A thread about the history of business and regulation

[Yoda]

In several other threads that touch on various political issues, various arguments about the relationship of government to business and the history of that relationship have kept cropping up. Since they rarely belong in those threads, I've created this one to house any such replies. I will first reply to this post by will.15 (http://www.movieforums.com/community/showthread.php?p=782344).

[Yoda]

That's not freedom for everyone, it is freedom for those who make it, and exploitation of those who don't with poor working conditions and low wages.That is the history of the 19th century. Government intervention created a higher standard of living for blue collar workers.
This is your only move, isn't it? When someone talks about free markets, all you can do is attack the straw man of no business regulations whatsoever. If that's the only card up your sleeve, stop playing, man.

Your logic about working conditions and wages is perplexing. If people take the jobs, it's because there are no better jobs, so you've now defined "exploitation" as offering someone the best job they can find. Like so many positions that are suspicious of markets, it is based on the idea that people have no idea what's good for them. It also betrays a pretty severe deficit of understanding about basic economics; regulations about conditions and wages raise the cost of hiring, which means we get less of it. So, in exchange for those better conditions for some workers, other workers don't work at all. In exchange for higher wages for some, some don't get wages at all. It does not create wealth, it consolidates it among some workers at the expense of others. I can point you to more on this, but I don't expect you'll read it, and if you do, I don't expect you'll engage it, anyway.

Not that it much matters, because your attempt to equate 19th century working condition regulation with current debates about abstract business regulation or tax policy doesn't wash, anyway.

Again, that's not what history teaches us.
Your forays into history on these topics never produce the evidence you seem to think they do, be it on monopolies or government intervention. It would be more accurate to say that's not what history teaches you.

That is the problem with ideologues, no exceptions and broad general statements, as if government bails out every industry that fails, which they don't. The auto industry wa an exception under unique circumstances brought on by by the mortgage debacle. Their problems existed before it, but it was the trigger that made their extinction an immediate danger. And what came of it? A good example of government succeeding. Capitalism was undermined, its very core? Ooh!
Ha. The auto bailout was not a success by any sane measure. If you care to renew that argument, the last post is right here (http://www.movieforums.com/community/showthread.php?p=759601). When it last left off you were trying your very best to pretend it wasn't a union giveaway, demonstrating major confusion about what was even being argued, and diluting the word "success" to the point of meaninglessness. Have at it.

That is because certain conserrvatives will always find a way to blame governent regulations for everything that goes wrong and ignore other explanations like deregulation.
No, it's because people are, when scared or nervous, completely unwilling to accept answers that don't involve action.

Feel like wasting both your time and mine with more flat assertions like this? Want to waste another 10 minutes saying "conservatives do this!" only to wait for me to point out that liberals do the opposite, and then remind you that neither is an argument? Because I've about had my fill of such pointlessness.

I can't disagree with that because I don't know what the heck you said. Did you just become Romney's speechwriter?
Go figure. It wasn't complicated.

[will.15]

[quote=Yoda;782355]This is your only move, isn't it? When someone talks about free markets, all you can do is attack the straw man of no business regulations whatsoever. If that's the only card up your sleeve, stop playing, man.

You talk about "freedoms" in absolute terms of the rights of business to do what they want, then you get upset when I bring up the example of the 19th century when they were closest to absolute freedom. I never have heard from you what regulation of business you find acceptable and have to assume based on your rhetoric that what you find acceptable is pretty minimal.

Your logic about working conditions and wages is perplexing. If people take the jobs, it's because there are no better jobs, so you've now defined "exploitation" as offering someone the best job they can find. Like so many positions that are suspicious of markets, it is based on the idea that people have no idea what's good for them. It also betrays a pretty severe deficit of understanding about basic economics; regulations about conditions and wages raise the cost of hiring, which means we get less of it. So, in exchange for those better conditions for some workers, other workers don't work at all. In exchange for higher wages for some, some don't get wages at all. It does not create wealth, it consolidates it among some workers at the expense of others. I can point you to more on this, but I don't expect you'll read it, and if you do, I don't expect you'll engage it, anyway.

See what I mean? This entire above paragraph is a justification for the shoddy way way workers were treated prior to the Progressive movement and the New Deal, and ignores how government intervention after World War II transformed the middle class particularly with the GI Bill and FHA loans.



Not that it much matters, because your attempt to equate 19th century working condition regulation with current debates about abstract business regulation or tax policy doesn't wash, anyway.

I didn't equate it, you did with your broad definition of freedom.

Your forays into history on these topics never produce the evidence you seem to think they do, be it on monopolies or government intervention. It would be more accurate to say that's not what history teaches you.

Of course it does because we have the type of regulation we have today because of the public reaction to the failures to an unregulated free market. My interpretation is based on the conventional assessment of mainstream economists and historians. It is extreme conservative and libertarian revisionists who in the last few decades have developed a distorted spin on events to justify their ideology.


Ha. The auto bailout was not a success by any sane measure. If you care to renew that argument, the last post is right here (http://www.movieforums.com/community/showthread.php?p=759601). When it last left off you were trying your very best to pretend it wasn't a union giveaway, demonstrating major confusion about what was even being argued, and diluting the word "success" to the point of meaninglessness. Have at it.

Not a success by any sane measure? They are doing well and paid off their loans. Even if it was a union giveaway, which it wasn't, it was still a success. I don't know what your definition of success is, but the industry in this country was close to extinction, even Ford, which didn't take government money, would have been in danger of going under if General Motors was liquidated because many of their auto suppliers would not have been able to survive without GM.

Sounds like again conservative ideological spin trying to rationalize a success that according to dogma should have been a failure. It is like scientific evidence in reverse. If the evidence contradicts the theory, instead of changing the theory you ignore the evidence and make up your own.


No, it's because people are, when scared or nervous, completely unwilling to accept answers that don't involve action.

Again, the history of the 19th century is government inaction is worse than government action. Four depressions (not recessions) in the 19th century versus one in the twentieth. Even the current economic situation never became a depression, but surely would have without government action.

Feel like wasting both your time and mine with more flat assertions like this? Want to waste another 10 minutes saying "conservatives do this!" only to wait for me to point out that liberals do the opposite, and then remind you that neither is an argument? Because I've about had my fill of such pointlessness.

But we are not actually talking about conservatives versus liberals. Not at all. We are talking about hard right ideological conservatives versus mainstream historians and economists. We are talking about one side who refuses to analyze anything with any type of objectivity.


Go figure it wasn't complicated.

You weren't saying anything that mattered. Both sides must be vigilant to avoid problems in the future. But if they can't agree with what they should be vigilant about it is like saying we should avoid war unless it is absolutely necessary. It means nothing

[will.15]

That should have been five 19th century depressions, not four.

[Yoda]

You talk about "freedoms" in absolute terms of the rights of business to do what they want, then you get upset when I bring up the example of the 19th century when they were closest to absolute freedom. I never have heard from you what regulation of business you find acceptable and have to assume based on your rhetoric that what you find acceptable is pretty minimal.
No, you don't have to assume anything. Especially given that you've done this exact thing before, and I've corrected you before. If you don't know something, ask. If you can't argue with things that are actually said, don't argue.

See what I mean? This entire above paragraph is a justification for the shoddy way way workers were treated prior to the Progressive movement and the New Deal, and ignores how government intervention after World War II transformed the middle class particularly with the GI Bill and FHA loans.
I'm still waiting for the part where you try to dispute any of it.

That said, only the disagreement with your use of the word "exploitation" is the only thing that resembles a justification. The rest is simply describing how such policies effect workers.

I didn't equate it, you did with your broad definition of freedom.
Nope, I didn't, and they're not comparable. Stop extrapolating beliefs.

