On Not Learning The Lessons Of Long-Term Capital's Failure

[Ivan Seeking]

Wow. Talk about a bull's-eye!

Randall Dodd, Director, Derivatives Study Center
September, 2000 -- unpublished

Learning from mistakes is finding silver linings to dark clouds. Failing to learn from mistakes is condemning oneself to repeat them.

Congress is rushing to deregulate derivatives markets – the markets for transactions such as futures, options and swaps. In order to not be deemed a do-nothing Congress, the House Republican leadership pressured committees to report out legislation in July, and they will be trying to bring a bill to the floor this September. In doing so, the advocates of deregulation seem to have completely forgotten the two key lessons found in the near disaster that was the collapse of the hedge fund known as Long Term Capital Management. LTCM, you may recall, leveraged $5 billion in capital to control $125 billion in assets and $1.4 trillion dollars in derivatives (mostly interest rate swaps).

Lesson one is that a major problem in over-the-counter derivatives markets stems from their lack of transparency. Lesson two is that a major source of vulnerability in financial markets comes from highly leveraged transactions and institutions, some of which are largely unregulated...

http://www.financialpolicy.org/dsclessons.htm

 

[neu]

Don't advocates of completely deregulated markets, argue that when things go wrong, that it isn't the fault of the system, but because it wasn't the free market, i.e. ideal system, that they envisiged; solution: more deregulation.

Or am I reading too much Naomi Klein.

 

[Brilliant!]

Don't advocates of completely deregulated markets, argue that when things go wrong, that it isn't the fault of the system, but because it wasn't the free market, i.e. ideal system, that they envisiged; solution: more deregulation.

Or am I reading too much Naomi Klein.

Your post is loaded with contradictions.

When things go wrong in our current economic system, advocates of deregulated markets most definitely argue that the fault is in the system. That's because no matter what approach an administration takes, we never have deregulated markets, and we definitely don't have a free-market system. I'll explain:

Those who argue in favor of more regulation usually cite misleading information to argue against free-market economics. For instance, this post is most misleading with its implications towards a free-market system. The general idea of "free-market economics" that I get when I talk to people is that "free-market economics" is when the president and his administration keep their hands out of the business, financial, and banking sectors. Well, they've definitely got it partly right. The part where that definition is terribly misleading is that it implies the market is free to begin with. But with all the regulation and taxation and subsidies that exist regardless of the president's involvement, we know that isn't true.

A system where the administration has cut taxes for the wealthy and corporations is not a free-market system. How anyone could think it is is far beyond me. "Free-market" only has one definition: the markets are free. There is no government intervention whatsoever. There aren't tax breaks, because there are no taxes at all. There are no government subsidies to certain corporations and not other (it's this type of preferential treatment that has gotten us into such huge trouble). Claiming that what the Republicans advocate is a "free-market system" is equivalent to saying Stalin was a capitalist. Yes, I did just call Republicans "socialist".

Both parties are socialist. It's easy to make the case against Democrats: they advocate higher taxes, and giving more and more to the undeserving. Obama wants to give free health care to everyone, and his followers act as though wanting to give people that which they don't deserve, at a huge cost to the people who have worked hard for their money, is some sort of advancement in humanitarianism. It isn't. A true humanitarian is someone who believes in individual rights, and believes that people must earn their keep, not take at the expense of others. A humanitarian most certainly is not what it's come to mean: you're not helping anyone when you teach them to accept what they never earned. You're hurting everyone. I could go on, but the point is clear: that today's Democrats are socialist, and there are no arguments to the contrary (if you'd like to give me some, I will gladly refute them).

What about the Republicans? How are they socialist? They give tax breaks don't they? Sure, they give tax breaks. But do they decrease operations? Certainly not. If Republicans give a 10% tax break to corporations, the Republicans continue to operate at 100%, and then boost it up to 110%, 120%, or 130% by expanding and creating new agencies and programs and etc. And they do this all with less money! They're receiving 10% less from the corporate business sector than they were before all of this expansion and growth! Amazing! And because they receive less money from the corporate sector but are still expanding, your and my tax dollars become more and more important to them, because where do you think they make up the difference? That's right, taxes from the private sector. This is socialist.

I could go into greater detail on both the Democrats, Republicans, and the American people themselves, but I think you get the picture.

