Side rant: (Cuban illustrates again how our billionaire caste is split starkly in half, with most of the self-made tech billionaires speaking up for the nation as a shared endeavor, meriting their gratitude and help... while another half seems deeply imbued in tax-resentment solipsism and dreams of oligarchy. This distinction shows that our troubles are not about left-vs-right... markets and capitalism, which almost always do better under democrats, are among the top victims of neo-feudalism, not the perpetrators. Though I despair of getting this point across to either my libertarian or liberal friends.)
The notion that markets can benefit from a little ‘slowing friction’ goes back to the Tobin tax, suggested by Nobel Laureate economist James Tobin, originally defined as a tax on spot conversions of one currency into another. The tax is intended to put a penalty on short-term financial round-trip excursions into another currency. Slowing such transactions to a human pace prevents hysteresis and nonlinear runaway effects and allows all market participants to acquire the knowledge they need for Smithian/Hayekian decision making, instead of favoring a select few.
(Further note: I think the neo-classical economists almost had the right idea. There is a magic ultimate ingredient that turns markets into thriving, supercharged creativity and wealth generating machines! But it is something other than the poisons we were prescribed by neocons. What benefits an economy and makes a market efficient-fecund is not unleashing boy “genius” bankers to gamble at lightning speed with other peoples savings. Nor is it pouring tax breaks into an oligarchy, praying that THIS time they will actually (according to supply side theory) invest it in plants and equipment. Nor is the secret ingredient maximal speed of trade or lowered regulation or “zero-friction.” {notice that all of these just happen to help existing elites to grab lucre by rent-seeking; what a coincidence!}
(No. What is essential -- and Adam Smith and F. Hayek and virtually all sane economists down the line agree with me -- is Maximized Transparency. So that all players in capitalism and politics and society (not just privileged elites) can know enough -- and have time enough -- to make informed decisions. The lies, obfuscations and concealed identities must stop. THAT will result in more efficiency and (ironically) even lowered regulation. Indeed, transparency is the only rational alternative that can manage to reduce government involvement in markets, period.) Side-rant off!
Despite some similarities, there are differences between my approach to the Tobin transaction tax and Mark Cuban’s. He calls for a levy of 25 cents per share traded. Ouch. Not gonna happen; won’t pass.
Simpler, and a way to ease it in, would be to levy one hundredth of a percent of the VALUE of each trade. (See: Why a Transaction Fee Matters to YOU.) Or else... more directly justifiable... don’t charge all of the costs of SEC etc to the federal budget. Instead the new transaction fee (not a “tax”) rises or falls based on the current cost of enforcement, regulation and reserves.
Either way, what Cuban strangely never mentions is my chief motive for doing this... a general Tobin Trading Levy would be death to a recent-modern villainy -- coded-reflex cheat-trading by big brokers who gamble and nibble at the margins through billions of tiny, computer-spun micro-trades, taking unfair advantage of both their privileged stock market memberships (no commission) and their quicker access to inside information to detect clients’' buy orders -- thus gaming the system while those buy order are in play!
This reform is obvious... and won't happen. The Chicago School neo-classicists who caused the collapse still see a trillion efficiency angels dancing on the head of a pin. The pin that popped our economy.
See: More of my articles on the Economy
=== Transparency and Anti-Terror ===
Re: the 4/010 attempt to car bomb Times Square, “it was the keen eyes of at least two of them — both disabled Vietnam War veterans who say they are accustomed to alerting local police officers to pickpockets and hustlers — that helped point the authorities to the Nissan Pathfinder parked just off Broadway on the south side of 45th Street — engine running, hazard lights flashing, driver nowhere to be found.” Moreover, the FBI relied on images, both taken by privately-owned cameras, at commercial buildings near the scene and taken by tourists, to assist in the hunt for the would-be bomber... exactly as I predicted in The Transparent Society.
More on Citizen Power? A piece by David Brooks in the New York Times talks about recent terrorism matters in terms that I have been raising since before 9/11... "citizen empowerment and resilience."
Alas, as I suggest in many places, this should be a matter of prioritization and resource allocation. 1% of the homeland security budget should be applied to the only thing that worked on 9/11. The only thing that worked against the shoe bomber or Abdulmutallab. The thing that wasn't allowed to work during Katrina. I'm in no position to push for this. It doesn't feather institutional nests. But it just happens to be the one thing that could help us to survive, if and when something awful happens. Alas.
==On the Oil Spill==
First, regarding the catastrophic oil spill in the Gulf of Mexico, a few notes:
1) The dome-capture solution was stymied by “icy” methanic hydrates on the deep ocean bottom. What this demonstrates - on the side - is that these clathrate hydrates are all over the place, not just in arctic waters, but anywhere deep enough to have sufficient pressure. (In my doctorate, I described them even on comets!) But, as the oceans warm, there will be increasing danger of these hydrates “blurping” methane into the atmosphere, causing a runaway greenhouse effect of prodigious order. That is one of the stakes that “deniers” are playing with.
2) An absolute must-read - “Sex Lies and Oil Spills.” Do go read it. Do. Read it.
Enough politics. Next time, shift gears to science and such...
Since reading your thoughts about citizens and their resources during these attempted bombings and natural disasters, it's really had my mind ticking. Thanks for introducing me to the idea.
ReplyDeleteI'm a long time fan of your fiction. Your blog is great too, Mr. Brin.
Given your liking for depicting the 'upper crust' CEOs as schmoozing on the fairway, and in the light of Kennedy's comments and finger-pointing on the great leak, you might be amused by the latest proposal to plug it... with golf balls
ReplyDeleteladical: chinese dissidents
You can levy a tax wherever you like. But just because you levy it somewhere doesn’t mean that that’s where it stays: there is this thing called tax incidence.
ReplyDeleteWe do have a transaction tax on financial transactions in the UK: Stamp Duty on share transactions. And who actually bears the economic burden of that tax? The wheelers and dealers? Actually, no: a report back in 2002 pointed out that it was individual’s pension funds that bore part of the brunt, the other major effect being a rise in the cost of equity capital to UK based firms. And as we know, a rise in the cost of capital shows up in the workers’ pay cheques as a reduction in them.
So far from a Tobin Tax screwing the bankers, it, once again, screws the workers.
Which isn’t what we really want to happen, is it?
Can we suggest something very cruel and unusual for the spammers infesting this blog? I'm a devoted fan of Jack Vance's prutanshir mentioned in Alastor: a pirex caudron full of boiling oil where the condemned are publibly immersed...
ReplyDeleteI think "neo-mercantilism" is a better description than "neo-feudalism".
ReplyDeleteI have a blog post on the subject - called how to fix capitalism - that you may like.
@gmknobl, from the last thread:
ReplyDeleteWe can't revoke "most favored nation" status from China because, at this stage, there is no such thing. All that MFN meant was that we gave China the tariff rates that we traditionally only gave other members of the WTO, despite the fact that they were not members. They've now been members of the WTO since 2001, which makes this irrelevant. There's been no such "MFN" status since then.
This also means, however, that, due to WTO regulations, there's not much we can do. Short of expelling them from the WTO. Nor would it be to our- or their- benefit to pressure them into democratic reforms at this stage. I live in China, I know how this country functions, and a democratic China would lead to a level of class warfare and corruption that could easily collapse their economy, if not lead to all-out civil war. There are significant reasons that political reforms have been slow in coming, and they're not all self-serving on the CCP's part. Maintaining political stability is issue #1 for China, and will be until the current generation in leadership- the ones who came of age during the chaos of the cultural revolution- leave power. Until the interior is more developed and a younger, less paranoid generation steps up, there won't be any change here.
"We do have a transaction tax on financial transactions in the UK: Stamp Duty on share transactions. And who actually bears the economic burden of that tax? The wheelers and dealers? Actually, no: a report back in 2002 pointed out that it was individual’s pension funds that bore part of the brunt, the other major effect being a rise in the cost of equity capital to UK based firms."
ReplyDeleteI don't know the details of the British Stamp duty but I suspect that that's probably a function of the design of the tax - it's probably a minimum amount plus a percentage of the value of the instruments traded with a cap on the total amount that can be charged.
But more broadly, I agree that when tens of billions of dollars are at stake the big banks and brokers will continue to find ways to give themselves an advantage over small private traders.
"...a report back in 2002 pointed out that it was individual’s pension funds that bore part of the brunt, the other major effect being a rise in the cost of equity capital to UK based firms.""
ReplyDeleteI call b.s.
First, a "report" can say anything and in an area where gazillions of dollars (pounds) are at stake, you can find a report to say precisely whatever you want. In particular, this report doesn't define "burden": is it the absolute amount of money traded or the fraction of amount traded? One-quarter of one-percent is a "burden" in some sense and, where the underlying amount is great, the "burden" total out to be large, but it is still insignificant. Likewise the "cost of capital" argument ... in any enterprise seeking capital, a transaction tax is just about the last reason you're going to have for cancelling the transaction, if the underlying transaction is sound.
Second, we in the U.S. had a STET for generations and it did not, in fact, burden pensioners, workers and all that as even a casual inspection of the math would reveal. If your pension fund makes its profits by day-trading, sure, you'll see an impact but if your fund is a long-term investor, the impact is almost incalculably small.
Finally, and this is a key point, the greatest value of a tax on financial transactions is that it discourages precisely the sort of bubbles that continue to threat our economy by requiring those who participate in the bubble to fund it. Our American markets have been a preferred place to park capital in large part because we're a reasonably reliable and predictable parking lot (...nothing is totally predictable and you wouldn't want that anyway ... but at least it's not a casino.) However the recent casinoization of American financial markets is removing that advantage: if investors worldwide lose confidence in our markets, we're in deeper trouble than we realize.
