AIG Merges with AIG to Form AIG

Ha ha.

I am reminded of Dogbert exorcising the demons of economic rationalism. Perfectly reasonable, if you have the right mindset.

You had me for a couple of seconds. Happy Monkey!!

I think I'm partly to blame. For years I would hear of "AIG" on the news and for a split second forget that it was "the other AIG." But when the story of the bonuses broke I thought of proposing the merger as "one made in heaven." One that doesn't even require the dreaded name change that invariably displeases one of the parties. I never got around to contacting them, but apparently "someone upstairs" heard my "prayers". ;-)

I thought that in order to modernize his organization to the 21st century Ken Ham was going to change the name to "Answers in Exodus."

I am sure that Bernie Madoff will be CEO of this fine organization. Can a religious institution apply for a bail-out?

Nice one!

Nice. Like the one a few years back when it was announced that Tim McGraw and Faith Hill had bought McGraw-Hill publishing.

Hmmm, don't Hamm and crowd think of the Vatican as Satan's vacation home? Or maybe its just Jack Chick (isn't he the one with the website proving the Pope is evil?)

Haha. April Fool's Day!

So, will our OTHER set of fundies descend on this, now?

If you haven't read this book by Albert Ellis, the pioneering cognitive therapist, you should. It's an updated edition of his early critique of market fundamentalism as inventing a new religion complete with unrealistic demands, dogmatic doctrine, and attacks on rationality.

Originally Ellis was fighting a palooka - the obviously weak Objectivist brand of fetishized capitalism. The updated edition is more of a heavyweight bout.

"In business news, 3M and Eminem have merged to form, get this, Ultradyne Systems. And speaking of news stories, here's.. another. Springfield spelling phenom has qualified for spellings answer to the Olympics, the Spellympics. In a related story, the Spellympics is being sued by the Olympics for the use of the suffix.. lympics. Ugh. This has got to be the slowest news day ever! Ah that's better. Paris is no more! The legendary city of lights has been extinguished forever as a massive..."

Very nicely done. The fact that I immediately recognised what it was didn't diminish the pleasure of reading it at all.

Matt,

I heard that they will be promoting primarily Klingon Cosmology according to some contacts I have on Q'onos. I've intercepted a top secret message from Klingon Chancellor Martok to an orbiting cloaked Klingon Bird of Prey, authorizing a team of Klingon warriors to apprehend a certain William A. Dembski, who will be subjected to rendition and waterboarding. They hope to persuade him that Intelligent Design creationism is mendacious intellectual pornography.

Cheers,

John

To me AiG and AIG is one and the same when it comes to how they handle money. I have a blog post about this you're more than welcome to come look at.

Two AIGs: One thing in Common

At least AiG is many billions ahead of AIG in finances, and hasn't sucked similar amounts out of taxpayers.

Considering the abilities of both to spin fanciful scenarios disconnected from evidence and reality, the merger appears a blessed one.

Glen D

http://tinyurl.com/6mb592

Or to follow Behe’s terminology they are now AIG squared!

Mark Farmer said: Or to follow Behe’s terminology they are now AIG squared!

Like creationism, free-market economics is wholly unsupported by the evidence: boom-and-bust cycles like the present cycle, for example, followed a failed experiment in deregulation.

The free market has been vindicated by its performance since the time of at least Adam Smith actually. Allowing people to choose, government holding itself in check regarding cartelization (cartels being a favorite form of protectionism going back to the classical world*), generally diminishing protectionism, etc. are the major reason why we live in a world of plenty as compared to any other generation of human beings on the planet.

As far as deregulation is concerned, regulation (across the board) grew significantly under the Bush administration just as it has done under past administrations. This is not a defense of the Bush administration so much as a dig against the notion that the lack of regulation is at the heart of our current economic problems; if anything it was the political class' obsession with making housing our chief national industry that explains much of why we are here.

As for boom and bust cycles, it would seem to me that the efforts to control them by say monetary policy or economic regulation or fiscal policy have proven to be rather fruitless, largely because people adapt (they evolve individually and collectively) to such or because they plug into unanticipated incentives which those who run the political economy don't really anticipate. Government efforts are always running behind what is happening in the real world, in other words.

Now, no one is suggesting that free markets (be they in religion, science, speech or economics*) are perfect; but IMHO they lead to far more satisfactory outcomes over the short and long term than centralized, top-down control of such do.

*People do tend to forget that free market types are interested in more than merely economic activity; the demands for choice extend past such, and I think this is generally what bewilders and confuses those of the traditional left and right re: free market types.

Free market speech can hurt someone's feelings. Free market economics can hurt someone's livelihood. Do you not appreciate the difference? Or do you just not care?

Glen Davidson said: At least AiG is many billions ahead of AIG in finances, and hasn't sucked similar amounts out of taxpayers.

Marion Delgado,

If not capitalism, then what exactly? Socialism pretty clearly doesn't work. Neither do any of the other systems which do not look to the individual as the locus of analysis, rights, etc.

As for objectivism, I would recommend this: http://www.amazon.com/Objectivism-Corruption-Rationality-Critique-Epistemology/dp/0595267335

Most free market types are for the record not objectivists; they are Hayekians or Friedmanites or Schumpetarians (or, like myself, a combination of those three and others).

Seward -

Your latest post is an excellent analysis of free market economics (It is ironic that, as I write this, European "socialist" heads of state are condemning our president's desire for a strong government stimulus via over regulation and printing money for more than a trillion dollars worth of new spending, whose economic reprecussions will be felt by all of us for years to come.).

