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Old 07-31-2008, 09:26 AM   #33 (permalink)
robot_parade
Junkie
 
Location: San Antonio, TX
Quote:
Originally Posted by loquitur View Post
actually, guys, I believe that I said elsewhere that the state provides infrastructure for capitalism, such as a legal system, law enforcement and defense. My issue isnt with that sort of thing. My issue is with attempts to pick winners and losers, to second guess economic outcomes, to prefer certain groups at the expense of others, and other such things. Contrary to your contentions, history amply demonstrates the folly of such activity. Friedman demonstrated, for instance, that the federal govt turned a manageable business downturn into a Depression. Japan just had a 15 year recession because it was unwilling to have a market shakeout.
"Friedman demonstrated, for instance, that the federal govt turned a manageable business downturn into a Depression."

No he didn't. He *argued* that the monetary policies of the Federal Reserve failed to stop the Great Depression. This interpretation is still up for debate, but he certainly wasn't arguing against regulation - he was in favor of the Federal Reserve, he just thought they made the wrong call. A lot of economists these days agree with that assessment, but it's not exactly like you can test these things. :-)

Quote:
Originally Posted by loquitur View Post
And almost invariably the governmental schemes become instruments of corruption of one sort or another - corruption that is much harder to root out than in a business and, because it's at the governmental level, much more dangerous and insidious because it affects more people and requires years -- several elections plus legislation plus enforcement - to get rid of. "Corruption" as used here refers to invocation of public machinery for private purposes, usually cloaked under hifalutin' rhetoric about the public good.
Absolutely, this happens quite a lot. That's why regulation should be clear, simple, and transparent.

Consider the bailout of Bear Sterns, Fanny Mae, Freddy Mac. Letting them crumble would be absolutely devestating to the economy. But, by bailing them out, the guys who made the irresponsible decisions at the top get off mostly scott free (not all of them, but I'm sure the big guys are doing fine). So how is there any incentive against them doing the same thing all over again?
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