>> ^chilaxe:
He's saying the financial crisis itself has nothing to do with free-market capitalism.
As I understand it, companies that were too big to be allowed to fail without ruining the economy engaged in activity that carried an unacceptable risk of failure.
Free-market capitalism isn't working if it's producing ruined economies, so it seems reasonable to say the free-market failed here.
(I say this as someone who's significantly libertarian.)



But Ron Pauls philosophy is not to bandaid problems. What he thinks it should be looked at is, not capitalism did fail, but i can fail, due to greed, and sheer laziness. Lets face it this all happens because the majority of americans, including many of those in positions of power are lazy! thats all it is.

I dunno, ron paul is 73, and healthy as fuck, john mccain is 72 and has had cancer a couple times... Not that i'm saying laziness causes cancer, but it probably doesn't help. But I can tell you one thing laziness causes, OTPS, Out of Touch People Syndrome, kinda like john mccain, just always peicing together whats seems to be at that very meeting what is going on and whos side he's on, he is intellectually lazy and border line alzheimers.

Ive said it before and I'll say it again, it's a set up, they set it up so obama will win, social neo-con capitalism for all. Hes the new face, the new face of the hand that feeds you. And this time his hand are empty, and hes hungry.

>> ^MINK:
lithuania has a fairly free market because it's fucking corrupt, and i can tell you it's not beneficial to the consumer. the lies they get away with in unregulated advertising are shocking. of course they do it, because they can and it works.
corruption is what humans do unless someone with a bigger gun tells them not to.

You are mixing up two systems: economic systems and political systems. Lies are fraud. Fraud is illegal. People who commit fraud go to jail. That is not the jurisdiction of the market (economics) it is the jurisdiction of law enforcement (government).

Imstellar, in your version of a free market, who would stop Microsoft dominating the place with shitty software? I think we need MORE regulation there, not less. How is it efficient for microsoft to keep churning out that crap? you are asking for everything to be a marketing, bribery and advertising contest.

I think BansheeX addressed this already. Monopolies are not inherently bad, they are only "bad" (from a consumer's standpoint) if they produce low quality products at high prices. I put "bad" in quotes because even this isn't "bad". Absent of regulation, consumers only trade when they feel they are gaining something. If they didn't think they were gaining anything from a buggy version of Windows, they wouldn't buy it. You miss the point about monopolies because you aren't considering the alternatives. Nobody has the right to buy a product, if nobody wants to produce it. You aren't entitled to bug-free, low cost software, nor are you entitled to software at all. What if Microsoft didn't even exist? What if people didn't even have the option of buying buggy high-priced software? How would that be better for the consumer? The mere existence of Microsoft and the option they provide improves the life of the consumer. And they exist because what it supply's is in demand. That fact does not change whether it is the only company, or 1 of 1000 companies.

The point is that Monopolies which don't satisfy their customers are never monopolies (or even alive) for long--again, just look what AMD did to Intel. Intel provided a window of opportunity where competition was profitable and someone took the risk and usurped them.

BansheeX:Without defining what you think regulation is, I don't know how to respond.

I was being rather literal in my translation. I've basically gone through the whole video and restated what I believe Ron Paul is saying. I'm not really putting forward an opinion of my own.

I believe though that what Ron was alluding to ,and what I was calling 'regulation', was any kind of new or extra government intervention. The best thing the government can do is either nothing or ideally re-evaluate some of the fundamentals.

In reply to this comment by BansheeX:
>> ^FishBulb:
Okay this is my interpretation of what he is saying:


Without defining what you think regulation is, I don't know how to respond. Government can't direct or stabilize transactions between millions of people and industry, that was sort of the problem to begin with. The interventions that have inadvertently perverted capitalistic incentive and self-regulation are too numerous to list. It's hard for the common man to understand how it happened, it was a chain reaction from trying to prevent banks from ever going bankrupt because this is perceived as bad for the economy (just this sector, I know, it's hilarious). Let me give an example. If you're a big bank and the central bank via the approval your government friends you helped get elected says it will bail you out if you lose your risky bets on real estate, what action are you likely to take that you otherwise wouldn't have taken? Now that you don't have to worry so much about bankruptcy, you go ahead and hedge billions of dollars of other people's money on subprime and junk bonds when Wall Street was rating them triple A. This yields such a high return, you can offer 5% yields on savings account. Even though people are skeptical of returns this high, they can't pass it up because the Federal Government insures deposits up to $100,000 to dissuade runs on the fractional reserve system. As more depositors choose this bank for the high yield, other banks are forced to do the same thing to compete or lose all their business to this bank. Yeah, you see where this is going.

