Galt’s Mulch
Alex Knapp on a big load of fertilizer.
Unqualified Offerings
Looking Sideways at Your World Since October 2001
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Comment by herb —
March 23, 2009 @ 8:30 am
Looking backward and yelling hypocrisy, that’ll get us far!
Also: the numbers matter. Obama’s deficits are set to dwarf Bush’s. But it’s okay, I’m sure that the economy and the nation can easily swallow infinite debt.
Comment by Adam Mentzer —
March 23, 2009 @ 10:10 am
If this is a libertarian site, you all should be thrilled about the Tea Party Movement.
Comment by Jim Henley —
March 23, 2009 @ 10:27 am
I think it’s fair to say this site’s relationship with “libertarianism” is . . . conflicted.
Except, I was alive in the years from 1994-2004 and my memory still works. The pipe dream that the tantrums of cranky white dudes will develop into a general movement for universal liberty is one I already woke from.
Comment by derek —
March 23, 2009 @ 10:28 am
One of the biggest problems of libertarians is the way they jump on every bandwagon started by Republicans who despise liberty, and end up looking gullible and used.
So yes, identifying the hypocrites and being skeptical about self-named “tea party” movements actually are useful mental hygiene activities for a libertarian site.
Comment by Adam Mentzer —
March 23, 2009 @ 10:56 am
Well then I guess you guys are content to take up the ass whatever BO does to you.
Don’t start crying when the hyperinflation begins.
Comment by Adam Mentzer —
March 23, 2009 @ 10:58 am
BO has spent more tax money in the first 100 days than Bush did in a typical year of his Presidency.
Comment by dhex —
March 23, 2009 @ 10:58 am
while this right wing version of “i’m moving to canada!” is both funny ha-ha and funny sad, it’d be interesting if something actually came of it. it has a very small amount of springboard potential due to being at least nominally motivated towards engagement, rather than running off.
that’s presuming this isn’t more than more sports bar theatre, which is probably a silly presumption to make.
Comment by Jim Henley —
March 23, 2009 @ 10:59 am
First off, some of my favorite people in the world TIUTA, so I’ll thank you to watch how you talk.
Second, there are all kinds of things to worry about re the present course, including possible hyperinflation down the line. The immediate problem is that you haven’t established yourself as someone worth discussing these issues with. All you give us is empty sloganeering and resentment. If you want to play here, you need to raise your game.
Comment by dhex —
March 23, 2009 @ 11:00 am
whose sock puppet is mentzer?
Comment by Jim Henley —
March 23, 2009 @ 11:01 am
I’m hoping it’s really Pam Atlas.
Comment by Adam Mentzer —
March 23, 2009 @ 11:02 am
It is very difficult to move to Canada.
It’s not so difficult to “go Galt” and make sure you become a net consumer in taxes instead of a net producer.
Comment by dhex —
March 23, 2009 @ 11:05 am
canada is a state of mind.
i mean, hey, maybe there are people out there who will significantly reduce their income just to spite a few thousand dollars to leviathan, but i think they’d be few and far between. there are far better ways to hide money from the gaping maw of the state than just shooting yourself in the food.
Comment by dhex —
March 23, 2009 @ 11:05 am
foot, even.
Comment by Adam Mentzer —
March 23, 2009 @ 11:06 am
I just don’t understand why everyone is still hating on Republicans, even people who are supposedly for smaller government.
Republicans don’t have any power anymore. Criticize the Democrats for once. Or is it just “cooler” to hate on Republicans?
Comment by Jim Henley —
March 23, 2009 @ 11:14 am
I’m no Rand fan, but Galt himself would despise you for this. You do realize that, don’t you?
Comment by joe from Lowell —
March 23, 2009 @ 11:16 am
It’s not so difficult to “go Galt†and make sure you become a net consumer in taxes instead of a net producer.
Just move to a red state.
Comment by herb —
March 23, 2009 @ 11:21 am
Adam Mentzer is a jackhole and I disavow everything he says.
But, Jim, I really wonder why you seem more ticked at the “angry white dude[s]” than at the administration that keeps shoveling taxpayer cash (and repayment obligations for the next generation) at failing businesses. This would seem to be the real scandal, no?
Comment by joe from Lowell —
March 23, 2009 @ 11:22 am
whose sock puppet is mentzer?
I think it’s Cesar, adopting a wingnut persona like he did during the election. Look at this:
I like how Joe continues to ignore the Tea Party Movement. People like him and the MSM are Baghdad Bob. “There is no Tea Party Movement! BO is popular!†Heh.
Nobody is actually stupid enough to end a comment with an accusation that one must be deluded to believe that Barack Obama is popular. It’s an act.
Comment by Seward —
March 23, 2009 @ 11:23 am
Jim Henley,
One of the biggest things I am concerned about is governments screwing things up enough that it leads to warfare between states with advanced technologies.
Comment by The Angry Optimist —
March 23, 2009 @ 11:24 am
Dude, wow, if you wanted to make the points made in the article, Jim, you could have done a much better job yourself.
Do you know this kid or something? Did you owe him a favor? He’s got a butane torch and a WHOLE FIELD OF STRAW TO BURN!
How would that make ONE a net consumer of taxes, joe? Nice try.
Comment by joe from Lowell —
March 23, 2009 @ 11:28 am
How would that make ONE a net consumer of taxes, joe?
