Atlas Shrugged hitting record sales? What the hell

On April 19 2009 21:36 warding wrote:
Rand's objectivism is about a little bit more than regulation of the financial sector.

I don't know how that article can make such wild assumptions about the motivation of Rand's readers.

On April 19 2009 21:45 Diomedes wrote:
I don't know if you are talking about me but that book is just a novel.

On April 19 2009 22:23 Diomedes wrote:
There are barely any properly functioning markets in the west. You just have to turn on the TV to learn about that.

So even if one believes in free markets, no one really wants to allow it.

Atlas Shrugged was a novel. Not a paper or thesis on economics or philosophy. And the ideological views that are expressed aren't taken seriously at all in the academic circles. Both by natural opponents and natural allies.
And her motivations to push her ideological views and the way in which she did make it a very silly novel. It got totally slammed by literary critics.
It's amazing that there are people out there that think it deserved both the Nobel prize of literature and economics.

On April 19 2009 23:01 Nevuk wrote:
There was a colbert segment on this :
http://www.colbertnation.com/the-colbert-report-videos/221335/march-11-2009/the-word---rand-illusion

I have Atlas Shrugged somewhere around, thought her writing was terrible and couldn't make it past the first page. I do agree though, that it's being massively misinterpreted by lots of people.

On April 19 2009 23:06 Diomedes wrote:
lol just read at what Brooks, who is now the head of the Ayn Rand Institute, wrote:


In "Atlas," Rand tells the story of the U.S. economy crumbling under the weight of crushing government interventions and regulations. Meanwhile, blaming greed and the free market, Washington responds with more controls that only deepen the crisis. Sound familiar?

Yeah, very. Only it's totally backwards. I thought that lack of regulation and too much greed caused this crisis. I know everyone in Europe has already accepted this. Is it even disputed? Apparently. And thus people are indeed calling for more selfishness and even less regulation, probably fixing the economy by creating new even bigger bubbles, making the mirror image perfect.

No wonder people lkike Michael Shermer claim that there is a Rand cult based on dogma.

On April 19 2009 23:14 Diomedes wrote:
Ok, I didn't realize people actually said in the mainstream what I just found out this Brooks guy said.

Colbert just pointed out the total irony. Ann Rand's followers are in control while the economy melts down because of how they were set up, without holding bankers accountable for gambling with other people's money, which make it profitable for the bankers to take risks than in the end will cause total collapse.

Then when it all goes down the bankers are the first to be bailed out. And then the Ann Rand supporters claim she was a prophet? And this is exactly what is happening in the book? And now the bankers want to go on strike because the losers want their money?

Not to mention economists understood way back that financial markets can't work the way they were working before the crisis. They couldn't predict what would actually happen. But the risks of it were not unforseen.

That said, I think that a respect of the facts is something that you accept. I am intersted in what facts make you think that the market caused this crisis.

On April 19 2009 22:05 sorech02 wrote:
when you say that Greenspan was a god for the free market, it turns my stomach a little. He IS government regulation in my view.

On April 19 2009 23:38 Diomedes wrote:
There can't even be a free market in the financial world because if governments don't bail out the banks you run the risk of going back to bartering.
Free markets for banks isn't even a possibility. And no country in the world even considered just letting all the banks go broke. Every single one took action.

No. They bail them out while still not putting on regulations. If they pay the banks so much money they should just take them over. Then they can actually stop all the damaging behavior. And they will stop being zombie banks.

As for a society with true pure free markets where you just can go Laissez-faire, there is no reason to think this is not a fairy tale. You can see how our attempts a free markets with rational customers making pure rational choices work out. Just watch some ads on tv. The best example of a market that isn't 'proudly irrational' is probably the stock market.

In the mean time in the US for every 10 dollars 1 is spend to undermine rational markets, trying to make them more irrational, through marketing.

On April 19 2009 23:06 Diomedes wrote:
lol just read at what Brooks, who is now the head of the Ayn Rand Institute, wrote:


In "Atlas," Rand tells the story of the U.S. economy crumbling under the weight of crushing government interventions and regulations. Meanwhile, blaming greed and the free market, Washington responds with more controls that only deepen the crisis. Sound familiar?

Yeah, very. Only it's totally backwards. I thought that lack of regulation and too much greed caused this crisis. I know everyone in Europe has already accepted this. Is it even disputed? Apparently. And thus people are indeed calling for more selfishness and even less regulation, probably fixing the economy by creating new even bigger bubbles, making the mirror image perfect.

No wonder people lkike Michael Shermer claim that there is a Rand cult based on dogma.

1) Get rid of central banks and allow the free market to operate properly, including the determination of interest rates.

On April 20 2009 00:06 warding wrote:

How plausible is this option... really? Just the uncertainty it would create in financial markets seems to me to be a good reason not to experiment around.

How sure can we possibly be that things would work out after a dismantling of the Fed?

On April 20 2009 00:09 Diomedes wrote:
in a true free market where everyone is purely rational, does one even have to discuss that? First off, people never have all the information. ...(etc)

Can one truly imagine a world where the government doesn't invest at all in certain technologies?

I shudder to think of a world where possibilities are restricted to the content of your imagination - or anyone else's, including my own, for that matter.

On April 20 2009 00:24 Diomedes wrote:
Both Adam Smith and Ayn Rand, if you can even use those names in the same phrase, both saw rational self-interest as essential for the functioning of a free market. WIthout it a market can still be free, that's not to point, but then it isn't any good.

It's not about possibiliteis being restricted. That was not the point. The point was, you can imagine living in a world without computers? Without cell phones?

So much science and research is subsidized. Just go to Forbes 500 and try to find a company that deals in an economic branch where there hasn't been any subsidization.

On April 20 2009 01:34 Diomedes wrote:
it's always used by a powerful institution to restrict someone else: "Free markets for you, not for me."

This crisis is a perfect example for that.