Let's get something straight: libertarians favor accountability over regulation. Feel free to dislike this position, but don't conflate the libertarian position with the deregulate without accountability position of the neocons.
ReplyDeleteMy libertarian friends scream about every bailout, including those done under Republican administrations. They've were griping about the loose money policies of Greenspan as well, and predicting that the bubble would pop.
Too big to fail is a giant moral hazard. Accountability means actually allowing some bank runs to happen (and honoring deposit insurance at the originally stated limit). Without accountability you need regulation, but by who? Barney "Let's give FHA loans to the rich" Frank?
Spend some time reading the blogs of the Ron Paul fans. They'd oppose your transaction tax, but they also oppose the leverage which makes these transactions profitable in the first place. They'd put an end to the banking practice of kiting people's aggregate piggy bank money to make long term investments. Want to finance a mortgage? Sell some long term CDs.
Hint, whenever the yield curve gets flat, you know that somebody is playing funny financial games. A flat yield curve is not natural.
Carl M. said:
ReplyDelete"Let's get something straight: libertarians favor accountability over regulation."
And, in the real world, how do you propose to enforce accountability without regulation?
"Spend some time reading the blogs of the Ron Paul fans. They'd oppose your transaction tax, but they also oppose the leverage which makes these transactions profitable in the first place. They'd put an end to the banking practice of kiting people's aggregate piggy bank money to make long term investments."
Again, without regulation just how do they propose to "put an end" to it? Who do they propose should "put an end" to it? Should a group of outraged victims exercise their right to bear arms and seize control of AIG by force?
Hyperbole aside, why wait until there is a crisis and then hope that someone will step up and respond positively to the crisis? History shows very clearly, if only you would look, that the market can not be relied upon to fix itself. Unless by fix you mean concentrate wealth and power into a small group of liars, cheaters and stealers.
If you want the market to only benefit the top few percent of your society, I suppose no regulation is fine. If you think that the market should benefit everyone in your society then you need to devise and enforce regulations on the market to limit lying, cheating and stealing to a level that is tolerable. Your way has been tried, and it really sucks. Let's try a new way.
I've a small question concerning methane clathates on the bottom of the ocean. Is there any way to harvest these clathates for use in our energy sector? I mean, there's a risk of this stuff bubbling up and being released... so why not just start "mining" it and using the methane to power natural gas power plants?
ReplyDeleteRob H.
Robert said
ReplyDelete"Is there any way to harvest these clathates for use in our energy sector?"
In principal it is certainly possible to harvest / mine methane clathrates from the sea floor. There are some people who have championed this idea. Apparently there is a huge amount of energy available from these clathrates, even on the scale of global use. Or, rather, there is data to suggest that.
However, no one has yet devised methods and equipment to attempt this on an industrial scale. It is generally acknowledged, even by proponents, that mining these clathrates would be very difficult, and that any mining methods envisioned so far would have a very large environmental impact due to the basic nature of the deposits.
But, who knows what the future may bring?
In the future, we'll just beam mineral deposits out of the earth using transporters.
ReplyDeleteThey are diffuse, mushy and mixed with lots of stuff... and they clog pipes (apparently).
ReplyDeleteSure, it'd be better to use them and leave the oil and coal underground.
Darrel you miss my point entirely.
ReplyDeleteThe status quo -- Federal Reserve, Fannie Mae, bailouts, etc. -- is not libertarian. You are, of course, free to prefer the status quo and/or yet another layer of preemptive regulation if you like. Just stop with the dishonest straw man arguments.
The market does penalize risky banking practices. The mechanism is called a bank run. The federal government has heroically worked to enable banks and other financial institutions to engage in risky behaviors. That's the mercantalism.
You may consider it to be more orderly to have bank regulators and a Fed to stabilize things vs. letting the market weed out risky players. Fair enough, but keep in mind that your preemptively regulated system gave us the Great Depression, the S and L crisis and the current mess.
What would the financial system be like if bank runs were legal, or even encouraged? Answer: you wouldn't see interest bearing checking accounts. You might see some kind of money market accounts, but share values might drop below par during runs. To get real interest would require tying up money for a time -- no free lunch. Mutual and private partnership banking might predominate over corporate banking.
And yes, banking fees would be higher. It takes labor to process transactions and guard money. If banks cannot get away with lending money which might get called in, then they'll have to pay for these services some other way. In return for these fees, we could have monetary stability and tax savings on bailouts.
Oh, and IRAs could have decent returns without any money going to Wall St. Local banks could use IRA money for longer term loans. If you aren't going to retire until 20 years hence, you can get paid for the wait. IRA money could support Main St. instead of Wall St.
Carl M:
ReplyDeleteYou may consider it to be more orderly to have bank regulators and a Fed to stabilize things vs. letting the market weed out risky players. Fair enough, but keep in mind that your preemptively regulated system gave us the Great Depression, the S and L crisis and the current mess.
Are you sure about your cause and effect relationship there? It seems to me that the Great Depression (and the bank runs that DID occur then) begat regulation and deposit insurance rather than the other way around. The idea wasn't so much to protect the banks from their reckless behavior (although that is one of the unfortunate consequences), but to protect the savings of ordinary citizens, who would have otherwise buried gold in the back yard and never patronized a bank again.
Carl alludes to the biggest problem of excess govt regulation, which is not so much socialist do-gooder meddling (although that can get onerous and debilitating too.) But rather regulatory capture, where the industries supposedly being controlled have turned around and taken over the watchdogs.
ReplyDeleteThe horrific recent example - one of a zillion in a Bush Administration that simply handed over the regulatory keys to all its friends - was the mineral resources agency that regulated (among other things) offshore drilling. The officials, appointed from lists written by the extraction companies and Bush cronies, did nothing except eliminate rules, rubber stamp oilco actions and party with oilco hookers while snorting oilco coke.
This is why the list of regulatory agencies that the Republican Party has ACTUALLY DISBANDED is so small. Despite their rhetoric, they LOVE these agencies, so long as they can help pals capture them.
It's the democrats who, occasionally, come in with a broom, as they did when they disbanded the Interstate Commerce Commission and Civil Aeronautics Board, which had been entirely captured by the big railroads and airlines. This kind of sweep -- for which the democrats NEVER get any credit -- should qualify them as the big party that libertarians hold their noses and vote for... because they occasionally listen...
...but that will never happen, because most libertarians are simply too stupid to look beyond the randroid rhetoric to who ACTUALLY has a better track record benefiting competitive free enterprise.
Carl M.,
ReplyDeleteNo, I did not miss your point. I also did not say anything about supporting the status quo.
After reading your comment I was overcome with irony by your strawman accusation. I can only offer you a sincerely felt "thank you" for that.
Suffice it to say that your deductions about my position on this subject are not accurate. It does seem, though, that I was dead accurate in my deduction that you believe that the market should be unregulated because you believe that the market can somehow regulate itself in a way that maximizes fairness and function by some emergent property that has never before been observed and for which there is no data to support but plenty to refute.
Nothng wrong with that I suppose, as long as you are not so enamored of your beliefs that you can not give fair consideration to other ideas and actual real life evidence that has not been interpreted for ideological compatibility.
I would also like to point out that there is almost no truth in your brief summary of market history that you included in your post. You are interpreting the past in whatever way necessary to support your position. I would also like to point out that there is no evidence to suggest that any of your hypothetical market self correction scenarios would work like you think they would. Also, most (as in almost, but probably not all, since there are crackpots in any profession) current economists on the left, right, middle or whatever orientation would not support your views.
The thing that libertarians forget is that government exists to protect the people. This can be from foreign nations, businesses, fellow citizens, or even themselves. Is it right for the government to step in and state that you cannot drive drunk? How about preventing people from getting a hold of high explosives? Or regulating food so that the food you eat is not poisonous? (And yes, that was a problem 100 years ago.)
ReplyDeleteHow is regulation of banks different from regulation of the food industry to protect people? After all, if banks and other businesses are exempt from government oversight, then why should the food industry be exempt? Or prevent any industry from holding you hostage - overcharging for electricity and water because they have a monopoly and can make you pay whatever they want because there's no one else to turn to?
Libertarianism is a utopian dream that is as flawed in execution as Communism and Socialism is. It. Doesn't. Work. Or rather, it does work, but you don't want to live in a society that is a pure Libertarian society. If you don't believe me, open up a good U.S. history textbook and take a good look at business and society from after the Civil War up until World War II; business treated its workers as a resource to be burned up and thrown away, and got away with it.
Nor is the world more enlightened now. If there are not laws and regulations in place, then you will see people do their best to screw over everyone else and gain as much power and money as possible. People try this anyway even with the regulations. Do you honestly think this won't happen if the laws are changed to give business and industry a free hand to do whatever it wants?
Rob H.
Umm... Wasn't the laissez faire capitalism that allowed the robber barons of the Gilded Age?
ReplyDeleteAlso, if I remember correctly (and every reliable source I've read on the Great Depression is accurate), it was the UNREGULATED speculative gambling on the stock market, and related practices, that led to the stock market crash of 1929 and the Great Depression, and the Great Depression sparked tremendous INCREASES in financial regulation and oversight, and the following decades (1940s and '50s) were among the most prosperous years in our country's history, and the decades of most significant real economic growth in the last century at least. It was only the REMOVAL of those financial regulations (and the 'capture' of the regulatory agencies tasked with overseeing Wallstreet, et al by the groups/industries they were supposed to be regulating) that allowed the nearly identical practices that caused the Great Depression to be picked up again and throw us back into the same mess we are currently in right now.