Here's something else that led to an abandonment of lending standards:

http://en.wikipedia.org/wiki/Community_reinvestment

Basically, in the name of social progress, a bored congress one day decided to pass a bill that forced banks to make loans to extremely low income people. Apparently, the government felt that banks were discriminating or something by having lending standards at all. You can't make this stuff up if you tried. This stuff has ALL of its roots in government backstops and interventions, not spontaneous evolution of man becoming more greedy.

But yes, they should certainly be enforcing laws against the infringement of rights (which derive from property) and providing courts. The constitution would be a good start. *ba-doom boom ching*

>> ^FishBulb:
Okay this is my interpretation of what he is saying:


Without defining what you think regulation is, I don't know how to respond. Government can't direct or stabilize transactions between millions of people and industry, that was sort of the problem to begin with. The interventions that have inadvertently perverted capitalistic incentive and self-regulation are too numerous to list. It's hard for the common man to understand how it happened, it was a chain reaction from trying to prevent banks from ever going bankrupt because this is perceived as bad for the economy (just this sector, I know, it's hilarious). Let me give an example. If you're a big bank and the central bank via the approval your government friends you helped get elected says it will bail you out if you lose your risky bets on real estate, what action are you likely to take that you otherwise wouldn't have taken? Now that you don't have to worry so much about bankruptcy, you go ahead and hedge billions of dollars of other people's money on subprime and junk bonds when Wall Street was rating them triple A. This yields such a high return, you can offer 5% yields on savings account. Even though people are skeptical of returns this high, they can't pass it up because the Federal Government insures deposits up to $100,000 to dissuade runs on the fractional reserve system. As more depositors choose this bank for the high yield, other banks are forced to do the same thing to compete or lose all their business to this bank. Yeah, you see where this is going.

Here's something else that led to an abandonment of lending standards:

http://en.wikipedia.org/wiki/Community_reinvestment

Basically, in the name of social progress, a bored congress one day decided to pass a bill that forced banks to make loans to extremely low income people. Apparently, the government felt that banks were discriminating or something by having lending standards at all. You can't make this stuff up if you tried. This stuff has ALL of its roots in government backstops and interventions, not spontaneous evolution of man becoming more greedy.

But yes, they should certainly be enforcing laws against the infringement of rights (which derive from property) and providing courts. The constitution would be a good start. *ba-doom boom ching*

>> ^MINK:
lithuania has a fairly free market because it's fucking corrupt, and i can tell you it's not beneficial to the consumer. the lies they get away with in unregulated advertising are shocking. of course they do it, because they can and it works.
corruption is what humans do unless someone with a bigger gun tells them not to.
individual freedom will always fuck up the common good. crime does pay. if you legalise business practices which are currently criminal, you'll get more of it, not a magical balanced free utopia.
Imstellar, in your version of a free market, who would stop Microsoft dominating the place with shitty software? I think we need MORE regulation there, not less. How is it efficient for microsoft to keep churning out that crap? you are asking for everything to be a marketing, bribery and advertising contest.
here on the sift we have a free market of ideas and video uploads, and look what happens, a bunch of cliques and lolcats and vote whores and the noise level is so high that you can't find the good shit without watching 10 crappy videos. Can you imagine what it would be like here if siftbot stopped checking for sock puppet accounts?


You're confused, I blame the all-encompassing buzzword of the day "regulation" for this, people don't understand the markets and have come to take it as meaning "government making it all better and overseeing greed." Government indeed has desirable functions in law enforcement and offering recourse through courts for disputes. They should NOT be price-fixing, monopolizing money, or handing out taxpayer money under socialist ideals of directing industry or "enhancing market confidence," this has collusion and corruption written all over it. Politicians are humans and someone spending millions of his own money to get in a low-salary position of controlling other people's money is probably going to be a more harmful source of greed than any businessman. Because even though Henry Ford became a millionaire, thousands of people got cars out of the deal. Not sure the same would have come from government expenditures...

But many would consider this form of corporate wealth redistribution "regulating" the market. I don't.

