Rules: 1. Stay either on-topic or very close to topic. 2. Be as nice as possible.

The last post of an off-topic series in the climate denier thread posted by Мишель.

http://setiathome.berkeley.edu/forum_thread.php?id=74218&postid=1498708

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[quote]Look, I think it is YOU that doesn't understand introductory economics.

The subsidy scheme you mention is about price supports on agricultural goods.

You left out another entire class of subsidies. One where the government PAYS farmers to NOT grow their crops (or at least scale back and leave a certain amount of their land fallow). This directly leads to higher food prices.

The US Government makes use of both schemes. The scheme you mentioned leads to higher food prices because as you say 'the people still pay for it, just not at the supermarket'. You have to pay the salaries of all the Government Bureaucrats and other employees needed to administer the program, a non-trivial cost. Then, the Government has to pay to STORE all the agricultural goods it has bought until such time as they are distributed. And, Government being Government, a LOT of this food ROTS in the warehouse due to incompetence, before the Government can distribute it.

You beginning to see? Agricultural subsidies invariably lead to higher food prices.

It rots in the stores because frankly there is just no demand for it, not because of government incompetence.

But you will see, these subsidies will become necessary to achieve food security. The EU has done it for years, it is in fact one of their most successful policies. Sure, lakes of wine and mountains of butter and all that. But also much lower costs at the supermarket. And ever since they stopped doing it and left it to the free markets, prices have only gone up.

You are incorrect in this assumption. The Community Reinvestment Act (CRA) of 1977 as amended in 1995 required banks to make a sufficient number of loans to Low and Moderate Income borrowers to keep the Federal regulators happy. The ONLY way banks could do this was by disregarding standards of safe lending, and to start making home loans to people without sufficient (and in many cases ANY) down payment and insufficient ratio of debt and income. You know, people that shouldn't have HAD the home loans because they were not likely to be able to pay them back.

Eh no, the 1995 revision was aimed at streamlining the process and prevent banks from not loaning you any money because you came from a specific part of town or the country. You still had to be able to pay back the money. Then in 1999 they came up with the Financial Services Modernization Act, which repealed things like the Glass-Steagall act and completely changed the financial services landscape. As a result, it was simply to hard for the regulators to check whether banks where sticking to the rules.

In any case, there was no law that actually mandated banks to loan money to everyone who walked in and asked for a loan. Banks loaned the money themselves to people who couldn't afford it because those loans were profitable, not because they would be paid back, but because banks got money for everyone who defaulted on their loans.

It was US Government interference in business (the banking industry) that directly CAUSED the 2008 economic crash and the ongoing Great Recession.

Yeah, that government interference was nothing more than the repeal of a lot of safety measures that used to prevent the financial sector from going nuts. It was deregulation that led to the crisis, or in other words, the government retreating from the market.

Are you familiar with just who Tacitus was? He was a Roman policitian and historian. His public career spanned the time period between about 80CE and 116CE. The Roman empire at the time was a highly complex society, perhaps the most complex society that had yet existed. After all, it ruled the bulk of the 'known-world' of the time. Perhaps even as complex as ours. Sorry, but your 'complexity' objection falls flat.

Oh right, because I forgot the Romans also had the internet, a globally intertwined financial system, overfishing, environmental degradation, modern industries that pollute, cars, planes, and every aspect of all of those things that requires regulation if its not going to end up causing tons of damage and deaths.

I'm sorry but the Romans had it comparatively easy.

Uhh.. All that already *IS* the law. It *IS* regulated. It doesn't work, you admit it yourself. We are, after all, talking about the highest level politicians in the USA, and HUGE piles of money. You really think that more regulations will fix it, when the regulations in place now get routinely ignored?

Almost all lobby laws are jokes. The registers aren't mandatory or the rules around it are so full of loopholes no one ends up using them. And sure, politicians have to tell every time they get presents and trips. But that kind of lobbying happens relatively little. Lobbyists have tons of other, legal ways of getting in bed with the politicians. Promises of campaign donations, of future jobs, lending their expertise to a certain lawmaker, etc.

