The Ownership Society

Michael C. Moynihan | April 17, 2009

An Economist editorial reminds its readers that, in the mania to assign blame for the global financial mess—think sinister bankers, monocled capitalists, Wall Street gangsters, Jim Cramer—we run the risk of overlooking a more obvious culprit: government.  And specifically a government obsession with raising rates of home ownership:

BANKERS, frauds, predatory insurers: there has been a stampede to punish the villains of the global meltdown. Yet one culprit is not only rarely seen as an offender, but is also being cosseted and protected. Governments' obsession about home ownership has contributed as much to the meltdown as any moustache-twirling financier.

The bust began in America's housing market and soon spread to government-sponsored institutions created to increase home ownership, Fannie Mae and Freddie Mac. Part of the problem came about because of policy. In most rich countries the state subsidises private housing. Some places (America, Ireland and Spain) give tax relief on mortgage-interest payments. Others, such as Britain, eliminate or lower the tax on capital gains from sales of someone's main house. Still others use state-backed outfits to direct credit to housing or to make it easier for first-time buyers or the poor to buy their own homes. Subsidies are not to blame for everything-the housing bubble affected a range of markets regardless of how much they were subsidised-but the distortions aggravated the boom and bust by making housing artificially attractive.

The whole piece, which weighs the economic and social benefits of home ownership, is worth a read.

The Economist is surely right that government is more often than not viewed as a savior of the American economy. And it is also true that media accounts of the crisis tend to underplay Washington's role in the current mess. But for the enlightened readers of this magazine, it isn't an unfamiliar argument. In January, for instance, I sat down with Stanford University economics professor John B. Taylor, author of the new book Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis, to discuss the American government's role in creating the current financial crisis:

Comments

|4.17.09 @ 5:14PM|#

What's funny is that bankers and mortgage lenders were bitching about the government pushing home ownership with one hand while forbidding risk-based pricing (or making loans to the unqualified) with the other. It looked crazy back then, but, unfortunately, most of the lenders didn't see how bad that would get in combination with other factors, including a little too much risk taking by them.

Another HitnRun Corporatarian|4.17.09 @ 5:15PM|#

Whatever you do, don't blame the big, big, big companies. They are our friends and are here to help us!

|4.17.09 @ 5:18PM|#

Some places...give tax relief on mortgage-interest payments

America, check.

Others...eliminate...the tax on capital gains from sales of someone's...house

America, check.

Still others use state-backed outfits to direct credit to housing or to make it easier for first-time buyers or the poor to buy their own homes.

America: state-backed check, first-time check, and... poor check.

I LOVE this country!!

(Clearly, I need to buy more house. But I'm waiting for the price to drop.)

|4.17.09 @ 5:24PM|#

At least in CA, they can't pursue you personally for the deficiency on a home foreclosure. So you didn't have a whole lot to worry about if they did foreclose on you, it'd suck sure, but you wouldn't have them coming after you for 300,000. The mortgage company bears all the risk there, would encourage me at least to buy more house than I could handle since there is really a lot of upside while relatively minor downsides.

Paul|4.17.09 @ 5:34PM|#

Terrorist...

|4.17.09 @ 5:44PM|#

Whatever you do, don't blame the big, big, big companies. They are our friends and are here to help us!

Whatever you do, don't blame our benevolent overlords. They are our friends and are here to help us!

|4.17.09 @ 6:29PM|#

Hey Marc, it's a good thing the Right People are in charge, too, huh?

Leftitty|4.17.09 @ 6:42PM|#

THE ECONOMIST IS SHILLING FOR THE FAR RIGHT BANKERS AND CAPITALISTS DOWN WITH CAPITALISM DOWN WITH BANKERS GAD i HAt MY lIFE!

|4.17.09 @ 6:44PM|#

I hate big corporations. Big corporations are evil. They bug our houses and read our minds with their satellites and suck our souls out with their computers.

|4.17.09 @ 6:48PM|#

Cue joe or Tony or someone showing up to insist that only far-right wingnut Republican idjuts think that Fannie Mae or Freddie Mac had anything to do with the problem. Don't you know it was all cause by "deregulation" and the evil, evil, capitalism run amok?
Down with free markets! I want my life run by the government!

economist|4.17.09 @ 6:53PM|#

Hazel,
I think they're missing the elephant room. Specifically, the federal reserve policy from roughly the 2001 recession to today. Sustained artificially low interest rates create bubbles in durable goods and capital. This is why, when the bust inevitably comes, it is concentrated on capital, while the decrease in spending on consumer goods is fairly mild.

It's control over the interest rate and money supply is, arguably, the federal government's most potent tool for manipulating the economy, and the one which it uses most irresponsibly.

economist|4.17.09 @ 6:54PM|#

Should be "Its" rather than "It's". A mild joe'z law but nonetheless...

hmm|4.17.09 @ 7:17PM|#

It's far more pernicious than just raising home ownership. The government manipulates the capital structure of everyone and everything. Why do you think a lot of debt is deductible from your taxes for both corporations and individuals?

The fed also drove the rate into the tank and shifted investors from treasuries to MBS both privately provided and quasi GSE provided. All the time quietly allowing the belief that the private sector MBS were relatively safe since it was ok for quasi GSEs to create them. (a sort of implicit affirmation of reduced risk)Of course this just furthered the get everyone a home policy. The viciousness of the cycle really kicks in when you start making money damn near free and introduce a fuckton of leverage. The whole process turned out to be a grand idea.

|4.17.09 @ 7:30PM|#

Well, then there's always the issue that high house values raise property taxes, so governments have an incentive to inflate property values.

Plus the whole "housing starts drive the economy" meme. it was just a matter of time before artificially pushing housing starts became a preferred means fort he government to "stimulate" growth.

economist|4.17.09 @ 7:33PM|#

"it was just a matter of time before artificially pushing housing starts became a preferred means fort he government to 'stimulate' growth."
What do you mean "just a matter of time"? The government hasn't yet changed it's policy. Of course, low housing prices are bad, so sayeth the ruler of Be'ethos, so allowing housing prices to deflate as a way to increase homeownership is out.

economist|4.17.09 @ 7:34PM|#

Dammit, I did the same thing again. It's "Its" not "it's". Joe is getting his revenge on me, it seems.

..|4.17.09 @ 8:13PM|#

think sinister bankers, monocled capitalists, Wall Street gangsters

Stop right there. "Wall Street gangsters" says it all. They're the pushers, the pimps, the enablers. Without their Ivy League creativity we'd be slogging along at 2% annual growth. Where's the fun in that? Try getting a summer home in the Hamptons at 2%. Derivatives, baybee! It's what separates the rich from the suckers.

|4.17.09 @ 9:22PM|#

You know, the real cause was government. It was the fed keeping rates too low for too long.

...just like all the other cycles of misinvestmnent and the unwinding of those investments.

The world was awash in liquidity. All that cheap money was competing for the same investments.

Investors overpaid. When the suckers line up like that, they get all upset if you offer 'em an even break. Of course overpaying, like hindsight, is 20/20. The trick is to not overpay in the first place.

So who do you blame overpaying on? Problem of induction? Past performance really is no guarantee of future results. Character flaw?

The Lounsbury|4.17.09 @ 9:28PM|#

I am not sure which is more deranged, the American Left in its sub-literate howling about the bankers, or you people in the bizarro world point fingers at government with thread bare excuses.

MNG|4.17.09 @ 9:44PM|#

Private actors went nuts selling these derivatives.

MNG|4.17.09 @ 9:47PM|#

I didn't write anymore because what else can be said? Private market actors wents nuts buying, selling, insuring, etc., these terrible risks.

hmm|4.17.09 @ 9:47PM|#

There is no "real cause." There are several variables or forces that added up to a bad situation. The forces come from government, the public, the corporations, the banks, the people, hell you could probably tie in duck shit if you tried hard enough. To trying to argue there is a single cause of the current situation means you a) have an ulterior motive like all the talking heads on TV and politicians or b) you think you are smarter than the market itself. You can make some assumptions about which force may have had more of an impact and I'm sure people will be doing that for the next 20 years.

hmm|4.17.09 @ 9:48PM|#

I am going to use preview one day. That day is not today.

hmm|4.17.09 @ 9:50PM|#

"I am not sure which is more deranged, the American Left in its sub-literate howling about the bankers, or you people in the bizarro world point fingers at government with thread bare excuses."

Or they could all be right to some degree. You know, cause true absolutes are a rare thing when talking about an economy.

|4.17.09 @ 10:22PM|#

Free market theory doesn't claim that private actors won't ever do anything stupid. It just says that if you don't bail them out, they will stop doing stupid things in the future.
Markets are self-correcting - if you let them correct themselves.

hmm|4.17.09 @ 10:29PM|#

Actually it just says the stupid things will stop at a certain point for a given period. The stupid things are often repeated in the future. It's that whole cyclical thingy.

alan|4.17.09 @ 10:35PM|#

"I am not sure which is more deranged, the American Left in its sub-literate howling about the bankers, or you people in the bizarro world point fingers at government with thread bare excuses."

You got us. We are just making this shit up out of whole cloth because we are blinded by ideology, and we are so far from what the all wise mainstream has to say on the matter. Idiot.

September 30, 1999, New York Times:

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. (emphasis mine)


In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.

Derivative Pimpmeister|4.17.09 @ 11:22PM|#

I eat you for lunch.
Ethics? Save it for the middle class.
Baby needs hair plugs.

engineer|4.17.09 @ 11:28PM|#

Follow the money. Where does it all lead back to? Hint: It was established in 1916. It was billed as a way to keep things like this from happening. Two words. First word begins with f, second word begins with r.

Socialist Nitpicker|4.17.09 @ 11:30PM|#

"In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers."

You see! It was all the fault of the big corporations!