By allowing ONE to live a modern lifestyle – driving on roads, having police services, engaging in commerce with people who have money from their paychecks, etc. – that is subsidized by others.
Guilty conscience, TAO? Where are you writing RIGHT NOW, I wonder?
Comment by Jim Henley —
March 23, 2009 @ 11:29 am
herb, fair question. The Tea Partyers are funny while Tim Geithner’s various schemes to shovel money to his friends are not. People like Atrios and IOZ have said a lot of what needs to be said already about that, but I’m mulling over a somewhat more substantial take on it.
Comment by The Angry Optimist —
March 23, 2009 @ 11:35 am
Here’s how this went. you wrote that moving to a Red State would somehow magically make a person a net consumer of taxes. Try as you might, We Are Not the State. An individual net payer does not magically become a net consumer by moving to a Red State.
And your ad hominem is ridiculous. The last data I saw had Ohio breaking even or taking .02 cents more than it pays out…not that I give a shit, because why would I feel guilty about tax policy over which I have zero control?
Comment by Alex Knapp —
March 23, 2009 @ 11:39 am
That’s true. All you have to do is become the CEO of a major corporation and then run it into the ground.
Comment by Seward —
March 23, 2009 @ 11:42 am
On the whole blue state v. red state tax issue I thought this was one of the more interesting articles on the subject when it was some what more of a hot topic back in 2004: http://online.wsj.com/article/SB110290129211398078-search.html
Comment by herb —
March 23, 2009 @ 11:48 am
Comment #23 was a tour de force.
Joe, as soon as you apologize to TAO, I’m confident he’ll return a small fragment of your dignity to you in near-mint condition.
Comment by joe from Lowell —
March 23, 2009 @ 11:48 am
So you don’t want to tell us where you’re typing from?
OK.
Comment by The Angry Optimist —
March 23, 2009 @ 11:49 am
Did you think I talked about OHIO just for kicks?
Comment by The Angry Optimist —
March 23, 2009 @ 11:51 am
Huh…now how would that make one a net consumer in taxes?
I think you’re missing a step.
Comment by joe from Lowell —
March 23, 2009 @ 11:52 am
Try as you might, We Are Not the State. An individual net payer does not magically become a net consumer by moving to a Red State.
I guess the points I made about the services one consumes as a part of ordinary life are just too hard to counter.
I trust that, given the obvious pain this is causing you, you would have refuted that point, if you could have.
Nope, driving on roads doesn’t make you the state. Nope, enjoying police protection doesn’t make you the state. Nope, having your livelihood depend on the economic activity of people who are paid with tax dollars doesn’t make you the state.
Nonetheless, the point remains (and remains unaddressed): if you want to become a net consumer of tax dollars, move somewhere that relies on the largess of the federal government for its economic survival: ie, a red state.
Comment by herb —
March 23, 2009 @ 11:52 am
joe, you’re getting pwned.
It’s like a train wreck.
Comment by joe from Lowell —
March 23, 2009 @ 11:56 am
Did you think I talked about OHIO just for kicks?
Very little of what you do makes sense.
But now that’s it’s absolutely clear, good. The answer to the question “Guilty conscience?” is, in fact, “Yes.”
Don’t worry; it’s the natural order of things, in a society where the social contract is respected, that there will be a transfer from the more fortunate to the less fortunate, whether we’re talking at the individual or regional level. It’s ultimately in the best interest of the net-donors in Massachusetts to subsidize you and your neighbors in Ohio until you can get back on your feet. We’d all be worse off if we just let you slip into immiseration; it’s simply an exercise in enlightened self-interest for the blue states to carry you and yours.
Comment by joe from Lowell —
March 23, 2009 @ 11:57 am
I’ll be sure to keep that in mind, herb.
Eyeroll.
Comment by Alex Knapp —
March 23, 2009 @ 11:59 am
Angry Optimist,
Sorry, I forgot the last step: beg for and receive federal bailout.
Comment by joe from Lowell —
March 23, 2009 @ 12:00 pm
Danny Ainge must have pwned Magic Johnson every night.
That guy at the Boston Garden totally cheered for Ainge.
Comment by The Angry Optimist —
March 23, 2009 @ 12:00 pm
No, those “points” are entirely irrelevant. A lot of the largesse thrown to Red States comes via worker’s benefits (WV), farm subsidies (IA), military payments (GA) and social security checks (FL, natch)…none of which have anything to do with the “services one consumes as a part of ordinary life”.
The fact is, is if your net worth is, say, 10 million dollars, you are not magically going to be living high on the Government hog if you move from NY to Alabama.
Comment by The Angry Optimist —
March 23, 2009 @ 12:01 pm
I see you haven’t gotten any less pathetic.
Comment by The Angry Optimist —
March 23, 2009 @ 12:03 pm
Well, I asked for it because it’s important to note that the Government has the option of not listening. It let Lehmann Brothers run into the ground, right?
Trying to parse the schizophrenia from the last and current Administrations and Congresses is an exercise in madness:
“Economists tell us that WE NEED A BAILOUT…but don’t come with your hats in hand, you greedy fatcats! Why are proud companies like you asking for a bailout…even though WE DESPERATELY NEED ONE!”
Comment by Thoreau —
March 23, 2009 @ 12:12 pm
OK, this thread is doomed. Might as well consolidate all the big threads with big comment counts.
So, how about that Persian New Year?
