This is long, but if you want to see an great exhibition of Sowell’s Conflict of Visions, here you go.
I would truly love to see Judd see the light and become a Revoista. Is it possible to truly convert or is the Conflict of Visions in the DNA?
Commentator Judd said this in response to a thread here.
Maybe I have caused this thing to go horribly off topic and there is a better place to continue this. If so, let me know, I am in fact new here, and have not been “lurking.” Maybe that was another Judd.
“Hundreds of billions of [CRA] loans defaulted in 2008 leading to the housing meltdown and the current recession.”
I have been under the impression that the bottom fell out of the market because of bad bets made by Wallstreet. I think it has been relatively well documented. This is purely conjecture at this point, but the way I understand it is that, simply put, an increasingly lax attitude on regulations of banks and Wallstreet made it possible to start packaging and betting on mortgage backed securities, CDOs and derivatives that badly destabilized the inherent value in the housing market. I can imagine how the CRA helped to create the bubble, but I believe the lack of regulation was enabling a hand-full of people to make unnecessarily risky investments that caused the market to collapse.
“free markets and free minds for America.”
It is also my understanding that while free trade enables companies to expand quickly and make better profits by outsourcing, it doesn’t have a lasting effect on job creation and wealth in the United States, not to mention the exploitation of workers in other countries where we don’t actually have to provide a real living wage or safe working conditions (e.g. deadly warehouse fire in Bangladesh that killed several Wal-Mart workers.)
I suppose you could say I disagree with a lot of free trade practices on moral grounds, and maybe only half-smart economic ideas, but I think we need better manufacturing jobs in this country and tariffs on imports to incentivize domestic production.
“At what ratio of debt to GDP is considered dire Judd?”
Okay so maybe that was a little brazen of me, but Japan’s ratio is 200% and we’re not seeing them fall off the face of the earth. It’s poor anecdotal evidence, I know, and I realize our own debt to GDP ratio could easily be 200% in 10 years, which is an uneasy prospect. I will consider it dire when we see what Greece is seeing at this point in time. To me, what is happening in Europe seems to be a significant indicator that austerity isn’t the best recipe for success.
As a side note, there are a lot of financial leaders who were handling the European crisis who have been replaced with people who were in high positions with Goldman Sachs, and I think that’s another thing to look into but some might call that tin-foil hat territory.
Admittedly, I have only been a political junkie for the past couple of years now, and have indeed been getting most of my news from liberal sources. I have been aware of the fact that there are large gaps in the history that is being regurgitated to serve a particular bias, and that is partly the reason I am airing my opinion, with so much hubris, on this site. If I am right, then I have learned nothing, but if a few thoughtful people have any inclination to educate me on certain things well, I consider that to be even more of a benefit. I have been forced to double check a good amount of my own research as well as a number of the things asserted in this thread and I find it all good.
“Whatever the case, GDP that included government spending doesn’t tell us much about the health of the economy. The government could order the Grand Canyon filled with green Jello and it would have an tremendously positive effect on GDP. If the government also ordered the Great Lakes covered with ping pong balls a foot deep, GDP would skyrocket.”
When I read that I laughed out loud. I had never thought about it those terms and it struck me as blatantly accurate and funny. It’s a good point. But there is something to be said about the intrinsic market value of that jello and the ping pong balls. It inflates GDP sure, but it also creates jobs which generates purchasing power in the United States, and that stimulates growth, yes? The grand canyon jello-worker has money and now he wants to SPEND it, by God, and now people can profit from meeting his demand for product!…or is that a classic Keynesian fallacy?
“Putting regulations on businesses helps them expand operations and grow? Of course not. Regulations provide economic friction and reduce productivity. You can’t increase productivity with regulations. It is absurd on its face.”
I assure you I wasn’t trying to assert that, but I can see how the context made it seem that way. It was stupid to mention regulations there. But…regulations, which I think should be called “protections,” seem to emerge from instances of gross negligence in our country’s history. They are so blatant, that it would be a waste of all of our time for me to start listing them all here. Yes, they can be wasteful, and can fetter industry, but would you send your son of to work for a mining company that could in no way be held responsible for cave-ins and explosions? Would you let Shell frac for natural gas in your back yard if they didn’t have to guarantee they wouldn’t poison your land with (proven) toxic fracturing chemicals? There is a need for these things. And there is a need to reform them, but I won’t pretend I know how to do that.
“If the world worked the way you seem to think it does, the government could print $310 trillion in currency and give every man, woman and child in America a check for a million dollars and everyone would be rich.”