And in the mean time you still have on you the burden of proof how free markets would have prevented this crisis. And even if it did, economics are difficult enough to manage that it would be much more convenient to prevent the crisis through other means. You need to regulate to get free markets since there are too many greedy people. And if you can do that then why would the problem of this crisis even come up?

As for subsidies, I don't get your analogy at all. Why would industry not let the governemnt take the risk? Why would they do it themselves?

On April 19 2009 22:24 oneofthem wrote:
lol rand

On April 20 2009 01:57 Diomedes wrote:
Wait what? You basically want to make banks illegal? And you are the one promoting free markets while I blame lack of restrictions?

One of them is the participants are rational actors. This is the assumption everyone makes for their few dozen of economic courses.

The second one goes along with the first one, and that the actors have perfect information.

Not to say that the concept is without merit, we just need to understand the limitations of our models and systems.

On April 19 2009 20:23 Diomedes wrote:
Problem is that banks never thought about the risk of bad loans for others or the system as a whole. A market never takes in considerations any externalities actually. So a bank may say: "Hey if this loan doesn't get payed back that's so and so probable and so and so bad. So that is my risk." But then those loans also affect other banks and institutions. So then when all these loans suddenly turned out to be worthless the system as a whole almost had a meltdown.

And the funny thing is that Adam Smith was already aware of all of this and was critical about this aspect of markets The pollution of a car is not accounted for by the price of the car. The market totally ignores all this stuff. But the car does generate costs for society. And that's all very bad.

Adam Smith, the prophet of free markets, would roll over in his grave because of all the deregulation.

On April 20 2009 04:40 silynxer wrote:
jgad there is simply no way you can come only with formal correct deductions to the undisputable fact that no government involvement would be the best policy. And that is even if your axioms are in every situation correct (which I doubt they are).
Please enlighten me how you can be so sure otherwise don't talk about these things as if they have been proven.

On April 20 2009 05:17 Diomedes wrote:
Still people in Europe claim banks shouldn't even be allowed to take those risks. And politicians and economists claim what happened would never be possible in Europe because of regulation. And I also have heard people claim that it only was possible because of recent deregulations.

Lack of regulation never causes anything, in the strict sense of the word. The point is it should never be even possible, whatever triggers it. There should be a fundamental failsafe.

And the problem isn't just those mortgages but also how those risks were packaged and traded over and over in ways no one was able to figure out.

And it wasn't the government that made those mortgages either. So how can you blame them for that? Just because they created the scenario where everything could go so wrong but because of the actions of other people. The government did what I did and the banks did what they did.

Yeah, it all wouldn't be possible with the US credit culture. But those people don't manage the banks. People are responsible for their own actions.

On April 20 2009 05:03 Diomedes wrote:
jgad, what you propose would make the primary function of banks impossible and thus basically make banks in the sense we understand them now, illegal. You are doing exactly what was talked about. But your regulations are so extreme that it makes banking totally impossible.

And yet you claimed you want to deregulate? I don't get it.

In the US were basically no regulation for investment banks. This they did did because of market ideology. And your suggestions are so extreme compared with normal regulation proposals, its very odd. Just because the rules are the same for humans and banks that doesn't mean it's no regulation.

And who to blame for the special rights companies have? Exceeding those of normal persons when they aren't even legal persons in the first place. The same people who refuse to regulate.

On April 20 2009 05:41 Diomedes wrote:
The point is that it's the US where the problem started. So Europe is going to be more objective.

And how can governments force banks to make deals they don't want to make when at the same time there was almost no regulations. It's just an excuse bankers made if you ask me. What you are is basically saying that others force Manson to kill and thus Manson is not the murderer. Or at least not the prime suspect. Not the other way around.

As for Jgad, that banking will no longer possible is even besides the point that you propose extreme regulations while you propose there are already too many.

On April 20 2009 05:30 silynxer wrote:
To some extent I expected the "read this" counterargument but I wanted to see if you really think this to be the absolute truth (somehow it seems the number of pages written about it makes it "truer" to you) and since you do further discussion is pointless.
To consider anything based on axioms made on human behaviour to be entirely correct in the real world is too esoteric for me and you made clear your stance is final.

Though if I happen to find the time I will read the material and point out fluffy assumptions and fuzzy argumentations as they are bound to be in there.

On April 20 2009 05:41 Diomedes wrote:
And how can governments force banks to make deals they don't want to make when at the same time there was almost no regulations.

posted by jgad
a 100% reserve requirement for demand deposits

Indeed, any actor, when employing means, estimates that he will thus arrive at his desired goal. But he never has certain knowledge of the future. All his actions are of necessity speculations based on his judgment of the course of future events. The omnipresence of uncertainty introduces the ever-present possibility of error in human action. The actor may find, after he has completed his action, that the means have been inappropriate to the attainment of his end.

All that free markets suppose is that people have desires and will act in a way that they feel will most effectively satisfy those desires.

And that's fine. I'm happy to allow you to exercise your own affairs. I just don't want you, or anybody else, exercising my affairs, because I also feel competent to do so myself.

This is called "moral hazard" -

A free market would not allow this.

None of this would happen in a free market. Interest rates would reflect savings, and when savings went down, interest rates would go up. Demand for credit would increase the price of borrowing ever scarcer savings. This didn't happen because central banks can dictate the interest rate, and even if there are NO savings in the system, as was the case in the US, which was carrying a NEGATIVE savings rate AND had 1% interest rates at the SAME TIME

1) Get rid of central banks and allow the free market to operate properly, including the determination of interest rates.

On April 20 2009 05:17 Diomedes wrote:
Still people in Europe claim banks shouldn't even be allowed to take those risks. And politicians and economists claim what happened would never be possible in Europe because of regulation. And I also have heard people claim that it only was possible because of recent deregulations.