Comment by The Angry Optimist —
March 23, 2009 @ 12:20 pm
*kicks pebble* – well, thoreau, I would still be arguing about Southern CA traffic, but you left me hangin’ and babblin’ on about the IE…
Comment by dhex —
March 23, 2009 @ 12:22 pm
meet the persian new year, same as the old year.
Comment by joe from Lowell —
March 23, 2009 @ 12:22 pm
No, those “points†are entirely irrelevant. A lot of the largesse thrown to Red States comes via worker’s benefits (WV), farm subsidies (IA), military payments (GA) and social security checks (FL, natch)…none of which have anything to do with the “services one consumes as a part of ordinary lifeâ€.
I suppose you grow your money on a currency farm, then, and don’t earn income via the provision of goods and services to the people in Ohio – that is, the much-more-likely-than-average-to-be-receiving-government-benefits people of Ohio.
The fact is, is if your net worth is, say, 10 million dollars, you are not magically going to be living high on the Government hog if you move from NY to Alabama. That’s the great thing about moving from New York to Alabama – your income is going to be so much lower that your federal tax bill will plummet, so you move down the “donor-recipient” scale, both coming and going.
Comment by joe from Lowell —
March 23, 2009 @ 12:24 pm
I see you haven’t gotten any less pathetic.
And this is where government benefits are superior to private charity. When the recipients are ungrateful and bratty, the whims of the donors could well cause us to be less willing to donate, resulting in a decline in well-being for everyone.
Comment by b-psycho —
March 23, 2009 @ 12:25 pm
Joe: Suppose someone disagrees with your view of police “proteciton”, believing it overwhelmingly translates to police harrassment, and the laws they’re called to enforce encourage localized militarism, brutality, & treating everyone like a suspect?
Adam: if the moron teabaggers truly were anti-state they wouldn’t have been silent until now. Government has screwed us for the benefit of the rich & connected ever since its founding, merely being late to the party rather than useful idiots for an agenda they barely understand would be an improvement.
Comment by Thoreau —
March 23, 2009 @ 12:26 pm
TAO-
OK, I continued the discussion there.
http://highclearing.com/index.php/archives/2009/03/20/9222#comment-479165
Comment by b-psycho —
March 23, 2009 @ 12:27 pm
Just noticed the typo. Guess I’m becoming yet another internet stereotype…:(
Comment by joe from Lowell —
March 23, 2009 @ 12:29 pm
Seward,
Mr. Summerlin falls for the error of thinking that Democrats object to these transfers to the less-developed parts of the country. That’s simply not true.
On the level of the lizard brain, everything is zero sum. Either I eat the rat and you don’t get no rat, or you eat the rat and I don’t get no rat.
Once you get to a level of development that allows for pack hunting, on the other hand, it becomes manifestly in one’s interest to share the kill, no matter whose teeth grab the prey by the neck. It does the fastest, strongest pack member no good at all if half the pack is too weak from hunger to give a good chase.
Comment by joe from Lowell —
March 23, 2009 @ 12:31 pm
b-psycho,
Joe: Suppose someone disagrees with your view of police “protecitonâ€, believing it overwhelmingly translates to police harrassment, and the laws they’re called to enforce encourage localized militarism, brutality, & treating everyone like a suspect?
These opinions would still not change the dollar flows. If you’re walking down a sidewalk I paid for, I don’t get my money back if you’re pondering Atlas Shrugged while you meander.
The question asked was about the flow of dollars.
Comment by The Angry Optimist —
March 23, 2009 @ 12:33 pm
Somebody took their daily dose of “smug” this morning. Of course, this argument still has nothing to do with whether an individual can magically become a net consumer of taxpayer dollars.
If you want to make an argument that the subsidization of the states benefits everyone, and those individuals who live in tax-consuming states, hey, great. Still irrelevant to the original argument.
Comment by joe from Lowell —
March 23, 2009 @ 12:55 pm
Somebody took their daily dose of “smug†this morning.
Oh, suddenly you’re oh-so-sensitive to tone.
I’m sorry, I guess I just didn’t maintain the elevated, yet humble, level of discourse one finds in I see you haven’t gotten any less pathetic.
If you want to make an argument that the subsidization of the states benefits everyone, and those individuals who live in tax-consuming states, hey, great. Still irrelevant to the original argument. Yes, it is irrelevant. Regardless of the net outcome that attains from distributional justice, people in red states are still reliant on transfers from people in blue states. Ergo, an obvious answer to the question “How can I become a net consumer of taxes instead of a net donor?” remains “Move to a red state.”
Comment by The Angry Optimist —
March 23, 2009 @ 12:58 pm
The obvious answer is either A) give up your income and go on welfare or B) take over Archer-Daniels-Midland.
Comment by Seward —
March 23, 2009 @ 1:11 pm
joe,
I don’t think he does that, but even if that is the case…
As for the sharing and such, well, it doesn’t take wealth transfers by the state to do that. The marketplace does that by itself via the uncoordinated efforts of market actors. So the issue is whether the state enhances that or has some special competence regarding that issue. I don’t believe a case has been made that it does. What the state does do is shift things around to those who are able to gain the state’s (and by the state I mean the group of individuals in the state) attention; what it has a far harder time doing as opposed to the marketplace is actually growing the amount of kill available, and growing the amount of kill available over the short and long term is far more important than rationing out who gets what.