The companies that exist today have all been built in a highly-regulated, socialist economic system. It's this economic system that has allowed for such giants as AIG who are "too big to fail". While monopolies are possible in a free-market economy, companies that are "too big too fail" are not. This is because the growth of companies is dictated by direct involvement of the customer-base. In free-market economics, there is no such thing as outstanding leverage. In free-market economics, Bank of America would never be allowed to have 32-times leverage (Bank of America lent out 32 times their deposits, as in, they lent out 32-times more money than they actually had). These huge banking firms were shown preference by the government and the Federal Reserve. The system that allowed for government manipulation of economics also allowed for banks to grow wildly out of control, and become so huge that they could manipulate economics to their benefit. That's how you get 32-times leverage. Naturally, when you deregulate under these circumstances, you're going to create a lot of problems. But the problems are necessary. They are the system correcting itself. Right now we are going deeper and deeper into debt to prop-up a broken system. Recessions and depressions are scary, but how are they any worse than trillions upon trillions of dollars of debt that we can never make back? On the surface, trillions of dollars of debt seems better than a Depression, until you realize that the country is bankrupt. We can never pay back what we owe, and this country will have to claim bankruptcy at some point. A depression is imminent, we're merely staving it off for a little while.

Please, don't stop researching until you get the whole picture. Basing opinions and beliefs of off articles such as these is like staring at a picture of the Mona Lisa's forehead, but thinking you're seeing the entire woman.

I also discuss these topics in this thread: https://www.physicsforums.com/showthread.php?t=302217

 

[neu]

Your post is loaded with contradictions.

I'm sure it is; I wrote it tentatively.

Both parties are socialist. It's easy to make the case against Democrats: they advocate higher taxes, and giving more and more to the undeserving. Obama wants to give free health care to everyone, and his followers act as though wanting to give people that which they don't deserve, at a huge cost to the people who have worked hard for their money, is some sort of advancement in humanitarianism. It isn't.

So poor people don't deserve access to good health care?

 

[Werg22]

Brilliant, the US is already one of the freest market in the world. The burden of proof is on you to show that a completely free market can be successful. Can you cite one pertinent example either in history or in today's world?

 

[rootX]

Brilliant, the US is already one of the freest market in the world. The burden of proof is on you to show that a completely free market can be successful. Can you cite one pertinent example either in history or in today's world?

Come to think of Hong Kong

 

[drankin]

I completely agree with Brilliant!'s post. I'm just not as articulate and knowledgeable to be able to argue his points. And I don't believe he is saying poor people don't deserve health care, he is simply saying that people are responsible for their own health. Noone "deserves" health care regardless if they are poor or rich.

 

[Ivan Seeking]

Those who argue in favor of more regulation usually cite misleading information to argue against free-market economics. For instance, this post is most misleading with its implications towards a free-market system.

What exactly did I say that was misleading? Or shall we assume this is just a false claim?

The companies that exist today have all been built in a highly-regulated, socialist economic system. It's this economic system that has allowed for such giants as AIG who are "too big to fail". While monopolies are possible in a free-market economy, companies that are "too big too fail" are not. This is because the growth of companies is dictated by direct involvement of the customer-base.

What does this have to do with anything here? Also, "growth of companies is dictated by direct involvement of the customer-base" is not an explanation for anything.

In free-market economics, there is no such thing as outstanding leverage. In free-market economics, Bank of America would never be allowed to have 32-times leverage (Bank of America lent out 32 times their deposits, as in, they lent out 32-times more money than they actually had).

They would not be allowed by whom?

These huge banking firms were shown preference by the government and the Federal Reserve. The system that allowed for government manipulation of economics also allowed for banks to grow wildly out of control,

What exactly did the government do that allowed the banks to grow wildly out of control, and how precisely did that happen?

Recessions and depressions are scary, but how are they any worse than trillions upon trillions of dollars of debt that we can never make back?

That is not what is happening. You do understand that we could even make a profit, right?

On the surface, trillions of dollars of debt seems better than a Depression, until you realize that the country is bankrupt. We can never pay back what we owe,

Prove it.

and this country will have to claim bankruptcy at some point. A depression is imminent, we're merely staving it off for a little while.

Prove it.

Please, don't stop researching until you get the whole picture. Basing opinions and beliefs of off articles such as these is like staring at a picture of the Mona Lisa's forehead, but thinking you're seeing the entire woman.

You clearly miss even the most elementary points. This was a warning written nine years ago that was dead on. You object to basing beliefs on the empirical evidence?

 

[neu]

The burden of proof is on you to show that a completely free market can be successful. Can you cite one pertinent example either in history or in today's world?

It was tried in Chile. Pinochet was put in power in '73, as a dictator he was able to push forward reforms without resistance, privatising huge state own industries. It was a complete disaster for the initial 10 years: hyperinflation, 30% unemployment (x10 higher than before Pinochet).