I hope my viewpoint didn’t come off as that simplistic. I haven’t really been around that long, but I think that saving GM was good for the economy, and I think anyone would be hard-pressed to deny that, but yes, maybe you think it sets a bad precedent. Then again, Bush did enact TARP, right? Apples and Oranges maybe? Just throwing stuff to see what sticks at this point, and genuinely curious in all responses. Even though this has become hopelessly long winded and I’m sorry for that.
“Entitlement spending doesn’t spur growth. Breaking Windows is Not Stimulating”
I never meant to imply that it spurs growth, but I will say, I think that if you cut everyone off in a horrible job market, then spending would drastically decline, which would, I think, be detrimental to a fragile recovery.
And I don’t want a government to be my “care-taker,” per se, but it has evolved into that over the past 200 years in an attempt to eliminate injustices and ensure a level playing field for most people, and it took until the 1960s to get as close as we’ve come today. And it’s still a struggle (which, if you think about it, has many other facets beyond human rights to boot.)
I’m not blindly steadfast in my conviction that Keynesian economics is the proven way. And neither is Supply-side theory. Any half-smart economist will tell you that neither has been proven to work, as a rule, in any strict application. Whoops. More hubristic assertions. Oh well. This I feel has gotten horribly out of hand, but I look forward to further conversation. If there’s a way and will to take this somewhere else, let us. Otherwise, I’m content to exacerbate the bloat of this thread.
I responded with this…
“I have been under the impression that the bottom fell out of the market because of bad bets made by Wallstreet.”
Virtually 100% of the housing crisis is the fault of the United States Congress. They created and nurtured Fannie Mae. Had they not done so, the housing bubble absolutely, positively could not have occurred. I am not even going to blame this on Democrats or Republicans. They share the blame. They fostered the fiction that the government could guarantee an unlimited number of bad loans and everything would be fine. The consciously decided that inability to make monthly payments should not mean you cannot qualify for a mortgage. They consciously decided that welfare payments should be counted as income when qualifying for a mortgage. They consciously created laws mandating quotas for low income, high risk loans. They purposefully poured imaginary money into the real estate market creating the price bubble. They propagated the fiction that the mortgages were “guaranteed” by the government and therefore AAA quality… right up to the point they defaulted. This crisis could not have happened without the conscious, purposeful efforts of both parties of the United States Congress.
This isn’t a failure of free markets. Not even close. This is the opposite. This is a failure of the Congress and the entire government. This is a failure of the representative government that allowed people to attempt to vote themselves largess from nothing. If the market would have not been short circuited by the Congress, this crisis would not – could not – have happened. This was absolutely, positively a failure caused by the government interfering in the markets in the arrogant belief that they know better. The bailout wasn’t to save Wall Street, the bailout was to save our foolish selves from the government we elected.
“I think we need better manufacturing jobs in this country and tariffs on imports to incentivize domestic production.”
Repeat after me: trade wars are bad for everybody. If restricting trade across peaceful borders was good for the economy, we would put trade restrictions in place between the states. If it doesn’t make sense to restrict trade between Ohio and Indiana, it doesn’t make sense to restrict trade between Ohio and Ontario.
The imposition of trade restrictions causes a net loss to society because the losses from trade restrictions are larger than the gains from trade restrictions. Free trade creates winners and losers, but theory and empirical evidence show that the size of the winnings from free trade are larger than the losses.
“But there is something to be said about the intrinsic market value of that jello and the ping pong balls. It inflates GDP sure, but it also creates jobs which generates purchasing power in the United States, and that stimulates growth, yes?”
No. That is the broken window fallacy. It was proved a fallacy over a century and half ago by Frédéric Bastiat.
If filling the Grand Canyon with green Jello stimulated the economy by increasing the velocity of money and by putting Jello makers to work, the answer to recessions would be to fill the whole country with Jello at government expense. It wouldn’t work, of course, because there is no demand for states filled with Jello. The expense would displace other spending for things that are actually in demand. In any case, why bother with the Jello at all? If creating work is the goal, you wouldn’t actually have to go to the trouble of filling the Grand Canyon with Jello. The government could just pay tens of thousands of Americans to pantomime the motions and activities associated with filling the Grand Canyon. Of course the pantomime isn’t necessary either. They could just drop the money from helicopters.
It doesn’t work that way.
“…or is that a classic Keynesian fallacy?”
