A challenge to all Libertarians & Austrian Econ proponents

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Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.

Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF.

Ready go.

ah2
Joined:
Dec. 13, 2010 10:00 pm

Comments

As a secondary question: For WHOM is the distribution made by the market best?

ah2
Joined:
Dec. 13, 2010 10:00 pm

They aleady admitted "Free Markets are not perfect" and "I am not against all regulation".

Dr. Econ's picture
Dr. Econ
Joined:
Jul. 31, 2007 4:01 pm

Pirates, thieves, and fraudsters are the best people, and so when great men like Mittens Rmoney manage to change the laws to make piracy and fraud legal, that therefore, ifso factso, is the best possible outcome in this best of all possible worlds.

Phaedrus76's picture
Phaedrus76
Joined:
Sep. 14, 2010 8:21 pm

This thread has been up for over 12 hours now and not one of them can even venture to defend their most sacred belief. Pathetic.

ah2
Joined:
Dec. 13, 2010 10:00 pm
Quote ah2:

This thread has been up for over 12 hours now and not one of them can even venture to defend their most sacred belief. Pathetic.

Dr Econ already stated the reason why, your premise is wrong. Libertarians do not dispute the need for government regulations, particularly pollution laws, enforce legal contracts, zoning laws etc. The disagreement comes in the details.

WorkerBee's picture
WorkerBee
Joined:
Apr. 28, 2012 12:22 pm

How big a government does it require to get broad participation and information into the legislation and the power to enforce it on people with Money? The Devil in those "details" is the question of democracy and governing ourselves that is about having a State to hold Commerce and other public institutions to civil peace and benefit. Public institutions are not just those "owned" by the People through the State. They include all the public actors in Law, Education, Health and Commerce as opposed to private individuals.

Personal businesses are still conducted in public. There is some need to meet a public good effect for anyone to "do business" in society. Those businesses that extend beyond family also introduce commodification of the human relationships. There is no "family" or "personal" bond between employer and employee, and even if these justifications for small business exclusion are spotty in practice, there is a point where scale goes beyond the personal and must be treated as public with greater state regulation.

drc2
Joined:
Apr. 26, 2012 12:15 pm

Here is a short little video that explains the libertarian thought process in regards to regulations;

http://www.youtube.com/watch?v=yCsQ7VOr1oQ

WorkerBee's picture
WorkerBee
Joined:
Apr. 28, 2012 12:22 pm
Quote ah2:

Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.

Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF.

Ready go.

I'll go ahead and make my case. For my time and effort, I expect you to return to this thread and respond to what I have posted.

My first suggestion is that you should not phrase your statement that the burden is on libertarians or Austrian economists to prove that the market is "ALWAYS AND FOREVER" (obviously capitalized for effect) superior in the distribution of goods and services.

To sufficiently make our case, it is only necessary to pove that the market is the best in terms of efficiency and distribution of goods and services out of the economic systems that are available to us. Although unlikely, it is not beyond the realm of possibility that once in a thousand times, the bumbling bureaucrats and central planners could guess right or value a good or service close to accurately.

You are attempting to bolster your argument by challenging us to make the case that not only does a free market with property rights and economic liberty provide superior outcomes in comparison to socialism or communism (or whatever other flavor of authoritarian government you choose) but that there is NEVER a case where a centrally planner could succeed in any aspect.

I am not saying that a compelling case for that could not be made, but I will start with merely explaining why a free economy provides better distribution of goods and services in comparison to socialism. In the scope of a single post I think that will suffice for now.

I want to start with a critique of the lefts most common alternative they present to capitalism as an economic system. Of course I am referring to Socialism.

There have been many critiques of socialism over the years, the most common being the effect of people losing the incentive for hard work if so much of their income will be redistributed to those who work less (or not at all). The effect over society will be a disincentive to work hard and the creation of a "free rider" problem, whereby the incentive is to coast on the work of others.

This is fairly conventional right wing rhetoric against socialism. I believe it has some merit. Remember in high school when you had to write a paper with a group or do a project with other people? Everyone works less hard in a group and tends to dump more of the work on the "talented" member of the group. Frequently, test scores for group projects are less than for individual tests or papers.

So there is plenty of merit to that argument.

But Ludwig von Mises basically proved that socialism simply cannot work due to his pioneering work about the "Impossibility of Economic Calculation under Socialism". I think that is the most pertinent here.

Let me first give a set up of the problem. This is taken from a book by Mises:

The director wants to build a house. Now, there are many methods that can be resorted to. Each of them offers, from the point of view of the director, certain advantages and disadvantages with regard to the utilization of the future building, and results in a different duration of the building's serviceableness; each of them requires other expenditures of building materials and labor and absorbs other periods of production. Which method should the director choose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended. Therefore he cannot compare them. He cannot attach either to the waiting time (period of production) or to the duration of serviceableness a definite numerical expression. In short, he cannot, in comparing costs to be expended and gains to be earned, resort to any arithmetical operation. The plans of his architects enumerate a vast multiplicity of various items in kind; they refer to the physical and chemical qualities of various materials and to the physical productivity of various machines, tools, and procedures. But all their statements remain unrelated to each other. There is no means of establishing any connection between them.

Imagine the plight of the director when faced with a project. What he heeds to know is whether or not the execution of the project will increase well-being, that is, add something to the wealth available without impairing the satisfaction of wants which he considers more urgent. But none of the reports he receives give him any clue to the solution of this problem.

We may for the sake of argument at first disregard the dilemmas involved in the choice of consumers' goods to be produced. We may assume that this problem is settled. But there is the embarrassing multitude of producers' goods and the infinite variety of procedures that can be resorted to for manufacturing definite consumers' goods. The most advantageous location of each industry and the optimum size of each plant and of each piece of equipment must be determined. [p. 699] One must determine what kind of mechanical power should be employed in each of them, and which of the various formulas for the production of this energy should be applied. All these problems are raised daily in thousands and thousands of cases. Each case offers special conditions and requires an individual solution appropriate to these data. The number of elements with which the director's decision has to deal is much greater than would be indicated by a merely technological description of the available producers' goods in terms of physics and chemistry. The location of each of them must be taken into consideration as well as the serviceableness of the capital investments made in the past for their utilization. The director does not simply have to deal with coal as such, but with thousands and thousands of pits already in operation in various places, and with the possibilities for digging new pits, with the various methods of mining in each of them, with the various methods for utilizing the coal for the production of heat, power, and a great number of derivatives. It is permissible to say that the present state of technological knowledge makes it possible to produce almost anything out of almost everything. Our ancestors, for instance, knew only a limited number of employments for wood. Modern technology has added a multitude of possible new employments. Wood can be used for the production of paper, of various textile fibers, of foodstuffs, drugs, and many other synthetic products.

Today two methods are resorted to for providing a city with clean water. Either one brings the water over long distances in aqueducts, an ancient method long practiced, or one chemically purifies the water available in the city's neighborhood. Why does one not produce water synthetically in factories? Modern technology could easily solve the technological problems involved. The average man in his mental inertia is ready to ridicule such projects as sheer lunacy. However, the only reason why the synthetic production of drinking water today--perhaps not at a later day--is out of the question is that economic calculation in terms of money shows that it is a more expensive procedure than other methods. Eliminate economic calculation and you have no means of making a rational choice between the various alternatives.