KyleG|4.18.09 @ 1:03AM|#

engineer - I believe it was 1913, and I would agree it was a main culprit.

Chad|4.18.09 @ 8:01AM|#

I find it funny that the article claims that this issue has been over-looked. Really? Conservatives have been harping on it since day one, as it is absolutely critical for them to be able to peg the blame on the government. Indeed, conservatives NEED big government precisely because their ideology would come crashing down if they couldn't connect every problem to the government somehow.

That being said, the housing subsidy issue was and is a problem, but only a small fraction of the cause of this mess. Largely, it was just a classic bubble of large proportions, and yet another refutation of the efficient market hypothesis.

If anything, the biggest subsidies of home ownership were not even noted in the article, though. Homes are massive wastes of resources and space, and not all of that is counted in their costs.

MNG|4.18.09 @ 8:59AM|#

Hazel
The problem with that is that those chasing this funny money wre surely not thinking "oh boy, this is risky, but I can count on a bailout if we lose" they were thinking "we are going to be so RICH!". They were'nt planning to fail,, they were too certain they were going to win, because in their mind they had been winning on this for so long...

It's like criminals. They don't count on getting sprung on a liberal technicality, they count on never getting caught.

ed|4.18.09 @ 9:21AM|#

Conservatives have been harping on it since day one

Harping is the operative word, as in FOX News. They occasionally get things right, but as much of their reporting comes with an unintentionally comical far-right bias, it's hard at times to tell when they're being objective, insofar as any mainstream outlet can be objective. With the likes of Sean Hannity and Bill O'Reilly crying wolf five times a week, only the devoted choir is paying attention.

robc|4.18.09 @ 9:28AM|#

Chad,

Largely, it was just a classic bubble of large proportions, and yet another refutation of the efficient market hypothesis.

Bzzzzzttt. This, in fact, proves the efficient market hypothesis, in that the market fucking corrected. Do stupid bubbly behavior and, in the absence of bailouts, the market will punish you with extreme prejudice for being inefficient.

The response time is slower than some people expect, but they are just silly.

The cause of the bubbly behavior was primarily the fed, by encouraging capital to flow to less efficient areas.

robc|4.18.09 @ 9:40AM|#

For those that dont understand efficient market theory, it doesnt say the market will always price everything right - it says that when things are misprices, an arbitrage opportunity will be created. Eventually, someone will take advantage of this, pushing the price towards the proper equilibrium. However, like with many system, it will oscillate and eventually dampen (via the repeated arbitraging) so that the swing are much smaller around the true price.

In the housing bubble, we had a bunch of new tools that no one new how to price properly, which in combination with the fed pushing money into housing, led to some extreme arbitrage opportunities. Paulson (the other one) seems to be the main guy to take advantage of this opportunity, as he made billions figuring out how to short the housing market via purchasing of underpriced credit default swaps and etc.

Next go around, the oscillations wont be as big because the derivatives will be priced better, even if the fed misbehaves again.

robc|4.18.09 @ 9:43AM|#

Oh, and one more thing, about the worst thing you can do policy-wise is create regulations that restrict arbitrage. Mechanisms that prevent price pressure pushing back are bad.

|4.18.09 @ 9:55AM|#

Like I've said, I have a very Austrian view of the causes of credit crunches like this, and I see credit crunches as part of the solution to problems associated with the cycle, rather than the problem itself...

But I think some of you are answering the wrong question. You're being asked about the cause of the cycle but your answers are about the causes of the bailouts.

The bailouts were not a natural consequence of anything, but some of you talk about them like they were a natural force, like gravity or something...

But they weren't. There wasn't anything inevitable or absolutely necessary about the bailouts. The bailouts were a decision made by government and only the government is responsible for them. The bailouts were a feeble attempt to counter the effects of the credit crunch, which, as I've already said, are a part of the solution rather than the cause of the problem.

Blaming individuals for making the best they can of where they are in the cycle is like blaming the birds for flying south for the winter. Blaming the government for squandering our resources on trying to stop them from flying south, on the other hand, that's hitting the nail on the head.

|4.18.09 @ 10:24AM|#

about the worst thing you can do policy-wise is create regulations that restrict arbitrage. Mechanisms that prevent price pressure pushing back are bad.

But short sellers are eeeeeevulllll!

They must be punished for saying bad stuff about the emperor's wardrobe.

hmm|4.18.09 @ 11:18AM|#

"Next go around, the oscillations wont be as big because the derivatives will be priced better, even if the fed misbehaves again."

Next time around it will be just different enough that no one will notice. We had S&Ls lending on poor standards just over 20 years ago (not the only factor). Markets do not have a memory. Just like people don't.

Short selling is not evil. Short selling has several good reasons for existing. Naked short selling should be illegal or bonded (which makes it not naked).

|4.18.09 @ 11:21AM|#

I have to admit I spend far too much of my spare time reading the economist
The mainly for coverage of non EU/US affairs which is always good

But Its a little bit late from the economist,

although they claim impartiality they seemed to be backing Obama from the start and didn't want to bring up the whole Democrats/FannieMac thing and ruin his chances by association

Other UK liberals like The Adam Smith institute called it straight off

http://www.theaustralian.news.com.au/story/0,25197,24526673-5015664,00.html

The Economist had a vested interest in not mentioning it. The election of an african american is an advert for the strengths of liberal democracy and hence it was worth playing down the candidate's party's involvement in the crisis.

|4.18.09 @ 4:02PM|#

Whatever you do, don't blame our benevolent overlords. They are our friends and are here to help us!

Do you know anybody who has this attitude? Bitching about the government is something everybody does. Everybody is critical of the government. Liberals are the most vocal critics of the Obama administration on civil liberties. Just because we agree with his general approach to the economy (with significant caveats) doesn't make us mindless tools.

That would be the conservatives over the last 8 years who called anyone who didn't support even the most sadistic acts of the Bush administration traitors.

economist|4.18.09 @ 4:25PM|#

"Liberals are the most vocal critics of the Obama administration on civil liberties."

Excuse my while I laugh my ass off.

economist|4.18.09 @ 4:26PM|#

"That would be the conservatives over the last 8 years who called anyone who didn't support even the most sadistic acts of the Bush administration traitors."

FOR THE LAST, LEFITE-BOT, WE ARE LIBERTARIANS, not conservatives, and certainly not Bush shills. If you want to argue with Bush shills, there are plenty of Team Red blogs for you troll on. Dammit. We've said this fifty times already.

Tony-bot|4.18.09 @ 4:31PM|#

I love to shill. And libertarians are all Bush shills. I know it because they have defended everything Bush ever did. Barack Obama is the messiah. I am a liberal shill. Liberals are Barack Obama's harshest critics on civil liberties, but Barack Obama has never done anything to disappoint liberals on civil liberties. I hate libertarians because they shill for Bush.

Some Guy|4.18.09 @ 4:39PM|#

It's a good thing they're going to solve all those problems about artificially inflated house prices by giving away free money for buying houses and propping up interest rates.

Tony-bot|4.18.09 @ 4:48PM|#

Rightwing libertarian Repbublic assholez I hat you so much I wish you would all just shut up and GET OUT OF MY HEAD GET OUT OF MY HEAD YOU LIBERTARDIAN WINGNUTS! Your'e aalll just jealous that I'm so much smarter than you are!

MNG|4.18.09 @ 4:48PM|#

economist
I'm not sure Tony was saying that libertarians are like that, just comparing liberals to conservatives. At least I hope not, because I'm liberal and long time H&R participant who can say for sure that there was always little love for Bush here.

That said, I will defend Tony's assertion that liberals are critical of Obama. For example, the uber-liberal organization the ACLU has been on his ass for his treading water on state secrets, wiretapping, etc.

economist|4.18.09 @ 4:54PM|#

MNG,
Given that whenever anyone here complains about Obama, Tony's response is "Bush sucked", I tend to think that Tony is wedded to the image of libertarians as thoroughgoing Bush shills.

MNG|4.18.09 @ 4:54PM|#

I've been hearing this meme, the liberals are turning a blind eye to Obama! Look, Look!

It may surprise folks that I don't read liberal magazines like the Nation or Mother Jones much. So I just googled the Nation, and what do you know? Their head story is, well, critical of Obama...

http://www.thenation.com/blogs/notion/427979/the_torture_memos_obama_and_the_banality_of_evil?rel=hp_picks

I mean, damn, that didn't take much research to dispel!

MNG|4.18.09 @ 4:55PM|#

I'm not sure thats the right read of that last post, but if it is position its a misplaced and foolish one here. Libertarians hated Bush possibly more than liberals did from what I can tell....

MNG|4.18.09 @ 5:26PM|#

Pretty garbled, but what I meant to say is that I think one can fairly read Tony's last point taken alone in the way I mention, but if indeed he is accusing libertarians here at H&R of being Bush apologists he is simply very wrong.

|4.18.09 @ 5:34PM|#

@MNG
The American usage of the word liberal is awesome, Liberals are people who are not economically liberal therefore they are called Liberals :)

The term just seems to be a blanket expression for any left wing political opinion but would you really class the Nation as liberal?
seems more unashamedly socialist to me

I'd say that a American liberal really would be a socially liberal Keynesian, something typified by journals like The new republic. its not my cup of tea but its a rational political stance

It really is riduculous to class someone like Krugman who is what I'd say a textbook american liberal with the socialist types that write for the Nation (Klein,Choamsky etc)
The Nation crowd has a pathological hatred of America and possibly humanity itself and will critize any American leader regardless

Lets face it the New Republic isn't being particularly harsh on Obama's civil liberties.
I must admit I find the journal an interesting read but I havnt seem anything critizing Teh Big O

www.tnr.com

|4.18.09 @ 7:20PM|#

As one who tried home ownership and hated it, here are my main objections to it: Back in the day of the Good Samaritan, how much time did the Good Samaritan spend on his riding mower? How many chemicals did he spread on his lawn making life harder and harder for honeybees?

