Free market is not compatible with Atheism+, what is?

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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Fri Sep 28, 2012 12:29 am

cmscm wrote:
Find something wrong

Too easy:
<snip>
http://www.smirkingchimp.com/thread/mat ... to-profits
It's entirely possible to deleverage but, following asset-price shocks like those of late 2008, to subsequently show higher VAR. (It's a tail-risk thing.)

MT's wrong.

Color me skeptical, but your interpretation does not trump Taibbi's. His claim that Goldman deleveraged aggressively in between May and Aug. '08 is backed by fact.Your suggestion that subsequent VaR increase is due (exclusively? despite GS continued deleveraging?) to plunging asset values, not so much.
Whether his interpretation of Goldman's situation after that is accurate or not, I can't tell. But, you've provided jack in the way of evidence to the contrary.
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Re: Free market is not compatible with Atheism+, what is?

Postby Setar » Fri Sep 28, 2012 12:48 am

cmscm wrote:
His ravings are demonstrably wrong


I think so too. But many people think they are demonstrably true.

(You're right that it wasn't incitement, though.)

The point I'm trying to make is that society is riven with conflicts of interest: old vs. young, rich vs. poor, savers vs. borrowers, public vs. private, whatever. But, in trying to find a way to negotiate a settlement to these conflicts, imposing a narrative of one-sided domination (whichever side you feel is dominating) doesn't help; it just polarises things.

Gah. Progressive centrist me, eh?

If by that you mean tone police, then sure.
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Re: Free market is not compatible with Atheism+, what is?

Postby cmscm » Fri Sep 28, 2012 7:22 pm

Color me skeptical, but your interpretation does not trump Taibbi's.


I'm not being snarky (honestly!), but do you know what VAR is and how's it's calculated? Because, being an "Educational" thread, I'm happy to provide an explanation in case it helps.
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Re: Free market is not compatible with Atheism+, what is?

Postby Setar » Sat Sep 29, 2012 5:46 pm

cmscm wrote:
Color me skeptical, but your interpretation does not trump Taibbi's.


I'm not being snarky (honestly!), but do you know what VAR is and how's it's calculated? Because, being an "Educational" thread, I'm happy to provide an explanation in case it helps.

The appropriate response to a request for evidence is to provide the evidence requested, not to passive-aggressively insinuate that the person requesting evidence doesn't know what they're talking about. If you know what you're talking about, and the other person doesn't, the best way to throw it in their face is to give them exactly what they asked for, thus proving that you know what you're talking about.

You seem quite desperate to show that Taibbi is wrong, even though he's a popular writer and thus low-hanging fruit as far as economics is concerned. What do you want out of this?
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Re: Free market is not compatible with Atheism+, what is?

Postby Improbable Joe » Sat Sep 29, 2012 8:19 pm

There's no such thing as a free market, so there's really no problem in rejecting the idea as ridiculous pseudo-religious posturing. A "market" is a collection of people trading with one another. So there's no "market" that exists outside of people, or as some sort of abstract. And with people, there are always rules and controls and "freedom" only exists within social rules. The only questions are "who sets the rules" and "who enforces the rules"... the idea that "markets regulate themselves" is a lie, and a rather stupid and thoughtless one.
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Re: Free market is not compatible with Atheism+, what is?

Postby cmscm » Sun Sep 30, 2012 12:17 am

The appropriate response to a request for evidence is to provide the evidence requested, not to passive-aggressively insinuate that the person requesting evidence doesn't know what they're talking about. If you know what you're talking about, and the other person doesn't, the best way to throw it in their face is to give them exactly what they asked for, thus proving that you know what you're talking about.


I think if passive-aggresive is your preferred way of looking at things, then that might make sense. I was asking an honest question. If I know what I'm talking about (and, believe me I do) then I think asking someone if they need me to explain variance, skewness, and heteroskedasticity, and they say "no", then I can cut to the chase rather than having to explain basic statistics.

You seem quite desperate to show that Taibbi is wrong, even though he's a popula writer and thus low-hanging fruit as far as economics is concerned.


Limbaugh is a popula[r] broadcaster. Does that make him right?
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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Sun Sep 30, 2012 4:18 am

cmscm wrote:
Color me skeptical, but your interpretation does not trump Taibbi's.


I'm not being snarky (honestly!), but do you know what VAR is and how's it's calculated? Because, being an "Educational" thread, I'm happy to provide an explanation in case it helps.


I do know what Value at Risk is and the (bare)basics of calculating it (risk metric/measures).
I'm not clear on the nuts & bolts of the analysis involved and I'm not a statistician.
That said, let me point out that your claim was:
a) Taibbi is wrong - bc increased VaR might have happened regardless of their deleveraging attempts
b) Taibbi is just a journalist - when the article doesn't mention who provided the data or made the analysis of the situation at Goldman Sachs.
Now, let me ask:
a) do you have (insider) data on Goldman's situation, that invalidates Taibbi's claim?
b) is there something in Taibbi's piece which precludes the possibility that he's right (or, extremely unlikely to be right)?
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Re: Free market is not compatible with Atheism+, what is?

Postby cmscm » Mon Oct 01, 2012 10:23 pm

Fair questions. Let me take it from the top.