Comment by dhex —
March 23, 2009 @ 1:15 pm
to sidestep the usual dickwaving for a very brief moment, how would one figure the “individual share” of a sidewalk? a meaningless question to be sure but still…is it merely a case of taking the residents of a state and dividing the sidewalk cost for that year among them? or do property tax payers end up paying more? or is it a municipality by municipality, let a million flowers bloom on the greens near the sidewalk thing? speaking as committed walker who doesn’t pay property taxes, am i a net drain on the sidewalk budget? are motorists the unsung heroes of sidewalk maintenance budgets?
or do the fine folks at nyc.gov just take the first seven cents out of everyone for the department of sidewalks and ambulation?
not that it would prove anything, but it’d be fun to note at upcoming sidewalk-related functions.
Comment by Barry —
March 23, 2009 @ 1:25 pm
Comment by Adam Mentzer —
March 23, 2009 @ 11:02 am
“It is very difficult to move to Canada.
It’s not so difficult to “go Galt†and make sure you become a net consumer in taxes instead of a net producer. ”
Actually, it would be very hard. You’d have to radically cut your income (the only question would be ‘most’ or ‘almost all’). You probably still wouldn’t qualify for assistance, unless you were disabled. Unemployment insurance wouldn’t cover most of your income reduction, unless you could run a thriving business entirely under the counter (in which case you might be working *harder* than before).
And it’s even more so if you’re a law professor, just to take a person totally at random.
Comment by Seward —
March 23, 2009 @ 1:32 pm
b-psycho makes a good point; many of these supposed government benefits are perhaps dubious or even negative (from a utilitarian or a non-consequentialist perspective) in their outcome.
Comment by Hesiod —
March 23, 2009 @ 1:41 pm
Is the United States too big to fail? That’s kind of the whole point of what Obama is doing.
If you don’t think so, then attacking his defecit spending on libertarian grounds is principled and makes sense.
If you do, then you an idiot for criticizing his defecit spending.
Not, mind you, complaining about gow that defecit was racked up. Maybe you have a different idea on how fiscal stimulus should ooko that his. I mean, attacking defecit spending, per se.
And, mind you, Obama’s spending Chinese, Japanses, European and Oil Sheik money mostly. Not taxpayer dollars.
Comment by Seward —
March 23, 2009 @ 1:41 pm
dhex,
Well, you’d also have to ask who is most likely to get a sidewalk or sidewalk improvement in their neighborhood? I’m certain that in any polity that some people are paying for sidewalks that they will never use, etc.
Comment by Eric the .5b —
March 23, 2009 @ 1:41 pm
Joe’s not only brought over old Red playmates, he’s found a new one?
Ah, well.
I hope people thrilled about the Tea Party astroturfing are vocal about it; it saves me the time of hearing the specifics of how they’re vapid little talking-point-spouting Red fanboys who’ve shifted back into caring about fiscal responsibility and small government now that their team is utterly out of power.
Comment by Seward —
March 23, 2009 @ 1:43 pm
Hesiod,
Taxpayer dollars service the debt which is being undertaken. Even if you believe that we’ll never pay it off or that we’ll be able to reduce the amount at some future date, the interest on those debts – or at least some of them – will continue to be paid. The U.S. taxpayer will pay in the end for this.
Comment by Hesiod —
March 23, 2009 @ 1:44 pm
I think the big takeaway from all of this is: Free Markets don’t work well when the losers of a free market are numerous enough to threaten the existince of the exitsing order.
Everyone is all for lettiung the free market decide winners and loser — until they are one of the losers.
Comment by Seward —
March 23, 2009 @ 1:47 pm
One thing that I think will occur is a trend that is already in place; once the state takes on so much debt they will have to privatize or lease out more and more of what the state does today. That is already the case in Europe, where privatization seems to be far ahead of what has happened here.
Comment by Hesiod —
March 23, 2009 @ 1:48 pm
Taxpayer dollars service the debt which is being undertaken. Even if you believe that we’ll never pay it off or that we’ll be able to reduce the amount at some future date, the interest on those debts – or at least some of them – will continue to be paid. The U.S. taxpayer will pay in the end for this.
Yes. And that’s why you don’t want debt obligations to exceed a certain percentage of your current accounts.
Kind of like a home buyer taking on too big a mortgage.
This is why Obama wants to spend that money building up a 21st century infrastructure, on eductaion, and on trying to find that Tainterian energy subsidy.
Comment by Eric the .5b —
March 23, 2009 @ 1:53 pm
That would only hold true if you paid less in taxes than the per capita government spending (some 2005 numbers; feel free to suggest more recent data, anyone). A little googling finds that the average Texan, for instance, got $6.5k in federal money. If a Texan paid more than that in federal taxes, he’d obviously still be a net giver of federal money, despite being in a state with an average tax burden of $6.4k.
So, it’s a little trickier than just moving to a net-recipient state.
Comment by Seward —
March 23, 2009 @ 1:54 pm
Hesiod,
Or perhaps the lesson is that you can’t have a loose money policy by the government and not reap some consequences from it.
Comment by Eric the .5b —
March 23, 2009 @ 2:02 pm
Well, duh.
Free markets don’t work when people rush to stop the market consequences of bad behavior at every stage – bad behavior that people in power sometimes outright encouraged. As the consequences get bigger and bigger, it becomes harder and harder to prevent the fallout.