Also, the Great Depression saw a plethora of bank runs, especially in its early years, and they were a very Bad Thing, especially for smaller banks. The bank runs, and related 'stock runs' (panicked dumping of stocks for hard currency), were huge contributors to the Great Depression. In fact, much of the damage of the Great Depression was directly caused by bank runs.
Yet you would have us abandon regulation and oversight, in favor of bank runs and purely self-enforced accountability???
I'm sorry, but that is just sheer lunacy. The notion that an unregulated and unchecked free market will automatically and always balance itself out with fair distribution through some kind of magical karma is pure, mystic BS. It is human nature to cheat. It is human nature to game the system. It is human nature to gather as much wealth and power to oneself regardless of the longterm stability and viability of the system. It is human nature to use wealth and power to gain more wealth and power. All of those are instinctual behaviors bred into humans through millions of years of evolution. Humans can overcome that inherently greedy, self-serving nature, and I'll be among the first to praise the great and wonderful things humans can achieve when they do, and all they potential humanity has yet to achieve, but to think that ALL humans are able to always put aside that nature, and the temptations of that power and let the system work the way it is 'supposed to' on paper is the height of naivete.
Sure, most humans wouldn't abuse the system, or not to a significant degree at least, and full transparency is an excellent tool for preventing people from gaming the system, but it only takes a handful of people with large concentrations of wealth and power severely abusing the system to break it, and to think that those people will not arise, even with full transparency, is blatant idiocy. It is stupid make-believe because it completely ignores all of the countless times it has happened throughout history.
Maybe, some day in the distant future, humanity will have evolved past such self-serving tendencies, and I truly hope that humanity will evolve to that level of enlightenment, and beyond, but that day is very, very far into the future.
ReplyDeleteWith the realities of today, we NEED regulations and oversight to keep the system functioning, to prevent people from cheating and breaking the system for everyone. Smart regulations; a lean but not anemic system of checks and balances with clear regulations and firm punishments for their violation, along with strict separation of the regulators from the industry they are regulating. Too much regulation or unintelligent regulation can stifle the system, yes, and that must be avoided, but there is a balance to be had, and going to far into the de-regulation extreme will take us right back to the boom-bust cycle that lead to the Great Depression and the current Recession/Depression, and gave us the Gilded Age and the robber barons.
Darrel, you continue to win your battle with a strawman. Congratulations.
ReplyDeleteI am not a pure libertarian, and I actually agree with the idea of preemptive regulation at times. I'd rather have the NRC prevent a reactor meltdown than rely on lawsuits after the fact.
The libertarian position for meat packing or drunk driving would be full damages when someone gets hurt by reckless behavior. It's a matter of innocent until damage done, vs. guilty until proven innocent. Whether this is a better approach is certainly debatable, but don't conflate deregulation with full damages with deregulation with protection from damages and maybe some subsidies thrown in.
---
Objective fact: we got the Great Depression after the Fed was created. We got the S&L crisis after depression era regulations were made and FDIC put in place. We got the current crisis after mark to market was imposed. Preemptive regulation did not prevent these crises.
Maybe Guilded Age finance was even worse. Make your case. But don't call post-Fed banking libertarian. It isn't.
My above rant was directed at Carl M.
ReplyDeleteAlso, Rob, a minor nitpick on your note about Communism and Socialism not working. Communism, Socialism, and Laissez Fair Capitalism all do not work, if you try to enact them in a pure, 100%-distilled utopic format. This is because none of them are The Solution. They each have some parts of A solution, but each on their own cannot function.
When intelligently mixed together, however, they DO work, but only because they each cover a piece of the puzzle and require the mechanics of the others to properly function.
But, then, you don't have Communism, Socialism or Capitalism, you have a hybrid system, so you're still correct.
*has been missing his Nitpickers Anonymous meetings...*
Let me swerve around and join Carl in defense of libertarianism... as a "small l" general instinct and inclination.
ReplyDelete1) We have some copious examples of govt devolving into a tool of oligarchy (the Soviet nomenklatura) or a mechanism for stifling the market cornucopia...
e.g. the European welfare state was not wrong to set up universal health care... that is a realm not subject to clear market forces. But the Euros were simply mad to allow retirement ages in the 50s and vast expansion of vacations as a "right." They sneer at americans for LIKING to work, for identifying ourselves with our professions and believing in "productivity." Well, now they are learning the hard way.
What's needed is to gradually learn what the state does well and what it doesn't do well. There has been plenty of data but it is all obscured by dogmatic sunglasses.
We must recall that (1) the government regulators we first set up by followers of Adam Smith in order to provide an institutionalized counterweight vs the OLD enemy of enterprise, cronies of the king. That is still a good and proper role... as proved by the tremendous lengths that King George recently went through, to undermine the US Civil Service (the real aim of Culture war!)
2) That does not mean that govt is always the answer. There SHOULD be a party that looks to govt solutions to perceived problems. Such a party exists, the democrats and they seem sincere.
3) There should also be a party that speaks up for enterprise/market solutions to perceived problems. Such a party does not exist. The Republicans give only a surface gloss lip service to that aim, but almost never propose alternatives. (One exception, the 1993 GOP alternative to Hillary-Care, which was to force all Americans to buy insurance from competitive pools... an alternative that should harness market forces a bit... and that has now been enacted by the democrats.)
The libertarians offer platitudes, saying "the market will solve all problems," while ignoring Adam Smith's warning that the aristocracy is not interested in problem solving, it wants lazy rent-seeking and will suck capital away from entrepreneurs who DO want to offer problem-solving (and profitable) solutions.
Goldwater offered some glimmers of insight into this, before his movement was hijacked by monsters. He actually suggested certain market tweaking measures (e.g. making insurance companies earn their profit off actually intervening to make their clients live longer) that might have made a big difference and made the FDA, OSHA, FTC all less needed.
If we ever had such reforms... aimed at truly incentivizing markets toward competing against government solutions (the Tobin levy is another example that would shift emphasis toward longer-held stocks) then we might see a "withering away" of ham-handed state "solutions." It HAS happened!!! Enough times to prove the principle is sound.
THAT is how I am a Libertarian! The dream of a gradual withering of the state, as increasingly empowered individuals -- ALL individuals, including the children of the formerly-poor -- take ever-more sovereign power over their own decisions, in an almost perfectly transparent world where all players can play their market hands with sufficient knowledge to drive good bargains...
...in that world, the state WILL wither. Indeed, I think we are getting there!!! And when it happens, we will nod at the state - our mechanism from crossing this long divide from the implicit to explicit social contract -- with a sense of genuine gratitude.
And THAT is why I am not a "big L" libertarian. Because I am not addicted to wrathful ingratitude to the nation and civilization that brought me to this party.
(All first draft and post. Sorry about any typoes)
Speaking of moving from implicit to explicit social contracts...
ReplyDeletesee theLibertarian stuff that Carl once helped me to create. It really does lay all this out and you will never view the "left right axis the same."
http://www.davidbrin.com/libertarian1.htm
http://reformthelp.org/reformthelp/marketing/positioning/models.php
or
http://reformthelp.org/reformthelp/
marketing/positioning/models.php
http://reformthelp.org/reformthelp/rights/moderation/goal.php http://reformthelp.org/reformthelp/rights/moderation/consensus.php http://reformthelp.org/reformthelp/rights/generalizing
But related to this!!
HJas anyone seen the trailers for the new Russell Crowe Robin Hood movie?
It is filled with clues, related to THIS topic (see top sentence above)
Hints:
- he is the SON of the Robin Hood who (in all other RH movies) helps Richard return
- it's not Prince Jon but King John
- Crowe rants about "we want our rights IN LAW!"
I saw all that and sat bolt upright. Come on guys. Put it all together.
What it the new Robin Hood film about... and why am I thrilled?
This comment has been removed by the author.
ReplyDeleteHi Carl M.
ReplyDeleteI have sympathy with the libertarian intent, but there is something in the market that prevents the ideal from happening, and I have personally seen it in a few places.
The first example is in "cost-plus" contracts in aerospace, the second is in mining and mineral extraction, and the third is in the banking sector.
The problem is that the purported controls on risky behavior, cost overruns, and poor environmental stewardship (respectively) is that the penalties are time-lagged by a significant amount and don't apply to those who made the decisions.
Thus aerospace firms bid on a "cost plus X% profit" contract, managers get paid a proportion of the revenues, and there is no driving force for efficiency or cost control - in fact the opposite. The control should be that company not getting government bids in the future, which is what you see, but you see it after that contract is done - 10 to 15 years. By that time, the people who made the decision have moved on in their careers and the innocent left behind bear the pain.
Same thing happens with mines. Many states have little or no escrow requirements for mining companies to set aside for environmental remediation after mining, other states do have some. But what happens frequently is that they post a small escrow or none at all, and when the mine starts to leak leachant into the environment (cyanide and/or heavy metals) the executives give themselves $5 million bonuses, declare bankruptcy, sell the assets to a new company, and them move to the new company as the new management team. Leaving the tax payers to treat the water at their expense for, oh, 200 years or so. And all the local workers are laid off.