The socialists, it is true, object that economic calculation is not infallible. They say that the capitalists sometimes make mistakes in their calculation. Of course, this happens and will always happen. For all human action points to the future and the future is always uncertain. The most carefully elaborated plans are frustrated if expectations [p. 700] concerning the future are dashed to the ground. However, this is quite a different problem. Today we calculate from the point of view of our present knowledge and of our present anticipation of future conditions. We do not deal with the problem of whether or not the director will be able to anticipate future conditions. What we have in mind is that the director cannot calculate from the point of view of his own present value judgments and his own present anticipations of future conditions, whatever they may be. If he invests today in the canning industry, it may happen that a change in consumers' tastes or in the hygienic opinions concerning the wholesomeness of canned food will one day turn his investment into a malinvestment. But how can he find out today how to build and equip a cannery most economically?

Some railroad lines constructed at the turn of the century would not have been built if people had at that time anticipated the impending advance of motoring and aviation. But those who at that time built railroads knew which of the various possible alternatives for the realization of their plans they had to choose from the point of view of their appraisements and anticipations and of the market prices of their day in which the valuations of the consumers were reflected. It is precisely this insight that the director will lack. He will be like a sailor on the high seas unfamiliar with the methods of navigation, or like a medieval scholar entrusted with the technical operation of a railroad engine.

We have assumed that the director has already made up his mind with regard to the construction of a definite plant or building. However, in order to make such a decision he already needs economic calculation. If a hydroelectric power station is to be built, one must know whether or not this is the most economical way to produce the energy needed. How can he know this if he cannot calculate costs and output?

We may admit that in its initial period a socialist regime could to some extent rely upon of the preceding age of capitalism. But what is to be done later, as conditions change more and more? Of what use could the prices of 1900 be for the director in 1949? And what use can the director in 19890 derive from the knowledge of the prices of 1949?

The paradox of "planning" is that it cannot plan, because of the absence of economic calculation. What is called a planned economy is no economy at all. It is just a system of groping about in the dark. There is no question of a rational choice of means for the best possible [p. 701] attainment of the ultimate ends sought. What is called conscious planning is precisely the elimination of conscious purposive action.

The heart of Mises' argument against socialism is that central planning by the government destroys the essential tool, being competitively formed market prices, by which people in a society make rational economic decisions.

A modem economy with an advanced system of division of labor, sophisticated technologies and a wide variety of capital equipment is just too complex for planners to successfully organize and oversee. There is just too much knowledge (and too many different types of knowledge) dispersed among too many people. The planner is unable to centralize all of the relevant and ever-changing information in a complex society. He is unable to arrange everything in the economy in just the right way in order to "get it right."

Mises explained that in a market economy free of government intervention, this problem which the socialist planner faces is non-existent. The key, Mises said, is private property and individual freedom. In a system of division of labor, in which all of the transactions require the voluntary consent of buyers and sellers, self-interest is (as Adam Smith argued long ago) harnessed to the common good. No one can acquire what someone else possesses unless he, in turn, offers that person something he is willing to take in trade. Thus, improvement in each individual's condition requires that he consider the wants and desires of his fellow men.

In light of all this, I highly recommend two books.

The first is an essay called "Economic Calculation in the Socialist Commonwealth" by Ludwig Von Mises

Read it here for free:

http://mises.org/document/448/Economic-Calculation-in-the-Socialist-Commonwealth

The second is a grand economic treatise, "Socialism, An Economic and Sociological Analysis", also by Ludwig Von Mises

You can also read this book for free:

http://mises.org/document/2736/Socialism-An-Economic-and-Sociological-Analysis

Honestly, if you study this post and my argument and then you read Mises' great critique of Socialism and understand the essential function of market prices in the distribution of goods and services, I don't doubt that it will become self evident that a free economy provides superior distribution compared with central planning.

In fact, my argument should go farther than that. It should be obvious that Socialism in the long run is impossible. In the short run, Socialist economies can only limp along when their central planners can copy the market signals and valuations of capitalist economies.

I expect you to read what I have posted and respond to this thread and tell me what you have learned.

jrodefeld's picture
jrodefeld
Joined:
Oct. 15, 2011 2:24 am

I didn't read it and I don't care.

Why is it all of a sudden about 'socialism'?

What are you, a commie hunter? Witch burner?

Who cares what you think or say?

Not me certainly.

Nope.

No.

anonymous green
Joined:
Jan. 5, 2012 11:47 am
Quote anonymous green:

I didn't read it and I don't care.

Why is it all of a sudden about 'socialism'?

What are you, a commie hunter? Witch burner?

Who cares what you think or say?

Not me certainly.

Nope.

No.

When I hear responses like this I wonder why you even bothered to post anything at all. I mean, you take the time to post a reply just to say to didn't read anything I wrote and don't care?

I was responding to the challenge to make the case for a free economy being the best for the allocation of goods and resources.

I brought up socialism, but I could have picked any "centrally planned" economic system. Mises wrote the difinitive refutation of socialism and central planning.

I seriously hope you don't post too much here if you aren't even willing to respond in an intelligent way when presented with challenging information.

jrodefeld's picture
jrodefeld
Joined:
Oct. 15, 2011 2:24 am

I actually think Misses has a point on this - it is rather unique to Austrian economics and it's only significant contribution. It is somewhat unique since liberal and socialist economists at that time thought it was possible for the state to make all goods and products with the aid of computations and later with computers.

Unfortunatley, -like most of what jrod posts - it is irrelevent, because liberals don't believe a single state should control the market.

In fact, ah2's question is still ignored:

Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.

Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF.

Dr. Econ's picture
Dr. Econ
Joined:
Jul. 31, 2007 4:01 pm
Quote WorkerBee:
Quote ah2:

This thread has been up for over 12 hours now and not one of them can even venture to defend their most sacred belief. Pathetic.

Dr Econ already stated the reason why, your premise is wrong. Libertarians do not dispute the need for government regulations, particularly pollution laws, enforce legal contracts, zoning laws etc. The disagreement comes in the details.

To the contrary, I have had several of them post articles explaining the lack of need for environmental regulations. If you talk to any of the zero gov Libertarian nuts, they will tell you that the only thing you need is well defined property rights. They even suggest the use of private courts.

But the point here has nothing to do with the role of government. It has to do with the assumption that an unregulated market produces the best distribution goods made by ALL libertarians.

ah2
Joined:
Dec. 13, 2010 10:00 pm
Quote jrodefeld:
Quote ah2:

Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.

Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF.

Ready go.

I'll go ahead and make my case. For my time and effort, I expect you to return to this thread and respond to what I have posted.

My first suggestion is that you should not phrase your statement that the burden is on libertarians or Austrian economists to prove that the market is "ALWAYS AND FOREVER" (obviously capitalized for effect) superior in the distribution of goods and services.