By all means, prop up and “reform” every business that should fail. Once the economy rebounds, assure us that all those businesses are now hale and hearty.
And cross your fingers.
Comment by The Angry Optimist —
March 23, 2009 @ 2:04 pm
Please tell me that this is a joke.
Comment by The Angry Optimist —
March 23, 2009 @ 2:05 pm
They may be idiots, but they’re OUR USEFUL idiots.
Seriously, when I hear about “trillions here and trillions there” every day, I’ll take whatever exposure the media wants to give on people pissed off about spending.
Comment by Seward —
March 23, 2009 @ 2:06 pm
Hesiod,
Well, as far as 21st century infrastructure is concerned, the marketplace will continue as it does now to make up the bulk of that spending (four or five times as much in other words). So the Obama administration will not really being doing that; private market actors will be. Indeed, keep in mind that over the past decades that marketplace has outstripped spending on infrastructure at a time when we’ve seen dramatic rises over that same time period in public funding of infrastructure.
As for education, I’m rather skeptical of anything that the federal government does in this area. Education has significant problems with scalability and scalability is key to any centralized federal policy, program, etc.
Comment by Seward —
March 23, 2009 @ 2:07 pm
Eric the .5b,
Free markets don’t work when people rush to stop the market consequences of bad behavior at every stage…
There has be some destruction for the creative part to work.
Comment by Eric the .5b —
March 23, 2009 @ 2:07 pm
Well, we’re only a couple of months into a post-Red world after a long period of Team Red running the place, you know. And then there’s the “won’t STFU and go away” aspect.
So, you have to expect some flack for masturbatory Team Red stunts.
Comment by Eric the .5b —
March 23, 2009 @ 2:11 pm
What’s this “OUR” business?
This is actually my fear. If I’m overly optimistic about the economy recovering while Obama’s still in power, the current Blue spending program could backfire and get the current crop of Reds back in the power, instead of some new people who’ve at least recognized that Bush-style antics don’t sell.
Comment by Eric the .5b —
March 23, 2009 @ 2:15 pm
Bingo. And that doesn’t equal laying off a few workers while keeping the same companies with the same structures and operations in business.
Comment by Jim Henley —
March 23, 2009 @ 2:16 pm
Wow. This thread was actually more fun before we drove Adam off. <GDR>
Comment by The Angry Optimist —
March 23, 2009 @ 2:17 pm
But Bush-style antics do sell; they just sell better when you have a smooth salesman pushing the product.
Comment by Kolohe —
March 23, 2009 @ 2:19 pm
Mr Knapp’s disclosure is a fairly big one and nearly vitiates his entire argument.
(disclosure: I would have to make the same disclosure)
Comment by Eric the .5b —
March 23, 2009 @ 2:21 pm
Oh. Sorry?
GDR?
Comment by Jim Henley —
March 23, 2009 @ 2:24 pm
An ancient internet acronym.
Comment by Jim Henley —
March 23, 2009 @ 2:25 pm
But I really do want Adam to explain how his plan to become “a moocher” comports with the morality of John Galt. Makes one wonder if Adam actually read the 56-page speech.
Comment by Eric the .5b —
March 23, 2009 @ 2:25 pm
*looks it up*
Ahh. I only go back to 1992, and I was sporadic until 94.
Comment by Eric the .5b —
March 23, 2009 @ 2:28 pm
I’m curious myself, Jim.
Comment by The Angry Optimist —
March 23, 2009 @ 2:32 pm
With Bailout 1, opposition ran 50-1 against when it came to congressional correspondence, so are now going to just ignore the fact that there is some legit rage directed towards our Tone-Deal Overlords?
I mean, I’ll support the Reds until we get divided government back. The Right is the only major organ banging the anti-bailout drum, as stupid as they in doing so.
Comment by Alex Knapp —
March 23, 2009 @ 2:42 pm
Yeah, I wondered if it did, too, but it didn’t seem fair to not mention it. But then again, the bigger point that really got lost was wondering where the hate is against subsidies and rigged tax codes for the wealthy amongst the Tea Party folk. Which, of course, doesn’t seem to exist…
Comment by Eric the .5b —
March 23, 2009 @ 3:14 pm
Meh. Rage comes and goes.
Also doesn’t answer the question.
Comment by Hesiod —
March 23, 2009 @ 3:19 pm
Free markets don’t work when people rush to stop the market consequences of bad behavior at every stage – bad behavior that people in power sometimes outright encouraged. As the consequences get bigger and bigger, it becomes harder and harder to prevent the fallout.
Shorter Eric b: “Free markets never work.”
Comment by Hesiod —
March 23, 2009 @ 3:23 pm
Go read the wiki entry on the Panic of 1907. This was before the federal reserve even existed, and in a period generally recognized today as virtually laizez faire economics in this country.
The financial panic at that time was only arrested by massive non market based intervention by JP Morgan and the treasury.
In fact, their series of interventions looks alot like Tarp I and II.
Comment by Eric the .5b —
March 23, 2009 @ 3:27 pm
They do seem terribly concerned about penny-ante stuff like earmarks, though.
Still, I’d be remiss if I didn’t note what others have said – this is ad hominem. The hypocrisy of the TP folks (and the high inanity of the “I wanna be a tax mooch” folks) doesn’t invalidate criticisms of the shoveling spree in DC.
