What does the bread aisle of your local grocery store look like? Chances are it’s quite large, featuring shelves filled with many different types of bread. Each type of bread is also offered by different companies – you’ll have several brands of wheat or rye bread to choose from. One of these options will probably be the “house brand” of the grocery store itself, and it will likely be cheaper than any of the other brands, particularly for staples such as white and wheat bread.
What purpose is served by having so many types of bread to choose from? We could all survive nicely on wheat bread. Even if we make allowances for taste, and indulge those who prefer other flavors, what’s the point of having all those different brands on the shelf? And why would anyone buy a marquee brand like Wonder Bread or Pepperidge Farms, when the grocery store house brand is cheaper?
And why do we have to pay for bread at all? We need basic foods to survive, far more urgently than we need health insurance. Maybe it would be better if the government took over the bread industry. Think of all the money wasted on packaging and advertising, which could be saved if the State distributed Obama Bread in plain white wrappers that said RYE or WHEAT in simple block lettering. Our wise politicians could then decide if all those different varieties of bread are truly necessary.
If you have studied the history of socialism and communism around the world, you know what the inevitable results of a nationalized bread industry would be: hungry people staring at dusty shelves containing a few expensive loaves of low-quality bread. Humanity has invented few weapons that kill people more efficiently than collectivist agriculture.
Why is this always the tragic outcome of collectivism? After all, government control of goods and services is presented as a way to control costs. The bribes and shady backroom deals perpetrated in the service of ObamaCare are supposed to produce a system that increases “access to health insurance” and make it more “affordable.” The inevitable result will be a system that reduces the quality of care, makes it harder to come by, and increases its overall cost to American citizens.
The same thing has happened across decades and around the world, every single time the State has taken control of a private industry. There’s some grim amusement in watching a supposedly educated man like Paul Krugman make an utter fool of himself trying to pretend otherwise. (“In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.”)
The reason for the failure of collectivism is revealed in the parable of the bread aisle. Why are there many different flavors of bread? Because people demand them. Why are those flavors provided by different companies, at various price points? Because there is competition to satisfy demand. These factors produce reductions in price, and increases in quality… and the burning truth every statist desperately needs you to forget is that political commandments cannot produce either of these things.
Why couldn’t a nationalized bread industry produce higher quality bread at lower prices? A politician would simply declare bread must be healthy, delicious, and provided to Americans for fifty cents per loaf, paid by a loving government interested in the welfare of its people!
The problem is that politicians cannot redefine value, or repeal the laws of supply and demand. Ironically, given the endless invocation of the term by American liberals, the first thing sacrificed in a state-run industry is diversity. Political allocation of bread would see no logic in offering different brands of bread, or even different flavors… at least, not to the politically powerless average citizen, who would have no way to express his desires by spending money on the bread he prefers. The sole input available to the subjects of a state-run industry is power. If you don’t have any, you take the bread government sees fit to provide, at the time of its choosing.
This doesn’t happen because the masters of a politicized economy are heartless and cruel. One of the most dangerous, enduring illusions of the post-industrial era is the belief that collectivism has only failed in the past because nasty people were in charge of it. The elimination of diversity and choice is an inescapable requirement of command economics. Control cannot be dispersed among millions of consumers, imposing their individual preferences on the system. That’s what capitalism does. When Pepperidge Farms tries to win your business, it caters to your demands, and it can find opportunities for profit in satisfying very specific tastes. If the State provided bread, you would need to adapt your tastes to the requirements of the State.
Reducing costs and increasing quality, to earn profits in a competitive economy, is very difficult. Statists think it’s easy, which is why they believe an enlightened President and Congress can simply command it. Relieved of competitive pressure, the State’s bread-making decisions would be guided by political considerations, at the expense of variety and efficiency. Chances would not be taken on experimental flavors that could result in wasted production, if they don’t catch on with the public. The unhealthy decadence of white bread would likely be sacrificed in the name of reducing health-care costs.
Grain harvests, and the location of bakeries, would be shaped by the political power of local senators and representatives, rather than the painful demands of cost control. This is one of the reasons why government programs always cost more than the original estimates. Those estimates quickly become arbitrary limits, easily discarded when they become difficult to meet. This also makes it easy for politicians to obscure the true costs of their plans, by providing ridiculously low estimates of cost. They know they will not be held to account for those projections later, the way a private business would.
The bread aisle of your grocery store overflows with a variety of fresh, affordable options because that bread is baked in the fires of competition… where a fortune can be made by learning your tastes, and finding an inexpensive way to satisfy them. If you relied upon the government for your bread, you would accept what you were given, and you would be given what politicians think you were willing to accept. They would conceal the massive cost of its inefficient production by telling you it was free. Because this is a lie, you would soon find yourself staring at an empty shelf, remembering the days when you could choose between six different brands of honey wheat bread, while politicians explained why your nostalgia reflects a greedy and selfish desire to return to an impossible age.
Cross-posted at Hot Air.
Kudos, Doc — as usual you’re on the money. Your apt analogy reminds me of the fallacy of trying to ‘forecast’ a planet’s climate – a non-linear, chaotic unbounded system that will defy any attempt at ‘command & control understanding’ – just isn’t going to happen…
Back when I owned my own businesses, I used your bread analogy for explaining to my hired employees — produce more value than I’m paying for or else I’d go shopping for another loaf of bread that more suited my tastes and needs… Our dysfunctional educational system long ago failed us in this manner
;-{
Bread is a very old invention, a precursor of bio-engineering, (as cheese and wine also are) in which a microorganism is allowed to turn some of the milled grain into bubbles (CO2 by the way) and alcohol (which is why the fresh bread smells so good, before all the alcohol evaporates).