To sufficiently make our case, it is only necessary to pove that the market is the best in terms of efficiency and distribution of goods and services out of the economic systems that are available to us. Although unlikely, it is not beyond the realm of possibility that once in a thousand times, the bumbling bureaucrats and central planners could guess right or value a good or service close to accurately.

You are attempting to bolster your argument by challenging us to make the case that not only does a free market with property rights and economic liberty provide superior outcomes in comparison to socialism or communism (or whatever other flavor of authoritarian government you choose) but that there is NEVER a case where a centrally planner could succeed in any aspect.

I am not saying that a compelling case for that could not be made, but I will start with merely explaining why a free economy provides better distribution of goods and services in comparison to socialism. In the scope of a single post I think that will suffice for now.

I want to start with a critique of the lefts most common alternative they present to capitalism as an economic system. Of course I am referring to Socialism.

There have been many critiques of socialism over the years, the most common being the effect of people losing the incentive for hard work if so much of their income will be redistributed to those who work less (or not at all). The effect over society will be a disincentive to work hard and the creation of a "free rider" problem, whereby the incentive is to coast on the work of others.

This is fairly conventional right wing rhetoric against socialism. I believe it has some merit. Remember in high school when you had to write a paper with a group or do a project with other people? Everyone works less hard in a group and tends to dump more of the work on the "talented" member of the group. Frequently, test scores for group projects are less than for individual tests or papers.

So there is plenty of merit to that argument.

But Ludwig von Mises basically proved that socialism simply cannot work due to his pioneering work about the "Impossibility of Economic Calculation under Socialism". I think that is the most pertinent here.

Let me first give a set up of the problem. This is taken from a book by Mises:

The director wants to build a house. Now, there are many methods that can be resorted to. Each of them offers, from the point of view of the director, certain advantages and disadvantages with regard to the utilization of the future building, and results in a different duration of the building's serviceableness; each of them requires other expenditures of building materials and labor and absorbs other periods of production. Which method should the director choose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended. Therefore he cannot compare them. He cannot attach either to the waiting time (period of production) or to the duration of serviceableness a definite numerical expression. In short, he cannot, in comparing costs to be expended and gains to be earned, resort to any arithmetical operation. The plans of his architects enumerate a vast multiplicity of various items in kind; they refer to the physical and chemical qualities of various materials and to the physical productivity of various machines, tools, and procedures. But all their statements remain unrelated to each other. There is no means of establishing any connection between them.

Imagine the plight of the director when faced with a project. What he heeds to know is whether or not the execution of the project will increase well-being, that is, add something to the wealth available without impairing the satisfaction of wants which he considers more urgent. But none of the reports he receives give him any clue to the solution of this problem.

We may for the sake of argument at first disregard the dilemmas involved in the choice of consumers' goods to be produced. We may assume that this problem is settled. But there is the embarrassing multitude of producers' goods and the infinite variety of procedures that can be resorted to for manufacturing definite consumers' goods. The most advantageous location of each industry and the optimum size of each plant and of each piece of equipment must be determined. [p. 699] One must determine what kind of mechanical power should be employed in each of them, and which of the various formulas for the production of this energy should be applied. All these problems are raised daily in thousands and thousands of cases. Each case offers special conditions and requires an individual solution appropriate to these data. The number of elements with which the director's decision has to deal is much greater than would be indicated by a merely technological description of the available producers' goods in terms of physics and chemistry. The location of each of them must be taken into consideration as well as the serviceableness of the capital investments made in the past for their utilization. The director does not simply have to deal with coal as such, but with thousands and thousands of pits already in operation in various places, and with the possibilities for digging new pits, with the various methods of mining in each of them, with the various methods for utilizing the coal for the production of heat, power, and a great number of derivatives. It is permissible to say that the present state of technological knowledge makes it possible to produce almost anything out of almost everything. Our ancestors, for instance, knew only a limited number of employments for wood. Modern technology has added a multitude of possible new employments. Wood can be used for the production of paper, of various textile fibers, of foodstuffs, drugs, and many other synthetic products.

Today two methods are resorted to for providing a city with clean water. Either one brings the water over long distances in aqueducts, an ancient method long practiced, or one chemically purifies the water available in the city's neighborhood. Why does one not produce water synthetically in factories? Modern technology could easily solve the technological problems involved. The average man in his mental inertia is ready to ridicule such projects as sheer lunacy. However, the only reason why the synthetic production of drinking water today--perhaps not at a later day--is out of the question is that economic calculation in terms of money shows that it is a more expensive procedure than other methods. Eliminate economic calculation and you have no means of making a rational choice between the various alternatives.

The socialists, it is true, object that economic calculation is not infallible. They say that the capitalists sometimes make mistakes in their calculation. Of course, this happens and will always happen. For all human action points to the future and the future is always uncertain. The most carefully elaborated plans are frustrated if expectations [p. 700] concerning the future are dashed to the ground. However, this is quite a different problem. Today we calculate from the point of view of our present knowledge and of our present anticipation of future conditions. We do not deal with the problem of whether or not the director will be able to anticipate future conditions. What we have in mind is that the director cannot calculate from the point of view of his own present value judgments and his own present anticipations of future conditions, whatever they may be. If he invests today in the canning industry, it may happen that a change in consumers' tastes or in the hygienic opinions concerning the wholesomeness of canned food will one day turn his investment into a malinvestment. But how can he find out today how to build and equip a cannery most economically?

Some railroad lines constructed at the turn of the century would not have been built if people had at that time anticipated the impending advance of motoring and aviation. But those who at that time built railroads knew which of the various possible alternatives for the realization of their plans they had to choose from the point of view of their appraisements and anticipations and of the market prices of their day in which the valuations of the consumers were reflected. It is precisely this insight that the director will lack. He will be like a sailor on the high seas unfamiliar with the methods of navigation, or like a medieval scholar entrusted with the technical operation of a railroad engine.

We have assumed that the director has already made up his mind with regard to the construction of a definite plant or building. However, in order to make such a decision he already needs economic calculation. If a hydroelectric power station is to be built, one must know whether or not this is the most economical way to produce the energy needed. How can he know this if he cannot calculate costs and output?

We may admit that in its initial period a socialist regime could to some extent rely upon of the preceding age of capitalism. But what is to be done later, as conditions change more and more? Of what use could the prices of 1900 be for the director in 1949? And what use can the director in 19890 derive from the knowledge of the prices of 1949?

The paradox of "planning" is that it cannot plan, because of the absence of economic calculation. What is called a planned economy is no economy at all. It is just a system of groping about in the dark. There is no question of a rational choice of means for the best possible [p. 701] attainment of the ultimate ends sought. What is called conscious planning is precisely the elimination of conscious purposive action.

The heart of Mises' argument against socialism is that central planning by the government destroys the essential tool, being competitively formed market prices, by which people in a society make rational economic decisions.