It just means nobody anyone will hear will make criticisms aside from the TP/tax-moocher Reds. If, as I hope, we get an unmistakable upturn in the next couple of years, the plan will be regarded as basically good and any long-term issues with the plan will be ignored (until and unless folks a couple administrations from now are talking about the “Obama bubble” and how we need to have real regulation and public investiment to fix things).
Comment by Eric the .5b —
March 23, 2009 @ 3:42 pm
Only when folks like Bush, McCain, Obama and you can take credit for why.
Comment by Hesiod —
March 23, 2009 @ 3:44 pm
Only when folks like Bush, McCain, Obama and you can take credit for why.
Well…maybe when the Cylon supercomputer is running our economy free markets will work.
Comment by The Raven —
March 23, 2009 @ 3:46 pm
“If these people had just gone on the dole, we’d all be much better off,” croaked the Raven, a few days ago. I’m even being fair to Rand, who I disagree with. These losers, who don’t even understand marginal tax rates, think they’re John Galt. Krawk! Gotta learn arithmetic first, guys. I’ll make an exception for genuinely talented people who aren’t particularly good at math, but the fact of the matter is that most of these people have been beneficiaries of financial system manipulations of the past three decades, and no-way did they create all of their personal wealth.
Comment by Hesiod —
March 23, 2009 @ 3:48 pm
BTW, free markets are a complete misnomer anyway.
What is usually meant by “free markets” is a regulated market with a neutral arbitrator to settle disputes and prevent fraud.
Otherwise, it’s just a state of nature and the guys with the most money and resoirces accumulate all the guns and then enforce their will on people.
In fact, this is the reason why Governbments exist everywhere at all levels and “state sof nature” are rare to non existent.
Libertarian philosophy is a luxury only people who live in wealthy, liberal democracies — or Kleptocrats — can afford.
Comment by Hesiod —
March 23, 2009 @ 3:55 pm
“Free market” at work:
Group of ten people exist in a state of nature. They need food and water to survive and also need to procreate to pass on their genes.
If they live near abundant food and water resources, teh cost of obtaining the resoirces is low and conflict is commensuartely low. If any of these resources is distant or hard to obatin, then the cost of obtaining them is high.
Thus, maybe a proto-entrepeneur takes it upon himself to build a channel from taht river 10 miles a way to create a closer rsevoir of fresh water to drink. In exchange, he charges the rest a percentage of the food they gather as a fee for service.
Someone else gets the idea that this is a good way to accuulkate resources, and builds his own channel with a reservopir — and charges less of a tithe to undercut his competition.
But, the digging of the new channel will take 6 months. In the interim, the first guy uses his new food and water resorces to pay the biggest and strongest members of the community to go and beat the rap out of his potential competitor to maintain his monopoly.
Rinse. Repeat.
Comment by Eric the .5b —
March 23, 2009 @ 4:01 pm
Actually, I’d note rather different major details.
For one, some companies were outright allowed to fail. For another, those involved in the effort attempted to reassure people about the economic situation instead of milking the Coming Apocalypse for political benefit. For a third, the government fiscal involvement was relatively minor – the Treasury’s deposits into accounts were around a mere half-billion in 2009 dollars, and the major necessary action was waiving of anti-trust restrictions.
Hell, if TARP had worked that way or that well, would we even be talking about the economy and the need to throw a few more trillion dollars at it right now?
Actually, a chilling thought – how much closer would the last election have been if a Red-dominated government had taken credit for its secondary-level involvement in the resolution of the crisis?
Comment by b-psycho —
March 23, 2009 @ 4:01 pm
Joe: just pointing out that, though the TeaBaggers don’t have a credible argument against the government, understandable arguments do exist.
Comment by Eric the .5b —
March 23, 2009 @ 4:11 pm
*watches Hesiod argue at length with some invisible anarchist, not wanting to butt in on that until one interesting point comes up*
Good point. I’d even say that’s exactly right. The only problem is terminology.
Your average hard-core free-marketeer (all fifty of us?) would be fine if “regulation” meant that very arbitration, even if that neutral arbitration positively had to be done by the government. Even the anarchists don’t gripe too much, so long as you let them set up parallel private arbitration under the same government umbrella.
The sticking point is when “regulation” comes to mean far more than that arbitration. Then you get regulatory capture and influence on the regulators and their bosses, and then you go down the road of subsidies, and granted monopolies, yadda yadda. (Admittedly, you can go down that route without even hitting regulation, but it seems to help to a surprising degree.)
Comment by Eric the .5b —
March 23, 2009 @ 4:22 pm
*join’s Hesiod’s pile-on upon the pesky invisible anarchist*
And then the first guy decides he’d like to be called “King” or “Leader” or “El Presidente” – something fun like that. A majority of people affirm that they don’t want a beatin’. We all know the rest…
While I like the anarcho-capitalists for their consistency – unlike a lot of other “anarchists”, they’re not big on using “anarchy” as a label for systems that look, smell, and sound like governments – I just don’t think any society will last long without growing a state.
Comment by Seward —
March 23, 2009 @ 4:25 pm
Hesiod,
No one argued that markets were perfect. Indeed, I would expect a business cycle with a market centered economy.
What regulation of said markets beyond mere arbitration of disputes has done is made the risk of catastrophic breakdown more likely.
Comment by Hesiod —
March 23, 2009 @ 8:23 pm
Tehcnically, the 1907 panic followed the current one quite well. JP Morgan evaluated one trust, and determined it was insolvent — and let it fail. 9>the 1907 version of Lehman Brothers). Then all hell broke loose and things got worse.