The regulations in place get ignored because they lack teeth, they aren't tight enough and as a result, no one has to take notice of them. But improving the regulation can work. The only problem is that the people who need to approve of such a law are not being pushed enough to approve it. There is no huge voter backlash if they don't push for it, and for now they only benefit from having lax regulations. After all, they benefit from all the lobbyists.

And perhaps you don't understand what a 'free market' means. It means a market FREE of Government interference. The way markets become 'unfree' is when Government interference enters the picture.

A free market run by cartels is not free either. A free market means there is healthy competition between everyone operating on it and that it is free for anyone to enter. A market run by cartels and monopolies is by definition non of that. But who is the one that does all the cartel busting and who prevents from any corporation from getting so big they become monopolies? Right...the government.


EDIT: you are right, it is getting completely off topic. Lets leave this for another topic.

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https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

Point of interest, now that the dust from 2008 has largely settled, the numbers show that the CRA loans defaulted in no greater percentages than other fixed rate loans.
It was the ARMs that drove that part of the disaster.

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

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If you don't touch it, you can't break it.
;

When you subsidize anything based on the amount produced, you get more of it, since you are effectively lowering the cost of production, or increasing the demand above what the market would otherwise ask for, depending on how you structure the subsidy. Other things being equal (i.e., no other controls), I agree that that leads to lower prices to the consumer in the market. But the hidden cost, other than administrative, is the taxes that have to be paid for the subsidy.

Each industry that wants to be subsidized claims that they are necessary for national security. The only difference with the farmers and the large agri-businesses is that they have the votes to get what they want. That is to some extent built into our system in the U.S., since each state gets two senators regardless of population, and so the farm states are over-represented. I think they have comparable advantages in Europe.

...
Yeah, that government interference was nothing more than the repeal of a lot of safety measures that used to prevent the financial sector from going nuts. It was deregulation that led to the crisis, or in other words, the government retreating from the market.

That can't really be refuted. Every single one of the bad business practices that drove the collapse were illegal in the USA before the mid/late 90's. Every Single One.
Those were good laws passed with the wisdom of the 1929 Stock Market Crash and the event did not repeat till all of them were repealed or watered down to meaninglessness.

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If you don't touch it, you can't break it.
;

It rots in the stores because frankly there is just no demand for it, not because of government incompetence.

But you will see, these subsidies will become necessary to achieve food security. The EU has done it for years, it is in fact one of their most successful policies. Sure, lakes of wine and mountains of butter and all that. But also much lower costs at the supermarket. And ever since they stopped doing it and left it to the free markets, prices have only gone up.

I didn't say it rotted in the stores. I said it rotted in the Government Warehouse. If there was insufficient domestic demand, why not just donate it to a nation that needed it for any of various reasons? Nope, it rotted due to Governmental incompetence.

Perhaps the food prices rose for reasons other than the Government 'stopped doing it'.

Eh no, the 1995 revision was aimed at streamlining the process and prevent banks from not loaning you any money because you came from a specific part of town or the country. You still had to be able to pay back the money. Then in 1999 they came up with the Financial Services Modernization Act, which repealed things like the Glass-Steagall act and completely changed the financial services landscape. As a result, it was simply to hard for the regulators to check whether banks where sticking to the rules.

In any case, there was no law that actually mandated banks to loan money to everyone who walked in and asked for a loan. Banks loaned the money themselves to people who couldn't afford it because those loans were profitable, not because they would be paid back, but because banks got money for everyone who defaulted on their loans.

Yes, exactly! The parts of town, etc., where the low income to lower-middle income people lived. The people who did not earn enough to be able to save up the required 20% down payment, and those that did not earn enough to be able to afford to make a standard 30-year fixed mortgage payment on the houses they were trying to buy.