And that is what we see with the "too big to fail" banks as well. Since the consequences are decoupled in time and in individual, there really is no disincentive to behaving badly. By the time the bill comes due and the company collapses, those people already have their bajillions of dollars in performance pay. They are rich and "successful" - you think they would do anything different if they had it to do over again? I don't. Note that the poor sods who had no part in making those decisions (and no part of the performacne pay) are the ones who get laid off.
So we are left with the choice of the possibility of a truly apocalyptic market correction, which could cost an inconceivable amount of taxpayer money in terms of unemployment and a depressed economy, or a "bail out" that is really and truly immoral and costly, but is probably cheaper than a depression and the ethical thing to do.
Now I don't know that the bail outs we did were the right way to do it, but the *reason* we had to do them is that regulations did not exist that would serve to restrict such behavior. The reason that regulations *need* to exist in the market is that corporations are not living entities, don't experience pain (and thus act to prevent future pain), and don't allocate timely consequences to disastrous actions.
Rules are inefficient, yes, but the only alternative when consequences are so far removed from actions. Which is why laissez-faire capitalism is always a disaster.
SteveO: that was a thoughtful response.
ReplyDeleteMarket failures and externalities are serious problems. In the area of mining I favor more regulation for just this reason.
Just remember, when advocating regulation, that we are not looking at objective government vs. greedy capitalists. Congressmen are greed too. Regulatory capture happens often. Incentives often backfire. For example, we have mining incentives on the books left over from the 1800s when the government was using miners as shock troops to pacify Indian lands.
Regarding aerospace contracts, couldn't agree more -- I'm in the business. This is a powerful argument against government-private partnerships. (Sometimes arguments for trump these arguments; I'm calling for balance not knee jerking.)
Regarding financial markets, I have read in passing that Canada had free banking during the 1800s without major crises. U.S. banks were heavily regulated at the state level; branch banking was illegal in most states, for example. That said, I have not followed up with in depth reading so I cannot vouch for this assertion.
Another solution for the time mismatch: modification to limited liability. (You might be surprised how many libertarians agree with Greens about getting rid of corporate personhood.) Make liability limited to amount invested PLUS dividends received back. Executives should have liability up to what they were paid minus an "executive living wage." This gets rid of the "heads I win tails you lose" dynamic of modern corporations.
I repeat: most libertarians would agree that improved accountability must go hand in hand with elimination/reduction of preemptive regulation.
And once again: maybe preemptive regulation is superior in some circumstances. But let's compare regulation vs. full accountability, not regulation vs. partial deregulation with limited accountability still in place.
If I were a practicising lawyer, I would favor the "The libertarian position for meat packing or drunk driving ... full damages when someone gets hurt by reckless behavior" on the grounds that it would encourage endless litigation and therefore payouts for me. People tend to resist handing over their money on the grounds of being "reckless"; I have yet to meet a drunk who didn't think he was perfectly o.k. to drive or an oil company who didn't think it was perfectly safe drilling anywhere. The drunks tend to lack the assets to compensate for the damage they do and the oil companies simply outlast their victims. It must be justice because no-one's left to complain.
ReplyDeleteCertainly the regulatory state has many many many flaws, as described by others above, but that's true of any mechanical regulatory devices - even the brakes on your car. The trick is to have them work, not to eliminate them and pay for whatever you break.
I rather like the ideology of aiming to empower citizens to do for ourselves, and thus letting the State wither away over time. It may take a long time and may never be completely completed, but what the heck, that's true of just about any ideology and at least it's a sane approach to include in analyzing problems. IIRC the Next Generation Air Transportation System proposes to replaced a command-and-control air traffic system with much more autonomy for pilots and dispatchers, enabled by vastly improved information technology and collaborative decisionmaking. It would be kind of exciting to have the same idea extended to ground travel; it may sound crazy but if we had comparable technology for cars, we really could get rid of traffic lights and driving on one side of the road, which would be both somewhat liberating and more efficient in road usage.
"Umm... Wasn't the laissez faire capitalism that allowed the robber barons of the Gilded Age?"
ReplyDeleteNo, because capitalism is Good and government is Bad.
The Robber Barons were Bad, therefore they were a product of government.
" For example, we have mining incentives on the books left over from the 1800s when the government was using miners as shock troops to pacify Indian lands."
ReplyDeleteThis is factually incorrect.
Certainly the insanely low mining rates continue to exist, because (as Machiavelli observed) the immediate interests of the few who profit from them overwhelms the vague interest of the vast majority who are but slightly injured.
HOWEVER
Mining rights in the Western USA were *free of royalties* for the first part of our history and the rates set in the 1880s represented an *increase* that postdated the Indian Wars. Miners were NEVER paid incentives or employed as "shock troops" against the Indians; rather an esasperated Federal Government recognized that it lack the force to exclude miners from the land. Miners needed no financial encouragement to try to take minerals from Indian land and were of almost no help to the troops who had to be sent in to protect them.
I agree that the current royalty rates are far below value and I am confident libertarians would, with me, favor raising them, or at least letting them at public auction. However the rates are not a case of social engineering but rather a perfect example of unfettered game-players exploiting the rules, which is so basic to human nature that not even libertarianism can change it.
See "Historic Origins of the U.S. Mining Laws and Proposals for Change"
"Objective fact: we got the Great Depression after the Fed was created."
ReplyDeleteWe also got it after the talkie movie was created.
There's as much evidence for a causal link in the latter case as in the former.
"If I were a practicising lawyer, I would favor the "The libertarian position for meat packing or drunk driving ... full damages when someone gets hurt by reckless behavior" on the grounds that it would encourage endless litigation and therefore payouts for me."
ReplyDeleteIt's a curious part of the US health care debate that the same people who advocate private litigation as an alternative to regulation in other parts of the economy think that tort reform is the key to containing health costs.
"You may consider it to be more orderly to have bank regulators and a Fed to stabilize things vs. letting the market weed out risky players. Fair enough, but keep in mind that your preemptively regulated system gave us the Great Depression, the S and L crisis and the current mess. "
ReplyDeleteAnd the preceding era gave us Credit mobilier amongst many others.
"Another solution for the time mismatch: modification to limited liability. (You might be surprised how many libertarians agree with Greens about getting rid of corporate personhood.) Make liability limited to amount invested PLUS dividends received back. Executives should have liability up to what they were paid minus an "executive living wage." This gets rid of the "heads I win tails you lose" dynamic of modern corporations."
ReplyDeleteCool stuff there. Note that Lloyds of London is not a corporation but a fully shared-liability partnership. If they lose money, they go after the property of their members!
I do believe that there are simple things that could make libertarianism relevant. Reduction of corporate personhood is one. also:
1) Recognize and accept that market logic does not trump human nature, anymore than Marxian logic did. Dreamy incantations that things are just-so does NOT make them so. ANd ignoring history is lunacy. We are conspiratorial assholes at heart, who will cheat if we can get away with it, and so enlightenment civilization requires tending. Oh, and Ayn Rand's entire thesis is to find excuses to let the old oligarchs wreck freedom.
2) Accept that some types of liberalism serve enterprise capitalism. Enforcement of contracts, creation of peace, interventions that erase injustice and poverty and that see to it that the next generation's kids become maximally knowledgeable and empowered market competitor/participants, scientific research, and tweaking markets in order to fairly, predictably and stably veer the profit motive toward clear and urgent consensus desirables. Deny ANY of these and you are no friend of Adam Smith. (The last one includes discouraging tobacco and incentivizing alt. energy and offering prizes for spaceflight milestones.)
3) Recognize that transparency is THE most obvious agenda for any libertarian. To the degree that it is thwarted, oligarchs win and markets lose. (Oligarchs of left OR right.) Utterly open information is the grist by which individuals exercise sovereignty and savvy market decisions. It is the sole condition under which government CAN wither away. Libertarians who do not bring extreme-radical transparency forefront are simply hypocrites.
====
Did no one pick up on my clues about Russell Crowe's new Robin Hood movie?
It is relevant to this discussion.
Dr Brin says:
ReplyDeleteHints:
- he is the SON of the Robin Hood who (in all other RH movies) helps Richard return
- it's not Prince Jon but King John
- Crowe rants about "we want our rights IN LAW!"
I saw all that and sat bolt upright. Come on guys. Put it all together.
What it the new Robin Hood film about... and why am I thrilled?
The Magna Carta?
I'm not exactly sure where the more well-known adventures of Robin Hood fit relative to 1215, but hey, your excitement is contagious.
re Robin Hood...
ReplyDeleteForgive my ignorance of history, but I guess I always assumed that John became King John when Richard was held prisoner. Is that not the case? Did Richard return to England, and THEN John became King?
I think I knew all this in 6th grade history, but that was (gulp!) almost 40 years ago.
The other clue? We were talking about a theme I have raised... and to my knowledge I am the ONLY one to raise it... that civilization is gradually shifting from Locke's IMPLICIT social contract toward one as explicit at the "covenant" in Heinlein's future...
ReplyDelete...wherein each free citizen actually signs a contract with society, fully vetted and open-eyed.
Clearly the first step along that path was the Magna Carta.
Note that NOTHING in the trailer-preview said the story will be about Runnymead... and yet everything makes this utterly obvious as the central point of the film.
Love it.
Carl M:
ReplyDeleteThe libertarian position for meat packing or drunk driving would be full damages when someone gets hurt by reckless behavior. It's a matter of innocent until damage done, vs. guilty until proven innocent.