Naturally governments will never propose subsidizing Good Samaritanism versus home ownership, because it would distract attention from hare-brained ideas that draw votes.

|4.18.09 @ 7:48PM|#

MNG sez They were'nt planning to fail,, they were too certain they were going to win, because in their mind they had been winning on this for so long...

Wow. What insight. People only lose in the marketplace, or the casino when they PLAN to lose! Dammit, I plan to win tonight, I'll be RICH!

Actually MNG, I think you gave an almost textbook definition of stupid there.

MNG|4.18.09 @ 8:03PM|#

juris
Like a lot of economics and psychology, it seems like common sense, doesn't it? Of course, it totally gut the idea of moral hazard thrown around here and other parts, so maybe it's a bit more complicated, eh?


Monkee Man
Modern liberals have their pedigree from "classical liberals." I think the author of On Liberty's life is a good example if you want to understand how modern liberalism inherited the mantle of the word liberal from classical liberals. Classical liberals thought negative rights alone would create liberty. Modern liberals were classical liberals who started to think "some affirmative rights are important to that project."

Saying that TNR is more representative of liberalism than the Nation because the Nation is really socialist is goofy. The Nation, as far as I know, does not call for mass nationalization of all private enterprise and property, so not socialist. Further left than TNR, yes. But left, of course. And critical of Obama. Hence my point.

economist|4.18.09 @ 8:18PM|#

"The Nation, as far as I know, does not call for mass nationalization of all private enterprise and property, so not socialist."

The definition of socialism is a proper bugger, isn't it? Depending on who you talk to, socialism is a. what we have now (I would describe as a retched corporatist-socialist-vestigial free market chimaera) b. Something like the economic system in Sweden or c. Pure communism (kind of like, say, Cuba). Perhaps we need a Reason Dictionary (tm) describing exactly what terms like economic liberal, socialist, capitalist, communist, free market, etc. should mean when they're used in discussions here, in order to avoid confusion.

economist|4.18.09 @ 8:30PM|#

MaterialMonkee,
I would argue that both modern libertarianism and modern liberalism trace their pedigree from classical liberalism. As I see it, there were two elements of the classical liberal movement: an egalitarian element and a libertarian element. Back when both were devoted primarily to getting rid of state interventions (special subsidies, charters, land grants, tariffs, etc.) that created economic inequalities, the two were largely indistinguishable (although in many European countries there was a definite distinction between the classical liberals and the socialists, most of whom today would probably be classed as liberals). As government privileges became less important as sources of wealth, the two movements started to diverge. The libertarian element was generally concerned with getting rid of the last vestiges of state-imposed privileges and then leaving well enough alone. They generally formed some of the elements (though not the majority) of the American "old right". The egalitarian element, on the other hand, thought that since inequalities existed even without the government weighting the scales in favor of some, it should be OK for the government to weight the scales in favor of greater equality. This element became dominant in the United States, with the libertarian element being largely relegated to the right or the fringes, and even moreso in Europe, where in most cases there were not (and still are not) any significant political parties or movements with an identifiably libertarian philosophy.

I just wrote a lot. If I had said it out loud, it would have been a mouthful.

|4.18.09 @ 8:40PM|#

Like a lot of economics and psychology, it seems like common sense, doesn't it?

From what little I've read about the derivatives market, the sellers were offering "magic beans", and the magic in these beans were "guaranteed" by Moodys, S&P, etc. based on the general credit worthiness of the seller. No buyer could actually understand what he was buying, but bought because the raters had established AAA or whatever on the instruments. The real beauty in this little game is that the credit raters are paid by the sellers for providing the rating. Three card monty goes to Wall Street.

Then again, at the same time, you had Madoff scamming people left and right.

Now, the market does eventually punish stupidity, but like children everywhere, investors don't think they should have to pay for their bad judgment.

economist|4.18.09 @ 8:46PM|#

"From what little I've read about the derivatives market, the sellers were offering 'magic beans'"

Back in my college days I ate some magic beans. Not a good idea.

|4.18.09 @ 10:36PM|#

That would be the conservatives over the last 8 years who called anyone who didn't support even the most sadistic acts of the Bush administration traitors.

I don't think there is anyone who fits that description. Granted, there were a lot of leftists openly rooting for the Iraqi insurgents, which makes it pretty legit to call them traitors, imo, but that's a far cry from calling "anyone who didn't support even the most sadistic acts" of the Bush administration traitors.

There's a very large distance between wingnut Ward Churchill's who think America got what it deserved (of which there are many), and civil libertarians who objected to Guantanamo (of which there are also many).

economist|4.18.09 @ 11:26PM|#

Hazel,
You're screwing up Tony's caricature. Stop it.

|4.19.09 @ 2:27AM|#

How can Dave W. be listed as a troll on the "A Wiki Called Reason" and Lefti not be on there?

Bilderburger with fries|4.19.09 @ 3:25AM|#

The truth is here - this video by Alex Jones explains the connections between the mainstream pols like Obama/Bush/Clinton and the high financiers: http://www.brasschecktv.com/page/593.html

MaterialMonkee|4.19.09 @ 8:00AM|#

@MNG & Economist

"Saying that TNR is more representative of liberalism than the Nation because the Nation is really socialist is goofy"

I was just wondering if the American usage of Liberalism had any kind of more solid definition

Like is there a line to the left you can cross when youre no longer a liberal? Or if it really is just now a blanket term for left wing
Certainly to me It seems ridiculous to categorize say Paul Krugman with Noam Choamsky.

"even moreso in Europe, where in most cases there were not (and still are not) any significant political parties or movements with an identifiably libertarian philosophy."

That kind of tally's in with what I say in that on this side of the Atlantic Liberalism is still pretty much considered centerist to right wing and usually more socially liberal but not libertarian in the anarchist sense.
The economist (the newspaper not the poster), for example say they are liberals and use the term as the polar opposite of socialism
Generally Liberal parties in the EU generally have power in centerist or right wing coalitions and probably have more political sway than any socially and economically liberal groups on the rest of the planet.

getting a few links

http://en.wikipedia.org/wiki/Liberal_Party_(Iceland)

"The Liberal Party is an Icelandic centre-right political party"

http://en.wikipedia.org/wiki/Liberal_Party_(Denmark)

Some describe it as a classical liberal party, since the current leader (Anders Fogh Rasmussen) is known for his authorship of the book "Fra Socialstat til Minimalstat" (English: From Social State to Minimal State). His book advocated an extensive reform of the Danish welfare state along classical liberal lines, including lower taxes and less government interference in corporate and individual matters.

http://en.wikipedia.org/wiki/Free_Democratic_Party_of_Germany

The Free Democratic Party (Freie Demokratische Partei, FDP) is a liberal political party in Germany. The party's ideology encompasses beliefs in individual liberty, in a government "that is as extensive as necessary, and as limited as possible" (In German: so viel Staat wie nötig, so wenig Staat wie möglich!). It promotes a market economy, with reformed features of the German social welfare system. In foreign policy the FDP supports European integration and transatlantic partnership between the European Union and the United States. The FDP is currently the third-largest party in the Bundestag.

MNG|4.19.09 @ 8:54AM|#

"Certainly to me It seems ridiculous to categorize say Paul Krugman with Noam Choamsky."

Agreed.

"The definition of socialism is a proper bugger, isn't it?"

Also agreed.

Chad|4.19.09 @ 9:21AM|#

robc | April 18, 2009, 9:28am | #

Bzzzzzttt. This, in fact, proves the efficient market hypothesis, in that the market fucking corrected. Do stupid bubbly behavior and, in the absence of bailouts, the market will punish you with extreme prejudice for being inefficient.

I bzzzzttt your bzzzzttt and raise you one. An efficient market would not have been in need of correction in the first place.

robc|4.19.09 @ 10:04AM|#

I will defend Tony's assertion that liberals are critical of Obama.

That was not his assertion. His assertion was that liberals were the most critical of Obama on civil liberties. I disagree, I think libertarians are more criticial of Obama, for one thing we started earlier. We just assumed he was going to suck before he started sucking.

|4.19.09 @ 10:12AM|#

How can Dave W. be listed as a troll on the "A Wiki Called Reason" and Lefti not be on there?

There is a lot of information and more'n a few commenters omitted/not yet added to the thang. Someone needs to update it.

***not it!*** runs to far corner of internet

robc,

I see your point, but am glad that Tony actually had a reasonable and honest assertion

robc|4.19.09 @ 10:17AM|#

I bzzzzttt your bzzzzttt and raise you one. An efficient market would not have been in need of correction in the first place.

Read my next post on efficient markets (the one right after the one you responded to). You will then understand why you are wrong. Efficient markets arent efficient at every instance in time, they merely have a mechanism for getting there.

If you want to define an efficient market as one that is perfectly efficient at all times, then I agree with you that that doesnt exist. But no one claims it does. That isnt what anyone means by that term.

robc|4.19.09 @ 10:20AM|#

The biggest problem with most people's views on economics is that they consider companies failing, foreclosures, unemployment, etc as bad things.

economist|4.19.09 @ 10:55AM|#

"I bzzzzttt your bzzzzttt and raise you one. An efficient market would not have been in need of correction in the first place."