A “perfect” government would probably conclude that such an archaic product should be eliminated altogether, and replaced by some kind of
thick drink, of nondescript color and texture, purpotedly containing the same nutrients (or better!) one would presumably have obtained from bread if it had not been banned on grounds of economic inefficiency.
And presto! The citizenry is turned into cattle, eating something produced by a chemical plant, with no consideration for flavor, a manifestation of human frailty, typical of the dark ages of capitalism.
A small step for the tyrant, a gigantic leap backwards for humanity!
What would then stop the tyrant and his super-insightful advisers from making a costs-and-benefits analysis and reaching the conclusion that there are too many humans around, because they consume so much and produce so little? Once the personal choice has been eliminated by the perfect government, what’s the point of having humans anymore?
If it sounds like I exaggerate, think of the US representative (possibly H. Waxman) recently brandishing to his colleague (B. Stupak) the argument that with more abortions the cost of health care would be lower since the population would decrease? All in the name of improving society, of course. Better trust in God, methinks.
“ A “perfect” government would probably conclude that such an archaic product should be eliminated altogether, and replaced by some kind of thick drink, of nondescript color and texture, …”
Soylent Green?
Wonderful analogy, Doc, if ObamaCare were demanding a single-payer system. I’ll “fix” your analogy by stating that ObamaCare will be the Safeway bread, probably wheat, in your metaphorical aisle. People that prefer higher quality can always pay more for the Pepperidge Farm healthcare.
(Not that I’m stating that government wouldn’t want a single-payer system, but I’m certain, if prompted, Wonder would love to be the only bread on the shelf, too.)
Yes, Wonder would love to be the only bread on the shelf, but it does not have the power to make that happen.
Your analogy conveniently leaves out the fact that government ‘products’ do not have to turn a profit and that the government itself can simply legislate or regulate all other ‘products’ out of existence. Free market products cannot compete with government ‘products’ which are wholly subsidized with slave labor.
DOne, if you truly believe that Obamacare will lead to anything other than 100% socialized medicine, you need to read more history.
DOne also needs to realize that Wonder cannot bring force to bear in order to force you to buy and consume every last crumb of Wonderbread.
However, the Federal Government can (and has in the past) use the coercive force of law to force not only your purchase of Obamabread, but the consumption of said bread, at the time and place of their choosing.
This is the thousand pound gorilla in the room that statists cannot (or will not) see. Government has a monopoly on the initiation of force, and they default to it perpetually.
Private industry, for all their “evils” cannot force you under pain of death to do anything at all. They can cajole and entice you, but never can they force you. If all their persuasion fails, there is nothing else they can do to force you to choose in their favor.
Government, on the other hand, knows no other recourse except force. They may ask or cajole, but underpinning any “request” from the government is the explicit understanding that the very next step from persuasion is force, ultimately ending with mortal violence to your person (IE they kill you).
If you claim to not see the distinction between the power of private enterprise and the power of government force, you’re either being obtuse or disingenuous.
Agreed to both Misuninformed and Cool Hand: My exploration was an oversimplification. However, I would argue that the complete dismissal of reform is as well. Heath care coverage and services have, and never will be, as simple as pulling a loaf of bread from the shelf. Most often, our employers determine our coverage and we may, if we wish, purchase supplemental insurance from state-approved and regulated insurance companies. If we see a catastrophic need for service, we are shuttled into an emergency room where, we hope, the uncontrollable costs are covered by the insurance that our employers and our states have approved. To liken it to a trip to the neighborhood grocery store is equally as obtuse or disingenuous.
Hmmm….
I can see DOne’s point, but he misses the fact that the employers themselves have the choice of lots of bread too choose from, they only bring home one brand. Doc’s analogy is spot on because we are the children and it’s our parents (employers) who make the decision about which loaf of bread we can eat. If you owned a large company, you’d know that.
However, seeing that you’re not completely off the mark because Obamabread would be the generic loaf amongst the Pepperidge farm, it’s like this… The Gov’t then regulates all the other breadmakers to comply with the new rules. No fancy packaging, can only use the approved list of ingredients, and should you choose not to eat bread at all, you will be forced to buy Obamabread whether you want it or not. Oh, and if you can’t afford to buy it? That’s okay, because you can get a free loaf if you can prove you can’t buy it, and they’ll just past the cost increase of materials to the other people who have to buy the bread. If you buy Pepperidge farm though, that mean old Cadillac bread, you’ll be taxed bigtime for it. Once the rest of the breadmakers all look and taste like Obamabread, it then no longer matters who’s bread you buy, so the rest of the breadmakers stop making bread.
Which segues nicely into my point. Why on earth would you want to become a breadmaker if there is no real profit to do so? My biggest concern is we have the BEST healthcare in the world because of competition and innovation in the healthcare industry. Who would want to become the best specialist doctor when their pay would be the same as all the other Gov’t jobs? 7 or more years of school to become a doctor when I could be an auto mechanic in 6 months and make the same (possibly more) money? 250k for school that I’ll have to pay back or 10k for a career that’ll make me 50k a year for that 7 years, so I’d be +600k (or more) by the time my career starts as a doctor. Oh, that 7 years doesn’t include specialty training mind you.
So as the lack of talented breadmakers continues to decline, the quality and flavor of the bread decreases for lack of ambitious breadmakers, and ultimately the price of bread will INCREASE because of the lack of efficiency and increasing overhead from over-compensated breadmakers.
I can understand the need for healthcare reform. I just don’t want it controlled by the Gov’t, who have just about NEVER gotten anything done on time, under budget and with the ability to keep that department small and manageable. All the Gov’t does to address the overbloating of inflated beaurocracies is to create another beaurocracy to find out why the first one is so ineffecient.
