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Wouldn't you agree though that if enough people screw themselves, people who haven't screwed themselves start getting screwed, too?

by awt 18y ago

sokoloff 18y ago
In the long run, I do not. In the short run, I think you are confusing the end of the artificially high good times substantially fueled by these people "screwing themselves" with an absolute reduction in relative purchasing power (or other measure of "goodness") for people who didn't participate. Honestly, even though I bought a house in summer 2007 (which is now worth somewhat less than I paid), I've been made vastly better off by the free and easy credit that others took part in and that I for the most part did not. Sure, the economic turmoil/headwinds now are less pleasant than 2004-2006/early 2007, but that's far from saying "I got screwed by this obviously unsustainable great ride ending."
- jimbokun 18y ago
  "In the short run, I think you are confusing the end of the artificially high good times substantially fueled by these people "screwing themselves" with an absolute reduction in relative purchasing power (or other measure of "goodness") for people who didn't participate." The entire U.S. financial industry and the entire U.S. auto industry have, for all intents and purposes, been vaporized out of existence. To me, that seems a pretty high price to pay for "artificially high good times." Enough so that regulations that would have kept the good times from being quite so good in exchange for the down times not being disastrous, are more than a fair exchange. Do you disagree?
  - sokoloff 18y ago
    First of all: IMO, the US auto industry woes have not one damn thing to do with credit boom/bust, and if anything, their run (the companies and the UAW) was extended by the credit freedom, but in any free market, if your costs are 1.5x your competitors and the desirability of their product is 1.5x yours, you're in for a world of hurt. (I own three American cars: one Jeep and two sixties Mustangs, and if I had to do it over again, I probably wouldn't have bought the Jeep.) The US financial industry, I'd agree with you IF I thought we could effectively modulate without introducing deadweight losses for no net gain. (Historically, I don't think we have a good track record at this, in this or any other country.) What do I mean by that? The minute you introduce legislation to try to modulate something, a substantial result of that is to take smart people and apply them to figuring out how to comply with and/or work within/around the new regulations. So instead of building something people want or that makes the world better/more efficient, they're instead working on regulatory compliance. Then the most powerful institutions bid up the prices of the services of those people who are the very best at working around the regulation, or at lobbying for their activities to be exempted, and the cycle continues. If we could come up with a means to instanteously generate perfect regulation, I would indeed agree with your proposal. I'm not holding my breath for it...

Wouldn't you agree though that if enough people screw themselves, people who haven't screwed themselves start getting screwed, too?

by awt 18y ago

Wouldn't you agree though that if enough people screw themselves, people who haven't screwed themselves start getting screwed, too?

sokoloff 18y ago

In the long run, I do not. In the short run, I think you are confusing the end of the artificially high good times substantially fueled by these people "screwing themselves" with an absolute reduction in relative purchasing power (or other measure of "goodness") for people who didn't participate. Honestly, even though I bought a house in summer 2007 (which is now worth somewhat less than I paid), I've been made vastly better off by the free and easy credit that others took part in and that I for the most part did not. Sure, the economic turmoil/headwinds now are less pleasant than 2004-2006/early 2007, but that's far from saying "I got screwed by this obviously unsustainable great ride ending."

jimbokun 18y ago
"In the short run, I think you are confusing the end of the artificially high good times substantially fueled by these people "screwing themselves" with an absolute reduction in relative purchasing power (or other measure of "goodness") for people who didn't participate." The entire U.S. financial industry and the entire U.S. auto industry have, for all intents and purposes, been vaporized out of existence. To me, that seems a pretty high price to pay for "artificially high good times." Enough so that regulations that would have kept the good times from being quite so good in exchange for the down times not being disastrous, are more than a fair exchange. Do you disagree?
- sokoloff 18y ago
  First of all: IMO, the US auto industry woes have not one damn thing to do with credit boom/bust, and if anything, their run (the companies and the UAW) was extended by the credit freedom, but in any free market, if your costs are 1.5x your competitors and the desirability of their product is 1.5x yours, you're in for a world of hurt. (I own three American cars: one Jeep and two sixties Mustangs, and if I had to do it over again, I probably wouldn't have bought the Jeep.) The US financial industry, I'd agree with you IF I thought we could effectively modulate without introducing deadweight losses for no net gain. (Historically, I don't think we have a good track record at this, in this or any other country.) What do I mean by that? The minute you introduce legislation to try to modulate something, a substantial result of that is to take smart people and apply them to figuring out how to comply with and/or work within/around the new regulations. So instead of building something people want or that makes the world better/more efficient, they're instead working on regulatory compliance. Then the most powerful institutions bid up the prices of the services of those people who are the very best at working around the regulation, or at lobbying for their activities to be exempted, and the cycle continues. If we could come up with a means to instanteously generate perfect regulation, I would indeed agree with your proposal. I'm not holding my breath for it...