge of the bush but is living in the past. Market power imbalance is pervasive throughout our entire agricultural system and nobody who lives it would misunderstand that. to fix the problems something has to be done, I assume the Austrians would see nothing wrong with collapsing markets, reasonable income distribution would not one of their priorities. Stability not a high priority either.

Congratulation to ON Line Opinion for the debate

Jardine K Jardine
“ It shows that government failed in its stated purpose in interfering in an attempt to cause one favoured group to get higher profits. At no time has the author attempted to justify such interference for such aims. Nor has he considered whether the downside to farmers was outweighed by a greater benefit to the rest of society.”
Farmers have not been a favoured group for a very long time. Can you please explain why you think farmers going broke can be a benefit to society? We aren’t talking about pink Barbie dolls here where the product can be just lived without unless you subscribe to the school of thought that thinks food comes on styrofoam trays wrapped in plastic.
Your comments show a complete ignorance of how free markets operate in a price taking situation. In such a situation the free market does eventually break down. The free market has never come up with a solution for this except regulation in the form of anti-trust laws of various sorts. It is an economic reality which is poorly understood by most who are not at the pointy end of the market.
Our farmers mostly sell into a monopsony (one powerful buyer) or a duopoly and they do not set the prices. Do you think this is acceptable?
Sovereign risk has become an ever present intruder in the lives of our agricultural community. Firstly it came in the form of environmental regulation which put a huge brake on production and productivity growth. It has even taken the form of embargoes on farmers using huge areas of their farms in some states. Is this all acceptable to you? Should farmers have to foot the bill for community environmental expectations?
The ultimate example was of course the live cattle export ban. The effects of that are still ongoing: depressed cattle prices, foreclosures, loss of support industries and suicides and not necessarily just in the live export production areas.

Continued
Regardless of the findings of the ACCC that the Coles $1 milk was having no affect on dairy farmers it has had and it has had a deleterious effect on the milk processors as well. The ACCC attitude was that consumers benefited. Surely if consumers are to benefit it should be as a result of genuine increases in productivity so that the price paid at least covers the cost of production, processing and distribution, not as a result of a subsidy by a duopoly.
Lastly, do you think it appropriate that a processor of primary product conspire with outsiders, an environmental group for example, to cause a glut in the product they acquire?
The point is that prices for our agricultural production are highly manipulable and any large player can send any industry into decline at any time for any buyer to acquire at fire sale prices. Is this acceptable? Is this what you expect from the free market? Is it in the interest of society as a whole or the national interest?
You can argue the point about economic theory all you like but this is the reality

I think it comes down to which is more believable, Say's law with the supposed "supply creates demand" and the assumption at prices that pay the costs of production, or Engle's law with ever decreasing real prices, I know which one feels like the farmers real world .

Ben Rees has nailed it and its time the old guard took their leave and allowed a new crop to answer the policy problem with full knowledge of the way it is based on empirical information rather than some unrealistic theory which does not apply...

Nev
Empirical data don’t interpret themselves. That requires theory. And if the theory contains logical flaws, the conclusions will be logically invalid = irrational.

It is logically invalid to blame free markets for farms being unprofitable unless:
1. you have eliminated the possibility that the problem is being caused by any of the thousands of government interferences in farm markets. We are at the stage where the government claims effective ownership of the soil, the vegetation, the water, the air, the fauna, the labour, the conditions of raising, selling and transporting stock, the chemicals, the supply of money and credit, and has taxes on every input. What account have you taken of that fact in blaming free markets?
2. The allegation that the free market results in “distortions” to the market reminds me of that joke: one economist meets another and says “How’s your wife?”. The other replies “Compared to what?”
Unless you’re going to define and justify the ideal state you’re comparing to, the argument is vacuous nonsense.
3. The purpose of the existence of “the market” – all the seven billion people in the world their actions in buying and selling – is not necessarily to “deliver profits” to Australian farmers.

Therefore your criticisms of free markets are unfounded.

Campaigner
I am on the land myself, and at the pointy end. But it should be obvious to you that “environmental regulation”, and governments stealing billions of dollars worth of the property rights of farmers, a la the native vegetation laws, is not caused by “free markets” it’s caused by the opposite – government regulation. It’s caused by socialism.

“Is this all acceptable to you? Should farmers have to foot the bill for community environmental expectations?”
Not at all. At the very least farmers should be compensated for acquisition of property rights on just terms as required by the Constitution.

But the free market solution is even more just - those who want to restrict farmers’ property rights for political reasons must pay for the costs voluntarily, not use the political process to simply steal property rights of farmers.

The Labor party’s destruction of the industry of live cattle exports, and with it much of the economy of the northern third of Australia, together with the killing by starvation of thousands of head of stock, and depriving our third world neighbours of food – all to crawl up the arse of the ABC – is caused by government, not “free markets”.

“Can you please explain why you think farmers going broke can be a benefit to society?

Yes. Human society doesn’t stop at the borders. The State does, but society is not the State, the State is not society, and politicians do not represent you better than you represent yourself.

You could only logically blame “the market” if the purpose of the world's population were to deliver profits to Australian farms above all the other values and wants that all humans are trying to satisfy by buying and selling. But the purpose of the world’s existence is not necessarily to “deliver profits” to Australian farmers.

Think of it this way. If the profits delivered to farmers were solely a result of government policy, then that’s just straight socialism – redistribution of wealth forcibly taken from others. It’s exactly the injustice we’re complaining against in the native vegetation laws, and live cattle export ban.

However if the result of the free market were that Australian farmers make a loss, that’s the same thing as saying that the world’s food consumers can get the same satisfaction of their wants from someone else who can serve them more cheaply. In that case, that would be a benefit to human society. Handouts to farmers would be no more justified than to wagon-wheel makers.

The common farmers’ lament that they are “price takers” presupposes a false theory of price formation. If I offer them one cent for their year’s produce, they don’t take that, do they? Graziers don’t face a monopsony. And the grain-growers monopsony is caused by government, not free markets.

By far the single biggest factor preventing Australian farms from being profitable is the countless parasitic government interferences in virtually everything.

CouldI as a non economist, just a pragmatic fruit grower be permitted some comments. My arguement is not on economic theory but on what is currently happening in the real world. The free marketeers may be right - if we had, or can ever have a free market, that would be fine. I say we have never had such a thing and it is impossible given the stuctures we have.

The 'free market'(NOT) is full of distortions both corporate (monopoly, oligopoly, abuse of market power etc), government (production/export subsidies, tarriffs, insurance subsidies, subsidies cloaked in environmental guises, (see WTO rules, EU CAP policies etc etc). The world IS NOT the same all over and there are distortions everywhere.

The other major factor in NEVER being able to have a "level playing field" is simple, to my mind, the world will never pay the same wage rate, so there can NEVER be a level playing field - unless it is artificially levelled. This is why the developed economies should, and do impose tarrifs and pay subsidies (and then try to hide them as in the US subsidised insurance and the EU's environmental subsidies).

This is not socialism, it is pure pragmatism.