On April 20 2009 06:03 SWPIGWANG wrote:
[
What a Bank really do is convert long term, illiquid assets into short term liquid assets and does a critical function in the economy. When you put money in a savings account, you are really (indirectly) buying loans from the bank and insured by both the bank (and government) against loss. Deposits are a super high liquidity low risk investment that gets positive returns from interest. This is a financial product that many people likes to use in addition to everything else.

Its called lying. It works since the beginning of time, and with a 70 year lifespan, running a good con once is good enough. Its simple, just make a scheme where you pay out interest from the money of latter investors and you can run it in a free market just fine if you package it just right.

posted by jgad
To gain access to your money from a loan you would need to either wait until you were repaid by the original borrower or you would need to sell your loan to a buyer willing to give you cash in exchange for the IOU you are holding from the person who you lent your cash to.

On April 20 2009 06:21 SWPIGWANG wrote:

Didn't see this on top. The thing with loans is the following:

1. It is not liquid
2. It is at high(er) risk of default

A savings account is liquid and hedged against default by the bank holding so many different loans at the same time. (hedging reduces risk)

So what happens with an account is that banks packages a lot of loans, insurance and acts as a instant repurchase on demand all abstracted into a simple money account. The interest differential between loans and deposit accounts exists because that money is used to pay for that liquidity.

It is really not more dysfunctional than most financial instruments, many of which may result in huge or even infinite liabilities....as modern derivatives show. Bank run losses are uncommon, but try naked short selling and one may lose everything overnight.

I don't see any reason why they need be singled out, unless random arbitrary restrictions ought to exist in the economy because people are too stupid to figure out what is going on.....

I have nothing against the existence of products like loan-backed deposits, I just don't agree with the way that risk is managed.

On April 20 2009 06:31 SWPIGWANG wrote:

While one could say that arbitrary government involvement is not necessary (banks can buy insurance from each other.....right) What it really is, is a hack that was added on as experience from past failures.

What happens is that the economy is so interdependent that it can really be consider a single entity rather than disconnected competing interests in certain pathological cases. Just for thought experiment, what would happen if an economy have only one bank in existence and it fails?

Now lets assume that many banks exists, and due to a quirk of profit margins that banks finds lending to each other is very effective, and all loans are crossed with each other so that if one fails, it creates a crisis that spread to everyone else. Well that is what we have in reality.

We have a few choices here:

1. Prevent banks from "merger via economic crossholding", which is probably a few hundred pages of regulations (and much whining from free marketers)

2. Prevent banks from failing if a failure happens and is too big (current solution)

3. Pray that crossholding do not happen, or big banks don't ever fail enough despite the fact people err, or that failures are quickly recovered despite that the economy operate on implicit trust that takes time as opposed to instant operation of fast rational response of well connected agents.

On April 20 2009 06:03 SWPIGWANG wrote:

Finally, there is savings in the system, It is just outside the boarders of United States. While Americans are spending like crazy, other countries like China are buying massive amounts of US debt. If the feds are merely blindly injecting money and liquidity into the system, US dollars would be so devalued that no American would be able to afford anything that made at home (which was anything but the case). No, other nations bought into the system and that is how Americans managed to spend. The Asian countries sold the goods and used the cash to buy US debt.

I wonder how useful is the free market concept when billions of people not under the system (of self interest) is gaming currencies and trade as well. In libertarian land, a economic predator can burn cash to do all sorts of damage, like cornering markets or making mess of exchange rates. I wonder what the peoples of the Asian financially crisis felt when a bunch of rumor and some schemers managed to screw exchange rates enough to make their economy ruined while "free market correction" did nothing to save them. (at least they know that a central bank is handy some of the time now)

On April 20 2009 06:03 SWPIGWANG wrote:
The people have spoken, and they've chosen big government. (despite assertions that they can not or should not)

On April 20 2009 06:35 fanatacist wrote:
Atlas Shrugged is one of the best books of all time.

Yes, but at least it would be illegal and those people would go to jail.

On April 20 2009 06:03 SWPIGWANG wrote:

So the question is, who should control the money supply? Lets see the choices:

1. Metals: Supply of metals is not stable, and finding gold maybe the ruin of economy as the 100% inflation per year Spanish experience shows. (or why Britain became powerful while Spain lost position) On the other hand, not having enough metals during economy growth result in deflation, which result in a unnaturally high interest rate, resulting in too much savings, and too little spending as deposits just pile up. It also means more people digging for gold, which is a waste.

2. Companies (Everyone): If the fed does a bad job of printing money, what would happen if everyone is handed the presses to print money. Whats likely to happen is that people would probably have heavy skepticism in private money and would just use foreign government issued money. If some private currency gets widely used by whatever reason, a quick betrayal of trust can make massive money with even less controls than the fed.

3. Neo-barter concept: It is just too clumsy to work fast enough to be competitive. Money is a wonderful thing that makes economics tractable.

On April 20 2009 05:10 jgad wrote:


If you want the full derivations, here :

Human Action
Man, Economy, and State

A few thousand pages of reading to keep you busy. I refer you specifically to chapter 12 of the latter and the full Power and Market addendum, especially sections on binary and triangular intervention. They have been proven. I'm open to counterargument if you're willing to present them.

On April 20 2009 06:59 SWPIGWANG wrote:

The idea is that missing information (like cons) can be dangerous to the economy. With complex computer systems and cross trading tricks we have today, dangerous things like ponzi schemes can exist outside the mind of a single individual. People often have no idea about the complex systems they are working on. If you break up a ponzi scheme across dozens or even hundreds of people across the economy, hidden behind nobel prize level math, it can do huge damage without any particular individual masterminding it.

And thus it needs to be illegal, but it can only be outlawed with convoluted laws used to outwit the equally convoluted schemes that it is build on. It does not help that people always try to find loopholes to get rich quick and how they work is often poorly known.

