Anarcho - Capitalism

simplistic2

I do not believe a debate has been undertaken on this fine philosophy so I'll get the ball rolling.

Anarcho - Capitalism is a philosophy that causes outrage and contempt from all angles of the political spectrum. From "I want a free lunch" democrats to "the cloths on my back aren't mine " anarchists the word anarcho -capitalist conjures up images of men branded by the corporations that they are owned by. This of course is false and only proves the current power of mindless propaganda circulating through society.

Anarcho - capitalism is a simple, beautiful, rational and moral philosophy:

"I am the owner of my body and I am the rightful owner of the product of my labor. I believe that it is immoral to initiate or threaten anyone with violence".Thats it. If you agree with this statement - you are also an anarcho capitalist.

Anarcho - capitalists want to end equality doled out by state coercion and replace it with equality built on voluntary, respectful and peaceful co-operation.

All functions of the state can be provided voluntarily.

• Security
• Dispute resolution
• Welfare
• Health care etc.

Since humans tend to gravitate slowly but consistently toward more humane and moral standards, it is only a matter of time before this philosophy is realised for its potential and we can finally watch the death of statism.

someoneok

Yes I see what you are saying here with this. It has been plagued with propaganda and mixed around in the general population to mean a chaotic and destructive way to organise society. It is an emotional response which many people seem to give off when talking about the practicalities of this as a system in their own environment. I have tended to come against the argument 'but what about the roads, who will build them' I usually answer with 'the very same way it happens now will happen in the future,PEOPLE will build the roads!'.

Anarchy is a much maligned word and so has capitalism to a lesser degree so it is no surprise people tend to have emotional responses to these ideas. The public school or should I say the government indocrination chambers don't do much to help the situation either. Fair play to you for bringing this up. I wonder will we see any emotive responses on this thread or will it stay calm and focussed on the actual term.
It would be good to see this ideology become a reality here on the island one day and I wonder what people see as the steps that would be needed to make it become a reality. Imagine a life without coercive taxation and the threat of imprisonment for commiting no rights violations. Voluntarytopia!

oscarBravo

someoneok wrote: »

I have tended to come against the argument 'but what about the roads, who will build them' I usually answer with 'the very same way it happens now will happen in the future,PEOPLE will build the roads!'.

...if they think there will be a return on the investment required.

I tend more to questions like "who will save the rainforests?" or "who will make sure my food is safe to eat?" I know the stock answer is that market forces will punish suppliers of unsafe food products, but it's not much comfort to me when I die of food poisoning to know that my death will put a small dent in the supplier's next quarterly earnings statement.

simplistic2

oscarBravo wrote: »

...if they think there will be a return on the investment required.

I tend more to questions like "who will save the rainforests?" or "who will make sure my food is safe to eat?" I know the stock answer is that market forces will punish suppliers of unsafe food products, but it's not much comfort to me when I die of food poisoning to know that my death will put a small dent in the supplier's next quarterly earnings statement.

I tend toward questions like "who is going to invoke mass genocide and war?", "who is going to inflate massive credit bubbles?", " who is going to throw innocents in prison for victimless crimes?", "who is going to snatch a hefty portion of your wage to create dependent underclasses" or "who is going to help cover up massive sexual abuse scandals?".

Its seems as though you are implying that governments are "saving the rain forest" and " making sure your food is safe" how? if that is your conclusion did you arrive at that?

Gary L

Not familiar with the concept at all. What separates this from free market capitalism?

oscarBravo

simplistic2 wrote: »

I tend toward questions like "who is going to invoke mass genocide and war?"...

War has existed as long as civilisation has existed. It's a quaint fantasy that in an anarcho-capitalist utopia, nobody is ever going to be tempted to band together in a group to attack another group, but it's a fantasy nonetheless.

..."who is going to inflate massive credit bubbles?"...

Ah, that would be the other quaint capitalist fantasy that Wall Street would never, ever have fallen into the trap of inventing unsustainable investment vehicles - and making out like bandits in the process - if they hadn't been forced to do it by the nasty, evil federal government. Because, as we all know, Wall Street is all about the caring and the sharing, and they were forced to make obscene and unsustainable profits by the Fed. Right.

..." who is going to throw innocents in prison for victimless crimes?"...

Such as?

..."who is going to snatch a hefty portion of your wage to create dependent underclasses"...

That's right - in the anarcho-caplitalist utopia, there won't be dependent underclasses. Unless you count the people who are dependent on charity, but who cares about them? Or are you going to argue that once government gets out of the way, everyone's going to become prosperous overnight?

...or "who is going to help cover up massive sexual abuse scandals?".

The government shouldn't have been complicit in covering up the abuses by the Catholic church - agreed. That doesn't mean we don't need a government; it means we need a government that won't collude in such a coverup.

Its seems as though you are implying that governments are "saving the rain forest" and " making sure your food is safe" how? if that is your conclusion did you arrive at that?

If you don't understand how governments help ensure food safety, I'd suggest you go find out. Argument from ignorance is pretty hard to debate meaningfully.

oscarBravo

Gary L wrote: »

Not familiar with the concept at all. What separates this from free market capitalism?

Absence of government. Markets would work perfectly - and everyone would be happy and prosperous - if governments would only stop interfering.

Apparently.

simplistic2

Gary L wrote: »

Not familiar with the concept at all. What separates this from free market capitalism?

Its more specific than that term.That term is usually associated with our current system wrongly, it implies that we have free markets but we don't because there is a state.

simplistic2

oscarBravo wrote: »

War has existed as long as civilisation has existed. It's a quaint fantasy that in an anarcho-capitalist utopia, nobody is ever going to be tempted to band together in a group to attack another group, but it's a fantasy nonetheless.

How will this group be funded since there is no taxation? Or do you think if say the American tax payer was asked to voluntarily pay for their wars they would tick the yes box and wait for the bills?

oscarBravo wrote: »

Ah, that would be the other quaint capitalist fantasy that Wall Street would never, ever have fallen into the trap of inventing unsustainable investment vehicles - and making out like bandits in the process - if they hadn't been forced to do it by the nasty, evil federal government. Because, as we all know, Wall Street is all about the caring and the sharing, and they were forced to make obscene and unsustainable profits by the Fed. Right.

Wrong. The government creates bubbles by forcing competing curriencies out of the market through regulation meaning that the central banks can control interest rates on a whim.

oscarBravo wrote: »

Such as? That's right - in the anarcho-caplitalist utopia, there won't be dependent underclasses. Unless you count the people who are dependent on charity, but who cares about them? Or are you going to argue that once government gets out of the way, everyone's going to become prosperous overnight?

