Coyote Blog

Today, as linked by Hit and Run, the Washingtonian lists a number of blogs that are popular with journalists.  I have no particular problem with the list — I read many of the same blogs myself.  However, this description of the libertarian blog at Reasons’s Hit and Run struck me as odd (emphasis added):

The libertarians behind Reason magazine strike back with
moderate commentary on a variety of topics ranging from public
television to Gwen Stefani’s “Hollaback Girl.”

I am not sure that many Republicans or Democrats would consider Reason to be moderate.  Its hard to believe that any of us anarcho-capitalist make-government-and-taxes-go-away libertarians would ever be confused with moderates.  Reason has in the last month taken stands against the drug war, against any government intervention into property rights, against the Patriot act, in defense of steroid use, and favoring legalization of prostitution and continued legality of pornography.  Not many red-staters or blue-staters would call that moderate.  It may be consistent, in that it is against statism and for the primacy of individual decision-making, but libertarianism tends to be extreme and uncompromising in these views.  And, while most libertarians are not moderate, most moderates are not libertarians — those who generally call themselves moderate tend to do so because they pick and choose bits of statism from both political parties. 

But there is an explanation for the word "moderate", and it goes back to the crappy civics lessons we all have gotten.  As I wrote before, those civics lessons were the statist’s wet-dream, portraying the range of political thought on a linear scale from socialism on the left to fascism on the right.  In other words, our political choices are defined as running from statist control to… statist control.  In this framework, anyone who is not a commie or a Nazi are put somewhere in the middle, which has been shorthanded "moderates".

This is obviously a stupid framework, and breaks down when libertarians come into the picture.  More modern self-assessment frameworks use grids of at least two dimensions, with at least one dimension being the degree (from none to total) that one accepts state authority over the individual.

Update:  Oops, I missed the fact that some of the Reason writers themselves had much the same reaction. 

I am a little late linking this, but the world is in the midst of one of those pure, tightly controlled experiments to demonstrate the true price of socialism.  And, as usual, no one will learn from it.  Via Jane Galt:

It is depressing to look back at history and see how regularly the same
nice-sounding idea–"let’s take the land from the rich people who unjustly own
it and give it to those who need it"–turns into tragedy for everyone. It’s even
more depressing to realise that despite the seeming predictibility of the
result, lots of people want to do it anyway.

The Atlantic, which she quote in a follow up post, has more detail:

Mugabe decided on what he called "fast-track land reform" only in February of
2000, after he got shocking results in a constitutional referendum: though he
controlled the media, the schools, the police, and the army, voters rejected a
constitution he put forth to increase his power even further. A new movement was
afoot in Zimbabwe: the Movement for Democratic Change—a coalition of civic
groups, labor unions, constitutional reformers, and heretofore marginal
opposition parties. Mugabe blamed the whites and their farm workers (who,
although they together made up only 15 percent of the electorate, were enough to
tip the scales) for the growth of the MDC—and for his humiliating rebuff.

So he played the race card and the land card. "If white settlers just took
the land from us without paying for it," the President declared, "we can, in a
similar way, just take it from them without paying for it." In 1896 Africans had
suffered huge casualties in an eighteen-month rebellion against British pioneers
known as the chimurenga, or "liberation war." The war that brought Zimbabwean
blacks self-rule was known as the second chimurenga. In the immediate aftermath
of his referendum defeat Mugabe announced a third chimurenga, invoking a valiant
history to animate a violent, country-wide land grab…

The drop-off in agricultural production is staggering. Maize farming, which
yielded more than 1.5 million tons annually before 2000, is this year expected
to generate just 500,000 tons. Wheat production, which stood at 309,000 tons in
2000, will hover at 27,000 tons this year. Tobacco production, too, which at
265,000 tons accounted for nearly a third of the total foreign-currency earnings
in 2000, has tumbled, to about 66,000 tons in 2003.

Mugabe’s belief that he can strengthen his flagging popularity by destroying
a resented but economically vital minority group is one that dictators elsewhere
have shared. Paranoid about their diminishing support, Stalin wiped out the
wealthy kulak farming class, Idi Amin purged Uganda’s Indian commercial class,
and, of course, Hitler went after Jewish businesses even though Germany was
already reeling from the Depression. Whatever spikes in popularity these moves
generated, the economic damage was profound, and the dictators had to exert
great effort to mask it.