Australia, is duped into obeying rules that are not obeyed by the ones that made them. We pay the highest cost for labour in the world. USA on the other hand, pays a quarter of what we pay for labour but provides a tarriff barrier for some industries and subsidised crop insurance - instead of direct production subsidies. I could go on for ever....

We need to overhaul our system and convince government to think for itself and what is good for Australian farmers and people. If we could have a true free market and a level playing field then I would support that. But, we can't so we need to level the playing field using all the measures available to us so that we can give a 'fair go' to our farmers and our people. Stop the ideology, look at the real world and then counter all the distortions.

The economics of what we are discussing couldn’t be explained clearer or briefer than in these two short funny articles by Bastiat which are as true today as when they were written in 19th century France:

“Must Free Trade Be Reciprocal?
http://mises.org/daily/6193/Must-Free-Trade-Be-Reciprocal

“A Negative Railway”
http://mises.org/daily/5201/

Your critique appreciated.

What you are all saying, is like saying, to be “pragmatic” why don’t we dig holes in the roads where foreign goods are received into Australia?

It doesn’t make sense. It should be obvious that this will make the Australian consumers, and foreign producers and consumers worse off. It would “deliver profit” to Australian farmers at everyone else’s expense, by a straight wealth redistribution.

But if that is the aim, to be more "pragmatic" why not just take the money directly out of the bank accounts of everyone else – old age pensioners, and kids working at McDonalds, and bus drivers, and shop assistants – and directly deposit it into the bank accounts of farmers? Because that’s what you’re suggesting after we strip away all the jargon about “distortions” and “Engel’s law”. Everyone would immediately recognise and reject it as corrupt snouts in the trough, which is all it is.

Certainly there is not and never can be any such thing as a “level playing field”. But the argument that “This is why” western states impose tariff barriers doesn’t logically follow. They impose trade restrictions to create a level playing field? Are you kidding? Meaning what? Please define it and we will immediately see how any policy advocated on that basis is self-contradictory, and makes society poorer.

And what is the perfect or ideal state which market distortions are allegedly a deviation *away from*? A level playing field again? But we are already agreed that it doesn’t and can’t exist: it’s a nonsense reason. “Equilibrium”? Another abstraction of perfection.

According to all you guys’ theories, while ever imperfection exists in this world, governments should have an open-ended to arbitrarily loot productive person A and give to pet political favourite B.

It’s socialism alright, and the exact opposite of pragmatic.

The problem Jardine is that your proposal is nether achievable nor realistic and if the entire theory were enacted we would have what I think was called a "robber economy" where the exercise of market power distributes recourses, where equity, is abandoned and individuals with more fire power (literally) have the power, perhaps the 1920's us. or perhaps some Russian economies, most of us prefer a more enlightened way to allocate recourses but more than that, a law of economics which not only can be supported by empirical evidence but actually describes how it is on the ground for those engaged has far more use and currency for our futures.
If you believe your theory you want a revolution...it will not happen and we must deal with what is.

Jardine K Jardine
I cannot agree that the cattle industry does not sell into a monopsony. At the very least it is a duopoly and on a regional level even worse.
You did not enter the discussion on my theoretical question about the buyer conspiring with others to cause a glut.
Do you have an opinion on any anti-trust laws?
The market failure of a price taking market where there are a large number of sellers selling to a few buyers is well recognised.
Initially when a market is deregulated after a period of protection it is theorised that efficiencies and innovation occur and the more efficient producers prevail.
It is also recognised that once this cycle has run its course it leads to poor profitability and capital rundown. many of our farm enterprises are at that stage now. They would benefit if many of the previously stated imposts such as environmental imposts were reduced.
The Tasmanian Forest Industries have been harmed by environmentalists visiting foreign boardrooms and persuading them to cancel orders of product which do not meet their specifications. Their claims are not always based on science but they get away with a plausible argument.

Mr Jardine....I think you are arguing just to be arguementative.

I have read your remarks and I am at a loss to see where you propose a workeable solution to any problem facing agriculture in Australia that have resulted since the Hawke/Keating government started this. All I see is negativity, and a call for government to get out of our lives. That will not happen! That's what governments do and why we elect them.

We have to show governments (of all political persuasions) that they have, by the blind following of a failed theory, inexorably led us over an economic cliff. Economies of scale was not the answer (shown in Ben Rees original article) Doha (WTO)has not been answer-it was the cause!

Your arguement about people having to pay for the support of farmers in Australia at the expense of overseas producers is indeed very peculiar - especially for a supposed Australian farmer.

The australian consumer should pay a fair price for Australian produced food, and not pay a cheap price for imported subsidised (directly and by stealth), by overseas residents, where the farmer receives more for his produce than it is sold for in Australia.

My pragmtic approach that you deny and call socialism, is not the philosophical theory of "pragmatism', of 19th Century U.States., but the more accepted common usage of : "advocating behaviour that is dictated by practical consequences than by theory or dogma" (Collins dictionary. p.1151) You seem to favour the dogma and theory over what is really happening.

It is sufficient to dispose all your arguments to note that you cannot answer the following questions without falling into self-contradiction or circular argument:
• what is the perfect or ideal state which alleged market “distortions” are allegedly a deviation *away from*?
• by what rational criterion do you distinguish the market rate from your alleged fair rate?
• if your assumption is correct that governmental decision-making on the allocation of resources is presumptively more productive and/or fairer, then why not have full communism?
• But if not, then by what rational criterion do you distinguish legitimate from illegitimate governmental decision-making on resources?

Nev
It’s you who are arguing that resources should be distributed on the basis of who has more firepower, not me. I’m arguing against it, remember?

Campaigner
I’m in a remote regional area and it’s not a duopsony where I sell my cattle.

But even if it were, the flaw in your theory is that this fact would justify coercive interventions. You haven’t given any reasons for that, any reason why tariffs or other such interventions would make society more productive or fairer – and I don’t accept your appeal to absent authority, on the ground that it’s a logical fallacy. Reasons, please?

My opinion on anti-trust laws is that I’m waiting to see whether anyone can justify their arguments in support of them on any rational ground. They seem to presuppose some ideal state which “trust” behaviour allegedly violates. What is that ideal, and why does infringing it justify coercion?

Fruitgrowered
The issue is whether protectionism makes society more productive or fairer. I’ve shown why it doesn’t, and you haven’t shown any reason why it does. To say unfair anti-social interferences with other people’s livelihoods is “what governments do” is not doubt true, but that’s not the issue.

If you can’t answer my questions you have no ground for claiming pragmatism over ideology. All it means is that you would like an arbitrary handout paid for with money taken from its owner and producer. No doubt government can: the question is whether it should?

Great article by Ben, describing how the so called VERSION of "free trade" that Australian politicians and bureaucracy peddle is flawed disadvantaging and failing to give Australian farmers and manufacturers the ability to compete in the market on a level field.
Being inefficient and being Uncompetitive are not the same in the current trading market that we have.
People can argue all you like about the benefits of "true" free trade or protected and subsidised trade but it wouldnt matter as long as it was FAIR TRADE with the playing field level no matter how it got there.
If its expected for farmers to receive global prices then wage earners should also expect global wages. Social and environmental policy must also be at the same level as our competitors, and yes our standard of living will be that of our competitors including crime, education and health care ect..., We would also need to scrap the games played by currency manipulation as this is the most effective protection method used and probably need to use a gold standard.
The article I dont believe is asking for favourable treatment for farmers but rather that they not be disadvantaged as compared to our international competitors or treated with lesser rights then those bestowed onto wage earners in Australia.

