Comments on: Questioning an assumption

By: Paul Marks

Paul Marks — Tue, 21 Sep 2010 01:23:39 +0000

No Laird – we are misled, misled by a propaganda campaign on a truly vast scale.

Almost every school (including many of the private ones), almost every university, and almost every media outlet (including the entertainment media) pumping out propaganda.

And yet……

Most people do NOT think Barack Obama is wonderful (not any more), nor do most people think that government either is (or CAN) solve the basic problems with more spending and more regulations.

The propaganda campaign is running into the wall of objective reality.

The one thing the left can not deal with.

By: Laird

Laird — Mon, 20 Sep 2010 02:06:27 +0000

Paul, when a large number of people (perhaps still an overall majority, and certainly a majority of academics and pundits) continue think of F.D. Roosevelt with reverence, as our savior and deliverer from the Great Depression, notwithstanding 70 years of evidence to the contrary, do you really expect them ever to grasp “what a terrible thing President Barack Obama is”? With luck we’ll be able to mitigate the worst effects of his disastrous policies after November, and be rid of him entirely in 2013, but my bet is that even then most people will continue to think of him fondly. He will be remembered as the victim of his times rather than his policies, the unfortunate protagonist in a classic Greek tragedy rather than an overtly malevolent force. Because we’re stupid.

By: Paul Marks

Paul Marks — Sun, 19 Sep 2010 21:02:06 +0000

Ian B. – I agree with you that creating a social order without error, perfectly “stable” is beyond the wit of man (and would be deeply spooky anyway).

However, there is a vast difference between individual enterprises going bankrupt and a GENERAL “boom and bust”.

These things really are created by monetary expansion (seeking to push down interest rates) at that is a “bad thing” – to put it mildly.

Sorry but there is no way to “learn to love” ecomomic bust (which the phony “boom” creates).

And such busts play into the hands of the statists.

The New Deal did NOT help get America out of the Depression – but without the Depression it would have not have been possible.

Nor, without the bust of 2008, would there be a President Barack Obama.

I still think most people (even many conservatives and libertarians) have not fully grasped what a terrible thing “President Barack Obama” is – we will all (even those of us who live thousands of miles away from the United States) experence how terrible this is, soon.

People would not have been so accepting of a vague message of “Hope and Change” (undefined) without the backdrop of the bust of 2008.

They did not want to see what was behind the curtain – many people still do not want to see the truth.

By: Richard Thomas

Richard Thomas — Fri, 17 Sep 2010 04:56:51 +0000

The free market is like a steam pressured system that lets off any overpressure through cracks which form and heal occasionally. Government doesn’t like that so it reinforces all the cracks and employs a man to watch a gauge and turn a valve to let the pressure out every now and then. Of course, being the government, the man has a weak bladder, and ADD and the government is shouting “For fucks sake, don’t open the valve” at him over and over.

By: Laird

Laird — Thu, 16 Sep 2010 18:22:36 +0000

OK, I guess our experiences are just different.

By: Ian B

Ian B — Thu, 16 Sep 2010 15:27:57 +0000

Laird-

You may think that, and I may think that, but in my experience a lot of libertarians don’t. In fact when Johnathan posted that SQOTD of mine, there was a lot more criticism than support.

This ties in with the other thread a few posts down about FRB. There seems to be a quite general belief in Libertarianism of the Rothbardian/Misesian type that booms and busts are the direct consequence of fiat money, central banks and FRB, and some kind of hard currency/free banking/ban on FRB will entirely eradicate them. That is, that cluster errors are entirely a consequence of the current financial system.

There’s an interesting sub-narrative in there as well that seems to be that errors in the marketplace are entirely due to government interference with market signalling; for instance that if the market set interest rates (rather than the central bank setting a base rate) there would be no investment errors. That seems to me to be ascribing Godlike predictive powers to flawed human beings, and I think it’s grossly overstating what benefits we make expect from a true free market. And I don’t like making exaggerated claims, because when they don’t work out they harm the claimants (in this case, libertarians in general).