Surprisingly, Chile's free market reforms are held up an economic miracle after a period of steady growth in the mid 80's.

But Chile was never a completely liberated market, it was a failed experiment, in the end, after the economy crashed again in the mid 80's, Pinochet was forced to nationalise many of the industries he privatised. It didn't stop Thatcher taking his advice on f*cking up the UK public sector.

Communism was never realized in it's proper theorized form, yet it's widely perceived to be a failure. Yet because of the easy money to be made out of exploitation, capitalism/consumerism won't change.

 

[Brilliant!]

What exactly did I say that was misleading? Or shall we assume this is just a false claim?

Funny, I was sure you would know I was addressing both this post, and the post of yours in my thread (which I replied to, but have yet to get a response. Instead, this thread was custom-made for me as a rebuttal).

What is misleading is your misrepresentation of the free-market. As I've already said in this thread, the Republicans did not try the free-market approach, so the free-market approach is not the "blind ideology" they adhere to. To imply anything different is absurd, and totally irresponsible.

Also, "growth of companies is dictated by direct involvement of the customer-base" is not an explanation for anything.

It's what I haven't said that is the explanation. Growth by customer base alone implies that governments keep their hands out of it and don't show preference for one over the other.

What does this have to do with anything here?

It has everything do with your post. Both you and the article are arguing that deregulation is to blame, as if it were the only part of the picture. What you fail to realize is that the problem isn't in the deregulation, but is inherent in the derivative markets, namely the stocks, loans, and bonds markets. Stocks, loans, and bonds are not commodities, and therefore hold value in the same way our currency does. Trades and contracts formed on items that aren't just prone to inflation, but are a large cause for inflation, are reckless and irresponsible. Even more than that, they are also incredibly dangerous, when the derivative markets have become as large and powerful as they have in this country. This type of finance won't be allowed in a free-market. I know this sentence may be a bit confusing, considering how I advocate free markets, and the word "allow" implies regulation. I'll address that...

They would not be allowed by whom?

... here.

The Gold Standard, or something like it. When your country operates without credit, or with very small amounts of credit, derivative markets aren't possible. There is not enough money to support them. This should also answer plenty of questions, such as "How will the free-market system keep banks from growing like crazy to a point where they are too big to fail?" Just in case it doesn't, I'll explain:

Our present-day banking sector is pretty free from competition. It's an oligopoly. And they operate on a system much like price fixing. However, it's never addressed. They all have very similar policies, rates, and fee structures. Other than their names, their isn't much difference from one bank to another. This can be blamed on the regulation of the financial and banking sectors.

In a free-market system, which is free of regulation, competition is inevitable. Imagine price wars in the banking sector. Yeah, that'll be the day.

What exactly did the government do that allowed the banks to grow wildly out of control, and how precisely did that happen?

This is requires such a huge explanation, that it's going to have to wait. I'll type up an essay and post it here, ASAP.

That is not what is happening. You do understand that we could even make a profit, right?

Yes, that is what is happening. What part of national debt is so hard to understand? We do not have the money to buy toxic assets, create stimulus packages, bailout the auto and financial industries. We don't have the money to take over "too big to fail" industries. We are operating with a deficit in the trillions. Double-digits. Sure, we have the fiat currency to do it, but what are we going to do? Just print and introduce more and more and more money into the system every time we have an economic problem? This is the basis of inflation and rising prices. Every new dollar introduced into the system decreases the value of every other dollar that already exists. This is high school economics.

And we "could" make a profit? Talk about bad business. A business venture where you "could" make a profit isn't even worth considering. If you "could" make a profit with an idea, you'll shortly find out that you "couldn't" ever hope to get investing. Combine this with inflation, and you'll understand why it's so absurd. If the debts are paid off in full in 10 years, it isn't very likely that inflation will have stopped between now and then, so $800 billion will not have the purchasing power then that it has today. When I was a kid, a lent someone a quarter so that they could buy a candy bar. I really wish he would pay me back, so that I couldn't even afford to put air in my tires at a corner store.

Prove it.

http://www.brillig.com/debt_clock/

National Debt:

How long do you think we can keep running such huge deficits? How long do you think we can sustain under such amazing debt? Being in debt means that we owe. And it isn't like those we owe don't want their money. Our system operates because we assume the debts will never be called. Sounds like a good mentality to approach something that effects the lives of $300+ million people.

