(USSA) United Socialist States of America...
Posted: Sat Sep 06, 2008 4:28 pm
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Essential agreement.Mikko_Sandt wrote:Of course these two GSEs should never have been created in the first place. Nationalization should only be a temporary solution with full privatization or liquidation being the ultimate aim.
Lol, practically every single depression has been caused by excessive government spending, poor monetary policy (manipulation of money supply and exchange rates) or fatal restrictions on trade.seremtan wrote:lol, capitalism saved by government, again
I'm mainly referring to the kind of spending that has destroyed Latin American economies (usually combined with poor monetary policy). Rich countries with stable economies have of course more room for spending. You need a sound economy before you can start spending.Massive Quasars wrote:You lost me on the excessive government spending bit, perhaps long run mounting debt and servicing requirements
In an ideal world yes but in an imperfect world governments would never cease control of money supply. The gold standard was not abandoned because it didn't work but because it prevented governments from waging wars. The current fractional reserve system is not that bad since it's at least semi-independent but I'd lessen the amount of moral hazard in the system: Banks should be allowed to go bust just as any unfit businesses.On monetary policy, it sounds as though you'd prefer full commodity backing outright.
It's a building crisis of sorts (fiscal excesses), but it's not the first thing one implicates in a depression, IOW the causal association is hardly immediate.Mikko_Sandt wrote:I'm mainly referring to the kind of spending that has destroyed Latin American economies (usually combined with poor monetary policy). Rich countries with stable economies have of course more room for spending. You need a sound economy before you can start spending.
I disagree in some respects, but I understand your position.In an ideal world yes but in an imperfect world governments would never cease control of money supply. The gold standard was not abandoned because it didn't work but because it prevented governments from waging wars. The current fractional reserve system is not that bad since it's at least semi-independent but I'd lessen the amount of moral hazard in the system: Banks should be allowed to go bust just as any unfit businesses.
The whole point of a corporation is to remove individual responsibility, which naturally means that no one will take responsibility for the public well being if the government won't.R00k wrote:It's one of the most important reasons that the invisible hand of the market can't be relied upon for the well being of society: when the market's hand is invisible, it will inevitably creep under the shirts and scratch the backs of policy makers.
how many depressions are we talking about here?Mikko_Sandt wrote:every single depression
The whole point of a corporation is to make profit. That is its responsibility and in order to do so it must offer a good the public wants to consume. Also, "public well being" in general is a result of market efficiency, ie, that scarce resources are not wasted on unproductive projects. If resources are allocated outside the market mechanism this will lead to lower-than-possible living standards. If corporations were forced to be responsible for the public well being this'd only make matters much worse.Grudge wrote: The whole point of a corporation is to remove individual responsibility, which naturally means that no one will take responsibility for the public well being if the government won't.
Many. While the US has not suffered from a depression since the Great Depression other countries have, including Mexico, Argentine, many East Asian countries (the 1997 crisis), Finland etc. I don't know of a single case where free market capitalism has collapsed an economy. This leaves us with the fact that only governments destroy economies. Everyone knows the results of Marxism in Europe, Asia and Africa (where freshly independent countries embraced the Soviet model of development).Seremtan wrote:how many depressions are we talking about here?
Regulation usually makes matters much worse not to mention that regulation usually is the source of inefficiency in the first place. A government bureaucrat is rarely fully aware of the cost of regulation. A good example of this is ANWR.GONNAFISTYA wrote:Actually go0f's other thread is another example of why capitalism and "market efficiency" cannot be trusted with the "public well being" and why regulation is needed.
This doesn't really matter. Markets work like evolution: the unfit are weeded out and out of what appears to be chaos comes order, spontaneously. Markets are self-organizing. Mistakes are made all the time but the point is that those who make mistakes are punished: only this makes it possible for resources to be allocated without generating waste. If you remove the possibility of being punished you have a moral hazard in your hands. This is what caused the current crisis: investors believed that the Fed will come to rescue if their risky investments go wrong.It seems most people completely forget that market reactions to events can be directly equated with fussy children freaking out over the smallest things and that markets move with a "crowd behavior" (ie. not done with forethought or approached rationally).
