In response to a newsletter from a thinker I respect, I was moved to reply and it turned into a mini-essay that I felt had some valuable insights.
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One of your comments struck me as almost accurate and I thought it worthy of a response.
o Also, note that government doesn’t produce anything but simply redistributes capital from producers of capital to consumers of capital.
o And while government has an important role to play in a thriving economy, it is one of facilitating the production of wealth, not creating it.
o Therefore, the larger the government, the greater a drag it is on the productive capacity of the economy.
One of the obvious differentiators between Objectivism (which is a full philosophical system) and the economics-focused Libertarianism we commonly see is the role of government in a proper society.
Libertarians fall into a range of camps that include Anarchy, Anarcho-capitalism, Minarchy, and related ideas. According to Rand, these are all anti-concepts that attempt to fuse a negative into a positive, thus destroying people’s ability to properly conceive and consider the positive. Anarchy is the absence of a central government. Anarcho-capitalism is the worst because it names the positive and then destroys it. Minarchy generally means the smallest government necessary and might be the closest to a proper formulation, but unnecessarily clouds the issue by creating a new term for what is simply capitalism.
The positive is capitalism, the political and economic system where all property is privately owned and government is created to protect the rights of every individual citizen to life, liberty, and property. So long as the individual does not violate the rights of others, the government has no role, no policy, and takes no action.
In a free society, government is an unalloyed good, an absolute necessity. Such a government is generally very small, but it may expand sometimes if needed to protect the country from external threats. Such a government is not good because it is small – size is not the standard of value – but because of what is does: protect rights from internal and external threats.
The first bullet could be improved by stating that through economic policy and the resultant use of force against innocent citizens, the government seizes the capital of producers and gives it to those people and groups favored by government policymakers. Some of those receiving the favours are also producers.
Your second bullet is almost perfect but can be improved by reformulating it as “A free society requires Government to play an essential role in the economy by protecting the rights of producers and consumers, creating the optimal conditions for production and trade.”
The third bullet is the weakest because it implies a negative correlation between government size and economic productivity. This is contradicted by Objectivism. A better formulation would be that since government is essential, there is a Kuznets curve something like this:
At the origin point, there is essentially no economic production due to the condition of anarchy. This was the state of humanity for most of its history, with almost no production other than that needed for subsistence, and even then, subsistence was miserable. This is the fixed-pie view of wealth where anything can be stolen or destroyed with relative impunity.The introduction of a government that starts to protect rights enables a sharp increase in production such as seen in the transition from the Enlightenment re-discovery of the power of reason and the consequent introduction of rights through the Industrial Revolution. In the U.S. and other relatively capitalist countries this persisted into the late 19th century and economic growth was 6% or even higher for long periods.
Once the government started to adopt and enforce policies that did not protect rights, but violate them, the rate of economic growth started to decline. Controls, regulation, tariffs, taxes and other types of non-objective law are all forms of rights violations. The decline side of the curve is much more gradual than the increase side because it still contains significant rights protection, and these are usually gradually eroded. Because all the infrastructure created during a period of rights protection is difficult to destroy, both physically and intellectually, it is possible for a fascist government to commandeer production yet not rapidly destroy it. I think a good case in point is Argentina, in the news these days due to the election of a relatively free-market figure, which was once among the wealthiest of nations but then suffered a slow decline as collectivism became entrenched.
A proper formulation of the third bullet point would thus be: “Once a proper, rights-protecting government has been instituted, any further growth of government will of necessity be rights-violating and thus lead to lower economic production.”
All this started with just the idea that the third bullet point was weak, but I am very happy with the thoughts that emerged, particularly the shape of the graphic, the form of which I have not seen before.
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The Ontario Government currently pay $500.00 for each hearing aid.
The problem is that this is paid to the hearing aid provider company.They then can charge whatever they want on top of that as they are already assured that much profit .When you go in for a test they have you sign a " waiver " that directs the government money to them.Saw a report that it cost $ 65.00 to make a hearing aid.
