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Libertarian Thread # 3: Liberty will never die

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Equality 7-2521 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Equality 7-2521 Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 10:56
Someone's wearing his snarky shorts today.
"One had to be a Newton to notice that the moon is falling, when everyone sees that it doesn't fall. "
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Post Options Post Options   Thanks (0) Thanks(0)   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 11:04
Violin




(have no idea how that relates to anything, I just wanted to use itTongue
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 11:17
Originally posted by rogerthat rogerthat wrote:

Acting in one's self interest does not always serve the best interests of the world at large.  It's oft-repeated by free market-advocates but it's just a myth.  Of course there's a built in assumption in said myth that the decision made to serve one's self interest would always be the most rational one but practical experience shows that things like greed or fear or ambition override rationality all too frequently. Why would an incumbent CEO of GM bother about the ignition switch problem (if I am not mistaken, that is the issue?) if he's very likely not going to be the one who has to face the music when it blows up?

Another thing I'd like to say is the theory that competition would somehow take care of these greedy oligarchs seems to ignore the financial dimension of the marketplace.  The marketplace is not just a location where goods are bought and sold.  It is also a place where money multiplies and often by a mindboggling factor.  And that puts the player with say a large market share as well as large share capital at a totally different level.  You can never ever create a level playing field on the financial side because the larger player gets money at far more favourable terms which it can use to shut out upstarts before they have half a chance.


Indeed. And in recent years I think it's safe to say the financial aspect is finally getting more attention. 
There's actually been more and more attention being given to Hyman Minsky and his "stability is destabilizing" and "unchecked, financial capitalism is inherently catastrophic" ideas. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 11:18
I am not at all familiar with Minsky's work; interesting that he said that.  Should read more about his work sometime soon.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 12:00
He's quite obscure, I never heard of him before a year ago. He was not a big name, and by the time he passed away in the 90s efficient market hypothesis and de regulation was pretty much law of the land, so I hate to say but it seems he was outcasted ideologically. 




What I found a little nutty was that apparently, private debt is something that was ignored by economics...at least until very recently. The Post-Keynesians who stressed it have been largely marginalized to a couple of institutions, (and in fact caused a split of the Notre Dame department!) and they claim shut out of "major" publications. 

I've only taken through intermediate levels, maybe you (or llama) can confirm but is private debt really something that's not taken into account??


Edited by JJLehto - April 11 2014 at 13:09
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Failcore Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 13:33
I vote we replace our entire economy on a system that uses shiny beads.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 13:34
I propose grains or rice instead. We would all be filthy rich. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 14:10
By the way, I'm driving to Washington DC this Sunday. Any message any of you want me to give to The Bama? Tongue
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 15:15
Originally posted by Failcore Failcore wrote:

I vote we replace our entire economy on a system that uses shiny beads.

Bryan....go awayTongue
Leave our shenanigans to FB pls


This is one thread that people leave alone and it's nice. 






Edited by JJLehto - April 11 2014 at 15:16
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Equality 7-2521 Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 16:01
Originally posted by The T The T wrote:

By the way, I'm driving to Washington DC this Sunday. Any message any of you want me to give to The Bama? Tongue


Nothing that wouldn't get you ghost arrested and water boarded.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote The T Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 16:10
It's ok, that will add some thrills to the trip, like riding a roller-coaster in a CIA theme park Tongue
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 21:51
Eh, all I could think to say to Obama is along the lines of "I don't blame you personally...I just have realized the WHOLE darn system is pretty much f**ked. You're not so much the bad guy though, without you we'd just get the next puppet to fill in" Cry  

Edited by JJLehto - April 11 2014 at 21:51
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 23:33
----deleted double comment------


Edited by rogerthat - April 11 2014 at 23:37
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: April 11 2014 at 23:33
Originally posted by JJLehto JJLehto wrote:

He's quite obscure, I never heard of him before a year ago. He was not a big name, and by the time he passed away in the 90s efficient market hypothesis and de regulation was pretty much law of the land, so I hate to say but it seems he was outcasted ideologically. 




What I found a little nutty was that apparently, private debt is something that was ignored by economics...at least until very recently. The Post-Keynesians who stressed it have been largely marginalized to a couple of institutions, (and in fact caused a split of the Notre Dame department!) and they claim shut out of "major" publications. 