Department of Energy and Conservation project ring a bell? Here’s what’ll happen to the breadmaker in 40 years….
http://peswiki.com/index.php/Directory:How_Well_is_U.S._Department_of_Energy_Fulfilling_Its_Mandate_to_Facilitate_Clean_Energy%3F
I’m sick and tired of the government creating more overhead, more stupid agencies, more freeloading government types to tell me that I need to heed their advice. When was the last time you said “Boy, that Government agency was FAST! And POLITE! That was so EASY!!!”
Yep, I thought so.
Great article Doc.
@ Symo:
Having just visited the SSA two weeks ago, I had to chuckle at your closing. I think the SSA should have been Dante’s 2nd ring.
I realize that government intervention creates a tremendous amount of frustration. However, I have rarely issued those same words (fast, polite, easy) when visiting a physician, let alone an ER. The fact is that the current system is inundated with bureaucracy, from both the government and the free market insurance industry. Medicare and Medicaid have already done some of the “damage” that you cite, but, more shockingly, privately-owned insurance companies have been as active, if not more so, when mandating or declining services and price-fixing procedures and pharmacueticals into or out of practice. If you are frightened by government agents determining which procedures you may or may not have, how about the current system, where account managers, making $15-20/hour and not having any of the medical training that you cite, making that same determination…always with profit in mind, not your health?
I cannot state, with any shred of confidence, that goverment would be a better system; in fact, it probably will not. But, granting service to those “cheated” out of health care coverage (mandated part-time workers, those priced out of the market) with a similar system in place is, to me, preferable. Hell, I’ve been waiting for the discussion and debate since 1993.
Fair enough… I’ve been waiting for a real discussion as well. Not holding my breath though.
As for the account managers making the decisions about my health, these people wouldn’t be in the position to say “no!” if the government had not created so many roadblocks to create the competitive atmosphere that a true free-market healthcare system would thrive in, and ultimately, take anybody’s money, not just the healthy.
You make it sound like the insurance companies are the ones who created the bloated boondoggle that we’re forced to live with now. Alas, it has been over-regulation by the government to BEGIN with, starting with Medicaid and Medicare, which has caused the elimination of competition and just practice in the medical community. There isn’t an honest doctor in this country that would refuse you treatment, but thanks to regulation, the insurance companies are forced to spend money on lobbying the $%^&* gov’t to keep their businesses alive. Not just profit motivated, it’s a survival instinct of the company. He who spends the most on Mr. Beaurocrat is allowed to provide insurance. So, it’s backwards… the company that is forced to spend the most money on Senator X gets the contract, and in turn raises its rates to the consumers because of the money it is forced to spend on anything BUT treating it’s customers. You’re right that it’s a disgrace, and that issue does need to be addressed.
This is the point to Doc’s article… allow ALL breadmakers to the table. Remove the blocks that prevent honest and fair competition. This will eliminate the lobbying, force companies to be efficient, allow more people to be covered because there will be companies that will find room for more customers instead of denying ones that are of a higher risk. If the market exists, companies will fill the niche.
If the Gov’t really wants to do something good about the healthcare problem, then it needs address the issues that concern the doctors… tort reform, unfair regulatory practices, etc. This way, people will still want to become doctors instead of poorly compensated individuals in a government machine.
” how about the current system, where account managers, making $15-20/hour and not having any of the medical training that you cite, making that same determination…always with profit in mind, not your health?”
This statement is erroneous. The account manager is not interested in profit at all… they do not care if the company makes a profit. But their bosses will care if they don’t get money for services rendered. After all, they cannot pay off Senator X to keep their choke hold on their respective districts if they are not getting paid their unjustly bloated fees.
I worked for a non-profit children’s hospital… I saw it all firsthand. There are parents whose children will spend their entire lives dependent on constant medical care, and it is heartbreaking. I’ve seen yearly bills of over 100k. But which company would you choose, the one that strives to harbor and treat these children or the one that is only concerned about their bottom line? My guess is you’d choose the righteous one. Yet at this time, we are not given that choice, and should this current healthcare plan pass, the situation will become worse, not better. And as for these children that are dependent on services now, under a socialist model, they will not be allowed to live (if under the age of 22) because “quality of life” will not be there. Beaurocrats do not consider “love” a quality.
I have NO faith in our current (and past) government to do the right thing. This is exactly why we need to prevent the Gov’t from getting it’s incredibly filthy hands on something so important to us. Put the ball back in play to be played by all, not just the elite and greedy.
[...] Via Doctor Zero. [...]
Amen, Doc, AMEN. You are spot on, as usual.
@ Symo:
Well stated. A very astute set of points and well delivered. While we both hold a skepticism (to put it mildly) of government, I would state that you and the Doc are a bit overoptimistic vis-a-vis the free market. Whether or not it was originally facilitated by regulation and the subsequent removal of that regulation, the American banking system and its current state is a perfect model for unchecked and unregulated industry. An industry like healthcare, which comprises such a large percentage of our GDP, left unregulated at all, would spiral to the point that Congress would be forced to produce another trillion-dollar TARP fund to keep the system afloat. I guess what I’m speculating is that the taxpayer is going to be forced to fix this system either way; we will pay through increased taxes or through inflated prices (since Congress and the Fed love to print money) regardless of which course we choose.
As for the enormous investments of time and money that physicians must spend for their craft, I do agree that they need to be fairly compensated for their effort. I, myself, believe that a federally regulated industry would not impact physicians as strongly as some assert. After all, there are doctors everywhere (even in single-payer systems) and, if Obama is not being disingenuous (*shaky ground, here*), many of these student loans will be forgiven through tax incentives. The system will provide, I believe, even if it’s not an ideal provision.
