"The main problem is political. Who would pay for any bailout and over what time period? To what extent are German taxpayers, for example, willing to foot the bill, directly or indirectly, for the mistakes of other countries -- or, you could say, the mistakes of their bankers?" [bold added]So which is it, a political problem or a banking problem. Throughout the interview he blames the bankers for much of the problems in Greece, Ireland, and every other country in economic crisis mode. And yet, he seems to hold that this is a system crisis. A system of what? Does he mean an economic system? A political system? Or does he consider economics and politics so intertwined that they are one in the same? If the latter, then why does he place the blame on just the bankers? If the bankers are in bed with the politicians, then, by his standard, aren't both to blame equally.
This is my take on the current crisis: to the extent that European countries (and the U.S.) maintain a mixed-economy, politics and business will necessarily be intertwined. Bankers are the most regulated industry in most countries and so highlights the major problems with socialism. So if this is a system crisis or a problem with banking, its manifested by the political/economic system that these countries adhere too, socialism. Its not a failure with the free-markets or with bankers, its a failure with trying to control industries, necessitating political lobbying, favoritism, and bailouts. Banks don't need more regulations, but less. But let them fail when they screw up. The short term hurt will be worth the long term strength. And they will quickly learn NOT to do that again. But most importantly, respect the property rights of the bankers. Doing so will ensure their self-interested pursuit of fiscally strong institutions. But let's stop acting like the banks are the boogie man.
"Bankers are the most regulated industry in most countries and so highlights the major problems with socialism."
ReplyDeleteI think there's a bit of a non sequitur there. "Most regulated" does not mean "most socialist."
"So if this is a system crisis or a problem with banking, its manifested by the political/economic system that these countries adhere too, socialism."
And this is a false dilemma. Surely there are other options for why something failed other than "because they're socialist."
As far as letting them fail -- I agree. But some of these banks were "too large to fail." Is regulating how big a bank can get also too much regulation?
I must admit I will never understand the "capitalist good, socialism bad" argument as it is by far an overgeneralization. We've seen examples of where Marx AND Smith are enacted poorly.
Curtis,
ReplyDeleteSocialism: a system of society or group living in which there is no private property. Merriam-Webster
To the extent that a business is regulated is the extent that private property rights are denied - and hence more socialistic. So yes, the statement is correct.
As for the false dilemma, perhaps, but we're dealing with a system crisis when we're dealing with an entire country bankruptcy. In these countries, the government is the large entity with huge influences on the system. When looking for a root cause, that is the best place to start. Without writing a treatise on this subject (as others have already done), I summarized the findings of these others(sorry for leaving off the citation, but I'm bit lazy the day before Christmas).
As for the capitalist good/ socialism bad, my belief is that socialism is fundamentally evil. Its premised on the principle that your property and your life are not your own. That others can control what you can and can't do in all things. This destroys our ability to flourish. Capitalism, with a full protection of individual rights, is the best economic system ever imagined because of its respect for individual mind, property, and life.
Your definition doesn't match with your writing though. If socialism means no one owns private property (a pretty inaccurate definition, but who's gonna argue with Webster?), then Greece and Ireland aren't socialist.
ReplyDeleteI'm sorry, but socialism is no more inherently evil than capitalism. Both have shown how truly evil they can be.
I believe I have been consistent. I speak of Greece in adopting Socialist policies. They are not completely socialist, but do approach the socialist ideal better than some other European nations. I see it as a continuum, with more or less economic control. The more control, regulations, state ownership, etc, the more socialistic a nation becomes. The less control, regulations, state ownership, etc., the more capitalistic a nation becomes. The U.S. sits somewhere in the middle today.
ReplyDeleteBut on the flip side, there has been no pure Capitalist nation in history either. The U.S. was probably the closest during the 19th century, during which time we experience massive economic growth, unprecedented improvements in standard of living, increases in longevity, and falling prices - all the while protecting individual's right to create a better life for themselves (for the most part).
While there are certainly examples of a few (and I do stress few) unscrupulous businessmen in capitalists societies, they were largely unsuccessful except when backed by guess who... the government. At least from all the histories I have read about this time period, this is my basic take away.
Obviously, we disagree on a fundamental level. Which I don't have a problem with. It happens. :)
ReplyDeleteWe always see supposed "market failures" in the most heavily regulated industries. Banking and health care are two present day examples. When was the last time you saw a "market failure" in the personal computer or consumer electronics industry?
ReplyDeleteAyn Rand stated that one of the favorite tools of politicians is to tie the hands and feet of industry so that it may not function freely, and then point and call it a failure, while calling for ever more controls.