The irony is that it’s you guys who seem to be basing your criticisms of free markets on false assumptions from neo-classical models and ideology rather than reality and pragmatics.

We need to distinguish the two categories of reasons why markets are not a “level playing field” (dreadful term): market reasons and government reasons.

The “market” reasons are because the surface of the earth is variegated, labour rates are different in different places, the prices of the factors of production are different in different places, access to transport is different for different places, and so on.

There is nothing wrong with this. The problem is not caused by “ideology”, it’s caused by reality. The fact that these natural limitations prevent the market from complying with the abstract notion of “equilibrium” is not a reason for government to take any action whatsoever in an attempt to out-perform or “correct” the market.

The concept of equilibrium can be a legitimate tool of theory; because this *imaginary construct* of a stasis may give us useful insights into the dynamic reality.

But:
• There is no *ethical* superiority to the state of equilibrium
• It is only the state to which the market *tends* in the absence of new data entering the market. But new data always are entering the market!
• Equilibrium is a state of *non-action*. It is not a legitimate end and goal of policy.
• The equilibrium price is not knowable in practice, and all the pretensions of economists to know it with their statistical methods are false: mere gizzard-lore of high priests.
• It is not legitimate to define deviations from a standard of perfection – perfect knowledge, perfect information etc. – as “market failures”
• It is laughable and criminal to *assume* that government – of all things - has some kind of economic super-competence to correct the imperfections of ordinary mortals.
• Government does not have, and is not capable of ever having, the knowledge, the capacity, or the disinterestedness to level the playing field.

The “governmental” reasons for a non-level-playing field are all the various subsidies and handouts and price-rigging and cost-shifting that only a government can indulge in by virtue of its legal monopoly of the use of force.

The irony is that you guys are arguing for intervention by an actual monopoly based on force, to pre-empt mere possibility of monopolies based on consent.

Any attempt to “deliver profits” to Australian farmers by means of policy amounts only to making everyone else worse off by a straight-out forced wealth distributions, and none of you has attempted to deny this.

So it’s not clear what policy action you guys are calling for. Correct me if I’m wrong, but “We! Want! Handouts! We! Want! Handouts!” seems to be all your argument about pragmatics amounts to.

Well I think we can all agree that it’s pragmatic to the beneficiary of the stolen loot! The question is whether agricultural policy should be doing that! Of course, if it should, then why not above-market privileges and handouts for the rest of the population too – paid for out of magic pudding presumably?

But this is not pragmatic: it’s a policy of destruction of wealth. If carried to its logical conclusion it would literally spell the end of human society, which is why full communism caused the death of millions and complete social collapse whenever it was attempted.

You are in a double bind about the level playing field. On the one hand you declare that it’s an absurd concept that can never occur in reality. On the other, your critique is nothing but that government should be attempting to level the playing field - by coercive interventions.

Sorry to be so blunt in telling you this, but the reason you can’t answer my 4 questions, which disprove your argument, is because the theory you are using is illogical and self-contradictory.

Both neo-classical and Keynesian theories are demonstrably wrong for the reasons I have shown. Austrian-school theory isn’t, and I respectfully recommend it to your readership:

“Human Action” by Mises
http://mises.org/Books/humanaction.pdf

“Man, Economy and State” by Rothbard:
http://mises.org/Books/mespm.PDF

Jardine K Jardine
I have at no time asked for tariffs or handouts. I have just asked for the lifting of some of the imposts such as unscientifically based environmental law without compensation and protection from an uncompetitive environment where too few players means that they can get away with offering prices below the cost of production.
As for anti-trust laws-I do not think that a few large players should be able to get together and set prices or carve up territory or arrange tenders with impunity.
Belonging to a cartel which managed to raise prices for lysene by 70% in a short period resulted in record fines for ADM (the proposed buyer of AWB) in both Europe and the US and some executives imprisoned.

You just dont seem to get it .
You claim labour is market reason? clearly this is government.
the free market will never exist while countries impose different standards.
I think you talk about natural advantages certain countries have should be able to be exploited, however the reality is this doesnt happen, the reality it governments are manipulating the market all the time , the reality is that the free market you talk about does not exist, never has and more than likely never will.
The reality I face as an producer and exporter is that every market I compete in , including domestic , i face competition that have either lower standards (labour/environmental) or have government support and protection.
This is the reality, so to compete we either drop all social costs (tax) so i dont fund someones drunken night fling to night at the opera to retirement fund or hospital visits and have no food safety regulation and we will compete with the rest of the developing countries. or we need to pay our producers for the regulations imposed that give us the higher standard of living that most western world enjoy like the USA or the EU cap. China is ours and almost every countries largest trading partner, try and convince them to stop protecting thier domestic industries even with thier cheap unprotected labour force.
You can sling or the quotes and theories around all you like but this is the trading reality.
If anyone thinks that they can influence or convince all the world to follow the same line then you better stick to sipping tea in the garden with the fairies and smurfs.
Best result in this is to ensure domestic industries are not at a disadvantage in the markets to give thier competitive advantage a chance and to maintain a standard of living that we can all enjoy.
the current "free trade " australia has, means producers/ manufacturers face Global incomes with highly regulated costs in a market that has unregulated standards and subsidised goods.

This gives local industry a disadvantage that all the competitive advantage will never overcome. I double the ave. Brazilian farmers yield, while using less than 1/3 the chemicals but processors at times say that even if I gave them the fruit for free it’s still cheaper to import! and that’s after they have to use the extra energy to concentrate and ship it. Is this your free trade at work benefitting the efficient.
All the excuses then pop up and I’ve heard them all from fools like warren truss who then said we need to be more mechanised... Except that still doesn’t work because the grape industry in Australia is also the most mechanised and the market is failing as they still can’t compete... the answer is do nothing but find a wage job and hold onto it until the local business shuts also and then what?? Move to the cities to do what?? India and china can do all the white collar jobs from their desktop much cheaper than here, manufactures are dropping like flies, Can we all pour coffee for Who?? or the promised green jobs??.... the tourists who don’t come anymore because our dollar is too high from manipulated currencies.
The Only thing the Author was wrong about was that Economic philosophy is failing us all , for Ag and manufacturing it’s the end game, for tourism and education industry its down the slippery slope and for the rest its coming, just a matter of time

The Austrian school also believe in Say's Law of Markets. So supply creates demand and there is no problem in producing as much as you want . It will be bought. If they understood the nub of Ben's discussion, it would be clear that his article applies equally to neoclassical, classical and Austrian. So long as Say's law underpins their theory of supply and demand, the article is just as relevant

Engel's Law looking from the demand side says Say's Law is nonsense. As farmers, just think about your own experiences and make up your mind who has the right understanding of agriculture Say or Engel

From the belief in Say's Law of Markets follows the false understanding of productivity and profitability. enough of the ranting's which are self opinionated meaningless slogans and clichés . Typically anything uncomfortable is dismissed as illogical.