"Innocent until proven guilty" is a good legal precept, but I don't think it means that you ignore safeguards against easily-predictable harm until that harm is actually done. You really think it's a good idea to wait until someone dies from (say) rat poision added to baby food, and THEN assess damages? To what end? Unless the company can pay for bringing the babies back to life, they're going to get off easy and the harm they cause is going to be irreperable.
Regulation is necessary for the same reason sports have referees and umpires. As long as a company who cheats has a competitive advantage over those who don't cheat, then the cheaters will be the ones to survive and prosper.
David, I have to disagree with you about Rand's entire thesis. Many of the villains in Atlas Shrugged were oligarchs. She attacked the aristocratic wing of modern liberalism more than the unionists and welfare recipients. The trade unionist is at least trying to fulfill his self-interest, after all. The heirs to 20th Century Motors were the ones dabbling in hardcare Marxism.
ReplyDeleteThis is not a defense of Rand's moral philosophy. In fact I am in the process of rewriting a dissection of same. I just think she should be attacked for where she was actually wrong (and very wrong she was).
Rand was a big believer in "greed is good" as long as greed was constrained by a few rules of conduct. Now ask yourself what class in society is the least greedy. Answer: old money aristocrats! The principle of diminishing returns indicates that money has a declining marginal utility as you have more of it. This is both the justification for progressive taxes today, AND of government by the old money elite back in the day. Those sated by wealth are harder to bribe. Honor and moral satisfaction have relatively higher priorities.
This filter breaks down with the newly rich because these people pretty much by definition got there by having a higher propensity for acquiring wealth. Though some of this class may be sated by wealth (Bill Gates today), they are people with a higher appetite to start with (on average), so the club of aristocrats tends to frown upon such Randian heroes.
Oh, one more data point. As the economy collapses near the end of Atlas Shrugged, the villains set up a caste system to attempt stability.
ReplyDeleteRand idealized technical achievement and laughably underestimated how much brain power it takes to play power games (cf. the bad Bond novel elements when Galt is rescued). Rand's aristocracy was one of nerdly achievement, not inheritance or skill with power.
Methinks Rand and Veblen could have gotten along with each other.
John did conspire with King Philip of France to revolt against Richard I's authority while Richard was being held by Leopold V of Austria, then Holy Roman Emperor Henry VI; however, he did not ascend the throne until Richard died suppressing a revolt in English-held territory in France.
ReplyDeleteInterestingly, the Great Charter had traditionally been verbally proclaimed by each King at the beginning of his reign (tradition claims this dates back to William the Conqueror); John had refused, stating that this was an unjust limitation on the Divinely-given powers of the King. When the nobility (worried about losing their own privileges) forced John to sign the Magna Carta at Runnymede, it tied the hands of John and all future royals far more than the traditional proclamation would have.
It also enabled the rebels in the Americas to gain far more sympathy among the colonists than might otherwise have been the case; when rebel leaders complained that they were being denied their rights as Englishmen under the Magna Carta, George III replied that as colonists, they weren't properly English, and thus had no such rights. When the rebels publicized this, the colonists began wondering why they were still being required to pay homage to King who had denied them...
Carl, of course I oversimplified. What Rand romanticizes is NEW lords.
ReplyDeleteSexually, she was profoundly attracted to men who, like Conan the Barbarian, would "wrest a kingdom by his own hand."
In fact, I believe all the rest of her vast rationalization was built on the edifice of that frank case of extreme sexual "hypergamy" or wish to mate with the hyper top male, who deposes the fat old king and cronies in a dazzling display of extreme male Fitness.
Note, she makes no allowances for preventing Conan's sons from inheriting it all. After all, they would be HER sons, too. Hence, the hypocrisy, that the fourth generation will be fat old money oligarchs who need deposing, is never addressed. Because these sexual matters do not dwell upon tomorrow. They respond to deepseated Darwinian drives.
And the last thing that either Rand or Marx or any other nomenklatura leader will ever acknowledge is the lessons of Darwin, or Locke.
Jonathan, good insights into Runnymede. But you simplify the American revolutionaries, who looked back much closer in time, to Cromwell and to the Glorious Revolution. But it is true that George II et al were morons. New York and Philadelphia were among the largest towns in the Empire. Denying them representation was infantile.
But hey, I'm still jazzed to have sussed the new Robin Hood, based on so little data from a trailer.
Interesting that it's been panned by critics, even before it's premier showing.
ReplyDeleteThis could either mean it's a bad movie with good ideas, or it's a good movie with 'bad' ideas.
ReplyDeleteNote, she makes no allowances for preventing Conan's sons from inheriting it all. After all, they would be HER sons, too. Hence, the hypocrisy, that the fourth generation will be fat old money oligarchs who need deposing, is never addressed.
Y'know, Dr Brin, I'd say Rand is conspicuous in her refusal to consider matters of reproduction AT ALL. Dagny Taggart (Atlas Shrugged) and Dominique Francon (The Fountainhead) have numerous sexual adventures with multiple virile partners, and yet neither even THINKS about the reproductive aspects of sex let alone gets pregnant even by accident.
There's only one mention of children at all among the "good guys" of Atlas Shrugged, and that was a kind of throwaway reference to one woman in Galt's Gulch who raises her ildren without lying to them. Other than that--nothing. For a book that supposedly lays out a theory of what society should be like, the absence of any sort of "next generation" is glaring.
This seems quite at odds with her assertion that Dagny and Hank only find pleasure in a good meal to the extent that that meal is utilitarian--that one "stokes an engine" for a purpose, and that it is the purpose one is stoking up for that gives a meal its desirable quality, not the animal pleasure alone. Yet the book bristles with sexual activity that is by Rand's own design NOT for a functional purpose beyond the pleasure of the act itself.
She doesn't consider the effect of newer generations because she seems to genuinely think very little if at all about there BEING any new generations.
Many authors seem unaware of their hostility to children or reproduction.
ReplyDeleteI reviewed Iain Pears (darling of the liter-artsies) THE DREAM OF SCIPIO. No one reporduces or loves beyond the solipsistic present. Ah wisdom.
My tuppence worth on markets
ReplyDeleteAs Adam Smith said (but worded differently) the market has positive feedback
Them that has gets
This is inherently unstable.
The job of regulation is to prevent this from moving to the inevitable end game of "Regulatory Capture"
The market system Smiths "Invisible Hand" is the best system tried so far BUT it steers out of control in the medium/long term
I really like the "Tobin Tax"
In control terms this is like the dampers (shock absorbers) on a car they prevent a minor bump from bouncing the car off the road
Just time for a short comment...
ReplyDeleteCarl M says, "Regarding aerospace contracts, couldn't agree more -- I'm in the business. This is a powerful argument against government-private partnerships. (Sometimes arguments for trump these arguments; I'm calling for balance not knee jerking.)"
Actually, I have been talking to people currently in aerospace about this. I can totally see the justification for cost plus/best effort contracts. If we need something that has not been done before, that is bleeding edge, and that no one can reasonably cost-estimate, you need that guarantee to get what you want.
But I do also think that we can get around the bogus behavior too - change the paradigm and require not only a quote that says, "cost plus X%" but adds an efficiency metric, along with penalties for not achieving stated efficiencies. Or be the first aerospace company to propose such to the government, and then you win and change expectations.
And it would be supported - some of my students worked on the "focused lethality munition" program and utilized what we taught them in order to deliver to the war fighter a lower collateral damage munition a year ahead of schedule and $2 million under budget, using Boeing as the external contractor, and they were totally on-board.
I too am concerned about inappropriate behavior driven by clumsy regulation - get me started on "pay for performance" stories some time. But I fear the absence of regulation in those "lag prone" industries even more. LLCs or eliminating the corporate "person" might help some, but don't eliminate the decoupled "smash and grab" mentality as far as I can see.
We have multiple examples in banking (Great Depression, S&L Crisis, the Great Recession of 2008) that should have taught us by now that lacking regulation leads to Very Bad Things.
I don't think you can take solace in saying that these happened because of regulation or some suboptimal combination of bad regulation and lack of accountability. I believe they happened because people evolved to make the most out of what they can get away with today, and leave the resulting problems for somebody else's children. (Exceptions can happen too, though - as Diamond describes in Collapse.)
It seems to me that libertarians often assume that people make logical decisions accounting for long-term results...but where acquiring resources and the trappings of, if not the fact, of reproductive fitness comes in, they just don't seem to do so. If we can't get people to make ethical decisions, we can make it harder to get away with making unethical ones.
...and to bring it back to a previous posting...
ReplyDeleteDr. Brin says,
"Many authors seem unaware of their hostility to children or reproduction.
I reviewed Iain Pears (darling of the liter-artsies) THE DREAM OF SCIPIO. No one reproduces or loves beyond the solipsistic present. Ah wisdom."
...and the ones that do reproduce, like Heinlein's characters, get the author accused of misogyny since he is clearly implying that all women are only complete when pregnant...sigh...
I see your point, but I have to object to your rather careless use of the term "neo-classical economics". Neo-classical economics is branch of economic science and has nothing to do with neocon politics. It offers no normative support for neocon economic polices, or "supply-side economics" or any other political position for that matter. It can however be used to analyze it.
ReplyDeleteIt is simply a framework for studying economic behaviours of the firm and the individual based on rational choice theory. The widespread use of this theory did not cause the crisis. The inbalances in incentive structures and the resulting over-the top risk behaviour that did, is not something that neo-classical economcis would offer any normative support for. It does not "tell you" take high risks or create complex banking products that no one understands, it does not tell you to cut taxes for the rich or any other such thing.