You clearly miss even the most elementary points. This was a warning written nine years ago that was dead on. You object to basing beliefs on the empirical evidence?

I object to basing beliefs off of empirical evidence that proves only superficial aspects of an incredibly deep subject. I've already partly explained why the problem isn't in the deregulation. I'm not repeating myself.

 

[ThomasT]

Brilliant, a lot of what you've written here makes sense to me. Since I don't know much about the big economic picture, I have a few questions.

In a free-market system, which is free of regulation, competition is inevitable.

Wouldn't a totally free-market system also inevitably produce monopolies? Is that necessarily a bad thing?

Just print and introduce more and more and more money into the system every time we have an economic problem? This is the basis of inflation and rising prices.

Isn't general inflation (a decrease in the value of the dolar) a result of prices rising faster than incomes? If so, what's wrong with printing and introducing more money into the consumer sector and then capping (but not fixing) prices across the board? Wouldn't everybody benefit from this (ie., the increased demand for goods would allow manufacturers to continue to produce at a gradually increasing rate without being saddled with huge surpluses; the need for workers would gradually increase; distribution flow through transportation, wholesale, and retail channels would gradually increase; and the standard of living of the mass consumer base would gradually increase -- and presumably the demand for services would also steadily increase)?

Every new dollar introduced into the system decreases the value of every other dollar that already exists.

But isn't this because prices are allowed to rise disproportionately wrt the increased buying power that the money infusion was supposed to facilitate, eventually resulting in actually decreasing that buying power?

Wouldn't a totally free-market system steadily erode the buying power, and standard of living, of the general mass of consumers -- resulting, inevitabley, in a lasting general economic depression where the vast majority of people would be living in more or less abject poverty? If not, what would prevent this from eventually happening? Increased small business activity?

 

[Brilliant!]

Thank you for the opportunity. I am flattered (I realize this may sound sarcastic. It isn't.).

Wouldn't a totally free-market system also inevitably produce monopolies? Is that necessarily a bad thing?

This to is a rather large topic, with no short explanation. Thankfully, great minds have addressed this topic very well. The best article that I've ever read on the subject of monopolies, as it applies to the free market, is http://www.nathanielbranden.com/catalog/articles_essays/question_of_monopolies.html , written by Nathaniel Branden. It's a lengthy article, but will be incredibly interesting to anyone who is truly curious on the matter. It goes into great detail of the government interference I keep referring to (preferential treatment).

Isn't general inflation (a decrease in the value of the dolar) a result of prices rising faster than incomes?

Or to put it another way, purchasing power is damaged. The thing to do now is identify why purchasing power has weakened. Currency is just like any other product: it is effected by supply and demand. As more money is pumped into the system, demand for it goes up. All manner of service providers, producers, distributors, etc raise their prices because their is more money to be made. This isn't simply because they are greedy, however. Their costs are rising, because everyone involved in their supply chain wants more of the monetary pie.

If so, what's wrong with printing and introducing more money into the consumer sector and then capping (but not fixing) prices across the board?

This would only inflate the currency even more because you will create currency surpluses. A balance between prices and money supply is beneficial. That's not to say that people shouldn't be able to have savings accounts to the tune of millions of dollars. The reason to save money is that you can spend it at a later date. It still has worth. That's part of it.

The other part is that prices aren't arbitrary numbers. Prices are cost and profit indicators. A company sets the prices that allow it to recoup costs and continue production, all while securing a profit for their efforts.

Now let's combine these parts and make a whole. If you cap prices, you cap production, research and development, and technological advancement. A company can only produce what it's money allows. On the other end of things, people have money, and expect to be able to spend it. That's why they worked so hard for it. But, there are no products to buy.

Currency surpluses would be a very terrible thing. A huge step backwards. Just ask the Russians. They tried to control the markets by capping and fixing prices. It got so bad that they were using Rubles as wallpaper and toiler paper. I'm not joking.

To emphasize my point: You never regulate prices.

Wouldn't a totally free-market system steadily erode the buying power, and standard of living, of the general mass of consumers -- resulting, inevitabley, in a lasting general economic depression where the vast majority of people would be living in more or less abject poverty? If not, what would prevent this from eventually happening? Increased small business activity?

This comes down to morality. The hope is that Americans can re-learn how to do an honest day's work. If we take on a free-market system (which would be slowly integrated over time through a process of shrinking the government and deregulating across the board. I most certainly do not advocate a "cold turkey" approach), but still maintain this idea that we "deserve" happiness, that we deserve "success", that we deserve "free health care" (free health care. That's an oxymoron isn't it? I mean, who is going to pay these doctors? The money fairy?), that we deserve anything that wasn't earned by the sweat of our own brow, it will most certainly fail. We will wind up with frightened, lazy, and incapable people once again electing advocates of socialist policies. The government will grow and grow, and intervene, doing their "humanly" (altruist's) duty, until we are right back here.