No one here (apart from the passing idiot) has argued that markets are perfectly efficient in the short run, or that people don't occasionally do stupide things. What we're arguing is that markets are more efficient in the long run, but that if one gets rid of mechanisms that allow it to correct (through, for example, bailouts and their concomitant moral hazard) the long-term correction is hampered. Yes, it sucks that some people in the market are short-sighted and buy into bubbles. It also sucks that there are people in government who created policies that encourage this sort of behavior (Federal Reserver interest rates, Fannie Mae and Freddie Mac, "universal home ownership"). In general, it's futile to hope that people in government will be any smarter than market actors when viewing the economy. Apart from a few "fringe" figures like Ron Paul, the fashionable opinion was that everything would be OK, that if the fed permanently lowered interest rates, we could always have a "quasi-boom", and that lending standards were for evil racists and monocled plutocrats trampling on the working classes. Yet, whenever the government fails to see a problem in the market until it's too late (and makes it bigger in the process), the solution is somehow always "WE MUST HAVE MORE OF TEH GOVERNMENT, BECAUSE IT WILL PROTECT US AGAINST TEH EVIL CAPITUHLISTS!"

robc|4.19.09 @ 11:04AM|#

To add on to what economist said, that explains why we are always blaming the government. It isnt that other people werent at fault too, its that, with some exceptions, those people had to pay for their mistakes. Homeowners, failed banks, etc have paid the price. Bailed out companies (which is the governments fault) and the government havent paid the price. What government agencies got shut down as government revenue fell?

Did 50% of the fed reserve get fired for the mistakes they made? Do they even acknowledge their mistakes?

I think there are plenty of regular people who learned a lesson and will never again buy a home they cant afford or without a reasonable downpayment. They wont assume the housing market will keep going up forever. There will be a new generation to make the same mistake, but some people wont do it again.

Federal Reserve Economist|4.19.09 @ 1:18PM|#

"Did 50% of the fed reserve get fired for the mistakes they made? Do they even acknowledge their mistakes?"

What mistakes? I see no mistakes here? And the fed didn't have anything to do with the Great Depression, either.

Federal Reserve Economist|4.19.09 @ 1:19PM|#

Ignore the inflationary policy behind that curtain!

Alan Greenspan|4.19.09 @ 1:43PM|#

Ayn Rand made me do it!

|4.19.09 @ 1:50PM|#

Certainly to me It seems ridiculous to categorize say Paul Krugman with Noam Choamsky.

Hey, that isn't as odd as it might sound. Both are brilliant in their primary fields, and eyeball deep in wing-nut soup outside of their respective specialties.

|4.19.09 @ 2:28PM|#

The biggest problem with most people's views on economics is that they consider companies failing, foreclosures, unemployment, etc as bad things.

The problem with most people is their visceral and overwhelming fear of change.

MNG|4.19.09 @ 2:58PM|#

"The biggest problem with most people's views on economics is that they consider companies failing, foreclosures, unemployment, etc as bad things.

The problem with most people is their visceral and overwhelming fear of change."

Sorry guys, but it's pretty fucked up not to consider foreclosures and unemployment as bad things. It's a human thing to feel empathy for someone who has lost their home or job, a lot of human suffering goes on in both situations. Anyone who, seeing that goes "Oh Hosanna to the Market God for His Wise Creative Destruction and Proper Re-Allocation of Capital to More Productive Uses" is pretty fucked up...This is the problem with some libertarians, market efficiency becomes something so important and focused on that it can be split from human welfare.

engineer|4.19.09 @ 3:31PM|#

"This is the problem with some libertarians, market efficiency becomes something so important and focused on that it can be split from human welfare."

And the problem with some liberals is that they get so focused on averting short-term suffering that they ignore the long-term consequences of their actions.

engineer|4.19.09 @ 3:34PM|#

Honestly, it's not as if people are starving to death or on the streets. If they got foreclosed, more likely than not they moved into a rented apartment. If they lost their job, there's unemployment (Yes, I know, not standard libertarian policy, but it's one of those things I'm usually willing to budge somewhat on).

engineer|4.19.09 @ 3:35PM|#

Should have read "unemployment insurance".

I really do need to start using the "preview" function.

|4.19.09 @ 4:50PM|#

Sorry guys, but it's pretty fucked up not to consider foreclosures and unemployment as bad things.

It can be bad things for the individual involved, though not necessarily a long-term bad thing. Moving out of a house you can't afford into a rental you can afford can make you happier in the long run. Becoming unemployed if you're a Wall Street banker who made money slicing and dicing tranches of worthless mortgages suck for said Wall Streeter, but in the long run they may find employment more useful.

Now, advocating having the government prop up people with mortgages they can't afford and jobs they should be fired from because they fucked up other people's lives with bad decisions, and financing all these wrong-headed subsidies by confiscating money from people who didn't screw up and are actually contributing value to society -- now that, from a libertarian perspective, is truly fucked up and lacking in compassion.

The Angry Optimist|4.19.09 @ 5:08PM|#

This is the problem with some libertarians, market efficiency becomes something so important and focused on that it can be split from human welfare.

Thanks for that, MNG. It could not possibly be that libertarians view the individually bad as necessary evils. I mean, do you want to revive the candle and horse-buggy industries, or do you want to stop beating strawmen?

Chad|4.19.09 @ 5:43PM|#

economist | April 19, 2009, 10:55am | #

occasionally do stupide things. What we're arguing is that markets are more efficient in the long run

Does 25 years qualify as the long run? Because in the last 25 years, we have largely invested the proceeds from a generally excellent economy in McMansions, SUVs, tons of cheap Chinese crap, and numerous mechanisms for outsourcing real jobs....and essentially bankrupted our nation in doing so. How much longer should we wait for your vaunted efficiency to come around?

Rather than being efficient, our private-sector economy has largely lurched from chasing one bubble to the next, while spending on short-term consumption rather than long-term investments.

I am confident that the government could use a blind monkey in order to chose what to invest in, and they would do better than anything the private sector has given us lately.

Chad|4.19.09 @ 5:45PM|#

engineer | April 19, 2009, 3:31pm | #

And the problem with some liberals is that they get so focused on averting short-term suffering that they ignore the long-term consequences of their actions.

THAT has to be the most ironic comment I have ever seen posted here. Please explain the vaunted long-term benefits of McMansions, SUVs, and cheap Chinese crap that breaks months after you buy it....as opposed to, say, a large public transportation network that lasts indefinitely.

|4.19.09 @ 6:04PM|#

Do you know anybody who has this attitude? Bitching about the government is something everybody does. Everybody is critical of the government. Liberals are the most vocal critics of the Obama administration on civil liberties. Just because we agree with his general approach to the economy (with significant caveats) doesn't make us mindless tools.

That would be the conservatives over the last 8 years who called anyone who didn't support even the most sadistic acts of the Bush administration traitors.

You seem to have completely missed the point that I was parodying a particular post, then you stated a bunch of things that, whether true or false, seem to be neither here nor here. You're a strange bird.

robc|4.19.09 @ 6:08PM|#

Please explain the vaunted long-term benefits of McMansions, SUVs, and cheap Chinese crap

Some people gain pleasure from owning McMansions (btw, please define, and no SCOTUS obscenity definitions allowed :) ), SUVs and cheap Chinese crap. Maybe they like the taste of lead.

Is pleasure not a good enough benefit for you? I dont know about you, but I dont know what else the purpose of more money than mere survival is for. Pleasure seems like a good thing to use it on.

robc|4.19.09 @ 6:12PM|#

essentially bankrupted our nation

Nations dont go bankrupt.

Individuals do. Governments do. Nations dont. This government may fall and be replaced by who the fuck knows what, but I will still love my nation (while hypothetically attempting to overthrow its new government).

Then again, the nation that I love isnt entirely defined by geography, which confuses some people.

The Angry Optimist|4.19.09 @ 6:23PM|#

Please explain the vaunted long-term benefits of McMansions, SUVs, and cheap Chinese crap that breaks months after you buy it

*looks around*

I have on my desk a digital alarm clock that automatically sets itself when you plug it in or when the power goes out. It remembers the settings so, if the power does go out in the middle of the night, I won't be late in the morning. It's Made in China and I've had it about five years now. it cost me 15 bucks.

My favorite pair of shoes (black leather loafers...modesty forbids I namedrop the brand) say "Made in China". I've had them probably two or three years now.

That's just two, little bigot. Look around your house at some of your clothes and electronics and I'll bet that A) they're made in China and B) you've had a vast majority of them more than a year.

The Angry Optimist|4.19.09 @ 6:26PM|#

oh, and the long-term personal benefits of a house should be obvious. as should the long-term personal benefits of a car.

It's clear that Chad is saying "Yeah, but what has that SUV done for ME lately?", and the answer is "nothing, chumly, it ain't yours. Stop whining and go buy your own."

MNG|4.19.09 @ 6:44PM|#

"and the long-term personal benefits of a house should be obvious"

Ditto for a job. But losing your house a la foreclosure or your job a la layoff is a good thing. Don't be upset about it, think about the wonderful reallocation of capital to more productive uses!

MNG|4.19.09 @ 6:45PM|#

"It could not possibly be that libertarians view the individually bad as necessary evils."

And since what's necessary is good...

MNG|4.19.09 @ 6:46PM|#

You have two nations.

One nation has an unemployment rate of 10%, the other of 3%.

How many people think things are "going good" in the first?

Ditto for foreclosures dudes.

robc|4.19.09 @ 6:47PM|#

MNG,

I didnt say good thing, I said "not a bad thing". Totally different.

Also, a house you can afford is a blessing. A house you cant afford is a curse. Getting rid of the 2nd (preferably other than foreclosure, but that is better than stuck with a debt you cant handle) is a good thing for many people. And a thing for the rest. Never a bad thing.

robc|4.19.09 @ 6:49PM|#

MNG,

Depends why the rate is 3%. Makework BS Soviet Union "we have 0% unemployment jobs"? Then I will take the 10%.

I would rather live in Carter's America (and I did) than Breshnev's USSR.

Thats the choice you are giving.

And, yes, I would rather live in Clinton's America than Carter's America. But both were better than most of the other options.

engineer|4.19.09 @ 6:52PM|#

We need to get that sand out of Chad's giny.

MNG|4.19.09 @ 6:53PM|#

"Thats the choice you are giving."