I still (albeit, reluctantly) stand by my last thought: given a choice between two desperately broken systems, I’ll choose the one that at least provides some broken coverage to those without.
[...] Doc Zero on Red Bread: The bread aisle of your grocery store overflows with a variety of fresh, affordable options because that bread is baked in the fires of competition… where a fortune can be made by learning your tastes, and finding an inexpensive way to satisfy them. If you relied upon the government for your bread, you would accept what you were given, and you would be given what politicians think you were willing to accept. They would conceal the massive cost of its inefficient production by telling you it was free. Because this is a lie, you would soon find yourself staring at an empty shelf, remembering the days when you could choose between six different brands of honey wheat bread, while politicians explained why your nostalgia reflects a greedy and selfish desire to return to an impossible age. Comments (0) Trackbacks (0) Leave a comment Trackback Comments appear entirely at the whim of the guy who pays the bills for this site, and may be deleted, edited, ridiculed, or otherwise pissed over as he in his capricious fancy sees fit. Thank you. [...]
DOne,
You are just plain wrong. You sound like a guy who is receptive to reality (ie not a typical liberal) but you just don’t have your facts straight.
To suggest that the current financial problems are the result of an unregulated free market is crazy, to put it kindly. For more info read:
http://www.amazon.com/Architects-Ruin-government-liberals-economy/dp/0061953342/ref=sr_1_1?ie=UTF8&s=books&qid=1268888196&sr=8-1
Do I believe that the free market provides the best solution for everyone each and every time? No. Does a good solution even exist for a family faced with a child who is going to require a million dollars in care? I don’t know, and from what you have written so far I think we agree that it is very unlikely that if a good solution does exist, government is going to provide it.
And even if somehow government does somehow create a good outcome, never forget that, one way or another, the good outcome is the result of a gun held in somebody’s face. In my opinion, that and that alone ends the argument of government vs. free market.
@ Unmisinformed:
Thanks for the reading suggestion; I’m only vaguely familiar with Schweitzer, so I’m not going to comment upon his objectivity yet. I’ll see if the ‘ole library’s got a copy. Although not in printed form, a good documentary on the economic crisis is Frontline’s “The Warning”. It’s on PBS’s website. Regardless, it’s difficult to point fingers at a single entity when so many hands are in the economic pot.
As for the “gun in someone’s face,” you’re absolutely right, metaphorically-speaking, of course. Government severely and inflexibly imposes upon the rest of us in order to provide for those that cannot. Every April 15th I am as irritated as most, but, for this issue, I would swallow my ire for the sake of what I believe is needed. As for right now, I already do what I can for charities like the Ronald McDonald House and the United Way. It just seems like a pittance … a fluid ounce of medicine where a reservoir is sorely needed.
@DOne
Thanks for the tango… you’re correct that I have more optimism about free market practices, but I disagree with your comparison to the financial markets because once again, those are regulated by government. I recognize that tearing up all the regulation and letting the current system in place be it’s own master would at this time be catastrophic, to say the least. All I want to see is for the system to head back to the direction of a customer based system instead of a regulated one. Imagine if hospitals and clinics had to rely on keeping people happy as well as healthy… No excruciating waits, service with a smile, etc. My local medicine man actually runs a pretty good shop. No long wait, the staff was friendly and very helpful. I would choose to go to them for my care for that service than just because my insurance company said it was okay. I’d rather give just them all of my insurance dollars instead of it filtering through fifty other wallets… true free market. It’s okay to be cynical. It all boils down to I’d choose to be on the side of the Doctor I know instead of the beaurocrat I don’t.
This argument basis its premise on a faulty foundation. They start with the idyllic picture of a bread isle in a supermarket as if this is representative of any other structure in government. Then the false statement that it is consumer demand that drives the choices. But this is false. It is availability or profitability that drives the choices that are made available to the consumer.
Like a health care provider, they present their few choices and the prices do not swing dramatically in either direction. At least not unilaterally. They act in collusion to meet the prices and stay roughly the same in price per offering. Consumer demand is NOT met, but instead they choose the best customers only. Thus demand is not met if it is not considered profitable enough. Those that survive may make it to 65 and get government sponsored care, or they may not.
The demands of the free market and the myth of Capitalism being a servicer of the people is as absurd as the myth that the Soviet Union and its satellite countries were actually Communist. Where in fact Capitalism creates and maintains class systems with very little chance of upward mobility and a great chance of downward mobility.
Communism exists well in theory but the States that have attempted implementation tend to turn “Right Wing” in practice soon after they are created. The usual suspects of the U.S.S.R., PRC, East Germany, Cuba and the first Kim regime of North Korea have been Totalitarian Dictatorships. This is NOT left leaning or moving towards personal empowerment. The rhetoric, images and statements were leftist, but that is where the embrace of left leanings ideas ended. The only thing missing was the color of the uniform accents. The Soviets and their brethren used red instead of black. Otherwise they are indistinguishable in practice or depravity towards their citizens.
The only real distinction is that these regimes have been officially atheist. However the cult of personality replaces “God” with the leader whom is worshiped and adored in a similar matter to a deity. Therefore one ethereal god is replaced by a contemporary mortal investiture. That being the leader of the state. Fascism uses a similar practice to achieve their cults of personality, but the church is co-opted before being destroyed.
Those who promote the narrative that the right wing is moral and the left is not generally lack knowledge of these basic facts or correctly presume their audience is equally ignorant.