Thanx Jardine for the intro into the Austrian schools thoughts, we need though to deal with real answers to real problems...Engle's law is reality...Says is a recipe for collapsing industries...we need not experiment any further with the lives of our people.

Notice how no-one has ventured to answer any of the 4 questions I asked? That’s because they prove you wrong and you can’t answer them without self-contradiction.

Nev
“The Austrian school also believe in Say's Law of Markets.”

Can you refer us to original Austrian-school authority for that proposition?

Bartb and Nev
What specific policy are you proposing?

Campaigner
I agree about the so-called environmental laws. Science does not supply value judgments, whereas law requires them, so the scientism of such laws is always fake. If they were really about the environment, and not about mere power, then their proponents would voluntarily pay the costs of the landholders whose equity they confiscate, and there would be no political issue.

However obviously government reducing or destroying farm profitability by imposts for whatever reason, is not the fault of markets, free or unfree. Anyone who thinks you have established a criticism of free market economics is only displaying confusion on the most basic economic categories in issue. On this point you are agreeing with neo-classical theory on laissez-faire.

As for the anti-trust/uncompetitive point, the criminalisation of such activity only begs the question whether such laws are justified, which is precisely what is in issue. The Austrian argument is that the standard that monopolists, the trusts, et al, are alleged to breach, cannot be distinguished by any rational criterion from economic activities which are universally acknowledged to be necessary and beneficial. The convicting court will not concern itself with whether the definition also applies to many other common and necessary activities; only with whether the statutory definition applies to the defendant.

I have a monopoly of the sale of my own poetry. But that doesn’t mean I can get whatever price I care to ask, does it? And everyone has a monopoly of the sale of his own labour. A monopoly, of itself, is no guarantee that one can charge high or unfair prices.

Everyone charges for his services as much as the market will bear. At some stage, everyone refuses to work more at ...

… a given rate, preferring instead the value of leisure. So, according to your theory, they are committing the monopolists’ supposed crime: withholding supply from the market in an attempt to force up the price.

Again, in reality, everyone always offers their goods or services in conditions of imperfect competition. Notice how you did not actually define the proscribed standard of uncompetitiveness? We will find that any definition you propose is arbitrary and includes economic activities which yourself agree are socially beneficial and not criminally culpable. Go ahead: try.

The Austrian argument is that these actions by government are always arbitrary, and thus are only an abuse of power: an attack by the coercive class against the productive class.

If someone charges above the market price, the regulator can say it’s “price gouging”; if below, it’s “predatory pricing”; and if on par, it’s “collusion”. What the regulator can never identify is the rational criterion that distinguishes the proscribed standard from many ordinary and necessary market actions on which human society depends? Can you?

“I do not think that a few large players should be able to get together and set prices or carve up territory or arrange tenders with impunity.”

Governments do all of those things, don’t they? But when they do, unlike market actors, governments setting of prices and carving up of territory is done on the basis of a legal monopoly of force and threats.

Please see Rothbard’s index and follow the reference to his treatment of monopolies, where you will find the anti-trust arguments completely and totally demolished. I would be interested to know your critique of his argument.

Thus, as concerns the anti-trust point, you have not established any criterion of unfairness that does not equally describe
a) other market activities that you accept should not be criminalised, and
b) government.

All
The fact that other people can produce goods cheaper than you, is not an argument for government protection, whether or not those others producers are protected. If they are, it only means their governments are forcing their subjects to provide us with cheaper goods!

"The fact that other people can produce goods cheaper than you, is not an argument for government protection, whether or not those others producers are protected. If they are, it only means their governments are forcing their subjects to provide us with cheaper goods!"

You dont export yourself i guess by this failed comment.
So explain how I am then supposed to compete in export markets? Is it so good that someone else is supplying my market with cheaper goods, no good for me, my employees or Australian efficient production as the only one to survive will be the subsidised country. Is that your market result? then only the subsidised will win, so will thier employees and thier economy will have a net benefit as the good isnt sold for less then it cost to produce overall, just the producer/ manufacturer has the costs reduced but all others in the supply chain receive full payment and pay the tax ( net benefit).
Again I dont care who is right or wrong in thier theory because thoery doesnt pay the bills nor does the buyers care.
Also if the country we compete with has manipulated its currency then there is an unfair advantage again against us, and we have to deal with it, it isnt a theory it is a reality I have to deal with daily.

You dont also answer the question of the need to drop our living standards and wages to compete in these markets.Countries that dont subsidise have low standards, we too would still have a textile industry if Bonds could treat workers like bangladesh companies do.
All your theories equate to BS in the real market place. No one gives a stuff about moral high ground or efficient production as they dont buy Government votes.

I don't think all this intellectual grandstanding has helped us much at all.
The reality is that Jardine K Jardine thinks that if other countries can produce food more cheaply and with less regulation, including regulation which impacts health, then we do we should embrace it.
Some of us believe that there are logistic and strategic reasons, health and safety reasons and even economic reasons why we need food produced right here on our doorstop.
All power to Joe Hockey for rejecting the ADM takeover.

If the reality is either low living standards or protection then we also need to choose, that answers your perfect theory, the same as all other countries do, what gives your own country the best net return for the long term, not just cheap socks now at the overall loss of jobs.
Don’t try to run the old furphy of new jobs or industries emerging to replace them because where are they? again another theory which doesn’t work in reality. Don’t also try to use unemployment stats as we know they have been manipulated. soon you will be classed as employed if you think you can work.
There will always be Governments so we have to live with that. There will always be countries willing to deliver their people low living standards, so we have to deal with that and others that use protection to keep their living standards. This is reality and the market to deal with.
If our people/ government have standards that want imposed on business whether social or Environmental that make up our living standard then society must pay. You don’t have to agree with this you just have to live with it, or change people’s views or change the government
The problem is at the moment OUR version of free trade and deregulation does not include labour or standards so it’s a bastardised version that makes business subsidise employees and uncompetitive against OS competitors until they go broke. The long term will result in not enough jobs to support the standard of living.
All the theory, efficiency and competitive advantage wont overcome this, Accept the trading world and do what the rest do to compete, while maintaining the living standard that is expected.
After all isn’t the main aim of society to achieve a living standard rather than deliver short term cheap socks.

Bartb
You keep confusing problems caused by government with problems caused by the market. If, in the logical consequence that you refer to, foreign protectionism totally destroyed all Australian industry, that would be a result of protectionism and socialism, not “my market” or free market economics. You’ve got it back-the-front. You’re proving my argument, not yours.

If the government puts so many restrictions and taxes on Australian businesses that it stamps out profitability, then why are you
a) blaming free market economics, and
b) calling for more restrictions on productive activity as a cure?

“There will always be Governments so we have to live with that.”

You seem to be saying that even if we agree that governments are causing the problem, there’s nothing we can do to fix that, but if markets are causing the problem, then we can get governments to fix it! Well if there’s a need to move government to do something, why not get them to stop doing what’s causing the problem in the first place?