The free-market system depends on a population who is capable of realizing their full potential. For this reason, I'm not holding my breath.

On a side note, the fact that people can identify policies as socialist, and even identify entire presidencies as socialist, but still maintain the idea that we are a capitalist nation should tell you a lot about our current mindset an morality. This amazing case of Doublethink, as Orwell would have called it, is only possible with a huge, heaping dose of denial. It's become such a huge part of the American collective that it can even be used as a legitimate generalization, and there aren't many of those.

 

[WheelsRCool]

Prices communicate the information about supply and demand. You change the price of one thing, and all the millions of other prices in the economy have to fluctuate in relation. Allowing the price system to do this itself works fine, but trying to centrally control it doesn't work.

As for now, we actually live in a quasi-fascist society. Now many equate the word "fascist" with Nazi, but Nazis were only one form of fascist, and some scholars of the subject even debate whether the Nazis were fascist or something else altogether.

But we are quasi-fascist in the sense of how many of our industries are highly, highly regulated, thus allowing oligopolies in industries, we have a lot of state intervention in the economy, even though not as much as other nations, we have large state social safety nets such as Medicare, Medicaid, Social Security, etc...being "fascist" isn't necessarily wrong or bad or evil at all, I'm just talking about the technical definition.

And I agree, both parties are for a form of statism, the Democrats in general for big government and socialism, the Republicans in general for big corporations. Big corporations are just as corrupt and anti-free market as big government.

The Ronald Reagan-type Republicans are pro-free market, but often mistaken for being pro-corporation.

 

[Al68]

Brilliant, the US is already one of the freest market in the world. The burden of proof is on you to show that a completely free market can be successful. Can you cite one pertinent example either in history or in today's world?

First, the burden of proof is on the oppressor to justify the oppression, not on the libertarian to justify liberty.

Second, we can't empirically prove anything about a completely free market, or a completely government controlled economy, because neither has ever existed. But there is ample evidence that prosperity results from relative economic freedom. The U.S. was a great unprecedented experiment of this, and went from literally non-existence to the greatest country in human history in 150 years.

Third, there is the moral issue of using force against our fellow man, and using it to obtain their property for the simple reason that they can afford it while others need it is obviously theft by definition.

 

[WheelsRCool]

First, the burden of proof is on the oppressor to justify the oppression, not on the libertarian to justify liberty.

Second, we can't empirically prove anything about a completely free market, or a completely government controlled economy, because neither has ever existed.

Completely government-controlled economies have existed, the Soviet Union, Cuba, North Korea, and China are examples.

However, a completely laissez-faire economy has never fully existed. One thing some seem to confuse is that a free-market has no taxes. You have to have some type of tax so the government can exist. Government is a necessary institution, and the free-market couldn't exist without it. Without government, you have anarchy.

But there is ample evidence that prosperity results from relative economic freedom. The U.S. was a great unprecedented experiment of this, and went from literally non-existence to the greatest country in human history in 150 years.

Yes, a mostly free-market economy with light and efficient regulation produces the most prosperity.

Everywhere you find freedom, you find people engaging in free trade and voluntary cooperation.

Third, there is the moral issue of using force against our fellow man, and using it to obtain their property for the simple reason that they can afford it while others need it is obviously theft by definition.

Yup.

 

[neu]

Both parties are socialist. It's easy to make the case against Democrats: they advocate higher taxes, and giving more and more to the undeserving. Obama wants to give free health care to everyone, and his followers act as though wanting to give people that which they don't deserve, at a huge cost to the people who have worked hard for their money, is some sort of advancement in humanitarianism. It isn't.

So poor people don't deserve access to good health care?

 

[Brilliant!]

So poor people don't deserve access to good health care?

Everyone does have access to good health care.

 

[neu]

Everyone does have access to good health care.

You believe that?

But you didn't answer my question. You said:

Obama wants to give free health care to everyone, and his followers act as though wanting to give people that which they don't deserve, at a huge cost to the people who have worked hard for their money, is some sort of advancement in humanitarianism. It isn't.

Regardless of what the situation is now, are you saying poor people don't deserve access to good health care?

 

[Brilliant!]

You believe that?

