An Interesting Interview - are they right?
From: HoweStreet.com (‘the source for market commentary’) published Jay Taylor’s ‘Gold and Technology Stocks’ column (http://www.miningstocks.com/select.shtml) with an interview with Professor Ravi Batra called “Greenspan’s Fraud”. Ravi Batra has a web site: www.ravibatra.com.
I quote an extract:
“Batra: The main reason wages are not keeping up with productivity here is the merger mania that the government allows or fosters. I think that is against my free market thinking. If you have too many mergers, you restrain competition, and competition is desirable. If competition becomes limited, that lowers the living standard, and I think that is against the free market principles. That’s why in this book I have said that big companies should not be allowed to merge if they are very profitable. If companies are losing money and to stay afloat they need to merge, that is different.
Taylor: So you are a very strong advocate of the Sherman Anti Trust legislation?
Batra: That is right—merely to keep markets competitive—and that is my definition of free markets.
Taylor: Would Adam Smith not have held that if governments had stayed out of the way to start with you would have had free competition or pure competition? But in fact it was government intervention that led to this lack of free competition to start with. For example, Sarbanes-Oxley legislation puts enormous cost hurdles in front of small companies and thus keeps them from competing against larger firms .
Batra: Yes, exactly. The main thing is that the government is controlled by the rich. They use all kinds of excuses and theories to maintain control in the hands of the wealthy. They come up with various theories, but Adam Smith was against all those monopolies, and so am I.
Taylor: So given the fact that we have this political reality—that the rich have managed to shape government and economic policy in their favor—and I would argue they do it largely through the Federal Reserve as well as legislation, but given that fact, what you are advocating is a reduction of taxes for the lower income people in one way or another?
Batra: That’s right—reduce taxes on the poor. How you raise money for the government and how much government is going to use is a question for society. But at least don’t tax the poor because that is very bad for the economy.”
Comment:
The article itself is warning of an imminent depression in the US; it’s all the fault of Greenspan and President Bush, they both have ‘hidden agendas’; he opposes tax cuts for the rich and favours some linkage between the quantity of money and gold (though not 1:1).
In so far as his views on Adam Smith are concerned he is correct, though I am not sure that both Taylor and Batra are clear that Adam Smith was of the view that the ‘natural’ propensity for “merchants and manufacturers” was towards monopolies if left alone to their own devices. The only power capable of deterring such monopolistic tendencies is government.
To suggest, as Taylor does in his question and follow-up: “Would Adam Smith not have held that if governments had stayed out of the way to start with you would have had free competition or pure competition? But in fact it was government intervention that led to this lack of free competition to start with” requires further questions as to what he means.
Is he suggesting that monopoly and impure competition a fault of government intervention? Is he in favour of a complete withdrawal of government from the economy? He says he is a ‘Libertarian’ (as does Batra) but that is a very broad church covering multitudes of shades from the Libertarian Right through to the Libertarian left (and some who seem unable to make up their minds).
I quote an extract:
“Batra: The main reason wages are not keeping up with productivity here is the merger mania that the government allows or fosters. I think that is against my free market thinking. If you have too many mergers, you restrain competition, and competition is desirable. If competition becomes limited, that lowers the living standard, and I think that is against the free market principles. That’s why in this book I have said that big companies should not be allowed to merge if they are very profitable. If companies are losing money and to stay afloat they need to merge, that is different.
Taylor: So you are a very strong advocate of the Sherman Anti Trust legislation?
Batra: That is right—merely to keep markets competitive—and that is my definition of free markets.
Taylor: Would Adam Smith not have held that if governments had stayed out of the way to start with you would have had free competition or pure competition? But in fact it was government intervention that led to this lack of free competition to start with. For example, Sarbanes-Oxley legislation puts enormous cost hurdles in front of small companies and thus keeps them from competing against larger firms .
Batra: Yes, exactly. The main thing is that the government is controlled by the rich. They use all kinds of excuses and theories to maintain control in the hands of the wealthy. They come up with various theories, but Adam Smith was against all those monopolies, and so am I.
Taylor: So given the fact that we have this political reality—that the rich have managed to shape government and economic policy in their favor—and I would argue they do it largely through the Federal Reserve as well as legislation, but given that fact, what you are advocating is a reduction of taxes for the lower income people in one way or another?
Batra: That’s right—reduce taxes on the poor. How you raise money for the government and how much government is going to use is a question for society. But at least don’t tax the poor because that is very bad for the economy.”
Comment:
The article itself is warning of an imminent depression in the US; it’s all the fault of Greenspan and President Bush, they both have ‘hidden agendas’; he opposes tax cuts for the rich and favours some linkage between the quantity of money and gold (though not 1:1).
In so far as his views on Adam Smith are concerned he is correct, though I am not sure that both Taylor and Batra are clear that Adam Smith was of the view that the ‘natural’ propensity for “merchants and manufacturers” was towards monopolies if left alone to their own devices. The only power capable of deterring such monopolistic tendencies is government.
To suggest, as Taylor does in his question and follow-up: “Would Adam Smith not have held that if governments had stayed out of the way to start with you would have had free competition or pure competition? But in fact it was government intervention that led to this lack of free competition to start with” requires further questions as to what he means.
Is he suggesting that monopoly and impure competition a fault of government intervention? Is he in favour of a complete withdrawal of government from the economy? He says he is a ‘Libertarian’ (as does Batra) but that is a very broad church covering multitudes of shades from the Libertarian Right through to the Libertarian left (and some who seem unable to make up their minds).
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