One problem I've noticed is this knee-jerk reaction to the thought of raising taxes even on something so simple as stock transactions. I had an argument with one of my friends over this with his foaming at the keyboard about "no new taxes!" and his desire to starve government of money so that it stops spending.
ReplyDeleteHe didn't even want to listen to my comments that this doesn't work: if you starve a government of tax revenue, it borrows instead. He believes the U.S. government will never pay off its debt and will default on its loans, and lays the blame on Obama for his "trillion dollar waste package" and tripe like that.
Ironically, and I've pointed out this hypocrisy to him (to which he shrugs and ignores it), he wants the government to subsidize him and anyone else who wants to put up a wind turbine or solar paneling. It's okay for the government to spend money... if it's directly to help him. Otherwise? Screw it.
I honestly don't know if you can effectively argue with someone like this. If they refuse to see reason and blind themselves with foolishness about taxes and on the fact industry cannot be trusted to be unregulated... then why try to pull their heads out of the sand?
Then again, I may just be a poor arguer. ^^;;
Rob H.
I said:
ReplyDeleteShe [Ayn Rand] doesn't consider the effect of newer generations because she seems to genuinely think very little if at all about there BEING any new generations.
David Brin said...
Many authors seem unaware of their hostility to children or reproduction.
Seems to me that for all her pretentions at being an architect of a wonderful social structure, Rand is stuck at the level of adolescent fantasy, on the order of superhero comics and action flicks and romance novels. Truly adult literature takes into account such universal truths as the inevitability of death and the subsequent need (and pleasure) for creating and empowering a fresh generation to carry on beyond your alloted timespan. Adolescent fantasy doesn't look beyond the "happy" or "tragic" ending AS ending, the stais point beyond which nothing of consequence is presumed to change ever.
For all that she'd never recognize it herself, this is the sort of thing that Ayn Rand was truly writing. She'd logically give no thought to Dagny's and Galt's children because they have no need to create imperfect copies of themselves. Galt and Rearden and D'Anconia and company, having established themselves in their rightful positions, will presumably carry out their functions until the end of time. She really does expect the Reich to last a thousand years.
It actually doesn't make for a bad adolescent fantasy story. But as some sort of blueprint for civilization, the glaring absence of any focus on future generations should remove all credibility.
The idea of a transaction tax after a financial collapse is not new. Hoover imposed a check tax. From Wikipedia:
ReplyDeleteTo pay for these and other government programs and to make up for revenue lost due to the Depression, Hoover agreed to roll back previous tax cuts his Administration had effected on upper incomes. In one of the largest tax increases in American history, the Revenue Act of 1932 raised income tax on the highest incomes from 25% to 63%. The estate tax was doubled and corporate taxes were raised by almost 15%. Also, a "check tax" was included that placed a 2-cent tax (over 30 cents in today's dollars) on all bank checks. Economists William D. Lastrapes and George Selgin,[47] conclude that the check tax was "an important contributing factor to that period's severe monetary contraction." Hoover also encouraged Congress to investigate the New York Stock Exchange, and this pressure resulted in various reforms.
Ah, but was it the tax, or the size of the tax, which caused problems? This is the question that needs be asked.
ReplyDeleteRob H.
ReplyDeleteThe idea of a transaction tax after a financial collapse is not new...
Carl, you seem to be missing the point of the transaction tax as Dr Brin proposes. Its primary function is not to raise government revenue, but to impose a cost upon the practice of stock-chruning in line with the harm that the practice causes to the system. The cost isn't going to be borne by those who buy and hold, or by those who buy and sell carefully for sound investment reasons, but by those who flip one stock for another at high speed. This certainly isn't a "soak the rich" proposal.
Larry, I understand the point. I just enjoyed pointing out a bit of irony.
ReplyDeleteThat, and I don't think it will fix the underlying problem. We've had overleveraged markets prior to computerized trading. It's the leverage, not the number of transactions, that's the problem.
Many good comments. Too bad I missed out on the conversation.
ReplyDeleteThe basic problem seems pretty simple to me. People strive continuously to find or devise ways to game the system in order to maximize their wealth/power. If the system is changed to curtail the current schemes that are being used to cheat and steal, the players will immediately begin to work at finding new ways to cheat and steal.
That is the basic problem with markets. I am not for regulation, changes to corporate law, or whatever, for the sake of those things. I am for whatever can be demonstrated to improve the function of the market. And ideology ain't one of those things.
We can look at the past history of the market to determine the causes of bad events and then try to implement changes to prevent them.
But, since the market is a dynamic complex environment, and we can not predict its future with any accuracy, we have to continuously monitor the market not only to try and catch new problems that may occur, but to determine if the changes that have been made to encourage fairness and prosperity are having the desired affect, or if they need to be changed or eliminated.
Transparency, timely accountability and pragmatic regulation will all be required. There are no dichotomies between any of these, and we can and should make use of all of these to limit the cheating and stealing that has brought the economy to its knees, again.
Darrel E said:
ReplyDeleteThe basic problem seems pretty simple to me. People strive continuously to find or devise ways to game the system in order to maximize their wealth/power. If the system is changed to curtail the current schemes that are being used to cheat and steal, the players will immediately begin to work at finding new ways to cheat and steal.
That seems to be the genius behind the American Experiment (both in democracy and in capitalism, which are two different things)--that instead of trying to pretend human nature is different from what it is, it does a very good job of channeling those human foibles into a good direction.
The system was DESIGNED to channel the work that people willingly perform for their own selfish wants into societal benefits. A damn good work of engineering, if you ask me.
But it's a mistake to presume that the system is flawless--that it will function correctly forever without maintenance.
And it's a fallacy to look at a carefully crafted SYSTEM designed to channel human effort into good directions and conclude from that that human effort TENDS towards good directions if left totally unchannelled. And by the time one gets to Glenn Beck-ian levels of presuming that the act of channeling effort is in itself evil (socialism), then one is truly exiting the realm of sanity. One might as well look at the combustion engine as "proof" that uncontrolled explosions are good things.
Dagny screamed, a scream not of pain, but of righteous triumph. The baby emerged like an industrial diamond from a rich mine, ready to be hewn into hard perfection.
ReplyDelete"I created these booties," John Galt said. "They are made from a special fabric only I can make. They will warm the child's feet; feet that will one day stride among girders, that will one day operate accelerators. As the child becomes older, they will transform into coveralls."
Dagny Taggart placed the booties on the child's feet. The booties were emblazoned with dollar signs, and were stronger than steel, yet more pliable than silk.
"I call it Galt Fabric II," said John Galt, "since I already named the first one Galt Fabric."
The baby flexed inside his booties, commanding them to conform to his feet. Dagny would shape him as a machinist shapes the sturdy, powerful tank of a boiler. And yet, one day those feet would tread on her as the child realized his own will was supreme.
"That will be fifty cents for the booties," said John Galt. "I take gold, silver, or Rearden Banknotes."
@Stuart: ROTFL!!!
ReplyDeleteOff of politics for a moment, scientists have created molecular DNA robots that can walk and potentially form assembly lines for nanotech assembly factories. So it looks like we're one step closer to the GOO scenario. ;) Or at the very least having nanomachines that can break apart oil on a microscopic scale and keep oil spills from devastating the environment. ;)
ReplyDeleteRob H.
Re- Robin Hood and the Magna Carter
ReplyDeleteI had always understood the Magna Carter to limit the power of the king over the great nobles
For a more democratic document I preferred the Declaration of Arbroath
Which held that the Scottish people had control over the choice of their king
Hi, I ussualy just lurk here(I think I posted twice, a year ago), but since nobody else seems to have mentioned it, NPR was doing a specail on Greece yesterday and while I only caught a small chunk of it one of the issues that the addressed was the rampatant tax evasion. Thought you might like to know.
ReplyDeleteFrom Brin... on the road...
ReplyDeleteStuart... hilarious!
Possibly a small facet of a larger situation, the New York Times has an interesting piece on de-fanging car dealers. The Pentagon is considering it a readiness issue, predictably, Sam Brownback sees little wrong with used car dealers vampiring young soldiers and sailors.
ReplyDeletehttp://www.nytimes.com/2010/05/12/business/12dealers.html?emc=eta1
From here, it seems the liberal/progressive movement are not availing theirselves of a useful bludgeon when they leave scripture quoting to the fundies.
I am not sure that quoting scripture would do any good. As has often been noted throughout history, you can interpret scripture to support just about anything.
ReplyDeleteBut it seems that with the demographic that would be moved by scriptural quotes to support a particualr social, economic, legal or governmental position, it's the anything, along with the appearance of piety, that they actually respond to.
If you use scripture to justify slavery, slave owners will support you while antislavery proponents will not. If you use scripture to justify emancipation, slave owners will not support you while antislavery proponents will.
Quoting scripture doesn't seem to be much use in politics, except maybe to give a politician a certain odor that may cause a certain demographic to except the politician as a member of their group.
Seems to be a lot of editorial animosity to letting Franchise-level superhero properties at Marvel and DC be successful parents and family people, too, doesn't there?
ReplyDeleteLarryHart said:
ReplyDelete"But it's a mistake to presume that the system is flawless--that it will function correctly forever without maintenance."
Yes. One of the points I was trying to make. You said it more clearly and more concisely than I did.
You made some other good points in that post as well. To add to what you said, I think that another 1st of its kind thing about the American Experiment is that there were enough people together at the same time that believed that empowering the people, equality, equal access to opportunities for the people, and secularism, were desirable enough goals to base a society on in the first place that they dedicated themselves, and future generations, to that effort.