Overall, the country has gone from a net exporter of food to outright famine.  For this particular experiment, I am happy to live in the control group.  Stay tuned, as this show is likely to hit the road soon and move to Venezuela. 

Well, it worked for Johnny Carson, why not for me?  Instead of leaving you with dead air (photons?) while I am knocking the rust off my beer pong skills back at Princeton, I will share with you a few of my favorite posts from my early days of blogging.  Since most of these posts were viewed by about 5 people, there is a certain temptation to just recycle them without attribution, given the unlikelihood of getting caught.  Instead, though, I will share them as my best of Coyote…

This post was from early last December, and is titled "60 Second Refutation of Socialism, While Sitting at the Beach":

Last week, there were several comments in Carnival of the
Capitalists that people would like to see more articles highlighting
the benefits of capitalism.  This got me thinking about a conversation
I had years ago at the beach:

Hanging
out at the beach one day with a distant family member, we got into a
discussion about capitalism and socialism.  In particular, we were
arguing about whether brute labor, as socialism teaches, is the source
of all wealth (which, socialism further argues, is in turn stolen by
the capitalist masters).  The young woman, as were most people her age,
was taught mainly by the socialists who dominate college academia
nowadays.  I was trying to find a way to connect with her, to get her
to question her assumptions, but was struggling because she really had
not been taught many of the fundamental building blocks of either
philosophy or economics, but rather a mish-mash of politically correct
points of view that seem to substitute nowadays for both.

One
of the reasons I took up writing a blog is that I have never been as
snappy or witty in real-time discussions as I would like to be, and I
generally think of the perfect comeback or argument minutes or hours
too late.  I have always done better with writing, where I have time to
think.  However, on this day, I had inspiration from a half-remembered
story I had heard before.  I am sure I stole the following argument
from someone, but to this day I still can’t remember from whom.

I
picked up a handful of sand, and said "this is almost pure silicon,
virtually identical to what powers a computer.  Take as much labor as
you want, and build me a computer with it — the only limitation is you
can only have true manual laborers – no engineers or managers or other
capitalist lackeys".

Yeah, I know
what you’re thinking – beach sand is not pure silicon – it is actually
silicon dioxide, SiO2, but if she didn’t take any economics she
certainly didn’t take any chemistry or geology.

She
replied that my request was BS, that it took a lot of money to build an
electronics plant, and her group of laborers didn’t have any and
bankers would never lend them any.

All
too many defenders of capitalism would have stopped here, and said
aha!  So you admit you need more than labor – you need capital too.
But Marx would not have disagreed – he would have said it was the
separation of labor and capital that was bad – only when laborers owned
the capital, rather than being slaves to the ruling class that now
controls the capital, would the world reach nirvana.  So I offered her
just that:

I
told her – assume for our discussion that I have tons of money, and I
will give you and your laborers as much as you need.  The only
restriction I put on it is that you may only buy raw materials – steel,
land, silicon – in their crudest forms.  It is up to you to assemble
these raw materials, with your laborers, to build the factory and make
me my computer.

She thought for a few seconds, and responded "but I can’t – I don’t know how.  I need someone to tell me how to do it"

And
that is the heart of socialism’s failure.  For the true source of
wealth is not brute labor, or even what you might call brute capital,
but the mind.  The mind creates new technologies, new products, new
business models, new productivity enhancements, in short, everything
that creates wealth.  Labor or capital without a mind behind it is
useless.

From the year 1000 to the year 1700, the world’s wealth, measured as GDP per capita, was virtually unchanged.
Since 1700, the GDP per capita in places like the US has risen, in real
terms, over 40 fold.  This is a real increase in total wealth – it is
not money stolen or looted or exploited.  Wealthy nations like the US
didn’t "take" the wealth from somewhere else – it never even existed
before.  It was created by the minds of human beings.

How?  What changed?  Historians who really study this
stuff would probably point to a jillion things, but in my mind two are
important:

1. There was a philosophical and intellectual
   change where questioning established beliefs and social patterns went
   from being heresy and unthinkable to being acceptable, and even in
   vogue.  In other words, men, at first just the elite but soon everyone,
   were urged to use their mind rather than just relying on established
   beliefs
2. There were social and political changes that greatly increased
   the number of people capable of entrepreneurship.  Before this time,
   the vast vast majority of people were locked into social positions that
   allowed them no flexibility to act on a good idea, even if they had
   one.  By starting to create a large and free middle class, first in the
   Netherlands and England and then in the US, more people had the ability
   to use their mind to create new wealth.  Whereas before, perhaps 1% or
   less of any population really had the freedom to truly act on their
   ideas, after 1700 many more people began to have this freedom. 