Some of those here at PT may forget that Darwin was influenced strongly by Adam Smith's thinking of an "invisible hand", using that as a perfect metaphor to explain the "economy of nature". Several recent books, most notably Michael Shermer's "Why Darwin Matters" and Mark Pallen's just published "Rough Guide to Evolution" have made this very point.

Regards,

John

fnxtr,

"Free market speech can hurt someone’s feelings."

A lot of people of course argue that free speech hurts more than this; and thus we see efforts to control such.

"Free market economics can hurt someone’s livelihood."

Are you talking about job guarantees? If so... People stopped being guaranteed a job when we got rid of the guild system. Fluidity in employment is fairly key to the operation of economic development and growth. Indeed, job guarantees are unsustainable largely because states or industries which engage in such cannot compete in the long run with states or industries which have fewer or lack such employment protection. You can only put a stop on social evolution for so long; and there will be a great deal of pain associated with the period where that stoppage is undone.

fnxtr,

BTW, it isn't that I don't care; I care a lot in fact.

John Kwok,

Thank you.

Thanks, Seward and John,

I wanted to address Matt's reference to "free-market economics" but figured that others would do it better. Regardless of who is right about economics I think we can all agree that both AIGs are quite detrimental to US competitiveness.

So where's the joke? Makes as much sense as anything else in intelligent design creationism.

Glen Davidson said: At least AiG is many billions ahead of AIG in finances, and hasn't sucked similar amounts out of taxpayers. Considering the abilities of both to spin fanciful scenarios disconnected from evidence and reality, the merger appears a blessed one. Glen D http://tinyurl.com/6mb592

Frank J.,

Well, even more to the point; there are numerous economists who have won Nobel prizes in their field who advocate free markets (obviously what they mean by the latter can vary at the margins, but I would guess that they would generally agree on things like robust property rights, free trade, lack of government ownership and cartelization etc.). However, I can't recall any creationists winning Nobel prizes in medicine, physics or chemistry.

Stephen said: Very nicely done. The fact that I immediately recognised what it was didn't diminish the pleasure of reading it at all.

Seward said: If not capitalism, then what exactly? Socialism pretty clearly doesn't work.

Stephen,

When has capitalism ever functioned and been sustainable without its socialistic safety net?

The economic relations of human beings have never been free of political interference; some of that interference is necessary, some is not. I would note though that there is a significant difference between government control of the "commanding heights," which proved to be quite dangerous and murderous in the 20th century, and a safety net. I like Milton Friedman have less of a problem with something like a negative income tax as opposed to centralized planning. The latter has proven itself over and over again to be abject failure on multiple levels, including that of human welfare.

Anyway, I would argue that bailing out AIG isn't necessary for the survival of capitalism and that bailouts in general inhibit the dynamism of a capitalist system and are merely very costly delays of the inevitable.

...all the Social Security funds collected from workers, remember that?

I would note that the use of SSI funds for financing general government spending has been around for decades. Did you know that? Were you also aware that it is severely unfunded and basically amounts to an age based wealth transfer?

As for it being used on Wall Street, Bush's plan wasn't really all that empowering; I would have preferred the ability to stop paying into SSI entirely myself and to decide for myself what to do with those dollars. Choice as a general rule is a good thing.

...he fact remains that the completely “free market” is a mythological creature.

I'm really not going to engage in logomachy.

eric,

Some elements of the U.S. economy are social democratic in nature (social democracy and socialism aren't the same thing I would argue); however, social democracy still depends to a large extent on the marketplace providing for the goods necessary to carry the cost associated with it.

"...but funny thing, no one ever called the country socialist under the last president."

You haven't been hanging around libertarians and free market types I see.

I bet that article is fake. It is Aprils Fools Day so I bet it is a joke.

Does the public health service have long waiting lists and inadequate facilities? Buy private insurance. Has public transport broken down? Buy a car for each member of the family above driving age. Has the countryside been built over or the footpaths eradicated? Buy some elaborate exercise machinery and work out at home. Is air pollution intolerable? Buy an air-filtering unit and stay indoors. Is what comes out of the tap foul to the taste and chock-full of carcinogens? Buy bottled water. And so on. We know it can all happen because it has: I have been doing little more than describing Southern California. Now it is worth noticing two things about the private substitutes that I have described. The first is that in the aggregate they are probably much more expensive than would be the implementation of the appropriate public policy. The second is that they are extremely poor replacements for the missing outcomes of a good public policy. Nevertheless, it is plain that the members of a society can become so alienated from one another, so mistrustful of any form of collective action, that they prefer to go it alone.

I didn't realize it was possible scoop the Onion.

Any day other than April 1st, the real analog to Answers in Genesis for market fundies would be either AIR (Answers in Rand) or AIM (Answers in Mises).

And hey, at least a couple former AIM members are now Libertarians, so who knows?

If I were revising my elevator points about market fundamentalism the main one i'd add would be the crippling effect on science of secrecy agreements, which always accompany privately funded research. I hear or read complaints about that one every week.

We gave up pure laissez faire capitalism, hundreds of years ago. It didn't work. What happened was boom and bust cycles, monopolization, and oligarchies grabbing the government and running things for their own benefit.

Regulated capitalism has worked well for most of the 20th century. Not perfect but no better system has been developed. In general, markets should be as free as possible consistent with maintaining a level playing field.

The IMF and the World bank deal all the time with a common situation. The upper economic classes and the banks end up with a stranglehold over the government due to their money and ownership. They proceed to strangle the economy for their own benefit. There are many third world examples. There is now a first world example. I'll give you a hint. It takes up half of N. America and was once called the Last Superpower.