So “letting things fail” as a strategery for resolving credit panics is a big FAIL!
That just accelerates the panic.
And, Obama is TRYING to reassure people.
Comment by Hesiod —
March 23, 2009 @ 8:25 pm
What regulation of said markets beyond mere arbitration of disputes has done is made the risk of catastrophic breakdown more likely.
The exact opposite, actually. Panics like this occurred much more frequenty before we created the federal reserve, Glass Steagall, etc.
And, most probably, had we kept the same regulatory scheme in place that was created in the wake of the Great Depression, this mess would never have happened either.
So, the takeaway is this: Greed has to be regulated because otherwise it will crash the system.
Comment by Joshua Holmes —
March 23, 2009 @ 8:27 pm
Otherwise, it’s just a state of nature and the guys with the most money and resoirces accumulate all the guns and then enforce their will on people.
This has already happened. It’s called “The United States of America”. Try not paying the protection money and see where you end up.
Comment by Hesiod —
March 23, 2009 @ 8:28 pm
Look. I know ts hard for dedicated libertarians and Hayek worshippers to grasp that their economic and political philosophy is a failure, but that’s the reality. It don’t work. Never has. It’s too unstable.
It’s like an uncontrolled nuclear reaction.
Even Ayn Rand devotee Alan Greenspan now admits it.
Comment by Hesiod —
March 23, 2009 @ 8:34 pm
This has already happened. It’s called “The United States of Americaâ€. Try not paying the protection money and see where you end up
Yes, and every other Gvt. on Earth. Government is the true “state of nature.” Because human beings are human beings.
And, the assumption that you can turn human greed into a force for progress is a great idea in theory — and works quite well most of the time. But, it breaks down when bubbles occur.
Comment by Hesiod —
March 23, 2009 @ 8:38 pm
The sticking point is when “regulation†comes to mean far more than that arbitration. Then you get regulatory capture and influence on the regulators and their bosses, and then you go down the road of subsidies, and granted monopolies, yadda yadda. (Admittedly, you can go down that route without even hitting regulation, but it seems to help to a surprising degree.)
Which will always happen, all of the time. And neutral private arbitrators will be bought off, or will have no ability to enforce tehir rulings.
[Yes, I know. Private arbitrators who have a reputations for being unfair will lose out in the market place. But, they still have no enforcment mechanism other than the willingness of the actors to be bound by the arbitration]
You want to see how governmentless ad hoc regulation works? Look at international law.
So long as everyone voluntarily follows the law, its good. But how do you enforce international law if someone strays? The big powers can pretty much do whatever they want.
Comment by Glaivester —
March 23, 2009 @ 9:07 pm
Tehcnically, the 1907 panic followed the current one quite well. JP Morgan evaluated one trust, and determined it was insolvent — and let it fail. 9>the 1907 version of Lehman Brothers). Then all hell broke loose and things got worse.
So “letting things fail†as a strategery for resolving credit panics is a big FAIL!
That just accelerates the panic.
But accelerating the panic is often what you need. Notice that the 1907 panic did not turn into a Great Depression. Also notice that the recession of the early 1920s, where the government barely intervened at all, was over in about a year.
When the Depression started in 1929, on the other hand, Hoover sprang into action, trying to maintain farm product prices and to prevent wages from declining, the Federal Reserve cut interest rates from 6% to 4.5% (then to 2% the next year, then to 1.5% iby the end of Q3 1931). And look where that got us.
And the oft-lamented Gilded Age was actually a time of great economic growth when you look at the period as a whole, and a lot of the supposed depressions were a lot less severe than people make them out to be.
Comment by Hesiod —
March 23, 2009 @ 9:16 pm
And the oft-lamented Gilded Age was actually a time of great economic growth when you look at the period as a whole, and a lot of the supposed depressions were a lot less severe than people make them out to be.
Other than the long depression that lasted from 1873-1879?
65 months of contraction.
And some argue that it lasted until 1897. So, um, a long 24 year period of contraction and slow growth.
Yeah. That was much better.
Look, I don’t mean to be harsh — but the libertarian position on this is just dead. It failed. You lose the argument.
hat doesn’t mean socialism wins! though. It just means regulated capitalism with a social safety net is the best way to run an economy.
Comment by Hesiod —
March 23, 2009 @ 9:17 pm
P.S. — the “Gilded Age” was really great for folks at the top. But it sucked fr everyone else. This was back when people worked 18 hour days and children were digging coal.
Comment by Hesiod —
March 23, 2009 @ 9:19 pm
So, letting Lehman brothers fail was “just what we needed” eh? Good one.
Comment by Walt —
March 23, 2009 @ 9:42 pm
Who opened the big can of “suck” and sprayed it all over the comment section?
Comment by Seward —
March 23, 2009 @ 10:00 pm
Hesiod,
I would note that the 1873-1879 contraction was in large part based on government efforts to pump railroad building and investment in the U.S., particularly by state governments. There really is no controversy on that issue.
As for all the state of nature talk, well, generally speaking, the classic theorists of such were casting back to justify their view of some current state that they either loved or despised. In other words, there is no single “state of nature.” Human beings evolve, just like every other creature on this planet, and our social and cultural structures are of course part of that evolution. Which means one thing is for sure; how human societies exist will be quite different two hundred years from now than they are today.
