We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Samizdata quote of the day “Groupthink was a major factor in the buildup of risk in the financial system in the decade preceding the recent crisis. Top bank executives and regulators ignored dissenting voices from both ends of the political spectrum which were questioning the excesses that were building up in the system. What was once a comfortable consensus about the strength of our regulatory structure has now been replaced by an equally comfortable and equally flawed consensus about how to fix it.”
Arnold Kling, libertarian-leaning economist, giving a long report on the problems with how the US administration has sought to deal with the crisis, and why he thinks those moves will make future problems more, not less likely. My fear is that for now, such warnings will continue to go unheeded not just in the US administration of The Community Organiser, but in the UK and parts of Europe, as well.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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An excellent report, and definitely a keeper, if only for the fact that it ties together in one handy package all the perverse incentives and unintended consequences of the regulatory structure which contributed so heavily to the current mess.
I could have done with this passage being a little more emphatic though:
Sadly, expecting a government, any government, to go through the current regulatory system with a chain-saw removing the regulations that led to those perverse incentives and unintended consequences, (assuming that some of the more deleterious consequences were unintended), rather than applying yet more dubious regulatory regimes is expecting too much.
Kling is also a regfular contributor at Libertyfund.org; go there and click on library.
His approach (the “counterintuitive”) is a reminder of Isiah Berlin’s essay The Sense of Reality.
All these trends match the aphorism:
We now live under a law of rules rather than a rule of law.
Sadly, the sure way to predict the business and governmental ‘philosophy’ of the moment is to bet on the one that gives the players the greatest short-term profit. Too bad ‘shame’ is now officially quaint.
It is literally impossible for the statist mentality to accept, or even admit the possible utility of, any non-statist proposal.
These various players in the lemmings’ rush off the cliff could never admit that everything wasn’t under control, that they didn’t know what was going on, or what was going to happen.
Their big claim to rank and fortune and power rested on the belief that they knew what they were doing, that their management or oversight was successfully doing what it was supposed to be doing, and that everything was under control.
For them to admit that the entire situation was too volatile, too complex, and too fragile for them to understand, and prevent, the coming implosion would mean that all their other claims of knowledge and competence might be also open to question.
Recall how quickly the “unregulated traders” were deemed to be the villains in this drama. The dominoes had barely started their cascade when the scapegoat was trotted out and displayed to the public through the compliant media.
Any attempt to discuss the role of government policy actively encouraging risky loans, or the fundamental role of the federal agencies like Fannie Mae in underwriting mortgage speculation, and thereby giving the process a false image of security, were summarily dismissed as invalid complaints.
This economic debacle is, in fact, a political collapse with economic consequences. As is always the case when politicians and their faulty policies bring about massive economic dislocations, scapegoats take the blame, and the actual perpetrators of the fiasco huff and puff their indignation in the newspapers and TV news shows.
Very few of these characters could successfully manage a supermarket or hardware store, but they have their prestigious degrees on the wall, so they presume they can manage complex segments of the economy.
For them to admit they can’t would be a form of self-image suicide. Personally, I would like to see some good, old fashioned seppuku on prime time TV, but that would require both a sense of shame on their part, and a certain amount of courage, both elements that are noticeably lacking.
Tar and feathers would be another option…
The hardest part I find is explaining this to the man-in-the-street, or to be more exact the sun-readers-in-the-tea-room. The ‘greedy bankers done it’ meme is so well ingrained that trying to explain how less regulation and not more could prevent and solve this crisis is a task i find very difficult. any ideas?
wh00ps:
The best way I find to explain is to posit a true free market trading away quite happily. Some traders make lots of money, some lose money, most trades are win-win. Occasionaly a trader loses his shirt.
Then, one day a lot of traders lose their shirts and there’s a big outcry for the government to ‘do something’. The government, sensing that there’s votes in this, steps in and starts regulating to prevent shirtloss. Immediately every trader has to employ lawyers to find his way round the new regulations, lobbyists to press for changes in the regulations and legislators to push for new regulations to suit that trader.
When the next shirtloss crisis occurs, instead of saying, “Oh well, that regulation stuff didn’t work, we’ll get rid of it and go back to the old ways”, the government adds yet another layer of regulation, this time heavily influenced by the traders and the myriad lobbyists as well as by the gubmint’s political leanings. The end result is a market so hedged in by regulation and so beholden to government and interest groups that it has no chance of riding out a storm.
Thus we get the sort of mess we find ourselves embroiled in today.
Or, shorter version: “When govenments intervene in markets, markets intervene in government. Result; chaos.”
thanks. i ‘know’ that interfering in things mof which one knows little rarely gives good results.and i ‘know’ that this applies to governments interfering in The economy, but i am no financial whizz and so just ‘knowing’ in this case is a sort of quasi-religious reasoning, which doesn’t really cut it in the tea-room!
wh00ps, I seriously doubt that the “tea-room” set has any better understanding of matters economic than do you (and probably far worse, I’d bet). “Quasi-religious” is an apt description of their mind-set, too, as it is unlikely that they would be willing to read anything like this essay which questions their “received wisdom.” Unfortunately, challenging their groupthink is likely be every bit as unsatisfying as entering into a religious debate.
Still, you could do worse than to give them a copy of this essay. It’s a brilliant summary of the reasons we’re in the current mess, as well as a thorough skewering of the Obama Administration’s proposals. I loved the line “there is the issue of whether the Report’s visionary reach exceeds regulators’ cognitive grasp.” That won’t win Kling any friends in Washington, but it’s a pretty fair assessment.
As Kevin B says, definitely a keeper. I’m sending copies to colleagues and business associates.
Groupthink can be a force for good!!!
All together now- “We Are All Individuals!!!”
Chant that a few hundred times, and see the statists shrivel up and die, as they try to think for themselves.
This seems as good a place as any to quote from a recent Mises.org article about AJ Nock(Link):
This follows a brief description of Nock’s distinction between government and state, the state being
Or said in another way:Consensus builds Bubbles.
Marc, thanks for the pointer: a fascinating character.
Our rulers (in both the United States and Britain) have learned nothing from the crises.
They continue to “expand the money supply” (i.e. hand out corporate welfare via the Bank of England and the Federal Reserve – welfare that is used to build an inverted pyramid of debt upon, a pyramid that must fall) and they shout with joy when news of high consumer speeding or more loans to buy houses are reported (i.e. what it is reported that malinvestments are not being liquidated – and people are not really facing up to the situation, markets are not clearing).
In short they think corporate welfare is good (as long as it goes to the right corporations of course – such as General Electric) and they think that spending (on houses on consumer goods – on anything) is good and saving is bad.
Our rulers are, at best, demented fools – and they are destroying the economy.