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Capitalism under full attack by Obama
- Thread starter bugscoe
- Start date
Quote from bugscoe:
"The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks..."
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032302830_pf.html
"Pure" laissez faire capitalism is just as defective and doomed to failure as "pure" socialism. Neither takes into account human nature to the extent needed for success. If the American hybrid of socialistic capitalism is to succeed, there will have to be enough regulation to keep the excesses of capitalism in check, otherwise self-destruction is inevitable. Similarly, socialism must not be allowed to get out of hand either. So far at least, the Obama administration appears to be taking a less precipitous and better thought out path then the previous administration did when they first gutted all nature of regulation, and then when trouble appeared, rushed headlong into socialism.
Could you elaborate on why laissez faire capitalism won`t work?Quote from piezoe:
"Pure" laissez faire capitalism is just as defective and doomed to failure as "pure" socialism. Neither takes into account human nature to the extent needed for success. If the American hybrid of socialistic capitalism is to succeed, there will have to be enough regulation to keep the excesses of capitalism in check, otherwise self-destruction is inevitable. Similarly, socialism must not be allowed to get out of hand either. So far at least, the Obama administration appears to be taking a less precipitous and better thought out path then the previous administration did when they first gutted all nature of regulation, and then when trouble appeared, rushed headlong into socialism.
I would think that capitalism, coupled with laws that truly protected workers and the environment from abuse would work great... unbridled capitalism is what motivates.. oh.. the drug cartels for example... or maybe they are just psychopaths that found a business they can excel at, not sure... I think the psycho part comes first, and the business finds them maybe...
Quote from Fractals 'R Us:
I would think that capitalism, coupled with laws that truly protected workers and the environment from abuse would work great... unbridled capitalism is what motivates.. oh.. the drug cartels for example... or maybe they are just psychopaths that found a business they can excel at, not sure... I think the psycho part comes first, and the business finds them maybe...
Drugs,mmm,well the thing about that is that alcohol,apparently kills way more people than drugs,but the government is happy for you to poison yourself with that and cigarettes but where is their tax cut on drugs- i heard stories that the CIA have done a fair few drugs deals in their time.
Now,many politicians own up to smokin a bit of hash in their college days...just to fit in you understand... i didn't really like it... was it clinton who said he didn't inhale?. Is there a connection between the type of person who goes into politics also not enjoying a product that produces a profound sense of happiness,contentment and well being.....?
Quote from jprad:
Funnier is that ever since Man could slap two syllables together he's been predicting the End of the World(tm).
Talk about the ultimate buy & hold...
Yup.
Why UK should not fret about National Debt
I have to say that while there may be a good many reasons to think twice about a further stimulus in the forthcoming UK Budget, the size of budget deficit or the associated national debt is not one of them. Since my undergraduate days, I have been pointing out that a government budget is not the same as that of an individual or company. Indeed, the more reluctant people and corporations are to spend, the greater the case for the state to spend to fill the gap. The message is still too counterintuitive to get across...Nothing I have said will convert people who have an instinctive fear of governments getting into debt. Let me therefore cite the distinguished English historian, Lord Macaulay: âAt every stage in the growth of that [national] debt the nation has set up the same cry of anguish and despair. At every stage in the growth of that debt it has been seriously asserted by wise men that bankruptcy and ruin were at hand. Yet still the debt kept on growing; and still bankruptcy and ruin were as remote as ever.â Harold Macmillan, as chancellor of the exchequer, quoted Macaulay in his 1956 Budget speech and remarked how the national debt had risen from £6bn in 1914 to £27bn in 1956, representing 27 and 146 per cent of gross domestic product respectively â about twice what is now in prospect. Yet these percentages were reduced in the postwar phase without any heroic reserve or âsinkingâ funds, through the simple forces of economic growth and inflation creeping at a rate not much above current inflation targets.
The vast majority of those who know a little bit about economics, being just knowledgeable enough to be a danger to themselves, will take the other side of Brittan's trade, until they're proven disastrously wrong, as they always have been and always will be.
Vast deficits in bad times are a disaster to places with inert economies, like Zimbabwe. For places with strong economies, like the UK or the US, running a vast deficit in bad times is the precise medicine needed. Folks who stopped with Ricardo and never really understood Smith won't ever get it.
Ditto with government interventions in any form, which of course is what these people are really against, not recognizing that only the fact that they live under a strong government with a monopoly over enforcement of societal rules allows them to make and keep their wealth. What is being proposed here will make capitalism stronger, not weaker. But once again, the counterintuitive argument will have to win without the support of the people who will most benefit by its triumph.
The debt increase you give the example for is a factor of 5 over 42 years which included two full blown hot wars. US debt has increased by a factor of 12 or 13 in 28 years without any difficult wars. Britain was able to pay back debt because their defense spending decreased dramatically and they received substantial aid from the USA. USA defense spending continues to increase with no end in sight. And, the big difference is most of the war debt bonds were bought by citizens of the country at war. Now, with consumers way over-leveraged with debt, US depends on foreign countries to buy debt. If foreign countries even slowed buying our debt, the US government would have to cut spending drastically or commit the political suicide of raising taxes a lot. You can't really compare post WWII UK to USA now.
If very little private debt is being issued, as is happening now in the US, then government borrowing is a) not crowding out private debt issuance, and b) will have a ready market from the savers in the country and by overseas buyers looking for something to invest in, who now no longer have agency debt and private/corporate debt as much of an alternative, because of its relative scarcity now.
So your argument is static: it doesn't take into account the changed circumstances brought about by recession and the destruction of the debt bubble we just went through.
As for the argument about how much larger the increase has been: look at US Civil War debt. It easily dwarfs any of this. The Republic survived, because the economy grew its way out of that massive debt. Why? Because this isn't an inert economy. That's a point that can't be stressed often enough.
So your argument is static: it doesn't take into account the changed circumstances brought about by recession and the destruction of the debt bubble we just went through.
As for the argument about how much larger the increase has been: look at US Civil War debt. It easily dwarfs any of this. The Republic survived, because the economy grew its way out of that massive debt. Why? Because this isn't an inert economy. That's a point that can't be stressed often enough.