Libertarianism (was EEL is returning)

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Re: Libertarianism (was EEL is returning)

Postby EEL Mk2 » Thu Aug 13, 2015 6:36 am

Amazeroth wrote:Obviously it's a system that's highly vulnerable to corruption and general bad behaviour, but I'm not sure it could be said that it's irrational as a system.
Don't you think that corruption and bad behaviour is (from a social/economic perspective) pretty irrational? (Especially when this bad behaviour encompasses the entire market - e.g. the dot-com bubble, which can't in all fairness be ascribed to government stuff-ups.)

Amazeroth wrote:I'm not too sure - so far I've seen economists justifying almost anything I found curious there.
Well, lots of theories that seek to explain the bad behaviour of financial markets (e.g. Minsky's instability hypothesis) are predicated on departures (at least to some extent) from the idea of economic actors as necessarily rational utility maximisers, and yet even when they argue that irrational behaviour can exist and cause problems in financial markets, they have never made the effort to really understand behavioural science.

Darkylightytwo wrote:Once again, the system is about you have rules or not and if you enforce them or not. then we could discuss if the rules are bad or good, but if you don't enforce, then they don't exist.
Well, to be honest, I'm not entirely sold on the idea of bad rules being better than no rules at all. Certainly some of the more vicious tendencies of financial markets can be seriously exacerbated by poor decision-making on the part of governments (like the excessive policy accommodation you referred to).

And as Amazeroth has already observed, it's not exactly a free market when you have a central bank rigging interest rates (poorly, as you note).
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Re: Libertarianism (was EEL is returning)

Postby Amazeroth » Thu Aug 13, 2015 8:35 am

EEL Mk2 wrote:
Amazeroth wrote:Obviously it's a system that's highly vulnerable to corruption and general bad behaviour, but I'm not sure it could be said that it's irrational as a system.
Don't you think that corruption and bad behaviour is (from a social/economic perspective) pretty irrational? (Especially when this bad behaviour encompasses the entire market - e.g. the dot-com bubble, which can't in all fairness be ascribed to government stuff-ups.)


No, not really. As long as the economic/social perspective doesn't allow for failure, failure itself shouldn't be irrational. And even the theories that treat every actor in a system as rational and well informed are not arriving at the conclusion that failure would be eliminated, only minimised. There will always be bad investments, and I wouldn't say that the dot-com bubble itself was mainly a fault of the financial markets as a system, but rather people thinking their business of choice would make it. It was also the case of a new technology bringing completely new possibilities, where accurately predicting what would fail and what wouldn't should be much harder.
Also, I don't see how the dot-com bubble could have been avoided in the first place.

Amazeroth wrote:I'm not too sure - so far I've seen economists justifying almost anything I found curious there.
Well, lots of theories that seek to explain the bad behaviour of financial markets (e.g. Minsky's instability hypothesis) are predicated on departures (at least to some extent) from the idea of economic actors as necessarily rational utility maximisers, and yet even when they argue that irrational behaviour can exist and cause problems in financial markets, they have never made the effort to really understand behavioural science.


No argument here, I agree.
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Re: Libertarianism (was EEL is returning)

Postby Darkylightytwo » Thu Aug 13, 2015 2:21 pm

you probably did not notice, but the central bank lowering or making the interest rate higher has no impact on the free market for me. Because I am thinking in a very classical mindset. If you are thinking with the neo-liberal mindset, you probably do not believe this, because regulation impede on the free markets, but I don't believe regulations limit the free market.

Having no rules is just stupid, if you do not organise the economy, has a government, then other will organise you, and the america government did not organise anything, he had to be organised.

By the way, you were talking about bank bailed out by government, we had no choice, I agree, we should have nationalise them or anything, but that is too socialist, so instead we gave them money, but we had no choice in that regard, else the crisis would have been prolonged, Beside, the FED is semi-private.

An easy way the bubble could have been avoid is to not give loan to people who could not pay, that started here.