"Creationism . . . is wholly unsupported by the evidence." Congrats, you've written an article that takes anti-creationist nonsense and athiest lies as givens. Whoop de do. SOOOOO original. Never been done before. TOTALLY not beaten to death. Ha-ha. Ha. ha. While you're at it, why don't you call G. W. Bush stupid and claim that the attacks on the Twin Towers and the Pentagon were faked.

Marion Delgano,

"And free market economics has never ever been vindicated, let alone the authoritarian, totalitarian religious cult built around it since the 1940s."

I would note that authoritarianism and totalitarianism are two quite different things. As for free markets and individual choice being authoritarian or totalitarian, well, it was the collectivist ideologies of Nazism and Soviet Communism which proved that not to be the case.

As for Mises and facts, many of the Austrians argue that our simplistic, 19th century physics based math used to describe the world of economic interactions simply is inadequate for the task. I tend to agree with them there in many respects.

"There’s no difference between the Divine Right of Kings and the wisdom of the market..."

I'd say that the wisdom of the market is vindicated daily. The next time you show up at the grocery store and they have the kind of bread and olives that you want demonstrates that well enough.

"1. that markets self-regulate"

If they didn't self-regulate business would simply come to a halt. Governments are simply incapable of regulating markets in any wholesale or micro manner. This is one of the reasons why the central planning collapsed. Imagine designing a commercial code which do such a thing as opposed to the self-regulated evolution of such by market actors.

"2. that businesses and industries self-regulate."

See above.

"3. that people will only respond to economic metrics"

Free market types don't argue this. I certainly don't. Indeed, it is expected that the family unit will not generally run this way and that philantropy will exist in a free society.

"4. Virtually everything Adam Smith was saying about the capitalism of his time. Not only does it ignore most of Wealth of Nations, but all of Moral Sentiment, for instance. They still get that wrong."

Sorry, but I really don't understand what you are writing here. Could you be a bit more clear? Anyway, I highly recommend both of these works.

"5. Quite a bit of what even von Hayek said about laissez-faire and the governmental needs of an advanced state. they still get THAT wrong."

Hayek was concerned with central planning and how it might lead to totalitarianism; he did not fret as much about social welfare programs. Is that what you are getting at?

"6. that giving up on socialized health care would ever benefit any country whatsoever. It’s always in fact killed them off. By the tens of millions by now, starting with India."

I also don't understand this sentence. Socialized medicine is of very recent import historically; basically a phenomenon which can be traced from the end of WWII to today.

"7. that mercantilism doesn’t work. it’s the only thing that’s ever established an industrial base."

This is non-sense. The internal trade of both Britain in the 18th century and the U.S. in the 19th century pretty clearly illustrates the benefits of taking down barriers to market entry. Compare this to the sluggish performance of states (e.g., Germany and France) which took longer to take down such barriers. This is scalable to international trade. All mercantilism does is benefit certain producers and impoverish everyone else. Talk about rewarding entrenched corporate interests; there is no better way to do that than via mercantilism.

"8. that government planning doesn’t work. It did wonders for Korea, Japan, Taiwan, and many other countries."

I will simply note that Honda as a car company wouldn't exist if the MITI had its way. And of course Japan suffered a significant recession which stretched into this. As for Korea, well, yeah, North Korea is a centrally planned economy; I don't think it has done wonders for the place though. As for South Korea, I really don't know enough about their economic development to comment. I do however know that during the 1960s when the government there argued that it was going to pursue an export based economy that the various international lending institutions argued against it. In the case of Taiwan, I don't know much about their path to development.

"8. That you don’t need data. Both Keynes and Gailbraith had a much better track record of prediction and effective responses due to both of them demanding data and testing of the theoretical aspects of economy. In comparison, the religious fundamentalists, the 2 friedmans, greenspan, etc. have never ever been proven right, not even once."

This is just silly. For example, Friedman's most famous text, his history of the Federal Reserve, is chock full of data. BTW, I would say that Milton Friedman has been more than vindicated on our ability to get rid of a draft and still continue with an effective military.

I would note that Galbraith argued for wage and price controls in the 1970s and they proved to be, well, rather problematic.

"9. that science works better when you pay in advance for the results of tests and research."

How is one supposed to respond to such a comment? What exactly are you suggesting? That economists who take a free market view are on the take?

"10. that socialists can’t do science."

That probably depends on why they are doing it. I hate to drag up this old example, but clearly socialists like Lysenko didn't do science very well.

"11. that the market shows real value, always - first disproven decisively by the tulip mania, and reinforced by the psychotic compensation system existing in the United States today."

There is no such thing as "real value." Value is subjective. I would say that the vast majority of economists these days accept this basic insight of the Austrian school. In other words, Austrians aren't Aristotelians.

"12. that the gold standard is a cure-all - it’s actually what spread the Great Depression in the 1930s world-wide."

I'm not a gold bug; though free banking might be worth a try. A for what spread the Great Depression, that would be protectionism and a variety of acts by dunderheaded central banks.

"13. that privatizing utilities is sound - despite a consensus of every other economic school on the planet that some things are natural monopolies, including all utilities, and that unregulated markets are the worst possible way to manage them."

I don't believe Keynesians argue that all utilities must be public. Anyway, the performance of public utilities in the U.S. has been far, far from perfect; corruption, poor safety records, poor cost to benefit ratios, etc. have generally plagued them.