No, it isn’t Keynesian. John Maynard Keynes said stimulus was to mitigate what he called “liquidity traps.” He never expected government spending to drive the economy forever. Keynes called for contractionary economic policies during booms. Keynes’ contracyclical economic theory called for increasing aggregate demand in recessions and decreasing aggregate demand in overheated expansions. We haven’t even been in a recession since 2009. Furthermore, Keynes said stimulus should be paid out of savings. He didn’t say borrow until the debt service debauches the currency and undermines the economy. He also said not to rely on this sort of stimulus nonsense for long. It is an emergency tactic to use when the economy is collapsing and liquidity is trapped. It isn’t just business as usual. Keynes wouldn’t be calling for stimulus now.
“But…regulations, which I think should be called “protections,” seem to emerge from instances of gross negligence in our country’s history.”
The gross negligence of the last decade has been of the government. Who will regulate Obama?
“but would you send your son of to work for a mining company that could in no way be held responsible for cave-ins and explosions? “
Please don’t set up straw men. No one here is calling for a world without basic regulations.
“I think that saving GM was good for the economy, and I think anyone would be hard-pressed to deny that,”
I will deny the hell out of it.
What was good about it? The government propped up $33 IPO that has traded below that since? The blatant theft of bond holder funds? The use of tax payer funds to prop up a failed business plan at the expense of its successful competitors? The Administration directed firing of thousands of dealership employees? The Administration directed termination of the pensions of 20,000 salaried retirees at the Delphi auto parts manufacturing company? The loss of billions of tax payer funds? The creation of a zombie company that survives only through government economic voodoo? The massive transfer of wealth to Obama’s union allies? The abortion of a thousand healthy start-ups that would have been formed and forged in the fires of creative destruction?
There is still $23.6 billion sunk in GM. That is $23.6 billion that was taken away from other uses in the economy and used to prop up business plans that were proved failures. That is $23.6 billion that cannot be invested in business plans that could and would succeed. That is $23.6 billion used to give favored businesses an unfair advantage against Ford Motor Company. That is $23.6 billion that will choke off funding to thousands of other businesses effectively strangling them in the cradle. That is $23.6 billion used to create a zombie corporation raised from the dead but not made healthy. That is $23.6 billion used to undermine creative destruction, the engine of growth in modern capitalism. That is $23.6 billion of your money used by the Administration to reward favored constituencies and punish those who are not favored. That is $23.6 billion of venture socialism.
It is a disaster.
“And I don’t want a government to be my “care-taker,” per se, but it has evolved into that over the past 200 years in an attempt to eliminate injustices and ensure a level playing field for most people, and it took until the 1960s to get as close as we’ve come today.”
The government hasn’t leveled the playing field the least little bit. It has sloped it in favor of its constituencies. It creates winners and loser (mostly it picks losers) and it makes rules that are neither fair nor level.
In a perfect world, there would be no need for government. We would be born free, live our lives free and die free without being dominated by others. Sadly, the human condition precludes this. Human beings are, by and large, selfish depraved creatures who will raid, kill and steal from each other and, throughout history, have. This has caused humans to band into villages, tribes, kingdoms and nation states for mutual protection from attacks from others. This is the basis for the social compact that is government. As in the case of the polio vaccine, it would be a better world were government unnecessary. That world does not exist so we have government.
The government of today, however, has gone far beyond the entreaties of the Founders to “establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.” It has become a massive Leviathan that, through millions of pages of laws, hundreds of thousands of pages of tax law, millions of swarming bureaucrats, has worked its way into the most basic and intimate aspect of every citizens’ life.
Thomas Jefferson wrote that “Experience has shown that, even under the best forms of government, those entrusted with power have, in time and in operations, perverted it into tyranny.” Sadly, our current government has been thus perverted.
Today we are soothed by celebrity politicians who are securing huge fortunes as public servants who assure us that happiness and self actualization can be attained only by handing over increasing shares of our property, wealth and freedoms to them to manage on our behalf. They will smooth off the rough edges of life, pad the hard corners of existence and make life better while we are allowed to pursue a dignified life devoid of care or worries. In other words, we are a flock of timid and industrious animals asking for a little more veterinary care – please – from our shepherd.
There isn’t a single member of Obama’s cabinet who has ever started or run a business, met a payroll, created and marketed a product created wealth. They are lawyers, teachers, military members and career bureaucrats. In other words, they are people who have lived their lives in the expense column funded by those who actually create the wealth that is the source of our comfort, health, welfare and ease.
These are the masters we have elected to hold our leashes. Thees are the shepherds of administrative despotism. In these masters and their cohorts in the Leviathan, we have concentrated all the powers of massive, intrusive government. We tell ourselves that they answer to us but this is the self-imposed delusion of democratic despotism: we have submitted.
I want no part of it. I will live free.