no, i can’t
June 5th, 2008 by Dylan
Sorry Obama fans, as a libertarian, there’s no way I can in good conscience support someone that said:
We can’t drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times … and then just expect that other countries are going to say OK.
The last thing the world needs is the government or the UN telling us what we can and cannot do.
Even worse:
Obama’s “Global Poverty Act” (S.2433) would commit the U.S. to spending 0.7 percent of gross national product on foreign aid, which amounts to a phenomenal 13-year total of $845 billion over and above what the U.S. already spends.
The government’s job is not to tell us what we can do, or how it will spend our hard earned money.
When George Will was on the Colbert Report the other night, he said that liberals believe in equality, and conservatives believe in freedom.
Conservatives understand that the government’s job is to deliver the mail, defend the shores, and get out of the way.
Sadly, the neo-conservative candidate John McCain does not actually believe this, so we’re left with two really bad choices. Other than voting for the libertarian or constitutional party candidates, we’re badly missing out on the only real choice:
.
I guess I’m still holding out hope that our country will wake up.
I fully agree with the Libertarian [and historically, constitutional conservative] perspective of government not having will, desire, or authority to tell us citizens what we can and cannot do, or in the case of Obama’s statements, what other countries will or will not be okay with us doing. I’m not one to stick up for yet-another-CFR-goon Obama, but I think you misinterpret his point completely.
His statetment [to my line-of-thinking] was meant to imply that the wastefulness of the America lifestyle is one that, as GLOBAL resources begin to restrict, CANNOT be sustained. I, for one, can espouse what he’s saying on that point, solely by looking at the data. Until recently we as a nation were far and away the largest international producer of greenhouse gases, consumer of fossil fuels, producer of waste [toxic and otherwise], etc. China and Russia are just creeping up on our tails. That, from my perspective, is a global leadership position that I would not mind seeing the US lose.
And again you are dead-right to say that McCain has any fresh perspective on the matter. He seems to offer no fresh perspective on any matter… for that matter.
I don’t disagree, I just don’t believe it’s the government’s job to regulate it! I think libertarian viewpoints are actually very closely aligned with environmental interests, but people are often forced to choose environment/left or no env./right. If people want a better environment, let the marketplace force the issue, etc.
Sorry, I normally wouldn’t do this in a public forum, but this crap keeps showing up in the Dojo aggregator feed and so I feel compelled to respond.
What I don’t understand is how you can be a libertarian in good conscience. Speaking as a former libertarian, I think that it’s completely disingenuous for libertarians to assume that markets everywhere will make things better without adequate information available to the market to price things. The heart of Obama’s comment is that there are massive negative externalities which the market isn’t accounting for and that efficient pricing requires the cooperation of price-setting back-stops across the world (e.g.: international multi-lateral accords to prevent price dumping and the market inefficiencies and distortions that they create). We depend on independent enforcement functions for other forms of price-setting functions in the market, e.g. law enforcement to protect property rights. ISTM that libertarians seem only to be enamored with the law-enforcement part of that equation insofar as it preserves their ability to dump their negative externalities onto everyone else…when market forces and the invisible hand come calling to pay back all the harm that has been done, the libertarian camp has no answer except to suggest that in some Rand-ian way that those who were harmed “deserved” it.
It is unconscionable to ignore the predictable consequences of our actions, and libertarian policy — particularly with international trade and our negative effects on the rest of the world and interdependence with it — does nothing but stick our heads in the collective sand. An ideology that cannot come to grasp with what has been given, and not only what is taken, simply isn’t serious or credible.
Regards
If people want a better world, great, then make it happen… just stop making everything be the government’s job. If people are too stupid to do what’s best, then they need to figure that our rather than the government stepping in and doing everything for them. The government proves time and time again it cannot do a good, efficient job spending money, so why do we continue to expect a system to work that clearly does not. The latest example is the mortgage industry… the government ignored the trend on the way up because it masked a poorly performing economy, and now the government is bailing out the mortgage industry and borrowers that couldn’t do basic math, and you and I are paying for it through an inflation tax.