I particularly like how the author calls Krugman a fool. Even though Krugman is a Nobel prize winner in Economics. It is a common tactic to attack the messenger when you cannot defeat the message. Obfuscation is a strategy for those who lack the intelligence and creativity to formulate valid arguments of their own. A little fact: John Stossel was the back up for Geraldo Rivera on sensationalist TV in the 80s. Compared to a man who is considered one of the premier economists of the 20th and 21st centuries. We do not produce that many Nobel prize winning economists. In fact there have barely been a dozen in the last 90 years (which is how old the prize is I believe). Why oh why do these people keep picking the defeated to stand behind?
Hey Righties: Drop the ZERO get with a HERO!
At LEAST bring someone of equal stature…OK you don’t have anyone…near equal…uhmmmm….I’ll settle for knowledgeable about the subject. Bring them into challenge the argument.
Socialism and Communism do exist in the world in variations of the Marxist model. The people do not starve, they have functioning governments with Democratic elections. Some are even first world/Western. Most have socialized medicine and have lower infant mortality rates, and at least the same life expectancy as in the United States. The threats of a menacing government take over are not realized or even feared. This argument and its silly scare tactics about forced collective farming being implemented by megalomaniacs has some historical support. But it was the rare exception in post revolutionary countries where the society was being transformed by mad men and political crony-ism. There is NO record of a modern Democratically elected government that has instituted Socialized medicine moving towards forced collective farming.
It is a scare tactic which is base and offensive.
To the bread aisle again. The government exerts oversight in various industries. In those where they have not, such as mortgages, there have been severe problems. I understand the fantasy that government is the problem. The real problem is ignorance. If we were left to a world of complete individual accountability then that would be self government. It has another name: “Anarchy” which is a left wing concept.
So I must ask Doctor Zero and his acolytes (great name by the way…Doctor of nothing? Or is it Doctor of no value?)
How is it that everything you claim to love is everything you claim to hate? You say one thing but you mean another? Does that make sense in your internal dialog?
What kind of place is it in your head? How do you live like that?
@ Veritas:
….Says the guy who lives in the USA, which is probably still the most capitalist nation on earth. What exactly is keeping you here?
Krugman is an idiot because he is a Keynesian. Keynesian economics is a proven failure. I figure you will simply dismiss this argument by again saying that if only the Keynesians of past had not turned “right wing”. Yeah, if only we could find the right people (hell, maybe it is you!) then communism would turn out just peachy.
BTW, you respond to the perceived ad hominem attack on Krugman with an ad hominem defense. At no time did you support Krugman’s message, only his so-called credentials. How is that any different than what you accuse Doc Zero of?
Do you ever think as you type this drivel about why you have a computer in front of you? If you are like me, you have a $750 computer that no one on earth could have made ten years ago, for any amount of money. How did that computer appear on your desk? Was it through the magic of communism?
I guess that in contrast to communism, capitalism has always been ‘run’ be intelligent and virtuous people. There is just no other explanation for its successes. Surely it is just a coincidence that communist countries always wind up with murderous dictators at the helm. Just bad luck so far, they will get it right eventually if we keep trying.
Do you realize that you used the phrase “personal empowerment” in a paragraph defending communism? So capitalism, where each person decides to dispose of his resources as he and only he sees fit, reduces “personal empowerment” and communism, where every decision about capital is made a central authority, improves “personal empowerment”?
I’d love to hear an argument defending that concept.
I think you should take the last two sentences you wrote in your comment and apply them your yourself.
Unmisinformed:
In your attempt to be pedantic you are also missing the point. We are attempting to discuss political theory and why it does or does not fit.
Keynesian economics and its variations are the standard by which government controls are applied to serve the public good. Industries that are left to self govern have PROVEN themselves to be unreliable or indeed harmful to the public, per my earlier reference to the mortgage industry. Maybe I should have included Real Estate agents too.
Stoessel does not present a link to Krugman, unless it didn’t appear when I hit the hyperlink. All I saw was Stoessel calling him a fool. Was there more?
So if its a matter of putting up the collective bona fides of you, Doc Zero, and Stoessel up against Krugman, I’ll put a grand on a blind bet that you collectively do not stand up to him individually. So calling him a fool is both silly and diminishes your credibility. Or do a couple of you hold a PhD in Economics?
The reference to your computer suggests that innovation only exists or is hastened through motivation of profit. Not true, technology has advanced out of need and via transfer between peoples through recorded history. Neither of us could say what a competing or alternate form of government would have proffered in the same time frame. Speculation and conjecture do not sway the argument like facts. Perhaps if you have some of those….
I should have been more clear when I referred to Communist govts., I was referring to the Israeli Kibbutz system. They are true “Communist” organizations in the way that all the money are resources are redistributed to the members. But most would be right wing in their thinking, paradoxically.
I’m sorry, I must not be able to see where I wrote the words: “personal empowerment” and simultaneously defended Communism. Please tell me what you are referring to.
What you are missing, and it is a common error is that the system of Capitalism, like most theories suggests a fair playing field where the rights and privilege are transparent across the lines. We all know this is not true. It is the hope of success and mythos perpetuated that “YOU” will achieve “wealth” and happiness in your life via hard work and commitment that is ultimately false. It is a pleasurable lie to believe and likely the lie you want to hear. But that does not deliver the promises conveyed and ultimately adds to the frustration and disenfranchisement of the players.
Nor am I a Communist or a sympathizer for that style of government on a National level because as you said it has not been a successful model, and instead is a cover to appeal the ignorant masses. Then they are betrayed and abused. Sounds like religion when I think about it.
My anger comes from the arbitray use of the words Communism, Socialism, Marxism and Fascism (though only the first 2 were used here in this particular dialog…so far) being interchanged as if they were all synonyms. It is intellectually dishonest to suggest they are the same.
Countries that have government control of some sectors are arbitrarily called Socialist when it suits the narrative. However the United States has several Socialist style programs, mostly for senior citizens. These have been in place and have been enjoyed for generations. This fear of Govt. moving towards Socialism because of an attempt to manage corporate greed and corruption would be laughable if it weren’t so damn sad.