Its an arms race of creating pathologies and fixing them, and the economy is often filled with hacks as a result. Perhaps an elegant structure exists to solve them, but that is often too slow to deal with the here and now as it is often only found after it is doing damage.
-------------
Markets may correct towards equilibrium, but we are in disequilibrium times. We are in exponential times of insane growth and change in everything, something that history have never seen and whose optimal solution defy analysis. Pretty much no one really knows anything and waiting for knowledge to spread everywhere is often too slow compared to a hack by someone with power and a bit more information. Personally, every time I see an ad, I remind myself that we are so far from equilibrium. Every ad is a piece of information waiting to spread across the economy and humanity is nowhere near catching up.

From this point of view, the free market is just as much a hack as most other things. When people don't know what is for sale nor do they know what can they sell on the first order, higher level knowledge is just a silly assertion.

Perhaps after the modern era, economists would find a extension to economic structure that can elegantly solve all the problems it has encountered (working economic concepts like insurance, banking, hedging, and such are all invented) without bandaid, but I don't see it as now unless someone show me some killer apps. (well, fishery rationalization impressed me, but thats small compared to everything else)

Classical economists are those crazy people that claims to have proven a solution exists without showing the details of how it works.....well its nice markets with massively modified property rights concepts may solve huge array of problems, but no details on the details of who or what or where would exchanges of everything take place (its left to the invisible hand that takes time to come up with innovations).

Until the microeconomists can do enough to link its space with the macro, i'm not trusting the libertarian project.

On April 20 2009 07:07 oneofthem wrote:
citing austrian works to support austrian conclusions is a proud tradition apparently.

On April 20 2009 06:53 jgad wrote:


Then why bother having a debate? Just submit to the tyrranty of the majority, I suppose. By this logic there is nothing wrong with genocide or apartheid or CCTV cameras placed in every living room by the state - as long as the majority choose it, then it is as it should be. The Palestinians really are criminals and the Tibetan monks are getting what they deserve from China. The people have spoken, and thus it should be. This is silliness.

On April 20 2009 06:54 Diomedes wrote:
Just because there was bad government incentive doesn't mean the banks don't bear responsibility.

You bring up Manson and murder which is so strange. It's the banks that went bankrupth and this is only because of their own actions. The government didn't force them to do anything. Just because there were incentives for this behavior doesn't mean it was forced upon them. Banks were all to eager because they all thought they were going to make a lot of money.

Then the banks failed and the government had to bail them out with tax money.

Only reason banks even work is because people trust them because of the role of the government. The government has a regulating task. And clearly regulation failed.

I have never seen anyone say it was all caused by this CRE. Never. It was the banks taking too much risk on loans they shouldn't even have handed out in the first place to americans who were loaning too much for a second house and all kinds of crazy stuff. And then they sold and resold all kinds of complex financial products to each other based on these loans. All this happened while Greenspan was deregulating to make stuff easier for the banks to do their thing. The banks were all too glad with what the government did. When Greenspan adjusts interests it's often almost at the request of Wall Street.

The whole Manson analogy, it's like saying his parents are murderers because the murder was an effect of his bad childhood. This is an exact perfect analogy since you hold the government accountable for something the banks did. But at the same time you are against regulations and you don't believe the governemnt should have stepped in and stopped them while it happened.

On April 20 2009 07:25 SWPIGWANG wrote:

Submit, indeed, that is what a "rational" selfish person would do. When faced with a effectively immovable force there is no point in fighting it as if one's sense of accomplishment depends on it. The logical solution is to work with it and extract the best deal out of the mess. What this is for me, is a hobby no different from figuring out a new m&m timing.

Submit, indeed, as one can not impose freedom on those that refuse. Tyranny of freedom is perhaps the most silly idea possible. The solution to the desire for tyranny is just tyranny as other attempts are just unstable and self destructive.

Only a moralist and collectivist that is outraged by the behavior of everyone else. I guess the biggest irony of Randian objectivists is that they are really some of the biggest moralists around, motivated by their own sense of justice as opposed to self interest. They are so outraged because other people dare furthering their self interests in ways they don't approve! (like poor voting to rob the rich) Other people just think different set of strategies are fair game and too bad if you don't play the game.

Perhaps, the difference between randians and facists is that randians believes one should rob someone bad at economics, while facists believe one should rob someone bad at military strength. Survivalist competition but merely with different domain for the rules.....
----------------------
If one ask me what morality ought to be, they should be possible choices that is possible in reality. The rest is just fantasy. If you ask me on the morality of Palestianians, I wouldn't be able to give an answer since I don't know what can be done.

Fundamentally, my morality lies on in my own behavior and my own values, not anyone else's. The only relevant question for myself is whether my own behavior is moral, as others should not be evaluated by this criteria. That is the only solution that I can come up with while both respecting reality and the non-uniformity of moral beliefs.

We're talking about totally different things - one is criminals who would seek to circumvent the law to their own advantage (what you are talking about) and the other is the way that legit individuals operate under the law (what I'm talking about).

Should not Greenspan go to the same cell as Madoff?

On April 20 2009 07:41 SWPIGWANG wrote:
Well, it is too late to create a post-hoc law to punish him for his mistakes. If there is a government/legal structure (which can include punishment) that can do things like preventing excessive liquidity (but still provide in case of serious deflation) than it should be considered.

I think one huge is issue is how to prevent politicians from building a bubble to boost numbers to make themselves look good. The strong incentive to "spend now and let the next guy deal with it" is probably the biggest issue in politics today, and it can only be solved with a overhaul on how government works. You can't fix the economic system if you don't fix this as any "solution" would be bust by the next administration and lapse in the media attention cycle.

If there is a solution to this problem, than lets hear it, than we can figure out if there is a way to implement it. That would be far more productive than saying that people don't act the way one wants when they have no reason to....

The notion that the most productive system which satisfies the most material and immaterial desires

The solution is to take away....

On April 20 2009 07:53 SWPIGWANG wrote:

One needs to recognize that this is only a assumption but not a fundamental pillar of truth. People may desire anything from a material free Amish existence to endless conspicuous consumption depending on culture programming and some other things. And this result in the madness where anything is good if people are happy in it and believe it is good.....and breaks economic theories behind utility.

