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Failure of states in a free society

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I firmly believe a free society(laissez-faire) is the best and only way for long term economic growth. But succes is not guarenteed. The fault hindering success in the case of a free society would be the mentality of the people. I realized this first-hand while observing the Great Falls(Montana) city after learning of its apparent lack of economic growth over the past several years. Its quite obvious what the top 3 businesses here are: thrift stores(second-hand stores), churches, casinos. And I think I see a link connecting these businesses and it also describes the general mentality of the people here.

First, lets look at thrift stores. Im going to assume that they are so popular because the people dont have much money. Why dont they have much money? Look at the next business on the list: churches. That means some of their top values are faith and self-sacrifice. They dont become selfish enough. So what does this lead to? The third business: casinos(slot machines mostly are what they are). These people dont want to work hard consistently to succeed, they want instant gratification. They would prefer to base their fortune on lucl and chance, and not on planning success rationally. In a more ideal society, (slot machine)casinos wouldnt be that popular because the people would fill their time with a more productive purpose. Playing slot machines is far from being productive, especially considering the majority of people here dont have much money.

In conclusion, the proper mentality of people needs to exist for an economy to grow even in a free society. Although Montana isnt laissez-faire, it is one of the more free states, so there needs to be another reason for its lack of growth. I think it comes down to the values of the people.

1. What do you agree/disagree with?

2. What other factors can hinder success in a free society?

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I realized this first-hand while observing the Great Falls(Montana) city after learning of its apparent lack of economic growth over the past several years.
What is the actual rate of growth; what would you have expected (in other word, what justifies your disappointment)? What does GF produce?
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Yeah, there's nothing much *in* Montana, so where's the incentive for companies to move or start up there?

Lots of cattle. Lots of oil. That is what is *in* Montana. What they don't have to many of is people. It still is (I believe) the least populated State.

The call it Big Sky Country. It is mostly flat and there is nothing between it and the North Pole except some barbed wire fences.

Bob Kolker

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What is the actual rate of growth; what would you have expected (in other word, what justifies your disappointment)? What does GF produce?

I dont know the actual growth rate. I was listening to a conversation between 3 of the older employees(lived here for decades) and they said that Great Falls hasnt had any economic growth for several years. And the reason I figured they were right is because 1)the reluctancy of big businesses to come here, 2)the majority of homes are small and arent worth much.

Im assuming GF and the surrounding areas mainly produce things involved with animals and agriculture. But what do other major cities produce that draw residents there? I mean, I lived in a nice suburb in Minnesota last year and it had so many nice businesses and nice homes. Why would Eagan, MN become this much nicer than Great Falls?

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Im assuming GF and the surrounding areas mainly produce things involved with animals and agriculture. But what do other major cities produce that draw residents there?
Well, I don't know really. But you've kinda changed the question from production per se to attracting people to move. Comparing Eagan and GF is wrong -- compare GF and Mupples. One of the things about Mupples is that you can live in Eagan. Whereas, if you live in GF, you live in GF. It's 150 miles to Butt, for pete's sake, and 360 miles to Spokane. You may laugh, but the big drive to a Real City is a non-trivial consideration.

I don't disagree with your underlying "it's the philosophy" premise, but I suggest digging deeper. Look at the manufacturing, the hi-tech industries. Banking and insurance, software-production, import-export businesses. Nothing? I also suggest ignoring the blitherings of 3 older employees. When you get old, it's a favorite pastime to reminisce about the good old days and lament how everything is crap. I suggest questioning the assumption that it's all crap in GF, though since I haven't been there myself (never could be bothered to make the left turn, for some reason) it could be. I just wouldn't buy the assumption without looking at the rational basis. Can a man really have a valid "gut feeling" about economic growth that holds for a whole town, based just on one's emotional reaction?

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1. What do you agree/disagree with?

2. What other factors can hinder success in a free society?

I disagree with the focus on Great Falls first of all. Your focus should be on making yourself happy. If that means having more people and more productive activity around, then maybe the answer isn't attracting more people to Great Falls. Maybe the answer is for you to go where the people and activity are. A great thing about this country is you get to choose. You can have anything from New York or Los Angeles to Mupples or Butt and everything in between. I grew up in a small town and my preference is for big cities with lots of people, and since I know I'll never duplicate what I find in a big city in a small town, it doesn't trouble me that the small town hasn't got it. I just don't choose to live in a small town.

It isn't necessarily a bad thing that not all towns grow. Some towns dying out or stagnating strikes me as perfectly normal. A dynamic economy means that the centers of industrial and productive activity change as industries themselves change. My home town (situated on the Great Lakes for shipping) was all about lumber and steel a century ago, now it's "tourism", i.e. it's dying. It doesn't trouble me. The growth is simply elsewhere. My family back there is ambivalent: they want growth for certain things, but they also appreciate the quiet and serenity of where they live and don't want it to change. They don't value big cities like I do so it's fine for them.

Edited by Seeker
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Maybe the answer is for you to go where the people and activity are. A great thing about this country is you get to choose.
This is an insight that remarkably many people fail to grasp. I know somebody from way the heck out back and up in the hills where there are no jobs and everybody is dirt poor. So my question was "why don't you move away" -- the answer was "This is where our family is from, we've always lived here for generations and generations, since the Civil War". Yep. I guess if you family actually grew out of the ground like a crop, I can see why you'd want to keep your feet buried in the dirt, even if the soil is no longer fertile.
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Lots of cattle. Lots of oil. That is what is *in* Montana.