I await your well reasoned response.
“Keynesian economics and its variations are the standard by which government controls are applied to serve the public good.”
Well, I guess that settles that. I certainly can’t break that argument.
The rest of second paragraph exposes your willful blindness to reality. I suppose the banks made all those risky loans simply out of greed. I mean look at all the money they were going to make when the borrowers failed to pay the loans back.
“So if its a matter of putting up the collective bona fides of you, Doc Zero, and Stoessel up against Krugman, I’ll put a grand on a blind bet that you collectively do not stand up to him individually.”
Once again, then it is settled. Obviously it is impossible to be wrong once you get the PhD.
Israeli Kibbutz is a red herring. Membership in a kibbutz is not compulsory. Communism as a political system is always compulsory, since all the producers get up and leave the day it is implemented. The walls are not for decoration.
Speaking of facts, I submit the FACT that capitalism has generated the cheap computer. I will await your counter example. After all, speculation and conjecture do not sway the argument like facts.
“like most theories suggests a fair playing field where the rights and privilege are transparent across the lines. We all know this is not true. ”
Sure, capitalism is imperfect in this regard. Faced with this imperfection, your solution is to substitute a system in which success and failure is determined entirely by privilege.
“This is NOT left leaning or moving towards personal empowerment.”
Here you equate left leaning (which I take to mean enforced collectivism) with personal empowerment. Communism is enforced collectivism. What is unclear about this?
Ahh the corporate greed and corruption strawman. All those evil corporations, forcing us to buy their products and services. I have noticed, and perhaps you have not, that a corporation in FACT has no means with which to force me to buy anything. What you mistake for corporate corruption is actually the pure white marriage of business and government, doing exactly what business alone cannot do, forcing me and you to buy things or otherwise do their will. Your solution to this problem: increase the power and scope and size of government, preferably to infinity, and rely on the righteousness of our chosen rulers to keep things ‘fair’. I submit the FACT that this solution has not worked out too well in the past.
I don’t really expect to change your mind. It would, however, be refreshing to hear a person who calls himself “Veritas” be truthful and simply state in simple terms exactly what you are espousing. You state that we only need to have the right people in charge and we will all be on the road to utopia. Those of us who are part of the ignorant masses who fail to be enlightened can simply be swept aside. The FACT is that what I describe is the business model for tyrants the world over, and you are in favor of it.
@ Unmisinformed:
Now, I’m enjoying the discourse, but I need to interject here. You said:
That is exactly what they did. Rather than rely upon risky mortgages being paid individually, these risky ventures were packaged into high-yield securities and subsequently sold at a tremendous initial profit. These securities relied upon the notes being paid, yes, but that was only a long-term consideration. Make as much cash in the short term as you can and then rely upon something else later to compensate for expected losses (like TARP). I believe Veritas is absolutely correct when implying that capitalism is short-sighted.
@ DOne:
I won’t comment directly on your example because I don’t know much if anything about whole derivatives phase of the collapse.
I will ask you where you think all these risky loans came from? We seem to agree that there were very large numbers of risky loans made, otherwise there would not have been these derivatives packages to sell.
The loans were originally made due to various blackmails against banks, usually made to support some social engineering project (which are actually nothing but bought and paid for voting blocks, but that is a different discussion). I suspect that you are skeptical of this claim, but ask yourself why these banks made these loans when they knew they were just plain bad business.
A few banks making a few bad loans is to be expected. The huge numbers of bad loans that were made indicates that banks were coerced to act against their own best interests.
Central to my argument is the FACT (that word again) that banks lose money when they make bad loans and profit when they make good ones. One would expect that over the years (centuries really) banks have learned how to evaluate this risk pretty well. So not only does it seem likely that the banks did not make all these loans on their own accord, there is plenty of evidence that they were coerced.
I suspect that the whole derivatives things would not have been possible if the federal government had not implied (if not outright said) that bailouts would happen if things got bad.
Please note that nowhere here do I say or imply that the behavior of the derivative traders (if that is the correct term) was smart or ethical, implied bailouts or not.
What was short sighted was the belief that loaning money to people obviously without the means to pay it back was going to have a good outcome for anyone.
In this case there was precious little capitalism to be found.
Unmisinformed:
You should drop the “un” part of your named if only because its a double negative. Actually there are several reasons but that alone should be enough.
My willful blindness to reality? Really, really?
Perhaps, in fact more probably the banks realized that there was limited if any oversight and they could move the bad debt off their books while reaping a profit on both sides of the transaction. You should know that banks are loan originators and not mortgage holders in many cases. At least not holding their own toxic paper. This has been verified by cases in New York against Deutsche Bank which is a loan servicing company and collects and distributes mortgage payments without being an owner of the paper.
Thus when they attempted to foreclose and could not produce title to the properties they were taking legal action against the court threw out the case because they found the loan servicing company had no standing. The basic equivalent of ME trying to foreclose on YOU. I have no legal right to do so. Neither did Deutsche Bank with their loan servicing client.
The loans were bundled into mortgage backed securities, guaranteed by the rating agencies and then split into thousands of bonds and sold around the world. Then the banks who you feel couldn’t have predicted created hedge funds around said bonds. Then they went on to sell Collateral Debt Obligations and Swaps of said CDOs as insurance against default. Which was fine because they already moved the toxic assets off their books. Since they had no skin in the game why should they care if the loan defaults? Its only a statistic at that point.
I knew this was going to be a MAJOR F-ING PROBLEM when I owned a recruiting firm in Miami in 2005. First I called the housing bubble but sadly did not profit from it.