Of course it does because we have the type of regulation we have today because of the public reaction to the failures to an unregulated free market. My interpretation is based on the conventional assessment of mainstream economists and historians. It is extreme conservative and libertarian revisionists who in the last few decades have developed a distorted spin on events to justify their ideology.
The problem is that you seem to view everything through that prism of what you think is "conventional" or "mainstream." That leaves you making inane arguments that rest on nothing but that, because when you encounter an actual argument to the contrary you seem perplexed and end up just insisting that it isn't conventional or mainstream. Which isn't an argument. This is maybe the tenth time I've pointed this out. You need to stop making me do that, man. It's getting ridiculous.

Seriously, just argue the facts. If you can't or won't, then you need to stop diving into these discussions. It's that simple. Argue. The. Facts. I realize this is not how you're used to arguing, but nothing else is worth a damn.

Not a success by any sane measure? They are doing well and paid off their loans. Even if it was a union giveaway, which it wasn't, it was still a success. I don't know what your definition of success is, but the industry in this country was close to extinction, even Ford, which didn't take government money, would have been in danger of going under if General Motors was liquidated because many of their auto suppliers would not have been able to survive without GM.
Yes, it was a union giveaway. There's no serious way to pretend otherwise; it was downright blatant. If you care to dispute it, I've laid out the stark facts in this post (http://www.movieforums.com/community/showthread.php?p=759601). I would love to hear anyone try to argue this.

The paragraph above is so, so telling: you clearly start with the assumption that we need to save the automakers, and everything else above follows from that. Do you not get that I'm questioning that very premise? Do you see that it takes 3-4 posts in every discussion before I can even get you to acknowledge the premise being questioned? Do you see that I have to machete my way through a thicket of presuppositions and non-arguments about what's conventional or mainstream?

Sounds like again conservative ideological spin trying to rationalize a success that according to dogma should have been a failure. It is like scientific evidence in reverse. If the evidence contradicts the theory, instead of changing the theory you ignore the evidence and make up your own.
Paragraphs like this tell me that you don't even really understand the philosophy you're trying to argue with. There is nothing about free market ideology that says a government loan will somehow not be repaid. Not a thing. That is not and never has been the argument, not in general, and not from me, specifically.

Between this and a dozen other such misunderstandings, I'm finding it very diffidcult to avoid the impression that you haven't made a good faith effort to understand or read about the thing you keep arguing with.

Again, the history of the 19th century is government inaction is worse than government action. Four depressions (not recessions) in the 19th century versus one in the twentieth. Even the current economic situation never became a depression, but surely would have without government action.
Yeah, you said this before, and listed an example. But the example crisis you gave that was allegedly caused by government inaction was, in fact, preceded by rampant government inflation which--surprise, surprise--produced malinvestment, as it almost always does.

As far as I can tell the problem is that you seem to act like government regulation is the only form of government interference, ergo less government regulation in the 19th century means government must not have had anything to do with crisis then. Unfortunately, that's simply not true: the government was not inactive or passive during those times.

But we are not actually talking about conservatives versus liberals. Not at all. We are talking about hard right ideological conservatives versus mainstream historians and economists. We are talking about one side who refuses to analyze anything with any type of objectivity.
I don't suppose you appreciate the comedy in talking about objectivity immediately after trying to make an argument that rests on something being mainstream, eh?

You weren't saying anything that mattered. Both sides must be vigilant to avoid problems in the future. But if they can't agree with what they should be vigilant about it is like saying we should avoid war unless it is absolutely necessary. It means nothing
No, it means nothing as an argument. You know why? Because it wasn't an argument. I was asked how we're supposed to stop problems from recurring and my answer was: vigilance. We have to keep on our elected leaders. How you could have a problem with this answer is beyond me. I think you're just trying to argue with whatever you see posted, even if there's no argument to be had.

[will.15]

[quote=Yoda;782393]No, you don't have to assume anything. Especially given that you've done this exact thing before, and I've corrected you before. If you don't know something, ask. If you can't argue with things that are actually said, don't argue.


I'm still waiting for the part where you try to dispute any of it.

That said, only the disagreement with your use of the word "exploitation" is the only thing that resembles a justification. The rest is simply describing how such policies effect workers.




I edited this down, but what they are describing makes what you wrote seem like a joke:


The War between Capital and Labor

...the two sides were indeed at war, with armies of armed men fighting on both sides. The level of human violence and destruction of property did in fact often create warlike conditions, a situation exacerbated by the fact that many workers were Civil War veterans. They declared themselves just as prepared to shoot a corporate hireling as they had been ready to kill a Yankee or a rebel. America’s captains of industry, who themselves often rose from very modest circumstances, saw workers as commodities to be dealt with like any raw material. Cold, ruthless, calculating and impervious to the negative effects of what they were doing, they hired their own armies to deal with recalcitrant laborers.

Capitalists often failed to understand their workers. Employers sought docile, sober workers who would do their jobs reliably without complaining. By 1880 five million Americans were engaged in manufacturing, construction, and transportation. They were paid employees, not producers and were dependent upon hourly wages and the good will of their employers. The worker was seen as “a mere machine”—he could not make the simplest decisions and had no self-respect. The degradation of the skilled labor class was one of the major grievances of labor. Wages were not enough to support a family—work was marred by inequities and corruption. Working families could survive only by “ruthless under consumption.” Workers were victims of business cycles—the winds of change swept many away. Piece work and lower wages were introduced to reduce labor costs. Whereas workers in earlier times had worked alongside their employers, now they were separated. Managers of large business rarely had personal contact with workers.

Women and Children in the Labor Force.
Many new jobs for women were created during the Industrial Age. From 1880 to 1900 the number of employed women went from 2.6 to 8.6 million. In 1880 4% of clerical workers were women; by 1920 the figure was 50%, but women could not get management positions. Although middle class married women were able to stay at home, among the poor, women—and children—had to work. (Truant officers who patrolled factories to get children into school were thwarted by struggling parents who needed the extra income.) A state of quasi-slavery existed where parents bound children to work, but child labor would not be squarely addressed until the Progressive Era. In the 19th century no special concern existed over children or women doing hard work—they had always worked within the family on farms or in family businesses. By 1890 18% of the labor force consisted of children between the ages of ten and fifteen.

Labor Conditions.
Industrial safety was a large issue: factory work was very dangerous, and it was difficult if not impossible to hold factory owners responsible for deaths and injuries. Around 1900 25-35,000 deaths and 1 million injuries per year occurred on industrial jobs. Many of the deaths occurred on railroad jobs, which were especially dangerous. Fires, machinery accidents, train wrecks and other misfortunes were common. No federal regulation of safety and no enforcement of state or local safety regulations existed. Insurance and pensions were rare, and courts were not sympathetic to worker claims; no liability was seen if the worker was negligent, or if the employer was not. The burden of proof was on the injured party to prove he or she had not been negligent—and it is difficult to prove a negative. Poor English was a problem; many workers could not read safety regulations or instructions on operating machines. Only about two percent of those injured or killed ever recovered on claims.
In all confrontations of the late 19th century, workers were generally losers. Immigrants and blacks were often targets of resentment because they were used as strikebreakers, or “scabs.” In general the union movement was secondary to the general struggle for jobs—in the labor game it was a buyers’ market. The age of industrialization was also the age of exploitation—of people, land, and resources.

