Libertarian Socialism

[Office_Shredder]

Credit ratings agencies are regulated by the federal government, and therefore are creatures of the federal government?

 

[mheslep]

Credit ratings agencies are regulated by the federal government, and therefore are creatures of the federal government?

Not just regulated. The federal government also designates them, that is, picks them. A very select club. Either you or I with the proper expertise and regulatory compliance can start a local bank (at least in the US, in my state), especially if we think the existing local banks under perform. Similarly we can start an insurance company (not so much an underwriter). But even with perfect regulatory compliance and convincing evidence that we're getting unreliable evidence from existing credit rating firms, we can't become a Nationally Recognized Statistical Rating Organization without, as far as I can see, extraordinary political blessing akin to an act of God.

 

[Office_Shredder]

Not just regulated. The federal government also designates them, that is, picks them. A very select club. Either you or I with the proper expertise and regulatory compliance can start a local bank (at least in the US, in my state), especially if we think the existing local banks under perform. Similarly we can start an insurance company (not so much an underwriter). But even with perfect regulatory compliance and convincing evidence that we're getting unreliable evidence from existing credit rating firms, we can't become a Nationally Recognized Statistical Rating Organization without, as far as I can see, extraordinary political blessing akin to an act of God.

You can rate whatever credit you want without getting government approval. Essentially what you have is a private/public partnership here: NRSRO's assign a rating to different bonds etc. which the government uses for regulatory purposes. If this didn't exist, the government would have to assign its own rating to all these bonds and would de facto become the sole credit rating organization.

The wikipedia article even describes how some believe that the existence of an NRSRO label has increased competition amongst credit rating organizations. Basically, you wouldn't be able to start a credit rating agency because nobody would listen to you even if NRSRO status didn't exist

Also, do you actually know how one gets NRSRO status? Do you have to be lucky to get picked, or is it that every company complying with certain regulations can apply and be granted the status automatically (from their website it seems like you just fill out a form, and prove you satisfy certain requirements)?

The Credit Rating Agency Reform Act of 2006

http://www.govtrack.us/congress/billtext.xpd?bill=s109-3850

seems to back this also

GROUNDS FOR DECISION- The Commission shall grant registration under this subsection--

(i) if the Commission finds that the requirements of this section are satisfied; and

(ii) unless the Commission finds (in which case the Commission shall deny such registration) that--

(I) the applicant does not have adequate financial and managerial resources to consistently produce credit ratings with integrity and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with subsections (g), (h), (i), and (j); or

(II) if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (d).GROUNDS FOR DECISION- The Commission shall grant registration under this subsection--

(i) if the Commission finds that the requirements of this section are satisfied; and

(ii) unless the Commission finds (in which case the Commission shall deny such registration) that--

(I) the applicant does not have adequate financial and managerial resources to consistently produce credit ratings with integrity and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with subsections (g), (h), (i), and (j); or

(II) if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (d).

basically says that if the application materials are complete and good, it has to be accepted. This is fairly recent of course and I don't know what the procedure was like before this bill was passed

 

[Al68]

I was kind of expecting a more sophisticated justification for this absurd idea.

So if a contract explicitly states that the contractee must kill someone who is not party to the contract, the contract is in and of itself perfectly valid?

What are you talking about? What absurd idea? That murder, and contracting murder should be illegal?

It seems either I made a serious typo somewhere or you have misconstrued something I said.

I said people have a right to enter voluntary agreements. A person obviously can only agree to do those things they could do without the agreement. Such agreements don't legally give anyone any claim against any third party. Is this not obvious?

 

[vertices]

What are you talking about? What absurd idea? That murder, and contracting murder should be illegal?

It seems either I made a serious typo somewhere or you have misconstrued something I said.

I said people have a right to enter voluntary agreements. A person obviously can only agree to do those things they could do without the agreement. Such agreements don't legally give anyone any claim against any third party. Is this not obvious?

A contract is a legally binding set of actions.

Murder is a crime.

So if a contract specifically states that the contractor is to murder a third party, this contract has to be null and void by definition.

So it is meaningless to talk about an absolute, unconditional "right to contract", "independent" of whether or not this contract impinges on the rights of third parties. The idea is even meaningless in anarchic systems, which rely on people 'cooperating' with each other (in a game-theory sense).

 

[mheslep]

You can rate whatever credit you want without getting government approval.

Meaning personally? As in, "I think the latest California Muni bond issue will likely default"? To what end? Nobody can effectively float a bond on the market without a NRSRO rating attached. As I understand it, the problem is with the buyers: banks and brokers are prohibited from buying unrated debt.