I don't think so, I think its the one you are giving.

Being foreclosed upon is a terrible thing for anyone who has ever been through it I would imagine.

More importantly, a nation that has shitloads of foreclosures is a nation doing worse than a nation that has very few.

MNG|4.19.09 @ 6:56PM|#

And I think if buying Chinese stuff puts more Americans out of work, or cuts the average American wage and results in more Chinese being put to work and raises their average wage, then I am concerned about it. Because I care about the well being of my fellow Americans more than I do the well being of Chinese.

Which shouldn't be so far out to someone who feels that the President of the United States personifies and represents us all so that his bowing to an Arab king has sullied and outraged us all...

MNG|4.19.09 @ 6:57PM|#

But I'm not digging folks like Chad's hate of "McMansions." Why hate on big houses per se? People have to build and service these big houses, they create jobs and such. And people like to live in houses.

MNG|4.19.09 @ 7:00PM|#

And the benefits of an SUV is that if you have a big family you can fit them and a lot of stuff in there.

But I imagine what you're getting at is that for whatever benefits SUV's have, they are offset by certain social costs (contributing to environmental ills). If that's the case you should just say so rather than hating on them because, well, I dunno why...

The Angry Optimist|4.19.09 @ 7:04PM|#

you're conflating two concepts, MNG. Individual foreclosure = bad for the individual; the existence and concept of foreclosures = a good thing...at least better than trying to somehow eliminate them.

Foreclosures and unemployment don't happen in a bubble. The existence of those two unfortunate individual circumstances do not unmake the need for the system which allows them to happen.

The Angry Optimist|4.19.09 @ 7:06PM|#

And I think if buying Chinese stuff puts more Americans out of work, or cuts the average American wage and results in more Chinese being put to work and raises their average wage, then I am concerned about it. Because I care about the well being of my fellow Americans more than I do the well being of Chinese.

OTOH, implementing trade barriers or autarky harms everybody. I like lower-priced goods because I care about the 300 million Americans who buy stuff more than I care about the 5 million who might be involved in making the stuff.

This is one of the dangers in picking and choosing outcomes you like and dislike. For one, no one person, or even a council or Congress, can or should dictate the free choices we make as individuals everyday, for moral reasons and utilitarian ones.

MNG|4.19.09 @ 7:12PM|#

Again, you don't think a nation with less foreclosures per capita is better off than one with more foreclosures per capita? Ditto for unemployment.

As to trade policy, the question is partly an empirical one (which is why I said "if" these policies result in what I mention then I would be against them), but the moral question is: do the increases in national welfare from more lower priced goods surpass the decrease in national welfare from lower wages, less job security and higher unemployment? If the answer is yes, then by all means free trade, if no then not so much.

And of course if the benefits are felt by 300 million and the costs by 5 million then those costs are going to have to be heavy indeed to outweigh the latter...

MNG|4.19.09 @ 7:14PM|#

"no one person, or even a council or Congress, can or should dictate the free choices we make as individuals everyday, for moral reasons and utilitarian ones."

That's twiddle twaddle if taken literally (I hope Congress limits the free choice of those who decide to break into my house and take my stuff).

MNG|4.19.09 @ 7:19PM|#

You might say that foreclosures and unemployment might be necessary to get us to a place, a "good" place, where there will be less overall foreclosures and unemployment, and that would make some sense and be less morally repugnant, but of course not having to be in the place where we must go through foreclosures and unemployment would have been even better.

Regardless, even were lots of foreclosures and unemployment "good things" as necessary to get the system back in order or to an ultimately better place we would still morally be required to want to lessen the suffering of those individuals going through both to the extent that we could without impeding the movement to that ultimately better place.

Will|4.19.09 @ 7:27PM|#

"Please explain the vaunted long-term benefits of McMansions,"
Geez, what do you have against large houses? Just because not everyone lives in a two-bedroom 650-square-foot apartment doesn't make them stupid.
"SUVs"
If you want to talk about the social costs of greenhouse gases, that's fine, but could you actually focus on that rather than saying "everybody who doesn't want to drive a hybrid or get packed like sardines onto MARTA is just stupid".
"and cheap Chinese crap"
Believe it or not, many things are produced in China that are not crap. If you want to argue about whether we should more carefully inspect incoming goods (for things like lead contamination), then we can talk about that. But please avoid the blanket generalizations. And yes, people do like to buy stuff at lower costs. They're crazy that way.
"as opposed to, say, a large public transportation network that lasts indefinitely."
Why wouldn't it be commercially viable, then? Why is it that most public transit systems continually operate in the red? Could it be that *gasp*, many Americans dislike the thought of being crammed like sardines onto public transport? And it doesn't last "indefinitely". Look at MARTA or the Chicago transit system if you doubt the veracity of my statement.

Your problem, Chad, is that you're so smug you love the smell of your own farts. But you don't just love the smell of your own farts. You think everyone else should love them too. And you think anyone who doesn't love the smell of your farts is an ignorant yokel, and they should have their head held down near your ass while you fart until they learn to appreciate it.
Your use of bizarre and inaccurate eithor-or scenarios (either you do everything my way or you buy stuff that doesn't work and the oceans will rise by 20 feet and drown you) make it impossible for you to come up with any valid points (like, perhaps, that the U.S. government should impose a carbon tax to hedge against the threat of AGW), and serve instead just to put your fundamental intellectual dishonesty on display.

Will|4.19.09 @ 7:32PM|#

"Because I care about the well being of my fellow Americans more than I do the well being of Chinese."

MNG is TEH RACIST!

MNG|4.19.09 @ 7:38PM|#

If you have certain types of cancer a bone marrow transplant, while being a horrible experience, is ultimately a good thing. That doesn't mean that a nation that has shitloads of bone marrow transplants is in a good place though. It's of course better off than a nation that has shitloads of those certain types of cancer and no bone marrow transplants, but it's worse off than a nation that has low levels of those certain types of cancer in the first place and so has no bone marrow transplants either. And of course, the transplants are still awful things to go through, and those who go through them deserve pity not scorn, and we should help them as much as we can to make it as little painful as necessary, though of course preventing them from getting bone marrow transplants or doing something that brings those folks a little relief but that will make it more likely they will have to get another one are things we should not do.

I think everyone can see the analogy to unemployment and foreclosures implicit (?) in this post...

|4.19.09 @ 7:47PM|#

This is the problem with some libertarians, market efficiency becomes something so important and focused on that it can be split from human welfare.

The problem with liberals is that they don't see the innate connection between market efficiency and human welfare.

The most efficient market is one which maximizes production of goods and services - ergo more "stuff" to go around for everyone, lower prices, and a net higher standard of living for the entire society.

You can practically draw a straight line between efficient markets and social utility. How hard is it to get that?

|4.19.09 @ 7:57PM|#

I am confident that the government could use a blind monkey in order to chose what to invest in, and they would do better than anything the private sector has given us lately.

Leaving aside the issue of government pumping of the housing market, that's a huge mistake. You're looking at a single macro-economic trend, blithely ignoring the fact that investment decisions are quietly dispersed throughout the entire economic network. They go on all the time at a lower level without government interference and do allocate resources largely efficiently. It's what keeps the vast majority of the everyday economy running. The mortage securities business was a particular slice of "high finance", not the sum total of the whole economy.

Moreover, when bubbles have occured in the last 20 years, governments have been enthusiastic cheerleaders of them. They certainly have plenty of incentives to be such, and neither then incentive to try to pop them, nor the financial expertise to identify them.

Ghost of Joe|4.19.09 @ 7:58PM|#

"I am confident that the government could use a blind monkey"

Racist!

engineer|4.19.09 @ 8:00PM|#

Hazel,
You're killing Chad's angry rant. Y'know, for someone who claims he's a scientist, what he says seems to be predicated more on his rather volatile emotions than on a "reasoned or nuanced" analysis of the issues at hand.
Case in point:
"SUVs cause global warming, so the free market sux!"

The Angry Optimist|4.19.09 @ 8:00PM|#

we should help them as much as we can to make it as little painful as necessary

I don't have a problem with people helping people, but the concept of charity is meaningless if it's forced.

Chad-bot|4.19.09 @ 8:02PM|#

If you don't like this hair shirt, then ur stoopid!

MNG|4.19.09 @ 8:02PM|#

"MNG is TEH RACIST!"

If having more concern for my fellow Americans welfare than for Chinese citizens makes one a racist, then I'm the frigging Imperial Wizard brother.

I wish the best for Chinese citizens, but not at the expense of Americans.

|4.19.09 @ 8:03PM|#

MNG sez More importantly, a nation that has shitloads of foreclosures is a nation doing worse than a nation that has very few.

Depends doesn't it? I mean if you are talking about when it happens to someone on their one and only home, yes. A lot of foreclosures though landed on people trying to flip houses. You still feel as teary-eyed for a speculator that got burned by his own greed?

engineer|4.19.09 @ 8:04PM|#

"Leaving aside the issue of government pumping of the housing market, that's a huge mistake."

Hazel, how many times do I have to say it? Don't pay attention to the federal reserve, federally backed mortgage banks, and perverse incentives behind the curtain. This was all caused by those evil capitulists!

engineer|4.19.09 @ 8:05PM|#

MNG,
The exaggerated tone of the post seems to suggest the poster was being sarcastic.

MNG|4.19.09 @ 8:06PM|#

"but the concept of charity is meaningless if it's forced."

Maybe not for the persons helped.

The Angry Optimist|4.19.09 @ 8:09PM|#

I wish the best for Chinese citizens, but not at the expense of Americans.

If you really did, you would care enough for individual Americans to decide whether they want to trade with other Americans or Chinese people. If I want to buy my alarm clock from China, please don't deign to tell me I cannot because you "care for Americans", because you obviously don't give two shits what I care about.

|4.19.09 @ 8:09PM|#

but of course not having to be in the place where we must go through foreclosures and unemployment would have been even better.