"14. That the free market always lowers costs. No insurance plan in history has had lower overhead than Medicare or Social Security."

Right now people are losing it because supposedly by what, 2050, both programs together will take over what is it, 75% of American's income to support? If they have such low overhead then why are continuously having to fix them so that they do not eat up the wealth of the nation? In other words, there is a reason why politicians are starting to talk about rolling back when one can retire, means testing, etc. Because public spending on health care and the like is so incredibly high. Indeed, whatever perspective one takes to the subject, free market, single payer, etc., it is pretty clear U.S. healthcare is broken and that we pay far more for care that is similar to most of what can be found in other industrialized countries.

"15. That the answer to the pseudoscience and fetishism that permeated Marxism was to set up an even worse counter-pseudoscience and enforce it with purges of academia and secondary education and government, and confiscations of the Commons."

Yeah, academia and the government has really been purged of the critics of capitalism. As for the "commons," we've really never had that in the U.S. outside say fisheries.

"16. That Argentina and Pinochet’s Chile were SUCCESS STORIES!"

I don't recall any free market types praising the fascism of Argentina; so that is just, well, something I am not remotely familiar with. As for Pinochet's Chile I certainly wouldn't praise it. After all, it was largely cronyist and mercantilist in execution.

"17. that imperialism and colonialism were welcomed worldwide, or that they were unnecessary to corporate capitalism."

Most libertarians and free market types are anti-imperialists and bemoan the imperialism of any period of time.

There, I think I answered all your points.

raven,

Hundreds of years ago laissez-faire capitalism didn't exist; mercantalism was the name of the game then. Look at the policies of the English and French governments under the Stuarts and the Bourbons for examples of such. So you are simply wrong on that count.

"What happened was boom and bust cycles..."

We still have these under "regulated capitalism," and a strong case can be made that regulation, in part by entrenching vested interests as well as by protecting us from low level risks, makes the busts and the booms worse, not better.

"...monopolization..."

We've had no greater period of monopolies than via government action; indeed, the chief proponents of monopoly are generally the well established in an industry. Indeed, ask yourself, why did not a single airline go bankrupt from the mid 1930s until deregulation in the 1970s?

"...and oligarchies grabbing the government and running things for their own benefit."

That's a decent description of the U.S. government as it exists today; the more power the government has, the more that vested interests can seize that power and wield it themselves. This is all covered in things like interest group theory, iron triangles, the iron law of oligarchy, etc.

I'd not heard of the insurance group until its financial woes started, which always made me wonder why Answers in Genesis was sponsoring a well-known football ([American translation] soccer[/American translation]) team...

Seward said: eric, Some elements of the U.S. economy are social democratic in nature (social democracy and socialism aren't the same thing I would argue); however, social democracy still depends to a large extent on the marketplace providing for the goods necessary to carry the cost associated with it. "...but funny thing, no one ever called the country socialist under the last president." You haven't been hanging around libertarians and free market types I see.

Seward,

With regards to your recent reply to Marion Delgado, I would note that the Japanese tried a massive economic stimulus package for themselves back in the 1990s, and it didn't trigger an economic recovery. Instead, the country was in an economic doldrum until the early part of this decade, when market forces finally lifted the country upward.

What happened to Japan may be our fate if Obama's economic stimulus package isn't overturned soon.

John

Seward said: Some elements of the U.S. economy are social democratic in nature (social democracy and socialism aren't the same thing I would argue); however, social democracy still depends to a large extent on the marketplace providing for the goods necessary to carry the cost associated with it.

John Kwok said: Obama seems intent on inserting not just social democratic - but indeed, outright socialist (as in the Federal government’s effective control of General Motors) - elements

eric,

I would argue that socialism requires significant ownership of the "means of production" by the state. I guess what "significant" means is something to be determined, but most states in the West do not state ownership outside of a handful of industries.

"...but suddenly becomes an intolerable evil when the buyer is one’s own government."

Part of it depends on what one thinks of Hayek's knowledge problem.

"Congress isn’t using legal force to acquire assets or shares at below-market prices."

I would note that the executive branch under the Bush administration required a number of institutions to opt into the TARP, when they wished not to go into it. At least I believe that is right. You can check me on that.

As for the government's involvement in bailouts, well, that is problematic on several levels; it is partly problematic because the government appears to be wedded to the notion that these firms should not be allowed to fail. Indeed, too big to fail is something we here all the time from advocates of these policies. However, this ignores Schumpeter's key insight regarding capitalism; that failure and destruction are necessary for a capitalist system to function. Otherwise what one gets is sclerotic cartelized corporatism.

"The exact same negotiation would occur in any typical corporate buy-out..."

In a real buy out it would be expected that large portions of the firms in question would simply be liquidated.

Seward said: As for the government's involvement in bailouts, well, that is problematic on several levels; it is partly problematic because the government appears to be wedded to the notion that these firms should not be allowed to fail... In a real buy out it would be expected that large portions of the firms in question would simply be liquidated.

eric,

Re; the knowledge problem - F.A. Hayek, The Use of Knowledge in Society: http://www.econlib.org/library/Essays/hykKnwCover.html

eric,

...I don’t think you’ve convinced me that the government is qualitatively different from any other market actor.

Well, the state is a different sort of actor, since it is the sole "legitimate" source of coercion. This is one of the core attributes of a nation-state as we understand such today.

Anyway, I think I've fairly well staked out my ground on these issues. I'm not quite sure what else I could write. Oh, and I don't expect people to visit the mountain like Moses as such if I'm talking to them; just that they be friendly. And you've definitely been the latter.