VAR is a somewhat-useful, but deeply imperfect measure of the risk of a bank's book. (Actually, you could use it for any business--even a grocery store--but it's mostly prevalent in finance.)

To calculate VAR you typically [1] take your positions today in all the financial instruments and/or derivatives you hold, [2] calculate a 250-day history of changes in prices of those instruments, or in the case of derivatives, the changes in the underlying prices on which they're based. You then [3] apply those 250 days' worth of changes to your positions and calculate the profit (or loss) if those days' market moves were to happen today. (This is complicated for derivatives but doable given some shortcuts and approximations.) This gives you [4] 250 simulated P&L numbers, of which you take the 95th percentile loss, negate it and call it "VAR". (95th percentile equates to 12th-worst-(simulated)-day, since 5% of 250 is 12-ish.)

If you were to bucket those profits/losses, and plot relative probability of occurrence, you'd--historically--get a nice bell curve with a mean somewhat above zero (i.e., in general you'd expect to make money) and a variance which didn't put that 12th-worst-day into scary territory.

Then, in 2008, markets broke down. The Fed reduced interest rates from just over 5% to basically zero. High-grade corporate credit spreads shot up from 0.75% to over 6%. Equities halved in value. Volatility spiked to record levels.

http://research.stlouisfed.org/fredgraph.png?g=bgT
http://finance.yahoo.com/q/bc?s=%5eGSPC&t=5y
http://finance.yahoo.com/q/bc?s=%5eVIX+Basic+Chart&t=5y

It was chaos.

Even worse was what happened to correlation. Prices which used to move in the same direction (and which therefore could be used to construct effective hedges) decoupled. Prices that used to be independent (and which therefore could be used to diversify risk) became highly correlated.

And so, as 2008 wore on, more and more weird market moves entered that 250-day pipeline. Fully-hedged, risk-neutral positions started to show wild P&L swings which (a) pushed that bell curve over to the left, towards systematic losses, (b) skewed the distribution so that it wasn't symmetrical, but had a "long tail" on the downside, and (c) caused some wild outliers on the downside so the distribution started to look multi-modal.

The 12th-worst-day naturally--even if you didn't change your portfolio; even if you were de-risking--sampled worse and worse losses, and so VAR went up.

I know this because in 2008 I was running a team producing risk, P&L, and VAR for the proprietary trading desk of an investment bank. (Not GS.)

---

So for MT to say that increased VAR is proof of increased leverage is wrong. GS may have levered up, but I doubt it. In 2007 GS were shedding all the mortgage risk they could. In 2008, everyone on the street was shedding every risk they could.

---

And, if you use more up-to-date numbers (MT is amazingly good at accidental cherry-picking), look at GS's VAR after 2Q09:

http://graphics.thomsonreuters.com/ce/R ... OLDMAN.pdf

As the crisis abates, the weird market moves start rolling out of the 250-day window, and VAR starts falling.

Of course, that doesn't fit his narrative, which is why he's never mentioned it since, but that's kind of my point ...
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Re: Free market is not compatible with Atheism+, what is?

Postby cmscm » Mon Oct 01, 2012 10:33 pm

Sorry, deleted the smiley. Pick a smiley of your choice and stick it on the end of that comment.
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Re: Free market is not compatible with Atheism+, what is?

Postby cmscm » Tue Oct 02, 2012 10:33 pm

More (sorry, can't help myself!):

1. The AIG bailout. Goldman might have gone out of business last year if AIG had been allowed to proceed to an ordinary bankruptcy, as AIG owed Goldman about $20 billion at the time it went into a death spiral. Instead, Goldman gets to call upon its former chief, Hank Paulson, who green-lights this massive, $80 billion bailout of AIG (with Lloyd Blankfein in the room), at least $12.9 billion of which went straight to Goldman. [...] Goldman was insane and reckless in making those deals with AIG. [...] Goldman makes insane bets, runs wild on AIGFP’s house idiot Joe Cassano for a while, sticking him with $20 billion in risk, and when it all went to shit — as it inevitably had to — they drove a big stake through AIG’s heart and got the government to step in and pay them off using our money.


He's right about Cassano, but not much else.

"at least $12.9 billion of which went straight to [them]" ... and straight out of the door. GS wasn't the principal here, it was an intermediary:

Now he couldn’t help but wonder who exactly was on the other side of his trades—what madman would be selling him so much insurance on bonds he had handpicked to explode? [...] Goldman Sachs made it clear that the ultimate seller wasn’t Goldman Sachs. Goldman Sachs was simply standing between insurance buyer and insurance seller and taking a cut.


http://www.vanityfair.com/business/feat ... rpt-201004

I reckon CDS bid-ask spreads were about 10 basis points (a basis point, or "bp", is a hundredth of one percent). So GS keeps 0.1% of that, for a total of $13 million. Benefit of the doubt: say 50bps, for $65 million. But here's the thing: by the time AIG was bailed out, GS had already spent $100 million insuring against just such an outcome, see pages 16-17 of the SIGTARP report:

http://online.wsj.com/public/resources/ ... 111609.pdf

So GS is $35 million down. OK. Next:

2. TARP. Much discussed, no need to really review here. Goldman got its $10 billion. It paid off its $10 billion.


... with interest. 6 months at 5%/year on $10 billion is another $25 million. $60 million down so far.

