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What Natasha said

Natasha:

If we were the creatures Ayn Rand's disciples think we are, we would live like bears, who have no civilization to speak of, no language in which to speak of it, and never will.

Which is why the current incarnations of plutocracy, patriarchy and all other 'screw you, I've got mine' politics are, in the deepest sense, antisocial. They're anti-civilization. What betrays the reciprocity of the social compact betrays the most useful trait of our species, the one arguably most responsible for our success. The people who hold these views are free riders, parasites, if you will, on the public good of basic human nature.

The fact that love, friendship, neighborliness and simple courtesy have survived the free riders' defections only proves how strong these impulses are. If government holds that corporations are people but pregnant women aren't, when theft is celebrated and work is punished, when debt trumps humanity, when the economic contracts that really matter are intentionally too complex to understand, let alone follow, these are direct attacks on most of the people, most of the time.

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gqmartinez's picture
Submitted by gqmartinez on

I'd like to see more of this. Libertarians and other conservatives have a hard time countering this sort of argument. Liberals would do themselves better if they can start tying their arguments to this sort of reasoning. Its powerful.

Submitted by [Please enter a... (not verified) on

Ah, another bash on Libertarians without actually addressing all the issues at hand.

I'm not surprised, but people should know better, if they're concerned at actually getting to the truth that is.

What were the causes of the financial "crisis?" Well, we all know about the deregulation of derivatives, and the SEC not enforcing legal standards, but is this everything? (The SEC enforcing or creating regulations unequally is an example of government intervention by the way.)

One of the most crucial causes of this "crisis" is one that's hardly ever emphasized, and in fact, it's an example of how poorly "regulation" can be used:
Moody's, S&P and Fitch had a legal cartel on ratings.

Pension funds and I believe anything that invests public money are only allowed to do so in vehicles that got high enough ratings by those three ratings agencies.

As Mish says:

The rating agencies were originally research firms. They were paid by those looking to buy bonds or make loans to a company. If a rating company did poorly it lost business. If it did poorly too often it went out of business.

Low and behold the SEC came along in 1975 and ruined a perfectly viable business construct by mandating that debt be rated by a Nationally Recognized Statistical Rating Organization (NRSRO). It originally named seven such rating companies but the number fluctuated between 5 and 7 over the years.

I don't even know if there are other ratings firms other than the big three now. I've never heard any mentioned.

So, when people start knocking these ratings agencies and the role, the enormous role they played in the "crisis," we should remember this is not a situation that just arose naturally, it was one that was forced into existence by the state.

Submitted by [Please enter a... (not verified) on

She doesn't. She's remarkably vague as to what she thinks the beliefs of her opponents are other than they're "patriarchal," "plutocratic," and proponents of Ayn Rand, which her first link makes clear means Libertarians. (By the way, any one who actually takes the time to even talk to the average self-identified "Libertarian," will know "plutocracy" and "patriarchy" are in direct opposition to the most fundamental belief of equality under the law that Libertarians hold.)

The fact that she doesn't even point to any examples just is a way for her to vilify her "opponents" rather relying on facts to construct an argument. Other people talk about the ratings agencies when they're actually trying to get down to issues, but people don't frequently talk about the role government intervention played in that, as well as in allowing people to get away with different things under the law.

okanogen's picture
Submitted by okanogen on

At least until we can come up with better humans.

But regarding financial markets, why don't you try reading someone who was working in that world at the time? Someone who knows that industry intimately? Someone who writes the following?

"No matter how much liquidity a market boasts, it will never be enough when everybody wants to get out at once. Mr. Fox is correct to say opacity and poor organization accelerated the freeze-up of derivatives and debt securitization markets and exacerbated their collapse. But transparency and better documentation would not have prevented it.

In his piece, Keynes ventures the opinion that regulators should impose external transaction taxes, or mandatory holding periods, to counteract the pernicious effects of creeping liquidity and speculation on financial markets. Whether these are appropriate ideas or not I will leave for other minds and another day to discuss. What I will say is the prescription for regulation of both investment banks and financial markets is clear: you cannot rely on the participants to regulate themselves. We are too busy counting the paper and inflating the bubble to care. The answer must come from outside the bubble, where the real economy and society lives.

But please, whatever you do, don't take too long. We are depending on you for answers."

Your libertarian musings are interesting in a theoretical sense, but not ultimately workable (recent history be proof).

Submitted by [Please enter a... (not verified) on

Ah, okanogen, you manage to lump me into a group and attribute qualities to me without even knowing me. Congratulations, that does seem to be the status quo of people who attack "Libertarianism." I'm sure you have plenty of people to socialize with.

As far as does "Libertarianism" work, or did it cause this crash, I just pointed to an example, two actually, two major ones, of how "Libertarianism" or a free-market philosophy didn't cause this crash, but how government intervention caused it. Simply put, I don't believe these ratings agencies would have the power that they have without the government granting a legal monopoly to them, and I don't think people could get away with such scam without the government unequally enforcing regulations.

You can say that people were greedy and that caused it. Of course people did behave greedily, but everyone acts in a self-interested way, even in a socialistic system, ideally. People's self-interests typically balance each other out, but when you have government intervention, you make it harder for people's interests to balance out because you're giving one group an advantage over the other.

You can say regulation may work, and in fact it may help stem the tide of destruction in the short-term, but unless we get rid of government granted advantages of one group over another, we will never truly solve our problem.

okanogen's picture
Submitted by okanogen on

Did I do that to you? Did I "lump" you in? I lumped the argument for libertarianism in with the argument for lassaiz faire capitalism certainly (and rightly so!), but you are not your argument. I would appreciate it if people would heed the site rules regarding calling people out in comment titles. Personalizing arguments is bad for the conversation, bad for the Corrente community, and bad for the threads.