A modem economy with an advanced system of division of labor, sophisticated technologies and a wide variety of capital equipment is just too complex for planners to successfully organize and oversee. There is just too much knowledge (and too many different types of knowledge) dispersed among too many people. The planner is unable to centralize all of the relevant and ever-changing information in a complex society. He is unable to arrange everything in the economy in just the right way in order to "get it right."

Mises explained that in a market economy free of government intervention, this problem which the socialist planner faces is non-existent. The key, Mises said, is private property and individual freedom. In a system of division of labor, in which all of the transactions require the voluntary consent of buyers and sellers, self-interest is (as Adam Smith argued long ago) harnessed to the common good. No one can acquire what someone else possesses unless he, in turn, offers that person something he is willing to take in trade. Thus, improvement in each individual's condition requires that he consider the wants and desires of his fellow men.

In light of all this, I highly recommend two books.

The first is an essay called "Economic Calculation in the Socialist Commonwealth" by Ludwig Von Mises

Read it here for free:

http://mises.org/document/448/Economic-Calculation-in-the-Socialist-Commonwealth

The second is a grand economic treatise, "Socialism, An Economic and Sociological Analysis", also by Ludwig Von Mises

You can also read this book for free:

http://mises.org/document/2736/Socialism-An-Economic-and-Sociological-Analysis

Honestly, if you study this post and my argument and then you read Mises' great critique of Socialism and understand the essential function of market prices in the distribution of goods and services, I don't doubt that it will become self evident that a free economy provides superior distribution compared with central planning.

In fact, my argument should go farther than that. It should be obvious that Socialism in the long run is impossible. In the short run, Socialist economies can only limp along when their central planners can copy the market signals and valuations of capitalist economies.

I expect you to read what I have posted and respond to this thread and tell me what you have learned.

What I have learned is that you are incapable of answering my question and instead chose to make a post on refuting command economies - which is not really socialism, by the way. Furthermore, you have conflated a regulated market with a command economy, which is in and of itself a logical fallacy.

The burden of proof is absolutely on you because this creates the foundation of your entire economic philosophy. As such, you should be able to prove its validity and claim on truth. Even if we agree that once in a while "bumbling buearocrats" will periodically be right, your claim is that they will NEVER be MORE right than a market that is unregulated.

You task is not to criticize an alternative to an unregulated market of your choice but to prove once and for all that unregulated markets are never wrong and always superior to all other alternatives.

The fact of the matter is, you will find that you have based an entire political and economic philosophy on a null hypothesis - making it very easy to cow uneducated individuals into believing it because they don't know any better.

The other thing I learned is that you are more than willing to acknowlege that free rider problems exist when government gets involved but then don't realize that once you acknowledge the free riders exist at all, you have completely invalidated the null hypthothesis you base your entire ecnomic and political philosophy on. Free riders exist first and foremost because of the nature of goods, not because government is involved. Free riders are a example of why government involvement in markets is important in the first place. The fact that you can clearly articulate a free rider problem and then not understand that the market produces free riders for nonrivalrous and nonexcludable goods is just hilarious. It should be noted that Mises specifically chose a good that does not have these properties to discount regulated markets - in other words, he too is avoiding the issues. And most likely what your response to this fact is going to be is what most Libertarians do - deny that the properties of the goods themselves exist at all; willfully ignore the physical properties of reality to desprately cling to the null hypothesis which you personally have already disproven.

The contradictions abound and it is simply astonishing to watch the mental acrobatics you wll go through in an attempt to make it work. lol.

ah2
Joined:
Dec. 13, 2010 10:00 pm
Quote jrodefeld:
Quote anonymous green:

I didn't read it and I don't care.

Why is it all of a sudden about 'socialism'?

What are you, a commie hunter? Witch burner?

Who cares what you think or say?

Not me certainly.

Nope.

No.

When I hear responses like this I wonder why you even bothered to post anything at all. I mean, you take the time to post a reply just to say to didn't read anything I wrote and don't care?

I was responding to the challenge to make the case for a free economy being the best for the allocation of goods and resources.

I brought up socialism, but I could have picked any "centrally planned" economic system. Mises wrote the difinitive refutation of socialism and central planning.

I seriously hope you don't post too much here if you aren't even willing to respond in an intelligent way when presented with challenging information.

This is perhaps one thing we will agree on. I am growing increasingly frustrated with the lack of content and the ad homenims in his posts. No offense anonymous but when you do this, you offer less to the discussion than folks like jrod do. Personally, I think behavior like this should lead to a ban as it has for some of our Libertarian counterparts. It's time to grow up, anonymous. If you can't create a thoughtful post addressing the issues, don't post at all.

ah2
Joined:
Dec. 13, 2010 10:00 pm

The right always comes back to comparing market economies (particularly the ways ours functions) to command economies....as if there is nothing else.

Even early libertarians, such as Tucker, made the clear distinction between "socialism" and command economies of "statism"..

Most who adhere to the prime core of socialism, direct worker ownership of their workplace, understand that government ownership isn't socialism. Government ownership just replaces one employer with another.

Some elements of social democracies, such as fire departments, would probably be retained in a socialist state. They are efficient. Costs to retain them are broadly spread, They perform a valuable function. They operate outside of the markeplace, ....and they aren't socialist.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

Mixed economies work better. Banking, Govt insurance, Education,Health care, Medicare work well with no profit motive. Free markets with competition work well with the profit motive. You can see

10. August 2012 - 13:28

(Reply to #4) of

http://www.thomhartmann.com/forum/2012/08/democracy-crisis-terror-economy-danger-democracy

with India as an example. "Either Or" is not the only option.

pshakkottai's picture
pshakkottai
Joined:
Jul. 11, 2011 11:27 am

I certainly agree, but I am not the one making absolutist claims like libertarians and "Austrian economics" proponents on this board.

ah2
Joined:
Dec. 13, 2010 10:00 pm
Quote pshakkottai:

Mixed economies work better. Banking, Govt insurance, Education,Health care, Medicare work well with no profit motive. Free markets with competition work well with the profit motive. You can see

Profit motives are great for bowling alleys and trinket sales. The general welfare should be non-profit, and those who supply the system should be non-profit also. Med supplies, pharmaceuticals, military hardware, etc.

anonymous green
Joined:
Jan. 5, 2012 11:47 am

Well, another day, another Libertarian runs away...

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm

Conservatives, Libertarians too, don't want no regulations, just not over regulations. Let's minimize the regulating. Keep government intrusion only to what's constitutionally allowable.

Tahuyaman's picture
Tahuyaman
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Aug. 16, 2012 2:39 pm

I guess you have a hard time of reading too. Ah2's point was "

Prove to me that the distribution of goods created by an unregulated market is ALWAYS AND FOREVER the best distribution.

Provide evidence, statistics, and theoretical support for your case. NO RHETORICAL BULLSHIT. I want PROOF.

Ready go."

We then proved Jrod's response foolish, and also Ah2 gave some reasons why the free market does not work well. Typically at this point some CATO drop out posts a long winded post about how working conditions were abosolutely safe and wonderful in the 19th century, and that snake oil salemen didn't exist, based on the diary of Winslow Logbottom in Kansas City Missouri.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm

This thread is not about Constitutionality. It is about the theoretical legitimacy of claiming that a free market is always and forever better in distributing goods than any other alternative available.

ah2
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Dec. 13, 2010 10:00 pm
Quote ah2:

This thread is not about Constitutionality. It is about the theoretical legitimacy of claiming that a free market is always and forever better in distributing goods than any other alternative available.