3. The Temporary Liquidity Guarantee Program. So Goldman last year converts from an investment bank to bank holding company status, which now makes it eligible for a new program that gives commercial banks FDIC backing for unsecured debt. This is not a direct subsidy in the sense of us actually handing over a bunch of money to Goldman, but it’s almost better, in a way. This basically hands over a free AAA rating to the big banks and allows them access to mountains of cheap money, with all of us on the hook if something went wrong. [...] Goldman took full advantage of this deal, issuing $28 billion in FDIC-backed debt after its conversion.


... or in reality:

The TLGP does not rely on taxpayer funding or the Deposit Insurance Fund. Both components of the program will be paid for by direct user fees. [...] Fees for participation in the Debt Guarantee Program depend on the maturity of debt issued. The cost of the guarantee to insured depository institutions is [...] 100 basis points for maturities 365 days or greater.


http://www2.fdic.gov/qbp/2008dec/qbptlgp.html

TLGP made a profit for the FDIC, and cost the taxpayer nothing.

For that $28 billion, GS just paid the FDIC $280 million. $340 million down now.

---

Exactly how hard is it for a bank to make a profit when it has unlimited access to virtually free money? It is almost impossible for banks to not make money when their cost of capital sinks this low.


Actually, in a liquidity trap (see: Krugman) it's actually quite hard.

---

And that’s just some of the help they’ve gotten. Should we bother to count Goldman’s status as one of just 17 remaining primary dealers in U.S. Treasuries, which naturally did a crisp business last year as the U.S. borrowed its way out of a hole the banks had themselves created?


Just 17?! Seriously? (It's 18 now that China has a direct line to the primary issue market.)

And "[the] hole the banks had themselves created"?

http://www.theatlantic.com/politics/arc ... ts/238786/

Mmmm. See the TARP. See the TARP take over the national deficit. Not.

---

Honestly, MT's hopeless.
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Re: Free market is not compatible with Atheism+, what is?

Postby cjmackay » Fri Oct 05, 2012 5:30 am

Where free markets don't impede social, environmental or economic justice they should be free. But freedom, as a construct, is relative. Of course you're free if you choose, to be landless, therefore hungry, thirsty and dead; to avoid these outcomes you become a part of the 'system' which promises that you'll be hungry, thirsty, landless and dead if you don't join. In joining, which is not a voluntary position, you accept the laws, which ultimately, deny your freedom. The secular community, A+ especially, is in a position to re-conceive this.
It has been attested that government should not compete with business[ref]. What however if a group of people, a collective, decided to compete in areas like health care, education,... How is collective action, exactly what a business enterprise is, so different from a government, representing 'the people', so different?
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Re: Free market is not compatible with Atheism+, what is?

Postby EZRD » Fri Oct 05, 2012 1:19 pm

I believe that lazy fair capitalism leads to vast inequality and eventually societal collapse.

I personally think that a progressive tax equation, with negative taxation, is likely one of the better solutions to counter capitalism's tendency to accumulate and isolate wealth to the top.

I also think that we need to make it clear that corporations are not persons. Any rights a corporation possesses should derive from its owners rights, with limitations in line with the limited liability and other protections corporate ownership confers.

Furthermore, democracy serves as our greatest check against economic force. Unfortunately, a great deal of economic force is being levied to corrupt the democratic process. I don't know what the solution is. One hair-brained solution I've thought of is constituent only campaign contributions. In other words, if you can't vote for candidate X, you can't make campaign contributions to candidate X. Likely impossible to implement, and people would find ways around it. I think it an interesting notion nonetheless.

NOTE: Lazy fair capitalism is easier to spell and a more accurate portrayal of laissez faire capitalism.
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Fri Oct 05, 2012 11:40 pm

In all fairness bailouts are the antithesis of laissez faire capitalism, so it's a pretty bad example. In fact in some respects its proof of the converse: governments can't be trusted to interfere benignly in markets, but will rather act in the vested interests of those who support their campaigns.
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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Mon Oct 08, 2012 9:04 pm

TimC wrote:In all fairness bailouts are the antithesis of laissez faire capitalism, so it's a pretty bad example.

It seems to me that a centrally planned economy is the antithesis of laissez-faire capitalism.
Bailouts are emergency measures (not economic policy), and are largely used to prevent catastrophic failures. Ultimately, they prop up a flawed system.

TimC wrote:In fact in some respects its proof of the converse: governments can't be trusted to interfere benignly in markets, but will rather act in the vested interests of those who support their campaigns.

I'm not sure what you mean by "interfere [] in markets". It's a pretty nebulous concept.
If your point is that Govt. should not interfere with the ideological concept known as free-market, I'd like to know what your definition of a market is, first. Because, to put it in the simplest terms, any system that can referred to as a market requires rules and enforcement. Therefore, a sort of politico-economical Heisenberg's uncertainty principle or Observer's Paradox is inevitable.
On the other hand, if you mean that regulation of markets leads to certain failure, I submit that the problem is not regulation per se, but corruption and unfair advantages granted to market actors. Same goes for direct Govt involvement in certain sectors of the economy.
On the gripping hand, even-keeled regulation of markets (sometimes including strategic planning), and the use of monetary and fiscal policies have historically produced the best results.