The Great Railroad Strike of 1877. An economic depression in Europe in 1873, combined with the turbulence of the post-Civil War years, led to a collapse of the American economy. Banks and businesses failed, unemployment rose to 14% and those who retained their jobs saw wages cut to as little as one dollar per day. The recession continued through the centennial year of 1876, and in July, 1877, a railroad strike broke out in Martinsburg, West Virginia. The Baltimore and Ohio railroad cut workers’ wages for the second time in months, and workers refused to let trains move. The governor sent state militia to address the crisis, but the soldiers refused to take action against the workers. The strike soon spread to Cumberland and Baltimore, Maryland. The president of the Baltimore and Ohio railroad refused to meet with or listen to strikers demands, and when the Maryland governor called out two regiments of the National Guard, street fighting broke out in the city of Baltimore.
The strike and then spread to Pittsburgh, where the worst violence occurred. On July 21 Pennsylvania militia engaged in gun battle with armed workers and were driven into a railroad roundhouse. Sixteen men were killed and 39 buildings were set on fire. As the strikers grew bolder, 20 more men were shot the next day. As the strike spread further across the country, other state militias as well as Pinkerton detectives were called out to break the strikes, and the railroads brought in scabs to replace striking workers. In the end over 100 men were killed and the damage to railroad property totaled $100 million. People everywhere feared a revolution, and marches and demonstrations in New York, Chicago, St. Louis, and other cities included both men and women.

Pullman. Yet another breakout of labor militancy occurred at the Pullman Palace Car Company in Pullman, Chicago. George Pullman organized the Pullman sleeping car company in 1867 and created a company town. Pullman’s paternalism meant that the company controlled everything in the worker’s lives—banks, churches, schools, utilities, and so on. As one worker resident put it, “We are born in a Pullman house, fed from the Pullman shops, taught in the Pullman school, catechized in the Pullman Church, and when we die we shall go to the Pullman Hell”
In 1893 Pullman cut workers’ wages by 25-40% without lowering rents or other living costs in the town. He fired negotiators who tried to work through the situation.

[will.15]

Originally Posted by will.15 http://www.movieforums.com/community/images/buttons/lastpost.gif (http://www.movieforums.com/community/showthread.php?p=782381#post782381)
Of course it does because we have the type of regulation we have today because of the public reaction to the failures to an unregulated free market. My interpretation is based on the conventional assessment of mainstream economists and historians. It is extreme conservative and libertarian revisionists who in the last few decades have developed a distorted spin on events to justify their ideology.
The problem is that you seem to view everything through that prism of what you think is "conventional" or "mainstream." That leaves you making inane arguments that rest on nothing but that, because when you encounter an actual argument to the contrary you seem perplexed and end up just insisting that it isn't conventional or mainstream. Which isn't an argument. This is maybe the tenth time I've pointed this out. You need to stop making me do that, man. It's getting ridiculous.

Seriously, just argue the facts. If you can't or won't, then you need to stop diving into these discussions. It's that simple. Argue. The. Facts. I realize this is not how you're used to arguing, but nothing else is worth a damn.

You haven't presented any facts, just ideological arguments only accepted by ideologues. Non ideologues don't accept them. I have not cited leftist arguments, but the interpretation of history by mainstream historians.

[will.15]

Quote:
Originally Posted by will.15 http://www.movieforums.com/community/images/buttons/lastpost.gif (http://www.movieforums.com/community/showthread.php?p=782381#post782381)
Not a success by any sane measure? They are doing well and paid off their loans. Even if it was a union giveaway, which it wasn't, it was still a success. I don't know what your definition of success is, but the industry in this country was close to extinction, even Ford, which didn't take government money, would have been in danger of going under if General Motors was liquidated because many of their auto suppliers would not have been able to survive without GM.

Yes, it was a union giveaway. There's no serious way to pretend otherwise; it was downright blatant. If you care to dispute it, I've laid out the stark facts in this post (http://www.movieforums.com/community/showthread.php?p=759601). I would love to hear anyone try to argue this.

We have already done this dance and debated this way, way back and it is irrelevant anyway to this specific discussion to if the government loan was a success or failure. There is no need to provide a link to something I already read and answered (even if you don't accept my response).

The paragraph above is so, so telling: you clearly start with the assumption that we need to save the automakers, and everything else above follows from that. Do you not get that I'm questioning that very premise? Do you see that it takes 3-4 posts in every discussion before I can even get you to acknowledge the premise being questioned? Do you see that I have to machete my way through a thicket of presuppositions and non-arguments about what's conventional or mainstream?

We were talking about success or failure of saving the auto industry with government money, not if it should have been done or not in the first place. And that is the only criteria that can be used to determine if it succeeded and it did. Your argument is not connected to success or failure, but should it have been done or not in the first place. It is an ideological argument about the role of government. There is nothing in any of your statements that shows it was a failure, which was what you originally said.

[Yoda]

I edited this down, but what they are describing makes what you wrote seem like a joke:
Yeah, see, this is exactly what I thought would happen: that you'd post something (unsourced, naturally) that talked about labor conditions and strikes in general without addressing anything I said at all. So either you don't understand the arguments, or you're ignoring them willfully.

Seriously, please show me where it addresses either of the things I said about available jobs (actually, some of what you posted supports that) or, more importantly, about how such regulations only consolidate wealth. I see nothing that has anything to do with either.

[Yoda]

You haven't presented any facts, just ideological arguments only accepted by ideologues. Non ideologues don't accept them. I have not cited leftist arguments, but the interpretation of history by mainstream historians.
Here we go again. Another reply talking about how you shouldn't have to reply, and such-and-such will only convince so-and-so. I've explained half a dozen times why this is not an argument. Referring back to how "mainstream" something is is an excuse not to think that you draw from far too often.

If you can't tell me why something is wrong (not unusual, or unpopular, or unconventional, or ideological, or anything else like that), then you simply don't have anything to say.

[Yoda]

We have already done this dance and debated this way, way back and it is irrelevant anyway to this specific discussion to if the government loan was a success or failure. There is no need to provide a link to something I already read and answered (even if you don't accept my response).
You didn't answer that post, though. Which is fine, except that this wasn't an example of us coming to a genuine impasse, either; there were things you never even remotely addressed, and several you confused with other issues. I still to this day have no clue what argument you think you had there. It was an absolute mess.

Regardless, if you want to argue about the auto bailout or make claims about it, argue it there, please. I see no serious way to make these claims, and so I will refer you back to it as many times as I have to.

We were talking about success or failure of saving the auto industry with government money, not if it should have been done or not in the first place. And that is the only criteria that can be used to determine if it succeeded and it did. Your argument is not connected to success or failure, but should it have been done or not in the first place. It is an ideological argument about the role of government. There is nothing in any of your statements that shows it was a failure, which was what you originally said.
What's the value of that? There's no reason to grant them the ability to determine their own yardstick for success. By that measure, you can't argue with the Iraq War being a "success" if Bush says all they really had to do was depose Saddam. But that would be ridiculous. We judge the decision, we judge the validity of the goal itself, and we judge the execution. You can't defend the action simply by pointing to its own goals when the validity and prudence of setting those goals is the whole point of the argument.

[will.15]

Quote:
Originally Posted by will.15 http://www.movieforums.com/community/images/buttons/lastpost.gif (http://www.movieforums.com/community/showthread.php?p=782381#post782381)
Again, the history of the 19th century is government inaction is worse than government action. Four depressions (not recessions) in the 19th century versus one in the twentieth. Even the current economic situation never became a depression, but surely would have without government action.

Yeah, you said this before, and listed an example. But the example crisis you gave that was allegedly caused by government inaction was, in fact, preceded by rampant government inflation which--surprise, surprise--produced malinvestment, as it almost always does.

I didn't say it was caused by government inaction. I said it was caused by the free market president, Andrew Jackson, and he did it through deregulation, by eliminating the Bank of the United States (a quasi public institution) and depositing federal funds in state banks and allowing them to issue private currency.

As far as I can tell the problem is that you seem to act like government regulation is the only form of government interference, ergo less government regulation in the 19th century means government must not have had anything to do with crisis then. Unfortunately, that's simply not true: the government was not inactive or passive during those times.

