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« Baby it's cold outside | Main | The Planets »

Jan 30, 2010

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Spag

...just don't call us "Socialists". That would be unfair...

What is more likely to bring us out the recession, more government regulations or the free market?

Andrew Brod

That's right! If X caused the bad times, then what we need is more X!

The best answer to Spag's question is "both."

Andrew Brod

...although I'd say it's less about more government regulation than about smarter government regulation.

Spag

I can agree with that Andrew. My problem with the quote Ed used is that it is overbroad and presents a false choice. I've read several news articles about the Davos meeting and I don't think the free market is in danger. Smarter regulations aren't going to kill it, nor has it ever been unfettered in the first place.

Steve Harrison

That's true, Sam. As Libertarians are so fond of saying, we've never had a truly Free Market. But we've also never had (imo) a horrifically over-regulated market, either.

I do believe we're at a point now where the lack of smart regulation is severely hindering growth, and we need to take steps to guard against the destruction of wealth without hampering the creation of it. Economic recovery requires private-sector investment, but those investors will remain skittish until they see some protections put in place.

justcorbly

If "free market" means an absence of all regulation, then the quote is not "overbroad". Nor does it suggest applying an avalanche of regulation for regualtion's sake.

There is ample historical evidence that when the financial institutions that underpin the economy are left too much to their own devices, bad things happen. This isn't due to some mystic law of economics. It's due to human nature. People lie, cheat and steal.

There is also ample historical evidence that unwise regulation also produces bad results.

But, it does seem rational to identify the causes of each successive market disaster and take steps to prevent their recurrence, steps that do no rely on the good sense of actors in the market.

BTW, the chanting of the word "socialism" every time the issue of government activity comes up is getting pretty lame. People get away with it because large chunks of their intended audience don't have a clue what socialism is.

cheripickr

I must confess that I at times find myself as one of the chunks in that audience, which may be larger than you would like to believe. Perhaps you can clear the air by supplying the proper definition.

Also I also seek to better understand how your bluntly-, passionately-, and oft-stated vision for America contrasts itself with said definition.

justcorbly

CP, I'm surprised you took that Newsweek cover literally. I took it with a large does of snark.

To me, socialism means the community, either via govenment or by direct worker possession, owns the means of production, distribution and exchange. That necessarily entails regulation, but I do not accept regulation, in isolation, as socialist. As practiced, socialism obviously comes in many flavors.

The right has used "socialism" as an epithet increasingly over the last couple of years. It's my impression that most using it that way intend to equate government regulation with socialism.

Unless watered down to the social democratic policies practiced in parts of Europe and some Canadian provinces, socialism has proved to be a bust in the real world. Even when acting with the best of intent (a rare occurrence), the people making decisions in full-blown socialist systems turned out to be just as likely to make bad decisions as anyone else, and just as likely to lie, cheat, and steal. E.g., the guy who stacked the deck as a Soviet bureaucrat would very likely have stacked the deck if he had found himself working at AIG.

The market is the best approach to running an economy, when that economy is protected from the decisions of people with the ability and intent to distort the market's behavior in their own narrow interests. This distortion can come from the left, in the form of wrongheaded regulation or in the form of simple corruption. Distortion can also come from the right, in the form of power and wealth concentrated in too few actors, thereby magnifying the impact of their inevitable bad choices, or, again, from simple coruption.

I think it is human nature for people to ally with others to advance their interests against the interests of others. In a market system, that results in greater concentrations of wealth and, hence, power among fewer and fewer people. In a socialist system, that results in greater concentrations of power, and, hence, wealth, among fewer and fewer people.

Our modern technological consumer society has added a new wrinkle to all this. We demand, and depend on, goods and services that can only by provided by institutions of great size, wealth and power. The challenge is to prevent abuses of that power without hampering the ability of consumers to buy what they wish.


Beelzebubba

cartel: interests are allied to advance the interests of others

market: purchase decisions are determined by auction solely and only in the interest of the individual. this auction can be a minimum bid barcode on the package on a shelf. when consumers can vote with their dollar to let the item remain on the shelf, be deleted from inventory and sent to the landfill, then a market exists. when i am forced to purchase alcohol, drug, and marriage counseling coverage along with maternity and abortion benefits when i am 58 year old who has been "fixed", then i am not participating in a market. I am enabling a cartel.

Grant

That's 20th century thinking, JC. Postmodern conservatism's "there's no such thing as society" argument isn't grounded in economics. It's public face is Lyotardian, but at it's heart is the conviction that "My tribe should be making all the decisions."

justcorbly

Grant, here's the Beeb's take on that Thatcher story.

Thatcher's claim that there is "no such thing as society," and that "There is no such thing as a collective conscience, collective kindness, collective gentleness, collective freedom." are self- serving, if not delusional. Conservatives extol the collective wisdom of the market -- the overall impact of millions of little decisions made by individual buyers and sellers -- yet Thatcher and others like her claim that individual decisions made in other areas of life have no collective impact.

It's like the disease some college sophomores get when they decide that something they read about in Philosophy 101 or Pysch 101 can explain all human behavior. Most people grow out if it, but others grow up thinking they've locked onto Magic Wisdom that means they should rule by right.

justcorbly

Rats. Here's that Beeb piece.

Spag

The blanket use of the term "free market" is no less egregious than a blanket use of the word "socialism". That was kind of my point with my original comment and why I take issue with the passage selected by this blogs author and the context in which it is applied. This isn't the first time he has railed against the "free market" while getting quite defensive over anything being labeled "socialist".

Typical to not take a stand while taking a stand, not to mention the pot/kettle/black aspect of lecturing others about ideological generalizations.

Ed Cone

I am in favor of sensible regulation of financial markets, of the sort that was gutted in recent decades, and I've made that quite clear here and in my newspaper column over the past few years.

I don't think of such regulation as socialism, but as a necessary component of healthy capitalism.

I have had a lot of fun watching contortions over the word "socialism" in recent years.

The quote is the lede of the column for a reason -- it tells us in broad strokes what's up in Davos. As with any link or excerpt, it helps to read the whole thing.

Grant

but others grow up thinking they've locked onto Magic Wisdom

I'm not sure thinking is the right word.

justcorbly

Spag, I'm not sure what there is about the Davos quote for you to "take issue" with. It is not a pejorative statement. It simply acknowledges that the market is imperfect.

People are not test subjects in an experiment to prove the merits of the market. The market exists solely for our benefit. Certainly we have an obligation to fix it when it causes us harm.

Ed Cone

"[T]he financial system is too important to be left to the free market" is a provocative statement -- one that invites discussion of what exactly "the free market" means, and how much regulation can be put on a market that is still reasonably described as "free," and how the market absolutism of the past generation has in fact imperiled free markets, and so on.

In other words, just the kind of quote that one might use to lede a column, or a link in a blog post.

justcorbly

Yes, provocative. But, pejorative? Only if we don't recognize the distortion and control of the market that can be generated by actors within the market. Not everyone in the market perceives a free market as being to their advantage. Even in the complete absence of government involvement, the free market itself would generate forces antithetical to that freedom.

Bubba

"I am in favor of sensible regulation of financial markets, of the sort that was gutted in recent decades, and I've made that quite clear here and in my newspaper column over the past few years" he sniffed in indignation, offended at the notion someone pegged him accurately.

justcorbly

Do Bubba and Sapg ever leave their personal attacks behind and talk about things of substance?

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