I am just refering to the first quote from Obama you disliked (if I understand it right).
He is not saying the government wants to control all that, I think he is saying “people be more aware of your environment and the style you are living”.
I think he says: Turn the TV off a couple more times to save power and don’t let the computer run all night while you are sleeping. Use the bus when you can and polute the environment a little less with you car’s emissions.
Just try to do a little good every day, may be the sum of all the small contributions will keep our planet longer alive. And that is not only a US thing!
That is at least how I would understand it, and I fully agree.
Alex said:
“It is unconscionable to ignore the predictable consequences of our actions,”
Do you mean the the actions of letting the government control more and more. Yep, that does have predictable results.
So a couple of points:
First when, you say “if people want”, which is exactly what is being done when a government of, for, and by the people acts. I generally share your mistrust of government’s efficacy, but it’s important that we recognize that systemic brokeness isn’t “the government’s” fault unless we also equate that same borkness with our own responsibility.
Next, you bring up the mortgage industry…a weird example since it’s surely being written into textbooks right now as an example of how markets can and do fail. The mortgage industry failed because government didn’t regulate and enforce rules which would have forced transparency in the pricing of goods and services. As a result, critical data necessary for the “efficient market” theory pricing to work was hidden in opaque financial instruments, leading to a gigantic asymmetric information problem. The free flow of capital exacerbated the problem since the under-valuing of risk caused inefficient and sub-optimal allocation of capital to a bubble whose crashing is going to hurt individuals most and the responsible parties (mortgage lenders, investment bankers, et. al) least. Running to markets as an answer to problems without forcing participants to come to the table honestly got us into this mess, and as far as I can tell, inefficient markets or markets which don’t have perfect information, which don’t always clear, and which can’t have perfect information at no cost are the only kinds of markets we actually have in the real world. It’s just a bit of hand-waving when your macro econ teacher skips over externalities and asymmetric information, but it turns out that in the real world that once basic market conditions are set up, those effects dominate.
The housing bubble points to a role for government in a market-making capacity for the efficient allocation of capital to deserving firms and uses, much as it does when it enforces property rights to enable the fair-value exchange of other goods. In both cases, government’s role under libertarian criteria is to provide information to the market and then get out of the way. The general failing of libertarians to understand the direct equality of these functions in this case is puzzling to me. The housing bubble happened because government didn’t act, yet somehow libertarian thinkers have found a way to blame “them” (aka: us) for acting to avoid some of the worst outcomes. The inflation you reference isn’t caused by the collapse in housing values…it’s due to a spike in commodity prices, which can’t be due to reduced personal wealth (at least in the US). If anything, the current liquidity glut being promigulated by the Fed should probably be reversed, but so long as the inflation is tied to commodity prices and isn’t “baked in” to the prices of durable good and such, there’s reason to believe that a reduction in certain commodity prices will soften the inflationary pressure quickly. When they get “linked” into a cycle of re-pricing (as they did in the 70’s), inflation turns into a long-term destroyer of wealth. Short-term corrections in prices due to demand fluctuations (aka: “non core” inflation) may not be desirable, but they’re not as dire. More to the point, the Fed’s current actions probably aren’t helping, but they probably also aren’t hurting nearly as much as the market’s failures. Saying that government always gets it wrong but failing to acknowledge that markets as implemented in the real world also fail in similar (and in this case, much worse) ways is, I think, a bit naive.
I should say that Bernanke’s Fed has done a lot wrong here, but where congress has been far too slow to act, it has at least been seen to act quickly to provide a counter-balance to the emotional and irrational functioning of the market (at least as represented by wall st.). The Fed should have taken equity when they stepped in the Bear Stearns collapse and I feel that their new reserve banking facility to investment banks should come with significantly higher strings attached. Likewise, the previous Fed failed egregiously by not ratcheting up reserve requirements in the run-up and by keeping interest rates far too low. I think we’ll both agree on most of that. It’s in the response and its effect on individuals that we again part ways.