No, I care about the poor, in an free society poor people won't be trapped under wage laws or be ravaged by bubbles or be used as carcases for the judiciary to prey on and they won't be given mindless handouts that cause them to say "**** it why bother working".

oscarBravo wrote: »

The government shouldn't have been complicit in covering up the abuses by the Catholic church - agreed. That doesn't mean we don't need a government; it means we need a government that won't collude in such a coverup. If you don't understand how governments help ensure food safety, I'd suggest you go find out. Argument from ignorance is pretty hard to debate meaningfully.

You made the claim that governments protect food and have not backed it up.Instead you have claimed I am arguing from ignorance? Either you dont understand what an argument from ignorance is or you made a poor attempt at an insult.

oscarBravo

simplistic2 wrote: »

How will this group be funded since there is no taxation?

Wait, what? Are you claiming that in a world without governments, there will never, ever be such a thing as a group of individuals with a shared objective and pooled resources?

You're basically arguing not only for the end of statehood, but the end of any kind of organised society? If people want to form such a group and pool their resources to fund it, how do you propose to prevent them from doing so?

Or do you think if say the American tax payer was asked to voluntarily pay for their wars they would tick the yes box and wait for the bills?

A depressing percentage of American taxpayers are only too supportive of their government's interminable wars. That aside, those libertarians who aren't quite as out there as you seem to be are generally content to pay low taxes in order to fund a national defence.

Wrong. The government creates bubbles by forcing competing curriencies out of the market through regulation meaning that the central banks can control interest rates on a whim.

Ah, right. Bubbles are never, ever created through capitalist greed; only by government interference in interest rates.

Are you seriously telling me that the recent economic crisis was caused entirely by government manipulation of interest rates, and not in any way whatsoever related to the creation of artificial investment vehicles designed to decouple risk from mortgage lending?

No, I care about the poor, in an free society poor people won't be trapped under wage laws or be ravaged by bubbles or be used as carcases for the judiciary to prey on and they won't be given mindless handouts that cause them to say "**** it why bother working".

Sorry, but I'm not impressed by magical thinking. You talk about the poor in a "free" society with reference only to the poor in today's society - why not explain the precise mechanisms by which poverty will be eliminated through a free market?

You made the claim that governments protect food and have not backed it up.Instead you have claimed I am arguing from ignorance? Either you dont understand what an argument from ignorance is or you made a poor attempt at an insult.

Governments create food safety laws and prosecute food suppliers who produce food in an environment that isn't conducive to food safety.

Now, here's the thing: that's an objective fact. It's not a matter of opinion, or of speculation. Either you don't know that governments have laws and agencies to ensure food safety - in which case you simply haven't a clue and are arguing from ignorance - or else you know this, and are doing more arm-waving dismissal of the role of government without actually bothering to introduce any intelligent contribution of your own to the argument. Either way, you're making a very, very poor case for anarcho-capitalism; you're no different from the proponents of communism who simply claim that everything would be better if the government ran everything and that capitalism is the source of all evil.

They're wrong. You're wrong. If you can't be bothered introducing any coherent arguments in support of your position, it will be self-evident to any disinterested observer of this discussion that your position is without substantive merit.

Now, you can claim that you don't care whether or not anyone is convinced by your arguments, but that's the standard disclaimer of someone who knows he can't put together a coherent argument for his position.

So, which is it? Are you unaware of the role of government in the assurance of food quality standards, or do you genuinely believe that the role of government in the assurance of food quality standards is at best pointless, and at worst actively harmful? If the latter, would it be a lot to ask that you actually adduce some evidence in support of your position?

simplistic2

oscarBravo wrote: »

Wait, what? Are you claiming that in a world without governments, there will never, ever be such a thing as a group of individuals with a shared objective and pooled resources?
You're basically arguing not only for the end of statehood, but the end of any kind of organised society? If people want to form such a group and pool their resources to fund it, how do you propose to prevent them from doing so?

Firstly by examining the people that want to live in a society without government; they are people who typically hate violence or aggression of any kind. Even right now in your community, look around, who are the people that are going to group together to enslave us?

Economically, what is the incentive for somebody to try and install a new government? How do you suppose a group of murderers and thieves are going to get the funding to build a new state in a society where people despise statism? It would be easier for a Muslim to try to convert a scientific community.

Taxation is needed for modern war; no individual will voluntarily fund a war. War is the health of state not the individual, there will be no war in a free society.

oscarBravo wrote: »

A depressing percentage of American taxpayers are only too supportive of their government's interminable wars. That aside, those libertarians who aren't quite as out there as you seem to be are generally content to pay low taxes in order to fund a national defence. Ah, right. Bubbles are never, ever created through capitalist greed; only by government interference in interest rates.

Are you seriously telling me that the recent economic crisis was caused entirely by government manipulation of interest rates, and not in any way whatsoever related to the creation of artificial investment vehicles designed to decouple risk from mortgage lending?

Yes. The government not only enables reckless investing by coercing the markets into accepting a single currency but also actively encourages it by rewarding bankers with bailouts for mal-investments.

It is completely and utterly, 100% the fault of the government and would never even conceivably happen in a free society.

oscarBravo wrote: »

Sorry, but I'm not impressed by magical thinking. You talk about the poor in a "free" society with reference only to the poor in today's society - why not explain the precise mechanisms by which poverty will be eliminated through a free market?

Since poor is a relative term, it is difficult to define? Are there poor people in Ireland? Compared to what? Essentially the question is “will people wealthier if they keep 100% of their earnings or have half of it used to fund parasitical politicians and endless quangos?” It is simple to deduce the better option.

The free market eliminates poverty by giving people the opportunity to work their way out not grab their way out. When two people make a voluntary exchange; they are both agreeing that they are now better off than they were before the exchange. This multiplied repeatedly is how wealth is generated and thus how poverty is eliminated.

In the government model wealth is stolen from one individual, firstly to pay the wage of the person doing the stealing and then it is handed to another individual for doing nothing. This has many negative effects for society. Firstly, by punishing an individual for creating wealth; you dis incentivise him to produce. Secondly, the wealth stolen to fund the politician is not needed in this area and could be spent by the individual, creating jobs. Thirdly, dishing out wealth creates an underclass of dependants as they choose to take free money rather that participating in the production of wealth.

It is a mistake to think that the government helps the poor. They encourage and create poverty. By removing the government “poverty” will be become an ancient term associated with government intervention.

oscarBravo wrote: »

Governments create food safety laws and prosecute food suppliers who produce food in an environment that isn't conducive to food safety.

The creation of a law doesn’t create safe food it actually disrupts the market by adding extra costs to producers and stifling innovation in private food safety measures.

You are also assuming that the government’s standards are valid for everybody. This is not true, for instance in Asia I regularly ate food from street vendors, by Irish government standards they would be shut down and the vendor would lose his lively hood. I also had the choice to walk into a supermarket and buy an internationally known, reliable brand. The reason the vendor doesn’t have an international brand is because the consumer is not willing to accept his low standard. It is the consumer that sets the standard, the government is not needed.