Note from a european :
In parallel with your very interesting (friendly) fights and arguments over laissez-faire capitalism vs social democracy in USA etc imagine the following scenario,try to predict what will happen to your economy ,to your country and to the world if-when the US dollar ceases to be the de facto world currency...

Let's not forget that European leaders have pointed out that their spending on the "safety net" far exceeds ours to begin with. They don't need to be lectured on that.

The reason this crisis began is because of the rapacious greed of operators in major financial institutions. If making money is good then making more, regardless of the consequences is obviously better. And that's what free market idealists encouraged - not responsible investment but the value of creating wealth for itself.

It's easy to talk theory but apparently more difficult to sympathize with people who are hurt by free-marketeerists, especially those who hypocritically disdain a strong safety net.

It's obvious that some advocates of free markets are looking for a chance to simply loot and pillage without having to worry about being called criminals for their behavior, present company accepted, I presume.

A two-page fight over economic ideologies? This is the cruelest April Fool's joke ever!

"The reason this crisis began is because of the rapacious greed of operators in major financial institutions."

This makes little sense in light of the numerous government efforts to raise the level of home ownership in the U.S. The government was encouraging irresponsible lending because home ownership was viewed by many in the government as some sort of panacea for economic inequality in society.

"And that’s what free market idealists encouraged - not responsible investment but the value of creating wealth for itself."

I'm sorry, but I must disagree, for the reasons I stated above. If anyone was encouraging irresponsible investment it was the government.

"It’s obvious that some advocates of free markets are looking for a chance to simply loot and pillage without having to worry about being called criminals for their behavior, present company accepted, I presume."

I've personally never met an adovocate of free markets who was remotely like that; I find that people who want to loot and pillage are generally critics of free markets, because the best way to loot and pillage is either to loot and pillage Viking style or to do it by the power of the state.

Wheels,

*LOL*

Sounds like someone's memorized Gordon Gekko's lines just a little too well.

This post probably should fit under the "Superfluous comments" section on the About page.

Anyway, the publicity for AiG and the Creation Museum is great. Keep up the good work!

By the way, it's AiG (Answers in Genesis) not AIG if you are interested in accuracy and truth.

Thanks--Phil

Seward said: Well, the state is a different sort of actor, since it is the sole "legitimate" source of coercion. This is one of the core attributes of a nation-state as we understand such today.

Anyway, I think I've fairly well staked out my ground on these issues. I'm not quite sure what else I could write. Oh, and I don't expect people to visit the mountain like Moses as such if I'm talking to them; just that they be friendly. And you've definitely been the latter.

fnxtr,

How exactly am I supposed to respond to that comment? As for greediness, it is a good thing from the standpoint of utility. A couple of states in the 20th century tried to eliminate greediness from the character of human beings (e.g., the New Soviet Man) and it lead to disastrous consequences.

eric,

Well, the limited government (minarchist) argument is that the optimal form of regulation concerns only areas like force and fraud and not say minimum wage laws. Whether this is optimal because of consequentialist or non-consequentialist arguments tends to vary by person. I myself tend to be a rather mixed bag on that account.

"Thank you…for a completely off-topic series of posts this has been very interesting and enjoyable."

Well, I love to read about you science folks are doing, but generally have little to contribute to that, so I normally just lurk.

try to predict what will happen to your economy ,to your country and to the world if-when the US dollar ceases to be the de facto world currency…

Seward: If you think that rapacious greed wasn't behind what happened at AIG you should investigate for yourself the actions of its investment arm and note that the man who ran AIG until 2005 testified the other day before congress that the CEO who followed him had no interest in the welfare of the company but only his own wealth. The notion that self-interest is some guiding light for capitalism fails to explain why certain executives put their interests before those of the company and its shareholders. Looting and pillaging are kind words to describe the actions of those operators.

gregwrld,

"If you think that rapacious greed wasn’t behind what happened at AIG..."

I have no doubt that individuals will do harmful things in the name of making a buck. However, as I have noted, it was government policy to put as many people as possible into a home that they owned; from at least some point in the late 1990s people were concerned about this policy. Our industrial policy as it were. One cannot really ignore this fact and lump all the blame on private actors who were in many instances cajoled into following this policy.

"The notion that self-interest is some guiding light for capitalism fails to explain why certain executives put their interests before those of the company and its shareholders."

Self-interest and empathy are extremely good checks on excessive self-love, as Adam Smith would put it. It isn't foolproof by any means. The fact that the government was encouraging excessive self-love wasn't helpful would be my argument.

Seward: "Cajoled"? When the government, in cahoots with big business opens loopholes in regulations for operators to profit by - that's not "cajoling", that's self-interest all-around. And don't forget the merry-go-'round that these self-interested operators ride between government and the private sector. It's not just one helping the other, it's the same folks helping themselves and justifying it with free-market ideology.

By the way, I'm no socialist but I'm no lover of unbridled capitalism, either.

Wheels said: A two-page fight over economic ideologies? This is the cruelest April Fool's joke ever!

gregwrld,

"When the government, in cahoots with big business opens loopholes in regulations for operators to profit by - that’s not “cajoling”, that’s self-interest all-around."

Say this is the true cause of the current situation... I would note that I'm not going to argue against the general notion of agency capture as a general notion.

How exactly is more regulation going to solve the problem? Who watches the watchers? And who watches them? And the next group of watchers? That is to be frank a recipe for profiteering by both the regulated and the regulators in part because stepwise cascades of regulatory bodies like that remove the sunshine from government; which allows for concentrated interests to raise the cost of X activity, good, etc. for everyone else.