The “wealth effect” impacts of the housing bubble collapse should scare us much more than the up-front cost of government intervention. Remember: markets are demonstrably irrational and have proven time-after-time to over-correct when faced with adversity, and the compounding effects of the destruction of individual wealth simply cannot be over-stated. Unlike firms (which neo-liberal, aka: libertarian, models classify households as), families do not usually have the ability to lay off workers in times of hardship, nor do they tend to have giant capital reserves to weather the storm (and certainly not in the modern US economy). If they did, inflation might be more of a problem for them insofar as it acts like a natural tax, but for most households, income shocks and the removal of the wealth effect are much more serious. Households can cut costs somewhat, but the effects of wealth destruction due to asset bubbles popping is disbursed and households have little access to capital markets with which to soften the blow. The person whose house down the street has been foreclosed on is costing YOU money in the form of decreasing “comps”, not only themselves. That’s the kind of wealth-destroying, deflationary, negative externality that is much more worrisome than non-core inflation ever could be. It’s absolutely government’s job as an institution whose job is to look out for society as a whole to help prevent large-scale over-correction which could damage you and your neighbors when someone on your block screwed up. Anything else would simply exacerbate market inefficiencies in pricing due to imperfect information, a lack of clearing, and carrying costs.
Libertarian philosophy regarding markets hasn’t evolved as the economics community’s understanding of them has, and the fiercely pro-cyclical policies advocated by the libertarian viewpoint seem less now like a flame retardant than an accelerant for wealth destruction. Economists have moved on from Keyensianism to a more balanced view, often called “heterodox” thinking. The question now for libertarians everywhere is how to come to grasps with asymmetric information theory, behavioral economics, and the more-correct classifications of economic inputs and outputs which heterodox theory predicts. Libertarian thinking is stuck in a world where the Keynsian view of government intervention is “the enemy”, when in reality the rest of the world has moved on.
Regards
@wolfram: I agree, but we don’t need the government baby-sitting us to do that. Things are possible outside the realm of government mandate!
@rob: I couldn’t agree more
@alex: You and I will be debating this for the rest of our lives, and as you said, we’ll both be wrong 🙂
ufff… Russell. You give passing notice to the fed which artificially lowered/kept rates low. Without that there would be no incentive to give out silly loans. Do you not see that?
So what if it corrects! Who is going to give me back the money I lost in the tech bubble?
libertarian philosophy provides a clean, base API. Extend at your own risk but don’t ask me to pay for it.
hey Rob:
“For every problem, there is a solution that is simple, neat, and wrong.â€
— H. L. Mencken
I really don’t want to keep this going, but I’m afraid you’re missing a couple of key linkages which point to obvious problems with the libertarian refrain of “markets will fix everything”, particularly here (with regards to interest rates and asset bubbles). Lets run your disjoint arguments backwards.
First, lets assume for the sake of argument that the Greenspan Fed had been somewhat more prudent in the face of mid-90’s economic weakness and that congress had NOT given tech investments an hedonic accounting treatment (the critical change which precipitated much of the tech bubble). It’s reasonable to assume that the kernel of truth which the markets gravitated to — that technology was making firms more productive — would still have been factored into many of the prices early on. By 96 or 97, Yahoo and Netscape still would have quite likely been gigantic IPO’s…but what followed might not have happened. The liquidity precipitated by interest rates where were far too low spurred on, but critically, did not create the market’s inefficient allocation of capital to high-tech investments. This points to the key failing of libertarian economic thought: the rational actor theory is completely broken, or at a minimum, doesn’t actually set prices in line with optimal-good pricing. Behavioral economics is attempting to explain what happens when smart people, even the theoretical “rational actor”, participate in asset-bubble creation. See, for instance:
http://economistsview.typepad.com/economistsview/2008/03/rational-herdin.html
Long story short, markets — even those that the most ardent of libertarians would approve of — are prone to create bubbles with hugely negative consequences, and the anger you have with regards to the tech bubble is justified not on the basis that the market “didn’t work” (it did — sub-optimally WRT net societal benefit), but that the minders didn’t do their job well. You and I would BOTH string up Greenspan on that basis, but at least it’s not a special case in my view of markets. For you, acknowledging that the Fed screwed up means that the Fed can’t be trusted ever and that, consequently, it’s function in the market isn’t valid. Given what we know about pure markets and how they operate in the real world, that faith in purely unregulated markets simply can’t be justified on the basis of evidence, experience, or analysis.