But you didn't answer my question. You said:Regardless of what the situation is now, are you saying poor people don't deserve access to good health care?

I believe the right to deserve anything depends on whether or not you've earned it. And there isn't a person, or group of people, who have done anything so amazing that they deserve to benefit from the hard work and success of millions of other people for free.

And like I said, poor people do have access to good health care.

access
n.
1. A means of approaching, entering, exiting, communicating with, or making use of: a store with easy access.
1. The ability or right to approach, enter, exit, communicate with, or make use of: has access to the restricted area; has access to classified material.

Whether or not they can afford it is a totally different matter, one that doesn't concern you or I. Everything is stacked in favor of the people who would benefit from socialized services, such as health care: they pay either lower taxes than the rest of the country, or pay no taxes at all, some of them are on welfare, many of them pay no rent and collect food stamps. All of this, and they can't move up from the bottom.

And spare me any talks of ghettos, and poor schools that don't give people what they need to move up. I'm one of those people. When my parents moved from the ghetto in Natchez, Mississippi, they came to Houston, TX. We lived in Third Ward for 5 years. We practically moved overnight after my dad was robbed at gunpoint, for the second time. We moved to Alief, Houston, TX, and lived in an apartment complex named The Mint, which is infamous for being run-down, and dangerous apartment complex. They accepted welfare and Section 8 (which my parents were never on, they also rented to anyone else, and the rent was dirt cheap). I went to school at Mahanay Elem, O'Donnell Middle, and Hastings High. I lived there for 10 years. I lived with those people my entire life. They're lazy, almost every single one of them, in an apartment complex with some 700+ units. They don't work. They don't take care of their kids. They don't take out their trash. You could smell some apartments from the sidewalks because the trash was piled so high on their front porches, and had been there for weeks. In high school, my complex was "too close" to the school for the bus to come pick me up, so I rode city transportation (the Metro). I did that for 6 years, from middle school until I graduated high school. In high school, my teachers were incompetent, so I got a great education by reading the books at home, in class, and on the bus. I can't even remember my teachers, I paid so little attention to them. I just showed up to class, read the book, and then took tests. When I graduated, I graduated in the top 5% with a 3.2 GPA (Houston is on a 4 point scale), isn't that sad? My graduating class was 1150 students, and it wasn't a big school. 1150 seniors, and the school was built for 2500 students. The entire student body was around 7000 students. All throughout high school, my class sizes ranged anywhere from 30 - 45 students. Furthermore, hardly any of those students went to college. A huge majority of them went into the military, because they came out of school with no direction and the military is attractive to lots of people like that (free everything, even college if you're smart enough).

I live on my own now, and I work my arse off to finance my own schooling. I was able to get myself out of there, while facing every obstacle these "poor people" face, and I didn't receive a hand from a single person. I never asked for one. A huge part of my drive is to get my mother out of there. That's the person I want to provide health care for, that's the person I want to get out of poverty. What of those other people? Do you think they deserve my tax dollars?

The altruist's moral system of we should help out those people who are less fortunate is complete rubbish, this is why:

I obviously wouldn't vote for any law that would allow my money to be taken from me and given to someone. Despite that, you can get into a booth and vote away my money. Do you get that?

Do what you want with your money, but don't for one second think you have the right to do as you please with my money, simply because you have a "noble" cause in mind. This is equivalent to wanting to give money to a bum but not having any, so you point a gun at me and tell me to give money to them. Just like you can vote in laws that everyone should pay for the "poor people", and if I dodge my taxes, I can be arrested and imprisoned for tax evasion.

It's evil, and completely socialist. And the two are no mutually exclusive.

 

[neu]

I believe the right to deserve anything depends on whether or not you've earned it. And there isn't a person, or group of people, who have done anything so amazing that they deserve to benefit from the hard work and success of millions of other people for free.

You have a very simplistic view of the world; you seem to think you live in a perfect meritocracy.

i.e there is a linear relationship between "hard work" and salary, and that poor people just don't work hard enough.

This is quite clearly not the case is it.

Everything is stacked in favor of the people who would benefit from socialized services, such as health care: they pay either lower taxes than the rest of the country, or pay no taxes at all, some of them are on welfare, many of them pay no rent and collect food stamps. All of this, and they can't move up from the bottom.

I'm not sure about the US, but in the UK the top 2% pay less tax proportionaly than the bottom 10%.

 

[Al68]

You have a very simplistic view of the world; you seem to think you live in a perfect meritocracy.

i.e there is a linear relationship between "hard work" and salary, and that poor people just don't work hard enough.