Instead of the Austrian school, I suggest you read up on social choice theory and the voting paradox on a more expanded examination on human wants and how it result in intractable problems. I personally find that any claims of "optimality" suspect after learning it.

On April 20 2009 07:53 SWPIGWANG wrote:

edit:
Look, imagine yourself as a politician with your own self interest to take care of. Now why would you do what you suggested? (ideologically driven madness aside)

The question is how to make the government function that politicians would stop things like massive debt. Saying that "god, those crazy politicians need to stop borrowing" just don't cut it.

Also, deflation hurts all liability holders, which may hurt legit business that borrows for productive purposes on top of everything. Both inflation and deflation have "unfair" redistribution effects that can damage the economy.

On April 20 2009 07:48 Diomedes wrote:
Caller, Im talking about the loans that caused the crisis. The source you site contains only empirical data that it wasn't loans forced by CRA that caused the crisis.

You are talking about CRA. Im talking about the crisis. You are the one that tries to connect them.

You started the Manson analogy. Not me. Don't blame me for your bad analogies. You can hold the government accountable for bad governance. But not for going broke. Especially not because of CRA. At least not according to what those wiki pages say.

On April 20 2009 09:59 Diomedes wrote:
You are just drawing on straws. Everyone knows now what caused the crisis. It's the mortgage deals by certain banks and the trading in them by others. So called securitization and all the speculation.

CRA is something that happened all the way in 1977 according to wikipedia. And it doesn't even matter. Even if governments forced the banks to make a few money-losing deals, which you yourself admit is totally disputed, unclear and not backed up by data, they were still making a lot of profit. It's not why these banks failed. They were gambling with other people's money. And then the government bailed them out. Yeah, if they wanted to subsidize the middle class and lower class they should have done so with tax money. And if they wanted lower income people to be able to afford houses then it helps if they are cheaper, not more expensive. Allowing people to buy expensive houses more cheaply by subsidizing their mortgages only make them more expensive.

If you want to blame the government for one thing besides not regulating is for bailing them out or letting them get 'too big to fail'.

You can't blame the government allowing bubbles to be created. The market did it. They themselves did because they thought they would be crazy not to because people were making money off inflating the money. Now that all of this wouldn't be possible with higher interests is something different. What good are companies if they destroy themselves under certain circumstances?

You can't blame the government allowing bubbles to be created. The market did it. They themselves did because they thought they would be crazy not to because people were making money off inflating the money. Now that all of this wouldn't be possible with higher interests is something different. What good are companies if they destroy themselves under certain circumstances?

On April 20 2009 10:25 fanatacist wrote:

Hopefully a troll.

On April 20 2009 11:16 fanatacist wrote:

I've read a lot, but definitely not so much in the existentialism department besides basics like Thoreau, Emerson, and other American authors. Maybe that is why I thought it was such a good book.

I also enjoy Garcia Marquez's work, Bulgakov, Pushkin, Tolstoy, Sabatini, many other classical writers and more in science-fiction. If you have any books you would recommend me based on my tastes (including something you think is better than Rand), please let me know [:

posted by jgad that is if you don't allow anyone to invade his land and kick him out - if you respect his property rights.

originally posted by Caller
This lying was based off of a way to dispose of the very securities that commercial banks were forced to take on. Without disposing of said securities, the banks would be in the red-thus, since they had no choice to take on risky loans that they would not have made otherwise, they attempted to offload as fast as they could.

On April 20 2009 17:19 SWPIGWANG wrote:

The problem I have Austrians as a moral philosophy as opposed to a economic system is that there are things people that value that can not be traded with a simple exchange. Property rights don't work for a lot of things. The problem of life is not solved if you optimize utility within the tradible domain. If one looks at the utopian desires of the average person, "hyper efficient exchange system" probably do not even register. The Austrians on this thread is certainly motivated by things that lies outside the monetary trade domain as no money is passing hands anywhere. The same is with everyone else, and people often don't mind reduced "efficiencies" to fulfill desires like "I belong to a nation that saves the poor!!"

I could even make the claim that the marginal utility of money is near zero beyond the point of filling basic biological needs. If one looks at the self reported happiness rating of people, money is of weak correlation (and what remain probably comes from the fact that successful people are often rich, not rich people are happier) beyond a certain point. It is said that gain in money result in increase in happiness but wealth level does not, and lottery winners move back to their baseline happiness in just one year. The implication of those things is that the economist's theory of the utility function doesn't apply to humans, and human beings are horrible at estimating their own utility and controlling to optimize with their short memories and bad imagination, resulting in mass consumption of things like drugs. In this case, free market hardly result in optimal utility, only "giving them what exchange relations result in."

Even if we limit ourself to the free market project, free markets don't work when "property rights" are so underdeveloped. There are still many things that are valuable but not owned by anyone as externalities are all over the place. The atmosphere isn't owned by anyone but it is critical for all too many things, and I still haven't seen a workable proposal that can divide up the atmosphere in to property. There are many other externalities for example housing prices are influenced by other houses in the area, so how do you prevent someone building a toxic waste dump beside your house? Ideas behind "Closed" property rights where land can be used to do anything regardless of its external effects are seriously suboptimal. This extends from everything in the environment to critical piece of information and other things whose effects are too large to easily be tied up in property rights. If there is a market, or even just a good proposal, where all those things can be owned and traded, than there is a good reason for government to step out. Before that happens, no cigar.


Oh please. CRA is just functionally a tax. Taxes are a bad justification for lying and cons about AAA securities.

If your business model can't pay taxes, you change it or die. I don't think the CRA "tax" is anywhere enough to drive all of the banking sector that give out mortages to their doom. No, not at all. Only banks that are too weak to survive would seriously be troubled by it and they should have just died.

This is just another story of failures that try to survive by a con.