So today’s wealth, and everything that goes with it (from shorter
work hours to longer life spans) is the result of more people using
their minds more freely.

Look around the world – for any country, ask yourself if the average
person in that country has the open intellectual climate that
encourages people to think for themselves, and the open political and
economic climate that allows people to act on the insights their minds
provide and to keep the fruits of their effort.  Where you can answer
yes to both, you will find wealth and growth.  Where you answer no to
both, you will find poverty and misery. 

UPDATE

While it is not exactly a direct follow-on to this article, see my post Progressives are too Conservative to Like Capitalism
for an analysis of some of capitalism’s detractors.  For yet another
way to explain capitalism, at least libertarian philosophy, here is a new-agy approach that is actually pretty good.  Finally, Spontaneous Order
has an interesting post comparing religious creationism in the physical
world with progressives’ statism in the economic/social realms.

For years, high school civics books have portrayed our political choices as ranging from socialism on the left to fascism on the right.  These textbooks represent the statists’ wet dream — the reframing of political discussion such that all possible outcomes are defined as rigid government control of individual lives.  The only difference is who is in charge, and the path they took to get there. 

Think I am exaggerating?  Here’s an example:

The left hate George Bush.  Fine.  I have my own problems with the man.  Over the last few years, the left has cast about for a person to rally around as a counterpoint to Bush.  Some latched on the the French leadership, some to Saddam Hussein, some even recently to George Gallway.   I think you can see the problem here, and the mistake Michael Moore made.  Forcing voters to choose between Saddam Hussein and George Bush is practically begging them to vote Republican.

After the last election, I had hoped that the left had gotten wiser.  I guess not.  Apparently the "progressive" community is rallying around Hugo Chavez as their next model leader:

Of the top oil producing countries in the world, only one is a democracy with a
president who was elected on a platform of using his nation’s oil revenue to
benefit the poor. The country is Venezuela. The President is Hugo Chavez. Call
him "the Anti-Bush."…

Instead of using government to help the rich and the corporate, as Bush does,
Chavez is using the resources and oil revenue of his government to help the poor
in Venezuela. A country with so much oil wealth shouldn’t have 60 percent of its
people living in poverty, earning less than $2 per day. With a mass movement
behind him, Chavez is confronting poverty in Venezuela. That’s why large
majorities have consistently backed him in democratic elections. And why the
Bush administration supported an attempted military coup in 2002 that sought to
overthrow Chavez.

And this is the group that calls themselves "reality-based"?  Does anyone really believe that poverty results solely from not handing oil revenue to the poor?  The US doesn’t do this (well, except in Alaska), yet despite this our poor in this country are wealthier than the middle class in Venezuela, and its because we have a stable government that protects property rights and individual freedoms and provides a stable environment for investment.  Prosperity comes from building a healthy and growing economy, not looting a particular industry.  (By the way, I am sure that the previous regime was looting the oil industry as well, so I am certainly not defending them.)

However, this point is worth repeating:  Progressives consider Venezuela to have a better policy for helping the poor than the US, but the poorest 20% in the US still make more money and live better and longer than at least 80% of Venezuelans.  A person in the middle of the "poor" quintile in the US would be upper middle class in Venezuela.  And I will bet anyone that after 10 years of Chavez rule, this will be more, not less, true.

Chavez is a totalitarian thug.  Human Rights Watch has plenty to say about his miserable record of trashing freedoms.  In particular, you can compare the supreme court shenanigans of the "anti-Bush" with ridiculously mild controversy in this country (at least by comparison) over judicial nominations.  More background on Chavez here.

So there you are.  We are given the choice of Bush or Chavez.  Statism or statism.  Thanks a lot.