This is quite clearly not the case is it.

The fact that a person rightfully own the results of his/her labor doesn't depend on any such linear relationship. Or a meritocracy.

Clearly freedom, in the absence of theft and oppression, necessarily results in unequal outcomes.

 

[Al68]

Completely government-controlled economies have existed, the Soviet Union, Cuba, North Korea, and China are examples.

While I agree with most of your post, the examples you give here all had/have underground economies and so are not under complete government control.

Those countries had government controlled economies in the same way that the U.S. was alcohol-free during prohibition. That was the goal, but not the reality.

 

[Brilliant!]

The fact that a person rightfully own the results of his/her labor doesn't depend on any such linear relationship. Or a meritocracy.

Well said, Al.

 

[Al68]

I'm not sure about the US, but in the UK the top 2% pay less tax proportionaly than the bottom 10%.

Nonsense. Simply and grossly false. I shouldn't bother asking for the source of such an absurd statement, but I will.

 

[misgfool]

The fact that a person rightfully own the results of his/her labor doesn't depend on any such linear relationship. Or a meritocracy.

Clearly freedom, in the absence of theft and oppression, necessarily results in unequal outcomes.

If the poor can't compete with the laws of the society and they society won't help them, they have the right to forge their own laws.

 

[Al68]

If the poor can't compete with the laws of the society and they society won't help them, they have the right to forge their own laws.

Sure, but they don't have the right to use force against others to get their way.

That being said, stealing is obviously forgivable when someone is under duress, but we don't have to resort to thievery to help the poor. The cost of feeding the hungry is tiny compared to the amount of thievery advocated by many. Not to mention that the very policies advocated make the poverty problem worse.

Those who want power over society know they cannot maintain it unless the problems justifying their power continue. If the problem gets worse, they get more power. If the problem is alleviated, they are out of business. Simple logic tells us that organized power will not be used to reduce the source of their power.

Saying that Democrats want to alleviate poverty is like saying that fish want to eliminate water.

 

[misgfool]

Sure, but they don't have the right to use force against others to get their way.

Why would that be? They have the right to do as they please.

That being said, stealing is obviously forgivable when someone is under duress, but we don't have to resort to thievery to help the poor. The cost of feeding the hungry is tiny compared to the amount of thievery advocated by many. Not to mention that the very policies advocated make the poverty problem worse.

Isn't that a socialist policy?

 

[Al68]

Sure, but they don't have the right to use force against others to get their way.

Why would that be? They have the right to do as they please.

No they don't. No one has the right to do anything they please to other people.

That being said, stealing is obviously forgivable when someone is under duress, but we don't have to resort to thievery to help the poor. The cost of feeding the hungry is tiny compared to the amount of thievery advocated by many. Not to mention that the very policies advocated make the poverty problem worse.

Isn't that a socialist policy?

Isn't what a socialist policy?

 

[Office_Shredder]

No they don't. No one has the right to do anything they please to other people.QUOTE]


It's not so easy to draw a clear line between 'violence' and 'not violence' or any other such distinction to delineate what's right and wrong.

Example: I'm the richest man in the country say. I decide to expand my wealth by cornering the food market, and then adding a zero to the price of food (maybe I work with some other wealthly people to do this). Now, the poorest people in society are going to get slammed by the price increase, possibly to the point of starving. Would they be justified in killing me to break up the food oligarchy?

This goes right back to the basic laws of nature: kill to get the resources you need. Society is set up to protect those that have more resources from those that don't, and unless the structure is such that those that don't have resources are capable of living in comfort (a relative term of course), they have no incentive to follow society's customs

 

[misgfool]

No they don't. No one has the right to do anything they please to other people.

You believe that and I believe that, but once you default your contract with the society, you can have any philosophy you like.

Isn't what a socialist policy?

Giving food to the poor.

 

[Al68]

No they don't. No one has the right to do anything they please to other people.

You believe that and I believe that, but once you default your contract with the society, you can have any philosophy you like.

What contract with society? I made no such contract.

Isn't what a socialist policy?

Giving food to the poor.

Uh, no. Have you ever heard anyone oppose that? Nobody is against that except in the minds of delusional people. That would make everyone socialist, since everyone would like to help the poor. Of course, socialists like to pretend that the difference between them and their opposition is whether or not someone wants the poor to eat, but that's just obvious fraud intended to stir up hatred.

 

[misgfool]

What contract with society? I made no such contract.

It's a rather common figure of speech. Contract with the society means abiding with the border conditions and laws of the society.