Look, I'M tired at explaining and being ignored, so here, got a gift for you, a funny vid
https://www.youtube.com/watch?v=N9YLta5Tr2A
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Re: Libertarianism (was EEL is returning)

Postby Amazeroth » Thu Aug 13, 2015 8:51 pm

Darkylightytwo wrote:you probably did not notice, but the central bank lowering or making the interest rate higher has no impact on the free market for me. Because I am thinking in a very classical mindset. If you are thinking with the neo-liberal mindset, you probably do not believe this, because regulation impede on the free markets, but I don't believe regulations limit the free market.

Having no rules is just stupid, if you do not organise the economy, has a government, then other will organise you, and the america government did not organise anything, he had to be organised.


There is nothing neo-liberal about thinking that the markets don't need rules. Every libertarian agrees (and every neo-liberal, as thin as the dividing line is, too) that there need to be rules. However, all of the rules impact the market, regardless if it's free or not, and the central bank maintaining the interest rate affects the market very much, regardless if it's free or not.

Also, what a "free market" is is not dependent on your mindset - if you're going to make your personal definition of what constitutes a "free market", all you do is make the term more unclear. If we're saying that the market isn't (completely) free when a central bank acts by doing things with the interest rate, because the definition of a free market is a market where the government doesn't intervene by setting economic measures, and you're counter is that you have a different definition, then we're no longer arguing about libertarianism vs. whatever ideology you follow, but only definitions. And that's pointless.

By the way, you were talking about bank bailed out by government, we had no choice, I agree, we should have nationalise them or anything, but that is too socialist, so instead we gave them money, but we had no choice in that regard, else the crisis would have been prolonged, Beside, the FED is semi-private.


Of course there was a choice. Also, the crisis has been very effectively prolonged by bailing the banks out - after all, the banks don't have to change much in their practices now, since they don't have to be afraid of ever failing.

An easy way the bubble could have been avoid is to not give loan to people who could not pay, that started here.


True, but two things did see to it that that wasn't a real possibility. For one, banks and rating agencies were pretty shure that the people would be able to pay when the time came (or at least that foreclosing on their houses would settle the debt). That was of course wrong, but at least in general this is the very risk of giving loans in the first place - you never know if you'll get it back.
The second thing was that the government itself encouraged banks to give loans to low-income clients searching for homes. Which is, again, showing that this was not a problem caused by a free market.
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Re: Libertarianism (was EEL is returning)

Postby Darkylightytwo » Fri Aug 14, 2015 2:08 am

Amazeroth wrote:
Darkylightytwo wrote:you probably did not notice, but the central bank lowering or making the interest rate higher has no impact on the free market for me. Because I am thinking in a very classical mindset. If you are thinking with the neo-liberal mindset, you probably do not believe this, because regulation impede on the free markets, but I don't believe regulations limit the free market.

Having no rules is just stupid, if you do not organise the economy, has a government, then other will organise you, and the america government did not organise anything, he had to be organised.


There is nothing neo-liberal about thinking that the markets don't need rules. Every libertarian agrees (and every neo-liberal, as thin as the dividing line is, too) that there need to be rules. However, all of the rules impact the market, regardless if it's free or not, and the central bank maintaining the interest rate affects the market very much, regardless if it's free or not.

Also, what a "free market" is is not dependent on your mindset - if you're going to make your personal definition of what constitutes a "free market", all you do is make the term more unclear. If we're saying that the market isn't (completely) free when a central bank acts by doing things with the interest rate, because the definition of a free market is a market where the government doesn't intervene by setting economic measures, and you're counter is that you have a different definition, then we're no longer arguing about libertarianism vs. whatever ideology you follow, but only definitions. And that's pointless.


Every libertarian is a neoliberal, as neoliberals believe a market is free when there is a little intervention from the state as possible. But I certainly do not agree with such a definition.

And I'll even add, there is no point into having bad rules or rules that are no enforced.

And yes the definition is important, because you would see intervention of the state does not intervene in economy, while this is not important to me, the free market is more like a place where people can put forward their ideas and their prices in a free and fair competition. So the state could control all enterprises and the market could still free for me as long and what is important is present. this is a big difference in classic liberalism and neoliberalism.