"It’s not just one helping the other, it’s the same folks helping themselves and justifying it with free-market ideology."

Free market types are more than aware of this sort of behavior; partly because of this now famous quote by Adam Smith:

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is im-possible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and jus-tice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." - The Wealth of Nations, Book I, Chapter X

Free market types would argue that a government which regulates in the manner that modern social democratic governments do is prone to such "conspiracies." That the best of intentions lead to problematic results.

eric & gregwrld,

Did you two see what Joseph Stiglitz wrote in the NYT today? http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=2&sq=Stiglitz%20toxic%20assets&st=cse&scp=1&pagewanted=all

I would guess that Stiglitz (a Nobel prize winner) and I would disagree on a fair number of things, but I would say that he agrees with the core critique that free market types have about these bailouts.

KP said: Well, nobody can rightly say that "evolutionism" (sic sic sic) is the "religion" strictly held by "liberals." Somebody tell Ann Coulter.

KP,

Well, I'm a "liberal" in the 19th century sense of the term. ;)

Anyway, I don't really agree with Coulter on much I suspect.

Seward said: eric & gregwrld, Did you two see what Joseph Stiglitz wrote in the NYT today? http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=2&sq=Stiglitz%20toxic%20assets&st=cse&scp=1&pagewanted=all I would guess that Stiglitz (a Nobel prize winner) and I would disagree on a fair number of things, but I would say that he agrees with the core critique that free market types have about these bailouts.

eric,

Yes. I rarely look at dates on web based articles.

Stiglitz presents an alternative; nationalization. I myself would perfer short-term nationalization to what we are currently doing. Of course for me a more optimal solution would be some sort of liquidation and/or buy out by private firms.

I don't think I've been crying socialism. Social democracy describes what we've been doing in the West since WWII.

"...and because regulation and government has a place in even free markets."

I agree with this. The devil is thus in the details.

eric,

As Stiglitz notes, one reason to favor nationalization is partly because we have some experience with it nationally and internationally. Experience is hugely important when it comes to the political economy. Indeed, short-term nationalization is a common solution when the banks of other countries run into systemic, industry wide trouble. So, ask yourself why aren't we doing that here? It has in large part to do with domestic politics.

stevaroni said: try to predict what will happen to your economy ,to your country and to the world if-when the US dollar ceases to be the de facto world currency…

There's nothing particularly magical about the US dollar from a financial perspective, other than the size of our economy, which gives us stability of scale.

It's generally agreed that in the US we've been able to sustain our situation mainly by an influx of foreign capital, largely Asian.

However, that does weaken the dollar, and in fact, prior to the recent downturn the dollar was falling significantly on foreign exchanges and we were starting to see major investors start to ease up on dollar investments.

When that happens, it's going to significantly raise the cost of borrowing here in the States, and it will be a significant jolt to our system, which, as we have seen, is largely fueled by cheap credit and heavy consumption at all levels.

This process had already started. I do many overseas projects, and I noted that starting 2 years ago, the dollar was falling so fast that contracts that had always been priced in dollars were starting to price in Euros.

Interest on US treasury bonds had to climb relative to European and Asian bonds, and there was some speculation that investors, particularly the Chinese, were poised to see Euros as a better long-term bet.

Much of that has been reset with the global downturn, as wealth flees back to dollars, but that's more a matter of everybody else being in worse shape than it is any strong aligence to the American economic system.

Again I cannot think of a way for the Chinese to change in a safe way their trillions of dollars savings-investments-reserves.

True at all levels,most importantly since there is no gold standard

• Gold was/is rare, so therefore coins are difficult to forge (you have to find some gold first!)
• It didn't rust, so it was ideal for minting

Hey guys I agree fully,
I didn't say that the gold standard is the solution nor
that I would like a return to it
(don't forget that I wrote gold standard or something analogous).
In fact I believe there is no real solution to the problem.
Whatever we use as a currency it's really a virtual,
an imaginary thing ,it doesn't possess a real absolute objective value,
the only value it has is what we give and apply to it.
Having said that, something like a gold standard is certainly less fixed to only one specific country,
it seems more just, hey even gold is mined in quite a few countries,
it's solid not just an idea and it has proven enough enduring through time.

USD on the other gives a huge advantage only to you.
Well I must confess that if I were you I'd like that too... :)

P.S. I really hate not being able to format my text as I want.One continuous paragraph isn't what I meant posting.Are there any instructions on text formating and tags for here? I haven't been posting (only reading) frequently since the software change of this site and I haven't adapted yet to the new enviroment...

Seward said: KP, Well, I'm a "liberal" in the 19th century sense of the term. ;) Anyway, I don't really agree with Coulter on much I suspect.

BTW, did anyone else happen to see the Simpson episode Wed/Thu night? I can't remember which day. Lisa's school had decided to teach Creationism and she was quite upset. The episode was quite funny. Ned & the Preacher cast Darwin in cahoots with the devil of course. Lisa held private Darwin readings until the police arrested her. She was about to give up, threw here Origins book in the trash, whereupon her mother picked it up and said "I wonder what this is all about." She pored over the book and came to the ghastly conclusion that Darwin made very strong arguments! She was impressed. Well, they had a trial, the climax of the episode, to weigh the merits of creationism versus evolution. In defense of creationism was a slick, dapper looking fellow all in suit who had received his academic PhD in "toothology" and was well qualified to defend creationism based upon his deep understanding of the subject and pointed to the "missing fossil" gap between man & earlier ancestors. Of course, Homer, acting as a retarded monkey unable to open a bottle of beer, filled the gap nicely and the creationists lost again. They handled the episode very well. It was quite funny. Springfield ended up giving creationism the (well deserved) boot.

