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Now Playing at Reason.tv: Obama's New New Deal—as bad as the old New Deal?
Nobel laureate economist and New York Times columnist Paul Krugman says he wants President-elect Barack Obama to enact "something like a new New Deal." Historian Douglas Brinkley has said that Obama could come to office with a "sweeping legislative agenda which will be Johnson-like or New Deal-like." An aide close to Obama told New York magazine that "A lot of people around Barack are reading books about FDR's first hundred days."
On the cusp of a deep economic recession, and with a staggering amount of bailout money being offered to struggling industries, pundits and political advisers are advocating that the incoming Obama administration construct a new New Deal.
But is the popular narrative about the old New Deal—that Keynesian economics and top-down planning rescued America from the Great Depression—accurate? Reason.tv's Michael C. Moynihan talks to UCLA economist Lee Ohanian, who argues in work written with colleague Harold Cole, that the New Deal's massive intervention into the economy actually prolonged the economic crisis by seven years.
"Obama's New New Deal" is written and produced by Michael C. Moynihan. Director of Photography is Dan Hayes.
PFJ|12.16.08 @ 12:25PM|#
I can see the support for the New Deal, even if I think its pretty stupid, but people still support the Great Society? Really? Will we have to wait until Medicare completely destroys the federal government until they stop supporting it?
|12.16.08 @ 12:30PM|#
Paul Krugman says he wants President-elect Barack Obama to
enact "something like a new New Deal."
How about Deal or No Deal instead? Frankly, I trust Howie Mandel's
advice more than I do Krugman's.
|12.16.08 @ 12:37PM|#
Most people can't just stand there. They have to DO
something.
Now throw in the people willing to stand there, but the politicians
say to them, hey, you can continue going about your normal business
because I'LL DO SOMETHING. Next thing you know, you've got an
hysterical mob.
(Always off in the wrong direction. But you knew that.)
Our biggest problem is that Milton Friedman can no longer patiently
explain to us what's happening.
Egosumabbas|12.16.08 @ 12:42PM|#
"Our biggest problem is that Milton Friedman can no longer
patiently explain to us what's happening."
And Naomi Klein is feasting on his freshly-lain corpse.
Egosumabbas|12.16.08 @ 12:52PM|#
And Krugman is winning a nobel prize.
Sadly, our only asset is getting Ron Paul on Fox News whenever
Bernanke/Paulson do something stupid.
|12.16.08 @ 1:00PM|#
Is the current economic crisis really affecting enough people
that we need something on the scale of the New Deal?
While I don't wish it to happen, it would seriuosly serve my
curiosity to find out what would happen if GM and Chrysler went
under in a month.
We're in a terrible situation with a lot of no-win terrible
decisions to make. Just be wary of anyone too eager to settle on
and make one of those terrible decisions.
|12.16.08 @ 1:05PM|#
Krugman's Nobel comes from a time when he was doing some pretty
neat work - my copy of Dispatches from the Dismal Science
is still a favorite.
And I'm with you, Reinmoose - I'm not at all excited about failure
of the Big Two And A Half but am definitely going to do my best to
enjoy watching what happens. Living in Michigan, that may be easier
said than done.
|12.16.08 @ 1:13PM|#
Worst case scenario for the Big 2.5 - the UAW Bailout never
quite clears the political minefield, and they have to declare
bankruptcy.
Which would, of course, be a Chapter 11 reorg, not a Chapter 7
liquidation. They keep operating, so Detroit does not become a
radioactive wasteland (as the UAQ Bailout proponents like to
pretend), the supplier networks stay at least somewhat viable,
etc.
Sure, there'll be some pain amongst their many creditors, but that
pain is coming anyway without the kind of reorganization that has
to occur sooner or later to keep them viable. After all, they can't
suck on the public teat forever; even the Dems will get tired of
pumping tens of billions a year into the rathole of the Big 2.5 as
they currently exist.
Lefiti|12.16.08 @ 1:15PM|#
You fucking right wingers can twist any fact like a pretzel to fit your moronic ideology. But the country is moving left, fucksticks. Contribute now!
Egosumabbas|12.16.08 @ 1:30PM|#
What's that annoying scrambling on my screen under R C Dean's
post? *wipes monitor* It just won't go away!
Oh it's just Lefiti posting again.
Neu Mejican|12.16.08 @ 1:35PM|#
I remain skeptical of claims regarding the prolonging effects of
the New Deal...particularly when they involve specific dates (7
years, yeah right).
Predictions in economics are never better than common sense
guesses. This is true whether you are projecting into the future or
into an alternate past.
In addition, conditions now are significantly different than they
were when FDR was mucking around. This makes any analogies to the
Great Depression pretty sketchy.
IOW, a pretty useless post.
Yes we should discuss what, if any, government interventions into
the economy are wise. And yes, we should discuss which
interventions are clearly unwise. But couching this as some
parallel to the New Deal complete with silly ornaments about the
"true" effects of FDR's programs is a waste of words.
Warty|12.16.08 @ 1:36PM|#
Make sure to post the free-market prayer now, Lefiti. It gets funnier every time OLOLOLOLOLOLOLOLOLOL
|12.16.08 @ 1:39PM|#
What's distressing is that, once again, the likely market (such
as it were) outcome is being drowned out by stories of the worst
possible case scenario. If the car companies go into Chapter 11--a
not uncommon experience for companies over many years of doing
business--they'll have the ability to restructure themselves and
their relationships with other parties, all while still remaining
in operation. They won't simply vanish, taking out thousands of
jobs and all of the suppliers dependent on their continued
existence. As the unions, politicians, and the media keep
suggesting--egad.
That's not to say that there won't be ill effects felt across the
economy by such bankruptcy filings, but those effects are hardly
likely to be anything remotely cataclysmic. There's reason to
believe that only GM and Chrysler are definitely bankruptcy
candidates, anyway.
Failure is an option.