Your example of false advertising is an example of where law enforcement should take place. Can I sell a product that purports to do something it doesn't? No, that's a swindle, the contract was not upheld, and you can go to government-provided courts to be compensated. Similar things apply to other swindles, though in most cases even the government can't prevent you from falling for some e-mail scam to a Nigerian clearing house. Unless, of course, you agree to have them snoop all your incoming e-mail to check for this stuff. I'd hope you understand that that's a pretty stupid of you, though, for giving up your privacy in order to protect yourself from being gullible. Not understanding cost/benefit ratios is a huge socialist mistake. They're always missing the potential costs and focusing on the benefit.

Gun bans, for example, have the intention of reducing violence but in reality remove the deterrent criminals otherwise have against a society that does have them, causing crime to increase. Plus, it makes you defenseless to oppressive government. The utopian allure of creating a "perfect" society where no gun crime exists and everyone can live in peace and trust is what gets them to miss the greater cost incurred that any thinking man would have foreseen.

The Fed is another one. Fractional reserves caused a lot of bank runs in the old days. Instead of banning this practice, they backstopped it with a central bank, but the central bank price fixed interest rates, causing a crash in 29. Further temporary socialist measures turned it into a fifteen year depression, a nuclear explosion compared to the firecrackers of the original problem. Then the FDIC was created. This incentivized a lot of risk and borrowing, which has helped the current problem fester. See how the failure to correctly solve one problem has led to a cascade of "solutions" that create even more problems that beget even more solutions? That's socialism, my friends. It just builds and builds until eventual collapse.

I would say that another socialist mistake you are making is that law enforcement itself is a proper regulatory measure. Not when they're selective, they're not. There is plenty of legislation out there that legalizes something for one industry, but not the other. Banks can loan out money they don't have at interest. Any other industry, and you're thrown in jail for fraudulent lending practices.

LOLskers at your Microsoft argument, too. Who prevents Microsoft from churning out crap? Consumers, mayhaps? People were free to not adopt Windows ME or Vista, and that's exactly what happened, their sales were disappointing for both. Anyone investing in Microsoft don't like failures leading to lost earnings. But Microsoft is smart and continues to sell XP, which is a perfectly good OS even today. But if they currently get any tax credits or subsidies, they shouldn't. No company should have access to forcibly appropriated money, period.

I think the real scary thing about all this, besides the fact that you don't understand it, is that you seem to be implying that a government office operating on forcibly appropriated money is capable of greater efficiency than the private sector. Maybe it comes close for laying pavement and picking up garbage. But in the grander scheme, no. It wasn't the case with Chernobyl and it ain't today, buddy. You take a hell of lot of innovations and products for granted if you believe that.

>> ^vermeulen:
Monopoly and price fixing would can hurt the free market, and is possible under a free system.... how can you deny that.
Do you not think it is possible for the government to aid in the free market?
Such as to enhance competition?
I consider myself a libertarian, but I do think it is possible for some type of control of the markets to be beneficial.


"Monopolies" are one of the popular scapegoats for politicians to use to gain power, and one of the most misunderstood talking point for socialists. In truth, the only "true" monopolies around the world and throughout history are borne of government. I tend to draw a distinction by calling these "self-sustaining monopolies" because of way in which they are financed: with an unlimited stream of forcibly appropriated money rather than a choice to pay by consumers.

First, let's agree on one thing: in order to become a monopoly in a free market where every transaction is mutually agreeable rather than forced by the will of the clueless majority (like a tax or inflation), a company had to offer a great product that people wanted and that benefited them. As much as you may hate Microsoft, for example, Windows has changed the world for the better. As have Intel's processors. Now, many would consider these companies monopolistic. According to socialist theory, AMD should not exist. Intel was so large and dominant, that being such disabled any competition from forming without government intervention. What happened in the real world was that as a result of being large and dominant, and perhaps overcharging and under-delivering, a window of opportunity was created that allowed an AMD to come in and kick netburst's ass with the athlon series. They exist because of what Intel tried to do, not the opposite.

Here's the part that really busts the socialist's brains: If Intel had chosen not to overcharge and under-deliver, no window of opportunity would have existed. They would have effectively become a monopoly that was delivering a great product at a price no one could better. So... what's the problem with that? There isn't one. And while I agree that it can't last, socialists erroneously assume that a monopoly is inherently bad. It isn't, it just can't stay good. And when it doesn't stay good, it can't preserve it. Because even a monopoly can't put poop in a box and sell it, they are not immortal and all-powerful where they no longer need to deliver a product to service or prevent private capital not available for buyout from coming in and supplanting their marketshare.