Sure, one can make a good argument against the tax rate and the annoyance of convoluted indirect taxation. That does not pass the responsibility of failure to another party.

------------
I would say that much of this mess happened because investors don't know exactly what those packaged securities mean as they were new and hyped. Next time comes around, they'll know better and over leveraging and things would be curbed by skeptical investors all over. (until young investor grow up and promptly forget all the lessons...ah well) Even the fed can't pump enough money to fuel a bubble (without massive inflation which should sound alarm clocks in voters everywhere) if the investors don't believe it.

On April 19 2009 22:24 oneofthem wrote:
lol rand

On April 20 2009 17:19 SWPIGWANG wrote:

The problem I have Austrians as a moral philosophy as opposed to a economic system is that there are things people that value that can not be traded with a simple exchange. Property rights don't work for a lot of things. The problem of life is not solved if you optimize utility within the tradible domain. If one looks at the utopian desires of the average person, "hyper efficient exchange system" probably do not even register. The Austrians on this thread is certainly motivated by things that lies outside the monetary trade domain as no money is passing hands anywhere.

The same is with everyone else, and people often don't mind reduced "efficiencies" to fulfill desires like "I belong to a nation that saves the poor!!"

I could even make the claim that the marginal utility of money is near zero beyond the point of filling basic biological needs.

If one looks at the self reported happiness rating of people, money is of weak correlation

On April 20 2009 23:02 cUrsOr wrote:
I know so many people, and see a lot of posts on the internet, by people who think the big thing happening in the US is the "Democrats" controlling everything (media, banks, school systems) to create just a gigantic government that soaks up like 50% of everything in taxes. I think that this idea is absolutely rediculous. I would argue that the "big thing" happening in America is corporations buying and owning all the power, and the 2 parties just putting on a puppet show that gives people the idea there is some debate going on.
I havent read the book, but I did the article, and it seems like the author honestly believes that the "government" is the driving force in this country, driving and manipulating the private sector. I, obviously, see it as the other way around.

On April 20 2009 19:46 HeadBangaa wrote:

lol stereotypicalCondescendingPhilosophyUndergraduate.

On April 21 2009 09:56 Tal wrote:
This is going to sound ignorant, but I really don't understand Libertarianism- or at least the economic brand that Ann Rand fans seem to put across.
Which schools of philosophy or philosophers include it in their theories? With something like socialism I've been presented with endless (fairly convincing) arguments, which are underpinned by present day thinkers like John Rawls. Yet I'm yet to hear any philosopher or philosophy mentioned with LIbertarianism. Who should I read? In the British press I have read continuously scathing extracts of Ann Rand's writing, and I've never seen her referenced in academia, so I'd like to find someone else if possible.
Also, while on philosophy, what is Libertarianism's main goal? From this thread it doesn't seem to be to promote the standard of living of all (unless constant unregulated competition is their standard.) What provisions does it give for the unfortunate which makes it superior to European welfare state based economies? Are there examples of this? Aren't their serious problems with assuming a business will eventually go out of business if it treats its workers badly (e.g it will be able to do so for a long time, and in some circumstances might be able to survive)
When people put forward other ideologies, even ones I think are self-interested or stupid (Conservatism), I kind of understand them. But when someone says Libertarianism I don't quite get it.

Conservatism isn't an ideology, btw.

On April 21 2009 10:16 Caller wrote:

Yes it is. See Edmund Burke.

On April 21 2009 10:22 warding wrote:

No it isn't. See Edmund Burke.

On April 21 2009 10:13 warding wrote:
You can try going for the Austrians, Friedrich Hayek and Ludwig Mises. Friedman's Capitalism and Freedom is pretty good and covers a lot of what is Libertarianism. For a more hardcore libertarianism you can turn to Rothbard. These were the ones i found most insightful and still relevant decades after their major works were published.

There are plenty of Libertarian thinkers still around, but I find they really haven't been as innovative in their thinking as the ones I've mentioned.

Conservatism isn't an ideology, btw.

On April 21 2009 10:22 oneofthem wrote: and it is the methodology that could still be discussed. i dont really see much going for them on that front either, since its axiomatic and simplistic treatment of human action is immediately problematic.

On April 21 2009 13:02 oneofthem wrote:
a priori principles of human action is a simplifying abstraction. the axiomatization is dogmatic.

On April 21 2009 13:44 oneofthem wrote:
that humans act by strict rational principles is already a dead horse. nevermind that people do not act with rational consideration most of the time, their working rationality is not even as simple as welfare maximization.

take up behavioral and empirical economics

i would suggest wider engagement with contemporary political philosophy and political science. reading classical works will not be enough as the perspective you take on them will most likely be deficient

But in the Austrian view human action is always "rational".

Satisfaction of a given valued end is prefered sooner over satisfaction of the same end later

A good consumed in the present cannot be consumed in the future

To challenge this, you must present an example of human action which is not "rational", or, in other (better) words which is not purposeful pursuit of valued ends using scarce means.

There are innumerable reasons why economics is a poor discipline to tackle with empiricism.

Again, I think I've failed in conveying the objective effectively. What sorts of non-tradeable goods can not be incorporated. This isn't outside the scope of austrian theory. What are you talking about? Give me an example. I don't think there is anything in the human domain which cannot be accounted for.

The problem is that you always have to make that choice for some people by force. Why do that? If anything it's just begging for trouble - you create civil unrest any time you have to force people to do things they don't want, and every extraneous government programme is something like this.

And if people do have to be forced, then are you really the benevolent nation you appear to be....

Man's greed is infinite - he will always find new desires to satisfy when previous ones are sated.

