olegvolk: Walter Williams writes again

Oleg Volk (

olegvolk) wrote,
@ 2008-05-15 11:51:00

Walter Williams writes again
http://www.gmu.edu/departments/economics/wew/articles/08/Congressional%20Problem%20Creation.htm

(Post a new comment)

	smjayman 2008-05-15 05:42 pm UTC (link)
	Yeah, that about sums it up. (Reply to this)

	seadevil001 2008-05-15 05:48 pm UTC (link)
	As far as I can see - Feds created opportunity for crisis by lowering rates, but free market actually created crisis jumping on that opportunity. As a former bureaucrat, I can tell that many things people take for granted (i.e. free or mostly free competition) are result of complicated regulations. (Reply to this) (Thread)

	What free market? maineshark 2008-05-15 07:42 pm UTC (link)
	You're under the illusion that we have a free market, here? The Feds didn't just "create opportunity for crisis." They forced banks to lend to customers who they knew could not repay the loans, as a matter of law. (Reply to this) (Parent)(Thread)

Re: What free market?

madscience
2008-05-15 08:38 pm UTC (link)

And you seem to be under the illusion that it hurts banks to issue mortgage loans to people who can't repay them. It's a guaranteed win; they either profit from the interest, or they end up owning the property, and all with essentially no risk since the banks don't actually have the money they're loaning out in the first place. Read up on fractional-reserve lending.

(Reply to this) (Parent)(Thread)

	Re: What free market? maineshark 2008-05-15 08:41 pm UTC (link)
	I'm well aware of how the system works. It is a system that was created by the government. Banking is one of the most heavily-regulated industries out there. And the banks, regardless of whether they benefit by it, are forced to take on these loans. (Reply to this) (Parent)(Thread)

Re: What free market?

madscience
2008-05-15 08:55 pm UTC (link)

Fractional-reserve lending wasn't created by the government. There were actually several attempts to outlaw it in the first hundred and fifty years of our country's history.

And the CRA can hardly be blamed for creating the subprime mortgage crisis. For one thing, the CRA was gutted in recent years, and that's when lending got out of control. If anything, the CRA was holding the crisis back. Over half the loans involved in the crisis were not subject to the CRA in the first place, and of those that were, an unknown but undoubtedly significant fraction were not made to "unworthy" applicants. The crisis was created by the banks trying to make a quick buck with shady lending practices. They thought they could gouge a whole bunch of people with adjustable interest rates, but the weak economy didn't support it and now the banks are left holding the bag. Trying to pass the buck and call for even more deregulation of their lending practices is absolutely insane!

Edited at 2008-05-15 08:56 pm UTC

(Reply to this) (Parent)(Thread)

Re: What free market?

maineshark
2008-05-15 09:13 pm UTC (link)

Fractional reserve lending was, in fact, created by the government. I would suggest taking Economics 101 or some similar course.

The CRA requires that many banks engage in certain lending practices. The only way other banks can compete with that is to engage in similar practices. All do so because they expect that the Feds will insulate them from the results of their actions.

A capitalist system has not taxpayer-backed "safety net" for irresponsible businesses. With no expectation of a bailout, banks (any any other businesses) must actually maintain responsible business practices, for their own survival. Additionally, capitalism doesn't allow for limitation of liability through incorporation. No one except the criminally insane will defraud others if they can't just say, "hey, I'm declaring bankruptcy, so get lost" to their victims. Under capitalism, strict liability would put the responsible parties in debt until such time as they paid for the harm they caused.

Try again. You won't find any examples of this sort of behavior in a capitalist system. This sort of fraud and generally-scummy business practices only occurs when socialists start taking over.

(Reply to this) (Parent)

	Re: What free market? seadevil001 2008-05-15 09:19 pm UTC (link)
	Could do you please show me a sworn statement of banker were he/she tell about government forcing him/her to issue a AR mortgage to a person with FICO score below 600 (or without SSN even)? (Reply to this) (Parent)(Thread)

Re: What free market?

maineshark
2008-05-15 09:36 pm UTC (link)

I would suggest that you read the article, then do some research on the CRA, among other topics.

The issue isn't technically with credit rating, but with ability to repay. The CRA imposes a score system on the lending institutions that requires them to offer and accept certain numbers of certain loans in a variety of income brackets. Someone can have a "reasonable" credit rating, but have an income that is too small to make the monthly payments of the new loan. The banks can't just turn those customers away, because they would not meet their CRA requirements and would be fined for noncompliance.

