After A Great Deal Of Thought

Gotta be honest with you, George....I see government playing a much larger part in the eventual solution to the problem we are discussing here than most American conservatives do.

I just do not have the disdain for government that seems to cloud the conservative mind.

This is part of a comment I posted earlier in another thread:

Right now, our nation's wealth is concentrated in the hands of a small number of families. Conservative estimates have that at: The wealthiest 1 percent of families owns slightly over 34% of the nation's net worth, the top 10 percent of families owns over 71%, and the bottom 40 percent of the population owns way less than 1%.

I get the feeling that the conservatives of our country would not be bothered if the wealthiest 1 percent of families owned 75% of the nation's net worth...and the top 10 percent owned 99%...with the bottom 90 percent of the families owning but 1% of the wealth.

George, I think allowing “capital market” whether regulated or not to have a larger say in where we are going on this issue…is to invite even great accumulation of the wealth in the hands of those relatively few who can operate successfully in this kind of climate.

Suppose instead, we allowed physical might to prevail over who gets to accumulate the wealth. The “street smart” thugs would end up with damn near everything.

“The capital market” has much, much too great an advantage over the common folks, George. That is something that we have to realize…and something the left of center people get much more clearly than the right of center people.

No real argument with you there, Frank. However I am also mindful of the increasing power government bureaucracies also exert over our lives. In my professional life I have come to know the self-serving venality of such organizations very well.

I don't see much net gain in replacing successful capitalists with them. Bill Gates & Larry Ellison (to count two very different personalities) have gotten very rich and certainly count among those who control a disproportionate share of our wealth. However each did stimulate economic activity and technical innovation that did benefit the lives of many - in addition to accumulating wealth and power for themselves. I'm not sure one could say as much about the U.S. Department of Energy or even the Environmental Protection Administration, or any of the other bureaucratic institutions that credulous reformers of humanity wish to inflict on us.

Jeeze, O'George, talk about credulous . . . there never has been free trade. There never has been unregulated capitalism. At the worst of times, capitalists formed cabals, politely termed guilds, to exclude any competition. At the best of times, society makes sure that you don't poison us in your unprincipled rush to stuff dollars in your pockets.

You're every bit as naive as any "reformer" whom you disparage. Societies have the power, and if only on that basis alone, the right to regulate the activities of acquisitive individuals. Stack up OSHA, the EPA, the NLRB and any number of state and local agencies, and capitalists are still going to make money--the difference will be the extent to which they will do so with an arrogant and selfish disregard for the wellbeing of their fellow citizens. Capitalists whined in just such terms when governments told them they couldn't pay skilled labor for piece work; they whined in the same way when government limited the hours children could work in a week, and prohibited child labor below a certain threshold. Capitalists whined when government told them they couldn't let rats and insects run unchecked through their meat packing plants, and told them they couldn't pad their cans of coffee or tea with adulterants. In every case, the capitalists whined about a doomsday scenario in which they would be driven from business, the economy would collapse and everyone would suffer.

They're still around, they're still enriching themselves at everyone else's expense, and they still whine about being regulated. They still wrap themselves in a flag and whine about freedom and their right to endanger everyone else's health so that they can make a buck. And they'll always pull bullshit dog and pony shows out of their collection behinds whenever they're faced with regulation. And they'll go right on making money despite regulation. A little vigilant regulation by the failed former administration might have saved us all from the consequences of a cutthroat credit market. Of course, they all would have whined about their rights and restraint of trade--but we all would have been better off.

As opposed to the venality of the profit-motivated? Is that any less self-serving?



The EPA has helped keep a lot of pollutants out of the air I breath and the water I drink, and that goes for pretty much everyone in the country. I'd say that benefits the lives of more people than many capitalists who have gotten quite rich.

Sometimes there's a benefit in not doing something, but you guys never seem to realize those sorts of benefits exist.

Cycloptichorn

I'm no opponent of government regulation and I don't believe that unfettered capitalism is the ultimate solution to the problem Frank has posed.

However, I am mindful that even well-intentioned government regulation can have (and usually does have) unanticipated (usually bad) side effects. Interestingly the initiating event for our current liquidity crisis was a combination of both under and over regulation - the unanticipated bad side effects of government intervention in the mortgage market both through Fannie Mae & Freddie Mac and banking legislation that required banks to dilute credit standards to meet (admittedly good) social goals; and the unregulated market for credit default swaps (which in effect made AIG an unregulated bank, pouring more capital into a bubble).

Right now everyone appears to be focused on the well-known tendency of capitalism to produce surges, contractions and occasionally bubbles. Unfortunately there appears to be less focus on the tendency of governments to occasionally add to them or otherwise make matters worse. Certainly a detailed perusal of the proposed Economic Recovery legislation doesn't give one much confidence that it will accomplish much more than giving us the illusion that we are doing something about the crisis.

The "bad" side effects of which you speak are usually adjudged to have been bad by those who wished to make more money than they were able to do as a result of regulation. That is not evidence that the unintended consequences were "bad" in any ultimate sense. The remarks you make, for example, about the cause of the trash mortgage market and the buying and selling of credit have nothing to do with regulation, but rather with an unwise and ill-considered decision on the part of the former administration to stimulate a housing boom, and more consumer spending, by abandoning the very principles which are entailed in financial regulation. When that is coupled with the derisive character of actual, statutory regulation of financial markets in that administrative, it was sufficient to signal the credit market and sellers of credit and credit instruments that anything would go. To suggest that that was an example of the unintended consequences of regulation is merely silly.