I knew I would not be able to sue the vendor if I fell ill, so I paid a lower price. I chose my own standard based on the risk, it is entirely irrational to think that an external third party is able to choose what standard is best for me and not only that but since you’re so worried about poverty it also destroys the poor vendors opportunity to rise out of destitution.

oscarBravo

simplistic2 wrote: »

Firstly by examining the people that want to live in a society without government; they are people who typically hate violence or aggression of any kind. Even right now in your community, look around, who are the people that are going to group together to enslave us?

I'm pretty sure that there's nobody in my community that wants to enslave anyone (using the objective definition of "slavery", as opposed to your self-serving definition).

Economically, what is the incentive for somebody to try and install a new government? How do you suppose a group of murderers and thieves are going to get the funding to build a new state in a society where people despise statism? It would be easier for a Muslim to try to convert a scientific community.

You'll find it pretty hard to bring anyone around to your way of thinking by describing people who disagree with your worldview as "murderers and thieves".

Taxation is needed for modern war; no individual will voluntarily fund a war. War is the health of state not the individual, there will be no war in a free society.

Leaving aside the fact that this is yet another example of magical thinking (and almost indistinguishable from communist rhetoric about workers' paradises), how exactly is this "free society" going to come about?

Yes. The government not only enables reckless investing by coercing the markets into accepting a single currency...

The markets have a single currency? When did this happen?

...but also actively encourages it by rewarding bankers with bailouts for mal-investments.

I agree that governments were complicit in the creation of the financial crisis through their encouragement of moral hazard. However, I disagree that the solution is to remove government and trust that Wall Street firms are incapable of greed and stupidity in the absence of government.

One of the common factors in the recent credit bubbles is the absence of firm regulation. It seems naive in the extreme to me to claim that the problem would not have arisen in the total absence of regulation.

It is completely and utterly, 100% the fault of the government and would never even conceivably happen in a free society.

That's nothing but more magical thinking. You're claiming that in a "free" society, there would be no incentive for banks to create investment vehicles and sell them with hyped-up credit ratings to gullible customers. On the contrary, in a society without government, there would be nothing whatsoever to prevent such actions.

Since poor is a relative term, it is difficult to define? Are there poor people in Ireland? Compared to what? Essentially the question is “will people wealthier if they keep 100% of their earnings or have half of it used to fund parasitical politicians and endless quangos?” It is simple to deduce the better option.

It's certainly an attractive option, when looked at from a middle- or upper-class perspective.

The free market eliminates poverty by giving people the opportunity to work their way out not grab their way out. When two people make a voluntary exchange; they are both agreeing that they are now better off than they were before the exchange. This multiplied repeatedly is how wealth is generated and thus how poverty is eliminated.

What happens to people who can't work as hard as others, or at all? What happens to orphans, or people with learning disabilities? Where's their opportunity to work their way out of poverty?

In the government model wealth is stolen from one individual, firstly to pay the wage of the person doing the stealing and then it is handed to another individual for doing nothing. This has many negative effects for society. Firstly, by punishing an individual for creating wealth; you dis incentivise him to produce. Secondly, the wealth stolen to fund the politician is not needed in this area and could be spent by the individual, creating jobs. Thirdly, dishing out wealth creates an underclass of dependants as they choose to take free money rather that participating in the production of wealth.

Nobody steals tax from me. I operate in the framework of a society, where I pay tax in return for the services provided by society. I feel that those services could be provided more efficiently, thereby reducing the cost to me in the form of taxes, but the answer is to lobby for greater efficiency in the provision of services, not the destruction of society.

My house isn't as well insulated as it could be, which means I spend more on heating it that I should have to. My answer is to improve the insulation of the house. Yours is to demolish the house, and wear more clothes.

It is a mistake to think that the government helps the poor. They encourage and create poverty. By removing the government “poverty” will be become an ancient term associated with government intervention.

Magical thinking. I believe you're utterly wrong in that assertion. I think your "free" society would have much sharper and deeper divides between haves and have-nots, and until you convince me otherwise (by explaining how a world without government makes poverty impossible, rather than just asserting it) I'll be working very hard to make sure your vision never becomes a reality.

The creation of a law doesn’t create safe food it actually disrupts the market by adding extra costs to producers and stifling innovation in private food safety measures.

Therefore, food is now less safe than it was before governments introduced food safety legislation? Got any evidence for that?

You are also assuming that the government’s standards are valid for everybody. This is not true, for instance in Asia I regularly ate food from street vendors, by Irish government standards they would be shut down and the vendor would lose his lively hood.

Nope. I've eaten food from street vendors in Denmark. Those street vendors are required to prepare their food to the same standards as Danish restaurants. They were still doing business.

Also, you do realise that people quite frequently get seriously ill by eating food from unregulated street vendors in Asian and other countries?

I also had the choice to walk into a supermarket and buy an internationally known, reliable brand. The reason the vendor doesn’t have an international brand is because the consumer is not willing to accept his low standard. It is the consumer that sets the standard, the government is not needed.

You do realise that one of the reasons the international brand is "reliable" is because it's produced under stringent conditions enforced by governments, right?

I knew I would not be able to sue the vendor if I fell ill, so I paid a lower price. I chose my own standard based on the risk, it is entirely irrational to think that an external third party is able to choose what standard is best for me and not only that but since you’re so worried about poverty it also destroys the poor vendors opportunity to rise out of destitution.

Yeah, like all those poor vendors starving on the side of the road in Denmark because the evil government has put them out of government with its stupid and unnecessary safety standards.

I mean, who cares whether kids' toys have lead in them? If enough kids die, the manufacturer will go out of business, and that way the problem is self-correcting. Right?

Permabear

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oscarBravo

Bruce Schneier's latest Cryptogram newsletter contains an interesting article that I thought was pertinent to this discussion:

James Madison famously wrote: "If men were angels, no government would be necessary." Government is just the beginning of what wouldn't be necessary. Currency, that paper stuff that's deliberately made hard to counterfeit, wouldn't be necessary, as people could just keep track of how much money they had. Angels never cheat, so nothing more would be required. Door locks, and any barrier that isn't designed to protect against accidents, wouldn't be necessary, since angels never go where they're not supposed to go. Police forces wouldn't be necessary. Armies: I suppose that's debatable. Would angels -- not the fallen ones -- ever go to war against one another? I'd like to think they would be able to resolve their differences peacefully. If people were angels, every security measure that isn't designed to be effective against accident, animals, forgetfulness, or legitimate differences between scrupulously honest angels could be dispensed with.

Security isn't just a tax on the honest; it's a very expensive tax on the honest. It's the most expensive tax we pay, regardless of the country we live in. If people were angels, just think of the savings!

It wasn't always like this. Security -- especially societal security -- used to be cheap. It used to be an incidental cost of society.