I doubt a return to Gilded Age rapacity and predatory tactics, or allowing the "natural" boom-bust inherent to unregulated capitalism is a serious proposal. Remember, errare humanum est, perseverare ...
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Mon Oct 08, 2012 10:04 pm

As political structures a centrally planned economy is the opposite position of a laissez-faire one (agreed). My point is that the current structure is somewhat of a hybrid, and the particular action of the government bailing out failing businesses (of any variety, for any reason) is not laissez faire capitalism.

There are a range of definitions of free markets, ranging from: government doesn't act except to prevent the use of force, to government is allowed some regulatory measures and taxation, but I have yet to see a definition of free markets that includes (government can arbitrarily subsidize or bailout individual actors/agents in the marketplace).

I think it's quite evident that the very act of bailing out or giving favourable regulation to a few specific corporations is antithetical to the definition of free markets. If specific actors in the markets can take actions based on protection from negative consequences of those actions by government, then other actors in the market that aren't protected can't freely compete with them. This very practice is a distortion of the market by government.

I'd also say that some of the worst tactics in the gilded age were political in nature and some of the worst monopolies were created by government action. See for instance abuse of monopoly powers granted by government subsidy or the attempt by the Rochester City Council to make money shorting a railway by granting and then refusing access to the city. Lastly, if you think the gilded age is the closest working example to libertarian ideals, I'd argue that it is a far more successful model than that of fully centrally planned economies: Historical Examples? It's disappointing that the expansion of the middle class in the gilded age wasn't more universal but the middle class existed, which was something better than any previous age. The overall economic growth of the period has been unparalleled before or since, and while GDP doesn't tell the whole story, GDP + emerging middle class + massive expansion of public services through charity seemed to be remarkable accomplishments relative to the alternatives for the time period. I think it's difficult to say the same for anything resembling a centrally planned economy at any time period in history.

If we're in agreement that some degree of mixed economy is necessary, and are in disagreement over the type of that mixing and how much power we should allow the government to have that's an interesting conversation to have. One libertarian position is as much power as is necessary to solve the problems markets don't solve. This is a position I currently believe in, largely because I feel market forces solve some major problems, and don't solve other ones. Most implementations of centrally planned economies I've seen try and override market forces entirely which introduces a whole series of new problems to solve, usually by excessive authority that results in the state having unprecedented power to micromanage people's lives.

As for predatory tactics and rapacity, most libertarians are not opposed to the Sherman act. If you're arguing against Randroidism rather than Libertarianism I imagine we're on the same page. I just don't believe that government is benevolent by magic, and find politicians of all stripe predictably act in their own best interests and those of their contributors rather than the interests of those they are supposed to represent.
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Re: Free market is not compatible with Atheism+, what is?

Postby Setar » Mon Oct 08, 2012 11:31 pm

The overall economic growth of the period has been unparalleled before or since...

Economic growth is not social justice. We are interested in social justice, not economic growth.
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Mon Oct 08, 2012 11:45 pm

Yes, and points I made in the argument addressed issues other than just economics: emergence of middle class, regret that the extension wasn't universal, discussion of charity extending services to the general public that weren't available before.

While economics is far from the whole picture, when the resources of a country grow from a situation where most are in poverty to a situation where most are not, economic growth is relevant to social justice and deserves to be mentioned. Quoting part of a sentence out of context and intending it to be the entire thrust of an argument is not a valid representation of my claims.
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Re: Free market is not compatible with Atheism+, what is?

Postby Setar » Mon Oct 08, 2012 11:51 pm

TimC wrote:Yes, and points I made in the argument addressed issues other than just economics: emergence of middle class, regret that the extension wasn't universal, discussion of charity extending services to the general public that weren't available before.

Except that you admit that the extension wasn't universal. That method didn't work. You don't get out of that by merely expressing regret. Things got demonstrably better for everyone when we started to implement social programs in the wake of the Great Depression and World War II, economic growth be damned.
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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Tue Oct 09, 2012 12:18 am

TimC wrote:As political structures a centrally planned economy is the opposite position of a laissez-faire one (agreed). My point is that the current structure is somewhat of a hybrid, and the particular action of the government bailing out failing businesses (of any variety, for any reason) is not laissez faire capitalism.

Am I correct in assuming that when you say 'laissez-faire' you're actually thinking 'no Govt interference whatsoever' (aka anarcho-capitalism)?
My (ill expressed) point was that laissez-faire leads to situations in which it's imperative for the Govt. to save the day.

TimC wrote:There are a range of definitions of free markets, ranging from: government doesn't act except to prevent the use of force, to government is allowed some regulatory measures and taxation, but I have yet to see a definition of free markets that includes (government can arbitrarily subsidize or bailout individual actors/agents in the marketplace).

No need to hit me with a straw-man. I just wanted to know where you're coming from.

TimC wrote:I think it's quite evident that the very act of bailing out or giving favourable regulation to a few specific corporations is antithetical to the definition of free markets.

