Re: Is Bigger Government Better
Quote:
The question isn't whether markets always work well or are always free of corruption (because they don't and aren't) but whether the alternative is better. Is government any better at sorting out market failures than the market is? Or in somehow preventing those failures in the first place? In my opinion and experience, I'd have to say no. Quote:
I don't know if you consider a professorship of economics as an acceptable credential, but their names and institutions are listed and you can decide for yourself. Quote:
6.5 million Americans have lost their jobs since last September (and more to follow). These are people who did not and will not get a bailout. Paying additional money for "bailout insurance" might be a reasonable option as long as you believe your employer will be bailed out when needed; but as more and more people don't get bailed out then it doesn't look nearly so attractive. |
Re: Is Bigger Government Better
Quote:
This would lead me to believe that the people whose names appear on the list are against the specific bail out plan presented by the above mentioned government institutions. This does not mean that they'd be against bail outs per principle, or that they'd think that simply not bailing out would be a better option, or that the bail out plan could not be improved through modifications or follow-up actions. I'll ask again, and I'll try be more specific: could you please point me out an economist with creditentials that will specifically state that the bail outs should have never happened, and bail outs should never happen, because they are "wrong" (because markets clear as per efficient markets model). It's worth mentioning that nobelists like Krugman and Shiller would follow the list to argue that the bail out plan was poor. Yet, they'd probably not argue that it was worse than doing nothing, or, that the whole of the financial sector should be left for free markets to reign. I doubt any sensible economist nowadays would so trust some pristine efficient market model. Quote:
In fact, in this aspect, I'll quote your own citation. Please, read this part carefully. "We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan" I'll ask again, in case you misunderstood. I'm not supporting the Paulson plan vis a vis. But I'm a fan of certain bail outs. I'll quote myself. Quote:
|
Re: Is Bigger Government Better
In a further attempt to elaborate why your citation is not a valid argument to back up your claims I've researched a bit of it for you. I picked up the name Robert Lucas from the list, mostly due to his background as a famous macroeconomics/public sector focused economist (Lucas Critique), and also for the fact that he carries some special weight as a nobel laureate. Last but not least, his opinion is easy to track.
This text written by Robert Lucas dates after the last update on your paper. The source link is here. He is discussing the fed's 600 billion dollar actions, under the name "Ben Bernanke is the best stimulus right now". Quote:
Quote:
Quote:
Let's be honest here. Read the article, and come back and claim to me that the person you named to support your argument, Robert Lucas, is saying that the bail outs were a bad thing, and that it shouldn't have been done. I'm prepared to find more professors that are putting their word out for actions and against free markets. Clearing up: treasury bailout bad, fed bailout good? Supports your argument, how? I'll start with another nobel laureate, Paul Krugman, mostly because he's also a very prominent (and loud) figure speaking on the current situation. It, link here, also provides some background on May and Mac you can feed your free market flamebait on. Yes, I know: "Mac & May failed because of their background, which is inherently detrimental". Quote:
|
Re: Is Bigger Government Better
Quote:
Quote:
Quote:
Quote:
|
Re: Is Bigger Government Better
Quote:
Quote:
This is the part where we enter a discussion that'll never end: one economist (here, Princeton professor, nobel laureate Paul Krugman) will argue to you that FM/FM didn't actually participate in excess risk taking; another will argue that they did exactly that (here, Harvard senior lecturer Jeffrey Miron). This is part of the academic nature: different views argue with each other. The problem with claiming that Freddie Mac and Fannie May took excessive risk is that the loans refered to as toxic waste wouldn't have qualified for Mac's or May's portfolio - because their portfolios, unlike such of say Citibank, had strict requirements (this is the Krugman argument; Miron seems to think diagonally opposite: which is right and wrong comes down to a question of perspective). The argument as such is never going to end - but most definitely, if you look at equity-asset rates, and portfolios from early 2000s onwards, you'd probably agree that if anything, FM/FM ran considerably less risk than the investment banks did (hence, Bearn, Lehman, et cetera)? Why did the investment banks run such a high risk to cause several of them to collapse? They weren't government regulated - in fact, they had very little to do with the act mentioned by Miron. Unlike conventional banks, they weren't "encouraged" to spread their portfolio anywhere. Yet, only a few of them (f.ex GS, as Johnny mentioned) have emerged alive. While Miron can build a case on what was wrong with the act as per regulated banks, it's hard for these. Why do these Wall Street institutions seem to have participated in systematic high short term term profit high long term risk investing? Does their spillover play a role more significant than FM/FM, or, even amplifying the problems of FM/FM, as suggested by Krugman? I'm not completely familiar with all the installations of the CRA, but I'm fairly sure it didn't force anyone to go subprime - which is essentially what Miron agrees should've never have happened. Why did so many investment "banks" participate in high risk activity, such as subprime mortgage securitization? Because of the high short term profits that would reward their CEOs with high bonuses they'd keep whether the company would sink or not? Because of their responsible long term business plans? Quote:
