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Rethink capitalism - aka rebalance capitalism and socialism, two sides of the same coin. The government plays a regulatory, distributive role in society, allow

Rethink capitalism - aka rebalance capitalism and socialism, two sides of the same coin. The government plays a regulatory, distributive role in society, allowing profits to accrue to capitalists but setting taxes and running social programs at the proper level to ensure that society as a whole functions smoothly, and that there are opportunities for everyone to improve their situation. Most of the economic world is in agreement that financial deregulation was a huge contributing factor in the crash of 2007-08. The repeal of Glass-Steagall allowed banks to take on too much risk with too little supervision. This would have been fine if the banks had been the only ones punished when their bets went bad - but they had also been allowed to accrue so much power (through consolidation/M&A) that it was impossible to let them face the consequences of their own bad decisions and fail. So they had to be underwritten with public money in the form of QE. A functional society requires healthy levels of both capitalism and socialism to survive. But the most important thing in my opinion, is that those who intentionally commit fraud or do not act in the fiduciary interest of their stakeholders are adequately punished. This last part is of course the rub - how can you tell if the leaders of business and finance were intentionally setting up their dependents for a crash? What is the adequate punishment?

dnautics 11y ago
> The government plays a regulatory, distributive role in society "We shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State... Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: "Let me have the benefits, and let others pay the costs." Everyone's effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success." Perhaps Bastiat was overoptimistic. The suffering classes will almost never have the greatest success; as over time the path to becoming wealthy becomes more and more dependent on the ability to extract benefits that the government doles out with increasingly byzantine rules and "arbitrary (i.e. cronyist)" process (think SBIRs). Goldman Sachs is the least worthy company to have to "rethink capitalism" - it itself is such a cronyist organization that in many circles it's nicknamed "government sachs". If Goldman Sachs is only now saying, "there are broader questions to be asked about the efficacy of capitalism" - that's stunningly oblivious about its own actions. If anything Goldman Sachs should be asking itself about the efficacy of government in doing anything but redistributing wealth upwards.
vezzy-fnord 11y ago
In case you haven't noticed, this has been how virtually all first-world states have operated for decades. This social democratic ideal has not worked out, but has led to a dysfunctional corporate statism where mere "deregulation" (which is a misnomer, as most cases of deregulation have really been regulatory adjustments in an overall baroque framework that unsurprisingly lead to new pathological regulatory states - just because you cut some edges off the graph doesn't mean the nodes are going to stand still) can lead to catastrophe. This is an example of the state being entrusted to ensure smooth regulation, and failing miserably at their task. In fact, many banking panics and examples of financial fragility have originated from pathological financial regulations guided by desires of the state to subvert various public finance constraints. Authors like George Selgin, Kevin Dowd and Lawrence H. White have written on this subject.
- roymurdock 11y ago
  I'm not sure what you're advocating for - pure capitalism with no government oversight and regulation?
  - vezzy-fnord 11y ago
    I'm advocating for actually getting acquainted with economic literature and not repeating moronic talking points about "redistributive and regulatory role of governments" that are filled with theoretical and empirical problems, and in any event are not a radical new idea but how it has always been to begin with. Whether it was anti-vagrancy and poor laws or the modern welfare state. Whether it was mercantilism or the state-guided capitalism of today.
    - roymurdock 11y ago
      I understand your frustration, but you are not going to win any support or convince anyone to read somewhat obscure economic literature by being caustic and attacking old ideas simply for being old. How would you structure society and how would this work in a more efficient manner than the government that we have now? If you a) define the problems and b) give me some tangible examples of how you/these authors think we should fix these problems I'm more than happy to read and think about them.

dnautics 11y ago

> The government plays a regulatory, distributive role in society "We shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State... Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: "Let me have the benefits, and let others pay the costs." Everyone's effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success." Perhaps Bastiat was overoptimistic. The suffering classes will almost never have the greatest success; as over time the path to becoming wealthy becomes more and more dependent on the ability to extract benefits that the government doles out with increasingly byzantine rules and "arbitrary (i.e. cronyist)" process (think SBIRs). Goldman Sachs is the least worthy company to have to "rethink capitalism" - it itself is such a cronyist organization that in many circles it's nicknamed "government sachs". If Goldman Sachs is only now saying, "there are broader questions to be asked about the efficacy of capitalism" - that's stunningly oblivious about its own actions. If anything Goldman Sachs should be asking itself about the efficacy of government in doing anything but redistributing wealth upwards.

vezzy-fnord 11y ago

In case you haven't noticed, this has been how virtually all first-world states have operated for decades. This social democratic ideal has not worked out, but has led to a dysfunctional corporate statism where mere "deregulation" (which is a misnomer, as most cases of deregulation have really been regulatory adjustments in an overall baroque framework that unsurprisingly lead to new pathological regulatory states - just because you cut some edges off the graph doesn't mean the nodes are going to stand still) can lead to catastrophe. This is an example of the state being entrusted to ensure smooth regulation, and failing miserably at their task. In fact, many banking panics and examples of financial fragility have originated from pathological financial regulations guided by desires of the state to subvert various public finance constraints. Authors like George Selgin, Kevin Dowd and Lawrence H. White have written on this subject.

roymurdock 11y ago
I'm not sure what you're advocating for - pure capitalism with no government oversight and regulation?
- vezzy-fnord 11y ago
  I'm advocating for actually getting acquainted with economic literature and not repeating moronic talking points about "redistributive and regulatory role of governments" that are filled with theoretical and empirical problems, and in any event are not a radical new idea but how it has always been to begin with. Whether it was anti-vagrancy and poor laws or the modern welfare state. Whether it was mercantilism or the state-guided capitalism of today.
  - roymurdock 11y ago
    I understand your frustration, but you are not going to win any support or convince anyone to read somewhat obscure economic literature by being caustic and attacking old ideas simply for being old. How would you structure society and how would this work in a more efficient manner than the government that we have now? If you a) define the problems and b) give me some tangible examples of how you/these authors think we should fix these problems I'm more than happy to read and think about them.