“Alas, how terrible is wisdom when it brings no profit to the man that’s wise!”
– Sophoclese Oedipus Rex
We were staffing for bank and brokerage firms. I got a lot of requests for brokers with experience in said products. It AMAZED that out of 300 qualified applicants NONE could explain how any of these products actually worked. Then I knew we had a real problem on the horizon.
So some Govt. oversight, such as Keynesian might favor, perhaps, would have helped. What do you think?
As to Krugman I guess I get to keep my $1000. I will feign surprise to not injure your ego….OK then…
Since a PhD is the terminal and apex academic degree and because Krugman is a both a Professor of the subject and a Nobel Prize winner its reasonable to say he is an expert in the field and likely a genius. You do not have to agree with him, though you can present nothing that counters his point. But calling him a “fool” does not strengthen your position or make you seem his intellectual superior. The result is antithetical to your desired conclusion. Plus the whole double negative thing in your name doesn’t help either.
Since living on a Kibbutz is a voluntary choice like remaining in a country the point was apropos to this discussion.
Capitalism created an environment that allowed cheap computers to be created. OK, was that point in contention? Or did you just need an easy win? You can have that one for free.
Then you went on to say:
“Sure, capitalism is imperfect in this regard. Faced with this imperfection, your solution is to substitute a system in which success and failure is determined entirely by privilege.
Actually I didn’t say anything that resembled that. I did not suggest a substitute system nor did I say I favored it. I realize its easier to create a straw man that throws up softballs so you can try to hit it out of the park with your reply, but bad news…you struck out again. Have you considered something less rigorous…like say…Croquet?
Left leaning is NOT forced collectivism. Left leaning as I intend it is a focus on the greater society but it is voluntary. You can choose not to play. If you want to share in the harvest then you farm, if you want to hunt and gather then you do. If you want to be on your own and have no government, but instead absolute personal freedom and discretion in all your decisions that would be fine too.
You are confusing the practices of dictatorships with “left leaning.” Dictators are right wing, regardless of what color flag they fly.
Corporations do not force you to buy directly. But they sell to the government that maintains the roads and arms the military. You pay for this in taxes. They sell you a car and gas and the sudry items and processed foods, but you have to work don’t you? And I trust you drive to work? Or do you grow all your own food and hunt for your meat? Of course you can, if you have time and energy. That would be a unique. Perhaps you drink well water and have solar panels. Do you have cable? Any real choice there? I mean beyond terrestrial or satellite? In fact you do HAVE to buy or live off the grid. But I’m not getting the sense you are the kind of fellow who can be too far from a premium coffee house. You don’t have to buy…but are you willing to give up EVERYTHING you need to in order to be free of the corporate yoke?
You go onto suggest I hold certain opinions or favor a particular outcome. This is a classic folly of so many internet bloggers. Please do 1 of 2 things:
1) Ask me what I believe and why I believe it.
OR
2) Deal with the facts presented and do not fly off on theories that are wrong from the word “go.”
Government will grow as society becomes more sophisticated. The historical record (Rome, China, England) have shown as the natural path. This will create a society too large to manage and it will fracture or fail. But that normally takes the better part of a millennium. So we have a little time. I want the government to regulate healthcare since they will not regulate themselves. Most industries promise self reform, they screwed us now its time for legislation. That is also the historical pattern.
You go on to remark to Done, that there was little capitalism found in the behavior of the banks.
Nothing could be further from the truth!!!
They followed the perfect model of creating a product, selling it for the value the market would pay and then moving onto the next one. There was no morality and no social conscious. Perfect capitalism really. Ultimately they exerted or bought control with the politicians and had themselves bailed out. Flawless victory, I applaud their single focus. Now it has been revealed they injured us. And I want my pound of flesh. Its odd that you do not seem to share that sentiment? Or am I wrong?
@ Unmisinformed:
Understood; however, you failed to add two central and important points to the discussion which may discredit the governmental strong-arming that you state:
1. Yes, there was governmental influence, realized in the Fed. Greenspan (Fed Chairman) kept interest rates steady and low during the ’90s and ’00s to stimulate lending. Banks, in true capitalist fashion, could charge seemingly “reasonable” rates to risky buyers (oh, 7-12% above prime) that would to the buyer, at least on paper, seem affordable.
2. Home prices at the end of the ’90s and the beginning of the new decade skyrocketed. Banks saw foreclosures as opportunities to actually make a profit, given the rate in which home prices were inflating. Sucker in a “questionable” homebuyer in 2001, charge him an exorbitant interest rate, front load the interest. If he pays, great! $$$. Otherwise, foreclose three years later when the home’s value has more than doubled, put it to auction, and make back more than the initial investment. $$$. Win-win.
What the short-sighted industry failed to realize (or possibly ignored) is that the real estate market could actually lose value. Once the bubble burst, the banks were receiving more and more foreclosed homes because the people that bought them realized that their property was not worth the mortgage payment and simply inflated the lifeboats. In the meantime, securities were bundled on the remaining loans to make as much cash as possible before the bottom dropped out.
Fannie and Freddy were the initial architects for this model. (Yes, I know that Harry Reid has been closely tied with these entities; however, the history shows that F & F’s donations and influence were not party-specific. Even old W. was spurring American lenders to “take a chance.”) Once the rest of the industry saw the cash pouring in, they mimicked their business plan in order to get their piece of the pie.
@ Veritas:
And, thanks for the correction (we were typing at the same time, I assume). I failed to offer that most of the banks didn’t even carry the notes after purchase. Wasn’t it Iceland that went bankrupt by holding these bonds? Ah, who cares? They ain’t American, anyway.