A world with no sticks - just carrots, is that about it?

The Angry Optimist|4.19.09 @ 8:11PM|#

*to allow them to decide whether

Maybe not for the persons helped.

I suppose you could say the same thing for the syphilitic who were helped by the Tuskegee experiment.

engineer|4.19.09 @ 8:12PM|#

Just remember, AO, MNG's a fairly innocuous lefty type. Chad could post here more, and he's an a-hole.

MNG|4.19.09 @ 8:12PM|#

I'm not trying to be cagey or lay a trap here, but what is the role of the federal reserve in this mess according to you guys? Is it that they made it easier to extend credit and so more risky loans were made, and then these risky loans blew up? I'm just not sure how the feds doings "made" banks make such dumb loans, and then made others buy the dumb loans packaged as derivatives or to insure the derivatives. Please explain.

engineer|4.19.09 @ 8:13PM|#

"A world with no sticks - just carrots, is that about it?"

I wouldn't mind that, but I also don't think it's possible.

Chad|4.19.09 @ 8:15PM|#

But I'm not digging folks like Chad's hate of "McMansions." Why hate on big houses per se? People have to build and service these big houses, they create jobs and such. And people like to live in houses.

Five reasons to hate big houses

1: Beyond a reasonable level, they do NOT make you happier. A number of studies have shown that beyond a certain point obtaining more doesn't make you happier, but obtaining more than your neighbor does. There is essentially no relationship between happiness and income/wealth once you are basically comfortable. The reason people pursue the bigger house, faster car, and monster bank account is so that they can prove they have the biggest dick on the block. THAT makes them happy, but is zero sum. Like the tails of peakcocks, we could cut them all in half and they would all be better off.

2: They are massive wastes of non-renewable resources. We are stealing from our children.

3: They are a critical element of the soul-less, unhealthy suburban culture, and all of its negative externalities (ugliness, lack of community, forced reliance on cars, etc).

4: They only are viable due to massive government subsidies of road transport and fossil fuels.

5: Most of them are cheaply built crap that has to be gutted to the studs periodically.

MNG|4.19.09 @ 8:15PM|#

TAO
I'm not sure what you are talking about re the Tuskegee thing, as they were not helped and that was the problem. We were talking about third party C's forcing of help from one person or class A of persons to another B. Who are the Tuskegee subjects supposed to be there?

If a certain amount of help were shown to be given to those worthy of it through charity, and a higher amount of help were shown to be provided through forced charity, then to the extent the help benefits the persons who get the help the latter situation is better for the persons getting the help. No?

engineer|4.19.09 @ 8:15PM|#

"Is it that they made it easier to extend credit and so more risky loans were made, and then these risky loans blew up?"

Essentially, yes. Easy credit often leads to people to spend like drunken sailors. Additionally, the federal government's other actions helped to inflate the housing market creating, alternately, the positive "it's an investment you can't lose on" carrot and the "buy now or you'll never be able to in the future" stick.

The Angry Optimist|4.19.09 @ 8:16PM|#

MNG - I suppose you could say that nobody made anybody do anything, but (not to appeal to Econ 101 here) people respond to incentives: it's as foreseeable and predictable as the sun rising in the East. I mean, if we don't want X business moving into Y local city, why does Y City offer it a tax break?

engineer|4.19.09 @ 8:17PM|#

"I'm not sure what you are talking about re the Tuskegee thing, as they were not helped and that was the problem."

I think TAO was referring to whatever knowledge may have been gleaned from the study, and the individuals helped by that knowledge.

The Angry Optimist|4.19.09 @ 8:18PM|#

we're talking past each other. I'm just saying "don't have the audacity to call it charity when it's forced." It runs counter to the concept. It might be a certain percentage more helpful when you force aid, but that doesn't make it more charitable.

MNG|4.19.09 @ 8:20PM|#

Chad
I think you have a point on point on point 2 and 4.

If the big houses make people on average unhappy then your goal should be to get that message out and let those who are made happy by them have them and everyone else hopefully follow their self interest and move on.

I can't agree with your wholesale condemnation on suburban life. People flock to the suburbs because of the real goods they seem to offer to them and their families. I live in one. There was a time when intellectuals fashionably derided cities (Jefferson) as unhealthy and alienating, now they decry suburbs.

The Angry Optimist|4.19.09 @ 8:20PM|#

engineer - yes. It may be the case that future syphilitic patients were helped by the Tuskegee experiment, but that doesn't make it ethical nor an optimal thing to do.

When you do a thing, imagine if it were (as close to) universalized: when you forcefully take money from A to give to B, imagine if everyone did that? If you deny treatment and lie to patient C to garner information for future patients, imagine if that always happened?

The Angry Optimist|4.19.09 @ 8:24PM|#

Chad, let's make a deal. You agree that no government money should go to the maintenance or building of mass transit, or anything like mass transit, and I'll agree that no government money should go to roads, either development or maintenance thereof.

If you make this deal, you'll be respectable. If you don't, it just shows you want your values subsidized at the expense of other peoples' values.

Deal?

JustSomeRandomFellow|4.19.09 @ 8:25PM|#

I know I'm just the poor ignorant fool here, Chad, but might people who buy big houses not necessarily fit your caricature? I come from a family of nine, and a big house is rather important for us.

"3: They are a critical element of the soul-less, unhealthy suburban culture, and all of its negative externalities (ugliness, lack of community, forced reliance on cars, etc)."
1. Since when did you have the insight to declare that all suburban culture is "soulless and unhealthy.
2. The things you listed (except possibly for the last one) aren't externalities. If you're referring to pollution from cars, then, once again, we can talk about carbon taxes, but who says it necessarily means we must all give up houses in the suburbs? Eco-friendly, welfare state Sweden has rather vast suburbs, and big-box stores.
3. Beauty is in the eye of the beholder. Some suburban houses are ugly, some aren't. It's not really for you to decide whether people should live in them or not.
4. "Lack of community"? Really? First of all, you seem like a smug, self-satisfied prick, and the last thing I would want is to be "in community" with you or anyone like you. Second, if neighbors don't want to be all buddy-buddy with each other all the time, it's really none of your beeswax.

engineer|4.19.09 @ 8:27PM|#

Good lord, AO, I wasn't justifying the Tuskegee study! I was merely pointing out to Chad the point of your post, which was that gains to others do not justify the use of force against a particular individual or group of individuals. I'm sorry if anything in my post gave you that impression.

I'm not a ghoul.

The Angry Optimist|4.19.09 @ 8:28PM|#

Even though my personal values trend "vertical" rather than "horizontal" with respect to this particular battle of the Culture War, I find it hilarious that Chad thinks there's more "sense of community" in a New York City tenement than there is in a suburban cul-de-sac. That's just fucking ignorant.

The Angry Optimist|4.19.09 @ 8:29PM|#

uh, engineer? I never, ever would assume that you endorsed such a thing! I was just glad that you explained it, is all. you and I are on the same page.

engineer|4.19.09 @ 8:30PM|#

I propose a different deal to Chad: All roads must be funded entirely through user fees (tolls, gasoline tax, etc.). In exchange, his beloved mass transit system must also support itself through user fees (fares). If it's really more efficient, it can survive commercially. THEN Chad will be intellectually honest, and we can avoid the unhappy state of having no infrastructure whatsoever.

engineer|4.19.09 @ 8:31PM|#

AO,
Sorry if I misinterpreted your post. It just seemed that you mistook what I was trying to say in my own post, and wanted to set the record straight.

Sorry.

The Angry Optimist|4.19.09 @ 8:32PM|#

Of course, every mass transit booster will claim that roads have an unfair leg up because of prior investment.

engineer|4.19.09 @ 8:33PM|#

Now that I look at AO's post more closely, I can see that it was simply an affirmation, not an accusation.

Must remember to use the preview function.

|4.19.09 @ 8:33PM|#

It must be nice to be a libertarian. You never accept blame for anything because your ideology has not been implemented yet. Therefore, everyone except YOU is blame! Perfect cult behavior.

engineer|4.19.09 @ 8:35PM|#

AO,
They can claim all they want. If their system is really more efficient, it can compete with roads. But given that most mass transit systems run a constant loss and have to be subsidized to survive, I'm kinda doubting that such a deal would be to the liking of mass transit boosters.

engineer|4.19.09 @ 8:36PM|#

Yes, Ray, it's amazing that people whose ideas haven't really been implemented get annoyed when others blame their ideas for the suffering of millions. We're just nuts that way.

The Angry Optimist|4.19.09 @ 8:37PM|#

Libertarian ideas, by definition, cannot be implemented. That's the whole point.

Thanks for playing, Ray.

MNG|4.19.09 @ 8:37PM|#

"I'm just saying "don't have the audacity to call it charity when it's forced." It runs counter to the concept."

Point taken, but I think it depends on what is fundamental about charity, the result or the voluntariness of it. Like a good utilitarian I say the result, like a good libertarian you say the voluntariness.

engineer|4.19.09 @ 8:40PM|#

Well, AO, by "implented", I mostly meant that the government kept its hands off. My point was that since (as Ray all but admitted) libertarian ideas have never been followed in government policy (and certainly not in the last eight years), it's foolish to say "YOU LIBERTARIANS CAUSED THE CRISIS!"
Someone else here said it, and unfortunately remember who it was to give him/her credit, but we really are the Jews of the political world.

MNG|4.19.09 @ 8:43PM|#

"when you forcefully take money from A to give to B, imagine if everyone did that?"

But if everyone forcefully took money from those that had plenty to give to those that really needed it, I'm not sure that would be a bad thing at all.

"every mass transit booster will claim that roads have an unfair leg up because of prior investment."

Yeah, if I were Chad that would surely be my next move there...

