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These subsidy should not be looked at as a subsidy but instead as a partnership contribution. A partnership between the United States government and big oil corporations. The government will recover their investment with future tax dollars on oil sales.

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"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power" - Benito Mussolini

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Very bad example. A lot of infrastructural investments have what is known as a natural monopoly. Taking the British water industry as an example, most companies competed bitterly over the valuable urban business to the point where prices were so low that none of the companies could turn a significant profit, and rural communities were left with no competition & high prices due to the slim profit margins of sparsely populated regions. These multiple systems were not used to capacity (failing the prime test of capitalism - effective distribution of capital to places where it is best invested). Eventually, following a series of water-borne epidemics in the mid-19th Century (not necessarily linked to private water supplies), the government allowed municipal authorities to invest in the water & sanitation of their municipalities. They were better able to raise the capital needed for investment than the private companies.

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I suspect similar issues would arise for road and rail investment - possibly even worse as few people would like to see 3 or 4 companies competing in the provision of 6-lane highways between, say, New York & Washington. If nothing else, that much tarmac is a massive blight on the landscape, not to mention the difficulty in finding routes that are acceptable to all communities on the way (who won't benefit much from the 'competition' element as intermediate large towns may not be served by more than one company anyway).

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Infrastructure is best left to those who can plan a rational network. This does not stop private companies from benefiting (public-private partnerships, licensing of routes by government agencies to ensure maximal network utilisation), but the experience here in the UK is that government cannot write a semi-decent contract to ensure that private companies involved make a profit without burdening the users with excessive charges:

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- Bailout of London and Continental Railways as their build and operate contract for the UK's first high-speed line caused major financial difficulties due to over-optimistic revenue forecasts (again, capital can only be rationally invested if you assume that all parties act rationally - unfortunately, companies have a poor track-record at this as they often 'big-up' their forecasts to attract investment. Better government regulation can help mitigate this).

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It seems (final graph) that there is a strong correlation between income inequality and societal problems (the study included 25 things like murder and suicide rates, prison population, mortality, sexually transmitted diseases, abortions, marriages, deaths, alcohol consumption, poverty and unemployment). The US shows up quite badly in this, most of Europe does fairly well, as usual the UK straddles the Atlantic being neither as good as Europe, nor as bad as America.

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The general consensus seems to be that he is cutting too deep, too soon. Even the OECD seems to think we might be moving too fast.

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Skandar,
Forgot to respond to the capitalism/socialism bit.
From my studies and experience, pure forms of either are negative.

Pure socialism basically is just communism by another name. Pure capitalism is too open to abuse such as the UK of Charles Dickens' time and the railroad "robber barons" here in America.

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In little more than two decades, three transcontinental railroads were built with government help. All three wound up in bankruptcy courts. And thus, when James Jerome Hill said he was going to build a line from the Great Lakes to the Puget Sound, without government cash or land grant, even his closest friends thought him mad. But his Great Northern arrived at Puget sound without a penny of federal help, nor did it fail.

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Social conservatism
Might be an idea to spin this off into a separate topic thread. Anyway, I'm an agnostic (technically a theological noncognitivist, but let's not split hairs), secular, pro-choice, pro-gay rights, pro-assisted suicide, anti-abstinence-as-a-reproductive-health-strategy, anti-right to bear arms (not really an issue over here), slight leftie liberal. Pick a target and we'll start from there.

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I firmly believe in capitalism. But human nature includes a portion of greed in most. This can lead to "shortcuts" in safety measures and some exploitation. The vast majority of companies are conscientious (after all, if their plant blows up or the people all leave due to mistreatment they won't have a business left), but there are always some who want to "cut corners" for fast profits.

Fully agree that legislatures need to stay out of the day to day ops of corporations. My stand on regulations deal with safety measures, and to a certain degree working conditions.

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Another example for you - one policy of the British government that made the Irish Potato Famine (1845-52) even more catastrophic was its refusal to intervene in the free market. A previous famine in 1782-3 had been dealt with, in part, by closing the ports so that food grown in Ireland was used to feed the Irish.