Quote:
Could you please elaborate why the mentioned #1 and #3 should be valid objections to almost any bailout plan? I can't quite grasp it. Seems that Robert Lucas can't either. He seems to think that the Bernanke route is really good. Maybe Mr. Miron can? To be fair, unparalleled prosperity can also equal unparalleled national debt. (I'm not sure where you got the implication that I'd say people were only concerned over #2; I don't also believe that all bailout plans by default need to have adverse long term effects, but I'd really like to hear why you think so; in fact I just linked you a piece where one of the persons you cited as to back up your claims elaborates why he thinks a bailout plan would have positive long term effects, here I'm refering to the Robert Lucas part). Of course, people are concerned of #1 and #3 too. #3 is very ambiguous (ironically) to begin with, and seems to mostly be specific to this very plan: I can't see why every possible bail out plan would have adverse effects to the innovative markets which came up with securizitation of subprime mortgages. Krugman's especially concerned about #1 in what he spits out: this is one of the prime reasons he thinks temporary nationalization (ie. ownership over subsidy) would be a better idea, although he does also argue that this would function to remove some of the "heads I win tails you lose" incentive for the owners. |
Re: Is Bigger Government Better
On the other hand, Jeffrey Miron's CNN article seems to imply that he thinks the market should be left to itself: I'd be curious what he thinks the "we agree with the need for bold action to ensure that the financial system continues to function" (which Miron signed) mentioned in your original link to support your cause of "all bailouts are evil" would include? Bold inaction? Bold abolishing of all financial market regulation?
|
Re: Is Bigger Government Better
Quote:
|
Re: Is Bigger Government Better
Quote:
|
Re: Is Bigger Government Better
Quote:
|
Re: Is Bigger Government Better
Quote:
(apologies for reply to such an early post, I'm still progressing through the thread). |
Re: Is Bigger Government Better
Quote:
My limited understanding would suggest that he is getting frustrated at every step by the Congress (particularly the Senate), in the areas of Health, financial services re-regulation, the stimulus package back in January, and I'm sure other things too. If you have one arm of government trying to do something, and an other arm preventing them from doing it, how are their intentions ruining the country? |
Re: Is Bigger Government Better
Quote:
At least in Australia, government departments have strict chains of accountability and responsibility which is enforced through freedom of information law and the principle of responsible government. Sometimes I wonder that government activity and 'frank and fearless advice' is constrained by those FoI laws: if adverse advice is given to the Government, and then made public, the Department is placed in the position of embarrasing it's Minister, which causes ovbious problems for the relationship of trust between the two. I was talking about this to friends of mine who work in the private sector (actually, in banks), and they actually envied me because they also are burdened by large amounts of documentation should there ever be civil action by either their clients or their customers, who then have to provide those documents prior to court cases. Also, just because someone is a public servant, doesnt mean that they are a slacker. I work longer hours than most people in the private sector. Annectodal evidence of other (public & private sector) graduates in Canberra would suggest that private sector grads work essentially the same hours. Whether they are as equally productive in those hours or not is much more difficult to measure. I think, however, that competition is the key factor. A business has to keep looking to make itself more efficient by cutting costs, innovating, adopting new technology, better targeting its products to their customer's needs, because if they dont then they loose money to their competitors. Governments dont really face this - if you dont like the way a country is being run, you cant just switch your subscription to an alternative government. You have to move countries (at least), and that can have significant cost attached to it. The way most (western) government agencies are funded through annual budgets is that they have great incentives to spend all of the available funds for their purpose, and no less. There is little incentive to save here, pinch pennies there, make things work smarter elsewhere etc. There are big disencentives for underspending as then the department will loose funding the following year, there are also disencentives for overspending (but this is less of a problem for the department - it may embarrass the Minister during Senate estimates/Question Time however). Competition really is the key. |
All times are GMT +1. The time now is 20:12. |
Powered by vBulletin® Version 3.8.1
Copyright ©2000 - 2024, Jelsoft Enterprises Ltd.
Copyright ©2002 - 2018