Originally posted by: Amused
Originally posted by: 3chordcharlie
Amused,
The water-shortage problem is two-fold, and free-markets will have problems producing a useful solution.
Given the economic disparity between wealthy and poor nations, the price of meat could stabilize at a level where the associated price of water was out of reach for the poorest countries in the world. In effect, given our 100 and 1000-fold higher incomes compared to the poorest nations in the world, we might find ourselves willing to pay a price for water to feed the cows that citizens of poor nations can't even afford for water to feed themselves.
Obviously poor nations with their own water supplies could choose to keep these off-the-market (which would, incidentally lead to further price distortions), but nations without adequate water would be faced with starvation.
I don't know the details of any potential water-shortage, and I'm having too much trouble with my mundane work tasks to care right now; it's *possible* that price levels would stabilize at a point tht would avoid this outcome, but unlikely. I'm willing to spend several hundred dollars a year on meat (maybe more; I've never had to make that choice), and I don't really make very much money. I could see even middle-class families being willing to spend several thousand dollars a year on meat. This exceeds the total income of families in many countries. The orders of magnitude are certainly there for the potential problem I'm thinking of, and it would be quite the humanitarian (and economic!) disaster.
Free markets lead to massive problems when income disparity is so enourmous; it's bad enough trying to coordinate the uber-rich and the poor within a single country; world-wide income disparity is much worse. I'm not planning to give up meat anytime soon, but free markets (which, btw, no western economy currently allows to operate even in domestic food markets) do not seem like the most encouraging solution.
Income disparirty is so enormous because there are markets that are not free.
Free markets make for a better standard of living. Even the poor in the US have an extremely high standard of living comparied to much of the world.
Sorry, but class envy will not make me give up my economic (and thus all) freedoms.
Ayn Rand said it best:
"Intellectual freedom cannot exist without political freedom; political freedom cannot exist without economic freedom; a free mind and a free market are corollaries."
Income disparity is mainly because of education and capital accumulation (both in public goods capital/infrastructure, and capital acucmulated by citizens for investment in firms). Neither of these is directly solved by free markets, though they may be a tool toward private capital acucmulation, which is certainly necessary.
You're confusing a useful tool for a cure-all, and it's as simple as that. Free markets are an absolutely fabulus way of distributing resources amongst people of relatively equal means. They are a pretty good way of distributing these resources amongst people with means in the same order of magnitude. They are a terrible way of distributing goods amongst people with massively disparate means and are equally bad as a way to coordinate distribution of goods where market power rests with one side of the market (monopolies, cartels like OPEC and the college of physicians, etc...).
Free markets would help poor nations, but only after they each a level where they can successfully avoid exploitation. Free markets left to manage the world economy as they see fit are merciless and unforgiving, and would shortly result in the deaths of millions, with the additional market hiccups that come in between. They are an 'ideal' and like any other ideal, they are more than likely to destroy the world if they are pursued too aggressively.
And I'm sorry to take issue with one of your heroes, but Ayn Rand said nothing "best". Ever. Of all the fine folk to argue for economic freedom as a route to salvation, Ayn Rand may well have said it worst. She is making a ridiculous leap from political freedom to intellectual freedom, and a slightly less ridiculous leap between political and economic freedom. It sounds very eloquent the way she says it, but is in fact nothing more than fluff.
Now as far as this water shortage thing goes, I have my doubts that it is real, but given the current state of the world, there is no way that 'free markets' could solve the problem without first directly causing the deaths of millions of people. Even then the vagaries of arbitrage, costs of shipping, monopolies, cartel control of scarce necessities and a million other market-failures would prevent the lovely little two-by-two box from libertarian trade theory from panning out properly. Remember all those things that were 'demonstrated here for two goods, but work equally well with 'n' goods'? It's not true; the conditions for market equilibrium are so strict and varied as to virtually guarantee that an equilibrium does not exist.