Lefiti|12.16.08 @ 1:50PM|#
http://blogcritics.org/archives/2008/09/04/1628412.php
Book Review: The Conscience Of A Liberal by Paul Krugman
Written by Dan Schneider
Published September 04, 2008
In short, Krugman discourses on how the aftermath of the Stock
Market Crash of 1929- which ended what he calls the Long Gilded
Age, of the 1870s thru 1920s, impacted Americans via the Great
Depression, which saw the rise of Liberalism, through what he calls
the Great Compression, after the Second World War, when higher tax
rates and governmental policies squeezed incomes from top and
bottom, creating a more egalitarian and stronger economy- and one
that has yet to be equaled. Krugman posits that the post-war
economic boom, and the rise of the suburban middle class (using the
example of Levittown), was not a result of the free market, which
he rightly acknowledges ended, for all intents and purposes, with
the Great Depression, but with direct government
intervention.
He then charts the rise of Movement Conservatism's early and naked
biases, how it learnt its lessons, and emerged to wage a stealth
politics of class division (which they often accuse their
counterparts on the Left of doing) to seize power, and begin a
decades long assault on social gains instituted by the New Deal of
President Franklin Delano Roosevelt. Krugman also details how they
overplayed their hand, and why he feels the 2006 election was a
turning point back to more Liberal control of national politics,
or, at the very least, a return to 1950s and 1960s moderation of
the two major political parties, when, Krugman quotes President
Eisenhower, on the radical Right Wing, who wanted to dismantle the
New Deal, abolish social security, unemployment insurance, and
eliminate labor laws and farm subsidies, as their 'number is
negligible and they are stupid.' The President was wrong on their
size, and he shows how and why they let the accordion expand again,
economically, undoing the Great Compression, and bringing on the
income stagnation of recent decades. Krugman cleverly shows that in
no other period of American history was there even an argument over
whether a younger generation would do better than an older one. The
very fact that there is debate is proof of the poor policies of
Right Wing agenda-driven governance.
Mike M.|12.16.08 @ 1:50PM|#
Is the current economic crisis really affecting enough
people that we need something on the scale of the New
Deal?
Just this morning on my way to work I observed three grown men
pushing apple carts outside my building, and at least half a dozen
more selling pencils.
As for getting our economy jump-started, when the new New Deal
fails, Obama should deliberately engineer World War III.
Zeb|12.16.08 @ 1:52PM|#
Is there even a real Lefiti anymore (or was there to begin with)? All of his posts just seem like parodies recently.
|12.16.08 @ 1:53PM|#
Bull hockey. Without 9/11 (a primarily non-economic event), the GOP wouldn't have overreached so much and would likely still be in power. Evidence that we've suddenly veered left is scant, at best. See how things go in 2010 before you get cocky.
Neu Mejican|12.16.08 @ 1:56PM|#
Another annoyance regarding New Deal comparisons...even in their
work, these economist primarily blame the NIRA for the
damage.
Obama would not be able to implement a new NIRA as it was declared
unconstitutional.
So...the approaches used in the New Deal that are blamed for
prolonging the depression are not even on the table for any New New
Deal.
Sam Grove|12.16.08 @ 1:57PM|#
if any, government interventions into the economy are wise.
And yes, we should discuss which interventions are clearly
unwise.
The problem is that if there are wise interventions by government
(whatever that means) you will also get unwise interventions by
government. It's a package deal, neither you nor I get to choose
what it will do. Government actions are a product of political
forces, influences. They are not a product of wisdom.
Lefiti|12.16.08 @ 1:58PM|#
http://www.fpif.org/papers/2004keynesianism_body.html
FPIF Special Report
May 2004
From Keynesianism to Neoliberalism: Shifting Paradigms in
Economics
By Thomas I. Palley
Excerpt:
The concept of market failure has proved extremely powerful, but it
has in turn generated a neoliberal counterargument framed in terms
of government failure. The claim is that, though markets may fail,
having government remedy market failures may be even worse, owing
to bureaucratic inefficiencies and lack of market-styled
incentives.
The government failure argument has had great resonance in the
United States, given the culture of radical individualism. However,
the role of government in a market economy runs far deeper, and its
contribution is inadequately understood. Government not only plays
a critical role in remedying market failure, it also provides
essential services related to education and health. In addition,
government is pivotal in stabilizing the business cycle through
fiscal and monetary policy. Deeper yet, government is integral to
the workings of private markets through its provision of a legal
system that supports the use of contracts. Absent the ability to
contract, the benefits of a market economy would be enormously
diminished.
Particularly poorly understood is the role of government in
preventing destructive competition, in which market incentives lure
agents to engage in actions that generate a socially suboptimal
equilibrium. This type of situation is illustrated by the bribery
problem. Bribery is economically destructive, because it allocates
business on the basis of bribe-paying rather than economic
efficiency. For this reason, societies should aim to avoid bribery.
However, unregulated markets tend to produce bribery. If one agent
bribes while others do not, that agent thrives while others suffer.
As a result, all agents have an incentive to bribe. Left to itself,
the market therefore generates a "bad" equilibrium in which all
agents pay bribes. The "good" equilibrium in which none pay bribes
can only be induced and maintained by laws imposing penalties that
deter bribery. This illustrates how government action may be needed
to support optimally efficient outcomes. The real world is
afflicted by situations generating destructive competition-examples
include bribery, excessive advertising expenditures, tax
competition between jurisdictions to attract business investment,
and the global race to the bottom, in which countries ratchet down
labor standards to attract business. Remedies for all of these
situations require government intervention.
Neu Mejican|12.16.08 @ 2:01PM|#
Sam Grove,
We the people...government of, for and by the people...yadda
yadda.
Get involved.
You are part of those political forces.
Political forces is shorthand for the opinions of citizens. If the
wiser citizens check out of the process...then the process is less
likely to result in good outcomes.
Neu Mejican|12.16.08 @ 2:05PM|#
I wonder if anyone will address the substance of the excerpts
lefti just posted with substance.
I wonder if lefti will add any substantive thoughts on how they are
relevant to the current posting.