Bailouts and (tailored) corrupt legislation are different things.
For all practical purposes, when bailouts are necessary the free-market has failed. Unless you're OK with soup-kitchens and "natural" recovery, which may endanger your polity and take long years to resolve.
Govts. have a duty to their citizens to prevent economic disasters. I, for one, have zero problems with bailing out sectors of the economy, as long as the Govt. doesn't reward specific actors for their failure.

TimC wrote:If specific actors in the markets can take actions based on protection from negative consequences of those actions by government, then other actors in the market that aren't protected can't freely compete with them. This very practice is a distortion of the market by government.

Yeah, corruption and moral hazard go hand in hand. Problem = political corruption NOT Govt.

TimC wrote:I'd also say that some of the worst tactics in the gilded age were political in nature and some of the worst monopolies were created by government action. See for instance abuse of monopoly powers granted by government subsidy or the attempt by the Rochester City Council to make money shorting a railway by granting and then refusing access to the city. Lastly, if you think the gilded age is the closest working example to libertarian ideals, I'd argue that it is a far more successful model than that of fully centrally planned economies: Historical Examples? It's disappointing that the expansion of the middle class in the gilded age wasn't more universal but the middle class existed, which was something better than any previous age. The overall economic growth of the period has been unparalleled before or since, and while GDP doesn't tell the whole story, GDP + emerging middle class + massive expansion of public services through charity seemed to be remarkable accomplishments relative to the alternatives for the time period. I think it's difficult to say the same for anything resembling a centrally planned economy at any time period in history.

You can't divorce economics from politics. The pioneers of the field used (correctly) the term political-economy.
The Gilded Age was in many respects a triumph of crony capitalism, and Govt played a significant role. I did not mean to imply that it was a practical example of libertarianism. I simply think it's the natural by-product of and the best we can expect from implementing "libertarian" ideas.
Re. your claims that it brought a bounty to the average Joe, that charity worked wonders, and that Robber-Barron capitalism were the reason the US economy experienced an accelerated growth during that era, I'd like to see evidence rather than ipse dixits. And BTW, that "emerging middle-class" was a) actually the working-class; and b) born out of bloody class warfare, that plutocrats tried (murderously) to suppress.
As for examples of high growth in centrally planned economies ... you gotta be shitting me. How about these: USSR, Nazi Germany, US during WWII.

TimC wrote:If we're in agreement that some degree of mixed economy is necessary, and are in disagreement over the type of that mixing and how much power we should allow the government to have that's an interesting conversation to have. One libertarian position is as much power as is necessary to solve the problems markets don't solve.

LOL, so we're all socialists now.

TimC wrote:This is a position I currently believe in, largely because I feel market forces solve some major problems, and don't solve other ones.

I won't latch on on the "feeling" part, but I'm genuinely interested to find out your list of "major problems" only markets can solve, as well as those that markets fail to address.

TimC wrote:Most implementations of centrally planned economies I've seen try and override market forces entirely which introduces a whole series of new problems to solve, usually by excessive authority that results in the state having unprecedented power to micromanage people's lives.

I'm wasn't arguing for Stalinism. Just correcting an inaccurate statement re. bailouts.

TimC wrote:As for predatory tactics and rapacity, most libertarians are not opposed to the Sherman act. If you're arguing against Randroidism rather than Libertarianism I imagine we're on the same page.

To the best of my knowledge there's no ideological injunction against monopolies in libertarian thought. The only caveat would be monopolies created using illegal/corrupt means. Moreover, anti-trust laws are seen by some prominent "libertarian" economists as Govt. interference and limitation of property rights. To wit, Greenspan's Antitrust essay, where he clearly states that such trust-busting "inhibits businessmen from undertaking what would otherwise be sound productive ventures".
Considering your views on Randroids (who are neo-liberals), would it not be more appropriate to call your economic position 'classical liberalism'?

TimC wrote:I just don't believe that government is benevolent by magic, and find politicians of all stripe predictably act in their own best interests and those of their contributors rather than the interests of those they are supposed to represent.

Just repeating "The Government is not the solution" does nothing to advance your position.
Govt. is a tool. The best tool we have to address large/societal problems.
Govt. corruption/problems can only be solved through political means, not trusting in the magic of the markets.
All religions are based on the same ridiculous imagination, that make man a weak, imbecile animal; a furious bigot and fanatic; or a miserable hypocrite. - Robert Owen (1771 – 1858)
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Tue Oct 09, 2012 12:19 am

Setar wrote:
TimC wrote:Yes, and points I made in the argument addressed issues other than just economics: emergence of middle class, regret that the extension wasn't universal, discussion of charity extending services to the general public that weren't available before.

Except that you admit that the extension wasn't universal. That method didn't work. You don't get out of that by merely expressing regret. Things got demonstrably better for everyone when we started to implement social programs in the wake of the Great Depression and World War II, economic growth be damned.


My point is that no economic philosophy on earth around at the time of the Gilded age would have resulted in such universality, and both the overall growth of the economy, the extension of middle class livelihoods, and the reduction of poverty occurred at unprecedented rates. Yes, it became obsolete to have no social safety net in a society that had grown affluent enough to afford one.

Social programs were an improvement, but carried with them some significant costs. The fact that they improved things doesn't make them immune to criticism or suggestion of a better way. I think I'll note again that my position is that the same benefits should be provided through negative income taxation for a variety of reasons that primarily relate to the fact that the current system has some disastrous interactions with the free-market. My contention is we're in an affluent enough society now to make that social safety net itself properly universal in a way that enables markets to operate well, and should do so.