Marginal Revolution notes a recent piece by Jeffrey Rosen about potential libertarian supreme court nominees.  In particular, they noted this quote:

…Epstein was promoting a legal philosophy far more radical in its
implications than anything entertained by Antonin Scalia, then, as now, the
court’s most irascible conservative. As Epstein sees it, all individuals have
certain inherent rights and liberties, including ”economic” liberties, like
the right to property and, more crucially, the right to part with it only
voluntarily. These rights are violated any time an individual is deprived of his
property without compensation — when it is stolen, for example, but also when
it is subjected to governmental regulation that reduces its value or when a
government fails to provide greater security in exchange for the property it
seizes.

Whoa, how crazy is that?  I find it depressing that believing in the right to part with property "only voluntarily" is today considered so wildly out of the mainstream that it is necessarily a disqualification to be a Supreme Court judge.  The courts today are terribly important battle ground in protecting individual rights against both creeping socialism and paternalism.  Unfortunately, neither Republicans nor Democrats can be trusted with leading this battle.  Each wants the judiciary to protect individual rights in one area and restrict them in another.  The left supports limitations on political speech via campaign finance restrictions and an unfettered right of government to invade personal property.  The right wants limitations on non-political speech via "community standards" on entertainment and hopes to regulate America’s sexual practices.

Most people interested in politics are constantly hoping their party is the winner in the race to power.  I just wish I had a horse in the race.

Instapundit has several links to biographies of Norman Borlaug, who won the Nobel Peace prize for starting the green revolution and perhaps single-handedly saving hundreds of millions from starvation.  This is a particularly interesting one.

Borlaug won his prize, of course, back when the Nobel Peace prize was actually given to people who made the world a better place.  Today the prize is typically given to whatever person did the most to appease a major dictatorship or terrorist or to whoever was most vocal worldwide in their socialism or  anti-Americanism.  This description of the Nobel committee’s criteria may sound flippant, but it is clear to me that the committee is dominated by those who favor peace ahead of anything else.  Which, in real life, means that you have to be ready to live with … anything else, including murder, rape, genocide, totalitarianism, etc. 

Just look at the list of recent winners.  In 1985 they gave the peace prize to the International Physicians for the Prevention of Nuclear War, who as a group systematically opposed everything the US was doing at the time which in 5 years would result in a true reduction in the risk of nuclear war.    In 1988 they gave the award to the serial rapists in the UN peacekeeping forces.    For God sakes in 1994 Yasser Arafat won, perhaps the single person most responsible for chaos in the Middle East.  In 2001 Kofi Anan won, at the very time he was out-Enroning Ken Lay by helping Saddam Hussein steal $20 billion while enriching his own son with contractor kickbacks.  And of course in 2002 Jimmy Carter won for appeasing just about every dictator in the world, but North Korea in particular (interestingly, Jimmy Carter is the only US president since Woodrow Wilson to win the award.  Can you think of any president in the last 60 years who has done less than Jimmy Carter to create a free and peaceful world?)

As a footnote, it would be impossible for Norman Borlaug to win the Peace prize today.  Greens and environmentalists have never liked him, and the politically correct Nobel Committee would never make a choice today that would irritate these groups.  People like Wangari Maathai who fit into the progressive-green sustainable development camp are preferred, even if they don’t have nearly the same impact in actually saving or improving lives.

Hope everyone out there has a fantastic Christmas, Hanukkah, Ramadan, Winter Solstice, New Year, etc. (did I get everyone?)  We try to do something different each year for our holiday card.  Here is this year’s.

UPDATE

I realized from fellow Arizona blog Speed of Thought, in their link to my post (cool, am I a moonbat?) that I left out Kwanzaa.  Oops, I hope there are not protesters outside my door.  Next week I plan a post on Kwanzaa — I have zero problem with people making up a new reasons to celebrate, since life is worth celebrating.  However, I will look at the 7 values celebrated by Kwanzaa and consider whether these 7 values are really helping African-Americans (hint:  think socialism).

By the way, Speed of Thought has a very moving image here.

New, via Reason, comes this excerpt from an article by Milton Friedman:

After World War II, opinion was socialist while practice was free market; currently, opinion is free market while practice is heavily socialist. We have largely won the battle of ideas; we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course. We are still far from bringing practice into conformity with opinion. That is the overriding non-defense task for the second Bush term. It will not be an easy task, particularly with Iraq threatening to consume Bush’s political capital.

Reason links to the whole article.  I have said on a number of occasions that as a libertarian, one of the downsides of the Iraq war that does not get discussed much is that it diverted Bush II from promised market reforms, including tort reform and social security.  There appears to be some hope that these can be addressed in the second term.