Egosumabbas|12.16.08 @ 2:05PM|#
I'm sorry Lefiti, but when the TITLE of an article is grossly incompetently wrong (lol! NEOliberalism!), I can't read the rest of it and take it seriously.
|12.16.08 @ 2:05PM|#
If the wiser citizens comprise a small minority of the whole,
then the process will likely steamroll over their wise
positions.
There were and are completely valid reasons for not structuring our
system as overly democratic. But we decided to break those
shackles. And now we're about to pay the piper. . .again.
Lefiti|12.16.08 @ 2:06PM|#
"If the wiser citizens check out of the process...then the
process is less likely to result in good outcomes."
And if the stupider citizens check out of the process, is the
process more likely to result in good outcomes? Anarcho-capitalists
surely don't vote, do they?
|12.16.08 @ 2:06PM|#
The concept of market failure has proved extremely
powerful
FIRST SENTENCE EPIC FAIL
Markets don't fail, they just don't provide the outcomes some
people expect. It's like saying that weather has failure when rain
falls instead of feathers.
Please, keep quoting idiots. (And yes, you may therefore begin to
quote yourself.)
Neu Mejican|12.16.08 @ 2:07PM|#
Pro Lib,
The wiser citizens can often influence the less wise with better
arguments.
It only takes a handful of articulate and dedicated individuals to
change the direction of a society.
It could be argued that is the only way societies ever actually
change.
Lefiti|12.16.08 @ 2:07PM|#
That's okay, Egosumabbas. I wouldn't want your lips to get all chapped and sore.
Egosumabbas|12.16.08 @ 2:07PM|#
"From Keynesianism to Neoliberalism"
LULZ. This really made my day. It's like saying FROM STALINISM TO
COMMUNISM.
Lefiti|12.16.08 @ 2:10PM|#
"From Keynesianism to Neoliberalism"
LULZ. This really made my day. It's like saying FROM STALINISM TO
COMMUNISM.
Yeah, people who have never had catechism class are soooo
fucked!
|12.16.08 @ 2:10PM|#
There are a number of people who claimed that FDR purposely got
America in WWII including the bombing of Pearl Harbor in order to
get America out of the great depression.
I don't know about that but was is definitely clear from history is
that without WWII and the significant increase in private
production needed to support the war effort the depression would
have lasted a lot longer than it did.
Jerry|12.16.08 @ 2:12PM|#
Keynes only published his General Theory in 1936, so you do have to be careful not labelling the whole New Deal as Keynesian, I rather call it proto-Keynesian.
|12.16.08 @ 2:13PM|#
Yes, I Truly Believe you are a retard. Quick! Spout off the same tired shit you do every day!
Naomi Klein|12.16.08 @ 2:13PM|#
Neoliberal means market fundamentalist because I say so! Nevermind that it really means "American Liberal"! I'm an anarchist who wants you to vote in big daddy government! wooooooo!
|12.16.08 @ 2:13PM|#
Stating a precise number that the depression was prolonged by is
silly. But it is still clear that FDR did prolong it. (And it
wasn't just FDR who is to blame, as Hoover's interventions did some
prolonging of their own).
Actual economic recovery didn't happen until after WWII. Many
economic historians declare that the depression ended at WWII, but
that's only because they measure unemployment. But all the
unemployed got drafted, so it's a false measure. There's no way you
can call the wartime austerity a good economy. In some ways it was
worse than much of the formal depression itself. Hell, nearly every
staple good was rationed!
Neu Mejican|12.16.08 @ 2:16PM|#
Sugarfree,
Markets don't fail, they just don't provide the outcomes some
people expect. It's like saying that weather has failure when rain
falls instead of feathers.
Just as it is logical to say the rain failed to provide our farm
with needed moisture this year it is logical to say the markets
failed to provide outcome x.
So, on the level you criticize the term your critique seems pretty
weak.
On a deeper level, you are assuming that markets always operate at
optimal efficiency when only bottom up forces are allowed. But no
complex adaptive system operates at optimal efficiency without BOTH
top-down and bottom-up forces.
"Market failure" is a term to describe cases whereby the market is
not operating at optimal efficiency. This may be due to too much
top-down, or too-little.
|12.16.08 @ 2:16PM|#
Why the war did not end the depression: http://www.fee.org/publications/the-freeman/article.asp?aid=8347
Egosumabbas|12.16.08 @ 2:19PM|#
The only way to have a market fail is when one party violates its contract (fraud), or a third party holds guns to the heads of the contract signers (government intervention).
Egosumabbas|12.16.08 @ 2:21PM|#
@Brandybuck:
When you have rationing, price fixing, and massive disruptions of
whole segments of the economy, it would be challenging to construe
that as a recovery.
Neu Mejican|12.16.08 @ 2:23PM|#
Sugarfree,
Also, the first sentence talks about the
"concept of market failure" proving to be powerful.
I am not sure how you can refute that given the proliferation of
the meme. It seems to serve a useful purpose in discussions of
policy and shows up in literally 10's or thousands of serious
papers on economics.
|12.16.08 @ 2:26PM|#
First, I vote.
Second, the ability of The Wise® to influence the masses on complex
concepts, particularly when they appear counterintuitive, is quite
low. This doesn't mean that I think we need to give the wise more
power; rather, I think we need to weaken the power of government to
impose the foolish whims of the majority--or even the
not-so-foolish whims--willy nilly.
Talk of a new New Deal is so out of whack with the current
situation as to make any debate about it quite difficult. We're not
even remotely in the economic pit we were in during the Great
Depression. Nor are there any real signs that we will move there.
We may face a deep recession, but that's just life in the business
cycle. This time around will hurt more than usual, but I have yet
to see any indication that this recession will be even as bad as
the late 70s, let alone the 30s.
Lefiti|12.16.08 @ 2:29PM|#
Face it wingnuts, the New Deal was the best thing to ever happen
to this country, Cuba has the best healthcare in the world, and
North Korea is a worker's paradise.
Fucking free market fundamentalist fucks.
|12.16.08 @ 2:30PM|#
Keynes only published his General Theory in 1936, so you do
have to be careful not labelling the whole New Deal as Keynesian, I
rather call it proto-Keynesian.
or, perhaps, New Deal Apologetics.