Uh, no. Have you ever heard anyone oppose that? Nobody is against that except in the minds of delusional people. That would make everyone socialist, since everyone would like to help the poor. Of course, socialists like to pretend that the difference between them and their opposition is whether or not someone wants the poor to eat, but that's just obvious fraud intended to stir up hatred.

Here we go again. Where do we draw the line in helping the poor? Maslow's hierarchy is one description of the basic needs for humans. How many levels should be fulfilled?

http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs

 

[Al68]

It's not so easy to draw a clear line between 'violence' and 'not violence' or any other such distinction to delineate what's right and wrong.

It's easy to distinguish between initiating the use of force and not initiating the use of force.

Example: I'm the richest man in the country say. I decide to expand my wealth by cornering the food market, and then adding a zero to the price of food (maybe I work with some other wealthly people to do this). Now, the poorest people in society are going to get slammed by the price increase, possibly to the point of starving. Would they be justified in killing me to break up the food oligarchy?

Well, in a free market, that would not be possible. You give an example that is impossible without economic oppression in order to justify economic oppression?

And if you had the resources to take out such a powerful man, why not just use those resources to compete with him instead of commit murder?

Bottom line is that you can't complain about the price of something in a free market if you can't offer a lower price yourself, and this especially applies to government.

Socialists want power over society, they have no interest in competing with private companies to offer a better deal to consumers. Why should they, when they can just use force to take control of those private companies instead?

 

[Al68]

It's a rather common figure of speech.

I know it is. But no such contract actually was entered into by the people it is attempted to be imposed upon. The expression fraudulently uses the word "contract" to describe one group of people forcing their will on another, when that's not what the word contract means.

Here we go again. Where do we draw the line in helping the poor?

There's no line to draw. Nobody is opposed to it.
I'm not religious, but I'll use Jesus as an example. He clearly advocated helping the poor. He never advocated any socialist policy. He never advocated theft of another's property to help the poor. Does that mean he didn't really care about poor people?

 

[WheelsRCool]

So poor people don't deserve access to good health care?

No one "deserves" food, healthcare, housing, etc...those things aren't rights, although the Left like to claim they are. Anything that requires the skills of someone else to provide it, cannot be a right. To make "good healthcare" available for all means you would have to take all of the good doctors who busted their butts to get their education and force them to provide services to everyone.

That would mean infringing on their rights.

Good healthcare has a price. There is a misconception that we have a free-market healthcare system right now, but that isn't the case, most amply illustrated recently by that doctor who wanted to provide services for a lower price to his customers, only to have the government come in and tell him he can't do that, he has to keep the price higher.

While I agree with most of your post, the examples you give here all had/have underground economies and so are not under complete government control.

Those countries had government controlled economies in the same way that the U.S. was alcohol-free during prohibition. That was the goal, but not the reality.

Yes I get what you're saying, that's because if the government owns all of the industries and tries to control the price system, the economy literally won't function, unless a black market pops up. In the case of the Soviet Union, the entire economy converts into one giant black market.

You have a very simplistic view of the world; you seem to think you live in a perfect meritocracy.

i.e there is a linear relationship between "hard work" and salary, and that poor people just don't work hard enough.

This is quite clearly not the case is it.

In a free-market economy, you aren't paid according to how hard you work, you are paid according to what you produce and how much of it you produce. How you produce it doesn't matter. If you build a robot that can do a job that used to take 50 men, and thus up your productivity to 50X as you are one person, well you will make lots more $$$, even if you are sitting on your butt from then on.

If you work very hard at a job that doesn't command a very high pay because it is easily replaceable, say a janitor, well then no you won't be paid much.

Another example, if you sit on your butt and code a great software program and start a company and make millions, well you probably haven't worked harder per se (at least not physically) than the janitor, but you have PRODUCED something far more valuable.

Wealth is created by creating better and more productive ways of doing things.

"The poor" is a misnomer. The only real reason "the poor" exist as they do is because of lazy people who won't work. Yes, there will always be a people who earn the lowest amount in society, but with all of the consumer products and services and the standard of living, even an idiot can make a semi-decent living these days.

You can work as a janitor and live in a one-room apartment, yet you still enjoy a standard of living beyond what billions in the world enjoy. You still have access to Starbucks coffee, high-speed Internet, computer, refrigerator, air conditioning, heat, shower, etc...yes there will always be some truly poor who weren't welfare folks, they just happened to get knocked on their rearend, and people can debate whether or not social safety nets should exist to help such people when they're down and out, but most of the "poor" exist only because society pays them to (welfare programs).