I also contend that attempts at a full command economy and central planning have largely been disastrous, so we should at a minimum examine what market forces do in an economy what decisions they allow us to avoid making, and how we could make those decisions without them. I believe that any attempts to replace these forces results in a stifling level of government authority that would be crippling to freedom, and could actually work against goals of social justice by political favourtism. There is strong body of work showing that government programs seldom function altruistically, and are subject to political interests. Similarly, the origins of democracy in many places related to curtailing government power, and democracy has been one of the better advances for social justice.

We shouldn't prioritize economic growth above all else, but it should be an important part of the picture rather than merely damned. More economic growth means more resources in society, and generally more chances for upward mobility. Making those chances more universal is important, but if the economy isn't growing than any gains made by someone have to come at the expense of someone else: a bad situation for social progress since it's the one in which most people are fighting to protect what they already have.
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Re: Free market is not compatible with Atheism+, what is?

Postby Setar » Tue Oct 09, 2012 12:39 am

TimC wrote:
Setar wrote:
TimC wrote:Yes, and points I made in the argument addressed issues other than just economics: emergence of middle class, regret that the extension wasn't universal, discussion of charity extending services to the general public that weren't available before.

Except that you admit that the extension wasn't universal. That method didn't work. You don't get out of that by merely expressing regret. Things got demonstrably better for everyone when we started to implement social programs in the wake of the Great Depression and World War II, economic growth be damned.


My point is that no economic philosophy on earth around at the time of the Gilded age would have resulted in such universality,

My point is that your constant appeals to economics are post-hoc bullshit rationalizations made from the privileged perspective of living in a society with some semblance of a social safety net rather than none. The political institutions of the Gilded Age were corrupt, not ignorant. In fact, those political institutions are largely the same today -- and they are largely still corrupt, and many of the players have not changed in the past 100 years.
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Tue Oct 09, 2012 12:42 am

HyperB wrote:
TimC wrote:As political structures a centrally planned economy is the opposite position of a laissez-faire one (agreed). My point is that the current structure is somewhat of a hybrid, and the particular action of the government bailing out failing businesses (of any variety, for any reason) is not laissez faire capitalism.

Am I correct in assuming that when you say 'laissez-faire' you're actually thinking 'no Govt interference whatsoever' (aka anarcho-capitalism)?
My (ill expressed) point was that laissez-faire leads to situations in which it's imperative for the Govt. to save the day.

TimC wrote:There are a range of definitions of free markets, ranging from: government doesn't act except to prevent the use of force, to government is allowed some regulatory measures and taxation, but I have yet to see a definition of free markets that includes (government can arbitrarily subsidize or bailout individual actors/agents in the marketplace).

No need to hit me with a straw-man. I just wanted to know where you're coming from.

TimC wrote:I think it's quite evident that the very act of bailing out or giving favourable regulation to a few specific corporations is antithetical to the definition of free markets.


Bailouts and (tailored) corrupt legislation are different things.
For all practical purposes, when bailouts are necessary the free-market has failed. Unless you're OK with soup-kitchens and "natural" recovery, which may endanger your polity and take long years to resolve.
Govts. have a duty to their citizens to prevent economic disasters. I, for one, have zero problems with bailing out sectors of the economy, as long as the Govt. doesn't reward specific actors for their failure.

Goverments have a duty to citizens to provide them a standard of living. Governments have no duty to corporations, banks or otherwise to provide
TimC wrote:If specific actors in the markets can take actions based on protection from negative consequences of those actions by government, then other actors in the market that aren't protected can't freely compete with them. This very practice is a distortion of the market by government.

Yeah, corruption and moral hazard go hand in hand. Problem = political corruption NOT Govt.

TimC wrote:I'd also say that some of the worst tactics in the gilded age were political in nature and some of the worst monopolies were created by government action. See for instance abuse of monopoly powers granted by government subsidy or the attempt by the Rochester City Council to make money shorting a railway by granting and then refusing access to the city. Lastly, if you think the gilded age is the closest working example to libertarian ideals, I'd argue that it is a far more successful model than that of fully centrally planned economies: Historical Examples? It's disappointing that the expansion of the middle class in the gilded age wasn't more universal but the middle class existed, which was something better than any previous age. The overall economic growth of the period has been unparalleled before or since, and while GDP doesn't tell the whole story, GDP + emerging middle class + massive expansion of public services through charity seemed to be remarkable accomplishments relative to the alternatives for the time period. I think it's difficult to say the same for anything resembling a centrally planned economy at any time period in history.

You can't divorce economics from politics. The pioneers of the field used (correctly) the term political-economy.
The Gilded Age was in many respects a triumph of crony capitalism, and Govt played a significant role. I did not mean to imply that it was a practical example of libertarianism. I simply think it's the natural by-product of and the best we can expect from implementing "libertarian" ideas.
Re. your claims that it brought a bounty to the average Joe, that charity worked wonders, and that Robber-Barron capitalism were the reason the US economy experienced an accelerated growth during that era, I'd like to see evidence rather than ipse dixits. And BTW, that "emerging middle-class" was a) actually the working-class; and b) born out of bloody class warfare, that plutocrats tried (murderously) to suppress.
As for examples of high growth in centrally planned economies ... you gotta be shitting me. How about these: USSR, Nazi Germany, US during WWII.