Wow, what an argument!scared? wrote:pure free market capitalism without regulation will collapse any economy...unless ur a moron...
Mikko_Sandt wrote: Wow, what an argument!
exactly what corporations r lacking...which is why regulations r needed...and why u r a moron...Without moral restraint, which requires a set of moral beliefs that determine right from wrong, people will abuse the freedom of free market capitalism by allowing greed to overtaken their actions.
Externalities, even with privately allocated natural resources, will persist. Rivers are part of ecosystems, the total cost of such pollution likely exceeds the private cost placed upon the polluting firm in your example.Mikko_Sandt wrote:Regulation usually makes matters much worse not to mention that regulation usually is the source of inefficiency in the first place. A government bureaucrat is rarely fully aware of the cost of regulation. A good example of this is ANWR.GONNAFISTYA wrote:Actually go0f's other thread is another example of why capitalism and "market efficiency" cannot be trusted with the "public well being" and why regulation is needed.
Laws should, of course, be respected. A company has no right to violate the liberty of others. A company should not pollute a river unless it has made a deal with the river's owner.
It's the belief among many that we can ill afford to let certain large institutions fail for their secondary effect on markets and the economy as a whole. Whether or not one agrees with this view, problems like moral hazard demand consistent regulation in good times and bad to reduce risk-taking at tax payer expense. Some difficult decisions will need to be made.This doesn't really matter. Markets work like evolution: the unfit are weeded out and out of what appears to be chaos comes order, spontaneously. Markets are self-organizing. Mistakes are made all the time but the point is that those who make mistakes are punished: only this makes it possible for resources to be allocated without generating waste. If you remove the possibility of being punished you have a moral hazard in your hands. This is what caused the current crisis: investors believed that the Fed will come to rescue if their risky investments go wrong.
You're new here. He can be ignored.Wow, what an argument!scared? wrote:pure free market capitalism without regulation will collapse any economy...unless ur a moron...
But externalities, which by definition are outside the market mechanism, are usually caused by imperfect property rights. If the river in my example is privately owned the firm that wishes to pollute must negotiate a price for their right to pollute that reflects the opportunity cost of not polluting. Rivers of course lead to oceans and so on but the source of the problem persists: public ownership of land or water, a tragedy of the common.Massive Quasars wrote:Externalities, even with privately allocated natural resources, will persist. Rivers are part of ecosystems, the total cost of such pollution likely exceeds the private cost placed upon the polluting firm in your example.
Of course, and, as I said, I believe the decision to nationalize Freddie and Fannie was right (the cost of letting it fail would be too high), just that it should be a temporary solution and things should be worked out so that further moral hazards can be avoided.Some difficult decisions will need to be made.
My argument is based on economic fundamentals. You didn't even attempt to prove otherwise.GONNAFISTYA wrote:your entire argument is based on ideological grounds instead of reality.
Imperfect property rights are not solely a product of government neglect. Many natural resources are not so easily compartmentalized, and the consequences of actions taken by their respective owners not limited therein (and therefore not priced accordingly). Nor is a tragedy of the commons scenario the necessary outcome of government control or regulation (read: restriction of economic activity).Mikko_Sandt wrote:But externalities, which by definition are outside the market mechanism, are usually caused by imperfect property rights. If the river in my example is privately owned the firm that wishes to pollute must negotiate a price for their right to pollute that reflects the opportunity cost of not polluting. Rivers of course lead to oceans and so on but the source of the problem persists: public ownership of land or water, a tragedy of the common.Massive Quasars wrote:Externalities, even with privately allocated natural resources, will persist. Rivers are part of ecosystems, the total cost of such pollution likely exceeds the private cost placed upon the polluting firm in your example.