Re: Dems totally in charge now

Awaken21 wrote:
On May 1, 11:51 am, John Galt <kady...@xxxxxxxxx> wrote:
Awaken21 wrote:
On May 1, 6:41 am, John Galt <kady...@xxxxxxxxx> wrote:
The first thing that the GOP has to figure out is
which party they are. Are they a theocratic party that supports policies
all over the political spectrum as long as they line up with
conservative Christianity, or are they free-market conservatives?
The two are rather different, and the real paranoia of the free
marketers in the GOP at this point in time is having to admit that
ultimately they have to cut the social conservatives loose and compete
on real ideas.
Big problem for the GOP because they're split about 50/50 between
those 2 camps, so cutting the party along those lines will completely
marginalize both groups. Rock and hard place since they've both
effectively marginalized themselves anyway....
I think it's probably a bit less socials and more econs, but not by
much. My SWAG would be 60/40 in favor of the econs.

At any rate, we agree on the situation.

That's scary, because the free marketers know it's very difficult to
explain why free markets are better for the citizens than a government
that looks and acts like Santa Claus.
But you're not a completely free market person are you? Haven't I seen
you in support of transparency and other critical types of regulation?
Transparency is an absolute requirement for free markets to function,
particularly in a complex economy. Proving that point is how Stigliz won
his Nobel Prize. So, I don't see how you got the idea that
"transparency" and "free markets" were at odds.

I'm not sure they're at odds, but transparency has to be regulated.
It's 'regulation lite' since transparency doesn't imply anything
specific needs to be done, but it is a type of regulation if we want
to have it.

Don't agree. Transparency is the natural state of a free market transaction. It is in the best interest of some producers to obscure this transparency to gain a negotiating advantage over the consumer. Thus, measures to insure transparency aren't "regulations" in the same sense as the term is usually used.

But, no sense arguing over semantics. This may be just my POV.

Milton Friedman took the position (with which I agree) that regulation
was called for in three primary areas. The first is the somewhat vague
notion of "keeping the market playing field level". The key example here
is usually anti-monopolistic laws, but anything that has the objective
of keeping the playing field level between all participants (both
consumers and producers) fits.

The second is in what Friedman called "neighborhood effects." The idea
here is that there are certain behaviors by businesses that may NOT be
subject to market discipline, and when those arise, the government may
intervene. His general example was envrionmental regulation, but I
suspect he would agree that when banks can export their risk to third
parties (CDO's, CDS's) then market discipine breaks down, and the
government would need to intervene in some fashion (preferably the least
impactful way possible) to correct.

The third was in the area of standardization. The example given was when
the railroad insfrastructure was being built out. The government moved
to standardize on a single gauge, for obvious economic reasons. In this
case, they weren't "picking a winner", since the guage selected was not
particularly relevant to success.

So, I don't buy off on this idea that "free marketers" must
automatically dislike all regulation.
Not even Adam Smith believed that.
What free marketers like are markets that function well and that have
market discipline, and they are rightfully SKEPTICAL of government
intrusion in the markets, and simply wish to insure that the government
has one of the three purposes listed above when they intervene, and not
some obtuse notion of "social welfare" which is not clearly defined and
risks market distortion for little or no benefit (like what we're
experiencing today.)


I thought we were having problems because bankers made unethical loans
and then sold them to other financial folks who turned them into even
bigger more problematic unethical products.

Well, we were exporting risk. If I can do a transaction and ship my risk to somebody else, then I can make progressively riskier transactions without realizing the aggregate risk.

I still don't understand the argument that regulation caused the our
current problem. I've heard the arguments that Fannie and Freddie and
the gov't in general caused the problem, but I'm not a buyer of that
argument because on the timeline Fannie and Freddie came very late to
the game, there were already billions in bad loans made by private
co's before the Feds joined in. Also their sister gov't institution,
Ginnie, is still a viable model that is making money to this day and
it's highly regulated.

Again, we're putzing with the definition of "regulation." I didn't say "regulation" in my last paragraph, I said "government intrusion." Not all government intrusion is regulation.

Fannie, Freddie, the mortgage interest deduction, the CRAs, the indemnification of Fannie and Freddie, the VA, the FHA, etc., etc, --- are all market distortive. Most of these intrusions were inflative to home prices and mucked around with risk mechanisms. Every time the government does anything to "increase home ownership", they are doing something inflative to home prices.


Nontheless, it must be done. The proper position of the GOP (and one
that I believe ultimately wins) is to expound the benefits of free
market and small government, tying those ideas back to Thomas Jefferson
and the other Framers and drawing links between the core ideas on which
this country was founded and the GOP's own governing principles.
This kind of assumes the small gov't, libertarian folks have the
default right to keep the GOP brand. Who says the social conservatives
don't get the keep the GOP brand and it's the libertarians who have to
find another name and create another brand? Who's got more right to
call themselves 'Republican' if the camps split?
Dunno. What I believe is that the first group to man up and split from
their mother ship (be that the social cons to form the "Christian
Democrats" or the small govt types to (re)form the Federalists, or for
that matter the democrat far left to form the "Social Democrats"), then
the other will follow suit.

IOW, if the GOP were to split credibly, I believe the Dems would also split.

I'm not so sure I agree that would happen, the rift on the left isn't
quite as serious as the one on the right. Although the split of the
GOP might attract a few centrist leaning independents, seems to me the
Dems would remain mostly in tact.

The Dems have moved left at the same time the GOP has moved right. The rifts don't look so large today in the Dems because they are all happy to be back into power. If the Dems stay relatively centrist over time. the left will become more and more disenchanted. Case in point -- evidently there are 80 or so Dems that say they will not vote for health care reform unless there's a government alternative insurer in there, which is not what Obama has proposed. If they hold that position, HC reform is DOA, by a large margin.

JG


JG

.

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