 

[Al68]

So if a contract specifically states that the contractor is to murder a third party, this contract has to be null and void by definition.

So it is meaningless to talk about an absolute, unconditional "right to contract", "independent" of whether or not this contract impinges on the rights of third parties. The idea is even meaningless in anarchic systems, which rely on people 'cooperating' with each other (in a game-theory sense).

Who is talking about such a thing? I have consistently said otherwise. Do you have me confused with someone else? Mixed up threads?

For a contract to be legal, the actions each party agrees to perform must be actions they are at liberty to perform. The actions that may be contracted are the same actions that may be performed without a contract. The right to contract doesn't imply the right to agree to actions which are illegal with or without the contract. A contract doesn't endow the parties to any "special" rights they don't already have. What would give you the idea that this wasn't the case?

Our disagreement was whether merely "affecting" a third party invalidates a contract. Clearly it does not. If an action agreed to in a contract affects a third party by violating their rights, then the contract isn't legal because the actions agreed to violate a third party's rights, not because they merely "affected" a third party.

 

[vertices]

Our disagreement was whether merely "affecting" a third party invalidates a contract. Clearly it does not. If an action agreed to in a contract affects a third party by violating their rights, then the contract isn't legal because the actions agreed to violate a third party's rights, not because they merely "affected" a third party.

If a transaction between yourself and myself affects a third person not party to this transaction, what we are doing, by not even bothering to consult them, is denying them personal autonomy, which is a violation of their (human) rights.

Corporations often pretend externalities don't exist, because it is not legally possible for them to deny the affected parties their rights.

 

[Office_Shredder]

Meaning personally? As in, "I think the latest California Muni bond issue will likely default"? To what end? Nobody can effectively float a bond on the market without a NRSRO rating attached. As I understand it, the problem is with the buyers: banks and brokers are prohibited from buying unrated debt.

There exist and have existed credit rating agencies that were not NRSROs. Hell, part of the process of becoming one is to have been a credible credit rating agency and to have people in the market back you up on that. So obviously there exists a market for non-NRSRO credit rating agencies

We can see here

http://www.defaultrisk.com/rating_agencies.htm

There simply are not a lot of credit rating agencies in the world, and not all the US credit rating agencies are NRSROs. If you want to use a non-NRSRO credit rating agency for regulatory purposes, you can ask the SEC to allow it.

The real reason you could not make a credit rating agency is because you have no credibility and no experience in rating debt, and reputation obviously means a lot in this market. It's not a government labeling issue that's stopping you

 

[mheslep]

There exist and have existed credit rating agencies that were not NRSROs.

Yes, but that's all irrelevant to the topic at hand, which was subprime mortage securities and their relation to credit rating agencies as connected in post https://www.physicsforums.com/showpost.php?p=2783651&postcount=349" by vertices and my response that they are 'creatures' of government. The non-NRSROs on your list have nothing to do with rating those kinds of (US) bonds, nor can they. Only NRSRO's have anything to do with that, that is those designated by the government. Given the utterly subjective rules in place from the SEC to select them:
"...adequate financial and managerial resources to consistently produce credit ratings with integrity..."

 

[Al68]

If a transaction between yourself and myself affects a third person not party to this transaction, what we are doing, by not even bothering to consult them, is denying them personal autonomy, which is a violation of their (human) rights.

So if I buy a car from you, and we don't consult everyone else "affected" by that transaction, such as everyone else that wanted to sell me a car and everyone else that may have wanted to buy yours, then we denied them all "personal autonomy" and violated their (human) rights? Baloney.

Are we through with this nonsense?

 

[vertices]

So if I buy a car from you, and we don't consult everyone else "affected" by that transaction, such as everyone else that wanted to sell me a car and everyone else that may have wanted to buy yours, then we denied them all "personal autonomy" and violated their (human) rights? Baloney.

Are we through with this nonsense?

But our transaction will not materially affect these 'third parties' - nobody else* will have gained or lost anything, let alone personal autonomy, as a direct result of our transaction.

*not stricly true - the negative externalities associated with car usage (through atmospheric pollution and CO emission) most certainly does affect people.

 

[Al68]

But our transaction will not materially affect these 'third parties' - nobody else* will have gained or lost anything, let alone personal autonomy, as a direct result of our transaction.

That's exactly why I used this example: A third party is "affected" but does not have his rights violated.