Stuart,
That was freaking funny. Thanks for the laughs.
There's a financial reason for that animosity. The editorial staff of these comics believes their fanbase consists of kids and older geeks who have no life or families of their own. Thus they decided that financially, having a character (such as, say, Spiderman) be happily married is a surefire way of driving off their fanbase either by alienating fans who in their eyes are total losers (and don't want to be reminded of that fact) or who are inspired by their heroes to go out, get a social life, and suddenly have other things to spend money on instead of comic books.
ReplyDeleteIn some cases, the family lives of the writers involved in the comics are responsible for situations in the comic - when Peter David was working on "The Incredible Hulk" his wife was a big fan of Betty (the girlfriend/eventual wife of Bruce Banner). He promised not to do anything untoward to Betty... until they got divorced. There were enough nasty feelings involved that David offed Betty in a horrid manner, and she's been dead ever since (despite a change in writing staff several times over).
Poor writing was part of the reason why I stopped buying comics (along with a period of unemployment); the final nail in the coffin was finding all these wonderfully imaginative comics posted on the internet for free. There are very few print comics I'll continue to buy (with the exception of things that catch my eye and some of the independent presses). While some of the early webcomics did lack in stable romantic relationships (fear of the "Moonlighting Syndrome" which is honestly a load of bull and a sign of lazy writing - relationships are just as tense and dramatic as unrequited relationships. They're just differently dramatic), there are so many webcomics out there these days that you can find stable marriages and relationships in many comics, both popular and unknown.
As the print comics continue to lose market share to the web, I suspect you'll see the editorial staff continuing to kill off stable relationships in hopes of keeping geeks happy and single. What the editorial staff doesn't realize is that their existing format is a dinosaur destined to diminish much like print newspapers are. Comics such as Girl Genius and the like which have moved to the web and have print compilations are the actual future for print comics - compilations being salable in multiple venues, not just comic book shops. Whether the large comic book companies realize this in time is debatable.
Robert A. Howard, Tangents Webcomic Reviews
On a world politics note, a leaked Russian document is suggesting that President Medvedev is planning to reappraise Russian foreign policy with a more pro-Western focus. I must admit to some curiosity on if Medvedev himself allowed the leak, so to reveal nationally to the Russian people (who mostly consider him Putin's pawn) that he doesn't take all his marching orders from Putin.
ReplyDeleteI hope that, assuming this is genuine, that Medvedev continues through with this plan. Having Russia be pro-West would help torpedo neo-Conservative efforts to regain power, first by showing Obama to be an effective foreign leader, and second by eliminating a major "enemy" for Republicans to use in scaring people to vote for them. I also notice that Medvedev is concerned about U.S. neo-Conservatives getting back into power; he may be partly interested in boosting Obama's political power so to keep anti-Russian political elements from gaining power in the U.S.
Rob H.
I've never read Rand but, judging from Stuart's impromptu and well-received parody, I don't think I've missed anything (that's Rand, not you, Stuart!).
ReplyDeleteBy chance. I've just started reading Girl Genius and, from what I've read here, I think it's setting (a wrecked world ruled by rival dynasties of spanner-wielding mad scientists) matches Brin's extrapolation of 'Atlas Shrugged' rather well.
Ah, romantic science!
@Robert
ReplyDelete"Poor writing was part of the reason why I stopped buying comics (along with a period of unemployment); the final nail in the coffin was finding all these wonderfully imaginative comics posted on the internet for free...."
Since the Geek Lantern has been lit ...
... yep, well-written web comics have basically beaten the pants off anything in print, as far as I can tell. I suppose it has something to do with the very low barriers to entry; you really can publish while keeping your day job ... ironically enough, one of the measures of success with a webcomic is that do attract a following that wants to buy print copies (...typically with a few extras ...).
IMO Girl Genius and The Order Of The Stick have the advantage of being written by people who have been in the field for ages and really understand about story. This makes their artwork more than just pretty drawings (ironically so, for OOTS). OOTS takes great advantage of discussion groups to build community.
"...one of the measures of success with a webcomic is that do attract a following that wants to buy print copies"
ReplyDeleteI'm not sure what my fingers meant by that, but what my brain meant is that if your webcomic is really successful, you can tell because people tend to want physical stuff: bound editions with extras, also coffee cups and holiday ornaments. Which is kinda of funny: your Cloud success is measurable in Stuff!
The low-barriers-of-entry means that there's a lot of cr@p out there but it's not really a problem; people recommend the stuff in a remarkably friction-free and information-intensive process. I mourn the demise of the comic book shop but I love my daily Sinfest, xkcd, New Adventures of Queen Victoria and periodic , Nodwick, Goblins, Erfworld, Something Positive, Weregeek, Nobody Scores! etc. And the creators own the content so we cut out one layer of middlemen.
I gave up, long ago, determining which webcomics are my favorites. I can't limit myself to just ten. Or twenty. I love almost all of them. ^^
ReplyDeleteWhich I suppose makes me both a better critic and a failure as a critic at the same time; I have a love and respect for the medium, which shows in my writing (to the point that some people had to stop reading my reviews because I addicted them to TOO many webcomics - surely, a critic is a success when he talks people into enjoying something)... but I tend not to be as critical as traditional "critics" tend to be. Something truly has to anger me before the claws come out (and even then I often tend to be kinder and gentler than most of my conferes).
Sadly, with a huge array of webcomics out there, there is a huge amount of trash out there. (I tend not to review the trash unless it has some element in it that is worth refining further. Why waste my time if I don't like it, with as many comics that there are out there? Especially as bad reviews just encourage people to visit the site to see for themselves.) Fortunately, you can almost always find a webcomic that focuses on a topic of your interest.
Rob H.
Rob, one exception to your last statement, in my experience, is a serious (drama over comedy) webcomic in which the main protagonist, or one of the main protagonists, is a dragon (and that is not a mini-pet used for plucky comic relief). I admittedly haven't dedicated huge resources to my search for such a comic, but I have yet to find even one in seven years of searching.
ReplyDelete(I also don't read your reviews regularly specifically to avoid becoming addicted to more webcomics...)
I found a paragraph in CNN's review of the Robin Hood movie that I felt would tickle Dr. Brin's fancy (if that's the proper use of the term... never did get the hang of colloquialisms):
ReplyDeleteCrowe's Robin is not, first and foremost, a socialist intent on redistributing wealth. Rather, he's a libertarian who believes every Englishman's home is his castle, and the King should keep his greedy hands out of it.
Now we just need the Tea Party to embrace this movie as their ideal movie for the summer. ^^
Rob H.
@Ilithi Dragon: I'm not quite sure if you'd call him a protagonist or an antagonist, but Deception over at Evil Overlords Unlimited (which had a large-scale multi-webcomic crossover with war being waged between the EOU and the rest of the internet) is a shapeshifting Dragon. Once the main "war" ended, Deception was kidnapped by one of the other cartoonists and is sharing time with another character for the EOU website. Of course, considering that for the most part Deception remains shapeshifted in a human-like (or elf-like) form, you might consider him to not be a proper Dragon. ^^;;
ReplyDeleteRob H.
Mr. Brin:
ReplyDeleteBut the Euros were simply mad to allow retirement ages in the 50s and vast expansion of vacations as a "right." They sneer at americans for LIKING to work, for identifying ourselves with our professions and believing in "productivity." Well, now they are learning the hard way.
it's not "Euros": Greece was insane in its public sector pensions, but most Euro countries (Italy included) have a retirement age between 60 and 67 (there are differences among women and men and such). And you must also factor employment and contribution history: in our '60s it was perfectly possible to start working as a blue collar factory worker at 18 and retire in the mid-fifities after over thirty/thirty-five years spent working.
Going back to politics, I found an interesting article about the Republican Party coming unglued, stating that "...the state Republican Party chucked its platform -- a sensible New England mix of free-market economics and conservation -- and adopted a manifesto of insanity: abolishing the Federal Reserve, calling global warming a 'myth,' sealing the border, and, as a final plank, fighting 'efforts to create a one world government'" and also talking about the defeat of conservative Republican Robert Bennett, who voted conservative 84% of the time and yet was "not conservative enough" for Utah conservatives.
ReplyDeleteAs the article talked about various Republicans who are at risk at this ultra-conservative backlash, it also talks about a very disturbing statement that the Maine Republican Party made: The Maine Republicans a week ago rejected a platform proclaiming that "we believe that the proper role of government is to help provide for those who can not help themselves"; that "we believe in ensuring that our children have access to the best educational opportunities"; and that "every person's dignity, freedom, liberty, ability and responsibility must be honored."
That last one suggests Republican Conservatives are moving away from American principles... and toward despotism. With Conservatives forcing their brand of idealism on the rest of the country.
On a more healthy note, we have another article concerning Florida Governor Crist's newfound enjoyment at being freed from the shackles of the Republican party. I personally have high hopes with Crist winning the Florida Senate seat, as I believe a well-placed Independent can do more for his or her State than the Republicans have in marching lockstep following the Mandate From Rove.
My hope is that what we're seeing is one last gasp from the Republican neoconservatives and oligarchy that will be rejected by the nation. If Democrats remain in control of the House and Senate in 2010, then we'll see the current Republican star begin to wane. With hope, either Republicans will then move toward the center and repair the damage done to their party... or this bloated diseased organization will shed off its moderates and become a Minority Party in the U.S. while Moderate Conservatives and Moderate Liberals work together in to govern effectively and intelligently.