TimC wrote:If we're in agreement that some degree of mixed economy is necessary, and are in disagreement over the type of that mixing and how much power we should allow the government to have that's an interesting conversation to have. One libertarian position is as much power as is necessary to solve the problems markets don't solve.

LOL, so we're all socialists now.

TimC wrote:This is a position I currently believe in, largely because I feel market forces solve some major problems, and don't solve other ones.

I won't latch on on the "feeling" part, but I'm genuinely interested to find out your list of "major problems" only markets can solve, as well as those that markets fail to address.

TimC wrote:Most implementations of centrally planned economies I've seen try and override market forces entirely which introduces a whole series of new problems to solve, usually by excessive authority that results in the state having unprecedented power to micromanage people's lives.

I'm wasn't arguing for Stalinism. Just correcting an inaccurate statement re. bailouts.

TimC wrote:As for predatory tactics and rapacity, most libertarians are not opposed to the Sherman act. If you're arguing against Randroidism rather than Libertarianism I imagine we're on the same page.

To the best of my knowledge there's no ideological injunction against monopolies in libertarian thought. The only caveat would be monopolies created using illegal/corrupt means. Moreover, anti-trust laws are seen by some prominent "libertarian" economists as Govt. interference and limitation of property rights. To wit, Greenspan's Antitrust essay, where he clearly states that such trust-busting "inhibits businessmen from undertaking what would otherwise be sound productive ventures".
Considering your views on Randroids (who are neo-liberals), would it not be more appropriate to call your economic position 'classical liberalism'?

TimC wrote:I just don't believe that government is benevolent by magic, and find politicians of all stripe predictably act in their own best interests and those of their contributors rather than the interests of those they are supposed to represent.

Just repeating "The Government is not the solution" does nothing to advance your position.
Govt. is a tool. The best tool we have to address large/societal problems.
Govt. corruption/problems can only be solved through political means, not trusting in the magic of the markets.



The argument characterized as a straw-man was intended as a direct refutation of the idea that bailouts prop up the current system which you seemed to be referring to as a free-market system.

I think it's fair to characterize Greenspan as a Randroid given the established mentor-like relationship he had with Rand. Classical Liberalism is quite close to major branches of modern Libertarianism, many libertarians would use the term liberal save for the fact that it has been usurped to mean something it no longer does. I think many of the positions modern libertarianism argues for have a classical liberal base and a more nuanced understanding of how markets fail to solve certain problems, and which problems markets actually solve. His position on the gold-standard is quite indicative, as the gold-standard is indefensible voodoo economics subject to all the problems of the current Euro on a worldwide scale.

The government bailing out sectors of the economy, or as was the case in the banking sector: forcing all companies in a sector to take a government loan with a high interest rate regardless of the health of the individual bank was deeply problematic. The fact that the entirety of someone's livelihood comes from work is a brokenness in the current system, where we advocate bad actions on the basis of individual livelihoods being connected to problematic organizations. There is no good reason that the current banks have to be the banking sector, and if they take actions bad enough to bankrupt themselves, actions which they profited substantially from, there is no reason that they shouldn't bear the costs of the losses later on. State subsidized gambles result in repetitive reckless behaviour (and this is far from the first bank bailout). If there are too few banks, people will create new ones* (ok new trust companies since banks require special acts of government to get the essential powers that make it a bank). It's not that the entire sector was underwater, but rather that a significant portion of the banks were bad actors. Many would have survived without the bailout. Yes plenty of people would lose their jobs and have to move on to other jobs (perhaps at the newly created banks, or in another sector). Again, I think the problem is we've tied economic survival to having a specific current job in a way that's bad for society.

Apologies if I mistook your criticism of my comment and mention of central planning as a defense of central planning. I tried to be careful to qualify such arguments as being against those positions, without actually painting you with having taken that position.

Some of the problems I feel markets fail to address: poverty, discrimination, environment, fundamental research

Some of the problems I feel markets solve well: pricing (of labour, of goods, of services), creation and investment in new companies (largely capital markets), construction and allocation of assets for increased production (largely capital markets), creation of new products (largely result of markets reading consumer demand by failure), commercialization of research (largely consumer demand related (again in part by failure)).
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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Tue Oct 09, 2012 2:04 am

TimC wrote:The argument characterized as a straw-man was intended as a direct refutation of the idea that bailouts prop up the current system which you seemed to be referring to as a free-market system.

No, it's the apologists who claim that free-market conditions exist(ed) prior to Govt. interventions, and demand return to same.
Secondly, you gave me some glittering generalizations and told me what the free-market is NOT. My question was: what is your definition of free-market?

TimC wrote:I think it's fair to characterize Greenspan as a Randroid given the established mentor-like relationship he had with Rand.

So, Greenspan is not a libertarian economist? If so, could you please point where his economic views diverge from "libertarianism"? Other than gold, mentioned bellow, which I don't buy without evidence.

TimC wrote:Classical Liberalism is quite close to major branches of modern Libertarianism, many libertarians would use the term liberal save for the fact that it has been usurped to mean something it no longer does.