We may face a deep recession, but that's just life in the
business cycle.
The business cycle has become one of those risks that Americans
must be protected against, PL. By government fiat, the business
cycle has been revoked.
|12.16.08 @ 2:30PM|#
Neu,
Just as it is logical to say the rain failed to provide our
farm with needed moisture this year
Yes, but only crazy people use this an argument to implement a
massive and expensive scheme to control the weather.
"Market failure" is a term to describe cases whereby the market
is not operating at optimal efficiency. This may be due to too much
top-down, or too-little.
I'm willing to grant this point, but "market failure" also seems to
be a term thrown around by people fundamentally ignorant of the
fact that a market (or any system created by millions of
interactions of humans) cannot be optimally efficient without
something approaching perfect knowledge. Something that the "market
failure" crowd thinks the government somehow magically
possesses.
Compound this with the fact that a lack of government "free"
healthcare is also a "market failure" and it seems to become a term
of abuse by the economically ignorant.
Despite the protestations of the village idiot, I'm not a free
market fundamentalist and concede that a certain amount of
oversight is necessary for an optimally efficient economy. But the
hard-left "market failure" crowd is usually complaining that the
free market doesn't produce a socialist paradise for them without a
whit of understanding that it won't and never could.
Neu Mejican|12.16.08 @ 2:32PM|#
Pro Lib,
I don't disagree with anything you say.
Although I think the wise have often been able to influence the
masses quite effectively. It requires, however, talking to the
masses as if they were indeed also wise and could understand the
complex topic as it exists.
The current habit of assuming the masses are idiots that wouldn't
understand does more to proliferate the ideas of pandering idiots
than anything else.
Pairing leadership with wisdom is a rare gift...I don't know if
we've got anyone that can take up the challenge, but I hope Obama
stumbles upon some wise individuals, cuz he certainly has the
"influence the masses" thing down.
|12.16.08 @ 2:32PM|#
I demand my right to an economic downturn, where my continued employment allows me to buy stuff at a sharp discount! Where's my top hat, boy?
EverElse|12.16.08 @ 2:35PM|#
Neu Mejican | December 16, 2008, 2:23pm | #
Sugarfree,
Also, the first sentence talks about the
"concept of market failure" proving to be powerful.
I am not sure how you can refute that given the proliferation of
the meme. It seems to serve a useful purpose in discussions of
policy and shows up in literally 10's or thousands of serious
papers on economics.
It is conceptually flawed because it relies on the idea that
markets are extrinsically malleable where in reality they are
intrinsic systems, not designed. Efficiency is not a real argument
against markets because every day produces a set of information
that is more efficiently allocated than the day before, through the
price mechanism mistakes are realized, and successes rewarded, and
eventual , visible progress is eventually seen in the outcome down
the road, but never in the actual process.
http://www.fpif.org/papers/2004keynesianism_body.html
FPIF Special Report
May 2004
From Keynesianism to Neoliberalism: Shifting Paradigms in
Economics
By Thomas I. Palley
Excerpt:
The concept of market failure has proved extremely powerful, but it
has in turn generated a neoliberal counterargument framed in terms
of government failure. The claim is that, though markets may fail,
having government remedy market failures may be even worse, owing
to bureaucratic inefficiencies and lack of market-styled
incentives.
The government failure argument has had great resonance in the
United States, given the culture of radical individualism. However,
the role of government in a market economy runs far deeper, and its
contribution is inadequately understood. Government not only plays
a critical role in remedying market failure, it also provides
essential services related to education and health. In addition,
government is pivotal in stabilizing the business cycle through
fiscal and monetary policy. Deeper yet, government is integral to
the workings of private markets through its provision of a legal
system that supports the use of contracts. Absent the ability to
contract, the benefits of a market economy would be enormously
diminished.
Particularly poorly understood is the role of government in
preventing destructive competition, in which market incentives lure
agents to engage in actions that generate a socially suboptimal
equilibrium. This type of situation is illustrated by the bribery
problem. Bribery is economically destructive, because it allocates
business on the basis of bribe-paying rather than economic
efficiency. For this reason, societies should aim to avoid bribery.
However, unregulated markets tend to produce bribery. If one agent
bribes while others do not, that agent thrives while others suffer.
As a result, all agents have an incentive to bribe. Left to itself,
the market therefore generates a "bad" equilibrium in which all
agents pay bribes. The "good" equilibrium in which none pay bribes
can only be induced and maintained by laws imposing penalties that
deter bribery. This illustrates how government action may be needed
to support optimally efficient outcomes. The real world is
afflicted by situations generating destructive competition-examples
include bribery, excessive advertising expenditures, tax
competition between jurisdictions to attract business investment,
and the global race to the bottom, in which countries ratchet down
labor standards to attract business. Remedies for all of these
situations require government intervention.
Fallacy of the Only Viable Actor. In the examples listed is a
coercive body the best choice in the possibilities that are
applicable to the situation, even in the example of fruad, the
damage is
|12.16.08 @ 2:36PM|#
I am not sure how you can refute that given the
proliferation of the meme. It seems to serve a useful purpose in
discussions of policy and shows up in literally 10's or thousands
of serious papers on economics.
Granted. It is only certain interpretations of the concept that I
object to, not the notion is is a powerful meme. (Dumb ideas are
often wildly popular.) I was hasty.
|12.16.08 @ 2:37PM|#
Get involved.
You are part of those political forces.
Political forces is shorthand for the opinions of citizens. If the
wiser citizens check out of the process...then the process is less
likely to result in good outcomes.
Neu--A perfect example of the political failure at work is the
insistent and incessant support of the bailout by the politician
class, while it is obvious that a sizable majority of their
constituents are opposed to it.
I sent emails to all 3 of my congresscritters prior to the first
vote stating my opposition and why I opposed the bailout and all 3
voted in favor of it. I did, however, eventually get back messages
from the 2 senators with their half-baked reasons for voting
yea.
Needless to say, my political opinion weighs in at about the same
value as a flaming bag of shit in Maryland. It's one-party rule
here and I wasn't invited to the party (well, I was invited, but I
didn't like the Tax Here! Stomp now! theme they picked for
it).