On April 21 2009 10:10 Caller wrote:

Libertarianism is the idea that people should have civil liberties and economic liberties alike. Akin to the classical liberalism of the Enlightenment (see: John Locke, Mill), it advocates a minimal size of government and negative liberties, i.e. the right to do whatever you want without infringing on the rights of others.
There are many branches of Libertarianism. On one hand, you have the Objectivists, Ayn Rand's faction. They believe in Egoism, which essentially praises the individual above all else, i.e. "I will not live my life for the sake of any other man." They are very anti-welfare, but are criticized by other libertarians because they trust too much in Ayn Rand as a cult, as well as more didactic differences.
You also have the Austrian branch, i.e. RON PAUL 2012. These libertarians are bordering anarchy-they are considered anarcho-capitalist. They believe that government should play no role in anything, and that in a private, free-market (this is key) people will be able to succeed and spread prosperity, and there will not be large mega-corporations infringing the people.
You have then more mainstream Libertarians in the Chicago Branch, which was based off of Milton Friedman's theories. Friedman was very opposed to most government involvement in the economy, and also advocated (to a lesser extent) government influence in war and civil policy. This branch is the most mainstream and is essentially one of the core groups of the Libertarian party.
If you want to know the thinkers that advocate Libertarianism, the list would include John Locke, Alexis de Tocqueville, Edmund Burke to an extent, Rousseau, Thoreau and Emerson, Milton Friedman, F. A. Hayek, Thomas Jefferson, John Stuart Mill, George Washington, Ludwig von Mises, and there are many, many other thinkers that support libertarian thought (although back then, it was considered liberalism, not today's liberalism, which is more of a progressivism/democratic socialism)

On April 21 2009 19:59 Tal wrote:


Thankyou, and cheers to the other replies. The objectivists sound fairly unpalatable, it seems odd to totally remove empathy from philosophy. I'm familiar with Locke, Burke, Rousseau and Mill - and can kind of see how Locke and Burke are part of a free-market tradition, with their focus on property rights. I'm less sure about Rousseau and Mill, as it seems their ideas like the general will or utilitarinism could be drawn upon by any ideology.
It sounds like it would be worth me checking out Hayek and Friedman, could you recomend a core text?
In answer to whoever said Conservatism isn't an ideology, I know that technically it isn't (being largely reactionary to the trends of the time), but the way I studied it showed that it valued certain principles (tradition, property rights, stablity), in a fairly ideological way, so it can generally be talked about in the same way.
I still haven't quite got my head round the core point of Libertarianism. If a free market is promoted, and that generates wealth (which it seems to do), why is that the best thing? What gurantee does that give to the unfortunate? It seems like by its nature there could be no safety net in place, which seems kind of troubling...

On April 21 2009 16:26 SWPIGWANG wrote:

That is a matter of definition. While it is possible to build a internally consistent structure from a number of basic definitions, it does not make it "useful."

An assertion, not a proof. The fact that I'm typing this as opposed to having lunch is a counter example. (and one counter example is sufficient)

I listened to my music CD therefore can not listen to it again? Oh, but "consumption" means destruction and what we have is 1+1 = 1+1 since what one has proven is that "goods that are destroyed is destroyed" but says nothing about "real" goods.

I can not present this under the framework of axioms presented, but I can point out the flaws of the framework.

Humans all die. Humans even kill themselves. So what is value? The definition here is circular because VALUE IS DEFINED BY ACTION! Because people do, therefore value is assigned.

What this is, is a classic philosophical bait and switch trick that is all too common in philosophy, where on hijacks the meaning of a common word by a matter of indirect definition and while inferring the common meaning to support an argument.

If all possible human action is "valuable", from suicide to murder, than it is but a useless word.
---------------------------------
I can not tell you what is valuable since you yourself have to find it in yourself.

My suggestion is to disbelieve whatever you are looking at, step back and imagine yourself believing another set of well developed philosophy (throwing everything of the old out of the window) and see if you can disprove it without bringing in outside concepts. Play around a bit and you'd understand the limits of logic.

Think about it this way. You are first of all a human being (over a thinking, rational or logical being). If humans are suppose to be logical beings with the same set of starting axioms, than there'd be no arguments in the universe since the result is self evident. (with enough processing power) Since that is not what humans do, there is no need to tie yourself to a logic frame work. It is fine to be the irrational "i don't know and i don't care" just as well. Frankly, the latter might be more useful starting point for arguments as logical frameworks are just tools.

You can define value as this, i can define value as god's law or some other crap and one wouldn't be able to have a debate since fundamental disagreement on the axioms can not be argued by logic.

Axioms without observation is pure math.

There is no functional discipline outside of empirical discipline. Axiomatic approaches result in models and only models and making it truth is just broken epistemology. Since there is no observation, there is no understanding of what is a "human", thus it would be perfectly valid to say:

"In the neo-austrian view, ant action is always rational. Ant action is an actor's purposeful pursuit of valued ends with scarce means. ....*15 pages of inductions latter* and we thus prove that ownership and free trade is optimal for ants"

Yes, it would be perfectly valid, since the specifics of human (or ant) capabilities and behavior is not necessary.

On April 21 2009 23:48 SWPIGWANG wrote:
2.1 In every voluntary exchange, between two individuals both except to benefit at outset of exchange, otherwise they would not. Exchanges must have unequal value in the eyes of the participants and have opposite preference orders. Is this even a hypothesis and how would we go about testing it.

Answer: Testing is easy, just have self reports during/before the exchange, or one can engage in psychological experiments where one is offered a exchange which is then interrupted and a gift of either the good being offered in the exchange is given away without cost instead. (which should work if given decreasing marginal utility)

How can this statement be false: when exchange of items is of lesser importance than other factors, for example exchange of gifts which is often a formality. (just remember gifts your throw away....)

2.2 If we raise the minimum wage to 1million dollars, unemployment would rise:

How can this statement be false: when 1million isn't worth much, look at this 100billion dollar bill (it is not worth a third of a dollar)
en.wikipedia.org/wiki/Fileimbabwe_Hyperinflation_2008_notes.jpg

Note that massive numbers is possible through normal inflation over long periods of time, but normally what happens is that new currency with smaller numbers are issued. Certainly, with another species better at math this may not be the case.