KP,

I would say as a general rule that libertarians don't find evolution to be troubling (whether they are religious or not). There are of course exceptions. Anyway, I was an "evolutionist" before I became a free marketeer.

Seward said: KP, I would say as a general rule that libertarians don't find evolution to be troubling (whether they are religious or not). There are of course exceptions. Anyway, I was an "evolutionist" before I became a free marketeer.

Seward: It seems to me one of the reasons nationalization doesn't fly here is because free-marketeers and libertarians scream "it's socialism!".

Glad to see you're not one of that ilk.

Also, you can't blame people for wanting homes (most do) when Realtors and mortgage
financiers are waving deals under their noses for low-interest ARM's without bothering to consider the future - for the new home-owners or themselves (that's why I chose the word rapacious).

gregwrld,

Oh, I dislike nationalization a lot; its just better than what we are doing right now IMHO.

As far as blaming people ... while these things are unfortunate, I remain convinced that the Austrian business cycle theory explains most of what is going on.

Seward said: KP, Well, I'm a "liberal" in the 19th century sense of the term. ;) Anyway, I don't really agree with Coulter on much I suspect.

KP said:

Seward said: KP, Well, I'm a "liberal" in the 19th century sense of the term. ;) Anyway, I don't really agree with Coulter on much I suspect.

Haha! Yeah it wasn't really meant to say anything about you personally. Coulter's premise is that liberals aren't christians, their god is Darwin and evolution is their religion. Obviously we have some conservatives and libertarians who post here about science and evolution, so Coulter has made yet another vacuous claim.

Guye writes... Spain found out about this the hard way, albeit with silver…

stevaroni said:

Guye writes... Spain found out about this the hard way, albeit with silver…

What was with silver anyway? Gold, I can understand, it's bright and shiny, and looks valuable. Silver, not so much. It tarnishes readily to a really ugly, dirty looking, patina, and it's not all that rare. Given the progress of modern metallurgy overt he past two centuries, I would have figured that silver would have disappeared from the pantheon of "desirable precious metals" long ago. (As an aside, I was in a museum in San Francisco a few years ago, and they had a fascinating display of wedding rings from the 1880's made of what was the truly precious metal of the day - aluminum).

John Kwok said: KP, It might surprise you to hear that there are liberals who are philosophically more in sympathy with Coulter than they would dare admit to

John Kwok said: If I'm not mistaken, silver was relatively rare as a precious metal until the Spanish conquest of Central and South America, which quite literally, "flooded" the world's market for silver.

(As an aside, I was in a museum in San Francisco a few years ago, and they had a fascinating display of wedding rings from the 1880's made of what was the truly precious metal of the day - aluminum).

Stanton said:

John Kwok said: KP, It might surprise you to hear that there are liberals who are philosophically more in sympathy with Coulter than they would dare admit to

Once, I would have been surprised that there are baby-eating, devil-worshiping, Anti-American, Osama Bin Laden-supporting boogie-people liberals who sympathize with Ms Coulter. After all, Ms Coulter has gone on the record, repeatedly, I might add, ascribing literally all of the world's evils, from 9/11 and abortions to Darwinism, just coming short of accusing liberals of inventing the common cold. But, there are odd people who agree with the weirdest things. After all, given as how there are Jewish Nazi- and Iranian-sympathizers, I wouldn't be surprised that there are liberal Ann Coulter sympathizers, too.

Stanton and Seward,

I have PZ pegged right. He's acting like Dembski now, having posted at Pharyngula a private e-mail that I had sent to him earlier today. Don't bother to take a look at his latest inane thread (I'm not reading it.).

John

John Kwok said: Stanton and Seward, I have PZ pegged right. He's acting like Dembski now, having posted at Pharyngula a private e-mail that I had sent to him earlier today. Don't bother to take a look at his latest inane thread (I'm not reading it.). John

AIG relied on prediction of low frequency/high severity events in conjunction with the certainty that their risk mix was spread far enough to *be* certain no matter how big it was in relation to their own capitalization. They were merely ignorant.

Creationists, on the other hand, are stupid.

John Kwok said: Stanton and Seward, I have PZ pegged right. He's acting like Dembski now, having posted at Pharyngula a private e-mail that I had sent to him earlier today. Don't bother to take a look at his latest inane thread (I'm not reading it.). John

Dale Husband said:

John Kwok said: Stanton and Seward, I have PZ pegged right. He's acting like Dembski now, having posted at Pharyngula a private e-mail that I had sent to him earlier today. Don't bother to take a look at his latest inane thread (I'm not reading it.). John

You mean this? http://scienceblogs.com/pharyngula/2009/04/kooks_amuck.php What if you get banned from Panda's Thumb as well? I don't agree with P Z Myers' banning you from his blog, but he does not owe you any favors either. Start your own blog to compete with him instead!

He’s gone on a little campaign online elsewhere, especially over at Facebook, against me and it has to stop.

GuyeFaux said: Is there proof of this:

He’s gone on a little campaign online elsewhere, especially over at Facebook, against me and it has to stop.

I thought the number of both of your ff friends increased since your falling out.