The premise of the question was faulty. No one is calling for a completely unregualted market as the author of this thread suggested. Libertarians want the least amount of relulation possible. Even liberals who claim they stand for civil liberties and freedom for all should not be against imposing the least amount of regulation possible.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote Tahuyaman:
Quote ah2:

This thread is not about Constitutionality. It is about the theoretical legitimacy of claiming that a free market is always and forever better in distributing goods than any other alternative available.

The premise of the question was faulty. No one is calling for a completely unregualted market as the author of this thread suggested. Libertarians want the least amount of relulation possible. Even liberals who claim they stand for civil liberties and freedom for all should not be against imposing the least amount of regulation possible.

The premise is not faulty. Even if I concede that all Libertarians actually want minimal levels of regulation, which I don't, the fact of the matter is that virtually all Libertarians and Austrian Economists claim that the free and unregulated market will always and forever produce the best goods distribution. To the degree that they acquiesce to minimal regulations, it is done begrudgingly and, in their view, at the detriment to market distribution in favor of some other concern such as national security.

ah2
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Dec. 13, 2010 10:00 pm

"Who cares what so-and-so said about this or that?"

Thesaurus of Alternate Responses to "So what if they said that then."

anonymous green
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Jan. 5, 2012 11:47 am

Libertarians and true conservatives aren't anarchists. People like the occupy movement have taken in the anarchists. We believe in minimal regulation of trade and all things government currently overregulates. Any time something is regulated it is to the detriment of that which is regulated. Some regulations are prudent. Most are not.

When the government wishes to deter a certain activity, it taxes such activity. Some actions may be prudent to tax and other actions are not. Trade is no different. If you wish to slow trade, regulate it and tax it. The opposite is also true.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote Tahuyaman:Any time something is regulated it is to the detriment of that which is regulated.

Thank you for proving my point. Now prove this statement.

ah2
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Dec. 13, 2010 10:00 pm

Why bother.

It's a false set of choices, in a single dimension, evisioned only by fools and marketers of goods.

anonymous green
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Jan. 5, 2012 11:47 am

I also said that sometimes that regulation is prudent, but you seem to have glossed over that.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote anonymous green:

Why bother.

Right, why bother.

I believe in as much freedom and civil liberties as possible. You don't. I want an individual's effort and merit determine their success, you don't. You want government to decide who wins and who loses, I don't. You want governement to expand the dependent class, I don't.

I truly think many of you would be comfortable with government taking 100% of our earnings if you felt we got our monies worth in services in return.

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Tahuyaman
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Aug. 16, 2012 2:39 pm

The rich are the only dependent class to government.

Welfare was and is a pittance, compared.

anonymous green
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Jan. 5, 2012 11:47 am
Quote ah2:
Quote Tahuyaman:Any time something is regulated it is to the detriment of that which is regulated.

Thank you for proving my point. Now prove this statement.

What happens when something which is unregulated finally becomes regulated? That activity slows. Sometimes that activity comes to a complete halt depending on the depth and scope of the regulation. Maybe that can be good and maybe that can be bad. Regulating the freedom for man to prosper and pursue happiness is usually not a good thing.

What happens when governemt determines too many people smoke cigarettes and are causing health problems? They impose additional regulations and taxes on tobacco companies in an attempt to deter smoking. The same with the consumption of alcohol. I'm sure someone can think of more examples. Then some people act as though they never knew smoking was harmful to their health all these years because they were being deceived by the tobacco companies. But government stepped in to punish the evil tobacco companies (and no I don't smoke) and relieve the harmed ones of thier personal responsibility in that area. But that's anorther issue.

I prefer to let consumers regulate commerce as much as humanly possible. If a company produces an inferior product, consumers will not purchase that product and that company will fail. If a company contracts to perform a service with the intent of taking your money and not providing the service, that's called fraud or theft. That's a crime and we have laws which punish those who perpetrate crimes.

Usually when a country suffers from economic troubles, or melt-downs so to speak, government regulation or intrusion is one of the primary reasons. Most of the economic troubles throughout the industrialized world today are caused by excessive government debt. This is not even arguable. It is a fact. The problems not because of government debt are due to government regulation. The home mortgage lenders did exactly what the government told them they had to do and the result was the mortgage crisis. This also is not arguable. It is a fact.

Exchanging views with liberals can be frustrating. They cannot even admit basic truths if they think that the truth even remotely hurts their argument. That's called intellectual dishonesty.

Liberals don't frustrate me though, because I know how they come to their views. They are conditioned by our media and schools at all levels to believe government is the solution to every ill in society. They believe that if something is wrong, or even perceived to be wrong the solution is more government regulation. If one dares to even question that point of view, he or she is ridiculed and made to feel like a pariah. They are brainwashed into believing that government is only there to do good and wonderful things and make life better for all. And if things aren't always good and wonderful the blame always lies with those who prosper and don't put all their faith in government. These people have been conditioned to believe that those who succeed have either cheated or simply won life's lottery. To the left, the depth of the cheating is determined by how much success one has achieved. The highest achievershave obviously cheated the most in their eyes.

People living their lives holding a left wing point of view don't put much value on intellectual curiosity, but that discussion is for another time.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote Tahuyaman:

I also said that sometimes that regulation is prudent, but you seem to have glossed over that.

I did not gloss over that at all. In fact, your post was basically a restatement of the one I had made just before it.

ah2
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Dec. 13, 2010 10:00 pm
Quote Tahuyaman:
Quote ah2:
Quote Tahuyaman:Any time something is regulated it is to the detriment of that which is regulated.

Thank you for proving my point. Now prove this statement.

What happens when something which is unregulated finally becomes regulated? That activity slows. Sometimes that activity comes to a complete halt depending on the depth and scope of the regulation. Maybe that can be good and maybe that can be bad. Regulating the freedom for man to prosper and pursue happiness is usually not a good thing.

In correct, cap and trade in the 1990s was one of the most successful governmental regulations ever created. Not only did it come millions under budget, the private industries subject to the regulation actually benefited from it. It forced them to think outside the box and come up with more energy efficient ways of doing business. In the end, the result was that they were able to lower their long term cost of production as a result of the governmental regulation which actually spurred on development of new technology.

The same thing is happening in the car industry right now. The federal government set emissions regulations for all cars sold in the US with a deadline of 2014. They coupled this with cash for clunkers which increased demand for new vehicles and R&D grants to help auto companies pursue new fuel efficient technology. The entire hybrid revolution of the last decade was almost completely created by these policies. My brother in law, who works in the hybrid R&D department for Ford, currently has a job right now because of these policies and the funds coupled with it.

There are so many examples where markets are content with a technological glut because they favor short term profits over long term gains and development.