For example, if the government wants to help the drought-stricken graziers in Queensland, instead of giving them handouts, why not
a) (stop destroying their business and industry in the first place, and)
b) get rid of the tax on diesel? This one reform alone would make a big difference to the viability of farm enterprises all over Australia.

As for, where are new businesses going to come from?, we both know very well that you need rocks in your head to try to start or run a business in Australia because at every turn, you’ve got bureaucrats blocking and charging you on every pretext, almost all of them fake, like the open-ended charges for “the environment”: a blank warrant for unlimited government interference in everything.

For example on my farm it’s illegal to cultivate the paddocks! What effect do you think that might have on profitability? Why are you blaming free market economics?

My mechanic friend was telling me of the problems trying to run a mechanics business with all the occupational licensing parasites bleeding …

... him at every turn. It’s enough to make him non-viable, and remove the only mechanic for 140 km – all in the name of consumer protection!

And your solution is to argue for more open-ended power in government to block and charge and restrict everything, without ever proposing any solution consistent with your own complaint.

“You don’t also answer the question of the need to drop our living standards and wages to compete in these markets.”

The need to drop our living standards or compete in these markets cannot be made to go away, because even if Australia completely stopped all trade with these markets, our living standards would drop further than if not. The government cannot make magic pudding. It’s simply socialist nonsense that we can get wealthier by passing laws restricting productive activity. But that’s what you’re advocating.

“So explain how I am then supposed to compete in export markets?”

Unfortunately the rest of the world, and the Australian government, don’t exist so that you or I can export what we want at what profit we want. It's just a dream of handouts.

Let’s come to tin tacks. My policy solution is start by abolishing the tax on diesel, as well as any compulsory licence to use one’s own property. What’s yours and why is it better?

campaigner
The intellectual grandstanding was the author’s, and everyone who agreed with him, in pretending by jargon-riddled argument and display of statistical illogic, to have shown that free market economics is to blame for declining farm profitability; not mine for pointing it out.

Perhaps he should have done a statistical correlation on the decline of farm profitability with the increase of costly regulation? I’d like to see that!

“All power to Joe Hockey for rejecting the ADM take-over.”

It is enough for me to demonstrate that no-one can defend argument by any rational criterion without self-contradiction and circularity; and that you are all advocating the anti-social and wealth-destroying policies that are the overwhelming cause of your complaints.

Jardine,

we can agree the "Joe" has done the proper thing in knocking back the sale to ADM of Graincorp.

You asked me to verify where the Austrian school are Say's law believers; "Say's Law and Austrian Economics", Quarterly Journal of Austrian Economics, date 2009, sure you can read as well as me, it says that Say's law is necessary for the Austrian Business cycle theory to be true...and more, I think that it also says that economic crashes are good and necessary.

http://mises.org/journals/qjae/pdf/qjae12_2_4.pdf

before you continues to give advise to a sector in dire straits, you need to understand the basis of your own economic philosophy.
The rural sector can do without commentators offering economic advise that do not understand the underpinnings of their own economics.

just a little more for you mate:

Scroll down to 6th paragraph.

http://mises.org/etexts/austrian.asp

When you learns the truth about your economic philosophy, you will then be in a position to offer advise to the real world. As it is now, you assume you know and like all many commentator's assume away the real world .



Rural Australia and rural industries need people with sound knowledge of economics so good results can be achieved with a new agenda. We all know more about the Austrian line, and I like it less than I did.

Nev
Thanks for that.

Note that:
1. “There is no specific “law” that Say pronounces in his book” (p.48)
2. “nowhere in the chapter does Say make the “supply creates its own demand” statement.” (p.50)
3. ‘The popular definition [i.e. not by Say] of Say’s Law is: Supply creates its own demand’(p.50)
4. i.e. neither Say nor the Austrian school ever proposed or defended Ben’s misrepresentation of Say

Thus I have not failed to understand the basis of Austrian theory. Rather I suspected, correctly as it turned out, that you were misrepresenting both Austrian theory and Say’s argument.

Furthermore, Ben has not established any relevance as between Say’s and Engel’s laws on the one hand, and reduced farm profitability on the other, because he has not established that the problem of reduced farm profitability is because of free market economics, because the methodology he has used – mere correlation - is *not capable* of proving what he is contending for, because it is not capable of showing causation.

He merely assumes what he is trying to prove - problem caused by free markets. He ignores the obvious possibility, and the common ground, that the huge increase of myriad governmental interventions *definitely cause* reduction and destruction of farm profitability. Thus his argument is merely circular; simply irrational.

My own take on Say’s law and Engel’s law is that, in this topic, such talk casts more shade than light. Obviously if you are so confused that you blame free market economics for governmental imposts (Campaigner), or think in a circle (Nev), you won’t be any clearer thinking in terms of jargonesque third-hand misrepresentations of economic theories which are complex and contentious, and not immediately related to the question of farm profitability.

Let’s talk plainly and cut to the chase. If you are not making a jargon- and illogic-covered cry for mere handouts, then
1. What specific policy are you proposing and why?
2. Why do you say that the problem it is intended to solve, is caused by free markets rather than government interventions?

Jardine you continually miss the point this is all about.
You must look at the reality and that is what is being discussed, The issue is the CURRENT VERSION OF FREE TRADE THAT IS BEING PURSUED BY OUR GOV"T AND SUCCESSIVE GOVERNMENTS IN AUSTRALIA.
Yes I have said all along the problem is how the Gov't has implemented a free trade that disadvantages business, i have stated how other countries policy has disadvantaged Australian business because we do not have the same policies to offset them.
We have the reality of the USA pushing A VERSION of free trade that ensures that only aspects of free trade policy that benefit its own industries are being pushed.
I have stated earlier that I have no problem with free trade if it was able to be operated in its entirety with all Govts following the same song book but the REALITY is this does NOT exist and I put it will never exist.
The school of reality shows how current free trade theory operated in Australia is failing business is exactly what the Author is talking about. The fall out is Companies bailing out of this broken system, Ford, Qantas, Hienz ect . the multinationals see the advantage of using brands that were Australian and consumers assume have the Australian standards and manufacturing or processing the goods overseas to pick up the advantages of low standards, environmental costs, wages and conditions that are imposed here as well as the support and protection offered.
Deregulation in Australia has failed to include the imposts to business that put Australian business at a huge disadvantage to facing competition in both domestic and international markets like labour ect.
If we had a system like south africa we would be extremly competitive in all markets with low living standards wages and conditions but this type of lifestyle comes with a huge cost, and I dont fancy living on a farm surrounded by razor wire and dobermans .

The reality is as I keep saying is that our Government and ITS version of free trade disadvantages business but forces business to subsidise the wage earner in the form of min wage , OH&S and social policy like water and land clearing.
YES this is the Government but it is part of the free trade it seeks by letting imports in that dont have these costs.
I dont live in theory and theory wont sell my produce and my buyers dont ask for fruit grown in theory.
Going broke because we believe in a system that MAY deliver more efficient allocation of resources while delivering the most efficient product because products entering our markets are less efficiently produced but have been received govt support or have workers living like caged animals seems to be to dumbest outcome but that is the reality.
I have never asked for handouts, bailouts or money to give producers ADVANTAGES over competitors. I have said that what is needed is whatever it takes to ensure we are not DISADVANTAGED because of the reality of trade.
Again all the competitive advantage and efficiency will not beat competition from protected industry and lower standard producing countries.