If they magically had sufficient numbers of qualified customers show up for loans, they would be doing great. But that's not what happens, in the real world. If they don't have enough qualified customers, they have to accept unqualified ones, to avoid noncompliance with the CRA.

Someone can have a credit score of 800, and still not have sufficient income to pay for a given mortgage. The banks were forced by the Feds to be "lenient" about the debt-to-income ratios.

Banks certainly don't want to foreclose. They get pennies on the dollar when they do that. But they did not have a choice, because some bureaucrats decided that they were being "greedy capitalists" by only lending to those who could actually afford the loans, and forced them to lend to those who could not. The banks (and their investors, who are often "real people" who will lost their retirements) will be hurt. The homeowners who lose their homes or become renters will be hurt.

The only groups that gain from government regulation are bureaucrats and lawyers.

(Reply to this) (Parent)

	madscience 2008-05-15 08:31 pm UTC (link)
	I got as far as where he blames the government, and not filthy capitalist greed and the indefensible legality of fractional-reserve lending, for the subprime mortgage crisis. The guy's clearly a kook. (Reply to this) (Thread)

maineshark
2008-05-15 08:43 pm UTC (link)

Who invented fractional-reserve lending?

Oh, yeah, the government.

"Capitalist greed" is the only reason we aren't still foraging for food in the African savanna and dying of old age by 20 years, if we don't get killed first by other animals. If you oppose capitalism, I'd suggest that the logical first step in demonstrating your opposition should be to renounce all technology (created by capitalism), including computers and the Internet.

(Reply to this) (Parent)(Thread)

	madscience 2008-05-15 08:57 pm UTC (link)
	The government didn't create fractional-reserve lending, and capitalism isn't responsible for technology. Your worldview is bizarrely skewed, and your logic fails utterly. (Reply to this) (Parent)(Thread)

maineshark
2008-05-15 09:06 pm UTC (link)

Always fun to "debate" with liberals, who seem to live in la-la land.

Tell me, what has socialism ever created, except for increasing the market for bulldozers for all those mass graves? What's the total, now? At least a quarter billion dead, right?

"Greed" is the only reason we have technology. It's the only reason that agriculture was even developed. Go pick berries and lament the evils of progress, if you want to oppose "greed."

(Reply to this) (Parent)(Thread)

(Anonymous)
2008-05-15 10:26 pm UTC (link)

Well, I for one have invented things, built them, advertized them, and brought them to market. Let me explain-- I didn't do it for "the children". I did it for me and MY children, i.e. "greed". Also because I think it's cool (more self interest). And you want charity? You want selfless devotion to improving the lot of others? Are going to ask a poor person or a rich person for that big donation (or would you rather have it extorted from someone)? Hint: Americans freely give away more money to charities than the entire economies of many less free nations. It's no mere accident that Bill Gates, for example, is one of the biggest donors to charity in the world. I understand he's doing that full-time now.

In a free market, a bank loan would be between the bank, the customer, and sometimes the insurance company underwriting one or the other. Congress would have no role to play in it whatsoever, other than to secure our Liberty so we can keep creating, producing and trading.
[/rant]
-- Lyle

(Reply to this) (Parent)

madscience
2008-05-15 10:40 pm UTC (link)

Your comment contains two examples of what I call "linguistic propaganda" – propaganda you seem to have swallowed hook, line, and sinker.

Socialism is a philosophy of the role of government that encompasses communism, including some pretty fucked-up governments that were only nominally communist, but which, contrary to the conditioning of most Americans, is NOT synonymous with communism. Socialism, per se, is not responsible for a single death, ever, anywhere.

And profit, in the Wall Street sense, has been deliberately conflated with the personal profit motive of receiving just rewards for hard work and creativity. But that's not profit; that's pay. Profit, in the Wall Street sense, is by definition receiving more than the just reward for your efforts. It's immoral and should be illegal. Capitalist greed is NOT the reason we have technology; capitalist greed actually impedes scientific and industrial progress. The personal profit motive is the hugely powerful force that is responsible for everything good in the world.

(Reply to this) (Parent)(Thread)

maineshark
2008-05-15 11:59 pm UTC (link)

Socialism is just communism-lite.

There is no fundamental difference between the two philosophies. A habitual drunk who isn't quite dying of liver failure (yet) doesn't get to claim not to be an alcoholic.

There no such thing as receiving "unjust" profit, unless coercion is involved. The "fair" price for an item is whatever someone will pay for it. By trying to arbitrarily define, from the outside, what a "fair profit" or "just reward" is for any given product or service, you prove my point. You have no right to interfere with someone else's choices in life. As long as there is no coercion involved, which there never is in capitalism (that's what the principle of laissez faire means), then it is no business of yours.