By: Laird

Laird — Thu, 16 Sep 2010 14:58:35 +0000

IanB, where did that come from? I know of no libertarians arguing that free markets are more "stable" than managed economies. On the contrary: we all understand that freedom is messy, that capitalism necessarily includes (nay, embraces) Schmumpeter's "creative destruction", that booms and busts are inevitable manifestations of human psychology. Central banks exacerbate booms and busts, but we've always had them and always will. The economy tends toward equilibrium but never achieves it; there are too many independent variables. So we're in a constant state of flux, lurching from one point to another. That's the fun of the ride; hang on and enjoy it!

By: Johnathan Pearce

Johnathan Pearce — Thu, 16 Sep 2010 14:55:17 +0000

Ian B, fair enough; but recall that there are certain aspects of financial instability that can be caused by governments or the side-effects of certain regulations, so the “Austrian” critiques of things such as fiat money and fractional banking fall into that category of “bad instability”, if you see what I mean.

Some big market dislocations are part and parcel of changes that are ultimately Very Good Things (ie, the Industrial Revolution).

By: Johnathan Pearce

Johnathan Pearce — Thu, 16 Sep 2010 14:51:07 +0000

Michael, true, governments can and do overstate growth to boast; OTOH, aid agencies and institutions such as the World Bank (which should be closed down), like to exaggerate certain issues if only to justify their raison d'etre.

By: Mike Lorrey

Mike Lorrey — Thu, 16 Sep 2010 14:32:09 +0000

Jonathan,
At least here in the US, economic gains have been thrown away. Home ownership is now back to less than the level it was at in 2000, and getting worse, while the stimulus money was spent primarily to keep employed government employees, who should be the first people jettisoned in an economic downturn along with budget cutting.
The common perception here in the US is that any growth overseas has been at the expense of standards of living here, which, if you claim that globally there has been zero net gain, the common perception is entirely right.
Worse, we saw huge chunks of the stimulus going to foreign companies, for example, cash for clunkers money was primarily spent buying foreign made cars, at least until the government ginned up the whole Prius accelerator “disaster” to make it appear that foreign cars are just as crappy as American models.
Unfortunately, trying that sort of scam with your average chinese made crap at Walmart is a lot more difficult.
Hopefully, making the Renmimbi a global currency will boost its value enough that the trade imbalance will get rebalanced.

By: Michael Jennings

Michael Jennings — Thu, 16 Sep 2010 14:15:08 +0000

the incentives (both to avoid the taxman and to attract aid, both internal and external) are for income and wealth to be down played, not exaggerated.

That’s true for individuals. It’s probably less true for governments though. There is a certain incentive to overstate growth to demonstate that you are doing a good job, and also to understate inflation for similar reasons. (As real growth = nominal growth – inflation, these amount to much the same thing). I think there is also an incentive to overstate growth in rural areas, because the nasty truth in much of Asia is that the urban areas are getting richer at the same time that the countryside remains dirt poor. So the statistics are dodgy, and I think there are both upwards and downwards biases to the numbers. Accurate figures are non-existent.

On the other hand, Thailand clearly is a middle income country at this point. The question is whether it can get through that and become genuinely rich.

By: Ian B

Ian B — Thu, 16 Sep 2010 11:29:27 +0000

This is one of the reasons I’m skeptical about Libertarians overstating a case for free markets being stable; that is, there is a narrative that central banking/FRB/etc cause boom and bust, and if you switch to hard money, no central bank, no FRB, etc, there will be no boom and bust. That’s a promise of economic “stability” by us.

Some time ago Johnathan you posted as a SQOTD one of my comments that we should instead learn to love boom and bust, which meant learn to expect and accomodate it. Markets make mistakes, and totally free makrets will IMV still have cluster errors. Certainly current economic systems make them *worse* but ultimately if too many people sink their money into unfeasible railways, tulips or dot coms in the hope of a quick buck, you’re going to get an economic hangover to suffer at some point down the line and that’s going to happen in a libertopia as well.