There are also fairly large trout fishing industries as well as plenty of coal mining in Montana. With regards to trout, I am presently uncertain as to what extent fishing industries are legally permitted to establish ownership of a trout farm or a trout hatchery. If I remember correctly, in Jared Diamond's Collapse Montana's rainbow trout were cited as an example of the Tragedy of the Commons where the fish population was supposedly significantly diminished from overfishing. Usually, this game theoretic phenomenon occurs when businessmen are unable to establish ownership over a portion of a large pool of resources that is being harvested by many competitors. I wonder if there are any such legal barriers in parts of the state.

Montana also has two beautiful national parks: Glacier National Park and part of Yellowstone National Park. There is probably a large tourism industry in Montana (hotels, native american casinoes, cheesy theme parks with dinosaurs, places where you can order indian fry bread.) Of course, given how the National Park system works, Montana residents (I think) cannot directly profit off of maintaining and running the parks themselves.

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I disagree with the focus on Great Falls first of all. Your focus should be on making yourself happy. If that means having more people and more productive activity around, then maybe the answer isn't attracting more people to Great Falls. Maybe the answer is for you to go where the people and activity are. A great thing about this country is you get to choose.

Yes, exactly. I love that about this country too. Thats why Im leaving for Charlotte, NC literally in two days and its a permenant move. My passion is playing baseball and Ive come to the conclusion after researching the states that Charlotte will give me the best opportunity to improve on my goals.

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What draws business and people to a city?
I don't know, but why is that relevant? Is economic success determined by the extent to which you're able to draw people and businesses to a location? Or are you saying that you're more interested in a place that draws people and businesses to it, because of some intrinsic value to being in an "attractor" location?
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What draws business and people to a city? Does the business come first or do the people?

Neither. Some kind of natural local benefit comes first. Why do you think major cities are on rivers or right next to nice big bays? Other cities grow up around iron mines or gold mines. All of these are industries that require a huge initial capital investment to get going, though, so they tend to be conservative and move very slowly . . . especially now because they are under huge punitive restrictions from the government. Massive population relocations just don't happen so much now.

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Neither. Some kind of natural local benefit comes first. Why do you think major cities are on rivers or right next to nice big bays? Other cities grow up around iron mines or gold mines. All of these are industries that require a huge initial capital investment to get going, though, so they tend to be conservative and move very slowly . . . especially now because they are under huge punitive restrictions from the government. Massive population relocations just don't happen so much now.

This is a crucial point. Something has to make a place of value to someone to even begin talking about or comparing its growth to other areas.

And to the extent that a certain "critical mass" is built up historically, the existing businesses are themselves a "natural local benefit". Think, Silicon Valley (San Fransisco), Biotech Bay (San Diego), Houston (petrochemical), and Milan (shoes!).

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I thought that was what economic growth is: the growth of business in the economy which increases its ability to produce goods.
Economic growth is the increase in production. It's not the same thing as "getting people to move". If you were asking about the "attractiveness", then concern over whether people would move to GF would be appropriate. But you're not, so it isn't. There may be a correlation in that economic growth can cause people to move to an economically-growing area, but don't get confused about cause and effect.
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People go where the jobs are. Jobs are created whenever capital providers and entrepreneurs get a marginal benefit for doing so that exceeds the marginal cost. This is also in reference to ALL benefits gained and costs faced by the capitalists and entrepreneurs, including personally, and not just revenue projections and direct employment costs to the businesses as going concerns. Thus a population will expand in any area that offers the prospect of that surfeit of benefit over cost to the capitalists and entrepreneurs, and will be maintained wherever the prospect turned out to be good.

An area out in the middle of nowhere may be developed if that area has in it or otherwise associated with it something that facilitates that surfeit. That something may be natural (minerals, arable land, transport lane access, etc) or man-made (stability of property rights, low crime, special economic zone status, etc). Hence you can find humans who will live in scorching deserts (eg countless Australian mining towns, such as Marble Bar in WA, the town with the global record for hottest temperature on record), frigid arctic locales (eg Murmansk, and that the only thing stopping migration to Antarctica is law against mining), swamps teeming with critters with a taste for human flesh (many tropical places around the world), and places with every other manner of inclement weather and other inhospitable conditions.

All this holds irrespective of whatever the particular sizes of the benefits and costs may be. A place in an extreme location will be developed if there is something there that is good enough to pay people money to put up with it. Enormous costs will be countered by even more enormous benefits, hence generating the required surplus, hence generating an impetus for development of business and population. After that, the population will be maintained so long as capitalists and entrepreneurs continue to enjoy a level of benefit over cost that meets or exceeds the required rates of return (both official and personal). This population level is also tweaked by things like technology etc.

I do not buy the critical-mass argument as an end in itself, as it is just a reference to how the personal connection that some capitalists and entrepreneurs have to a location enters into their benefit and cost calculations. That personal connection need not be maintained, and indeed is harder to maintain as an end in itself as generations pass. If the benefits of the area itself cease to exist, or costs rise to exceed it, then the decline and eventual abandonment of that area is inexorable. Tight personal connections only slow the decline down without stopping it. People who take for granted the continued existence of phenomena like Silicon Valley are foolish.

I'm simplifying, but that's it in a nutshell.

JJM

Edited by John McVey
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Economic growth is the increase in production.

Somewhat OT, but I disagree with that. Economic growth is an increase in the VIABLE CAPACITY to produce, not the actual production itself. Dr M Northrup Beuchner argued for this in one of his lectures, too, though the word 'viable' is my own addition. The reason is that total production can increase while savings and capital are being consumed / not replaced, which is what happens when there is a notable increase in the time-preference of a people in a given economy. This is one of the most insidious long-term economic effects of the welfare state, and is it further one of the pernicious effects of inflation to cause that increase on the sly by changing the statistical distribution of cash incomes away from savers and toward spenders.

Anyhew, we now return you to your regular transmission.

JJM

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