The right to contract is the right to agree to actions that each party to the contract is at liberty to perform. The parties are not at liberty to violate a third party's rights, and the right to contract doesn't change that.

The right to contract, even an absolute right to contract, does not endow the parties to it with any extra liberties regarding third parties. That's just not what the word contract means.

 

[Galteeth]

I think some of this debate has to due with the nature of the consequence to the third party. The action that causes the consequence must be considered independent of the contract. However, not all consequences of an action are an active restriction of the liberty of the third party. Note the key word "active." I think even most die hard right wing libs would admit that say, dumping poison in a water supply is an aggressive act. The line then becomes murkier as you abstract the consequences more. For example, releasing chemicals into the air that are potentially harmful, but not enough so to kill someone in a short period of time. What a libertarian does not believe is an active violation of liberty is all possible consequences of action, which would render the principle of individual responsibility meaningless. For example, if one were to argue that by me giving money to person x, I created the consequence of person y dying because I did not give person y the money he needs for medicine, a libertarian would not find that an active restriction of person y's liberty.

For an action to be aggressive, it must cause active direct harm that is unavoidable by person being aggressed upon, meaning that in the absence of that action, direct harm (of the type caused by the action) does not come. Aggression is not indirect harm (harm caused through some chain of events as oppossed to a direct cause-effect relationship) nor is it harm that would not necessarily be removed by not doing the action.

 

[vertices]

That's exactly why I used this example: A third party is "affected" but does not have his rights violated.

The right to contract is the right to agree to actions that each party to the contract is at liberty to perform. The parties are not at liberty to violate a third party's rights, and the right to contract doesn't change that.

The right to contract, even an absolute right to contract, does not endow the parties to it with any extra liberties regarding third parties. That's just not what the word contract means.

The 'third parties' you mentioned are:

1)everyone else that wanted to sell you a car

2)everyone else that may have wanted to buy mine

In both cases, the parties are not affected by the transaction between myself and yourself. I use the word 'affected' in a very literal sense - namely being materially affected, ie. whether the person has gained or lost anything of value, perhaps capital, if you will.

The parties maybe kicking themselves for not going the extra mile to sell/buy the car, but beyond this, they haven't actually gained or lost anything of value.

The point is simply this: an unregulated free-market is not free at all - in such a system, entities that we call corporations essentially become externalising machines, transferring risk to others, not party to their transactions.

 

[vertices]

The action that causes the consequence must be considered independent of the contract.

why?

However, not all consequences of an action are an active restriction of the liberty of the third party. Note the key word "active." I think even most die hard right wing libs would admit that say, dumping poison in a water supply is an aggressive act.

The line then becomes murkier as you abstract the consequences more. For example, releasing chemicals into the air that are potentially harmful, but not enough so to kill someone in a short period of time.

Not sure about this - the question is now one of degree. The company is still polluting the environment; their actions still have definite consequences that can actually be priced, and they have to be responsible for these consequences.

What a libertarian does not believe is an active violation of liberty is all possible consequences of action, which would render the principle of individual responsibility meaningless. For example, if one were to argue that by me giving money to person x, I created the consequence of person y dying because I did not give person y the money he needs for medicine, a libertarian would not find that an active restriction of person y's liberty.

See my post above. Person y has not gained or lost anything of value so the 'contract' between yourself and person x does not impinge on the rights of person y at all.

For an action to be aggressive, it must cause active direct harm that is unavoidable by person being aggressed upon, meaning that in the absence of that action, direct harm (of the type caused by the action) does not come. Aggression is not indirect harm (harm caused through some chain of events as oppossed to a direct cause-effect relationship) nor is it harm that would not necessarily be removed by not doing the action.

So any contract is always valid unless the contracting parties cause "active direct harm" to third parties?

I hope we agree that no contract should impinge on a third party's rights. I do think that you (like Al68) are defining these rights too narrowly.

A transaction that ignores the opinions and wishes of affected third parties does by definition violate their rights to personal autonomy. We could get a bit philosophical about this but suffice it to say, people deserve to, indeed have a right to, have a say on matters that directly affect them.

 

[Al68]

I use the word 'affected' in a very literal sense - namely being materially affected, ie. whether the person has gained or lost anything of value, perhaps capital, if you will.

If they gained or lost something directly in the transaction, then they are by definition not a third party.

The point is simply this: an unregulated free-market is not free at all - in such a system, entities that we call corporations essentially become externalising machines, transferring risk to others, not party to their transactions.