There is no difference between interfering in my personal profit if that involves just myself and one other individual, or interfering in my personal profit if I get together with a group of others to form a large company which sells products or services to other individuals or groups. It's still my personal choices and their personal choices which you, ultimately, are attempting to coerce.

Not that you socialists leave small-scale capitalism alone, either. If you did, there would be no taxes on individuals and small businesses, now would there?

Capitalism is capitalism, on any scale. The same goes for socialism. Your desire to control the lives of others is no different from that of Stalin, Hitler, or any other socialist monster. All that you differ from them on is scale, not any fundamental matter.

The whole of politics and philosophy can be divided into two groups: those who desire to control others, and those who do not. There are variations of degree within those groups, but one cannot simultaneously belong to both. Choose a side of that fence, and mind who you will be sharing your space with.

(Reply to this) (Parent)(Thread)

	olegvolk 2008-05-16 12:03 am UTC (link)
	http://mises.org/midroad.asp (Reply to this) (Parent)(Thread)

maineshark
2008-05-16 12:15 am UTC (link)

Indeed. I can't recall if I've read that whole article, but what I do recall reading from it was quite good.

Those who want socialism but claim that their hands are clean are just deluded. The socialists go off and murder a quarter billion men, women, and children, torture, rape, maim, and otherwise brutalize countless millions more than that, force billions into poverty and oppression, and their enablers just sit back and wash their hands of it, saying "well, they make the trains run on time, and I didn't personally murder anyone."

Hitler didn't kill millions of Jews and others. Even those took the vile orders and did the deeds were a small number, in the grand scheme of things. The monsters don't succeed because they have such overwhelming numbers that they cannot be resisted. They succeed because well-meaning fools ignored their evils, covered their own eyes, plugged their own ears to shut out the screams, and prattled on about the lovely weather and how clean the streets were.

(Reply to this) (Parent)(Thread)

	madscience 2008-05-16 12:25 am UTC (link)
	Keep believing in your false dichotomies. I don't expect you'll ever understand anything related to government, economics, or human behavior. (Reply to this) (Parent)(Thread)

	maineshark 2008-05-16 12:47 am UTC (link)
	I understand all too much about government, economics, and human behavior. Socialism is the refuge of the stupid, insane, and evil. Which are you? (Reply to this) (Parent)

madscience
2008-05-16 12:23 am UTC (link)

"There is no fundamental difference between the two philosophies."

Yes, there is. Socialism is a philosophy of the role of government, and encompasses many things aside from communism. Communism is a structure of government. The confusion is a deliberate Cold War deception. Your analogy is silly and irrelevant.

As for unjust profits, all profit in the Wall Street sense is unjust. The contradiction inherent in corporations being treated as legal entities which for many purposes are equivalent to persons, while at the same time allowing them to be owned by other entities, creates a situation where "profit" equates to a perpetual debt that can never be repaid. My solution would be to force all corporations to buy back their stock and reorganize as nonprofits, owned by no-one. Investors could still make a personal profit by offering loans to be paid back with interest at a rate determined by the free market. Their profit would then be equal to the real value of the wealth created by their investment. This would promote a much healthier economy, especially for small businesses, because it would require that capital be continuously reinvested instead of being converted to share ownership that allows investors to skim off profits far in excess of their original investment while essentially contributing nothing to the creation of wealth.

"If you did [leave small-scale capitalism alone], there would be no taxes on individuals and small businesses, now would there?"

Who's going to pay taxes, then? Big corporations? Brilliant idea. I'm sure you'll win lots of support among the greedy capitalists.

But in my plan, no, there will be no taxes on any corporations, small or large, since none of them will be making a profit. The only tax would be income tax. People create wealth and earn money, not corporations.

(Reply to this) (Parent)(Thread)

maineshark
2008-05-16 12:54 am UTC (link)

"Yes, there is. Socialism is a philosophy of the role of government, and encompasses many things aside from communism. Communism is a structure of government. The confusion is a deliberate Cold War deception. Your analogy is silly and irrelevant."

War is peace. Freedom is slavery. Ignorance is strength.

Socialism and communism stem from the same route, and contain the same poison. They simply have varying degrees of it.

"As for unjust profits, all profit in the Wall Street sense is unjust."

You don't get to decide that. If you don't want to support Wall Street's "injustice," I suggest you stop using their products. No one is forcing you to. Unlike you, who does want to force others to do things your way, and only your way. That which is not mandatory is forbidden, right?