Alternative way this statement can be false: one operates under communism/hyper-monopoly which prints all the money! Or if we assume an adjustment period (which can be very short given fast systems) than one can imagine the velocity of money increasing sufficiently to increase the money supply to inflate it back to worthlessness.

...and so and so on.... now factors like relative purchasing power and no alternative employment structures can not be axiomically derived but observed. That said, this is a functionally absurd statement that has high trust value due to number of previous confirmations of the model.

2.3 If we quadrupole supply of money overnight, keeping all else constant there will be inflation: See the line above in section 2.2. Note this would be untrue if velocity of money if highly variable, and this is uncommon since this level of instability is far shorter than human adjustment cycles.

2.3 Under-socialism without private ownership factors of production and then there is no prices for factors of production, one can not use cost accounting

Counter example: The state can still use money and markets as a internal control mechanism despite not having private ownership. One possible arrangement would be markets between government owned organizations. Another possibility would be the assignments of tradeable rights (right to use land, rights to build stuff and so on) and rents out of factors of production but still retain ultimate ownership.

2.4 Decreasing marginal utility and fulfillment of the highest utility demand first.

Counter example: Network effect systems. For example, phones. The first phone is of low utility while every extra phone today have much higher utility due to all the other phones that exist. The same is with airports, internet access and so on. Hell, windows is valuable only because there is so damn many windows computer around.... (thus with it, IT people and supporting software written for the platform)

2.5 Things like Pythagoras theorem or a ball of red and non-red. They are analytic propositions do not need to be proven. (but do not necessarily say anything about reality, like 14 dimensional non-Euclidean geometry as opposed to planar triangles)

4. Argument: Other economists (that aren't Austrian school) run finance and make money, but they aren't the richest people on earth and there are other rich people that don't use models and thus they don't count.

My counter argument: Well, if we see richer Austrians than they'd have a point. Economic theory is not perfect and economists make money mainly out of market imperfections which is finite.

On April 21 2009 23:48 SWPIGWANG wrote:
Someone posted "Professor Hans-Hermann Hoppe: Praxeology: The Austrian Method" video on the Austrian method, and I'll answer his points here.

1. Popper does not prove his own philosophy as correct unless you take its propositions as correct to begin with: That is true with all philosophy as all of them assert correctness by simply claiming it or applying circular logic.

2. Absurdity examples where things don't have to be prove and can not be disproven:

Now first of all, I should note that in strictly empirical science, many statements are still "functionally absurd" like claiming that falling from a tall building won't result in death on impact. In the strictest popperian sense, this is not an fundamentally absurd claim, but it is functionally absurd due to amount of falsifications involved. This points to a probabilistic view of knowledge which he glanced over. Now look at his examples:

2.1 In every voluntary exchange, between two individuals both except to benefit at outset of exchange, otherwise they would not. Exchanges must have unequal value in the eyes of the participants and have opposite preference orders. Is this even a hypothesis and how would we go about testing it.

Answer: Testing is easy, just have self reports during/before the exchange, or one can engage in psychological experiments where one is offered a exchange which is then interrupted and a gift of either the good being offered in the exchange is given away without cost instead. (which should work if given decreasing marginal utility)

How can this statement be false: when exchange of items is of lesser importance than other factors, for example exchange of gifts which is often a formality. (just remember gifts your throw away....)

2.2 If we raise the minimum wage to 1million dollars, unemployment would rise:

How can this statement be false: when 1million isn't worth much, look at this 100billion dollar bill (it is not worth a third of a dollar)
en.wikipedia.org/wiki/Fileimbabwe_Hyperinflation_2008_notes.jpg

Note that massive numbers is possible through normal inflation over long periods of time, but normally what happens is that new currency with smaller numbers are issued. Certainly, with another species better at math this may not be the case.

Alternative way this statement can be false: one operates under communism/hyper-monopoly which prints all the money! Or if we assume an adjustment period (which can be very short given fast systems) than one can imagine the velocity of money increasing sufficiently to increase the money supply to inflate it back to worthlessness.

...and so and so on.... now factors like relative purchasing power and no alternative employment structures can not be axiomically derived but observed. That said, this is a functionally absurd statement that has high trust value due to number of previous confirmations of the model.

2.3 If we quadrupole supply of money overnight, keeping all else constant there will be inflation: See the line above in section 2.2. Note this would be untrue if velocity of money if highly variable, and this is uncommon since this level of instability is far shorter than human adjustment cycles.

2.3 Under-socialism without private ownership factors of production and then there is no prices for factors of production, one can not use cost accounting

Counter example: The state can still use money and markets as a internal control mechanism despite not having private ownership. One possible arrangement would be markets between government owned organizations. Another possibility would be the assignments of tradeable rights (right to use land, rights to build stuff and so on) and rents out of factors of production but still retain ultimate ownership.

2.4 Decreasing marginal utility and fulfillment of the highest utility demand first.

Counter example: Network effect systems. For example, phones. The first phone is of low utility while every extra phone today have much higher utility due to all the other phones that exist. The same is with airports, internet access and so on. Hell, windows is valuable only because there is so damn many windows computer around.... (thus with it, IT people and supporting software written for the platform)

2.5 Things like Pythagoras theorem or a ball of red and non-red. They are analytic propositions do not need to be proven. (but do not necessarily say anything about reality, like 14 dimensional non-Euclidean geometry as opposed to planar triangles)

3. Claim: Empirical science is useless in social science since predictions are tainted by knowledge:

Now all things are effected by knowledge, and those are indeed can not be predicted. That is the limit to knowledge due to observation horizon and thats all.

4. Argument: Other economists (that aren't Austrian school) run finance and make money, but they aren't the richest people on earth and there are other rich people that don't use models and thus they don't count.

My counter argument: Well, if we see richer Austrians than they'd have a point. Economic theory is not perfect and economists make money mainly out of market imperfections which is finite.