Not even in the US of A.

TimC wrote:I think many of the positions modern libertarianism argues for have a classical liberal base and a more nuanced understanding of how markets fail to solve certain problems, and which problems markets actually solve. His position on the gold-standard is quite indicative, as the gold-standard is indefensible voodoo economics subject to all the problems of the current Euro on a worldwide scale.

I think you play fast and loose with the meaning of libertarian. Hard money advocates are definitely not a minority among people who use the label for themselves.

TimC wrote:The government bailing out sectors of the economy, or as was the case in the banking sector: forcing all companies in a sector to take a government loan with a high interest rate regardless of the health of the individual bank was deeply problematic.

It's actually fictional. Buying their toxic stocks with very low yields, guaranteeing their loans, and giving away interest free money doesn't strike me as extorting the 'poor virtuous banks'.

TimC wrote:The fact that the entirety of someone's livelihood comes from work is a brokenness in the current system, where we advocate bad actions on the basis of individual livelihoods being connected to problematic organizations. There is no good reason that the current banks have to be the banking sector, and if they take actions bad enough to bankrupt themselves, actions which they profited substantially from, there is no reason that they shouldn't bear the costs of the losses later on. State subsidized gambles result in repetitive reckless behaviour (and this is far from the first bank bailout). If there are too few banks, people will create new ones* (ok new trust companies since banks require special acts of government to get the essential powers that make it a bank). It's not that the entire sector was underwater, but rather that a significant portion of the banks were bad actors. Many would have survived without the bailout. Yes plenty of people would lose their jobs and have to move on to other jobs (perhaps at the newly created banks, or in another sector). Again, I think the problem is we've tied economic survival to having a specific current job in a way that's bad for society.

I get it now. We need a "real" free-market, and when unpleasant events happen we should let the chips fall where they may. Aaand, it will have the great advantage of educating people, and foster labor mobility & flexibility.

TimC wrote:Some of the problems I feel markets solve well: pricing (of labour, of goods, of services), creation and investment in new companies (largely capital markets), construction and allocation of assets for increased production (largely capital markets), creation of new products (largely result of markets reading consumer demand by failure), commercialization of research (largely consumer demand related (again in part by failure)).

I'd like to tackle these, but I'm too tired. G'night.
All religions are based on the same ridiculous imagination, that make man a weak, imbecile animal; a furious bigot and fanatic; or a miserable hypocrite. - Robert Owen (1771 – 1858)
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Re: Free market is not compatible with Atheism+, what is?

Postby TimC » Tue Oct 09, 2012 4:20 am

On the confusion of terms, I'll happily accept the relabel of my position as left-libertarian to distinguish it from Randroid Objectivism if that makes the conversation easier. I do think most libertarians up here don't take Randroidism all that seriously, I'm not sure what it's like in the states.

My point on letting organizations collapse as a result of taking reckless risks stand. I think the role of government is to provide a social safety net for people, not to prop up every broken organization that makes a bad bet, or worse yet to selectively decide (Bear Stearns can fall, but god forbid Merill-Lynch does etc..). I'm not saying that bad events educate people by letting the chips fall where they may, I'm saying a strong social safety net enables people to retrain more easily, and not propping up dysfunctional organizations is something that becomes a feasible option with a strong social safety net and a good one given the other negative consequences.
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Re: Free market is not compatible with Atheism+, what is?

Postby HyperB » Tue Oct 09, 2012 11:39 am

TimC wrote:On the confusion of terms, I'll happily accept the relabel of my position as left-libertarian to distinguish it from Randroid Objectivism if that makes the conversation easier. I do think most libertarians up here don't take Randroidism all that seriously, I'm not sure what it's like in the states.

Please don't! Relabel your position as left-libertarianism, that is.
It would confuse the hell out of people, unless you explain how your views re. capital privilege, rent and paternalism can be reconciled with key leftist & anarchist concepts of prioritizing social good* and non-coercion.
*(rather than hoping it would be a by-product of the market forces)

TimC wrote:My point on letting organizations collapse as a result of taking reckless risks stand. I think the role of government is to provide a social safety net for people, not to prop up every broken organization that makes a bad bet, or worse yet to selectively decide (Bear Stearns can fall, but god forbid Merill-Lynch does etc..). I'm not saying that bad events educate people by letting the chips fall where they may, I'm saying a strong social safety net enables people to retrain more easily, and not propping up dysfunctional organizations is something that becomes a feasible option with a strong social safety net and a good one given the other negative consequences.

See, that's the crux of my criticism. You keep saying that 'an ideal free-market' with it's inherent, periodic crashes is desirable. If the Govts. had not intervened in 2008-09 the situation would have been disastrous. Additionally, even with a safety net the loses would have been far, far greater and IMO gratuitous. That's assuming the huge cost of social programs in a depression could have been sustained without triggering a complete meltdown.
A social safety net is not sufficient to cushion the fall of entire sectors caused by unchecked speculation - a systemic flaw of (unfettered) capitalism.
All religions are based on the same ridiculous imagination, that make man a weak, imbecile animal; a furious bigot and fanatic; or a miserable hypocrite. - Robert Owen (1771 – 1858)
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