Submitted by [Please enter a... (not verified) on

Ah, okanogen, I'm glad you're concerned with the rules, or whatever etiquette may be required for civilized argument, but if you look back you'll see that you absolutely did try to attribute qualities to me without knowing me:

"[W]hy don't you try reading someone who was working in that world at the time? Someone who knows that industry intimately? Someone who writes the following?"

This of course implies that I haven't, and that the reason I don't hold your view is because I'm not properly educated. Is it not possible that I actually am properly educated and have read plenty of people who were "working in that world at the time?"

okanogen's picture
Submitted by okanogen on

I don't mean to imply you are not properly educated and apologize if my comment was worded in a way that was taken as such.

Kindly do not address me in your comment titles again.

Update #7:

"UPDATE 7. Comment subject lines:

Please call out a people by name in comment subject lines only when the content of the comment is positive. I know that, before I instituted this rule, I'd always get a stab of anxiety when I saw my name in Recent Comments. That wasn't pleasant, and I suspect others felt the same way. Also, we want to make sure that the focus in arguments is on the argument, and not on the person making the argument."

okanogen's picture
Submitted by okanogen on

And let's try to stick with the arguments rather than personalities, please.

Regarding the following:

"You can say that people were greedy and that caused it. Of course people did behave greedily, but everyone acts in a self-interested way, even in a socialistic system, ideally. People's self-interests typically balance each other out, but when you have government intervention,

you make it harder for people's interests to balance out because you're giving one group an advantage over the other

."

That is absolute poppycock, it depends on a premise (a "balancing out" will ensure that markets don't collapse?) that is negated by both our experience in the world, as well as the actual premise that illicites it as a corollary. The initial premise is that people should not be hindered in their desire and capacity to excel, well, if some excel, then the can't be a "balance out"! Some people (an elite if you will) will rise to the top. They will then use that ability (the one that helped them rise to the top) to ensure that they and their's stay on top. It is immaterial to that elite if the rest of the system collapses or does not collapse, as long as they keep control of what they have amassed.

Sound familiar?

Government intervention doesn't create the unequal playing field, that playing field is unequal already. The effect didn't necessarily have that cause. So what is left? Well, why don't we try better regulation? Kind of like the regulation that gave us stability in financial markets for decades following the recovery from the Great Depression? We've seen the alternative since Reagan.

Submitted by [Please enter a... (not verified) on

The reason I "addressed" you in my comment titles is because I typically don't put anything in the title. It wasn't intended to draw unnecessary attention to you.

As far as your argument is concerned, now we get to the core of it, the core of all these arguments that are aimed against the free market or free market advocates: we need socialism!

Sure.

You say there will be inequality, as if that's a bad thing. Isn't there "inequality" in nature? Aren't people and all different things born differently? Should we not allow them to be different or should we try to put them in a box where all things are the same?

Some people will have more than others. Sometimes it will be through ability and sometimes it will be due to choice: not all people define their lives or their happiness by how much money they have.

Some people want less money to be able to focus on their family lives or whatever, whatever non-revenue earning activity they choose. Should we not allow them to do this?

You also make a huge leap by saying that because there will be "inequality" that necessarily means that it will lead to a corruption of the government. Well, that's a problem with government, not the free market.

Ultimately, either you believe that people are capable of governing themselves or they need overlords to do it. I'm of the belief that people can do it for themselves.

(And if you're curious about if people are capable of governing themselves, look up fractional reserve banking and the Fed. Those are probably the two government induced flaws that are most responsible for distorting our market.)

letsgetitdone's picture
Submitted by letsgetitdone on

Can you give me a historical example of a free market, which didn't eventually become concentrated in such a way that its successful companies did not eventually penetrate the political system and use it to maintain their dominance?

I really think the key question here is whether market systems are or can be isolated from politics. I don't think they are or can be. We can perhaps prohibit the institution called the State from intervening in the market, but, absent real regulation, we can't stop businesses from growing large and increasingly powerful so that they control or influence markets and the rest of us politically and act as if they are, in effect, the State.

So, I think that is the problem with philosophies that rely on the free market. In theory, free markets will work for the benefit of consumers, but, in practice, "free markets" are subverted by businesses themselves, looking to avoid or short-circuit themselves. That's why we need effective regulation and why we got into trouble when we backed away from it.

In some situations, also, free markets are inappropriate to begin with. These situations are ones in which the producers in the market must use the commons to produce and where there short run interests in maximizing profits conflict with the longer-run interests od everyone to preserve the commons.

Finally, once we recognize that free markets are unstable and don't always produce the best result, then we have to ask whether the free market is the best thing to try to maintain in any given area of endeavor? And once we start putting that question, ideology is gone, and it always comes down to a question of what works best in a particular context. A free market, a regulated market, or a market administered by us all collectively.

In health insurance, it's pretty plain that the free market has been destroyed by past history, and that it could not be restored now without destroying the current insurance companies and beginning again. In addition, there's the moral question of whether companies should be trying to maximize profits based on first selling insurance and then trying to find reasons to avoid paying up. In any event, I think trying to restore a real market in health insurance would be far more disruptive to the health care system than passing Medicare for All would be. In other words, in this area, socialized insurance seems like a more pragmatic solution than trying to create a free market and then keeping it regulated in a way that would ensure its stability.