In a primitive society, informal systems are generally good enough. When you're living in a small community, and objects are both scarce and hard to make, it's pretty easy to deal with the problem of theft. If Alice loses a bowl, and at the same time, Bob shows up with an identical bowl, everyone knows Bob stole it from Alice, and the community can then punish Bob as it sees fit. But as communities get larger, as social ties weaken and anonymity increases, this informal system of theft prevention -- detection and punishment leading to deterrence -- fails. As communities get more technological and as the things people might want to steal get more interchangeable and harder to identify, it also fails. In short, as our ancestors made the move from small family groups to larger groups of unrelated families, and then to a modern form of society, the informal societal security systems started failing and more formal systems had to be invented to take their place. We needed to put license plates on cars and audit people's tax returns.

We had no choice. Anything larger than a very primitive society couldn't exist without societal security.

He's writing a book on the topic of societal security. I expect it will be an interesting read.

Permabear

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RichieC

simplistic2 wrote: »

I do not believe a debate has been undertaken on this fine philosophy so I'll get the ball rolling.

Anarcho - Capitalism is a philosophy that causes outrage and contempt from all angles of the political spectrum. From "I want a free lunch" democrats to "the cloths on my back aren't mine " anarchists the word anarcho -capitalist conjures up images of men branded by the corporations that they are owned by. This of course is false and only proves the current power of mindless propaganda circulating through society.

Anarcho - capitalism is a simple, beautiful, rational and moral philosophy:

"I am the owner of my body and I am the rightful owner of the product of my labor. I believe that it is immoral to initiate or threaten anyone with violence".Thats it. If you agree with this statement - you are also an anarcho capitalist.

Anarcho - capitalists want to end equality doled out by state coercion and replace it with equality built on voluntary, respectful and peaceful co-operation.

All functions of the state can be provided voluntarily.

• Security
• Dispute resolution
• Welfare
• Health care etc.

Since humans tend to gravitate slowly but consistently toward more humane and moral standards, it is only a matter of time before this philosophy is realised for its potential and we can finally watch the death of statism.

wow.. and the "left" are accused of chasing an impossible uthopia.. :rolleyes:

generalmiaow

RichieC wrote: »

wow.. and the "left" are accused of chasing an impossible uthopia.. :rolleyes:

I'm not an anarcho-capitalist by the definition given in this thread, but I think you could have given that a more effective criticism surely! A lot of socialist thought owes much to a book by that very name "Utopia".

I don't think the nation-state will last forever - it is less than a tiny percentage of human history as it is - but some sort of order will arise in its absence, and it won't necessarily be just, and some people will always be subject to coercion as long as we are biologically human.

I will always vote in favour of individual liberty and against oppression by organised bodies, but that is an idea fragment, not an ideology or a practical framework for society. As a personal philosophy though, it can be lived by.

The end of all institutions is an unavoidable reality - even the pope knows this - and if there is an end to statehood in the 21st century it will be from the top down (supranationalism) or the bottom up (collaboration replacing regulation)- but even now it is still possible to live a mostly free life, arguably moreso than during the still-longest period of humanity when we were even more powerless against the tyranny of nature and other people.

simplistic2

oscarBravo wrote: »

I'm pretty sure that there's nobody in my community that wants to enslave anyone (using the objective definition of "slavery", as opposed to your self-serving definition). You'll find it pretty hard to bring anyone around to your way of thinking by describing people who disagree with your worldview as "murderers and thieves".

I think I'll only find it difficult to persuade the supporters of murders and thieves.

oscarBravo wrote: »

Leaving aside the fact that this is yet another example of magical thinking (and almost indistinguishable from communist rhetoric about workers' paradises), how exactly is this "free society" going to come about?

Statism is mental construct, it is held aloft through emotional propaganda("I'm a law abiding tax payer,yay - go me"), through economic incentives, and essentially it is a product of child abuse.

A "free society" will come about from individuals choosing to live a life grounded in reason and virtue. Since you are a small slice of society, you can create a free society in your own life first. For instance, I have tried to reason with friends of mine about the immorality of the state, and after a period of time if they still support the initiation of violence against me, I act on my virtue and ostracize them from my life. It's sad really to watch them cling to the statist ideology, I don't even care if they work for the government, they didn't choose to be born into a world of statism, but to then support statist violence against me for not agreeing with them is cowardice and no self respecting individual would justify that as a friendship.

There are strong arguments that children who are physically abused lose there capacity for empathy and gain a blind spot to violence. "If violence is bad , then mammy and daddy are bad...but mammy and daddy can't be bad...they love me." In other words the state is a mental projection of an abusive parent upon the whole of society. Empirically, the friends I could't convince, were beaten and bullied as children and even as adults, they got into fist fights with their parents.

So, a state free world will follow a rise in parenting standards.

oscarBravo wrote: »

The markets have a single currency? When did this happen? I agree that governments were complicit in the creation of the financial crisis through their encouragement of moral hazard. However, I disagree that the solution is to remove government and trust that Wall Street firms are incapable of greed and stupidity in the absence of government.

Any body thinking of setting up a private currency with, for instance, a gold standard would look back at history and see the chances of being plundered by a government to be about 100%

oscarBravo wrote: »

One of the common factors in the recent credit bubbles is the absence of firm regulation. It seems naive in the extreme to me to claim that the problem would not have arisen in the total absence of regulation. That's nothing but more magical thinking. You're claiming that in a "free" society, there would be no incentive for banks to create investment vehicles and sell them with hyped-up credit ratings to gullible customers. On the contrary, in a society without government, there would be nothing whatsoever to prevent such actions.

For the same reason as the analogy I posted in the other thread about what would happen if Grafton street started installing coin - operated machines to cross the road - people will go elsewhere. Here people will choose safe banks if the government let them.

oscarBravo wrote: »

It's certainly an attractive option, when looked at from a middle- or upper-class perspective.

My Dad is taxi driver, my Mam is a part time bank assistant ,I have no college degree, so I doubt I would fall into either of those categories, yet I support a free society because it is virtuous ; not because I can make a quick buck.

oscarBravo wrote: »

What happens to people who can't work as hard as others, or at all? What happens to orphans, or people with learning disabilities? Where's their opportunity to work their way out of poverty?

I'm not sure, I'm not a central planner, but I believe that others will be kind enough to lend a helping hand.

oscarBravo wrote: »

Therefore, food is now less safe than it was before governments introduced food safety legislation? Got any evidence for that? Nope. I've eaten food from street vendors in Denmark. Those street vendors are required to prepare their food to the same standards as Danish restaurants. They were still doing business.

Also, you do realise that people quite frequently get seriously ill by eating food from unregulated street vendors in Asian and other countries? You do realise that one of the reasons the international brand is "reliable" is because it's produced under stringent conditions enforced by governments, right? Yeah, like all those poor vendors starving on the side of the road in Denmark because the evil government has put them out of government with its stupid and unnecessary safety standards.