What happens when governemt determines too many people smoke cigarettes and are causing health problems? They impose additional regulations and taxes on tobacco companies in an attempt to deter smoking. The same with the consumption of alcohol. I'm sure someone can think of more examples. Then some people act as though they never knew smoking was harmful to their health all these years because they were being deceived by the tobacco companies. But government stepped in to punish the evil tobacco companies (and no I don't smoke) and relieve the harmed ones of thier personal responsibility in that area. But that's anorther issue.

Of course this is not an example of a regulation but a tax specifically designed to deter a particular behavior and to offset the social costs of the behavior for the rest of us. This is not a valid comment for this discussion.

I prefer to let consumers regulate commerce as much as humanly possible. If a company produces an inferior product, consumers will not purchase that product and that company will fail.

If this were actually true, Walmart would have been bankrupt about two decades ago.

If a company contracts to perform a service with the intent of taking your money and not providing the service, that's called fraud or theft. That's a crime and we have laws which punish those who perpetrate crimes.

Again, not germaine to the topic of the thread. Please stay on topic.

Usually when a country suffers from economic troubles, or melt-downs so to speak, government regulation or intrusion is one of the primary reasons.

Please explain why all of the governments in Europe who engaged in austerity measures are now in a second dip in the recession (for example, England and Greece) while all of the countries who utilize managed economies are doing better than the rest of the world (for example, Germany and Sweden).

Most of the economic troubles throughout the industrialized world today are caused by excessive government debt. This is not even arguable. It is a fact.

Saying it is a fact does not make it true. We have discussed this in another thread and already disproven this point. Germany and Japan have some of the strongest ecnomies in the world right?

http://en.wikipedia.org/wiki/File:PublicDebtTriade.PNG

If it were true that economic stability were a function of governmental debt alone, then Germany would currently be as bad off as we are and Japan would be shitting mess. But they aren't. They are both doing better than we are, yet Germany has the same debt ratio we do and Japan has almost triple that.

The problems not because of government debt are due to government regulation. The home mortgage lenders did exactly what the government told them they had to do and the result was the mortgage crisis. This also is not arguable. It is a fact.

Actually that is arguable because the government didn't tell them to do anything. Government did not tell lenders to use subprime loans. Government did not tell speculators to inflate market values. Government did not tell builders to overbuild and flood the market with homes they had no hope of ever selling. These were all market mechanisms that SHOULD have been regulated but weren't that led to the crash. And before you even bring up Freddie and Fannie, they had the LOWEST percentage of toxic loans of all lenders. The private companies were the ones causing the problem. In fact, in February of 2007 Freddie announced that it would no longer purchase crappy subprime loans from dishonest loan originators. Shortly after that, all the private lenders started declaring bankruptcy and literally crapping their toxic loans onto the public.

Stop reading conservative blogs and check out what the real economists who report on the housing market say about this. I think you will find it enlightening...

Exchanging views with liberals can be frustrating. They cannot even admit basic truths if they think that the truth even remotely hurts their argument. That's called intellectual dishonesty.

What is intellectual dishonesty is calling something a fact as if willing it to be so will make it true. I have only seen a few of your posts but one thing characterizes every single one of them - you don't actually offer any evidence for your claims. Here you have basically proclaimed statements true with no proof. This is exactly what I meant by "no bullshit rhertoric." You are going to need to provide something more than simply your willfulness to make a legitimate argument.

Liberals don't frustrate me though, because I know how they come to their views. They are conditioned by our media and schools at all levels to believe government is the solution to every ill in society.

Ah... the ole' "if you are dumber you are actually smarter" meme. Gotta love it.

They believe that if something is wrong, or even perceived to be wrong the solution is more government regulation.

Please provide a direct quote of where a liberal on these boards has claimed this in all cases.

If one dares to even question that point of view, he or she is ridiculed and made to feel like a pariah.

Oh, so you are the victim? I get it... lol.

They are brainwashed into believing that government is only there to do good and wonderful things and make life better for all. And if things aren't always good and wonderful the blame always lies with those who prosper and don't put all their faith in government. These people have been conditioned to believe that those who succeed have either cheated or simply won life's lottery. To the left, the depth of the cheating is determined by how much success one has achieved. The highest achievershave obviously cheated the most in their eyes.

People living their lives holding a left wing point of view don't put much value on intellectual curiosity, but that discussion is for another time.

Right so let me get this straight. The left are brainwashed by seeking out information through media sources and advanced levels of schooling but are also characterized by not valuing intellectual curiosity. Brilliant work. Okay, folks, let's wrap it up. Tahuyaman, who has provided absolutely no evidence or proof for any of his claims, has decided that we are lacking in intellectual curiosity and that he alone holds the ability to proclaim Truth in the world. Hold on to your hats folks. He is the second coming of Jesus, God among us.

Seriously...

Let me let you in on a little secret - this conversation is above your paygrade. Don't feel the need to respond again...

ah2
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Dec. 13, 2010 10:00 pm

Every single thing I posted was 100% factual. You proved my point that a liberal can't even admit that which is true if his view is even mildly challenged.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote ah2:

Okay, folks, let's wrap it up. Tahuyaman, who has provided absolutely no evidence or proof for any of his claims, has decided that we are lacking in intellectual curiosity and that he alone holds the ability to proclaim Truth in the world.

That is correct, liberals don't value intellectual curiosity, but I have never claimed that only I have the ability to "proclaimthe truth". There are millions of us who will continue to carry people like you through society.

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Tahuyaman
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Aug. 16, 2012 2:39 pm
Quote Tahuyaman:
Quote ah2:

Okay, folks, let's wrap it up. Tahuyaman, who has provided absolutely no evidence or proof for any of his claims, has decided that we are lacking in intellectual curiosity and that he alone holds the ability to proclaim Truth in the world.

That is correct, liberals don't value intellectual curiosity, but I have never claimed that only I have the ability to "proclaimthe truth". There are millions of us who will continue to carry people like you through society.

No you implied it by expecting us to accept your statement "This is fact" as the only necessary evidence to agree with your argument. Laughable. Show me your evidence or begone you pathetic fool.

ah2
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Dec. 13, 2010 10:00 pm
Quote Tahuyaman:Any time something is regulated it is to the detriment of that which is regulated.

Libertarians argue - or should argue - that the only should be the protection of an individual's property, and then let the courts settle it out.

This arguement is faulty for many reasons.

The first is that information is costly and the facts are uncertain - therefore, even in such a Libertarian world, the wealthy will be able to make violence on the poor and middle class.

Secondly, as an extension of the above, there needs to be regulations to reduc the risk of corporate fraud. For example, the federal government requires that oil shipping companies have an emergency plan to clean up oil spills.

Thirdly, there are regulations on information - thinks like requiring ingredient labels, crash test reports, and the rest of it. Many of these things could be offered by private firms but are not. This is because technology has made products complex and often beyond the reach of the consumer's intellect. Locke could argue that the individual knows what is best for himself in the 17th century, but by the 21st no one takes that literally.