You can waste your time trying to argue for dropping the wage rate to even the USA equivalent let alone China, Argue that we should have the right to do what you want unhindered on your property, use all the water from a river that goes past your farm ,let in all the boat people then kidnap them to work on your farm ( like the Thai fishing industry) but the reality is this wont happen.
We have a huge amount of regulation that should be scrapped because it makes no common sense, I totally agree.

bartb
What specifically are you proposing?

"I have said that what is needed is whatever it takes to ensure we are not DISADVANTAGED because of the reality of trade."

Being what?

"My own take on Say’s law and Engel’s law is that, in this topic, such talk casts more shade than light. Obviously if you are so confused that you blame free market economics for governmental imposts (Campaigner)"

I am not arguing from a theoretical point of view and have not claimed that government imposts are a result of the free market. Just that they exist.
I have alleged however that the free market choice of the Coles half of our supermarket duopoly and the free market choice of the Woolworths half of our supermarket duopoly to follow suit in offering milk at a price that is below the cost of production, processing and distribution is a manipulated market in the absence of effective "anti-trust" laws in the modern sense of the word.
This distortion of the price then becomes responsible for closures of dairies and processing works and the offering of others for sale at fire sale prices.
However you may economically justify this "free market" the fact is it is a corrupt market which makes it easy for other players to acquire assets which would not normally be for sale.
Again the dairy industry is the present example.

continued
However I see no other option in the reality of trade and society that Govt needs to regulate because that is what the trading partners do. CAP covers most of this in the EU http://ec.europa.eu/agriculture/cap-overview/2012_en.pdf You need to understand CAP is not production based but compensates farmers for social regulation to meet social and Environmental goals,( i guess this could be market based as society needs to pay for this service).
Forget all the theory and look at the reality, If you dont export yourself then you will have no idea of the REALITY in the world markets where anything justifies trade restrictions and costs and NO country seems to give a stuff how much more efficient we are. Then on the domestic market again there is no bonus paid for efficiency when an import comes cheaper because of protection or lack of standards.
The answer is not to have your head in the sand and believe in theories that no other country follows, If society chooses regulation then society must pay. If other countries support thier industries then our industry should have the same level of protection, no more no less.
Like the carbon tax, my beliefs didnt matter as long as EVERYONE PAID THE SAME AMOUNT, or my business was compensated against product from countries who didnt pay. instead of taxing local business and letting in imports without the same level of tax, this only achieved in shutting down Aussie biz and replace it with imports
If our government (representing the people) wanted to stop live cattle trade because of our morals and beliefs, then I dont care as long as any losses were paid for by the people imposing them. not having the farmers pay for the moral decision our people chose over another countries practice

Regardless of whether Ben's table proves or disproves any economic theory, the rapid escalation of debt against GVFP should be ringing alarm bells for all public policy makers and commentators.
Instead we get a commetariat that sticks relentlessly to production and percentage of production exported and lampoons anyone who dares to suggest that food security may ever become an issue as if any decline will be gradual and linear in nature. This will not necessarily be the case.

“the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Keynes

I don’t know where you guys got the idea that I stand for “theory” and you stand for “reality”.

We are all using economic theory because without it, the facts, the data, of themselves, would just be billions of one-off transactions. We're all using theory, because the data cannot be interpreted without it.

The question is not whether or not one is using theory or ideology, the question is whether it’s true or not. I have shown why yours is self-contradictory. You have not shown why mine is wrong, only that you don’t like it.

But the fact that you don’t like the reality that my theory correctly describes, doesn’t mean I’m being “unrealistic”: it means you are.

We have now reached the stage where you all
1. disown the thesis of the article;
2. are unwilling to specify any specific proposal that would satisfy your own argument let alone mine, and
3. cannot distinguish legitimate from illegitimate interventions.

The only thing you have in common is that you want monetary benefits – handouts by another name – paid for by government violating someone else’s property rights.

Bart, the government didn’t represent me when they shut down the export cattle industry. Did they represent you? No? Well what makes you think they represented “the people”, rather than a small, selfish, ignorant, greedy, powerful group of parasites?

Your argument amounts to saying, unless and until an impossible precondition is met, you insist on calling for unspecified arbitrary interventions which you openly admit are a major source of the problem you’re trying to solve.

Since political action would be necessary to solve the farm profitability problem in any case, why is it more “realistic” to move politicians for more bloody meddling interferences, rather than less?

Nev, we’ve already seen you can’t identify the standard by which you allege market “distortions” and “corruptions”, so why repeat this? Coles and WW are not a duopoly, because “groceries” is not one single monolithic good. They don’t sell the same goods. And they aren't a duopoly, because of the existence of other supermarket brands. They aren't a duopoly because people can buy their groceries, as they used to, from grocery stores if they want – it’s just that they don’t want.

And even if they were a duopoly you still haven’t established that there is anything wrong with this, insofar as it springs from the consumers’ voluntary actions. Society have every right, by our buying or not buying, to prefer shops who bargain down the prices of their suppliers! You don’t have a God-given right to misuse the government to force everyone else in society to involuntarily pay above-market prices for you to live at others’ expense, simple as that. It’s you who are purely in the realm of abstract theory – incorrect theory!

Campaigner
“The rapid escalation of debt against GVFP should be ringing alarm bells for all public policy makers and commentators. Instead we get a commetariat that sticks relentlessly to production and percentage of production exported”

Look I think we all agree on much more than we disagree. I just wish everyone would stop for a sec and *re-think*.

The problem is not too much freedom for gossakes, it’s not enough!

All
"I beseech you, in the bowels of Christ, consider it possible you may be mistaken."
Cromwell

I’d like to see the productive class identify ourselves as such, and make common political cause to demand *less* taxing and regulation of every productive activity, groaning under layers of dysfunctional marxoid bureaucracies and parasitic vested interests. They don’t represent “society”: they represent themselves!

Anyway, you’re voting in vain to vote for either Labor or Liberal.

At least consider that even more big government is wrong and unpragmatic and unrealistic; and consider whether you don’t agree more with the policies of the LDP than Marx and Engels!

http://www.ldp.org.au

Jardine, Have a think who is unrealistic.
do you think the world which is more protectionist will suddenly do a full turn around and move to free trade, Do you think China the worlds biggest trading partner, will become a free trade economy , you must be joking.
You just are ignoring these facts, As i keep saying, i dont care about what theory is right or wrong when this is the reality.
If you cant beat them, join them.
Please explain how you intend on convincing the rest of the world to follow free trsde

How can you claim to be more realistic when you can't bring yourself to propose any actual policy, and can't explain why it's more realistic to call on politicians to give you handouts? Have you noticed both sides are agreed not to do it, and that's precisely what you're complaining about?