I mean, who cares whether kids' toys have lead in them? If enough kids die, the manufacturer will go out of business, and that way the problem is self-correcting. Right?

You have an economic blind spot, there is two sides to every equation, forcing resources into one area means you are forcing them away from another (usually with great waste as we have seen here). It is impossible to predict what safety mechanisms will arise, but real issue is that it is not just for another to force his food standards unto me.

simplistic2

Permabear wrote: »

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This is incorrect because the libertarian believes that it is legitimate to initiate and threaten people with violence for the provision of a legal system, therefore; not complying with my original statement of "believe it is immoral to threaten or initiate anyone with violence".

Permabear wrote: »

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The classical liberal argues from effect, which, is useless because every action a government takes has an equal and opposite reaction. So although you may say that the overall restaurant trade looks better on paper, what you do not see is the loss in business from other industries that have to fund these new regulations.

Permabear wrote: »

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Now, this is where the imbalance of incentives kicks in. So there is, lets say, a Ministry of Safe Food created that enforces these regulations. The employees that work in that state sector on an average of 50,000 each. They now have a 50,000 incentive to maintain these regulations. One problem with that is when the market does create a solution for the problem of food hygiene (say the vedors form an accrediting association that creates the same standards), the government workers will unionize and freeze standards in time. Also, since their product is technically "food safety" they have an incentive to begin to regulate every aspect to grow in size, because the more they grow in size the more chance they have at gaining a promotion.

Permabear wrote: »

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Can you give me an example of regulation that benefits the market as a whole? And how you can possibly determine that? (leaving aside natural law)

simplistic2

Permabear wrote: »

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There is never impartiality within a state, how can there be?The judges that are making the decisions on justice are employed by a monopoly from where they gain their pay and power ...their interests first lie in protecting their pay, and to protect their pay they have to protect their employer.

I have been in court several times for "crimes against the state", I can certainly say there is not an ounce of justice in there. For instance, I was cross examining the Gardai with the goal of establishing his competence I asked him several times to define "A crime" for me. He simply stayed silent, so I said "I will take it by your silence that you do not have knowledge of what a crime is and are incompetent to do you job". This by all means is a valid defense, yet the judge held me in contempt. As I was being led away by the gardai I was furious and told the gardai that I will be taking action against this injustice, he looked at me, laughed and said " what are you going to do about it , he's a judge".


Justice can only be dealt in a free society because you cannot have injustice at the foundation of justice - the entire system is based on injustice. Justice is a commodity like education and can be provided far better in a free market because those that are the most honest, ethical and have the most integrity will be sought after to as arbitrators of disputes, whereas like all statist systems its brown nosing , dis honesty and corruption that rise to the top.

It's to large a topic to describe an entire system, if you give me an example I will try to provide a possible scenario.

oscarBravo

simplistic2 wrote: »

I think I'll only find it difficult to persuade the supporters of murders and thieves.

Unless I've misunderstood your arguments, you're describing anyone who believes in the legitimacy of a state as a supporter of murderers and thieves. Which is a bit like trying to bring people around to a worldview by yelling at them that they are brainless idiots for disagreeing with it - it's unlikely to achieve the desired outcome.

A "free society" will come about from individuals choosing to live a life grounded in reason and virtue.

I do live a life grounded in reason and virtue. Now, you might disagree with that assertion, because you have your own personal definitions of those words, and you refuse to budge even slightly from your own perspective. The problem with that is that you can't possibly accept a world in which anyone disagrees with you. Until everyone complies with your personal definitions of reason and virtue, you can't possibly achieve the society you dream of. Which pretty much means it's not gonna happen.

Since you are a small slice of society, you can create a free society in your own life first. For instance, I have tried to reason with friends of mine about the immorality of the state, and after a period of time if they still support the initiation of violence against me, I act on my virtue and ostracize them from my life. It's sad really to watch them cling to the statist ideology, I don't even care if they work for the government, they didn't choose to be born into a world of statism, but to then support statist violence against me for not agreeing with them is cowardice and no self respecting individual would justify that as a friendship.

If you refuse to be friends with anyone who doesn't completely and unquestioningly agree with everything you do and say, you must be a very, very lonely person.

Empirically, the friends I could't convince, were beaten and bullied as children and even as adults, they got into fist fights with their parents.

That's an exercise in shocking arrogance. You're basically claiming that people only disagree with your phenomenally blinkered worldview because they were abused as children?

I've heard some breathtaking hubris in my time, but that is so far out there I'm having trouble believing anyone could possibly think that way.

I'm not sure, I'm not a central planner, but I believe that others will be kind enough to lend a helping hand.

I really must try running my business that way some time. Rather than, y'know, anticipating problems and planning for them, I'll just wave my hand and hope that somehow things will just magically sort themselves out. That'll make for a nice, short business plan.

It is impossible to predict what safety mechanisms will arise, but real issue is that it is not just for another to force his food standards unto me.

I really have a great deal of difficulty comprehending this point of view. I guess that's just a sign that I was beaten to a pulp by my parents. That is, after all, the only reason why people disagree with you, isn't it?

oscarBravo

simplistic2 wrote: »

There is never impartiality within a state, how can there be?The judges that are making the decisions on justice are employed by a monopoly from where they gain their pay and power ...their interests first lie in protecting their pay, and to protect their pay they have to protect their employer.

Who pays the judges in your perfect world?

For instance, I was cross examining the Gardai with the goal of establishing his competence I asked him several times to define "A crime" for me. He simply stayed silent...

What answer would have satisfied you?

SupaNova

Are you seriously telling me that the recent economic crisis was caused entirely by government manipulation of interest rates, and not in any way whatsoever related to the creation of artificial investment vehicles designed to decouple risk from mortgage lending?

Governments are not entirely the cause but the source of the problem(the initiators). You could blame the people who took out loans they could not afford at the other end of the spectrum if you like. The US government were very much involved in the creation of artificial investment vehicles. Sub prime lending was something that was not practiced before government intervention.

Look at the history of securitization, collateralized mortgage obligation, Fannie Mae and Freddie Mac. You will see that governments set this into motion, and wall street carried out the damage.

SupaNova

Ah, right. Bubbles are never, ever created through capitalist greed; only by government interference in interest rates.

Bubbles are not created by capitalist greed. They are created by greed maybe. Capitalism is just an economic system, its people who are greedy.

oscarBravo

SupaNova wrote: »

Look at the history of securitization, collateralized mortgage obligation, Fannie Mae and Freddie Mac. You will see that governments set this into motion, and wall street carried out the damage.

I have looked at it, in some detail. Government's major failing was allowing it to happen, not setting it in motion. Wall Street lobbied hard to be allowed to create synthetic financial products in order to decouple debt from risk. Government stood back and allowed them to do it.

There's plenty of blame to go around, but corporate greed is way ahead of government incompetence in the blame stakes.

SupaNova

Government's major failing was allowing it to happen, not setting it in motion.