Veritas,
“The rhetoric, images and statements were leftist, but that is where the embrace of left leanings ideas ended. The only thing missing was the color of the uniform accents. The Soviets and their brethren used red instead of black. Otherwise they are indistinguishable in practice or depravity towards their citizens.”
Because we know this from history, we rightly fear that the structure of Communism and Socialism, as it is applied by we imperfect humans, inherently encourages the rise of “Totalitarian Dictatorships”. That is why we wish to stop this most recent acceleration of the Socialist trend started in this country so long ago. We feel this way especially in light of the most recent practitioner’s penchant for ignoring our Constitution.
Your long, thoughtful, educated discourse regarding the potential of these mostly failed ideologies misses the most important fact of all: we Americans who understand the basic comparisons of them don’t want them, won’t accept them, and will gladly shoot your dumb ass if you try to impose them on us.
@ Tom:
And you started out sounding so reasonable, but then threatened to “gladly shoot your dumb ass if you try to impose them on us.”
Why is it you clowns think you are the only people who own guns or know how to shoot. You are so scary Tom in your death threat as an opening volley in your communication with me. Tell me do you have to sneak up on a mirror because you might frighten yourself?
And yes, your last line puts you into the camp of the absurd people who brandish weapons and expect everyone to repel in fear. Not to rain on your parade tough guy, but I have guns pulled on me in the past. I’m still here.
Additionally you confirm my statement that Communism and Socialism are interchangeable. If you had time I would explain the substantial differences to you.
If all you have to offer the dialog is hollow death threats, please spare us all from your direct replies.
@ DOne:
Apparently they also paid off their fishing contracts instead of sending the fleet out to meet the contract demands because it was more profitable to go into banking.
I see it ended well for them.
I got asked to respond to this post from another conversation and it was going to be for private consumption but then I figured I was tired of the Red Necks I normally debate with and went hunting in deeper water. Normally they don’t threaten to shoot me until the 3rd or 4th volley. If you knew me, you would really appreciate just how funny and absurd these threats are.
Anyway, I may stay for a bit. I like this sort of thing and my tools have been rusty because on most of the boards where I have these little chats, there hasn’t been any big game hunting for a while now.
“If you knew me, you would really appreciate just how funny and absurd these threats are.”
Yes, I am sure your parents’ basement has incredible fortification.
@ Unmisinformed:
In your attempt to be both clever and insulting you are missing on both counts. But as I said in my first post those that cannot defend their positions choose to attack the person and not the argument.
Try again…but this time spare us the trite insults.
Veritas,
I did not threaten you (it’s an implied promise), nor do I speak of Communism and Socialism interchangeably. There is no need for you to explain anything to us. We know the differences very well, and reject them both on principle. No amount of your phony baloney intellectual blather is necessary. Oh, and yes, we fully expect that there are those who would oppose us with their own guns. Your puffed out chest and “tough guy” comment about being “still here” doesn’t impress anybody. Many of us have seen the bullets fly. So what?
We believe that the most possibilities are offered to the most people by our republican democracy with a capitalist economy constrained by our Constitution and the moral values of Judeo-Christianity. We see through history that this is born out time and time again as other ideas, mostly offered by elites with little or nothing else to do, result in incredible human suffering.
We also have seen that it is a short road, and we don’t intend to let a**holes like you or our current administration take us any farther down it than the a**holes of other administrations have already done. It is more than enough, and it ends now. Chit chatting about the pros and cons of failed ideas lends nothing to the times. Give us your best NEW idea or sit down and shut up.
Veritas, you are an idiot. You only see what you want to see. There is no point discussing facts with someone so based in perception. Yes, the parable is not factual, but you go on about ideal conditions. Read the article without your rose-glasses on. I love how you cherry pick your talking points which aren’t directly related to… well.. anything.
When your 401k is worthless, your job is non-existent, and your idyllic democratic socialists ruin the fun for everyone because of over-regulation, I hope you die a horrible death to the inefficient healthcare system that will soon be employed. Nobody will want to treat you… you’re not a congressman.
And yeah, Veritas ( Veritas (meaning truth) was the goddess of truth), should look up the meaning of ‘truth’. You only see the truth you want to, which does not make you a paragon of truth, it only makes you a liar, because there IS no thing as absolute truth unless you’re a goddess… of which, you’re not.
I don’t need to shoot you… the restless masses will be sure to do that when our economy collapses in epic failure… unless poignant voices save the day.
You sir, are not poignant. Or relevant. Or analytical, or smart, or cohesive. Your points are tired. Doc isn’t saying the Republicans are great. He’s saying we need to fix this TOGETHER. Dems f*cked us. Repubs f*cked us. He sees this and is pointing it out. You only spew Dem talking points. You’re not helping us. Doc at least inspires us.
@DocZero
I’m sorry.
@ Veritas: I was all ready to debate the idea that consumer demand does not drive the market… Throw in Mises’ demonstration of the impossibility of pricing in a socialist economy to deal with this “communism looks great on paper” garbage. Mention that maybe with the lousy economic trend over the past century we ought not be too impressed with a guy who got a Nobel in Econ.
But then this dope said there are problems in areas of the market with no government involvement like MORTGAGES and I realized anyone that dense has no hope.
Paul Krugman says there are no true scare stories about the Brirtish NHS? Has he actually been in a British hospital? Has he never read a British newspaper? Has he never spoken to a Brit about the state of the NHS? ignorance really is bliss and denial really is a river in Egypt. I’ve lived here 20 years and I try to avoid going to the doctors or into a hospital if at all possible. The Brits on the other hand are convinced that there system is the envy of the world despite all evidence to the contrary. They remain convinced also that US hospitals search your unconscious body for your health care details when you are admitted at the emergency room. Common sense, for so long a welcome British characteristic, long since departed…