I've only taken through intermediate levels, maybe you (or llama) can confirm but is private debt really something that's not taken into account??

Thanks for that.  I also read some working paper on the financial instability hypothesis:  http://www.levyinstitute.org/pubs/wp74.pdf.  

Many of the observations ring true from my practical experience of observing businesses work.  

Especially the lines: "The documents "on the table" in such negotiations detail the costs and profit expectations of the businessmen: businessmen interpret the numbers and the expectations as enthusiasts, bankers as skeptics"

And:  "Investment takes place now because businessmen and their bankers expect investment to take place in the future."

It appears to be a more realistic view of how the market actually works.  You often find businessmen making references to 'sentiment' and to 'animal spirits'.  It is these beasts that ultimately have to be tamed to maintain some amount of stability.  Govts have historically been good at reviving animal spirits when the economy is down and out.  What they are not good at is in containing these animal spirits when they run out of control.  Coming back to the Bush days, the prudent thing to do would have been to tighten home loan lending to keep bubbles from forming whereas the Bush establishment did the exact opposite. 

Another sentence deriving implications of a para attributed to Keynes is also interesting and quite accurate: The Keynes veil implies that money is connected with financing through time.  

It is actually pretty evident.  If I offer a greater amount for a longer period as a deposit to the bank, I get a higher rate of interest and vice versa.  Same goes with loans.  Time is of essence when it comes to money.  

I did not major in economics so I cannot tell if private debt or the role of money as such is ignored in economics.  What I do know is I learnt very little about it in my graduate studies.  Um, it's a bit like how people STILL talk only about the Mozarts and Beethovens in classical music as if minimalism never happened.  The fact that people still spout neo classical economic assumptions as if they are indubitably valid suggests that 20th century economics is not being taught enough in college.  And that's sad.  Maybe the profession needs to stop arguing, settle down and develop some consensus on what theories developed in the 20th century are worth handing down to students because to teach people growing up in the modern world about invisible hand and perfect competition is borderline dangerous. 



Edited by rogerthat - April 11 2014 at 23:37
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 00:45
Ah good man, went right to the Levy Institute so I didn't have to post even more of their stuff hereLOL
Yes, it makes a lot more real life sense to me, and the fact that so many "real" business people and investors have led support to their ideas gives it more credence in my book. 

You hit on the head, their school of thought claims to "go back to" Keynes, and not the "watered down" version we have seen since WWII...were Keynes has been blended with neo classical thought. 
If I may go farther, it is this strain they feel is a failure, and that ideas like "pump priming" and trying to boost Agg Demand will just become inflationary before anything else. They like the idea of that universal gov job program, basically a universal, permanent new deal (devised and administered locally not centrally). I'm not sure I'm totally sold on it, both for logistics and their claim it absolutely will not be inflationary... but I do find it intriguing, and a breath of fresh air. 

They have some other out there ideas, like permanent zero interest rate, and that while gov deficits can be inflationary, they never seem to think it an issue, even if we reach their goal of full employment (though I'm still reading about it). As you said, it's when times are booming I think these issues become a problem. Still, new ideas at least. Or not, since Minsky spoke of them in the 60sLOL

As you said, it appears economics is lagging severely. There does seem to be consensus, but on maintaining many of the neo classical ideas you mention (with Keynes thrown in there) and maintaining models that just don't make real life sense. Stuff like ignoring private debt, which seems just illogical though I guess difficult to "do much" about and how people are always rational. Seems to me you're right, those animal spirits are quite timid. Scared to move in a slump and have to be prodded, but when they do awaken in a boom it's like a drunken orgy. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 00:49
Anywho, I'm still in the long process of taking a ton of classes, but I hope it's not as ideological and "clubby" as some maintain...where you're either in and accept their ways, or get relegated to "joke" status and never hope to make it any of the "better" institutions Cry


Edit: Maybe this will entice MoM to read!Wink Some liberals who feel the War on Poverty has largely been a failure. http://www.levyinstitute.org/pubs/ppb78.pdf
Again, Minsky is the hero here... it appears his predictions about the "War on Poverty" (as well as the impact of  trying to boost agg demand and investment led growth) were as accurate as his financial instability. Shame he spent so much time in obscurity. 