Before government intervention financial institutions would not lend sub prime. Governments pushed for a way to make it happen, that's how securitizations and collaterized mortgage obligation came about to my knowledge. These were first introduced by government backed Fannie Mae and Freddie Mac.

I have not read anything to say that the private banks came up with this on their own for their own use and pushed the the scheme on governments, if you can point me to something that suggests this?

oscarBravo

SupaNova wrote: »

Before government intervention financial institutions would not lend sub prime. Governments pushed for a way to make it happen, that's how securitizations and collaterized mortgage obligation came about to my knowledge. These were first introduced by government backed Fannie Mae and Freddie Mac.

That's pretty much completely ass-backwards, if you'll pardon the expression. It's the narrative I've seen popularised by those who want to believe that everything is the government's fault, but it's quite simply not true.

I have not read anything to say that the private banks came up with this on their own for their own use and pushed the the scheme on governments, if you can point me to something that suggests this?

I highly recommend All the Devils Are Here by Bethany McLean and Joe Nocera. One or two quotes:

In 2003, Fannie Mae's estimated market share for bonds backed by single-family housing was 45 percent. Just one year later, it dropped to 23.5 percent. As a 2005 internal presentation at Fannie Mae noted, with some alarm, "[P]rivate label volume surpassed Fannie Mae volume for the first time."

There was no question about why this was happening: the subprime mortgage originators were starting to dominate the market. They didn't need Fanny and Freddie to guarantee their loans --- and for the most part didn't want the GSEs mucking around in their business. The subprime originators sold their loans straight to Wall Street, which, unlike the GSEs, didn't really care whether they could be paid back. "The subprime market needed the companies who created all the rules to go away," says subprime entrepreneur Bill Dallas. "Fannie and Freddie were in thepenalty box. They were gone."

Fannie Mae hired Citigroup to try to figure out how to recapture market share:

Citi's key recommendations for increasing ... market capitalisation: Fannie should begin guaranteeing "non-conforming residential mortgages" --- i.e., subprime.

I will agree that government was far from blameless, but context is everything:

The new, tougher housing goals of the Bush administration also ratcheted up the pressure. How was Fannie going to achieve those goals without adding subprime mortgages to its books? The products it had carefully tailored for low-income borrowers were no longer appealing in a world where those borrowers could get much bigger mortgages from a subprime originator by making up their income. But Fannie couldn't just dive headlong into the subprime market. Its systems weren't able to gauge the risk of subprime mortgages. "[W]e are not even close to having proper control processes for credit, market, and operation risks," wrote the company's chief credit officer, Enrico Dallavecchia, in an e-mail. The irony was painful: HUD had increased and toughened Fannie's housing goals at the precise moment when the market was willing to make loans --- often terrible loans that quickly soured, to be sure --- to any low-income person who wanted one. "The difference between what the market produced and what we had to produce grew bigger and bigger," says a former Fannie executive.

The market had invented subprime long, long before Fannie got into the act, and Fannie only got into it because it was forced - partly by government targets, but mostly by market pressures - to do so.

In June 1988, [Guardian Savings & Loan] sold the first subprime mortgage-backed securities. Over the next three years, [Guardian] sold a total of $2.7 billion in securities backed by mortgages made to less-than-creditworthy borrowers, according to the [Orange County] Register. Fannie and Freddie were most decidedly not involved.

If you're interested in the topic, I highly recommend the book.

Permabear

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SupaNova

Not much different to what we here from certain politicians in our own country:
http://www.youtube.com/watch?v=SjJb8Bt98Ss

The Federal National Mortgage Association (FNMA), colloquially known as Fannie Mae, was established in 1938 by amendments to the National Housing Act.[6] after the Great Depression as part of Franklin Delano Roosevelt's New Deal. Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.[7] Fannie Mae created a liquid secondary mortgage market and thereby made it possible for banks and other loan originators to issue more housing loans, primarily by buying Federal Housing Administration (FHA) insured mortgages.[8] For the first thirty years following its inception, Fannie Mae held a monopoly over the secondary mortgage market.[9] In 1954, an amendment known as the Federal National Mortgage Association Charter Act[10] made Fannie Mae into "mixed-ownership corporation" meaning that federal government held the preferred stock while private investors held the common stock;[6] in 1968 it converted to a publicly held corporation, in order to remove its activity and debt from from the federal budget.[11] In the 1968 change, Fannie Mae's predecessor (also called Fannie Mae) was split into the current Fannie Mae and the Government National Mortgage Association ("Ginnie Mae"). Ginnie Mae, which remained a government organization, supports FHA-insured mortgages as well as Veterans Administration (VA) and Farmers Home Administration (FmHA) insured mortgages, with the full faith and credit of the United States government.[12] In 1970, the federal government authorized Fannie Mae to purchase private mortgages, i.e. those not insured by the FHA, VA, or FmHA, and created the Federal Home Loan Mortgage Corporation (FHLMC), colloquially known as Freddie Mac, to compete with Fannie Mae and thus facilitate a more robust and efficient secondary mortgage market.[12]
In 1981, Fannie Mae issued its first mortgage passthrough and called it a mortgage-backed security. The Fannie Mae laws did not require the Banks to hand out subprime loans in any way.[13] Ginnie Mae had guaranteed the first mortgage passthrough security of an approved lender in 1968[14] and in 1971 Freddie Mac issued its first mortgage passthrough, called a participation certificate, composed primarily of private mortgages.[14]

I don't know if i would trust a book saying sub prime lending started in 1988. It started off the back of securitization and collaterized mortgage obligation, both brought about by government.

oscarBravo

SupaNova wrote: »

I don't know if i would trust a book saying sub prime lending started in 1988. It started off the back of securitization and collaterized mortgage obligation, both brought about by government.

Wow. Did you just try to refute a 300-page book you haven't read, written by two respected journalists, with a single quote from Wikipedia?

Anyway, it was a pretty poor refutation. The problem wasn't CDOs per se; the problem was CDOs backed by junk subprime mortgages (which Fannie and Freddie didn't get involved with until 2005), which were rated AAA by (private) rating agencies.

Again, I'm not trying to claim that government is blameless. I'm arguing with the rather bizarre idea that regulation magically makes corporations do stupid things that they would otherwise carefully avoid.

SupaNova

Wow. Did you just try to refute a 300-page book you haven't read, written by two respected journalists, with a single quote from Wikipedia?

I quoted to show the timeline of the introduction of securitaztion. I would rather listen to respected economists on the cause of the economic downturn than respected journalists.

No institution is going to lend sub prime unless they can get those off their books. Fannie Mae and Freddie Mac were set up by government and were the largest buyers of sub prime mortgages. Their sole purpose since their inception has been to loosen lending practices.

Here's a good assessment of Fannie Mae and Freddie Mac.
http://www.youtube.com/watch?v=Ennn4Qq8MUY&playnext=1&list=PLC7C2D7AFFD62C0BA

How you can call sub prime lending a product of the free market is beyond me.