Government is never completely inactive or passive, but the best example of the free market at work without government regulation is the 19th century and its economic record is not very impressive. Compare the United States after 1941 versus the 19th century and what do we see? Five depressions versus five recessions in the 20th century and the current situation in the 21st

[Yoda]

I didn't say it was caused by government inaction. I said it was caused by the free market president, Andrew Jackson, and he did it through deregulation, by eliminating the Bank of the United States (a quasi public institution) and depositing federal funds in state banks and allowing them to issue private currency.
You said the history of inaction was worse than the history of action, and then mentioned those examples. I'm not sure how to take that other than as you blaming government inaction. As for the "free market president"--that's one of the problems. The fact that we don't talk about free market policies, but free market presidents, and thus anything they do gets lumped under the free market ideology whether it fits or not, the same way Bush's policies are described as free market, even as they include bailouts and a massive prescription drug benefit, for example.

The example you provided involved massive government inflation. That is not the government being inactive and passive, that is government skewing the market in a substantial, far-reaching way that directly feeds into the crisis, which was about malinvestment. This requires no leaps of faith: there is a directly line between inflated credit and malinvestment.

Government is never completely inactive or passive, but the best example of the free market at work without government regulation is the 19th century and its economic record is not very impressive. Compare the United States after 1941 versus the 19th century and what do we see? Five depressions versus five recessions in the 20th century and the current situation in the 21st
The 19th century is not a good example of the free market at work by any stretch of the imagination, and I'm not sure why you're just repeating that claim over again. It was just interfering in other ways than regulation; all regulation is government intervention, but not all government intervention is regulation. The depressions you're talking about are not market failures: they're accompanied by things like inflated credit (1830s), pointless trade wars (late 1820s), and other policies that are in no way consistent with free market principles.

[will.15]

Quote:
Originally Posted by will.15 http://www.movieforums.com/community/images/buttons/lastpost.gif (http://www.movieforums.com/community/showthread.php?p=782417#post782417)
We were talking about success or failure of saving the auto industry with government money, not if it should have been done or not in the first place. And that is the only criteria that can be used to determine if it succeeded and it did. Your argument is not connected to success or failure, but should it have been done or not in the first place. It is an ideological argument about the role of government. There is nothing in any of your statements that shows it was a failure, which was what you originally said.

Yoda:
What's the value of that? There's no reason to grant them the ability to determine their own yardstick for success. By that measure, you can't argue with the Iraq War being a "success" if Bush says all they really had to do was depose Saddam. But that would be ridiculous. We judge the decision, we judge the validity of the goal itself, and we judge the execution. You can't defend the action simply by pointing to its own goals when the validity and prudence of setting those goals is the whole point of the argument.

Me:
I'm not following your point here at all. And are you conceding the Iraq War was a failure?

[Yoda]

I'm saying that you can't call something a success or a failure based only on its own stated goals: questioning those goals in the first place is part of evaluating it. If a program says it wants to hire people to dig holes in the ground and then fill them back up, then by your logic it is a "success," even though it's completely pointless.

[will.15]

You said the history of inaction was worse than the history of action, and then mentioned those examples. I'm not sure how to take that other than as you blaming government inaction. As for the "free market president"--that's one of the problems. The fact that we don't talk about free market policies, but free market presidents, and thus anything they do gets lumped under the free market ideology whether it fits or not, the same way Bush's policies are described as free market, even as they include bailouts and a massive prescription drug benefit, for example.

The example you provided involved massive government inflation. That is not the government being inactive and passive, that is government skewing the market in a substantial, far-reaching way that directly feeds into the crisis, which was about malinvestment. This requires no leaps of faith: there is a directly line between inflated credit and malinvestment.

The inflation was not caused by deliberate governemnt policy. It was caused by passivity, yes, inaction, by not regulating, by allowing private banks to introduce currency into the financial system.

The 19th century is not a good example of the free market at work by any stretch of the imagination, and I'm not sure why you're just repeating that claim over again. It was just interfering in other ways than regulation; all regulation is government intervention, but not all government intervention is regulation. The depressions you're talking about are not market failures: they're accompanied by things like inflated credit (1830s), pointless trade wars (late 1820s), and other policies that are in no way consistent with free market principles.
So let's get down to specifics. How much regulation should there be in your ideal free market system? Should we disband the Federal Reserve, return to the gold standard, and eliminate how many regulatory agencies and throw out how many laws protecting workers? Eliminate compulsory workers compensation, the forty hour work day, and child labor laws?

[will.15]

Yeah, see, this is exactly what I thought would happen: that you'd post something (unsourced, naturally) that talked about labor conditions and strikes in general without addressing anything I said at all. So either you don't understand the arguments, or you're ignoring them willfully.

Seriously, please show me where it addresses either of the things I said about available jobs (actually, some of what you posted supports that) or, more importantly, about how such regulations only consolidate wealth. I see nothing that has anything to do with either.
Yeah, I didn't provide a direct link to the source. I even edited out two of the cited sources because it took away from the narrative. So are you disputing the facts it presents? Facts are facts, what do I need to cite a source for? There is nothing controversial or in dispute here.

What you were saying suggested labor and business in an unregulated free market are on equal terms and they are not, business has the upper hand and uses it to exploit workers. Clearly, the history of the 19th century contradicts your claim regulations consolidates wealth. The consolidation of wealth occurs without regulation.

You don't seem to understand the ramifications of your own arguments. The 19th century contradicts your utopia view of labor and business in a utopian free market that never was and never will be. Government laws and regulations tries to put both labor and business on an equal footing. You could argue from your point of view it favors labor too much (and people on the other end of the political spectrum would argue the opposite), but without an attempt by government to create a balance business is in the driver's seat to run roughshod over workers.

[Yoda]

The inflation was not caused by deliberate governemnt policy. It was caused by passivity, yes, inaction, by not regulating, by allowing private banks to introduce currency into the financial system.
Since when is letting banks create their own currency a free market principle? We're not talking about State of Nature here, man.

So let's get down to specifics. How much regulation should there be in your ideal free market system? Should we disband the Federal Reserve, return to the gold standard, and eliminate how many regulatory agencies and throw out how many laws protecting workers? Eliminate compulsory workers compensation, the forty hour work day, and child labor laws?
The forty hour work day? Sure, I'm against that. ;) I'm against any metaphysical impossibility.

Serious response: I think we should return to the gold standard, yes; not because I think it's perfect, but because government clearly cannot be trusted with such dramatic control over the currency. I don't know if I would completely eliminate most regulatory agencies or not; it would have to be case-by-case. But just as we have the BB, the AHAM, and Consumer Reports even now, fewer regulations would increase the demand for more such organizations. As long as people want this, there will be financial incentives for businesses to participate. It'll never be perfect, but it isn't perfect now, either.

Re: child labor laws. Yes, I'm for them, at least on some level, for the same reasons I'm for age of consent laws: kids aren't always capable of making informed choices. However, depending on how flexible they are (I'm not up on whatever the latest is), they might need to be modernized. There's nothing wrong with a 13 or 14 year old doing programming work, as I did at that age, or something else similarly sedentary.

Re: worker regulations. Well, let's talk about what would happen if we removed them. While I'm sure many people just imagine a reversion to a world of expendable air brakemen or something, the danger of jobs in the past was primarily a product of a lack of wealth. Today, our collective wealth is such that, if you removed these regulations, people would be in a position to demand self-imposed compensation packages or protections. Worker protections would be part of their compensation, which is what happens anyway: all requirements that we work safer ultimately mean we work for less.

That's the tradeoff, regardless of whether or not it happens through free markets or government regulation. All government regulations in this area do are force people to take a part of their compensation in the form of certain safety procedures and standards. But as much as people probably hate staring that choice in the face, it's a part of life. When I buy a car I have to weigh its cost (older, cheaper) versus its benefits (newer, safer), too. I would be safer if I got my brakes checked every single morning, but I make the calculation that I don't usually need to and I save money as a result. People have to make the same calculation when joining the military. We have no problem with people making these tradeoffs between money and safety; why do you think workplace conditions should be different?