The 1995 amendments to the 1977 CRA forced banks to start making loans in these areas, to people who could not really afford it. The only way that banks could avoid the huge fines and possible closure that violating the CRA, as amended, would bring on them was to get... shall we say, rather creative with the loan standards. Yes, they didn't loan money to *everyone*, but they made enough bad loans to cause... trouble.

but because banks got money for everyone who defaulted on their loans.

I don't think that you understand the situation here. The banks sell loans to others almost the moment of closing. The banks already had their money on ALL of them, trouble or not. The loans were sold to investment concerns or even US Government agencies (Fannie Mae, Freddie Mac -- most were bought by these 2) to be repackaged as derivatives and resold to investors. This 'paper' was mistakenly seen to be some of the safest in the world, hence its wide popularity. When things went splat and the mass defaults started, these assets turned out to be fairly worthless, then the 'insurance' on them (CDS) proved to be fairly worthless. In the end, you would likely not had been able to GIVE them away. They were that toxic.

Re: the 1999 partial repeal of Glass-Steagall. I was not in favor of this one. The seperation between a consumer/commercial bank and an investment house was, imo, a vital one. But as to why it happened. Banks have been under pressure for years from interest rates being kept artificially low by the Federal Government so that the Federal Government could easier make the interest payments on its ever-increasing national debt. The bankers, desperate for income for their banks put lobbying into high gear and in 1999 were successful in getting their way. Smell the corruption? The banks started merging with investment houses. This is how the banks got 'hurt' by 2008. Not directly from the toxic loans that they had made, but indirectly through their pet 'investment house' subsidiaries. Not just the US banks, not just the US as a whole, but the entire world's financial system took a HUGE kick in the nuts. Ok, I will concede that the 1999 partial repeal of Glass-Steagall had a SMALL part in it, but the PRIMARY cause was the 1977 CRA, as amended in 1995.

Oh right, because I forgot the Romans also had the internet, a globally intertwined financial system, overfishing, environmental degradation, modern industries that pollute, cars, planes, and every aspect of all of those things that requires regulation if its not going to end up causing tons of damage and deaths.

I'm sorry but the Romans had it comparatively easy.

Hey man, don't be a chronological bigot. Just because our tech. level is higher doesn't mean the ancient Romans didn't have their hands full of issues themselves. Remember, they had some of the most advanced technologies of the time, especially engineering and military technology. Much of what they did directly paved the way for us today. And administrative challenges... You try administrating an empire the size of theirs and see how long YOU can keep things together.

Almost all lobby laws are jokes. The registers aren't mandatory or the rules around it are so full of loopholes no one ends up using them. And sure, politicians have to tell every time they get presents and trips. But that kind of lobbying happens relatively little. Lobbyists have tons of other, legal ways of getting in bed with the politicians. Promises of campaign donations, of future jobs, lending their expertise to a certain lawmaker, etc.

The regulations in place get ignored because they lack teeth, they aren't tight enough and as a result, no one has to take notice of them. But improving the regulation can work. The only problem is that the people who need to approve of such a law are not being pushed enough to approve it. There is no huge voter backlash if they don't push for it, and for now they only benefit from having lax regulations. After all, they benefit from all the lobbyists.

So, we have had failure after failure of regulations to force the lobbyists and the politicians to make nice and obey the rules, and you want to try MORE regulation?!?!

Insanity: doing the same thing over and over again and expecting different results.

Albert Einstein

I think it is time to change the system, don't you? More regulation just isn't going to cut it.

A free market run by cartels is not free either. A free market means there is healthy competition between everyone operating on it and that it is free for anyone to enter. A market run by cartels and monopolies is by definition non of that. But who is the one that does all the cartel busting and who prevents from any corporation from getting so big they become monopolies? Right...the government.

We are using different meanings when each of us use the phrase 'free market'. You stated your definition above.

When I use the phrase 'free market', I am speaking of Laissez-Faire.

Laissez-Faire is an economic environment in which transactions between private parties are free from government restrictions, tariffs, and subsidies, with only enough regulations to protect property rights.

That is what I mean by 'free market'

Monopolies? Who do you think created them? The Government.