You haven't even specified what actions you oppose, much less why. You claim a third party has risk "transferred" to them. That's simply not a description specific enough to have any logical meaning relevant to this issue.

Even if we disagree about what actions constitute a "violation of a third party's rights", that is what determines whether it's a wrongful action. Being part of a contract doesn't cause or prevent any action from being considered wrongful.

I do think that you (like Al68) are defining these rights too narrowly.

Huh? I haven't defined them at all. I used murder as an obvious example, not as a comprehensive list of possible violations.

A transaction that ignores the opinions and wishes of affected third parties does by definition violate their rights to personal autonomy.

Still making no sense. A person directly involved in a transaction is by definition not a third party to it.

The action that causes the consequence must be considered independent of the contract.

why?

Because that's logically coherent. It's not logically coherent to suggest that a contract itself, instead of the actions performed by the parties to it, violates the rights of a third party.

 

[vertices]

Sorry, this is literally a month overdue. A couple of comments:

If they gained or lost something directly in the transaction, then they are by definition not a third party.

You said it! So, going back to Galteeth's example, if a corporation pollutes the environment (a 'public good' that everyone shares), the general public are all directly involved in this 'transaction', no?

Because that's logically coherent. It's not logically coherent to suggest that a contract itself, instead of the actions performed by the parties to it, violates the rights of a third party.

I have no problem with this if, by 'contract', you mean a piece of paper with inconsequential scribblings.

In legal parlance though, a contract is something that is legally enforceable. It is meaningless to talk about a contract which ignores and impinges on the rights of parties that are directly involved in the transaction because such a contract would necessarily be 'null and void' (in democracies, anyway).

 

[Al68]

You said it! So, going back to Galteeth's example, if a corporation pollutes the environment (a 'public good' that everyone shares), the general public are all directly involved in this 'transaction', no?

Of course, I never said otherwise. And polluting the environment violates our rights regardless of any contract. That was my whole point: The right to contract doesn't give the parties to it any extra liberties it didn't already have. A contract between a paper mill and OfficeMax, for example, has no effect whatsoever on whether either of them has the right to pollute the environment or violate others' rights in any other way. Yes, they both have the right to contract. But a paper mill can't obtain a right to pollute from OfficeMax in a contract between them, because OfficeMax doesn't have that right to give.

And relevant to the point, a law prohibiting pollution does not violate anyone's right to contract. I'm against laws that violate the right to contract, I'm in favor of laws that prohibit the violation of people's rights.

In legal parlance though, a contract is something that is legally enforceable.

It's only legally enforceable against the parties to it. That's why there is no basis for denying the right to contract, because everyone who could ever be sued for contract default agreed to the contract.

No one else has any obligation. No one else is obligated to accept pollution or any other rights violations as a result of any contract.

 

[RenasontsMan]

Since libertarianism is toward the right extreme of the political spectrum, while socialism is toward the left extreme, libertarian socialism would seem to be the equivalent of wet dryness, cold heat, and black white.

Adolf Hitler's party was the Social Democrats. You cannot have socialism without fascism.
Impossible. Witness North Korea, and of course that Democrat nirvana, Cuba.

 

[mheslep]

Adolf Hitler's party was the Social Democrats. You cannot have socialism without fascism.
Impossible. Witness North Korea, and of course that Democrat nirvana, Cuba.

The leader worship characteristic of facism does seem to be present in totalitarian socialism cases, including:
[PLAIN]http://www.chinabooks.com/cart/files/t_19424.jpg [Broken]
[URL]http://www.jhindin.com/posters/poster01.jpg[/URL]

 

[DavidSnider]

Since libertarianism is toward the right extreme of the political spectrum, while socialism is toward the left extreme, libertarian socialism would seem to be the equivalent of wet dryness, cold heat, and black white.

Adolf Hitler's party was the Social Democrats. You cannot have socialism without fascism.
Impossible. Witness North Korea, and of course that Democrat nirvana, Cuba.

I think it's a bit more like this:

http://politicalcompass.org/images/axeswithnames.gif

 

[Galteeth]

Since libertarianism is toward the right extreme of the political spectrum, while socialism is toward the left extreme, libertarian socialism would seem to be the equivalent of wet dryness, cold heat, and black white.

Adolf Hitler's party was the Social Democrats. You cannot have socialism without fascism.
Impossible. Witness North Korea, and of course that Democrat nirvana, Cuba.

If you go back and read earlier parts of this conversation, you will understand what is being discussed. (Or what was originally being discussed)

http://en.wikipedia.org/wiki/Libertarian_socialism