[Yoda]

Yeah, I didn't provide a direct link to the source. I even edited out two of the cited sources because it took away from the narrative. So are you disputing the facts it presents? Facts are facts, what do I need to cite a source for? There is nothing controversial or in dispute here.
Nope, not disputing them as facts, at least not at the moment. But I want to see the context for myself; it might matter. I don't think that's unreasonable.

What you were saying suggested labor and business in an unregulated free market are on equal terms and they are not, business has the upper hand and uses it to exploit workers. Clearly, the history of the 19th century contradicts your claim regulations consolidates wealth. The consolidation of wealth occurs without regulation.
How are you disputing the idea that worker regulations consolidate wealth? The mechanics are insanely simple: it costs more to comply with such regulations. Higher costs mean less employment, either through firing, less hiring, or less expansion (from existing businesses or new ones). Thus, worker regulations benefit some workers at the expense of others. Same as minimum wage laws: if you make the cut, you're better off. If you don't, you're worse off. Same amount of wealth consolidated in fewer hands.

I don't think labor and business are on "equal terms." I think that when one has the upper hand (and it's not explicitly because of government with its thumb on the scale) it's because of an underlying economic reality, and not by the whim of some robber baron. If it were easy for someone else to succeed by doing the same thing, but with more appealing working conditions, there's nothing to stop them.

You don't seem to understand the ramifications of your own arguments. The 19th century contradicts your utopia view of labor and business in a utopian free market that never was and never will be. Government laws and regulations tries to put both labor and business on an equal footing. You could argue from your point of view it favors labor too much (and people on the other end of the political spectrum would argue the opposite), but without an attempt by government to create a balance business is in the driver's seat to run roughshod over workers.
I don't think a free market would be utopian; nothing is utopia here on Earth. I think it's generally the best option compared to all the others, and I think people credit government intervention with the fruits of increased economic growth based on correlation, rather than causality.

[Deadite]

Explain your position on environmental regulations, Yoda.

[Yoda]

Heh. I love how much that sounds like a demand.

It's a vague question, so it's going to receive a similarly vague answer, but my general attitude towards environmental regulation is different than my attitude towards business regulation. Many businesses regulations interfere with free people making mutually agreed upon decisions that they themselves bear the consequences for. But environmental regulations are different: they are, at least ideally, about stopping people from abusing public resources. It's a totally different calculus, because the effects of the decisions can be directly felt by people who had no say in them. So the arguments I've made about workplace regulations wouldn't generally apply, if that's what you're wondering.

[DexterRiley]

http://i54.tinypic.com/16atpjd.jpg

[Powdered Water]

@ Chris

I have a question. I know you haven't seen Inside Job yet. Which is a pity, I hope you'll make time for it at some point, but anyway.

What are your thoughts about where we are now? Are we "better off" now than were were before the collapse in 2008?

I know that our current President has made little to no change in any of the regulations that were systematically dissolved in order for the rich to make these big cash grabs and at the same time start a huge recession. Are you in favor of putting regulations back in place to prevent these huge financial companies from doing the same thing all over again after the heat dies down?

Do you have an opinion on the fact that most of the people directly responsible for large chunks of the collapse are still involved in key positions of government?

[DexterRiley]

http://i53.tinypic.com/2yvpcsk.jpg

[Deadite]

Heh. I love how much that sounds like a demand.

It's a vague question, so it's going to receive a similarly vague answer, but my general attitude towards environmental regulation is different than my attitude towards business regulation. Many businesses regulations interfere with free people making mutually agreed upon decisions that they themselves bear the consequences for. But environmental regulations are different: they are, at least ideally, about stopping people from abusing public resources. It's a totally different calculus, because the effects of the decisions can be directly felt by people who had no say in them. So the arguments I've made about workplace regulations wouldn't generally apply, if that's what you're wondering.

And business regulations just get in the way of "mutually agreed upon decisions" that aren't "directly felt by people who had no say in them"?

Like, say, when financial institutions wreck the economy with predatory lending and a fraudulent derivatives market?

That doesn't affect people who had no say in them?

It is the fault of government for tying the hands of business and preventing them from behaving ethically? If there were less regulation, these businesses would be able to do the right thing?

That kind of different?

[Yoda]

I can reply to both of you with the same thing: no, because I don't agree with the underlying assumptions about the cause of the crisis. Our disagreement is largely factual. We differ about who is primarily responsible, not on the nature of morality or responsibility. I could ask you both rhetorical questions that assume the very thing being disputed, too, but it would serve no purpose.

Three quick answers to more specific questions:

What are your thoughts about where we are now? Are we "better off" now than were were before the collapse in 2008?
Sort of. We're better off in the sense that we have the same problems, but are actually wrestling with them, at least. At least now we know, and are beginning to question things we were not questioning before. That's progress.

I know that our current President has made little to no change in any of the regulations that were systematically dissolved in order for the rich to make these big cash grabs and at the same time start a huge recession. Are you in favor of putting regulations back in place to prevent these huge financial companies from doing the same thing all over again after the heat dies down?
No, because I don't think systematically dissolved regulations are or were the problem.

Do you have an opinion on the fact that most of the people directly responsible for large chunks of the collapse are still involved in key positions of government?
Yes. I have a very negative opinion of that fact.

[DexterRiley]

No, because I don't think systematically dissolved regulations are or were the problem.



I'll take "Things that only persons not having Seen Inside Job could possibly say" for $1000 Alex.

[Yoda]

Man, you really think Inside Job is magic, don't you? As if nobody could possibly disagree with you once they've seen it.

Well, I've seen a third of it (and I'll finish it just as I said I would) and it looks far from unassailable so far. I greatly look forward to finishing it, posting my thoughts and issues with it, and having those thoughts and issues completely ignored or used to suggest I watch some other magic movie that will finally devastate my beliefs and leave me with no rational choice but to agree with you completely.

[Deadite]

i'll take "things that only persons not having seen inside job could possibly say" for $1000 alex.

:D

Don't worry, everything will be all better once Gubbermint stops forcing banks to give poor people loans.

[Yoda]

Or maybe it'll get better when they stop backing mortgage-based securities and wildly inflating credit. Though your sarcasm is kind of hysterical given that you were calling giving poor people loans "predatory lending" before.

Seriously, though, great argument, misspelling the word government ironically. That's quality debate. Cicero would crap himself.

[Deadite]

http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html

[Yoda]

http://reason.com/archives/2011/03/04/the-truth-about-fannie-and-fre/singlepage

I started writing a "real" reply, but I've seen how that goes, so I'll put exactly as much thought into my reply as you put into yours.

[Deadite]

http://www.businessweek.com/investing/insights/blog/archives/2008/09/fannie_mae_and.html

[Yoda]

Yeah, I have no interest in some mindless link war. If you want to involve yourself in a discussion, be prepared to have a discussion. If you're not, there's the door.

[will.15]

Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data in much greater detail than Wallison, Pinto, or myself, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve, have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
The other side has virtually no research conducted that explains their argument, with one exception that I’ll cover below.
4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.