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https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

Point of interest, now that the dust from 2008 has largely settled, the numbers show that the CRA loans defaulted in no greater percentages than other fixed rate loans.
It was the ARMs that drove that part of the disaster.

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

I agree that ARMs have their share of the blame, but that businessweek article is from Sept. 2008... A bit early to judge things, given that the mess is still on-going.

Besides, ARM = bad, CRA = bad, ARM*CRA = bad^2.

It was the combination of the two, as I alluded to in an earlier post that drove the Big Problem.

When you subsidize anything based on the amount produced, you get more of it, since you are effectively lowering the cost of production, or increasing the demand above what the market would otherwise ask for, depending on how you structure the subsidy. Other things being equal (i.e., no other controls), I agree that that leads to lower prices to the consumer in the market. But the hidden cost, other than administrative, is the taxes that have to be paid for the subsidy.

Each industry that wants to be subsidized claims that they are necessary for national security. The only difference with the farmers and the large agri-businesses is that they have the votes to get what they want. That is to some extent built into our system in the U.S., since each state gets two senators regardless of population, and so the farm states are over-represented. I think they have comparable advantages in Europe.

Perhaps, but then the Cost of the food still goes up, for you have to add in both the taxes paid to support the subsidy and the administrative costs of the program. The food cost is higher in the end.

How about the agricultural subsidies where farmers are subsidized based on how much they do NOT produce? Underproduction produces slight shortages which keeps prices higher than they would have been without the subsidy. This style subsidy has been very popular in the USA, and judging from a few of the replies in the other thread has seen some use in Europe as well. These subsidies are for the express purpose of keeping crop prices higher.

The big-state/small-state problem... Well, in the Senate, the small states may have some advantages... But in the House, it is the populous states that have the advantage. It was a compromise necessary and vital to get all the competing interests to agree to the Constitution. It should not be tampered with, in my opinion.

Oh..the news hasn't changed any. i just put that one up because it's accessable.
you'll find the same story here if you want to spend the time.

http://www.federalreserve.gov/communitydev/craloansurvey.htm

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If you don't touch it, you can't break it.
;

Oh..the news hasn't changed any. i just put that one up because it's accessable.
you'll find the same story here if you want to spend the time.

http://www.federalreserve.gov/communitydev/craloansurvey.htm

The Fed... Now you are expecting a Government controlled entity to admit that its boss screwed the pooch?

Not gonna happen.

Oh..the news hasn't changed any. i just put that one up because it's accessable.
you'll find the same story here if you want to spend the time.

http://www.federalreserve.gov/communitydev/craloansurvey.htm

The Fed... Now you are expecting a Government controlled entity to admit that its boss screwed the pooch?

Not gonna happen.

the report is based on surveys sent to thousands of financial institutions.
Now if you're going to contend they'd actually out and out lie...
we're both sure there's a lotta lieing going on but this one doesn't fit the cost/benefit profile imho.

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If you don't touch it, you can't break it.
;

Perhaps, but then the Cost of the food still goes up, for you have to add in both the taxes paid to support the subsidy and the administrative costs of the program. The food cost is higher in the end.

Sure, if you include the hidden costs.

How about the agricultural subsidies where farmers are subsidized based on how much they do NOT produce? Underproduction produces slight shortages which keeps prices higher than they would have been without the subsidy. This style subsidy has been very popular in the USA, and judging from a few of the replies in the other thread has seen some use in Europe as well. These subsidies are for the express purpose of keeping crop prices higher.

Agree. It was started as a result of the Great Depression, when farms were actually over-producing. They needed a way to provide income to the farmers so that they would not lose their land, while reducing production to raise prices. Also, during the Dust Bowl, a lot of the land was depleted of topsoil, and they needed a way to rejuvenate it. So the government paid farmers to plant grass, clover, etc. instead of food crops. But those conditions no longer apply today.