Similarly, we’ll agree again that the Greenspan Fed screwed up in the housing market as well, but we’ll again disagree on how. My perspective is that the market had imperfect information, which was the key flaw; not that the market had too much liquidity (although that was also true). Fixing liquidity issues is relatively simple, and current monetary policy gives policy makers some relatively good levers for managing them. It also gives them under-examined and under-utilized levers for managing information asymmetries (such as those that caused the follow-on CDO and debt-swap debacles). Remember: the housing bubble caused damage, but the real wealth destruction was caused by the linkages of local lies to national and international obligations. Those linkages were created in markets without sufficient information and in a futures market without infinite-future pricing….and now they can’t even clear efficiently (requiring re-capitalization and liquidity to get things moving again). What happened with both bubbles is attributable PRIMARILY to information asymmetries and the failure of markets to accurately price risk. Liquidity distorted the demand curve, sure, but it didn’t create the problems per-sae. The same things happened in the 80’s w/ the C&L debacle, and again in the late 90’s w/ the LTCM + asian crisis. It turns out that markets don’t yet know how to price risks…so how does running to them as “the answer” without discussing their structure and terms solve anything?
Neo-classical economics simply hand-waves about these issues, leaving it adrift and rudderless to explain (let alone predict) these sorts of bubbles and voiceless regarding the correct ways to respond to them. This isn’t about who pays, but how prices are set so that we can avoid bubbles in the future. The “clean” base API of libertarian economic prescriptions may work nicely in theory, but it can’t address the real problems we’ve got nor explain why those who seemingly follow them wind up being screwed hardest. What I’m asking here is not for you to pay for anything, but to seriously consider that you may be paying through the nose precisely because the policies you are promoting are hurting you; in large part because they lack any relationship to the real functioning of markets in the real world.
Regards
ugg, “Neo-classical” should have been “Neo-liberal” in my previous comment. My apologies.
Regards
@dylan I guess some people are so ignorant and egoistic that the government should at least spoil those that care more … in whatever way
Ouch, it´s in the theory of political power that the politcians goal to egoistically obtain power and what they say is only subordinated to the goal they are aiming on. It´s just sad but the main failure of our democratic system. On the other hand it isn´t an easy job to reconcile all the different expectations and what´s the best strategy to obtain power/be elected and keep this to the next elections. Just look on the sick amount of money that is guzzled for the campaigns of the candidates. Does someone really believe the donators won´t be rewarded for their “support”? Ach, I am sick to talk about it. People don´t care about it, because they only look the same egoistically way on their own situations: My SUV, my air-condition, bla bla bla! ILL! So isn´t it always Hobson´s choice?
Ouch, it´s in the theory of political power that the politcians goal to egoistically obtain power and what they say is only subordinated to the goal they are aiming on. It´s just sad but the main failure of our democratic system. On the other hand it isn´t an easy job to reconcile all the different expectations and what´s the best strategy to obtain power/be elected and keep this to the next elections. Just look on the sick amount of money that is guzzled for the campaigns of the candidates. Does someone really believe the donators won´t be rewarded for their “support”? Ach, I am sick to talk about it. People don´t care about it, because they only look the same egoistically way on their own situations: My SUV, my air-condition, bla bla bla! ILL! So isn´t it always Hobson´s choice?