I don't like the liberal push for mass transit. I can sort of see a justification for it for environmental reasons, but for most people, myself included, it would suck balls to have to take mass transit more. I like being able to get in my car and go whenever and whereever.

engineer|4.19.09 @ 8:46PM|#

"I like being able to get in my car and go whenever and whereever."
You're being antisocial and not a community player, MNG. Chad's perfect world can't have your type.

MNG|4.19.09 @ 8:46PM|#

Ray let me add some more nuance to your idea, because as is I'm not buying it. But if you mean that libertarians sometimes have this annoying tendency to respond to anyone who points to a decrease in government regulation or control which seemed to lead to a bad result with the reply "well that wasn't REAL liberty" or "well that wasn't REAL free market reform", or if you are getting at the sentiment of "well we've never had a REALLY free market" in order to be able to not have to attach yourself to any negative historical consequence, then I smell what you are cooking...

engineer|4.19.09 @ 8:47PM|#

Dangit, should have said "I can't remember who he/she was to give him/her credit."

engineer|4.19.09 @ 8:48PM|#

MNG,
If the government gets rid of regulations on a body, but continues to give them special privileges (such as guaranteeing the loans they make) then no, that's not real free-market reform.

MNG|4.19.09 @ 8:49PM|#

"You're being antisocial and not a community player, MNG."

Hey my ride seats four.

engineer|4.19.09 @ 8:49PM|#

"when you forcefully take money from A to give to B, imagine if everyone did that?"
I personally don't think it's gonna matter in ten or twenty years, cause a dollar won't be worth peanuts.

engineer|4.19.09 @ 8:51PM|#

MNG,
But how can we have Chad's wonderful sense of community if us common folk can travel about willy-nilly? It's going to contribute to anomie and community breakdown and...stuff.

MNG|4.19.09 @ 8:51PM|#

O shit guys, O Brother Where Art Thou is on the tube, CMT. Gotta go for a while, nice talking.

engineer|4.19.09 @ 8:53PM|#

"O shit guys, O Brother Where Art Thou is on the tube, CMT."
I hate college. We only have basic cable. Yeah, go ahead everybody who went to college in the dark ages and call me a whiner.

engineer|4.19.09 @ 8:58PM|#

Well, this sucks. I came here in an argumentative mood, and everyone I might argue with has left.

Maybe I'll turn in for the night.

Chad\'sOmniscientDick|4.19.09 @ 9:05PM|#

I know I'm just the poor ignorant fool here, Chad, but might people who buy big houses not necessarily fit your caricature?

You dare question the almighty Chad?!? Chad KNOWS what is in your heart and he will rip it out if it offends HIM! Heed the words of Chad and learn to live a humble life.

|4.19.09 @ 9:10PM|#

O Brother Where Art Thou

Oddly enough, I loved that the first time I saw it, and I've been less impressed each time since.

engineer|4.19.09 @ 9:10PM|#

COD,
I apologize profusely for angering the almighty Chad, our lord and master from whom all good things come. As penance I shall ride the MARTA for all of my transportation needs for the next year, and eat no meat.

engineer/JustSomeRandomFellow|4.19.09 @ 9:11PM|#

I just outed myself, didn't I?

Chad|4.19.09 @ 9:14PM|#

The Angry Optimist | April 19, 2009, 8:24pm | #

Chad, let's make a deal. You agree that no government money should go to the maintenance or building of mass transit, or anything like mass transit, and I'll agree that no government money should go to roads, either development or maintenance thereof.

If you make this deal, you'll be respectable. If you don't, it just shows you want your values subsidized at the expense of other peoples' values.

Deal?

No deal. The massive subsidies given to roads have given them an insurmountable head start. Let's rip up everything and start over, and then see what happens.

Actually, you still not get the right answer, due to yet another market failure. Transportation networks are non-linear in terms of value...the first road or train line is worth very little, the second worth more, the third even more still. They roughly scale as N squared rather than N. This implies that while one may be better at a small scale, the other could be better at a large scale. The problem is that markets will almost assuredly start building the one that works better at the small scale, even though in the long run it is the inferior option. The market fails because the better project is simply too big for one company to do, and collusion is both tricky and often illegal.

Btw, the Japanese rail system is cheap, efficient, the best on earth, and runs almost entirely free of subsidies. You sure can't say that about roads in America.

Chad|4.19.09 @ 9:16PM|#

engineer | April 19, 2009, 9:10pm | #

COD,
I apologize profusely for angering the almighty Chad, our lord and master from whom all good things come. As penance I shall ride the MARTA for all of my transportation needs for the next year, and eat no meat.

You can borrow or rent a car once a month for a big shopping run, and can have a nice steak on your birthday....I won't mind.

engineer|4.19.09 @ 9:21PM|#

Well gee Chad, how about instead of ripping up the roads we build a railroad network? You can even have it run by the government. It just can't be subsidized after the initial investment. But still tell me: Why do mass transit systems so often require subsidies to survive? And no, Japan's situation (with high population density and thus corresponding economies of scale) does not translate to an American setting.

engineer|4.19.09 @ 9:22PM|#

And threadwinner to AO for predicting flawlessly Chad's comeback.

engineer|4.19.09 @ 9:24PM|#

"The problem is that markets will almost assuredly start building the one that works better at the small scale, even though in the long run it is the inferior option."

Hardly. You just have to convince someone to make a sufficient initial investment. Granted, this is somewhat difficult, and with good reason. It generally doesn't pay to throw around multibillion dollar investments willy-nilly.

engineer|4.19.09 @ 9:40PM|#

Someone or more likely some group of individuals. Just to clarify.

The Angry Optimist|4.19.09 @ 9:54PM|#

Let's rip up everything and start over, and then see what happens.

Sorry man, if revolutionary anarchy is what you're after, I'm not buying it. I mean, I'm inclined to agree with you (very, very narrowly) on this one issue, but you need to reside in reality. Come up with something people are going to agree on rather than "burn the m----rf----r down"

My first three steps are as follows:
1. End the municipal/private civil engineering "joint projects" that are suburbs. It transfers some of the costs of roads and utilities (partially - I believe that developers frequently pay 70-80%) and make the developer, and therefore the subsequent homeowner, pay the full costs of extending and increasing the burden on roads and utilities.

2. Privatize as many roads as practically possible, with a stipulation that the follow-on profit model not unduly increase traffic (i.e. your tollbooth cannot take five minutes a car, or whatever...)

3. If you want cities to be habited again, cities have to stop subsidizing big, flashy projects that eat up land, raise taxes and push out practical businesses. Example: there are a thousand bars, one arena, one convention center and one baseball stadium in our Arena District, along with condos and apartments. You know what there isn't in any decent range? A grocery store; a hardware store....stuff that makes these places livable. Doesn't Wal-Mart have a model for multi-story stores?

|4.19.09 @ 9:55PM|#

Transportation networks are non-linear in terms of value...the first road or train line is worth very little, the second worth more, the third even more still. They roughly scale as N squared rather than N.

Well, it must be just a wee bit more complicated then that, otherwise the most value is derived when the entire ground surface of the planet is covered with one mode of transportation (or the other). Let alone would that model work for air or sea.

Hint: think diminishing returns.

Chad-bot|4.19.09 @ 9:56PM|#

"If you want cities to be habited again, cities have to stop subsidizing big, flashy projects that eat up land, raise taxes and push out practical businesses."

We need those big flashy projects, though!

engineer|4.19.09 @ 9:58PM|#

juris imprudent,
I understand Chad's point, just don't agree that it's necessarily a reason why railroads would not exist in a free market sans government interference.

robc|4.19.09 @ 10:16PM|#

MNG,

you don't think a nation with less foreclosures per capita is better off than one with more foreclosures per capita?

Not necessarily. If there are a lot of people who cant afford their mortgages, then foreclosures are a good thing, so that 5 years from now we have a low number of foreclosures. It is better to have a nation where everyone buys the amount of house they will be able to afford - but that isnt a realistic scenario. In the real world, some people will have bad situations or make bad situations and the best thing to have happen is it gets corrected, and foreclosure is one of those correction mechanisms. If you want to pick out someone and pay off their mortgage for them, I wont stand in your way, that is a good thing. But Im working on my remaining 51% first.

robc|4.19.09 @ 10:18PM|#

MNG,

I hope Congress limits the free choice of those who decide to break into my house and take my stuff

Wrong. Its none of congresses business. That should be handled at the state level. :)

That is a problem with liberals*, not understanding delegation of powers, always wanting to push local issues up to the federal level.

*and many conservatives too. And probably some libertarians. While federalism != libertarianism, they do seem to fit nicely together.

robc|4.19.09 @ 10:21PM|#

I think everyone can see the analogy to unemployment and foreclosures implicit (?) in this post...

Yes. And it in no way refutes my original point, that foreclosures and layoffs and whatever are not bad things. They arent the BEST possible outcome, but they arent bad.

You have been arguing with a beast of straw for a while today.

The Angry Optimist|4.19.09 @ 10:22PM|#

I mean, I catch his point, though...there should be State action to prevent the theft of goods from a house, but there's no problem with universalizing that notion (What if the State always prevented burglary? Uhh, that's a good thing). On the other hand, he needs to universalize the notion of "The Haves should fund the life choices of the Have Nots". The long-term ramifications of such a maxim are that there will be no Have-Nots.

robc|4.19.09 @ 10:24PM|#

I wish the best for Chinese citizens, but not at the expense of Americans.

See, this is where we are different. Americans I dont know and Chinese I dont know are equal to me. Because I dont know them. I care more about people I know (and not all of them).

The Angry Optimist|4.19.09 @ 10:30PM|#

I mean, the fact is, is that it doesn't matter whether you care about Americans or Chinese or whomever...you shouldn't be able to forcibly restrain people from peaceful activity just because you *think* it will "Do America Right".

robc|4.19.09 @ 10:35PM|#

engineer,

You are a whiner.