Fourth, there are various other regulations that help negotiate the gains of trade more to the consumer. This is the debit card fee restriction, caps on interest rates and rents, minimum wage laws, occupational safety, unemployment and old age retirement. And this is mainly because the economy is dominated by a few firms that don't have to compete on every single quality or input. There are many markets that are incomplete or require exorbitant costs.

Fifth, there are safety issues. It turns out the automobile industry did not crumble to dust when seat belts were required on cars. There is the efforts against smoking, obesity, and in some countries, against genetic modification of foods. When Jefferson wrote, people are fairly healthy and corporations did not try to make them eat foods designed to make profits. People today simply do not know better. Other examples are the CDC. Your plea against our anti-smoking efforts seems incredibly cruel and disgusting - but perhaps you are simply unaware of the progress that has been made in this area.

Sixth, there are negative externalities - for example waste disposal in the city or air, zoning laws.There are laws in Europe which say that a firm has to give a month's notice before closing. Closing the plant is a huge negative externality on the city, since much of the city has invested heavily and has been dependent on it. I also include here industrial and trade policies.

Seventh, there are economic regulations - like fiscal and monetary policy. This really is a combination of negative externality and information - but I put it here to emphasize its essential character. I know you disagree with economic policy - but if you grant it works as I say it does, I'm sure you would agree it is necessary. Certainly in a fiat economy, the government must replace the efforts of the gold miners - it needs to make more money when the economy demands it.

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Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Tahuyaman:

Every single thing I posted was 100% factual. You proved my point that a liberal can't even admit that which is true if his view is even mildly challenged.

If it is factual, then you should have no trouble providing evidence. For someone who clearly hails intellectual curiosity in the highest regard, I know you have already done the research so you have the information readily available. I expect you to post evidence for every single one of your claims from independent sources by the end of the day. Good luck.

ah2
Joined:
Dec. 13, 2010 10:00 pm

Start here......http://articles.businessinsider.com/2009-10-16/wall_street/29984294_1_mortgage-brokers-freddie-mac-fannie-and-freddie

I don't expect you to get beyond the first paragraph, but try anyway.

Tahuyaman's picture
Tahuyaman
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Aug. 16, 2012 2:39 pm

No, start by searching Tahuyaman on Google.

You'll see the extent to which the spies in your neighborhood go to clusterfucc the system.

Don't pay any attention to this fool.

Responding in any way to him is useless, except to further his own agenda of agent provocateur,

anonymous green
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Jan. 5, 2012 11:47 am
Quote Tahuyaman:

Start here......http://articles.businessinsider.com/2009-10-16/wall_street/29984294_1_mortgage-brokers-freddie-mac-fannie-and-freddie

I don't expect you to get beyond the first paragraph, but try anyway.

Completely wrong, and dishonest. The trouble did not begin in the early 90's. The bubble began in the 2002 - 2003 period, and popped in late 2006 - 2008, by regions. Most of the subprime lending was not done through Fannie and Freddie or FHA. Most of it was done in the free market created by the opening up of unregulated derivatives. Subprime lending went from 1% of the total market in 2000 to 20% in 2006. Conforming lending, or prime lending, which is what Fannie and Freddie did, lost their market share to the subprime and non prime lenders. At the height of the meltdown, the Freddie and Fannie portfolio had foreclosure rates skyrocket from 1.8% to almost 2.8%. Subprime mortgage backed securities foreclosures rates went from 5% to 18%, and stayed above 15% for 4 years running, and will finish 2012 over 15%.

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Phaedrus76
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Sep. 14, 2010 8:21 pm
Quote Phaedrus76:
Quote Tahuyaman:

Start here......http://articles.businessinsider.com/2009-10-16/wall_street/29984294_1_mortgage-brokers-freddie-mac-fannie-and-freddie

I don't expect you to get beyond the first paragraph, but try anyway.

Completely wrong, and dishonest. The trouble did not begin in the early 90's. The bubble began in the 2002 - 2003 period, and popped in late 2006 - 2008, by regions. Most of the subprime lending was not done through Fannie and Freddie or FHA. Most of it was done in the free market created by the opening up of unregulated derivatives. Subprime lending went from 1% of the total market in 2000 to 20% in 2006. Conforming lending, or prime lending, which is what Fannie and Freddie did, lost their market share to the subprime and non prime lenders. At the height of the meltdown, the Freddie and Fannie portfolio had foreclosure rates skyrocket from 1.8% to almost 2.8%. Subprime mortgage backed securities foreclosures rates went from 5% to 18%, and stayed above 15% for 4 years running, and will finish 2012 over 15%.

Yor analysis is incorrect. The foundation of the problem was laid back in the early 90's. I know you really want to put the entire problem on Bush's doorstep, but facts and truth get in your way every time.

Here's another demonstration of how liberals can't accept basic truths if such truth harms their agenda.

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Tahuyaman
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Aug. 16, 2012 2:39 pm

Re: " Most of the economic troubles throughout the industrialized world today are caused by excessive government debt. This is not even arguable. It is a fact. " by Tahuyaman

It is not at all a fact! In fact it is just propaganda. I have shown that

cumulative govt deficit = gross national wealth = $ 60 Trillion, with numbers from BEA in

http://pshakkottai.wordpress.com/2012/03/30/another-proof-of-mmt-4/

http://pshakkottai.wordpress.com/2012/07/31/cumulative-deficit-vs-househ...

Mitchell says "We hear the BIG LIE from politicians, on radio and TV, and even from our neighbors. We drown in the BIG LIE. Repetition creates belief, which creates more repetition.

And all these repetitions have one thing in common: They express alarm at the size of the federal deficit, but none provides any evidence the deficit harms the economy. The reason for no evidence: The deficit is absolutely necessary for economic growth.

“It’s bad because it’s big,” is the only “evidence” the liars provide, but that is exactly the same as saying, “Gross Domestic Product is bad because it’s big.”

Abraham Lincoln supposedly said, ” . . . you can not fool all of the people all of the time.” Old Abe might have been wrong about this one. The 1% has managed to fool nearly all the people about the federal deficit.

Rodger Malcolm Mitchell " from

http://rodgermmitchell.wordpress.com/2012/08/16/the-big-lie-its-everywhe...

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pshakkottai
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Jul. 11, 2011 11:27 am
Quote Tahuyaman:

Start here......http://articles.businessinsider.com/2009-10-16/wall_street/29984294_1_mortgage-brokers-freddie-mac-fannie-and-freddie

I don't expect you to get beyond the first paragraph, but try anyway.

Yes, I already addressed this. From your article:

"Mortgage brokers had to be able to sell their mortgages to someone. They could only produce what those above them in the distribution chain wanted to buy. In other words, they could only respond to demand, not create it themselves. Who wanted these dicey loans? The data shows that the principal buyers were insured banks, government sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac,"

This is not a factual statement. As I already explained Freddie refused to purchase the subprime loans that were the driver behind the market collapse about a year before the market tanked. Furthermore, Fannie and Freddie DO NOT ISSUE LOANS. They purchase them from banks. The banks were the ones issuing badly structured loans. Now, what most conservative ecnomists try to do is say is "the only reason the banks were doing this is because they knew they could sell them to Fannie and Freddie." There are several reasons why this is a false statement:

1. Fannie and Freddie have stricter purchasing guidelines than all of the private banks.

2. As as a result of these guidelines, Fannie and Freddie had the lowest percentage of toxic loans in the entire system. If they were truly the cause of all this, we would expect this to be the opposite case - they would have the highest percentage.