My personal favorite is Cato’s “Should CRA Stand for ‘Community Redundancy Act (http://www.cato.org/pubs/regulation/regv23n3/gunther.pdf)?’” from 2000 (here’s a write-up (http://baselinescenario.com/2009/11/19/cra-bashing-nth-generation/) by James Kwak), which argues a position amplified in its 2003 Handbook for Congress financial deregulation chapter (http://www.cato.org/pubs/handbook/hb108/hb108-21.pdf): “by increasing the costs to banks of doing business in distressed communities, the CRA makes banks likely to deny credit to marginal borrowers that would qualify for credit if costs were not so high.” Replace “marginal” with Bloomberg’s “on the cusp” and you get the same idea.
Bill Black went through (http://therealnews.com/t2/index.php?option=com_content&task=view&id=555&Itemid=) what AEI said about the GSEs during the 2000s and it is the same thing — that they were blocking subprime loans from being made. In the words of Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”

[Deadite]

Yeah, I have no interest in some mindless link war. If you want to involve yourself in a discussion, be prepared to have a discussion. If you're not, there's the door.

http://www.ritholtz.com/blog/2011/07/why-wallison-is-wrong-about-the-genesis-of-the-u-s-housing-crisis/

[Yoda]

Did Fannie and Freddie buy high-risk mortgage-backed securities? Yes. But they did not buy enough of them to be blamed for the mortgage crisis. Highly respected analysts who have looked at these data in much greater detail than Wallison, Pinto, or myself, including the nonpartisan Government Accountability Office, the Harvard Joint Center for Housing Studies, the Financial Crisis Inquiry Commission majority, the Federal Housing Finance Agency, and virtually all academics, including the University of North Carolina, Glaeser et al at Harvard, and the St. Louis Federal Reserve, have all rejected the Wallison/Pinto argument that federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages over the past decade.
The other side has virtually no research conducted that explains their argument, with one exception that I’ll cover below.
4. Conservatives sang a different tune before the crash: Conservative think tanks spent the 2000s saying the exact opposite of what they are saying now and the opposite of what Bloomberg said above. They argued that the CRA and the GSEs were getting in the way of getting risky subprime mortgages to risky subprime borrowers.

My personal favorite is Cato’s “Should CRA Stand for ‘Community Redundancy Act (http://www.cato.org/pubs/regulation/regv23n3/gunther.pdf)?’” from 2000 (here’s a write-up (http://baselinescenario.com/2009/11/19/cra-bashing-nth-generation/) by James Kwak), which argues a position amplified in its 2003 Handbook for Congress financial deregulation chapter (http://www.cato.org/pubs/handbook/hb108/hb108-21.pdf): “by increasing the costs to banks of doing business in distressed communities, the CRA makes banks likely to deny credit to marginal borrowers that would qualify for credit if costs were not so high.” Replace “marginal” with Bloomberg’s “on the cusp” and you get the same idea.
Bill Black went through (http://therealnews.com/t2/index.php?option=com_content&task=view&id=555&Itemid=) what AEI said about the GSEs during the 2000s and it is the same thing — that they were blocking subprime loans from being made. In the words of Peter Wallison in 2004: “In recent years, study after study has shown that Fannie Mae and Freddie Mac are failing to do even as much as banks and S&Ls in providing financing for affordable housing, including minority and low income housing.”
More unsourced quotes; just what I wanted for Christmas! Nevermind the unanswered ones in the other thread. We can just start over every time, I guess, like banging your head against an entirely new wall. In that thread, by the way, you specifically challenged me to specifically produce three things (one about your behavior in the discussion, one about whether or not one link refuted another, and one about an actual example of a bank being rejected for having a low CRA score), and I produced all three. No response.

The suggestions there are directly refuted here (http://mercatus.org/publication/gambling-other-peoples-money#sec7). At least, insofar as you can contradict something without any actual data in it. I suspect the escape hatch phrase is trying to contradict the idea that "federal affordable housing policies were responsible for the proliferation of actual high-risk mortgages." That's claim gives them a ton of wiggle room. For one, it doesn't specify whether or not "federal affordable housing policies" includes what we're actually talking about: gobbling up mortgage securities. For another, it could just mean that the majority were not bought up by F&F, which is true, but does absolutely nothing to dispute the claim that they had a huge influence on the market.

[Yoda]

http://www.ritholtz.com/blog/2011/07/why-wallison-is-wrong-about-the-genesis-of-the-u-s-housing-crisis/
...and we're done. Thanks for making it easy.

[Deadite]

...and we're done. Thanks for making it easy.

http://www.washingtonpost.com/business/what-caused-the-financial-crisis-the-big-lie-goes-viral/2011/10/31/gIQAXlSOqM_story_1.html

[will.15]

As that link shows conservative think tanks were saying the opposite in the early 2000s, that F&F and CCA were discouraging sub-prime loans. It hows what I already suspected, right wing ideologues change their arguments so government is always the villain. When the sub-prime loans were flourishing, they criticize government for restricting them. When the market crashed, it is now government's fault for encouraging loans they earlier said they were trying to limit. Government can't win when the libertarian think tanks are doing their rigged studies and analysis.

[Yoda]

Congratulations on winning the non-existent argument about whether there are ideologues out there who will change their tune to fit an agenda. Any comment on the argument we're actually having?

[will.15]

They were championing sub-prime loans then they change their tune when all it goes blooey. It isn't coming from radio talk show yahoos, but academics associated with think tanks.

[Yoda]

So what? They're not the Emperors of Conservatism. If we can just pick people with similar ideologies who were wrong on this issue, or have since changed their tune, that's not going to bode well (http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html?pagewanted=3&src=pm) for the other side of the issue (http://dailycaller.com/2010/05/13/dems-block-reform-of-corrupt-mortgage-giants/), either. But neither has anything to do with the actual cause of the crisis, which was the topic of discussion last I checked.

[Deadite]

http://real-estate-and-urban.blogspot.com/2011/07/mark-thoma-and-dean-baker-are-correct.html

The most disturbing part of the attacks on the GSEs is that it is an indirect method for blaming minorities and the poor for the financial crisis, an argument that is at once ludicrous, disingenuous, and reprehensible.

[Deadite]

Bloomberg?s Awful Comment; What Can We Say For Certain Regarding the*GSEs?

http://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/

[Yoda]

Man, we're doing this one again? That's like the fourth time you've expressed your contempt for a "blame minorities" strategy. But even the conservatives who think coerced minority lending was the primarily culprit still usually lay the blame at the government's feet.

Regardless, this is a discussion thread, not a link farm. I started it to have a discussion about a specific topic, not to be flooded with links of zero context and dubious relevance to the topic it was initially created for. More of the same will be deleted.

If you want to start your own thread that consists of nothing but links to articles, go right ahead.

[Deadite]

You have been harassing me in PM for the last half-hour or so about reading a list of links you provided, so don't you think you're being at least a little hypocritical?

[Yoda]

"Harassing" is a pretty strange characterization. And no, it's not remotely hypocritical, for two reasons:

1) I'm not doing it instead of having a discussion. It doesn't actually detract from the discussion in any way.

2) I didn't send them to you with any expectation or presumption that you had to reply to them. If you do, hey, great, but they were only proving a point: that anyone can just post a bunch of links, and reasonable people do not discuss things by talking past each other and seeing who can amass the most of them.

[Deadite]

It's pretty convenient to dismiss links you disagree with while pushing your own, I think.

As for harassing, yes, you've been hassling me for actually more like two or three hours, haven't you? I truthfully hadn't been giving you my full attention so I didn't realize it had been going on that long. I told you several times I would read the two links you said were best. The rest of it was you making guesses about hidden meanings in my posts, far as I could tell.

Isn't that fair enough?

[will.15]

So what? They're not the Emperors of Conservatism. If we can just pick people with similar ideologies who were wrong on this issue, or have since changed their tune, that's not going to bode well (http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html?pagewanted=3&src=pm) for the other side of the issue (http://dailycaller.com/2010/05/13/dems-block-reform-of-corrupt-mortgage-giants/), either. But neither has anything to do with the actual cause of the crisis, which was the topic of discussion last I checked.
The first link I didn't quite understand the point of linking it and the second link is worded in such an incredibly biased way, stating as fact things that are actually in dispute, it is impossible to trust it as a reliable source for what it is supposedly reporting. I would never post a supposed news item that used that type of incendiary language.