Amazeroth wrote:
By the way, you were talking about bank bailed out by government, we had no choice, I agree, we should have nationalise them or anything, but that is too socialist, so instead we gave them money, but we had no choice in that regard, else the crisis would have been prolonged, Beside, the FED is semi-private.


Of course there was a choice. Also, the crisis has been very effectively prolonged by bailing the banks out - after all, the banks don't have to change much in their practices now, since they don't have to be afraid of ever failing.


Letting more bank going bankrupt was not acceptable solution, for even the neoliberal in the Bush government, did you watch the video I show you, I think you should, at least this piece of info does not come from me. a communist.

maybe one or two forced nationalisations would have taken care, you've been a joke, you cost plenty to the public, you were in risky loans, you don't deserve to be in business, the state will run it for you, pretty that would a send a strong message to all banks. if you are serious about your business, you don't deserve it. And no, this does not limit the free market as the consequence for bad actions is the same for any bank that is caught, nationalisation and the bank could still be independant from the state, after all.

Look at the relation between CBC and the canadian government, many government tried to make it a state-tv but CBC always resisted, we don't want political interference in CBC, could be the same,

Amazeroth wrote:
An easy way the bubble could have been avoid is to not give loan to people who could not pay, that started here.


True, but two things did see to it that that wasn't a real possibility. For one, banks and rating agencies were pretty shure that the people would be able to pay when the time came (or at least that foreclosing on their houses would settle the debt). That was of course wrong, but at least in general this is the very risk of giving loans in the first place - you never know if you'll get it back.
The second thing was that the government itself encouraged banks to give loans to low-income clients searching for homes. Which is, again, showing that this was not a problem caused by a free market.
[/quote]

1, this is answered in the video I gave you, they though they could put the house to sell and make up their loan. so they though it was safe, but house market said something else.

2 The government did not force the banks to give such loans. it decided to reward bad decisions, yeah, but that is far from Keynesianism, as giving loans to low-income is not a good decision and I am sure we can all agree to that.
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Re: Libertarianism (was EEL is returning)

Postby EEL Mk2 » Fri Aug 14, 2015 6:41 am

Amazeroth wrote:As long as the economic/social perspective doesn't allow for failure, failure itself shouldn't be irrational.
Well, when you have share prices, for example, that completely fail to reflect the fundamental value of the stock (reasonable expectations of future profits, physical property etc.), I think that that is indicative of a systemic failure. Just look at the US stock market - it is hitting record highs, the US economy is still far from fantastic.

Amazeroth wrote:I wouldn't say that the dot-com bubble itself was mainly a fault of the financial markets as a system, but rather people thinking their business of choice would make it.
I think that the fact that investors bid the price of tech shares sky-high while consumers did not do the same with actual tech products is indicative of the fact that your first statement there may not be true. As for people thinking that their business of choice would make it, that would've been the case initially. Then people would have jumped on the bandwagon - not necessarily because they believed that the underlying business was sound, but because they saw the stock prices going up. And the wagon thus accelerates, until it reaches an unsustainable point. (This can happen with even sound businesses if the stock price is bid up too far, which has happened before.)

Amazeroth wrote:Also, I don't see how the dot-com bubble could have been avoided in the first place.
That's the point. Shit happens, and there's sometimes no way to stop it, because of inherent difficulties with the system. But if we understood the nature of sometimes irrational behaviour in financial markets, we might be able to mitigate more effectively.
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Re: Libertarianism (was EEL is returning)

Postby EEL Mk2 » Fri Aug 14, 2015 6:47 am

Darkylightytwo wrote:And yes the definition is important, because you would see intervention of the state does not intervene in economy, while this is not important to me, the free market is more like a place where people can put forward their ideas and their prices in a free and fair competition. So the state could control all enterprises and the market could still free for me as long and what is important is present. this is a big difference in classic liberalism and neoliberalism.
With respect, this is really absurd. It is nonsensical to say that "a free market means x to me" because definitions are necessarily a matter of social consensus and not a personal preference or ideology, for that matter. The definition of a free market is the same for an anarcho-capitalist as it is for an authoritarian socialist. Now, the Oxford Dictionary gives the following definition: "An economic system in which prices are determined by unrestricted competition between privately owned businesses". You may well have a preference for a system other than the free market as outlined in the above definition. You may well be happy with central bank intervention and nationalisation, and reject neoliberalism. That is fine. You are entitled to your opinion. But you are not entitled to be flagrantly imaginative with definitions. Because if you are going to play with definitions we cannot have a discussion. Language itself breaks down if definitions can be changed on a whim.
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Re: Libertarianism (was EEL is returning)

Postby Darkylightytwo » Fri Aug 14, 2015 7:46 pm

Do an effort and watch that little video, I did not even make it. only take 11 minutes of your time.