SupaNova

Again, I'm not trying to claim that government is blameless. I'm arguing with the rather bizarre idea that regulation magically makes corporations do stupid things that they would otherwise carefully avoid.

In a free market yes corporations would do stupid things and they would suffer the consequences by going out of business. The ones that didn't act stupid would last the longest. That's why you don't need a regulator pushing lending standards one way or the other in a free market.

oscarBravo

SupaNova wrote: »

No institution is going to lend sub prime unless they can get those off their books.

Correct. Read the quotes above: the GSEs got into subprime because lenders were getting subprime mortgages off their books in spades. Wall Street was buying AAA-rated subprime CDOs in the hundreds of billions for years before the GSEs got into the act.

Fannie Mae and Freddie Mac were set up by government and were the largest buyers of sub prime mortgages.

That's a non-sequitur and a half.

Their sole purpose since their inception has been to loosen lending practices.

And that's a gross over-simplification. Loosening of lending practices (in the subprime sense) started to happen in the late eighties and early nineties, decades after the GSEs were set up.

Here's a good assessment of Fannie Mae and Freddie Mac.
http://www.youtube.com/watch?v=Ennn4Qq8MUY&playnext=1&list=PLC7C2D7AFFD62C0BA

How you can call sub prime lending a product of the free market is beyond me.

Maybe you should research using more in-depth sources than YouTube and Wikipedia before closing your mind to the possibility that the free market could ever possibly get anything wrong.

oscarBravo

SupaNova wrote: »

In a free market yes corporations would do stupid things and they would suffer the consequences by going out of business. The ones that didn't act stupid would last the longest. That's why you don't need a regulator pushing lending standards one way or the other in a free market.

Which is fine, once you assume that large Wall Street firms collapsing is devoid of consequences for anyone other than those firms.

SupaNova

Which is fine, once you assume that large Wall Street firms collapsing is devoid of consequences for anyone other than those firms.

Any business that collapses will have massive consequences for more than the business itself, that does not mean you should save it. Leaving failing businesses fail is how the free market regulates.

oscarBravo

SupaNova wrote: »

Any business that collapses will have massive consequences for more than the business itself, that does not mean you should save it. Leaving failing businesses fail is how the free market regulates.

Yes. I know. And preventing businesses from doing stupid things that cause them to fail is how governments try to prevent the often catastrophic collateral damage that their failures inflict on others.

SupaNova

Maybe you should research using more in-depth sources than YouTube and Wikipedia before closing your mind to the possibility that the free market could ever possibly get anything wrong.

I am aware that these are not the most reliable sources and if anything that i have linked to is wrong feel free to tell me. I am not close minded to the free market getting it wrong. When the free market gets it wrong its self correcting and self regulating. I am pretty close minded to the possibility that government can do a better job at correcting and regulating the market, than just leaving it alone.

oscarBravo

SupaNova wrote: »

I am aware that these are not the most reliable sources and if anything that i have linked to is wrong feel free to tell me.

It's not a question of it being wrong; it's a question of you reading what you want to see into them - like the idea that the GSEs are responsible for subprime, which couldn't be more wrong if you tried.

I am not close minded to the free market getting it wrong. When the free market gets it wrong its self correcting and self regulating. I am pretty close minded to the possibility that government can do a better job at correcting and regulating the market, than just leaving it alone.

The evidence suggests otherwise. The US mortgage market worked fine for half a century under government regulation. When that regulation was eased, a subprime crisis ensued. Now, I'm sure there's a way to conclude from all that that the regulation was the problem in the first place, but I'm also pretty sure that such a conclusion fails every known test of logic.

Again: if you're interested, read the book.

SupaNova

Yes. I know. And preventing businesses from doing stupid things that cause them to fail is how governments try to prevent the often catastrophic collateral damage that their failures inflict on others.

I would have no problem with this if it worked but governments track records speak for themselves. The idea that we can put in strong regulation that will prevent people doing stupid things sounds great but it hasn't worked.

Also, the idea of governments stepping in to stop businesses doing stupid things or stopping a business failing has shades of the broken window fallacy. You think great, we have spent a ton preventing a business failing with strict regulation, or we have spent a ton rescuing a business and jobs. But you don't see by spending a ton on regulating and stopping businesses failing, that money is denied the chance of funding businesses that do a good job at regulating themselves and don't need constant watching and regulation.

SupaNova

Again: if you're interested, read the book.

I am interested as to why wall street bought these junk sub primes? I presume they knew and just tried to pass these on?

SupaNova

The evidence suggests otherwise. The US mortgage market worked fine for half a century under government regulation. When that regulation was eased, a subprime crisis ensued. Now, I'm sure there's a way to conclude from all that that the regulation was the problem in the first place, but I'm also pretty sure that such a conclusion fails every known test of logic.

I am not concluding that regulation is the problem. Whether you believe in a self regulating free market, which is way different than light regulation or strict regulation the recession has a hell of a lot more to it than that. Government policies and political culture, corruption between government and private sector, education(the fact that most borrowers had no idea what they were getting themselves into) and economic understanding to start.

oscarBravo

SupaNova wrote: »

I am interested as to why wall street bought these junk sub primes? I presume they knew and just tried to pass these on?

The rating agencies rated them triple-A, and the big Wall Street firms (with the exception, to a point, of Goldman) got sloppy about risk management. They assumed (wrongly) that the ratings agencies knew what they were doing.

SupaNova

The rating agencies rated them triple-A, and the big Wall Street firms (with the exception, to a point, of Goldman) got sloppy about risk management. They assumed (wrongly) that the ratings agencies knew what they were doing.

So it is incompetency and/or corruption on the part of rating agencies. Your philosophy is to bail out a incompetent and/or corrupt financial sector, and just put them under stricter regulation. The free market solution is to let them fail and remove barriers to entry, leave financial sector wide open to the competition, competition is the only way to improve quality and price. Regulation increases price and weakens competition. Competition is the best way support quality not regulation for those that believe in free markets.

oscarBravo

SupaNova wrote: »

So it is incompetency and/or corruption on the part of rating agencies. Your philosophy is to bail out a incompetent and/or corrupt financial sector, and just put them under stricter regulation. The free market solution is to let them fail and remove barriers to entry, leave financial sector wide open to the competition, competition is the only way to improve quality and price. Regulation increases price and weakens competition. Competition is the best way support quality not regulation for those that believe in free markets.

That's the word that troubles me. I see far too much faith, and not nearly enough logical argument, from proponents of unregulated free-market capitalism. I point out that a regulated mortgage market worked without problem for half a century, and that the relaxation of regulation led, step by step, to a financial crisis - you ignore that, and recite the creed that an unregulated market will work better.

Sure, an unregulated market will work - like an ecosystem in a jungle works. I don't want to live in a jungle.