The monopolies you need to be afraid of are the ones that are self-sustaining or government helped and enabled. Get companies AWAY from colluding with or taking advantage of government specific powers. When a company lobbies for a tax credit that another company or industry doesn't get, or a subsidy, or no-bid contract, or a bailout, or legislation crippling their competitor, that's when you need to be alarmed. So... be alarmed now, because this is everywhere and people are stupidly blaming the market when it is enablements in government like high taxes and an inflationary money making it possible.

>> ^imstellar28:
>> ^chilaxe
Once a company has a monopoly, the rational action would always be to create additional barriers to entry for other companies, and then cut costs and product/service quality, and raise prices.
That's what monopolies have done historically; why would they behave differently in a purely laissez-faire market?
This is another common complaint of the free market system. Unfortunately for monopolies, history has shown that no company has ever actually succeeded in pulling it off. There is actually a really humorous example of a group of German chemical companies which tried to do this to Dow (know his name?) Obviously it didn't work as Dow Chemicals is one of the most successful chemical makers in the world. I actually posted a video response to this as well:
http://www.videosift.com/video/Thomas-Woods-A-Shocking-
Presentation-of-American-History
Fast-forward to 24:00, the story is about 4 minutes, and its actually quite hilarious how Dow defeated the German monopoly.


When people say "monopoly," they're not referring only to 100% pure monopolies. Wiki:

[The government stated:]

"The evidence is, in fact, absolutely conclusive that the Standard Oil Company charges altogether excessive prices where it meets no competition, and particularly where there is little likelihood of competitors entering the field, and that, on the other hand, where competition is active, it frequently cuts prices to a point which leaves even the Standard little or no profit, and which more often leaves no profit to the competitor, whose costs are ordinarily somewhat higher."
...
Standard's president, John Rockefeller, had long since retired from any management role. But, as he owned a quarter of the shares of the resultant companies, and those share values mostly doubled, he emerged from the dissolution as the richest man in the world.[15]
http://en.wikipedia.org/wiki/Standard_Oil

In reply to this comment by vermeulen:
Do you not think it is possible for the government to aid in the free market?
Such as to enhance competition?

What would the government do to enhance competition? Also, what kind of controls do you envision?

>> ^chilaxe
Once a company has a monopoly, the rational action would always be to create additional barriers to entry for other companies, and then cut costs and product/service quality, and raise prices.
That's what monopolies have done historically; why would they behave differently in a purely laissez-faire market?

This is another common complaint of the free market system. Unfortunately for monopolies, history has shown that no company has ever actually succeeded in pulling it off. There is actually a really humorous example of a group of German chemical companies which tried to do this to Dow (know his name?) Obviously it didn't work as Dow Chemicals is one of the most successful chemical makers in the world. I actually posted a video response to this as well:

http://www.videosift.com/video/Thomas-Woods-A-Shocking-Presentation-of-American-History

Fast-forward to 24:00, the story is about 4 minutes, and its actually quite hilarious how Dow defeated the German monopoly.

>> ^imstellar28:
^vermeulen
What about anti trust laws? Laws against price fixing?
This is a common complaint about the free market, which is why I posted a video response:
http://www.videosift.com/video/Ron-Paul-and-Dr-Armen
tano-discuss-Anti-Trust-and-Monopolies
Historically, who do you think has lobbied for anti-trust laws? Its not the consumer...


Once a company has a monopoly, the rational action would always be to create additional barriers to entry for other companies, and then cut costs and product/service quality, and raise prices.

That's what monopolies have done historically; why would they behave differently in a purely laissez-faire market?

In reply to this comment by NetRunner
Sounds good to me, but I think we're in a problem more complex than that. Since these are banks, we'll see some pretty disastrous effects ripple through the economy as businesses and people's ability to get credit disappears.

What do you think about what happened to Lehman Brothers and Merrill Lynch, they both collapsed and the government didn't intervene, yet both were successfully bought and the bad assets were dissolved. Didn't crash the market, in fact it barely caused a blip.

^vermeulen
What about anti trust laws? Laws against price fixing?

This is a common complaint about the free market, which is why I posted a video response:
http://www.videosift.com/video/Ron-Paul-and-Dr-Armentano-discuss-Anti-Trust-and-Monopolies

Historically, who do you think has lobbied for anti-trust laws? Its not the consumer...

>> ^imstellar28:
Adding millions of sellers, millions of buyers, and millions of goods changes nothing about the underlying principle of voluntary cooperation. Two people trade because each thinks they benefit. That is free market theory. It predicts that given a choice, two people will trade if and only if both perceive that they gain something from the transaction. This simple fact leads to many corollaries such as supply and demand curves. It is a theory as firmly planted in science and reality as the theory of gravity.