And no, I have a classical mindset and there are a lot more people with classical mindset then you think. Maybe you, neoliberal, won the ideological war, but there is no way you eliminate us. and I don't think by ideology I don't have an ideology as I think ideology are poison that prevent you from thinking.

men, this discussion is going nowhere.
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Re: Libertarianism (was EEL is returning)

Postby EEL Mk2 » Fri Aug 14, 2015 8:41 pm

Darkylightytwo wrote:men, this discussion is going nowhere.
The reason for that is because you are incapable of using normative definitions. You are using non-normative definitions for "tragedy of the commons", "neoliberal", "classical liberal" and "free market". How is it possible for a discussion to go somewhere when we are faced with such incomprehensible newspeak? I hate to get snarky at you, but if we stuck to dictionary definitions things would be a lot smoother.
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Re: Libertarianism (was EEL is returning)

Postby Amazeroth » Fri Aug 14, 2015 9:17 pm

EEL Mk2 wrote:
Amazeroth wrote:As long as the economic/social perspective doesn't allow for failure, failure itself shouldn't be irrational.
Well, when you have share prices, for example, that completely fail to reflect the fundamental value of the stock (reasonable expectations of future profits, physical property etc.), I think that that is indicative of a systemic failure. Just look at the US stock market - it is hitting record highs, the US economy is still far from fantastic.


There is no fundamental value. Share prices don't tell you what a business is worth in fundamental terms, but just how much other people would be ready to pay for a share. Just as normal prices do. I confess, though, that I don't know enough about the US stock market to answer other than in general terms to your claim - do you have any links?

Amazeroth wrote:I wouldn't say that the dot-com bubble itself was mainly a fault of the financial markets as a system, but rather people thinking their business of choice would make it.
I think that the fact that investors bid the price of tech shares sky-high while consumers did not do the same with actual tech products is indicative of the fact that your first statement there may not be true. As for people thinking that their business of choice would make it, that would've been the case initially. Then people would have jumped on the bandwagon - not necessarily because they believed that the underlying business was sound, but because they saw the stock prices going up. And the wagon thus accelerates, until it reaches an unsustainable point. (This can happen with even sound businesses if the stock price is bid up too far, which has happened before.)


Yes, and the people losing are the people stupid enough to give their money away in a buying frenzy rather than making good decisions (as well as the people seriously miscalculating how their business of choice would do, of course). But unless your point is that a system, in order to be good, or rational, must be so perfect that human error or irrationality can't occur, this is not really an indication whether the financial markets are a good system.

Amazeroth wrote:Also, I don't see how the dot-com bubble could have been avoided in the first place.
That's the point. Shit happens, and there's sometimes no way to stop it, because of inherent difficulties with the system. But if we understood the nature of sometimes irrational behaviour in financial markets, we might be able to mitigate more effectively.


I don't think that there's a difficulty because there is no way to stop shit happening - as long as the people who suffer from this had the option to inform themselves and of knowing that there was a risk to their investing, I don't think it could be said that the system is working the wrong way. However, that's not necessarily the case with other financial crises or other actions at the stock market, the dot-bubble was just incredibly forward - so I agree (again) that behavioural science should play a bigger part in our understanding of the financial markets.


Darkylightytwo wrote:men, this discussion is going nowhere.


Which is hardly surprising, since, as EEL said, once you can't argue anymore on a factual basis, you just elope by saying that to you, words have a different meaning than the common consensus, and we're wrong not because we aren't right with the facts, but because we're using the wrong words to describe them. And by doing this, you could keep the discussion alive indefinitely without ever going further.
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