I don't have a great deal of faith in your proposed solution.
everelse|12.16.08 @ 2:38PM|#
Fallacy of the Only Viable Actor. In the examples listed is a coercive body the best choice in the possibilities that are applicable to the situation, even in the example of fruad, the damage is
EverElse |12.16.08 @ 2:40PM|#
Fallacy of the Only Viable Actor. In the examples listed it is assumed a coercive body is the best choice in the possibilities that are applicable to the situation, even in the example of fraud, the damage is
|12.16.08 @ 2:41PM|#
It only takes a handful of articulate and dedicated
individuals to change the direction of a society.
And it only takes a few vocal individuals with good PR and sweet
sounding rhetoric to turn it right back around. No offense Neu, but
you're incredibly naive to believe that committee style dialog will
ever produce something that is remotely wise or efficient for
anyone but those who stand to benefit by gaming the system.
Most of society is directed by memes, paradigms, and the occasional
urban legend. Like the idea that WWII brought us out of the
depression and that war is good for an economy. How long has that
nonsense idea been around? The fact that people continue to believe
in it, among other silly memes, is proof enough that the "wise"
have little direct influence on the movement of society.
EverElse|12.16.08 @ 2:41PM|#
Each time I've copied and pasted that entire section but it wont print out more than a shuffled version of the first few sentences.
Neu Mejican|12.16.08 @ 2:42PM|#
Sugarfree,
Yes, but only crazy people use this an argument to implement a
massive and expensive scheme to control the weather.
But wise individuals might implement a reservoir system or use
drought resistent farming techniques.
"market failure" also seems to be a term thrown around by
people fundamentally ignorant of the fact that a market (or any
system created by millions of interactions of humans) cannot be
optimally efficient without something approaching perfect
knowledge.
Not really true. This assumes a tighter relationship between
knowledge of the system and efficiency of the system than exists in
these kinds of systems. The top-down forces don't need perfect
knowledge, or anything close. They just need to be able to
recognize trends that will derail efficient operation and have the
ability to adjust in ways that correct those trends.
No magic needed.
Something that the "market failure" crowd thinks the government
somehow magically possesses.
I think you are attributing beliefs that people don't hold, or are
talking about a very very small minority of people that use the
term.
Compound this with the fact that a lack of government "free"
healthcare is also a "market failure" and it seems to become a term
of abuse by the economically ignorant.
No one uses this argument. The failure is the lack of health care.
A proposed solution is to have the government provide access to
health care. No one claims that the market should produce
government health care. They claim that the market fails to produce
access to health care for all who need it.
But the hard-left "market failure" crowd is usually complaining
that the free market doesn't produce a socialist paradise for them
without a whit of understanding that it won't and never
could.
I actually think they understand perfectly well that it never
could. That is why they are "hard-left." They don't believe in the
power of the free market to provide for society's needs.
EverElse|12.16.08 @ 2:43PM|#
Fallacy of the Only Viable Actor. In the examples listed it is assumed a coercive body the best choice in the possibilities that are applicable to the situation. Even in the example of fraud, the damage is
|12.16.08 @ 2:44PM|#
Your selected text may include special characters that are defeating your attempts to paste. Any greater-than or less-than symbols? Try copying or pasting as plain text, if you have that option.
Neu Mejican|12.16.08 @ 2:45PM|#
New topic:
How is the concept of "political failure" different or similar to
the concept of a "market failure."
Is politics a separate market, or part of the free market?
EverElse|12.16.08 @ 2:47PM|#
Fallacy of the Only Viable Actor. In the examples listed it is assumed a coercive body the best choice in the possibilities that are applicable to the situation. Even in the example of fraud, the damage is still done whether or not parties are punished and 'justice' is served. Will it prevent other actors down the road? History says no, not when the size and scope and degree of punishment in our Nation compared to the level of criminal activity is compared, who is to say a less law prone society would be more lawless as a result?
|12.16.08 @ 2:48PM|#
I'm not sure, but I suspect that GM's best hope is to close some
divisions and spin off others.
Corvette, for example, might thrive as a standalone niche marketer
of pricey sports car while it also continues to make engines for
Cadillac which might also survive as the maker of a couple of
luxury lines. How many other divisions are viable I wouldn't
venture to say.
I'm not sure there's any hope for Chrysler, except maybe the Jeep
part.
As PL suggests Ford may survive with little or no tweaking. I think
they'll stll need to renegotiate labor contracts, though. And
probably downsize some more.
I keep hearing talking heads say stuff to the effect that they
can't go into Chap 11 because noone will buy from a conpany they
think is bankrupt.
Doesn't everyone know that they're already
bankrupt?
Neu Mejican|12.16.08 @ 2:48PM|#
No offense Neu, but you're incredibly naive to believe that
committee style dialog will ever produce something that is remotely
wise or efficient for anyone but those who stand to benefit by
gaming the system.
You missed my point, clearly.
EverElse|12.16.08 @ 2:49PM|#
Pro Libertate | December 16, 2008, 2:44pm | #
Your selected text may include special characters that are
defeating your attempts to paste. Any greater-than or less-than
symbols? Try copying or pasting as plain text, if you have that
option.
Thanks, I found the problem and rewrote that section.
Neu Mejican|12.16.08 @ 2:55PM|#
they are intrinsic systems, not designed
Indeed. But they are also not homogeneous and include large and
small players, players whose role is regulatory, players whose role
is disruptive, players whose role is "creative destruction,"
etc....
Think of a brain. You have individual synapses firing in the
context of a hormonal background and a soup of neurotransmitters
that inhibit and excite and prevent cascading failures (epilepsy,
say).
Neu Mejican|12.16.08 @ 2:57PM|#
Pain,
Actually, I was thinking you should be the one who puts in more
effort.
I am doing fine.
EverElse|12.16.08 @ 3:02PM|#
players whose role is regulatory,
These players are extrinsic to the process whether or not you
accept their validity is a different story.
|12.16.08 @ 3:08PM|#
Neu,
I actually think they understand perfectly well that it never
could. That is why they are "hard-left." They don't believe in the
power of the free market to provide for society's needs.