At Costco the money goes to the patient and you should check their prices and no I do not work for them.
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Hearing aids exist because innovators were free to create, sell, profit, reinvest and improve their products, all competing for the preference of consumers. If you want to kill a product and stop innovation in it's tracks, get government to control it. Today's hearing aids are a hundred times better than those of a few decades ago and get better and cost less and less per functionality delivered.
Price differences between provinces must be because government has interfered in the market, else competition would drive prices to a similar level very quickly. When a product can be made profitably it attracts capital and competition, which then drives prices down and quality up until the rate of profit normalizes. Only the power of the state can block this process. For the sake of ll who want better hearing aids, we must insist that government not interfere in our marketplace.
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This discussion is not about market economy.It's about the flawed support payment system at the Ontario government level and it is an easy fix.Give the money to the individual needing and buying the hearing aid after which they can go shopping for the best price.Today's hearing aids are now all digital and the basic difference in them is minimal.Just bells & whistles.I spent 30 years in the commercial radio business and a hearing aid has the same technology.
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I believe that David McGruer's point was that government is not necessarily the best solution to the problem. But that the government has caused an inflated cost to medical health.
Maybe a better solution would be a tax deduction. Which is already incorporated into our taxes.
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Barriers to entry are a natural part of an advancing society. Before all the wonderful technologies we have, there were virtually no markets and thus few barriers. Legal barriers should only exist to protect objective rights such as intellectual property. Patents exist to protect intellectual property and without patents there would be far less innovation and human progress - they are an objectively vital part of modern human civilization. Technical knowledge is not a barrier since essentially all the knowledge of humanity is available at our beck and call, thanks to patents, intellectual property law and more specifically laws that protect individual rights including property of all sorts. A dominant existing firm is not a barrier because if a firm is dominant then it has proven to provide the greatest value to consumers - created the greatest value in society - else it would not be dominant.
It is important to realize that the existing firms are under constant pressure from all sides, both within existing product lines and from without. For example, Apple could decide to enter the market at any time and might quickly dominate, so other firms must be on their toes not only to existing competitors but all possible competitors. Just to maintain a strong market share requires constant thinking and innovation.Just imagine you are an existing hearing aid company and you decide to close your research and development department to make more money by reducing costs. How long would it take before you not only lost market share but drained all your capital and were out of business? Perhaps a few years? If you tried, you could come up with a dozen mechanisms of the free market that make such a decision extremely unlikely and cause instead the company to constantly strive for improved products and services.
Government is not all bad, I never said that. Government is essential for a free society, to define and protect the rights of its citizens. When it strays beyond that it has begun to infringe or even violate the rights of its citizens, and this is where is becomes a bad force in society. A monopoly by force can never be a good in society, and this is what is meant by regulated monopolies. In fact, there is no such thing as a real monopoly except by government force. Yes, there may be a dominant player, even up to 95% market share, but as I have shown there is the constant threat of new competitors fro all sides, including substitution for existing solutions, just as streaming services have totally overturned the long established oligopoly in television and prompted massive innovation just to survive as a going business concern. Imagine if government had regulated the internet as a public utility from its birth - we would still be hearing the beeping and buzzing noises of a modem as tiny little bits of data crawled slowly through copper lines.
In contrast, freedom is an unalloyed good - not that all outcomes will be perfect or even optimal for all people, but rather that freedom provides the proper moral framework for human beings and the very best possibility of social, cultural and technological advancements. If a freely acting person violates the rights of another, we absolutely need government to adjudicate and punish as justice requires.
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The Ontario Government should be encouraging the development of a Solar Ear, social enterprise affiliate providing jobs to deaf people in Ontario - not further subsidizing the huge profit margins of the producers of overpriced hearing aids. A Solar Ear, social enterprise affiliate located in Ontario would be able to serve the deaf market not only in Ontario, but in all of Central and Eastern Canada plus the Eastern USA, thereby providing affordable, high quality hearing aids to our deaf community, as well as jobs for our deaf people, and an increase in economic development and trade for Ontario.
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