2 ms·

Your plan literally never works. It simply never works. It’s a lovely theory that in the real world doesn’t yield results. You get shit like Nikola, like Thera

Your plan literally never works. It simply never works. It’s a lovely theory that in the real world doesn’t yield results. You get shit like Nikola, like Theranos - all that had sophisticated accredited investors looking at the books, not just randos, and look how that turned out. Ones dead and the other is pushing cars down hills in PR stunts worth billions in market cap. The directionality around regulation is clear: without it, rivers caught fire. Then we got environmental regulations and lo and behold, no river fire. The idea that customers can just police the environment is equally baseless. Customers aren’t experts in finance or the environment. That’s why we delegate the work to a group of experts who are. Banks are too important to yolo. Retailers can get their risk on elsewhere.

eru 5y ago
Huh? What I described worked really well in eg Scotland and Canada. See https://www.alt-m.org/2015/07/29/there-was-no-place-like-canada/ https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...
- arcticbull 5y ago
  Do you not think that there are demonstrably far more situations where regulation prevents adverse outcomes than situations where deregulation does? In my opinion, certain parts of the economy should be carved out and regulated carefully - even socialized - so that it can foster a thriving free market in the rest of the economy. Banking being a core aspect should be as boring, regulated and measured as humanly possible in support of this goal. Do you not agree that the average individual is not an expert in what makes for a successful banking system? If that's the case why would you leave it up to them? I agree I overstepped when I said it "never" works - generously, I was being hyperbolic, however cherry picking a few good outcomes doesn't a blueprint make, IMO.
  - eru 5y ago
    My thoughts on this issue are well summarized in https://www.bookdepository.com/Just-Get-Out-Way-Robert-E-Anderson/9781930865549 https://www.bookdepository.com/Just-Get-Out-Way-Robert-E-And... (ignore the simplifying title). > In this book, Robert Anderson, a development consultant and former World Bank economist, recommends a different approach. Instead of adopting policies that are common in rich countries, Anderson suggests that policymakers take into account the institutional weaknesses typical of developing countries - corruption, deficient rule of law, cronyism, and so on. Simpler, market-oriented policies are more suitable to poor countries institutional environments and more likely to produce growth and keep the private and public sectors honest.Anderson recommends sometimes counterintuitive policy solutions for a number of areas - banking, privatization, corporate governance, bankruptcy, and competition. For instance, he argues that "rich countries were once poor countries" and that "examples from the past in rich countries may be more appropriate for poor countries today." I chatted with the author a bit. Many of his suggestions are useful for rich countries as well. The argument starts from the observation that honest and competent civil servants are one of the most precious commodities a country can posses. They are in limited supply, and should be used wisely and sparingly. To give an example from child rearing: instead of the parents always intervening for how to share, teach your kids the divide-and-choose rule. https://en.wikipedia.org/wiki/Divide_and_choose https://en.wikipedia.org/wiki/Divide_and_choose Similarly, in the US there are essentially two kinds of bankruptcies: chapter 7 and chapter 11. Simplified, in chapter 7 the business just gets auctioned off, and proceeds go to the creditors. In chapter 11, the business keeps running mostly under old management, but with lots of micromanaging from a court. The former is rather simple. The latter has lots of opportunities for incompetence and corruption. The author suggests not implementing something like chapter 11. > Do you not agree that the average individual is not an expert in what makes for a successful banking system? If that's the case why would you leave it up to them? The average individual is not an expert in making shoes. But we allow everyone to manufacture shoes. Customers are by and large wise enough to buy shoes from competent producers. Historically, for banking it turns out that regulating them like shoe factories works really well. Adding special regulations just leads to lots of gaming of the system, and to regulatory capture and suppression of competition etc. From a game theoretic point of view, governments also have a hard time committing themselves. Eg committing themselves to paying back their debts or not issuing too much of a currency even in emergencies. That's because governments are, in a sense, too powerful. A normal company can bind itself with contracts, and they will be enforced in court. A government can try to do the same, but they can always pass a law that makes the old contracts void. (Rant over for now. It's becoming a bit rambly.)

eru 5y ago

Huh? What I described worked really well in eg Scotland and Canada. See https://www.alt-m.org/2015/07/29/there-was-no-place-like-canada/ https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...

arcticbull 5y ago
Do you not think that there are demonstrably far more situations where regulation prevents adverse outcomes than situations where deregulation does? In my opinion, certain parts of the economy should be carved out and regulated carefully - even socialized - so that it can foster a thriving free market in the rest of the economy. Banking being a core aspect should be as boring, regulated and measured as humanly possible in support of this goal. Do you not agree that the average individual is not an expert in what makes for a successful banking system? If that's the case why would you leave it up to them? I agree I overstepped when I said it "never" works - generously, I was being hyperbolic, however cherry picking a few good outcomes doesn't a blueprint make, IMO.
- eru 5y ago
  My thoughts on this issue are well summarized in https://www.bookdepository.com/Just-Get-Out-Way-Robert-E-Anderson/9781930865549 https://www.bookdepository.com/Just-Get-Out-Way-Robert-E-And... (ignore the simplifying title). > In this book, Robert Anderson, a development consultant and former World Bank economist, recommends a different approach. Instead of adopting policies that are common in rich countries, Anderson suggests that policymakers take into account the institutional weaknesses typical of developing countries - corruption, deficient rule of law, cronyism, and so on. Simpler, market-oriented policies are more suitable to poor countries institutional environments and more likely to produce growth and keep the private and public sectors honest.Anderson recommends sometimes counterintuitive policy solutions for a number of areas - banking, privatization, corporate governance, bankruptcy, and competition. For instance, he argues that "rich countries were once poor countries" and that "examples from the past in rich countries may be more appropriate for poor countries today." I chatted with the author a bit. Many of his suggestions are useful for rich countries as well. The argument starts from the observation that honest and competent civil servants are one of the most precious commodities a country can posses. They are in limited supply, and should be used wisely and sparingly. To give an example from child rearing: instead of the parents always intervening for how to share, teach your kids the divide-and-choose rule. https://en.wikipedia.org/wiki/Divide_and_choose https://en.wikipedia.org/wiki/Divide_and_choose Similarly, in the US there are essentially two kinds of bankruptcies: chapter 7 and chapter 11. Simplified, in chapter 7 the business just gets auctioned off, and proceeds go to the creditors. In chapter 11, the business keeps running mostly under old management, but with lots of micromanaging from a court. The former is rather simple. The latter has lots of opportunities for incompetence and corruption. The author suggests not implementing something like chapter 11. > Do you not agree that the average individual is not an expert in what makes for a successful banking system? If that's the case why would you leave it up to them? The average individual is not an expert in making shoes. But we allow everyone to manufacture shoes. Customers are by and large wise enough to buy shoes from competent producers. Historically, for banking it turns out that regulating them like shoe factories works really well. Adding special regulations just leads to lots of gaming of the system, and to regulatory capture and suppression of competition etc. From a game theoretic point of view, governments also have a hard time committing themselves. Eg committing themselves to paying back their debts or not issuing too much of a currency even in emergencies. That's because governments are, in a sense, too powerful. A normal company can bind itself with contracts, and they will be enforced in court. A government can try to do the same, but they can always pass a law that makes the old contracts void. (Rant over for now. It's becoming a bit rambly.)