The big-state/small-state problem... Well, in the Senate, the small states may have some advantages... But in the House, it is the populous states that have the advantage. It was a compromise necessary and vital to get all the competing interests to agree to the Constitution. It should not be tampered with, in my opinion.

I wasn't suggesting changing it. But it explains a lot of the artifacts of our economy that a pure free-market analysis does not explain.

Major Kong's gonna hate this, but I want what's best for America, not my personal Ideology.
Both unfettered Socialism and Capitalism are direct pathways to feudalism.
A healthy mix of both is what's worked best in history and we need a little more socialism, not less. This seems to be self evident as we have the least socialism of any first world country in the world and it ain't helping.

Do i need to bring up how well China's 10% capitalist and 90% socialist system is obviously working?
Somewhere in the middle lies paradise.

Free enterprise tends to concentrate wealth in fewer and fewer hands and when enough wealth is in few enough hands you get a new Nobility. You HAVE to shake some of the money back down because infinite growth is not possible and concentrated wealth has never failed to breed tyranny ever in history.

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If you don't touch it, you can't break it.
;

Major, a problem with a Laissez-Faire economy is for it to work Laissez-Faire requires perfect knowledge of the economy, that is not possible IMO.
An idealistic model that does not reflect reality is just a pipe dream.

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Both unfettered Socialism and Capitalism are direct pathways to feudalism.
A healthy mix of both is what's worked best in history and we need a little more socialism, not less. This seems to be self evident as we have the least socialism of any first world country in the world and it ain't helping.

Do i need to bring up how well China's 10% capitalist and 90% socialist system is obviously working?
Somewhere in the middle lies paradise.

Free enterprise tends to concentrate wealth in fewer and fewer hands and when enough wealth is in few enough hands you get a new Nobility. You HAVE to shake some of the money back down because infinite growth is not possible and concentrated wealth has never failed to breed tyranny ever in history.

I would agree with the end goal, but would state the problem somewhat differently. The free market works fine, as long as costs are allocated properly. But when an industry or activity imposes external costs (the so-called "externalities" as known by economists) on the rest of society, then the marketplace has no way to adjust supply and demand to account for such costs. At the moment, the biggest external cost that I know of is due to excessive greenhouse gas production, leading to global warming. If you are a coal-fired power plant owner, or coal mine owner, you would prefer not to pay those costs. But if you are a farmer losing his land as a result of drought, or the consumers who pay higher food costs, you would prefer that those costs were allocated properly. How do you do that? It will be difficult, but the mechanisms are economically possible, if not politically feasible at the moment.

As for the rich nobility, they love gambling with investors money, as long as when the system crashes the taxpayers bail them out. They love socialism then. A proper regulatory framework is necessary to keep the system stable. There are numerous other examples you could cite.

As for the rich nobility, they love gambling with investors money, as long as when the system crashes the taxpayers bail them out. They love socialism then. A proper regulatory framework is necessary to keep the system stable. There are numerous other examples you could cite.

After almost 35 years of 'Reaganomics' I suspect there's so much wealth concentrated in so few hands the .1% is essentially unfettered.
To the point where they are sitting on their money unless the blackmail is paid in tax breaks or the money just won't be invested here.

http://www.cnbc.com/id/101354173

after all. it's not about how much you have, it's about how much more you have than the next guy. The Nobility has already formed. We're at the 'establishing rule' stage.
oh crap. are we hijacking? sorry.

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If you don't touch it, you can't break it.
;

Major, a problem with a Laissez-Faire economy is for it to work Laissez-Faire requires perfect knowledge of the economy, that is not possible IMO.
An idealistic model that does not reflect reality is just a pipe dream.

No, it doesn't require 'perfect knowledge of the economy'. On whose part?

The economy regulates itself.

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https://youtu.be/iY57ErBkFFE

#Texit

Don't blame me, I voted for Johnson(L) in 2016.

Truth is dangerous... especially when it challenges those in power.