So you don't care that it's untrue, you don't care that it's unethical, you don't care that it's not what you actually believe in - you just want a handout. Paid for by destroying someone else's liberty and livelihood, and stealing his property, and creating more of the problems you're complaining about. Thanks - you're making my case for me.

Even the communists are giving away the protectionism and state coddling that is their defining characteristic, the world has learnt to identify the socialist sh!t sandwich for what it is, and you guys are trailing behind complaining about the progress of freedom against totalitarianism.

A better exposition of Keynesianism we couldn't have wanted.

"We want titty! We want titty!"

Jardine, I presume your last remark is addressed to all of us. It is not as simple as totally free market or handouts. It is more complicated than that.
Trying to free up everything unconditionally without some protections in place would mean all agriculturalists would be slaughtered. They almost are anyway. The opposite is not necessarily handouts.
It is also not true that there are no policies offered.
I have called for relaxation of imposts such as environmental imposts without compensation. Society needs to put a value on conservation not just expect farmers to foot the bill.
I have also called for stronger competition laws (more like the US and fully resourced) which I called "anti-trust" which is a bit of a 19th century term and I gave an example which you rejected. In fact I had more than one example and one went unanswered.
I am also calling on politicians to be mindful of the effects of their actions on agriculture so that we do not come up with decisions like the total live export ban which Barnaby Joyce called the worst decision ever made. That is true. It is just the most obvious in a long line of anti-agriculture policy settings.
A new offering is that I want the exclusions from prosecution for environmental organisations that exist under the secondary boycott and third line forcing provisions of the Competition and Consumer Act removed so that they cannot destroy whole industries as they have the Tasmanian timber industry.
Government handouts are what many environmental organisations get and they repay us by destroying agriculture. These grants should stop.
There needs to be general recognition of "price taking" and the market failures it can cause.
A free market also relies on perfect information and it is usually processors, large grain handlers ect. who have the information.

Campaigner
We all agree that farm profitability is adversely affected by environmental imposts, and government-granted immunities and privileges for environmental organisations.

However these are arguments against government interventions not free market economics; and they have nothing to do with Say’s Law versus Engel’s law (except disproving Keynes's assumptions in favour of government interventionism).

I assume you are not a member of the bartb school of economics and its “I don’t care whether theory is true or untrue” doctrine.

If not, you still need to prove your case against market decision-making and in favour of government’s alleged remedies.

The issue is whether you can define alleged market failures so as to exclude other economic activity that is universally regarded as necessary and beneficial (which you can't); but even if you can, whether you can justify the assumption that government can do any better. I deny both.

“A free market also relies on perfect information…”

No it doesn’t, and you have made no attempt to justify this claim. Ironically this notion comes from neo-classical theory, so you’re relying on neo-classical assumptions to claim that neo-classical theory is wrong.

Just think about it for a sec. Think of all those hundreds of millions of Chinese whose lives have been lifted out of poverty by the market reforms of recent decades. According to your theory, the fact that perfect information, perfect knowledge, etc. didn’t exist, means that governmental decision-making would have been better, to correct for the “market failures” based on imperfection. So they would have been economically better off with full communism. Why is your theory not absurd?

If you are going to claim that market failures justify government interventions, please define market failure, and *relative to what* normal or ideal state?

And then, why doesn’t the same criterion of failure apply to governmental action? If monopoly is bad, why doesn’t that prove that governmental action is bad? If imperfect knowledge proves market action illegitimate, then why doesn’t the same imperfect knowledge in government prove government action illegitimate? Aren’t you assuming that government is perfection personified, and if not why not?

The original economic problem, giving rise to all economic activity and all economic theory, is that there is a need to decide how to allocate scarce resources to satisfying the most highly valued ends. You can’t just *assume* that government knows how to do that, because the error underlying full communism, is that if only we could vest this decision-making power in government, then what a paradise we would have. What about full communism do you disagree with? Why don’t these same reasons apply to your argument in favour of government’s alleged ability to rectify alleged market failures, i.e. to know the difference in all cases between where resources are allocated by the market and where they *should be* allocated, to satisfy the most highly valued ends?

Also, you’re not taking account of the upstream actions of government in causing the alleged market failures in the first place. For example, we should be able to ring up a local butcher, and get him to come and get a few cows. This would help farm profitability, as well as help the local consumer, and local trade. We can’t, because of course everything is illegal. Guess-who strangles to death just about every small businesses and small process? Then when the government has killed off the possibility of any but big companies entering the market as buyers, we get this unthinking complaint that the problem is a “market failure” caused by “duopoly” "corrupting" the market.

Examples could be multiplied a hundred-fold. You can’t just *assume* that these regulations, e.g. tax, superannuation, workers comp., OHS, consumer protection, environment, etc. etc. etc. are automatically beneficial for “society” just because the government has made them, because then you’re back to the assumption that government presumptively knows best how to allocate scarce resources to their most valued ends. If that assumption is true, then why not make all decisions by government?

So please define market failures without including necessary and beneficial activities, and justify your assumption that government can do better without using a double standard?

Jardine you are black and white and have a closed mind.
It is not as simple as free market or handouts. You are the almost the only person in the country who does not think that Coles and Woolworths are not a duopoly and that many agricultural producers sell into a monopsony.
The large players can manipulate a market at almost any time and you seem to think that is OK.
You are objecting to minimum wages, superannuation and worker’s compensation.
Heck , why don’t we just introduce slavery, feed people a bowl of cornmeal a day and not offer any assistance when they are sick or injured? That is the end point of no regulation.
Why not dig holes in the ground for mining, allow companies to use, divert and pollute water courses to the detriment of all other water users to the extent that if you fell in the river you would die which is what I was told about a river in South America.
Then we would be competitive.
If you want an opinion on Say”s Law v Engel I think Say’s Law is a heap of wally. If you keep on producing at some point what you have is a glut and a fire sale at below cost of production. In Mill’s interpretation it also relies on increasing the money supply which is another interference.
Engel’s law is borne out by real world observation.

You want me to make my case for “anti-trust laws” as administered by the ACCC or similar but with more power and resources. I thought I touched on a couple of good examples where this should work in a properly regulated system (ours is very weak) and you have rejected them as “handouts”.
Without any “anti-trust Laws” ADM would have been able to buy Graincorp unconditionally and if they chose to just shut down the silos and ports it would leave a lot of graingrowers high and dry.
You would not have any objection to any buyer having “Cubby Station” and using and polluting unlimited amounts of water even if it meant those downstream went without or found the water mfit for purpose.
I could go on but it is pointless.
What you are proposing is that the biggest bullies do what they like and the peasants have to bear the load which is pretty much how it is anyway with not quite enough sweeteners to keep our next generation of farmers, the keepers of intergenerational knowledge, farming.
In the absence of any other method to keep food producers producing, almost every other Western country has resorted to “handouts” to ensure that they do.
You claim to have refuted many of Ben’s arguments in your first two posts. In many cases it is simply your opinion and it is wrong.

“We are all using economic theory because without it, the facts, the data, of themselves, would just be billions of one-off transactions. We're all using theory, because the data cannot be interpreted without it” Jardine K Jardine.