No such restrictions were imposed during the Potato Famine and, peversely, exports of calves, most livestock, bacon and ham actually increased. Also, don't forget that the same potato blight affected crops across much of Europe - this was not peculiar to Ireland. The attitude of the British at the time was that the free market would provide and correct the imbalance. Unfortunately, when people have no income due to crop failure (or unemployment due to an international banking crisis), it's pretty difficult to turn a profit selling them the food they need. Ergo, it was more profitable to export food to richer countries. The market did provide, but only in the form of profit.

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I assume, given our earlier discussions that this would exclude some issues regarding regulation, like accurate, honest and open accounting which must be legally enforced.

Even then, regulation can fail. Construction of our rail network resulted in an stock price bubble ("Railway Mania") as a result of poor scrutiny of bills placed before Parliament for the construction of new lines. This resulted in inflated costs associated with the construction of the network, a big recession when the bubble burst (this was prior to our social security safety-net, so no protection from the poor house), and a whole heap of duplicated and unprofitable routes, many of which were eventually closed in the 1960s (the Beeching Axe). In contrast to your earlier assertions that the free market wouldn't result in unnecessary duplication, we ended up with four routes between London and Birmingham (now down to two after the nationalised British Rail closed two).

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How do you ensure this does not happen without government legislation? If people are desperate for work, they may be tempted to take any job no matter how well-informed they are of bad working conditions. Health and Safety does impact on profits though, so there are incentives for private companies to cut corners, particularly when labour is cheap and readily available, such as during recessions.

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@Scarlet "I don't think the invocation of free market was seriously under the impression that the food would go to the Irish"
I think you're right on this. It wasn't the expectation that the free market would bring food to the Irish, but the ideology of the British elite at the time that intervening in the market to bring food to the Irish would be morally wrong.

Relying on charitable giving in such circumstances also tends not to provide enough resources, nor quickly enough. Charitable donations did help alleviate some of the suffering in Ireland, but there was a significant lag before they started, and they never reached a level sufficient to stem the flee from Ireland.

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You are also right to point out that it wasn't just the free market that caused this. There were laws that restricted the rights of the Irish, although they had been largely abolished by the time of the famine (the 1829 Act of Emanicpation removed many of the restrictions on Roman Catholics which had applied equally across Great Britain and Ireland with disproportionate effects on Ireland due to the greater numbers of Catholics there). These had been introduced over the preceeding centuries, in part in response to the refusal of the Pope to recognise the right of the Houses of Tudor and Stuart as lawful rulers, this being a result of the protestant reformation.

The point so far is, all of this is still ideologically driven. Even the semi-legal (in the sense that laws were enacted to declare it legal) process of dispossessing Catholic landholders was done with the dual aim of ensuring the protestant reformation in the UK AND improving the economy by enabling landholders to replace tenant farmers with more profitable sheep-rearing, etc. (free-marketeering). I suspect even your ideal "purely capitalist state", without the benefit of hindsight would have acted similarly - don't forget that an aspect of this was to secure the UK from potential Catholic aggression during the series of reformations and counter-reformations. War tends to make the stock market volatile due to uncertainty of supply and access to foreign markets and Europe had been in an almost perpetual state of war since the reformation started.

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This brings me on to my next criticism of your position - the philosophical aspect. I get a sense that your unswerving support for the morality of pure capitalism arises from familiarity with the philosophy and politics of Ayn Rand. In my opinion, she makes the same fatal error as die-hard supporters of Marxism (as distinct from communism, Leninism and Stalinism). All of these politico-economic ideologies seem to arise out of first principle thinking. They neglect to take into account the Real World.

No matter how self-consistent and theoretically perfect a system, they will fail when they come into contact with reality. This is why you often end up with supporters saying things like, "ah, but in a real Marxist economy..." or (to quote you above) "in a purely capitalist state...".

These ideal situations do not exist and none of the philosphies from Rand, Marx, Lenin, or Locke provide adequate suggestions for how to get from the World-as-it-is, to the World-as-they-say-it-should-be.