Although, we had more than basic cable in our dorm, just only in the TV lounge. And the one foreign student who didnt own a TV and would beat us there and watch over the air shows when we wanted to watch ESPN.

For some reason, running cable to the actual dorm rooms hadnt occurred to anyone.

robc|4.19.09 @ 10:37PM|#

I just outed myself, didn't I?

I dont know about that, but Im thinking we went to the same school. :)

NATS I assume?

NE '91

robc|4.19.09 @ 10:38PM|#

market failure

Pet peeve of mine, markets cannot fail. Whatever they do is the right thing. :)

Markets are a tautology.

|4.19.09 @ 10:41PM|#

So, Chad, how do you feel about Obama's stimulus package, which shoveled billions of dollars into road building projects?

Shouldn't you be out there loudly protesting this unjust subsidy to out now-state-run automobile industry?

Did you even go to any "tea parties"? Are you planning to picket the home of the new GM-CEO- cum-road-constructor-in-cheif, President Obama?

engineer|4.19.09 @ 10:52PM|#

"I dont know about that, but Im thinking we went to the same school. :)

NATS I assume?

NE '91"

'Fraid I didn't get the NATS acronym. But Nuclear Engineering '91 I understood.

Georgia Tech?

The Angry Optimist|4.19.09 @ 10:53PM|#

robc - markets can, and do, fail. Unfortunately, that term has been abused and conflated with "The Market didn't do what I wanted!", which is not the same as "market failure".

engineer|4.19.09 @ 10:53PM|#

"Shouldn't you be out there loudly protesting this unjust subsidy to out now-state-run automobile industry?"

Hazel, how many times do I have to tell you this? Waste is stimulative!

robc|4.19.09 @ 10:57PM|#

engineer,

NATS - North Avenue Trade School

Dont they teach the standard acronyms anymore?

And yeah, GT NukE - Class of 1991 (with highest honor, for those who question my intelligence at times)

engineer|4.19.09 @ 10:59PM|#

The campus authorities seem detached. How can I drink my whiskey clear if I'm not allowed to have whiskey?

robc|4.19.09 @ 10:59PM|#

TAO,

If you define a market* as two (or more) people/organizations/whatever freely agreeing to exchange goods or services with each other for other good/services/cash then I dont see the possibility of a failure.

If they cant reach a price both agree on, that isnt a failure.

*and I do.

engineer|4.19.09 @ 11:01PM|#

robc,
Sorry, completely forgot NATS. They don't mention the North Avenue Trade School designation as much anymore. Many here have gotten full of the research insitute pomp. Not that there's anything wrong with research.

I wish I was on track to graduate with highest honor. 70th percentile, maybe.

robc|4.19.09 @ 11:02PM|#

How can I drink my whiskey clear if I'm not allowed to have whiskey?

Like everyone else has done for the last 100 years: Pour it in the "mixers" sold by the roaming concession guys.

Okay, outside of football games, um, the answer always seemed to be "no one cared as long as you didnt make an ass of yourself". You know, like falling to your death while stealing the T and things like that. Asshole moves.

engineer|4.19.09 @ 11:02PM|#

robc,
I think TAO's mainly got externalities on his mind there. But no, under the strict definition, a market cannot fail.

engineer|4.19.09 @ 11:03PM|#

robc,
Yeah, it's just that I'm on the network, and they periodically monitor our internet use.

robc|4.19.09 @ 11:07PM|#

engineer,

NATS was always used ironically. Is "Designing Tomorrow Today" still the motto or slogan or whatever? We always used "Designing Tomorrow the Night Before" instead.

As an old geezer moment, you know those big trees surrounding the Burger Bowl? They were planted while I was a student. For some reason, the time I nearly drowned in the library fountain just popped into my head. Good times. :)

engineer|4.19.09 @ 11:07PM|#

I've seen a few of the asshole moves. Though none of the deadly falls, so far.

The Angry Optimist|4.19.09 @ 11:07PM|#

robc - if you and I agree to let me drive a car on your road, other parties have to deal with the subsequent pollution from that car. Personally, I'm in favor of letting [some of] those externalities exist rather than trying to internalize them (for various reasons, supreme among them is that I believe internalizing exhaust fumes is impossible to do effectively) because if one of the costs of living in a civilization is putting up with stuff you don't particularly like (I'm thinking the smells and sounds of city life, for example).

engineer|4.19.09 @ 11:08PM|#

I've seen the motto "Designing Tomorrow Today" some. They don't run the library fountain any more, though, because of the drought.

engineer|4.19.09 @ 11:10PM|#

AO,
You can allow the exhaust fumes, fine by me. But what about more serious externalities, like farting in a confined space?

engineer|4.19.09 @ 11:18PM|#

How many people here are engineers?

economist|4.19.09 @ 11:50PM|#

engineer,
Quite a few.

|4.20.09 @ 1:32AM|#

Shit, engineer followed by economist - both of my degrees. Just don't ask me how (or why).

MNG|4.20.09 @ 7:53AM|#

"That is a problem with liberals*, not understanding delegation of powers, always wanting to push local issues up to the federal level."

I know you were kidding robc, but as I wrote that I thought, I better say my state legislature or someone's going to call me on that...I said Congress because it was what TAO (rightly though, he was talking about trade policy which should be set at the federal, not state level) said, but it did create a suspect result (though successful analogy I maintain). Of course a federal B&E law is goofy.

"you shouldn't be able to forcibly restrain people from peaceful activity just because you *think* it will "Do America Right"."

Again, I'm not so sure. Sticking to your topic TAO, trade policy, surely the government can forcibly restrain people from engaging in the peaceful activity of trade if it can be shown that they are trading apples that are likely to have an insect that will thrive in our nation and decimate our home grown apple crops. And I'm not sure how far of a jump it is to restrain trade in those apples to protect the national good to restraining trade in some good that is shown to undercut the national interest by lowering wages, job security, etc., to a point that overall welfare dips down as discussed supra...

As to market failure, I disagree with robc (hanging one's ideology on an unfalsifiable premise is probably not a good idea either way btw) and agree with TAO about the possibility of market failure. However, I actually agree with TAO that too many people use the term too broadly, usually as he says when something happens they don't like (or worse, when they could just "imagine" conditions they would like better and so declare the market to have "failed"). Where I guess I'd disagree with TAO is that I probably am more likely to conclude there has been a genuine market failure and I'm more likely to invite government to get involved.

MNG|4.20.09 @ 7:56AM|#

"because if one of the costs of living in a civilization is putting up with stuff you don't particularly like (I'm thinking the smells and sounds of city life, for example)."

This just becomes an empirical question, with a bit of a fairness question thrown in, to me. Part of me thinks: when the negative effects of the externality outweigh the negative effects of any restrictions to prevent them then they should be acted upon. But another part of me says bah to that, if your externality is impinging on my health or enjoyment of my property screw such balancing, you're the wrongdoer and I can limit your activity.

robc|4.20.09 @ 8:32AM|#

Of course a federal B&E law is goofy.

You know that. I know that. Most everyone knows that. Change B&E to Dept of Educ and suddenly people dont see the same goofiness.

There are a large number of things that Congress is passing laws on that properly belong at the state level or lower. Roads. Drinking age. Drug laws. Etc etc, the list goes on. If congress wasnt regularly diving into the goofy end of the pool, I wouldnt have felt the need to correct you.

robc|4.20.09 @ 8:36AM|#

hanging one's ideology on an unfalsifiable premise

My ideology doesnt depend on my definition of a market, so that doesnt apply.

As far as externalities go, between good property rights laws (Im not an anarchist) and Coasian bargaining, problem solved. I realize if the transaction costs are high enough, Coase cant solve every externality, that is where property rights come into play. But, in most cases, Coase works just fine.

|4.20.09 @ 10:58AM|#

Part of me thinks: when the negative effects of the externality outweigh the negative effects of any restrictions to prevent them then they should be acted upon.

Part of the problem with externalities, in my mind, is that people tend to focus only on a negative externality, and not on whether the net externality of any given activity is negative or positive.

Externalities are consequences of economic activity experienced by third parties. Take a classic NIMBY example: Walmart wants to open a new store. Increased neighborhood traffic, noise, trash, etc. are all negative externalities of Walmart doing so, and will be cited by the NIMBYs.

What never gets mentioned are the positive externalities of a new Walmart. The benefit to the Walmart customers of lower prices, greater selection, the jobs created by Walmart, etc. are not externalities, as the customers, employees, contractors, etc. are parties to the economic activity, and so don't offset the externalities in trying to determine if net externalities are positive or negative.

However, a new Walmart creates all kinds of second-order positive externalities. One example: most Walmarts turn into "anchor stores" for new retail developments, as their neighbors "free ride" on the traffic to the Walmart. The benefits to those new businesses and their customers are externalities of having a new Walmart, and should be factored in.

MNG|4.20.09 @ 11:09AM|#

"The benefits to those new businesses and their customers are externalities of having a new Walmart, and should be factored in."

Agreed.

|4.20.09 @ 2:39PM|#

I think we're getting a little too broad there with what counts as an "externality". When you start including things like traffic congestion on public roads, why not include things like the local unemployment rate? Why not include the effects on downtown businesses that suffer from competition with the Wal-Mart?

Basically, nothing that is a result of free consumer choices in the market should count as an externality. If people start using the roads more, that's their personal choice, and you aren't entitled to compensation for it.

Put in Coasian terms, you would have to define property rights over other people's behavior in order to bargain effectively for such compensation. That's just inherently wrong and anti-libertarian. I have, and should not have, any claim to ownership over benefits I derive from other people's choices which I havn't entered into a contract with. I can claim ownership of land, of a house, a license to use a body of water. Physical things only - not other people's brains and behavior.