Jardine, that is exactly what the free market is "billions of one-off transactions". If you are going to allow a totally free market you have no need at all to examine or interpret data. The market exists and without any intention to set policies you have no need to know what is happening .

Hmm. Lots of ad hom, appeal to absent authority, non sequitur, misrepresentation, and circular argument.

But notice you didn't answer the questions that prove you wrong? Go ahead: Please define market failures without including necessary and beneficial activities, and justify your assumption that government can do better without using a double standard? Either answer the questions, or admit you can't.

In case you're thinking you did that in your last post, you didn't, because you used a double standard. You (wrongly) assumed that government creates benefits for society by threatening to attack innocent people - "policy" - while (rightly) identifying that as anti-social behaviour when anyone else does it.

"What you are proposing is that the biggest bullies do what they like and the peasants have to bear the load ..."

No, that's what you're proposing. I'm proposing that transactions should be based on consent, and mutual benefit. You're proposing that they should be based on the strongest and most aggressive party - with a legal monopoly of unilateral aggression and fraud - physically attacking innocent people to steal their property, or threatening to. And their victims have no rights but just to bear it. And when I ask you to prove the reasons you give, you evade answering, personalise the argument, and just give me a welter of fallacies, prejudice and hysteria.

The reason you can't answer any of my questions is because you're wrong and you know you're wrong, you stand for arbitrary power without limit or reason, you are COMPLETELY UNABLE to explain what limits on government power you envisage, and you support totalilitarian fascism, which i have correctly identified and you have been completely unable to disprove.

"I'm proposing that transactions should be based on consent, and mutual benefit."
Dream on.

just got in from work, and you blokes are still at it, your right campaigner and Jardine is wrong...that's the end of it...

Thanks Nev

Campaigner

What you obviously haven’t understood is that the issue *all along* has been whether you stand for an open-ended power for the most aggressive party in society to get whatever they want by attacking, threatening and looting the weaker, without legal limit.

That’s why I asked, and you (and Nev) were unable to answer, by what rational criterion do you distinguish
• private property rights that are to protected from forcible governmental override or confiscation, from those that aren’t?
• legitimate from illegitimate governmental decision-making on resources?

By asking these questions, I offered you all you needed to prove my argument completely wrong, if you could: - (unlike you, I don’t flee disproofs, I actively seek them).

The fact that you didn’t answer my questions, is because you can’t, because you stand for NOTHING BUT the principle that what you call the “peasantry” – the subject productive class - can be forcibly overridden and looted at will, by the most powerful and aggressive party in society – the State. Otherwise what're your answers?

>"I'm proposing that transactions should be based on consent, and mutual benefit."
>>Dream on.

Here you openly ridicule the value of protecting the productive from being plundered by their political overlords, mocking your own last desperate pathetic line of defence against my argument. Pathetic because you IGNORED that force and fraud are illegal in market transactions; that government is a force-based monopoly of force; and that the voter has no legal remedy whatsoever against politicians for misleading representations, so it’s a monopoly of fraud.

Thus you have failed to deal with any of the issues of economics, ethics, or politics without floundering in self-contradiction at every step. Worse, even after they are pointed out to you, your argument degenerates straightaway into ad hominem and even more self-contradiction and invincible ignorance.

Thanks for such an open display of the intellectual and moral bankruptcy of national socialism and its fake economics. You and Nev can always dream of the utopia you could achieve with total government power, free from all those pesky individual and economic freedoms you despise.

“you stand for NOTHI”G BUT the principle that what you call the “peasantry” – the subject productive class - can be forcibly overridden and looted at will,”
No Jardine, I don’t” stand for” this. I was trying to point out that this was the end point of your free market approach and lack of regulation.

“Pathetic because you IGNORED that force and fraud are illegal in market transactions; that government is a force-based monopoly of force”
“Illegal” Jardine? You are the one that doesn’t believe in governments or market intervention. I have been advocating protection remember?

As for the questions I was supposed to be answering, they seem to keep changing all the time.

Ad hom
If you seriously think this is ad hom you need to spend more time on the really tough sites.

““Illegal” Jardine? “

Yes. Robbery – aggressive force or threats to take someone’s property without their consent – is illegal in market transactions. So is gaining a financial advantage by deception. Do you deny it?

Therefore a general anti-social chaos characterised by the stronger forcibly taking from or cheating the weaker is not the end point of a free market approach; and you have not shown any reason why it is or would be. All the examples you give are examples of the violation of property rights, not the defence of them.

There is no issue that robbery and fraud should be illegal. But there is, because you’re saying that using aggression or threats to take someone’s property without their consent should be legal *so long as the government does it*; and the same with fraud.

“… the questions … keep changing all the time.”

They are all the same question from different angles – how do you define the legitimate from the illegitimate use of power to forcibly override property rights and individual freedom? This is the same thing as asking, what is the rational criterion by which you decide which property rights are to be defended against aggressive invasion by anyone including government; and the same as asking, what of full communism do you find an excessive exercise of government power; and the same as asking, how do you distinguish between the market price and the fair price [that is to be enforced]; and the same as asking what is the perfect or ideal state from which alleged market “distortions” [to be proscribed by force – the law] are allegedly a deviation?

“You are the one that doesn’t believe in governments or market intervention.”

Misrepresentation; mind-reading. I have never argued against government interventions to protect and defend freedom of person and property, neither of which entail any right to attack, threaten or defraud people. I have only argued against such invasions by anyone including government.

“I have been advocating protection remember?”

So have the mafia. The question is how do we distinguish legitimate from illegitimate force and threats?

The economic question with protection, as with any other economic good, is whether the amount and quality being produced or supplied is too much, too little, or just enough.

When the market provides it, consumers of a service, by their actions in buying and selling, directly select the amount and quality of the service that is provided. Suppliers who do not provide what the consumers want make losses and eventually go broke. The market impartially transfers their assets into the hands of those who serve the consumers better. Suppliers who provide what the consumers want make profits, which attracts additional capital into that mode of production, thereby reducing profits.

The same does not apply to protection supplied by government. Owing to the fact that the payment is non-voluntary, the connection between what the consumers want, and what is provided, is severed at the root. (That’s why it’s so much easier to find police in revenue-raising activities such as issuing speeding tickets and extorting prostitutes or drug producers, than finding who burgled your house or getting your stolen property back).

Worse, as a coercive monopolist, the State can and does provoke conflicts which it then intervenes in to settle in its own favour. I have already shown how your theory of anti-trust laws involves circular reasoning and is therefore fallacious. The truth is, the anti-trust laws amount only to threats and stealing of property by the coercive bully class – whom no-one voluntarily pays for and who make their living by aggression and threats - attacking the peasantry – the class of people who make their living by peaceable productive activity. If this were not so, you would be able to distinguish the rational criterion that distinguishes the alleged wrongful activity from necessary and beneficial productive activity, which, as we have seen, you can’t do.

It’s you who are proposing that the most powerful and aggressive people in society should be a law unto themselves, and that the peasants should just have to bear their load, and have no rights but whatever scraps the biggest bullies deign to leave them.

That’s why I can't plough my paddocks and you can’t answer any of my questions!