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To take one of your arguments about the effect of the Irish Potato Famine: "However, the market did cause something - the emigration of the Irish out of Ireland. People moving to more prosperous areas where there is greater opportunity is a correction".
This implies free passage across international borders (only possible at the time as Ireland was part of the British empire and there were fewer restrictions on movement of people and capital between our colonies, plus the fact that America was ecouraging immigration to help populate its expanding territory). Imagine the U.S. embraced your purely capitalist state ideal. To allow for this free transfer of people and capital, it would have to stop restricting immigration. How would the people of the states bordering Mexico react?

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Obviously you could argue that this is an unnecessary step - perhaps you only need to lift the restrictions on other equally purely capitalist states? All that would require is another poor country to enact laws to turn it into a purely capitalist state and you would immediately have large-scale short-term disruption caused by mass migration. The hawks in Washington would immediately demand immigration controls with widespread support from the electorate.

There is simply no way that what you think is the ideal politico-economic system could arise in the real world. I am similarly sceptical of ALL philosophical arguments regarding politics and economics. None of them can survive the Real World intact. Use them to influence policy, yes, but you always need to guard against the unintended consequences of not being able to fully implement them.

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A brief word about the morality of Pure Capitalism
I am fairly footloose in terms of moving to take a new job. I'm currently single with no dependents. Given that I'm fairly fluent in French, I could even move abroad. Is it necessarily moral that I could be forced to leave my home country to find work in order to live? What about a married/civilly-partnered couple (again: Real World, they exist over here and across much of Europe) with children who rely on their extended family for childcare? Is it moral to uproot them, take them away from their friends and extended family just so that they can earn enough to feed themselves? As mentioned in one of my posts above, Thatcher destroyed many Northern (England) mining communities with unemployment reaching 50% in some localities. I think it neither right nor moral that these people should be forced (by circumstance, not in the sense of forcibly removed) to move away from their friends and family. Especially since many had been in mining all their lives and didn't have the skills for other work. Staying in mining would probably have meant moving to a foreign country and learning a different language. Staying within the UK would have meant learning new skills - which should have been encouraged. But the market couldn't provide this for free (to unemployed miners, charity couldn't hope to supply the demand for training, and the state (under Thatcher) didn't provide it. The only entity capable of delivering the necessary re-training was the State, and ideology prevented Thatcher from doing so.

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My last point: natural monopolies again
"People aren't exactly forgiving in their role as consumers. If the start-up charges reasonable prices to start, they can force the competitor to charge reasonable prices, but the start-up will also gain business just from the old monopolies' past unscrupulous practices."
Generally agreed. However, when it comes to natural monopolies, the barriers to entry are incredibly high - a new rail line/motorway can cost billions and take decades to pay for itself. An already established company could more easily lower its prices, forcing the start up to do the same stretching the time until it pays back its investors (in the UK large supermarket chains have been accused numerous times of selling a wide variety of items at below-cost to put local competitors out of business - they can subsidise the losses with profits from other stores). This would be likely to depress the value of the start-up enabling the established company to re-establish its natural monopoly.

In terms of people being pretty unforgiving in the role as consumers, they also have very poor long-term memories. A year before our last election there was a massive scandal involving MPs claiming frivolous expenses (sticking to the letter of the rules, if not the spirit of them) for moat-cleaning (unsurprisingly a Conservative MP), dog food (not a necessary expenses incurred due to government business) and mortgage payments on the family home (this did eventually lead to a custodial sentence for fraud, although he rightly maintained that it wasn't against the rules on MPs expenses).

The issue probably contributed to us getting a coalition government this time round, but nearly everyone had forgotten about it by the election. It wasn't a big election issue and reform of the rules went from a high priority immediately following the scandal, to a watered-down proposal before the election, to nothing now. I believe the MPs have now signed up to a new voluntary code which still doesn't include full disclosure.

The point is, we have collectively forgotten this. I'd be willing to wager something similar would happen with companies who fleece their customers. There would be outrage for a few months, their stock would drop (admittedly risking a takeover), but it would all blow over in a few months.

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