Major Kong's gonna hate this, but I want what's best for America, not my personal Ideology.
Both unfettered Socialism and Capitalism are direct pathways to feudalism.
A healthy mix of both is what's worked best in history and we need a little more socialism, not less. This seems to be self evident as we have the least socialism of any first world country in the world and it ain't helping.

Do i need to bring up how well China's 10% capitalist and 90% socialist system is obviously working?
Somewhere in the middle lies paradise.

Free enterprise tends to concentrate wealth in fewer and fewer hands and when enough wealth is in few enough hands you get a new Nobility. You HAVE to shake some of the money back down because infinite growth is not possible and concentrated wealth has never failed to breed tyranny ever in history.

I don't hate you, we have a difference of opinion. Thats all. I agree that somewhat of a Mixed Economy is what is best for the USA. Where we disagree is that you think a bit more to the left is best, and I think that a bit more to the right is best. But there is quite another axis on the graph than the right-left one. One that you are not addressing. The Libertarian-Authoritarian axis. And on that one, I am very much near the Libertarian far-end. The two major parties (the Ds AND the Rs) in the USA are pretty much capped over at the Authoritarian end. They BOTH believe in the use of Government Power to benefit their 'protected class' (the 'poor', minorities, and Organized labor in the case of the Ds, and 'big business' in the case of the Rs). Where has all the freedom gone? It got defenestrated by the Ds and Rs.

It's no longer all about governments. The problem has permeated all aspects of society.

The main problem now is greed, pure and simple.

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Major Kong's gonna hate this, but I want what's best for America, not my personal Ideology.
Both unfettered Socialism and Capitalism are direct pathways to feudalism.
A healthy mix of both is what's worked best in history and we need a little more socialism, not less. This seems to be self evident as we have the least socialism of any first world country in the world and it ain't helping.

Do i need to bring up how well China's 10% capitalist and 90% socialist system is obviously working?
Somewhere in the middle lies paradise.

Free enterprise tends to concentrate wealth in fewer and fewer hands and when enough wealth is in few enough hands you get a new Nobility. You HAVE to shake some of the money back down because infinite growth is not possible and concentrated wealth has never failed to breed tyranny ever in history.

I don't hate you, we have a difference of opinion. Thats all. I agree that somewhat of a Mixed Economy is what is best for the USA. Where we disagree is that you think a bit more to the left is best, and I think that a bit more to the right is best. But there is quite another axis on the graph than the right-left one. One that you are not addressing. The Libertarian-Authoritarian axis. And on that one, I am very much near the Libertarian far-end. The two major parties (the Ds AND the Rs) in the USA are pretty much capped over at the Authoritarian end. They BOTH believe in the use of Government Power to benefit their 'protected class' (the 'poor', minorities, and Organized labor in the case of the Ds, and 'big business' in the case of the Rs). Where has all the freedom gone? It got defenestrated by the Ds and Rs.

I was saying you'd hate the thought, not me. I'm not one of the children that need to take everything personally and I give you the dignity of assuming it'd be the thought you didn't like.

System has been moving hard Right for over 30 years now...i've been both watching and old enough to know what i'm seeing.\
Moving RIGHT concentrates the wealth ... if you did manage to go libertarian all you'd do at this point is remove the last vestige of protection America has from the Owner Class. You're trying to get in on a game you started to lose 30 years ago.
If you take the system apart now, the only ones standing will be exactly the people we both fear.
Obama's not a marxist, nor a fascist.. he's a right leaning Reagan Republican.
Elections now are just a poll they take to see how fast they can move ahead with the establishment of the Oligarchy without losing too much profit.

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If you don't touch it, you can't break it.
;

Major, a problem with a Laissez-Faire economy is for it to work Laissez-Faire requires perfect knowledge of the economy, that is not possible IMO.
An idealistic model that does not reflect reality is just a pipe dream.

No, it doesn't require 'perfect knowledge of the economy'. On whose part?

The economy regulates itself.

The lack of knowlege is why the GM fiasco with ignition switchs occured, do you really believe that those cars would have been sold if the customers knew their cars would turn off?

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