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Re: NAFTA, Capitalism and Alternatives, Debate, VIII/1



Dear camaradas:

This posting is to apologize to Harry Cleaver for the tone of my comments to 
his postings. I admit that some of my arguments were "ad-hominen" and were 
groundless attacks on your academic credentials. To you Harry, my apologies.

I also defend the substance of my arguments. When an attack is carried on a 
science it must be based on the failings of such science. As I tried to make 
clear in my posting, most of what is served as economic prescription is 
actually hocus-pocus without grounds in economic science. Thus in attacking 
neo-liberalism or whatever other social doctrine NOT BASED ON ACTUAL ACCEPTED 
ECONOMIC SCIENTIFIC PRINCIPLES one can not blame Economics more than one can 
blame Mathematics or Logic. 

I would also reaffirm that any social system that is based on individual 
choice is preferable to one where choice is made on behalf of the individual. 
Isn't that what democracy is all about? And I argue that Economics as a 
science is very well suited to study the question of individual choice.

Is Economics suited to study collective choice? Not really, except in such 
cases where externalities do not exist. Externalities often exists because of 
market imperfections or failure. In this case the Theorem of Second Best (The 
foundation of Public Economics) basically states that free markets may or may 
not lead to optimal allocation (under the constraint posed by the market 
imperfections). Does this mean that as John Cross says Economics is so 
theoretical that its application is suspect? I don't think so.

In an ideal democracy mechanisms that would allow society to choose among all 
possible outcomes those that are best suited for such society. For example, 
some societies' like Japan may choose a high degree of equality a low degree 
of unemployment in exchange for a lower "material" standard of living -which 
explains why Japan has a per capita income superior to many countries and yet 
a lower "material" standard of life. Other countries such as the Scandinavian 
countries may prefer a high degree of equality and a high level of 
unemployment -there are trade offs as you see. The USA has choosen a high 
standard of "material" consumption, relatively low taxation rates, and higher 
levels of poverty than other "developed" countries.

Once an agreement exists then policies can be developed to carry out such 
agreement. Now, this policy making has as much to do with Economics as it has 
with other social sciences. Economics' contribution is really at the level of 
measuring individual response and choice to policies. For instance, a policy 
that rewards an employer by means of a tax-break for using machines instead 
of workers will result in more machines being used. A policy that rewards 
people for owning a home will cause a higher rate of homeownership. The point 
is that individuals respond to incentives in ways which are predictable by 
economic theory.

On the other hand, saying things such as "government spending crowds out 
private spending" lacks much of an economic foundation and can be better 
answered by means of empirical econometric -not economic- evidence. Arguing 
that a private monopoly such as TELMEX is more responsive to the public, or 
that it results in an increase in society's as compared to a government 
monopoly is also "vodoo economics" as the economic theory -Industrial 
Organization Economics would say nothing about that. 
On the other hand, it could be proven using Economics that, more than 
one telephone company contesting the same market results in increased 
consumer welfare whether one is government owned and the other not (if both 
are owned by government then it is a monopoly) or whether both are private.  

Actually, the recent declarations by one of the CONCANACOS, that private 
companies should not be left to suffer the vagaries of the market is 
predicted by economic theory and is absolutely rational. THe biggest enemies 
of free trade are not the consumers but the owners of the companies affected 
by it. Why, rent seeking is alive and well. 

The problem that I have with Marxism, is that all of its tenets have been 
proven wrong by historical developments. Furthermore, wherever an attempt has 
been made to implement it, a loss of freedom has resulted.  

Again, not much difference exists between the right wing "dictator" and the 
left wing "revolutionary" companero, both want to impose THEIR ideas and 
solutions because they think they know best. When things do no work out they 
blame everybody from "the imperialists" to the international bankers. Do you 
think that Castro is any different in this respect from any other two bit 
Latin American dictator?

And by the way Monique, if you think that advocating for individual choice is 
facista then I am guilty. In a way, the adjective brought back fond memories, 
I had been called that at a student meeting at my alma mater Ciencias-UNAM by 
none other than Salvador Martinez de la Roca (El Pino), who later turned out to 
be in Echeverria's payroll, when I proposed that a one day strike to ask for 
the resignation of a governor of Puebla who had shown some independence from 
Mexico City, was foolish since the matter of the protest (two inocent 
bystanders killed during a student demonstration, 
apparently by Puebla municipal police, but in fact by people from the DFS 
shooting from the top of the ADO building) was being orchestated from the 
presidency to overthrow the governor, and the point man for this operation 
was none other than Mr. Democracy himself Porfirio Munoz Ledo. (Said governor 
was Gonzalo Bautista O'Farrill and the President Luis Echeverria).
 
 
And by the way Monique, why do you imply that PAN is as bad or corrupt as the 
PRI, but say nothing about the PRD.