So, you think having absolutely no regulations on the market will result in the best economy? That it's that simple, that it's a science as just as true as gravity?
What about anti trust laws? Laws against price fixing? Since it's as true as gravity, obviously not have these laws would result in a better economy.

The point of the government intervening is to HELP free markets, to help them stay free and operate. To enhance competition, to ENHANCE the benefits of a free market. This is not me arguing for socialism, this is arguing against fundamentalist capitalists like yourself who rely entirely on theory
Why must it be exactly pure free markets? Is it just the simplicity that is so appealing to you?

>> ^imstellar28:
Theres really a much simpler, and more effective regulation to specify, how about the government makes this a law:
1. All businesses which take a greater risk than their their diversified portfolio or their % of overall investment allows, and subsequently suffer unrecoverable losses, shall be sold off in an elegant and undramatic fashion to its competitors, who did manage their risk, at a price determined mutually beneficial. Said company, who properly managed risk, shall be rewarded with a greater market share than before.


Sounds good to me, but I think we're in a problem more complex than that. Since these are banks, we'll see some pretty disastrous effects ripple through the economy as businesses and people's ability to get credit disappears.

I want the losers to lose, but I don't want innocent bystanders to lose too.

As far as regulation, I think the main regulations needed have to do with making the risks more transparent, and getting people to stop misrepresenting risk on a large scale.

I've been looking for some sort of consensus amongst economists on the topic, and the only consensus I'm seeing is that something should be done -- only non-economist ideologues (like Paul, and House Republicans) are saying the right action is to more vigorously pursue inaction.

I don't think a $700bn taxpayer funded gift basket to the fuckwads that screwed up the global economy is fair, but it might avert a wider disaster. I think it shouldn't be a gift basket, it should be like bankruptcy -- that the government nationalizes these organizations, brings in new leadership, cleans house, and sells the thing back to the shareholders, like what Sweeden did in a similar situation. Unfortunately, I don't see that happening.

I'm watching and waiting to see how it'll really shake down, because the politics on this are intense, and complex, and mostly in the hands of an increasingly unpredictable Republican party.

The only question now is whether the Democrats will fold to these shenanigans, or try to lead on the issue and give us a real rescue bill. Guess we'll have to wait until Thursday to find out.

>> ^MarineGunrock:
W H Y W A S N ' T T H I S M A N M A D E P R E S I D E N T ?
[edit]
Show me a man that has a better understanding of our economy. Without a doubt, the economy is now the most important issue facing America today.
He NEEDS to be president. NOW.



Sorry dude, but a lot of us wholeheartedly disagree with you.

Yes, Ron Paul is one of the smartest men in congress when it comes to certain aspects of the economy. He understands the markets, and our economic history almost more than anyone.

But, after watching him for the last two years I've come to realize that his knowledge is based 100% in theory, and not in reality. He couldn't give less of a shit about your and my reality, or the reality that faces huge swaths of this country. He doesn't give one shit.

He is a "free-market" fundamentalist, and thinks that somehow, CEO's everywhere are totally honest, good men who would only do awesome and honest and good things if that darn government oversight would stop, you know, overseeing stuff. Anyone who's had their eyes open, their heart beating and their lungs taking in breath over the last couple decades understands the exact opposite, and has watched these very same awesome CEO's tear our economy apart, slash our wages, steal our healthcare benefits and 401k's, and walk away with enormous bonuses worth more than most countries GDP.

Ron Paul's ideas of a "free market" are theories, and dangerous ones at that. His theories are one of those "if only" ideas/concepts that have NEVER ever been put into practice anywhere.

I would take a tanked economy with guidance under Barney Frank, than a "free-market" in a country that now has forced-prayer in schools, abortions made illegal, and "states rights" putting an end to anti-discrimination laws, integrated schools, and usher in every completely nutball right-wing extreme-christianist wedge issue you could ever imagine, shoved down the throats of us citizens.

Yes, Obama could do well with putting Paul somewhere in his cabinet, or in the FED or somewhere. But his domestic policies are utterly frightening, and the dude who he just supported for POTUS is one of the most crappy, hacked-out straight-up-white-dude's out there, with a completely laughable and outrageous platform.


Ron Paul is way more of a christianist fundie than you are allowing yourself to understand. "States rights" is a code-word. It's a lie. It's real meaning is to give the states their right to enforce some of the most backward, draconian laws every considered.