3. Fannie and Freddie are Federally mandated to hold a certain market share within the mortgage market. In otherwords, Fannie and Freddie CANNOT drive housing market loans. They can ONLY be responsive to what banks are cranking out and buying themselves. They are absolutely responsive to what hte private industry is doing, not the other way around.

4. Because of this responsive nature, the ONLY reason that Fannie and Freddie had any toxic loans at all is because private banks were both issuing them and purchasing them from loan originators.

http://useconomy.about.com/od/criticalssues/a/Fannie_Cause.htm

In many cases, the "toxic assets" that Freddie and Fannie did have were in the form of mortgage back securities that we now know were being improperly rated by S&P and Moody's as AAA. Some infomation on that can be found in the articles cited in the above link. In addition, there is good indication that the problems with Fannie and Freddie are largely due to the fact that they are PRIVATELY OWNED and therefore much of the questionable practices they engage in are actually induced by the profit motive:

http://www.nytimes.com/2008/08/24/business/worldbusiness/24iht-wbjoe23.3.15547596.html?pagewanted=2&_r=1

The biggest problem there is exactly what liberals have been railing on since the crash: You CANNOT privatize profits and socialize risk and loss. I think you could agree on that. Freddie and Fanny serve a particular purpose that the private market WILL NOT fill on its own. What really needs to happen is that Fannie and Freddie should be completely socialized and jettison their profit grubbing counterparts sucking money out of the system.

ah2
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Dec. 13, 2010 10:00 pm

Re : "That is correct, liberals don't value intellectual curiosity, but I have...."

See # 45 further down

18. August 2012 - 12:46

(Reply to #33)

pshakkottai's picture
pshakkottai
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Jul. 11, 2011 11:27 am
Quote Tahuyaman:
Quote Phaedrus76:
Quote Tahuyaman:

Start here......http://articles.businessinsider.com/2009-10-16/wall_street/29984294_1_mortgage-brokers-freddie-mac-fannie-and-freddie

I don't expect you to get beyond the first paragraph, but try anyway.

Completely wrong, and dishonest. The trouble did not begin in the early 90's. The bubble began in the 2002 - 2003 period, and popped in late 2006 - 2008, by regions. Most of the subprime lending was not done through Fannie and Freddie or FHA. Most of it was done in the free market created by the opening up of unregulated derivatives. Subprime lending went from 1% of the total market in 2000 to 20% in 2006. Conforming lending, or prime lending, which is what Fannie and Freddie did, lost their market share to the subprime and non prime lenders. At the height of the meltdown, the Freddie and Fannie portfolio had foreclosure rates skyrocket from 1.8% to almost 2.8%. Subprime mortgage backed securities foreclosures rates went from 5% to 18%, and stayed above 15% for 4 years running, and will finish 2012 over 15%.

Yor analysis is incorrect. The foundation of the problem was laid back in the early 90's. I know you really want to put the entire problem on Bush's doorstep, but facts and truth get in your way every time.

Here's another demonstration of how liberals can't accept basic truths if such truth harms their agenda.

Foundations go back millions of years. The point is that the mortgages that went bust were written in the 2000's, and you didn't respond to the point that F&F were not the issue.

You are undoubtedly talking about the CRA, but of course that myth also has been 'debunked' - using your terms.

Google it. Even the combined house panel on the crisis did not blame F&F.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm

ah2, kudos on an excellent written and well argued refutation of the Old Freddie and Fannie Tango the Right loves to dance to. The only thing I would add is that, had Huey and Bobby known how easily finance could have been used to bring down "the Man," they wouldn't have wasted the time on guns. Just issue lots of bad mortgages to people who need homes and feed them into the maw of Wall St., and watch the poison take effect.

I always try to take these Rightwing memes "seriously" so I can appreciate why they got upset about ACORN or thought a couple of guys doing historical re-enactment of the Panthers was the new ghetto uprising. I mean, who would have to invent this and why? Where does this fear come from, and what if it were real? Like the Birther nonsense. To believe that conspiracy one would have to wind up in awe of those who pulled it off. Anyone that able might also get us out of this mess.

The F and F flap is sick racism. It is willful ignorance and denial. You have to want to believe this crap to do so. But if you have the megaphone repeat it often enough, more and more of it will stick on the wall. Getting hysterical about stuff that sounds important but few have the time to understand is a classic technique of political manipulation. It was not that hard to turn a Rightie Bankster crime into people trying to "move on up" without the cash to back it up. It brought "Supply Side" and Southern Strategy into one message.

drc2
Joined:
Apr. 26, 2012 12:15 pm

Unregulated run-a-way captalism always creates bubbles and economic messes.

QUOTE: In the 132 years between 1797 and 1929, there was no effective regulation of U.S. economy. No federal agencies existed to control corruption, fraud and exploitation on the part of the business class. Even during the Civil War, economic management on a national level was minimal and war profiteering common. As a result the country experienced 33 major economic downturns which impacted roughly 60 of the years in question. These included 22 recessions, 4 depressions, and 7 economic “panics” (bank runs and failures).

Then came the Great Depression starting with the crash of the New York stock market in 1929. This soon became a worldwide affair which lasted until the onset of World War II. Millions were thrown out of work, agricultural production partially collapsed, and the fear of rebellion and revolution was palpable both in the U.S. and Europe.

It is to be noted that the way capitalism worked over these 132 years was a function of ideology. This was (and still is) the so-called free market ideology which taught that if the government was kept as small as possible (basically having responsibility for internal order, external defense, and the enforcement of contracts), the citizenry would have to pay very low taxes and be left alone to pursue their own prosperity. Thus, as the ideology goes, everyone would be free to maximize their own wealth and in doing so also maximize the wealth of the community as a whole.

The Great Depression was a real moment of truth for the capitalist West because it suggested to the open-minded that the free market ideology was seriously flawed.-

Lawrence Davidson is professor of history at West Chester University in West Chester PA.

Full article here:

http://www.counterpunch.org/2012/08/20/on-the-road-to-ryan-and-ruin/

“Those who cannot remember the past are condemned to repeat it.” - Santayana

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 4:01 pm

Those taught to misinterpret the past are similarly condemned. They remember the past, but still have no idea what happened.

That group includes the Manchurian Americans who are pushing for Romney. Brainwashed fools, every one.

anonymous green
Joined:
Jan. 5, 2012 11:47 am

Currently Chatting

GOP Blocks Equal Pay...again.

Just in time for election season, Senate Republicans blocked legislation aimed at closing the gender pay gap. For the third time since 2012, Republicans refused to allow debate on the Paycheck Fairness Act, and reminded women that the GOP doesn't believe in equal pay for equal work.

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