Then let them propose the folly of socialism and stop trying to
torture the market into providing them something it cannot.
Especially with the continuing blood libel that our already
heavily-distorted market is somehow "free."
But wise individuals might implement a reservoir system or use
drought resistant farming techniques.
Those are both bottom up solutions, analogous to investing
conservatively or saving to avoid financial disaster during
downturns and panics. Even if they are done by the government on
the macro-scale, they still aren't an effort to distort the
weather, but just to ameliorate is effects. Top down would be
controlling the weather. Ask the Chinese how well that
worked.
(On a side-note, I have no objection to a social safety-net
(reservoirs). But it should be a net, not a hammock. To further
torture this analogy, I don't give a flip about the guy who tries
to farm the desert and complains the reservoir doesn't provide him
enough water.)
No one uses this argument.
O'Rly?
http://www.nakedcapitalism.com/2007/04/market-failure-i-money-driven-medicine.html
http://rationalreasons.blogspot.com/2006/01/private-healthcare-and-market-failure.html
http://jontaplin.com/2008/04/05/market-failure-in-health-care/
These are three hits from the first page of googling "health care
market failure." Destroying the private health industry based on
the fact that is doesn't produce "free" healthcare is exactly what
they are proposing. Complaining that a private market cannot
produce something for nothing is economic ignorance.
(By the way, the last one is particularly stupid. He argues that
Mass. not producing enough doctors for it's Universal Health Care
program is somehow a market failure. He seems incapable of grasping
that if you heavily distort an employment market by controlling
wages, less people will want to do the job.)
|12.16.08 @ 3:09PM|#
Isaac,
Don't people fly on bankrupt airlines? I mean, where does this idea
come from? I'm sure people are a little more wary doing business
with a company in Chapter 11, but I'm not sure consumers care that
much. Certainly not enough to completely avoid the manufacturer. If
nothing else, the Buy-American mentality will set a definite floor
to the number of people who'll shop elsewhere. And, of course, if
Ford were to avoid Chapter 11, then it could be an alternative if
one is needed.
|12.16.08 @ 3:11PM|#
Think of a brain. You have individual synapses firing in the
context of a hormonal background and a soup of neurotransmitters
that inhibit and excite and prevent cascading failures (epilepsy,
say).
Synapses are not individual sentient beings thus the analogy fails.
Synapses do what they are told. Humans cannot be accurately modeled
to any certainty, especially in an economic environment where they
are aware of it. Because they will try to game or break the system
to their own gain. So unless you allow for a system that
compensates when others try to game it it will fall apart.
|12.16.08 @ 3:12PM|#
Ah, Neu.
I realized that I wrote "government 'free' healthcare." Sorry, you
are entirely correct with that mistake sentence. I wrote gov,
changed my mind and inserted free and forgot to delete gov. My
bad.
|12.16.08 @ 3:16PM|#
"FDR prolonged the Great Depression." As far as I understand it
the argument goes something like this: It is a priori true that
governments don't act as efficiently as the private sector, and
that high tax rates on the rich damage the economy, and that
greater wealth equality is bad, ergo FDR's progressive policies
prolonged the Great Depression, which would have ended 7 years
sooner had we simply put our faith in the private sector and the
free market.
Since nobody possesses a time machine capable of visiting alternate
universes, the evidence for this argument, of course, is scant.
|12.16.08 @ 3:18PM|#
If all we want is free healthcare, why not simply enslave all doctors and supporting medical personnel and make them give us healthcare without charge? Sure, that's unfair to those enslaved, but the greatest good for the greatest number, right?
EverElse|12.16.08 @ 3:22PM|#
You are probably looking for a more elaborated explanation --
forces that are extrinsic to a market system are those that are not
necessary to its function. These are cultural considerations
instead of operative ones. Say, the vast majority of people in a
given trading zone have a set of things that they believe to be
bad, the trade of humans, child labor, mixing of carrots and corn
in canned goods, for one set of people in a given trade zone, and a
different set, no trade for the revered cow, forced early
retirement, and no trade in sharp utensils exist for their
neighbors to the North.
Each group with its set of taboos sets of a board to decide how
matters that incur infractions against the reigning taboos will be
punished. In either case the 'efficiency' of the market is not
increased. You may say that the locals are relieved that their
chain store down the block does not carry steak knives so they have
more 'confidence' purchasing there, but that reduces things to the
whims of psychology, and we are no longer talking about market
factors since it is recognized that where demand is applicable the
black market creates more efficient means of allocation when
objects are banned and taboos are crossed (ie. booze, drugs, porn)
than exist when these things are culturally normative.
Regulators are a matter of culture and not intrinsic to the
market.
|12.16.08 @ 3:28PM|#
Don't people fly on bankrupt airlines?
Of course they do. But to listen to the pitchmen for the big 3
you'd think no company has successfully gone through Chap 11. God
almighty, it seems to me that just about every company except the
automakers have done it at least once by now.
I think the biggest problem for them is that chap 11 will make it
so that contracts with unions and dealers will be renegotiated. The
UAW will be weakened and a lot of dealers will go out of
business.
Mind you the dealers do know that there are too many of them and
their numbers need to be reduced. It's just none of them wants to
be one of the ones that has to take a bullet.
As to the New New Deal thing, hasn't it occured to anyone that we
maybe should have thought about paying for the old one before we
started a new one?
EverElse|12.16.08 @ 3:32PM|#
TonyQ | December 16, 2008, 3:16pm | #
"FDR prolonged the Great Depression." As far as I understand it the
argument goes something like this: It is a priori true that
governments don't act as efficiently as the private sector, and
that high tax rates on the rich damage the economy, and that
greater wealth equality is bad, ergo FDR's progressive policies
prolonged the Great Depression, which would have ended 7 years
sooner had we simply put our faith in the private sector and the
free market.
Since nobody possesses a time machine capable of visiting alternate
universes, the evidence for this argument, of course, is
scant.