SupaNova

That's the word that troubles me. I see far too much faith, and not nearly enough logical argument, from proponents of unregulated free-market capitalism.

There is plenty of logic in unregulated(financially, I'm not against environmental regulations for example) free market capitalism. It is very logical to let failing business fail. Its very logical to have highly competitive industry with low barriers to entry. Competition is what produces quality and lowers prices.

We do share something in common, we don't trust. I don't trust governments and regulations to steer businesses finances, i pointed out that its a broken window fallacy to spend money regulating and saving failing business, because ultimately it will be at the expense of businesses that are capable of regulating themselves. So its not only about trust, it is inefficient.

You don't trust a system of a highly competitive open market that only allows successful businesses to survive, bad businesses fail. Competition drives the quality of products and services up, and the cost to the consumer down. The more regulations the less competition.

I point out that a regulated mortgage market worked without problem for half a century, and that the relaxation of regulation led, step by step, to a financial crisis

There are plenty of factors that lead to the financial crisis. There was regulators all along, there was regulation all along. They were loosened due to political pressure. In a self regulating free market there are no regulations to tighten or loosen due to political pressure.

SupaNova

If a small business fails due to irresponsible decisions, it goes out of business. No government intervention, no extra regulation called for to save small business now or in future. Do you think we should call for more regulation in the case of small businesses?

Why is it different for big financial institutions?

Valmont

Permabear wrote: »

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According to that logic, would you equally support an extensive network of CCTV cameras on every street in every town of the country? Phone tapping? Email tapping? Surely the criminals need only worry.

Permabear wrote: »

This post had been deleted.

Well, in the absence of a centralised government, a road company could make you sign some terms and agreements limiting your use on the road on the condition that you abide by their safety regulations.

Also, I don't buy that the absence of a state would result in dozens of arbitrary road rules across the country. To suggest that we need the government to help us from veering all over the roads switching rules every ten miles is just the sort of paternalistic attitude that places the state on a pedestal of provision and rational order in the first place. I just don't see how this is the case.

oscarBravo

SupaNova wrote: »

It is very logical to let failing business fail. Its very logical to have highly competitive industry with low barriers to entry. Competition is what produces quality and lowers prices.

I don't disagree with any of the above. The bit you're leaving out is the human cost. Suppose you let a bank fail, and it takes with it my employer and my life savings. On the plus side, the highly successful bank that has the mortgage on my house is still in business.

It's all very well to talk about letting the market sort out the winners from the losers, but it's somewhat more humane to put checks and balances in place to help prevent businesses from failing in the first place.

We do share something in common, we don't trust. I don't trust governments and regulations to steer businesses finances, i pointed out that its a broken window fallacy to spend money regulating and saving failing business, because ultimately it will be at the expense of businesses that are capable of regulating themselves. So its not only about trust, it is inefficient.

Sure, it would be more efficient to allow weak businesses to fail. It would also be more efficient to allow starving people to die. If your only measure of efficiency is the ability of a successful business to survive, you're missing a fairly important part of the picture.

You don't trust a system of a highly competitive open market that only allows successful businesses to survive, bad businesses fail.

Step back from the ultra-wide-angle, ideologically-driven view for a second, and tell me America (and, by extension, the world) would be a better place today if the entire banking system had imploded and taken the economy with it. Because we're not talking about a corner shop closing because it can't compete with Wal-mart, we're talking about every damn bank in the US (and, by extension, the world) closing down and taking every penny of deposits, stocks and bonds with them.

Now sure, maybe we'd end up with a stronger market as a result - but I'm not interested in fighting tooth and nail to be a Darwinian survivor in a post-apocalyptic, dog-eat-dog world. Like I said: I don't want to live in a jungle.

Competition drives the quality of products and services up, and the cost to the consumer down. The more regulations the less competition.

You're falling into the trap of believing that the law of diminishing returns doesn't apply to competition. You subscribe to the view that if competition is good, more competition is better. That's not true of pretty much anything else in the world; why should it be true here?

There are plenty of factors that lead to the financial crisis. There was regulators all along, there was regulation all along. They were loosened due to political pressure.

Yes: political pressure from Wall Street. Wall Street firms said to their politicians, "we can't compete freely with all these regulations! We need a freer market!" The politicians obliged, and Wall Street competed itself into a credit bubble by believing their own bull****.

In a self regulating free market there are no regulations to tighten or loosen due to political pressure.

A self-regulating free market works in the same way as the self-regulating seismic/tectonic surface of the planet: if too much pressure builds up, a plate shifts, some magma flows out, and everything settles down again. If you take a long view, no harm is done. Right?

oscarBravo

SupaNova wrote: »

There is plenty of logic in unregulated(financially, I'm not against environmental regulations for example) free market capitalism.

Dealing with this separately: why aren't you against environmental regulations? If you can't trust the free market to look after the environment, why would you trust it to look after your financial well-being?

SupaNova wrote: »

If a small business fails due to irresponsible decisions, it goes out of business. No government intervention, no extra regulation called for to save small business now or in future. Do you think we should call for more regulation in the case of small businesses?

Why is it different for big financial institutions?

Big financial institutions are the engines of the economy. The consequences of failure of big financial institutions are too costly to the wider economy to be allowed to happen.

If a florist in my town goes bust, nobody really notices apart from the handful of people directly affected. If Goldman had gone bust, can you honestly say the same?

Small businesses are regulated plenty. Most of those regulations are there for a good reason. Yes, a small business would be more efficient without those regulations, but you've already argued in favour of environmental regulation as one example - putting the greater good ahead of the efficiency of a business. So why is unfettered and unmanaged competition good for the global economy, but bad for the environment?

SupaNova

The only real point you have is the human cost. Every time that local business fails due to Wal Mart moving in there is human cost for that business and its supporting businesses, but it is far outweighed by the human gain provided by Wal Mart moving in. How can you say competition between Wal Mart and the small business was not a good thing? Competition is vital for improvement in an economy.

How you compare something like the above to a jungle or letting starving people die is pretty silly. If you want to call the above competition a dog eat dog world that's fine, but realize that its a good thing.

Your only point is that these financial institutions are just too big to allow to fail, as the human cost of letting them fail would be apocalyptic. We would see the human cost straight away. But many would argue the human cost will be far greater after bailing them out, we will see the effects slowly through inflation, austerity, and eventual default(your post apocalyptic scenario). Maybe this way is more humane on us, maybe not so much for our children.

SupaNova

And whether it was Wall Street or government or mix of both that loosened regulation, what will make it different in the future, a better regulator? Whats to stop him being bought off or threatened in the future. And by putting the sole emphasis on the regulator and regulations, you have the perfect scapegoat the next time this happens. With bailouts and regulations you set up the too big to fail all over again. Its not a free market if wall street asks for freer regulations to run wild and then gets a bailout.