Hey, I can wish. I'm a writer. We work with dreams and hopes. =^-^=
Rob H.
You know, with the oil disaster, that Whisleblower prize would sure come in handy right now.
ReplyDeleteRe: Ayn Rand, amusing snippet from Harry Potter and the Methods of Rationality (a lovely fanfic)
ReplyDelete-----------
"Not to mention," Harry said, "being a Dark Lord would mean that a lot of innocent bystanders got hurt too!"
"Why does that matter to you?" Professor Quirrell said. "What have they done for you?"
Harry laughed. "Oh, now you're just sounding like Atlas Shrugged."
"Pardon me?" Professor Quirrell said again.
"It's a book that my parents wouldn't let me read because they thought it would corrupt me, so of course I read it anyway and I was offended they thought I would fall for any traps that obvious. Blah blah blah, appeal to my sense of superiority, other people are trying to keep me down, blah blah blah."
"But the Euros were simply mad to allow retirement ages in the 50s and vast expansion of vacations as a "right." They sneer at americans for LIKING to work, for identifying ourselves with our professions and believing in "productivity." Well, now they are learning the hard way."
ReplyDeleteDavid, per capita productivity growth n most of Europe is higher than in the US.
Higher US economic growth is mostly attributable to faster population growth, not higher growth in per capita output.
@Robert A. Howard...
ReplyDeleteWhat's interesting is how The Incredibles, a story about a super hero family with regular family issues as well as super villains, was very popular with both boys and girls as well as non-comic fan adults. Is similar to how Nintendo tapped in to the casual gamer market with the Wii.
As far as web comics go, man for about 10 years, I was following 60-80 comics on a daily basis but the last few years, I've really lost interest in a lot of them. About all I follow regularly are Devil's Panties, Something Positive, Ornery Boy and Girl Genius. I've bought mostly t-shirts from web comic folks but do have a decent collection of hard copy versions. Recently, the daughter (9 years old) has been getting in to Girl Genius so we've been buying a soft bound volume once a month. Anything that gets a kid reading is cool!
From a New Scientist article on high volume traders:
ReplyDelete"The traders use computers to profit from short-lived fluctuations in markets. An algorithm might, for example, watch for large transactions from institutional investors that could affect a stock's price and make trades before the rest of the market has time to react. That and similar strategies have created a market for high-frequency traders in which transactions amounted to around $8 billion last year."
http://www.newscientist.com/article/dn18900-briefing-computer-traders-blamed-for-wall-street-crash.html
If total annual volume for these computer-driven is only $8 billion it's difficult to see how high volume trading can have much of an impact on a market that trades in excess of $150 billion in shares PER DAY.
Hell, even if it's insanely profitable its difficult to see how it even makes a major contribution to the profits of the major Wall Street Banks.
Hell even if that's a typo and it's $8 bilion per day it's still only ca. 2% of the market.
Review of new Robin Hood movie by Howard Taylor of Schlock Mercenary.
ReplyDeleteI came across a rather interesting news article suggesting that the American people aren't quite as stupid as Fox News and the Neocons would want to think: a narrow majority of voters want Democrats in charge of Congress because they are better at Domestic issues such as job creation. The caveat? The vast majority want the incumbents out, including their own. So we may very well see change in Washington; and perhaps a wave of new people in D.C. may break the gridlock that has paralyzed the Legislature.
ReplyDeleteBut as I've said before, I'm a writer and dreamer. Sometimes I need to take the optimist side of things. ;)
Rob H.
Hi all;
ReplyDeleteI've been following the conversation here for awhile now. I've been tempted to jump in from time to time, held back primarily from the sense that I've little to add -- mostly questions. This one though, I think is worth asking, in regards to Robert's comment:
"So we may very well see change in Washington; and perhaps a wave of new people in D.C. may break the gridlock that has paralyzed the Legislature."
There seems to be an assumption that we want The Government to Do Something. I don't see gridlock as necessarily a bad thing. Better to do nothing, I would think, than the wrong thing, yes?
-- Brian
"There seems to be an assumption that we want The Government to Do Something. I don't see gridlock as necessarily a bad thing. Better to do nothing, I would think, than the wrong thing, yes?"
ReplyDeleteHi Brian,
We definitely want government to do what is in their scope. Gridlock is a terrible thing. Remember we're getting taxed to accomplish things. Gridlock is throwing away money -or- at best a corrupted form of "employed" unemployment program.
I understand where you are coming from though. We need to make sure that when we act, we do so with wisdom and prudence. We should be demanding this from our elected officials while we encourage them towards whatever our interests may be.
I am perfectly happy to discuss what should be the scope of government. I just think that where we are taxed, we should have an effective, efficient government. One of my greatest problems with Republicans is that they don't push for this end. They are happy to encourage ineffective government so they can argue against it.
A true conservative will let democracy determine the size of government be it 5% or 50%. Then they will work to make sure we get the most bang for our buck within that system. Or, to do the same task for less in order to reduce everyone's tax burden. As a "small c" conservative, Republicans disgust me.
Brian, while the libertarian in me is tempted by the argument for gridlock, I pause and consider who the Enemy is.
ReplyDeleteWe have experienced 30 years of propaganda that there is no greater villain than the bureaucrat. But let's be clear. THE central aim of the entire Neocon Era was one and only one thing -- the undermining and destruction of the United States Civil Service.
Every calamity we have seen, from the bungled first years of the Middle Eastern War to the Minerals Management Agency "officials" who whored and sniffed coke with the companies they were supposed to supervise, to the agencies that were packed with Goldman-Sachs agents...
...all of these calamities were about one thing, ensuring that government would NOT do its job intelligently or diligently, freeing oligarchs to run wild.
This business of wanting government to do its job badly, so that it will then lose our trust and be starved, is pure lunacy, even treason. Sane Americans want their government to function well SO THAT we can deliberate upon its proper tasks with full information and pick those tasks as well-informed masters of our public servants.
Love of gridlock is based upon an assumption so profoundly cynical that I know you can see past it. I have faith in you.
How about a compromise on gridlock: instead of having a government that cannot do anything, let us have a government that can't do anything secret!
ReplyDeleteThe list of things that we would like to have secret are small: how to make a nuke; where our troops are stationed. These are increasingly difficult to keep secret, but I can see how we might want to try although our secret missions have backfired quite a bit from a strategic standpoint.
Other than that very limited set of functions, the dangers that come from having a "SECRET!" stamp outweighs the benefits. For example, contract talks may go faster in secret, but too often it leads to corruption. Better to work it out in public (or its proxy, open access on the internet), take the hit but reap the benefit.
For example, defenders of the MMS will say it's necessary to have secret discussions with industry in order to get them to disclose proprietary information, but the provably bad results is that the bureaucrats end up literally sleeping with the lobbyists. A Zero Secrets Government would suffer some inefficiency from vendors unwilling to play along but the gains in efficiency from the reduction in corruption would more than offset it.
And then there's the little matter of freedom; we cannot be free if we don't know what our government is doing.
This idea may be too radical for some; full implementation may be impossible and instant implementation would be difficult. However I suggest that it should be the base of government reform strategy, and any deviations should be fully publicized.
Um, Rewinn... you expect Mr. Transparency to disagree with THAT?
ReplyDeleteActually I am a moderate. There are many things I would allow govt to keep secret. But under a systematized process wherein the burden of proof is almost always on keeping things dark.
ON TO NEXT POSTING
"...Rewinn... you expect Mr. Transparency to disagree with THAT?
ReplyDelete..."
Heh. Yeah, I thought it sounded familiar. Although I'm thinking it could be an explicit counter-proposal to the pro-gridlock faction.
But ... on to next topic!
Dr. Brin;
ReplyDeleteThe cynicism accusation is one to which I'll have to cop a guilty plea to. I try to fight it -- by trying to get regular doses of ideas from those smarter and both more creative and optimistic than myself. It helps. Though I do have days when I feel the only way out is to raze the structure and start fresh. I try to go lie down until the feeling goes away.
I want to stay on point here and not dig up every thought I've had following the conversation here over the last several months -- there'll be time for that later. So to keep it short:
The passing of 1000+ page bills, in a fevered rush, whose contents are largely a mystery, is as good an example as I can think of in favor of gridlock. More disturbing is the knowledge that most of the legislators casting their votes don't know what's in them. I've long felt a good fix would be a "One bill, one issue, one vote" rule. The amending of totally unrelated issues, the voting on legislation the contents of which is only dimly understood if at all, to me is a sign of a system spun out of control. To the benefit of the oligarch's of course.
You're absolutely right of course, true gridlock isn't desirable -- other than in comparison to bad law, occult law, law that chips away just a bit more at our independence, our liberties, our sense of ownership of and in the process of government.
On the other hand, as long as those such as yourself pound the drum for a better way, introducing and championing ideas like transparency, there's hope. There's reason to keep the cynicism at bay.
A final personal note: As this is my first direct response to you, allow me to take a moment to thank you (Jacob and rewinn, thank you for your responses. They're appreciated). I'll try not to gush or anything. I recall clearly seeing you speak (I believe it was on UCSD-TV) several years ago on transparency, and on how in the grand scheme of things the Democrats and Republicans had each other's backs in many ways (this was pre 9/11 and W I believe, so factor that in). I remember being simply stunned--gobsmacked--at how simple, how obvious (once someone with the creativity to conceptualize and articulate it came along), yet at the same time "outside the box" it was.
Thank you sir--and the others here, for your ideas, for challenging (my) assumptions, and giving me much to think about.
-- Brian