Our bathroom has a pocket door to save space – that’s one of those doors that slide on a hidden rail in and out of the wall.  From time to time, usually because my kids go slamming into it, the door comes off its rails and gets jammed, which is a problem as it can bottleneck some very critical facilities.

The first time this happened, I tried to get it back on its track, but I just could not.  The track is up in the wall and it is almost impossible due to the lack of clearance to do anything with it.  I checked in the Yellow Pages and saw there was actually a company that specialized in pocket door repairs, so I called them out.  Well, Joe (or whoever) shows up with his little tool kit, looks at the door for a second, grabbed it in a certain way, and then gave it a quick jerk – kabam – and it was back in its tracks.  It took him like 5 seconds. 

Well, there I stood, completely unmanned, right in front of my laughing wife and family, by Joe the visible butt-crack guy.  Bummer.

Since that time, I have had the door come untracked two or three times.  Thinking to save me further embarrassment, my wife tends to ask any passing stranger to come in and fix it.  I can sit there for hours fighting the thing, and then my wife brings in the guy painting the house – kabam – fixed.  Next time she brought in the 60+ year old sales guy who happened to be there – kabam – fixed.  I swear, if Paris Hilton was dropping by for a visit she could probably fix that damn door.  It is humiliating.

Well, this time I would not allow my wife get someone else to fix it.  Every night, for about 10 minutes, I would take my innings with the door, struggling to do what everyone else seemed to have learned at birth.  I actually suggested to my wife that we should call out a contractor and tear the thing out and install a real door.  She suggested instead that she could have our 13-year-old baby sitter come in from the other room to fix it.  Finally, tonight, when I was about to give up, I tried holding it in a slightly different way and – Kabam – fixed.  God I feel great.  My manhood is restored and I am at the top of the world.

WELCOME Carnival of the Vanities!  My post this week is a little more whimsical than usual.  If you need to chew on something more serious, check out a 60 second refutation of socialism while sitting at the beach.

Last week, there were several comments in Carnival of the Capitalists that people would like to see more articles highlighting the benefits of capitalism.  This got me thinking about a conversation I had years ago at the beach:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism.  In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters).  The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays.  I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both.

One of the reasons I took up writing a blog is that I have never been as snappy or witty in real-time discussions as I would like to be, and I generally think of the perfect comeback or argument minutes or hours too late.  I have always done better with writing, where I have time to think.  However, on this day, I had inspiration from a half-remembered story I had heard before.  I am sure I stole the following argument from someone, but to this day I still can’t remember from whom.

I picked up a handful of sand, and said "this is almost pure silicon, virtually identical to what powers a computer.  Take as much labor as you want, and build me a computer with it — the only limitation is you can only have true manual laborers – no engineers or managers or other capitalist lackeys".

Yeah, I know what you’re thinking – beach sand is not pure silicon – it is actually silicon dioxide, SiO2, but if she didn’t take any economics she certainly didn’t take any chemistry or geology.

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn’t have any and bankers would never lend them any.

All too many defenders of capitalism would have stopped here, and said aha!  So you admit you need more than labor – you need capital too.  But Marx would not have disagreed – he would have said it was the separation of labor and capital that was bad – only when laborers owned the capital, rather than being slaves to the ruling class that now controls the capital, would the world reach nirvana.  So I offered her just that:

I told her – assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need.  The only restriction I put on it is that you may only buy raw materials – steel, land, silicon – in their crudest forms.  It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded "but I can’t – I don’t know how.  I need someone to tell me how to do it"

And that is the heart of socialism’s failure.  For the true source of wealth is not brute labor, or even what you might call brute capital, but the mind.  The mind creates new technologies, new products, new business models, new productivity enhancements, in short, everything that creates wealth.  Labor or capital without a mind behind it is useless.

From the year 1000 to the year 1700, the world’s wealth, measured as GDP per capita, was virtually unchanged.  Since 1700, the GDP per capita in places like the US has risen, in real terms, over 40 fold.  This is a real increase in total wealth – it is not money stolen or looted or exploited.  Wealthy nations like the US didn’t "take" the wealth from somewhere else – it never even existed before.  It was created by the minds of human beings.