The essense of the argument against the New Deal boils down to
techocrats cannot replace entrepreneurs. Except for the energy
sector (and I guess, finance, but that is long way gone before even
yesteryear), Neu Mejican rightly points out that Obama hasn't
advocated this nowhere near the extent the New Dealers did.
|12.16.08 @ 3:39PM|#
I really think our best course of action is to wait for Obama to
fuck something up and then complain. All this anticipatory
complaining is just making us look like whiners. "I told you so" is
much more satisfying than Chicken Littling.
By the way Firefox, Barack Obama is now the President of the United
States. I'm not misspelling anything.
EverElse|12.16.08 @ 3:49PM|#
The gist of our objection to the use of term, 'market failure' is this, Mississippi is a cultural failure not a market failure. The extent they have free markets in Mississippi has no bearing on this, any more than to say in New York every one doesn't have his own hovercraft is a market failure. In all instances when the market is pointed to as the problem, you are not giving the matter careful enough scrutiny.
Paul|12.16.08 @ 4:00PM|#
"A lot of people around Barack are reading books about FDR's first hundred days."
If this is the case, Obama won't be giving us a New Deal, he'll be
giving us the Old Deal.
Paul|12.16.08 @ 4:12PM|#
"Market failure" is a term to describe cases whereby the
market is not operating at optimal efficiency.
Define 'optimal efficiency'. Exactly.
When people with an inordinate amount of power describe
inefficiencies as any case were prices go down, or money is lost,
well, do I need to even finish the sentence?
|12.16.08 @ 4:12PM|#
Obama will have learned from the mistakes of FDR, one of which was to attempt to reduce spending and balance the budget, which did, in fact, make matters worse in '37. The good thing is Republicans no longer believe in fiscal responsibility.
Neu Mejican|12.16.08 @ 4:21PM|#
Regulators are a matter of culture and not intrinsic to the
market.
This is pure opinion on your part.
It all depends on how you construe the boundaries of "the
market."
You are drawing a line and saying X is part of the market and Y is
not.
I am putting the line in a different place.
The disagreement has to do with the term necessary in this
statement.
forces that are extrinsic to a market system are those that are
not necessary to its function.
Regulations and the agents that carry them out, I contend, ARE
necessary to the functioning of the market. They are a feature of
the market, not extrinsic to it.
Neu Mejican|12.16.08 @ 4:27PM|#
Define 'optimal efficiency'. Exactly.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/invemgmt/effdefn.htm
Gives a decent discussion.
In an optimally efficient market, knowing the price would tell you
everything you need to know about the product making it very
difficulty to trick buyers or sellers. Optimal efficiency will, of
course, never be achieved.
Lefiti|12.16.08 @ 4:28PM|#
"If all we want is free healthcare, why not simply enslave all
doctors and supporting medical personnel and make them give us
healthcare without charge? Sure, that's unfair to those enslaved,
but the greatest good for the greatest number, right?"
You are really fucking stupid, aren't you, Libertate. I mean we're
talking moronic.
Neu Mejican|12.16.08 @ 4:35PM|#
Paul,
To expand a bit.
An inefficient market will not only provide highly flawed
information via prices, it will fail to fulfill both sides of a
supply/demand equation with some items that are in demand being
unavailable despite there being the means and the resources
available to make the items and provide them.
An inefficient market will not provide suppliers with the
information that there is a demand for X at price Y (a sustainable
and profitable price), and it will not provide buyers information
that item X could be made available at price Y. As a result, no one
provides item X at price Y.
Other Matt|12.16.08 @ 4:35PM|#
By the way Firefox, Barack Obama is now the President of the
United States. I'm not misspelling anything.
Absolutely a joe worthy misstatement of fact. He is the President
Elect, he wont' be sworn in until Jan 20, at which time he will be
the President, barring some kind of very odd series of events in
the interim.
Neu Mejican|12.16.08 @ 4:38PM|#
Other Matt,
So Firefox shouldn't recognize the spelling of his name until
1/20/2009?
Sounds like a market failure to me.
The market should have figured out the need for a spellchecker that
recognizes Barack Obama's name at least 18 months ago.
;^)
Neu Mejican|12.16.08 @ 4:46PM|#
Synapses are not individual sentient beings thus the analogy
fails. Synapses do what they are told. Humans cannot be accurately
modeled to any certainty, especially in an economic environment
where they are aware of it. Because they will try to game or break
the system to their own gain. So unless you allow for a system that
compensates when others try to game it it will fall
apart.
Of course, or, maybe, kinda.
Synapse don't do what they are told, they react to an environment.
As do people. People, of course, have a much wider set of options,
are themselves complex adaptive systems, etc...
This does not break the analogy, however.
All complex adaptive systems off-load excess complexity either onto
their environment (the source of top-down forces) or distribute it
across their primary elements (the source of bottom-up forces). The
process never reaches equilibrium as bottom-up forces try to reduce
complexity by recruiting top-down forces and top-down forces
attempt to off-load their work on the primary elements.
|12.16.08 @ 4:57PM|#
Why do you hate patients, Lefiti?
I also endorse enslaving all rude, vacuous trolls, because the
public needs them more than the trolls need to be free.
Warty|12.16.08 @ 4:58PM|#
*neurology pedant alert*
You mean neurons, not synapses. Synapses are the connections
between neurons.
Warty|12.16.08 @ 4:59PM|#
If we enslave Lefiti, can we dress him up in a rubber suit and keep him chained in my basement?
Neu Mejican|12.16.08 @ 5:30PM|#
Warty,
I meant synapses in the original post...but, you are correct. Pain
used synapse for neuron and I just went along.
Synapse = transaction (between two individuals in the
market).
Although looking back, the wording on my part was a bit
sloppy.
You have individual synapses firing in
Should be, "you have synaptic firing in..." or something along that
line.
Lefiti|12.16.08 @ 9:30PM|#
I'd much rather pay taxes than buy things with my money. Everyone knows that governments provide useful cost-effective services, while private businessmen only sell me useless junk that I've been brainwashed into wanting. besides, the state creates a cozy feeling of communal unity. Now excuse me, I have to go polish my Obama action figures.
mike farmer|12.16.08 @ 10:14PM|#
"I'd much rather pay taxes than buy things with my money.