Comment by Glaivester —
March 23, 2009 @ 11:01 pm
Other than the long depression that lasted from 1873-1879?
-Hesiod
Well, Thomas E. Woods would disagree with you there:
And in any event, the poor condition of the American economy in the 1870s has often been exaggerated. The decade iending in 1879 saw a 6.8 percent real national product growth per annum and a 4.5 percent average increase in real product per capita… What appears to have made historians conceive of this period as one of unmitigated “depression” is the ongoing decrease in the price level by about 3.8 percent per annum.
- Meltdown, pp. 92-93
In short, the Gilded Age gets a bad rap because deflation makes the dollar-denominated GDP/GNP figures look a lot lower than the real figures. They cannot conceive of an economic boom that does not involve huge increases in the money supply.
Comment by Glaivester —
March 23, 2009 @ 11:02 pm
In fact, Hesiod, the Depression you mentioned was the specific one that I was referring to in my first comment (#103), I was just being too lazy at the time to go and check out my copy of Meltdown to get the specific quote.
Comment by Glaivester —
March 23, 2009 @ 11:08 pm
In fact, Hesiod, from the very piece you linked to:
Some commentators suggest that the depression actually lasted into the 1890s, and was a price depression, not a production depression. According to some economic historians, this was not really a depression if production and GDP grew throughout the period (see table below)*. The confusion comes from the fact that prices were falling because of greater industrial productivity and the presence of sound money (gold and silver). There is no clear agreement among historians and economists.
*i.e., it sucked to be Russia during this period. Of course, when did it not suck to be Russia?
Comment by dhex —
March 23, 2009 @ 11:15 pm
“Who opened the big can of “suck†and sprayed it all over the comment section?”
i blame the demiurge.
Comment by Joshua Holmes —
March 23, 2009 @ 11:44 pm
And, the assumption that you can turn human greed into a force for progress is a great idea in theory
Nothing in libertarian theory requires or celebrates personal greed. Ayn Rand is not libertarianism, just a corporatist fruitcake like our “free market” GOP overlordz.
Comment by joe from Lowell —
March 24, 2009 @ 12:39 pm
The wrong-headedness of this statement, it’s factually inaccuracy, cannot be stated enough.
We averaged a depression – not a recession, a depression – every 20 or so years between 1800 and 1930.
We has zero (0) depression between the adoption of the New Deal financial regulatory regime and the deregulatory frenzy of the 1990s and 00s.
And now here we are, wondering if bank runs – BANK RUNS! – are going to come back into vogue.
Comment by Hesiod —
March 24, 2009 @ 3:37 pm
Yeah. The GDP growth in the late 1800’s was between 4.5-6.5% a year.
Only problem was that the population growth rate was between 30-45% per year for the same period.
http://www.pepps.fsu.edu/safe/pdf/pop2.pdf
Which is why the Cghinese Gvt freaked the hell out when it was determined they were going to have a mere 5% GDP increase this year.
If your economic output is increasing three to four times slower than your population — you got big problems.
Comment by Hesiod —
March 24, 2009 @ 3:41 pm
Erp — I should say that the last decade of the 19th century showed a 22% groth rate in population.
http://74.125.95.132/search?q=cache:vyic8k4UoWwJ:nces.ed.gov/naal/lit_history.asp+US+population+growth+rate+1870&cd=6&hl=en&ct=clnk&gl=us
Sorry.
Comment by The Angry Optimist —
March 24, 2009 @ 3:43 pm
Smell the ignorance…it smells like…victory!
Comment by Glaivester —
March 24, 2009 @ 7:52 pm
Only problem was that the population growth rate was between 30-45% per year for the same period.
Read the chart again. The population growth rate was 30-45% per decade. If it were 30-45% per year, then if we started with about 5 million people in 1800, we would have between 1 quintillion (10^18) and 79 sextillion (7×10^22) people in the U.S. by 1900.
Given 30-45% per decade population growth, the annual population growth rate would have been more like 2.7-3.8% (that is, ((1.3^0.1)-1)x100% or ((1.45^0.1)-1))x100%).
Comment by Eric the .5b —
March 25, 2009 @ 2:40 pm
But they weren’t remotely as catastrophic. Even the Long Depression you mention is a dubious case, as some economists still argue over whether it was really a depression.
Remind me what exactly Hayek said about banking, Hesiod?
Which will always happen, all of the time. And neutral private arbitrators will be bought off, or will have no ability to enforce tehir rulings.
Yup. Just as civil liberties will inevitably get fucked over, minorities oppressed, etc. and etc. and etc.
The idea is that these are tendencies one should push back against.
I mean, sure, I get discouraged sometimes on the likeliness of pushing back successfully. But the alternatives don’t include “set up a government that doesn’t have the bad tendencies of government“, so there we are.
Comment by Eric the .5b —
March 25, 2009 @ 2:45 pm
Talking per-decade, a constant 4.5% annual rate gives ~55.3% growth over 10 years.
Comment by Eric the .5b —
March 25, 2009 @ 2:46 pm
Oops, typo in my post #129 messed up the quoting. Should look more like:
Yup. Just as civil liberties will inevitably get fucked over, minorities oppressed, etc. and etc. and etc.
Comment by Eric the .5b —
March 25, 2009 @ 2:48 pm
Aside from the one that ran through the 1930s and 1940s, of course.