Re: Public/Private

["David S. Shemano" <dshemano@xxxxxxxxxxx>]

In reply to Ian Murray and Matthew Forstater:

Let me be more specific.  I am not disputing that the private/public distinction is often vague, and that markets are inseparable from the state that creates the rules that define the market, etc.  I am not saying that free trade is the natural state of affairs (btw, I am presently suffering through The Great Transformation -- aren't you proud of me?).

However, even if everything in the previous paragraph is true, there are types of behavior that are analytically distinct.  If Boeing goes to the legislature and says that it will move unless it receives the benefit of a state expenditure, that is a different behavior than if it does NOT go to the legislature, right?  So why would you call both behaviors the same thing?

To me, rent-seeking is the attempt to increase profitability through the lobbying of the state.  I am prepared to say that lobbying for a tax reduction or lower tariffs because it will provide an advantage compared to competitors may be rent seeking.  However, increasing profitabilty through making capital investments, for instance,  is simply a different type of behavior that is analytically distinguishable.  I do not see any reason why both behaviors should be called the same thing.

David Shemano



--- Original Message---
 To: PEN-L@xxxxxxxxxxxxxxxx
 From: Ian Murray <seamus2001@xxxxxxxxx>
 Sent:  5/30/2003  1:38PM
 Subject: Re: Public/Private

>> ----- Original Message -----
>> From: "David S. Shemano" <dshemano@xxxxxxxxxxx>
>>
>>
>>
>> > >> ----- Original Message -----
>> > >> From: "Forstater, Mathew" <ForstaterM@xxxxxxxx>
>> > >>
>> > >>
>> > >> The ideas of the Free Trade movement are based on a theoretical error
>> > >> whose practical origin is not hard to identify; they are based on a
>> > >> distinction between political society and civil society, which is
>> made
>> > >> into and presented as an organic one, whereas in fact it is merely
>> > >> methodological. Thus it is asserted that economic activity belongs to
>> > >> civil society, and that the State must not intervene to regulate it.
>> But
>> > >> since in actual reality civil society and State are one and the same,
>> it
>> > >> must be made clear that laissez-faire too is a form of State
>> > >> "regulation", introduced and maintained by legislative and coercive
>> > >> means. It is a deliberate policy, conscious of its own ends, and not
>> the
>> > >> spontaneous, automatic expression of economic facts. (Gramsci)
>> > >>
>> > >> =======================
>> > >>
>> > >> To borrow from Robert Hale and Charles Tilly, free trade, too, is a
>> form
>> > >> of protectionism and rent seeking...........
>> > >>
>> > >>
>> > >> Ian
>> >
>> > I am curious-- what is the definition of protectionism and rent seeking
>> that treats free trade as protectionism and rent seeking?  Doesn't that
>> just create analytical confusion?  I mean, cats and dogs are both animals,
>> but why would you want to refer to a dog as a cat?
>> >
>> > David Shemano (the conservative who is on the list because he is a
>> masochist)
>>
>>
>> ===========================
>>
>> If the State attempts to institute laissez faire 'free trade' it is
>> protecting those who advocate/lobby/bribe the State to secure the benefits
>> of 'free trade' vis a vis those who would advocate/lobby/bribe the State
>> to implement non-laissez faire policies. Either side seeks to use the
>> State to gain an advantage/rents that would not exist were it not for the
>> State's intervention; the State cannot refrain from intervening.
>>
>> I'll give you an example on the current agenda of the State I live in
>> [WA].
>>
>> Boeing is engaging in rent-seeking behavior by 'threatening' to build the
>> next generation 7E7 aircraft somewhere else in the US [with parts also
>> being manufactured overseas] if the State Gov. does not agree to several
>> concessions/infrastructure improvements, chief among them a $16 million
>> port/rail line dedicated to importing pieces of the aircraft from Japan.
>> Such a concession [populist term for this being 'corporate welfare'] is in
>> blatant violation of WTO rules even as Boeing is a big supporter of
>> WTO/Free Trade [well they might have changed their position given the
>> Foreign Sales Corporation tax case]. Such concessions are a make or break
>> regarding the future of the company in the State because if they pursue a
>> greenfield strategy and build, say, from scratch in a right-to-work State
>> that offers them even more concessions [tax breaks and the like],
>> thousands of workers in the State will either migrate in hopes of staying
>> with the company or lose their jobs--possibly moving down the wage ladder.
>>
>> If  the WA State Gov. grants the concessions it is protecting Boeing from
>> all the taxpayers who do not want their tax $'s subsidizing one firm. If
>> the State Gov. protects the interests of the taxpayers who don't want the
>> subsidies going to one firm, Boeing may move out of State for good. What
>> is the meaning of laissez faire in this case? How can the State Gov.
>> conjointly realize it's obligations under the rules/goals of free trade
>> compliance with the WTO, refrain from generating a pecuniary externality
>> that harms taxpayers who will gain no benefit from the company remaining
>> within the State and avoid having Boeing attempt to arbitrage the
>> tax/subsidy policies of several States in order to extract the maximum of
>> concessions for the minimum of 'campaign donations'?
>>
>> Such behavior makes the notion of comparative advantage and free trade
>> rather unhelpful in dealing with what is going on. I take the above
>> example as the norm for political-economic policymaking in the USA
>> regarding large firms since the New Deal, if not earlier. Hence the idea
>> that we can separate the political from the economic is just silly.
>> Phillip II of Spain would easily recognize how firms like Boeing secure
>> advantage over rivals in today's pol-econ environment.
>>
>> If you want text refs. I can provide them.
>>
>>
>> Ian
>>