Everyone knows that governments provide useful cost-effective
services, while private businessmen only sell me useless junk that
I've been brainwashed into wanting. besides, the state creates a
cozy feeling of communal unity. Now excuse me, I have to go polish
my Obama action figures."
You do this as well as Colbert does Republican. Good job.
Richard Stands|12.16.08 @ 10:50PM|#
Synapse don't do what they are told, they react to an environment. As do people. People, of course, have a much wider set of options, are themselves complex adaptive systems, etc...
This does not break the analogy, however.
All complex adaptive systems off-load excess complexity either onto their environment (the source of top-down forces) or distribute it across their primary elements (the source of bottom-up forces). The process never reaches equilibrium as bottom-up forces try to reduce complexity by recruiting top-down forces and top-down forces attempt to off-load their work on the primary elements.
Assuming that disparity of scale would play no significant role
(i.e. the system we're comparing to the brain contains only 300
million primary elements, rather than 100,000 million
primary elements), how would the following additional assumptions
affect the analogy?
1. The top-down forces in one system are comprised of
approximately 5% of the same type of elements as the primary
elements. The top-down force or forces in the other system is very
poorly understood*, and involves a single consciousness which is
arguably on a transcendent magnitude from its elements.
2. If we assume that the primary elements are endowed by their
creator with unalienable Rights, that among these are Life, Liberty
and the pursuit of Happiness. That to secure these rights, top-down
forces are instituted among the primary elements, deriving their
just Powers from the consent of the primary elements.
* I'll grant that the Federal Government is often pretty poorly
understood as well.
Neu Mejican|12.17.08 @ 5:15PM|#
and involves a single consciousness which is arguably on a
transcendent magnitude from its elements.
That is not an assumption I can live with...assuming I understand
what you are saying with your very obtuse language here.
I have not problem with your second assumption, but I am not really
sure it is relevant to the discussion.
Neu Mejican|12.17.08 @ 5:19PM|#
Many of the top-down forces in the brain operate well below the
radar of consciousness.
The assumption that the self is an undifferentiated whole is, at
best, unlikely based on our current incomplete understanding.
A good book on the topic:
http://www.amazon.com/exec/obidos/ASIN/0140230122/reasonmagazineA/
Norretranders does a lot of speculation, but makes some subtle and
important points along the way.
Neu Mejican|12.17.08 @ 5:20PM|#
contains only 300 million primary elements
Closer to 7 Billion, but whatever.
You don't really believe the market stops at our border do you?
Richard Stands|12.18.08 @ 12:58AM|#
You don't really believe the market stops at our border do you?
No. And sadly, attempts to establish and increase top-down forces
on the larger total are becoming more frequent.
That is not an assumption I can live with...assuming I understand what you are saying with your very obtuse language here.
Apologies if I wasn't clear.
My meaning is that the top-down element of a human culture (its
government) is populated by ordinary members of the culture
itself.
In the brain, can we find a complete explanation for consciousness
in the workings of governing neurons alone?
I have not problem with your second assumption, but I am not really sure it is relevant to the discussion.
I'd simply add that while American culture is a complex adaptive
system, it is more complex and simultaneously more constrained than
a single brain.
It's more complex because the primary elements are self-aware,
independent, and are asserted to be endowed with individual rights.
It's more constrained because not all off-loading of complexity is
permitted. While some bottom-up forces may try to reduce complexity
by recruiting top-down forces, the written structure of the
American system is designed to limit which top-down forces are
authorized (constitutional). Not all visions of attempted
equilibrium are supposed to be on the table.
When I consider a brain, I see it as being composed of wholly
"owned" neurons. When I consider America, I see it as being an
aggregation of free people.
Regardless, thank you for referencing the term 'Complex Adaptive
Systems'. It's been quite a while since I was in school and this
discipline is new for me. It'll be fun to research.
Neu Mejican|12.18.08 @ 7:13PM|#
Richard Stands,
This is probably a dead thread, but if you want to look more into
economies as complex adaptive systems go over to edge.org.
http://www.edge.org/3rd_culture/brown08/brown08_index.html
1) The economy is a physical system, involving flows of goods, information and energy, hence it might be useful to model an economy as a system in physics. However, while there is a concept of equilibrium in neoclassical economic theory, the concept of equilibrium in physics is not applicable to economies because it applies only to particular kinds of systems called closed systems.
These are closed off from the outside world and have fixed unchanging amounts of the goods that compose them. They have fixed amounts of energy, which cannot be added to or subtracted from the outside. Markets are not describable as closed systems, so the notion of their being in physical equilibrium cannot be applied.
2) Instead, markets are examples of systems physicists call open systems. They do not have fixed amounts of goods or currencies. They are situated inside larger open systems including the biosphere and energy and materials flows through them from the larger system that contains it.
3) Flows of energy and goods through an open system can drive its selforganization to meta-stable states. These states are not like equilibrium in that fluctuations around them are neither small, nor random, nor uncorrelated.
Neu Mejican |12.18.08 @ 7:19PM|#
To your points:
My meaning is that the top-down element of a human culture (its
government) is populated by ordinary members of the culture
itself.
As are the top down forces in the brain. Ordinary members of the
brain acting in the same fashion as other portions of the brain
further downstream. They are just utilizing different types of
information based on their place in the hierarchical structure of
the CNS.
It's more constrained because not all off-loading of complexity
is permitted. While some bottom-up forces may try to reduce
complexity by recruiting top-down forces, the written structure of
the American system is designed to limit which top-down forces are
authorized (constitutional). Not all visions of attempted
equilibrium are supposed to be on the table.
Again, this is how brains work also. While the individual neurons
are not self-aware agents, the relationship of the primary elements
to the whole are very similar.
Regarding "wholly owned" neurons.
Try and make a particular neuron fire.
You can't do it, so they are no more owned by the conscious parts
of the brain than individuals in a society are owned by the
government.
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