Edited by JJLehto - April 12 2014 at 00:59
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 00:58
About deficits, it depends on the overall alignment of domestic business plus international trade of an economy.  China has huge piles of public debt which people have been writing to warn about but as against that, it also has huge current account surpluses and maintains enormous reserves.  You could say they use the cushion of a very stable BoP position to invest in the future.  Whereas India has lower debt than some other emerging or even advanced economies but has managed only modest surpluses at the best of times.  In short, deficits are not inherently bad or good but the govt has to be competent enough to manage the genie once they let it out of the bottle.  Somehow I don't think they are a very good idea for democracies.  Deficit spending appeals to populist notions of politicians and they will invariably indulge in it even where it is not warranted.  

I have not read anything else yet of Levy Institute or Minsky's work.  I am not sure about job programs (especially govt job programs), a view I have expressed before.  But I would like to hear their views first and how they argue in favour of it before commenting on it.  


Edited by rogerthat - April 12 2014 at 01:00
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 01:10
That is their take on deficits as well. 

Oh boy, there is a lot there...the fast and dirty is:

.A federally funded but locally run jobs program, for anyone who wants one and is willing to work. 
.This would be at the minimum wage, and as it is now adjusted every few years. 
.Jobs would  be designed to NOT compete with the private sector. Infrastructure and environmental work seems to be their big pushes. 
.If someone was hired into the private sector, good. The gov would NOT bid to keep them in the gov program. 

The idea is based off automatic stabilizers. This gov program would grow in recessions, shrink in expansions, thus if we leave taxes be...the deficits will grow and shrink as needed. In a recession deficits will grow to whatever is "determined" by the private sector employment, in an expansion as people leave this program, earn higher wages, etc etc gov revenue will rise, naturally. It's not been stated that I see...but I take this to mean they feel it will all "right itself" if left on its own. 

It also maintains greater stability for the lowest rungs of the ladder, would stabilize the business cycle, could lead to the shrinkage of much of our "welfare state" and be a "bottom up" approach to poverty. 
The devil is in the details for me. I am hesitant still about inflation...if this was to happen there'd be a major agg demand boost. They seem to think increased tax revenue and the whole deal will "work out" but I'd like more in depth info! 

The solution is fairly radical, but not the concept. Automatic Stabilizers were in my intro textbook by Mankiw out of Harvard (and held a job in the George W administration). Even stating that clearly they were not large enough under Obama (!?) soooo it's not that crazy in theory, but I just see potential issues in reality. 


Edited by JJLehto - April 12 2014 at 01:18
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Post Options Post Options   Thanks (0) Thanks(0)   Quote rogerthat Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 01:14
Well, at any rate, a locally run program is a lesser evil as long as its budgets are managed tightly.  Inefficiency 'expands' when everything is managed from the centre by bureaucrats out of touch with reality.  
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Post Options Post Options   Thanks (0) Thanks(0)   Quote JJLehto Quote  Post ReplyReply Direct Link To This Post Posted: April 12 2014 at 01:19
Originally posted by rogerthat rogerthat wrote:

Well, at any rate, a locally run program is a lesser evil as long as its budgets are managed tightly.  Inefficiency 'expands' when everything is managed from the centre by bureaucrats out of touch with reality.  

Indeed. 
Even Trotsky said central planning was a bad ideaLOL


Edit: Here is a paragraph from a paper about the War on Poverty and how it's been, let's say lackluster (and in their opinion why direct job creation is needed)
This is about the "Keynesian investment/growth/prime pumping" techniques to "spur" the private sector to create jobs:

"Minsky argued there were four problems with the high investment strategy. First, tax incentives to shift income to capital exacerbate inequality between ordinary workers and those who have money to invest. Second, high capital incomes...create the potential for demand pull inflation. Third, contracts granted to sophisticated, high tech industries generate demand for skilled, high wage labor, thereby exacerbating inequality. Finally, by targeting the size and surety of capital income, tax cut programs would increase business confidence and debt financing...thus, a private investment strategy can lead to a debt financed investment boom, thereby undermining the the stability of the financial system."

hmmmm




Edited by JJLehto - April 15 2014 at 13:34
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