How?  What changed?  Historians who really study this stuff would probably point to a jillion things, but in my mind two are important:

1. There was a philosophical and intellectual change where questioning established beliefs and social patterns went from being heresy and unthinkable to being acceptable, and even in vogue.  In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs
2. There were social and political changes that greatly increased the number of people capable of entrepreneurship.  Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one.  By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth.  Whereas before, perhaps 1% or less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom. 

So today’s wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

Look around the world – for any country, ask yourself if the average person in that country has the open intellectual climate that encourages people to think for themselves, and the open political and economic climate that allows people to act on the insights their minds provide and to keep the fruits of their effort.  Where you can answer yes to both, you will find wealth and growth.  Where you answer no to both, you will find poverty and misery. 

UPDATE

While it is not exactly a direct follow-on to this article, see my post Progressives are too Conservative to Like Capitalism for an analysis of some of capitalism’s detractors.  For yet another way to explain capitalism, at least libertarian philosophy, here is a new-agy approach that is actually pretty good.  Finally, Spontaneous Order has an interesting post comparing religious creationism in the physical world with progressives’ statism in the economic/social realms.

Update #2:  Here is my more recent statement covering similar ground, focusing on the mistaken assumption that economics are all zero-sum.

I am all for restructuring the whole social security system, but, as I have written before, we cannot let the government invest social security funds in private equities.  The potential for manipulation and creeping socialism are astronomical.  Its easy to picture fights over whether the social security funds should be invested in tobacco makers, gun makers, hospitals that conduct abortions, Domino’s Pizza (that donates funds to oppose abortion), Haliburton, etc. etc. 

I have always used government-funding of universities as an example — the government uses the leverage of this funding (and the threat of its withdrawal) to force all kinds of regulations on universities.  Today, we have a good case example that is even more directly applicable. 

Over the past several years, Calpers (the California state workers retirement fund) has been a great example of how government control of equity investments can be a disaster.  In the case of Calpers, their huge pension investments automatically make them one of the largest investors in each company in their portfolio.  Calpers has used that power wisely at times, promoting improvements in corporate governance, but has also used it astronomically poorly. 

Under Sean Harrigan, Calpers portfolio has been unbelievably politicized, up to and including having the portfolio use its ownership in several grocery chains to support striking members of the grocery union run by… Sean Harrigan.  Professor Bainbridge has a couple of good roundups here and here.

If we are change how social security funds are invested, let individuals make their own investment choices. 

Congratulations to Edward Prescott, our hometown hero from Arizona State, who shares this years Nobel Prize in Economics.

Why is it that the Nobel committee gives its highest economics prizes to people who consistently put more intellectual nails in the coffin of socialism, then go out of their way to give the “soft” prizes, such as literature and peace, consistently to communists, socialists, and enablers of totalitarianism?

UPDATE

Marginal Revolution has a good roundup on what exactly this economics prize was won for. I should have been more specific when I said “more intellectual nails in the coffin of socialism”. The link explains it better, but one argument against free markets is that recessions are proof of market failure and a “better” system would not have them. Prescott and Kydland, among other things, show how:

Recession may be a purely optimal and in a sense desirable response to natural shocks. The idea is not so counter-intuitive as it may seem. Consider Robinson Crusoe on a desert island (I owe this analogy to Tyler). Every day Crusoe ventures out onto the shoals of his island to fish. One day a terrible storm arises and he sits the day out in his hut – Crusoe is unemployed. Another day he wanders out onto the shoals and finds an especially large school of fish so he works especially long hours that day – Crusoe is enjoying a boom economy. Now add into Crusoe’s economy some investment goods, nets for example, that take “time to build.” A shock on day one will now exert an influence on the following days even if the shock itself goes away – Crusoe begins making the nets when it rains but in order to finish them he continues the next day when it shines. Thus, Crusoe’s fish GDP falls for several days in a row – first because of the shock and then because of his choice to build nets, an optimal response to the shock.

UPDATE #2

This is very timely. Our new Nobel Laureates did a lot of work on short term / long term economic paradoxes. For example, they work a lot with problems such as prescription drug regulation, where people can be made happy in the short term (lower prices) but really unhappy in the long term (via forgone research and therefore fewer new drugs). Interesting given that Kerry/Edwards are advocating just such a short term fix that would lead to long-term disaster. The press made a big deal out of how the Nobel Committee slapped Bush in the face with its Peace Prize to Jimmy Carter. Don’t hold your breath waiting for anyone to point this one out.