John Kwok said: GuyeFaux - Actually, most of those who have recently "friended" me are long-lost friends from high school and, in one instance, graudate school! Thanks to PZ's inane comments over at Pharyngula, I have lost at least twenty friends due to him (And this isn't just his latest screed, but others, starting with his Survivor: Pharyngula thread):

GuyeFaux said: Is there proof of this:

He’s gone on a little campaign online elsewhere, especially over at Facebook, against me and it has to stop.

I thought the number of both of your ff friends increased since your falling out.

It's really hysterical that he gets bent out of shape after I sent him a few e-mails, mostly to criticize inane comments written by some about me over at Pharyngula. I guess he has some kind of "death wish", since I advised him to leave Muslims alone and he's now going after them, with as much vehemence as he has done towards Roman Catholic Christanity. Best, John P. S. It is especially ironic how all of this is playing out now, when, philosophically, I probably have more in common with him than I do with, for example, Ken Miller. However, unlike PZ, I don't accuse Ken of being a "creationist" or stage a risible incident like the "cracker incident" last summer.

Kwok, if you want to show the world how loopy PZ really is, why don't you link to the thread where you assert that, due to his "campaign" against you, he somehow owes you a camera?

Oh yeah, all that thread shows is how loopy you are.

ben said: Kwok, if you want to show the world how loopy PZ really is, why don't you link to the thread where you assert that, due to his "campaign" against you, he somehow owes you a camera? Oh yeah, all that thread shows is how loopy you are.

John,

Honestly, why are you surprised that a vocal atheist is "after" Islam as fervently as he is "after" Christianity or any other theism? It doesn't strike me as any more "loopy" than his atheism --- which you can consider loopy or not ---, which you surely knew about?

GuyeFaux said: Is there proof of this:

He’s gone on a little campaign online elsewhere, especially over at Facebook, against me and it has to stop.

I thought the number of both of your ff friends increased since your falling out.

John Wilkes Kwok said: So who's really the "loopy" one? I think the better bet is with PZ Myers than yours truly.

A prominent evolutionary biologist agrees with me - I won’t disclose who that is

John Kwok said: Seward, With regards to your recent reply to Marion Delgado, I would note that the Japanese tried a massive economic stimulus package for themselves back in the 1990s, and it didn't trigger an economic recovery. Instead, the country was in an economic doldrum until the early part of this decade, when market forces finally lifted the country upward. What happened to Japan may be our fate if Obama's economic stimulus package isn't overturned soon. John

Marion Delgado said: http://online.wsj.com/article/SB123903779551793559.html Zomg! The foolish Japanese are not even LISTENING to John Quack! Are they blind? Mammon is not mocked, and His Invisible Hand shall surely smite them! There is no God but Mammon and Mises was His true profit. My theory: The evil PZ got to them.

John Kwok said: Seward, With regards to your recent reply to Marion Delgado, I would note that the Japanese tried a massive economic stimulus package for themselves back in the 1990s, and it didn't trigger an economic recovery. Instead, the country was in an economic doldrum until the early part of this decade, when market forces finally lifted the country upward. What happened to Japan may be our fate if Obama's economic stimulus package isn't overturned soon. John

You guys build a lot of model planes out of straw and sticks in Wingnuttia, don't you, John. I bet that cargo is coming back any day now! What's the weather like there? Clearly, you have a radically altered history in your universe.

Marion,

Instead of acting like a delusional creationist IDiot, why don't you read Michael Shermer's "Why Darwin Matters" and Mark Pallen's "The Rough Guide to Evolution", since they both explain how Adam Smith's conception of an "invisible hand" inspired Darwin's thinking on the "economy of nature".

Anyway, the only god I believe in is a Klingon one.....

Qap'la,

John

The man you speak of DID NOT ADVOCATE the assassination of a democratic president, and suggested such a possibility only if he decided to become a Marxist - Leninist totalitarian dictator. Last time I checked, this president is my president, and will remain so until the end of his current term in office, even though I disagree strongly with his economic policies. Only delusional nuts like you jumped to the conclusion that I wanted him assassinated, waged a fear-mongering campaign at Amazon, and had me banned. Those who are far more sane recognized that I was guilty only of exaggeration, and have since welcomed me back into the fold as a reasonable commentator as noted here:

In reply to an earlier post on Feb 12, 2009 1:33 AM PST
Elliott Bignell says:

John has suggested I pass on some comments pertaining to the discussion in question. They are taken from an e-mail exchange occurring off-forum and devolving from this thread of discussion and I think it best under the circumstances to post them verbatim rather than attempt to paraphrase, which might introduce biases of my own:

"...I must strongly beg to differ with your interpretation. I didn't threaten nor promise to 'behave', period. All I've said is that I accept Obama as my president and will suspend criticism of him (though there's potentially a lot for me to be critical of, especially with his economic stimulus package). Don't mind at all if you mention that."

"However, I did say that I am pleased with his cabinet picks for the most part, especially in science and technology. I should also note too that two of his key advisors, Axelrod and Attorney General Holder, are fellow alums of my high school."

While I have my differences with John on political matters, I can only echo this sentiment. All who are interested in the success of science must be breathing a sigh of relief that the new administration appear to be reversing the anti-science part of the Bush agenda. More than that I do not wish to say!

That's a comment posted by Elliott after my review of Jerry Coyne's "Why Evolution is True".

ben said:

A prominent evolutionary biologist agrees with me - I won’t disclose who that is

Your well-known propensity for name-dropping is quite remarkable. You name-drop even when you won't tell us what the name is. PZ Myers, Glenn Beck, Wayne Gretzky and all the teachers at my famous high school agree with me on this.