[Yoda]

It's pretty convenient to dismiss links you disagree with while pushing your own, I think.
Yes, it is. That's the entire point. That you just posted a link and then kept posting links, ignoring other links and the discussion at large. Trying to participate through only posting links is ridiculous. This. Was. My. Point.

As for harassing, yes, you've been hassling me for actually more like two or three hours, haven't you? I truthfully hadn't been giving you my full attention so I didn't realize it had been going on that long. I told you several times I would read the two links you said were best. The rest of it was you making guesses about hidden meanings in my posts, far as I could tell.
If you think that's "harassing," then you have an absolutely crazy conception of the word. I sent you a message, you replied, and I replied to your reply. I didn't pester you with messages, nor insist that you respond or engage at all. You chose to.

[Yoda]

The first link I didn't quite understand the point of linking it and the second link is worded in such an incredibly biased way, stating as fact things that are actually in dispute, it is impossible to trust it as a reliable source for what it is supposedly reporting. I would never post a supposed news item that used that type of incendiary language.
The first link has Barney Frank insisting that Fannie and Freddie have no financial problems; I believe he's since admitted otherwise. The language of the second doesn't matter, because I can give you literally dozens of sources about the legislation, and I wasn't posting it for the guy's rhetoric, but for the event he's talking about.

The point, which you seem to be veering wildly out of your way to avoid, is that none of this is an argument against any claim about how the crisis came to be.

[Deadite]

Don't get me wrong, I'm not mad. It was both annoying and amusing. I'm not saying you're a stalker or anything ridiculous like that, Yoda, only that you had already made your point early on and I didn't see any more point for you to keep pushing, plus how you kept telling me what my posts meant. It was kind of frustrating. Maybe I misunderstood, but I don't think so.

If you want to, you can post that conversation on the forum, if you think I'm wrongly accusing you of anything. I don't mind at all, but otherwise I'm just saying enough's enough.

[will.15]

I don't think most people reading those links would have understood your point without you specifically highlighting it. And the point your making isn't comparable. Barney Frank conceded he was wrong. Those guys didn't admit anything, they just changed their tune. And how valid can the current think tank argument criticizing government institutions be when they were saying the exact opposite before the whole thing exploded? Saying the Maes and Macs needed more government oversight isn't the same thing as conceding they caused the housing loan mess. I would accept as reasonable a position that listed them as factor, but to put the the entire blame on them and excusing the insane practices of the banking industry is just a case of ideological blinders. It is based on the bizarre notion business only acts stupid and greedy when government makes them do it.

[Yoda]

Don't get me wrong, I'm not mad. It was both annoying and amusing. I'm not saying you're a stalker or anything ridiculous like that, Yoda, only that you had already made your point early on and I didn't see any more point for you to keep pushing, plus how you kept telling me what my posts meant. It was kind of frustrating. Maybe I misunderstood, but I don't think so.

If you want to, you can post that conversation on the forum, if you think I'm wrongly accusing you of anything. I don't mind at all, but otherwise I'm just saying enough's enough.
Yeah, I realize you think that. I think you're genuinely confused, but honestly, it doesn't matter.

Here's what I care about: posting links in lieu of having a human conversation is lame, and not what this thread is for. If that's what anyone wants, they are free to start a different thread that is for that.

[Yoda]

I don't think most people reading those links would have understood your point without you specifically highlighting it. And the point your making isn't comparable. Barney Frank conceded he was wrong. Those guys didn't admit anything, they just changed their tune.
It doesn't matter. If you want, I can find someone who hasn't conceded they're wrong (or do you think no such person exists?), but it could not be less relevant to the point, which I will now repeat: none of this is an argument against any claim about how the crisis came to be. That's the argument. Whether or not Peter Wallison is a hypocrite? Not the argument.

And how valid can the current think tank argument criticizing government institutions be when they were saying the exact opposite before the whole thing exploded?
Simple: because "they" are not a hivemind, for one, and because some report today is not more or less true because of some report yesterday, for another. In most cases they're not even the same organizations, and in others they're not made up of the same people, anyway. You're treating these two guys as surrogates for every anti-F&F argument. I don't have to account for what they said any more than you have to account for whatever Barney Frank does.

Saying the Maes and Macs needed more government oversight isn't the same thing as conceding they caused the housing loan mess.
Agreed. Good thing I cited sources for that claim, too, then (http://www.movieforums.com/community/showthread.php?p=782589), which your response about think tanks didn't really have anything to do with.

I would accept as reasonable a position that listed them as factor, but to put the the entire blame on them and excusing the insane practices of the banking industry is just a case of ideological blinders. It is based on the bizarre notion business only acts stupid and greedy when government makes them do it.
No, it's not, and I'm amazed that you could, after all these arguments, think this is what free market types think.

It's based on the notion that insulating anyone from risk will get you more of it, and that when you create financial incentives to make riskier loans, you--wait for it--get more risky loans! Far from being bizarre, it's painfully, sadly rational. The opposite--that creating a government entity willing to carelessly assume risk in the secondary mortgage market will not create the incentives for riskier loans--is what's bizarre. It's completely contrary to everything we know about economies and people.

[will.15]

Did Fannie and Freddie Cause the Mortgage Crisis?




Dec 13 2011
Fannie Mae (http://useconomy.about.com/od/governmentagencies/p/FNMA.htm) and Freddie Mac (http://useconomy.about.com/od/governmentagencies/p/FHLMC.htm) did not, by themselves, cause the subprime mortgage crisis. Legislative attempts to rapidly wind down Fannie and Freddie will not prevent another recession. Worse yet, it could further harm the housing market.
Fannie and Freddie (http://useconomy.about.com/od/criticalssues/tp/Fannie-and-Freddie.htm) were government sponsored entities (GSEs). This meant that they had to be competitive, like a private company, and maintain their stock price. On the other hand, the value of the mortgages they re-sold on the secondary market was implicitly guaranteed by the government. This caused them to hold less capital to support their mortgages in case of loss. As a result, Fannie and Freddie were pressured to take on risk to be profitable but knew they wouldn't suffer the consequences if things turned south.
The government set them up this way to allow them to buy qualified mortgages, insure them and resell them to investors, thus freeing up funds for banks to make new mortgages. In this way, they were traditionally involved in at least half of all new mortgages made each year. By December 2007, when banks began to constrict their lending, Fannie and Freddie were really the only lender still operating, responsible for 90% of all mortgages (http://useconomy.about.com/b/2008/04/07/fannie-mae-and-freddie-mac-now-provide-90-of-home-loans.htm).

Government regulations precluded Fannie and Freddie from buying mortgages that didn't meet downpayment and credit requirements. However, as the mortgage market changed, so did their business. Between 2005-2007, few of the mortgages acquired were conventional,fixed-interest loans with 20% down. Fannie Mae's loan acquisitions were:

62% negative amortization
84% interest only
58% subprime
62% required less than 10% downpayment.
Freddie Mac's loans were even more risky, consisting of:

72% negative amortization
97% interest only
67% subprime
68% required less than 10% downpayment.
It was the preponderance of exotic loans in addition to subprime borrowers that made Fannie and Freddie's loan acquisitions so toxic. Fannie and Freddie Held Fewer Toxic Loans than Most Banks