"Who's going to pay taxes, then? Big corporations? Brilliant idea. I'm sure you'll win lots of support among the greedy capitalists.

But in my plan, no, there will be no taxes on any corporations, small or large, since none of them will be making a profit. The only tax would be income tax. People create wealth and earn money, not corporations."

No one pays taxes in capitalism. Taxation is slavery, and is anathema to anyone who believes in freedom. Income taxation is the absolute worst form of it, too. That's direct slavery, rather than being indirect like some other types. Nothing legitimate that the government does cannot be paid for by user fees. And straight-up charity. Us "evil capitalists" are notoriously generous. Not like the slimy, stingy socialists who are only generous with other people's wealth.

(Reply to this) (Parent)

	madscience 2008-05-16 12:32 am UTC (link)
	I don't know where my last comment went. "The whole of politics and philosophy can be divided into two groups: those who desire to control others, and those who do not." Right, because in a capitalist economy, we don't have any laws or anything. You seem to believe in a lot of false dichotomies, but this one really takes the cake. (Reply to this) (Parent)(Thread)

maineshark
2008-05-16 12:57 am UTC (link)

There's one law. You may not, under any circumstances, initiate force or fraud against anyone else. That's it.

It's elegantly simple, and it is not a statement of control, but rather a statement insisting that you may not exert control over others. You may do anything you want to yourself. You may do anything you want with anyone else who consents. You may never exert force on a non-consenting party, except in defense of yourself.

(Reply to this) (Parent)

(Anonymous)
2008-05-16 02:04 am UTC (link)

I've hear all this from the first day I can remember, so it's not like you're saying anything new at all. Yeah, I get it. For the two hundred thousandth time over 45 years. Government: good. Liberty: Bad. Taxes: good. Profit: bad. Control by force: good. Control by market forces (peaceable, voluntary exchange): bad. Buying a busness by writing a check for it: OK, for now. Buying a piece of a business by investing in stock: Bad.

"capitalist greed actually impedes scientific and industrial progress"
Tell that to Henry Ford, Chrysler, Alex G. Bell, Madame Curie, the Wright Brothers, Salk, Keck, Bill Gates, and on and on and on. Then show me a less free society that has beat the U.S. in the department of really significant innovations on a regular basis.

What about "Socialist greed" which says in effect, "I can't be bothered with creating or producing anything, or (gag) actually having to trade with the little, stinky people, so I'll just take that from you by force, thank you very much, if I'm really generous, I'll let you go with what you're doing. For now."

And this is perfect: "..more than the just reward for your efforts."

Now we need a "Just rewards" department. And on that note, we already have a proposal for a "Reasonable Profits Board" in congress (look it up).

What you might want to consider is the question of the use of force for rights protection verses the use of force against rights violations. Making money, either by selling your labor to pick fruit, or in trading stocks, is exactly the same in that it does not involve coercion (the typical socialist at this point will attempt to confuse the definition of the word "right", and I'm not having any of it. Been there, done that. I was once a very "good" socialist).

A "Reasonable Profits Board" involves coercion, in that it gets between people who are involved in peaceable, voluntary exchange, and it says, "You are not allowed to make this deal, because....well, because we say so. Or else! Actually, it's worse than that. It allows the deal to go through, then it extorts the "windfall profit" for itself afterwards. And what about all those (maybe you included if you own mutual funds) who own stock in some of these target companies? Screw them too, right? "Take" those "unreasonable profits" by force of law.

And all the while, the founding principle is: Free people aren't good enough, and they're not smart enough, to handle their own affairs. "We" who now better are to be put in charge of the little, pea-brained "masses" in order to prevent them from shitting on themselves.

(Reply to this) (Parent)

	tomcatshanger 2008-05-16 02:34 am UTC (link)
	I'm sure glad you're idea of "just reward" hasn't become the law of the land yet. I get the feeling I wouldn't be allowed to have disposable income with which to buy firearms, video games, and trucks if it did. (Reply to this) (Parent)

(Anonymous)
2008-05-15 10:34 pm UTC (link)

OK, I'm directing my anger, my dissapointment, toward Congress for being so foolish as to think they can "run" things. They've been hindering our ability to live our lives in a productive manner. They've been abusing the coercive power of government, thinking themselves oh so clever and wise in the process. What do we do about it? Vote? Who is on the Ballot that has any ability to change things in the right direction?

(Reply to this)

	This essay deserves a footnote. (Anonymous) 2008-10-27 01:56 am UTC (link)
	It's eerily foreshadowing. (Reply to this)

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