It is critical to understand, however, that because of regulations, they took on less of these loans than most banks. According to several analysts, they increased their acquisition of these loans to maintain market share in what had become a very competitive market. (Source: (Source: SeekingAlpha, How Much Are Fannie and Freddie to Blame? (http://seekingalpha.com/article/98270-how-much-are-fannie-and-freddie-to-blame), October 2, 2008; Washington Post Fannie and Freddie Become Hot Topic (http://www.washingtonpost.com/wp-dyn/content/article/2008/10/08/AR2008100803531.html), October 10, 2008)
In 2005, the Senate sponsored a bill that sought to forbid them from holding mortgage-backed securities (http://useconomy.about.com/od/glossary/g/mortgage_securi.htm) in their portfolio because it wanted to reduce the risk to the government. In total, the two GSEs owned or guaranteed a total of whopping $5.5 trillion of the $11.2 trillion mortgage market.
After the Senate bill failed, Fannie and Freddie actually increased their holdings of risky loans. That's because they could make more money from the loans high interest rates than from the fees they got from selling the loans. Again, they were seeking to maintain high stock prices during a very competitive housing market. Even so, by 2007 only 17% of their total portfolio was either either subprime or Alt-A loans. Due to regulations, their percentage of these loans are actually better than many banks. (Source: Barron's, Is Fannie Mae the Next Government Bailout? (http://online.barrons.com/article/SB120493962895621231.html?mod=article-outset-box&page=1), March 10, 2008; IHT, Fannie and Freddie's blame game (http://www.iht.com/articles/2008/08/24/business/wbjoe23.php?page=2), August 24, 2008)


Derivatives Helped Cause Fannie's Downfall

As GSEs, Fannie and Freddie weren't required to offset the size of their loan portfolio with enough capital from stock sales to cover it. This was a result of both their lobbying efforts and the fact that their loans were insured, so they felt they didn't need to. Instead, they used derivatives (http://useconomy.about.com/od/glossary/g/Derivatives.htm) to hedge the interest-rate risk of their portfolios. When the value of the derivatives fell, so did their ability to insure loans. (Source: NYT, Fannie, Freddie and You (http://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r=1&oref=slogin), July 14, 2008)
This exposure to derivatives proved their downfall, as it did for most banks. As housing prices fell, even qualified borrowers ended up owing more than the home was worth. If they needed to sell the house for any reason, there would lose less money by allowing the bank to foreclose. Borrowers in negative amortization and interest-only loans were in even worse shape. Even though subprime and Alt-A loans only made up 17% of Fannie and Freddie's portfolio, they were responsible for over half of their losses in 2007.
Elimination of Fannie and Freddie Could Destroy Any Housing Recovery

Some legislators propose eliminating Fannie and Freddie. Others suggest that the U.S. copy Europe (http://useconomy.about.com/od/worldeconomy/p/european_union.htm) in using covered bonds to finance most home mortgages. With covered bonds, banks retain the credit risk on their home mortgages, but sell bonds backed by those mortgages to outside investors, thus off-loading interest-rate risk.
Elimination of Fannie and Freddie will dramatically reduce the availability of mortgages and increase the cost. Banks have not, and would not, step in to guarantee mortgages. Studies have shown that, without Fannie and Freddie, mortgage iterest rates could go as high as 9-10%. This would damage the housing market before it's had any chance to recover. (Source: Barron's, Life After the Old Fannie and Freddie (http://online.barrons.com/article/SB122126783361530999.html), September 15, 2008)

[Deadite]

Posting links again? Or "sources" if you prefer?

http://www.economonitor.com/blog/2011/11/who-caused-the-housing-crisis-why-do-people-not-believe-all-the-studies/

[Yoda]

If you can't discern the difference between "here are four links and I'm not going to respond to anything anyone else posts" and "here's a specific claim with a specific source," in the midst of other arguments directly addressing what other people have said, then I can't help you.

[Deadite]

Nope, you sure can't help me to believe that a government program helping some ordinary joe was responsible for a mess that came after banks lobbied for de-regulation that would let them play funny money games.

http://www.ourfuture.org/blog-entry/2008094030/firing-back-cra-strikeoutexcuse-diversionstrikeout-libel

[Yoda]

Yeah, great, except that's not what I asked at all. In fact, what you just said is a complete non-sequitur, both in response to my post and the discussion at large, because it's about the CRA whereas we've been talking about Fannie and Freddie. Which is what happens when you just spam links and don't pay attention to the discussion taking place, I guess.

Meanwhile, remember what you said just a few posts ago?

"It's pretty convenient to dismiss links you disagree with while pushing your own, I think."
You just did this. You posted another link, still not having addressed any of the links or arguments that have come before. The contradiction is so obvious it makes my head hurt.

[Powdered Water]

I can reply to both of you with the same thing: no, because I don't agree with the underlying assumptions about the cause of the crisis.

So, what do you think was the cause of the crisis? I'm sorry if you've gone through this before, these threads get so big that I just can't read them all. I'm also curious as to why you think some of these "underlying assumptions" are just that. A lot of the things I've seen and read seem pretty factual or at least public record. Is the bulk of the stuff that has come out in Senate hearings and investigations all BS?

Our disagreement is largely factual. We differ about who is primarily responsible, not on the nature of morality or responsibility.
Do you worry at all about being lied to? Or maybe more importantly, getting your "facts" from places that are skewed towards the very thing you may be trying to fight or protect against? I'm curious, because you kinda throw the fact thing around like you have the right ones and anyone you disagree with has the wrong ones. I may be totally wrong, but there are a lot of "facts" in this thing and even more dis-information put out by the people that caused this. How do you pick the right facts?



Sort of. We're better off in the sense that we have the same problems, but are actually wrestling with them, at least. At least now we know, and are beginning to question things we were not questioning before. That's progress.When you say "we", do you mean that "we" have some kind of power in this? Do you think we have any leverage to change what happened and more importantly, make sure it doesn't happen again? How so? I certainly don't have Billions of dollars and I'm not invited to these big fancy boards meeting where these decisions get made. Are you? I mean, people were talking about this crisis before it happened and it didn't matter then. How is going to matter now if we keep talking about it?


No, because I don't think systematically dissolved regulations are or were the problem.
Really, but it had a big part in it didn't it?


Yes. I have a very negative opinion of that fact.I bet. I do too. What the hell can we do about this? This kind of thing is driving me insane. In my little group of drunks its called: Doing the same thing and expecting different results. Which is a definition of insanity. What does it take to change this?

[Deadite]

I just wonder who Yoda will find to blame next time Wall Street and their phony politician enablers screw us.

[Yoda]

So, nothing to say about that blatant contradiction? Just going to talk right past it? Okay then.

You know what I wonder? I wonder when you'll consistently contribute meaningful things to a discussion, rather than slowly poison them until they devolve into useless bickering. That's what happens every time; not just in this thread, and not just with me, either. They all veer away from reasonable discussion and towards bitterness and pettiness.

Congratulations on sabotaging yet another conversation, I guess. Just keep talking right past any dissent and you'll "win" every time...because nobody who disagrees will see the point in playing.

[Deadite]

Sure Yoda, your links are pure truth.

Now answer Powdered Water and quit using my posts as an excuse.

[Yoda]

Holy crap, man. You're accusing me of using someone else's post as an excuse not to answer something inside the very post where you're using someone else's post as an excuse not to answer something. I give up: how do you keep your brain from imploding in a fit of irony? I simply must know.

I'm also quite tickled by the notion that, after sinking dozens of hours into arguing with three or four people simultaneously completely by myself, and answering almost everything they say even while they routinely ignore huge swaths of the responses, suddenly I'm supposed to be dodging something. Right.

[Deadite]

You won our debate, Yoda! I simply don't have the time or energy to keep up with you in multiple threads.

Now would you please stop wagging your finger at me and get back to the subject?

[ash_is_the_gal]

Deadite, do you even enjoy being here? at Mofo i mean. that's what boggles my mind - you seem miserable and pissed off in every thread yet you keep coming back for more like Marla Singer or something. i'm genuinely curious how this works for you, what you get out of your membership here. this is seriously like some sort of illusion to me.

this isn't a hijack cause that already happened btw ^.^

[Deadite]

I'm a miserable and pissed off person in general, ash. :)

Btw, I enjoyed your zine, and I think you should write more on your experiences within JW.