How to fix the Economy...?

[Achilles2]

Here's my thoughts on the matter.

The majority of the jobs lost are coming from small businesses closing their doors. This is why the government needs to stop bailing out every large company, some that can afford to fail, and start subsidizing smaller businesses. With small businesses, less bailout money will be needed; you won't see the government spend billions to save a small food chain. Yet at the same time, the total of jobs saved will be more than what is through bailing out large corporations. Basically, I'm suggesting a stimulus package for smaller businesses and less bailouts for big corporations.

Furthermore, the less bailout money used, the more power to our dollar. Since the government keeps bailing out companies, they are printing more and more money. The result is less power for a dollar and prices of food and such rise. Subsidizing smaller businesses, who don't need as much money, will require less money being printed and won't hike up the price of things.

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them. In times such as these, where one job means the world to our economy, we can't let that happen. Give the Big 3 their bailout. After that: NO MORE BAILOUTS FOR LARGE COMPANIES. Too much money has been used wastefully already.

Now onto taxes. I think that Customs Duties (tariffs) should rise, meaning that foreign businesses who export their goods to the United States will have to pay more to get their goods on sale here. This will support more competitiveness among struggling American businesses and prospering foreign businesses. It will also give the government more money to help subsidize struggling businesses.

These are just my opinions on what the government should do right now to help the economy. What are your thoughts on what should be done? Do you think the methods I introduced would help?

[Garthredbunlove]

IMO that's a very bad idea, and you've got very little knowledge of economics.

[Achilles2]

At 12/6/08 07:59 AM, Garthredbunlove wrote: IMO that's a very bad idea, and you've got very little knowledge of economics.

What exactly is a bad idea?

[Minarchist]

At 12/6/08 07:59 AM, Garthredbunlove wrote: IMO that's a very bad idea, and you've got very little knowledge of economics.

Agreed.

At 12/6/08 07:47 AM, Achilles2 wrote: The majority of the jobs lost are coming from small businesses closing their doors. This is why the government needs to stop bailing out every large company, some that can afford to fail, and start subsidizing smaller businesses.

The idea that full employment is optimal in an economy is a fallacy. If full employment was optimal, then the government could just employ everyone like under FDR. It's actually full production that is optimal, and this does not necessarily occur at full employment although as production increases, so does capital, which in turn is reinvested, creating more jobs. Therefore, government should intervene in the economy only to promote full production. This means creating a fair marketplace by penalizing those who commit aggressive acts or fraud and nothing more.

Bailouts of any form for any industry are silly for one principal reason: governments have no money. Government only takes money from the market and diverts it somewhere else, usually at a loss. So what you're suggesting is to divert capital from successful, job and capital producing industries, to small businesses, which for whatever reason (likely because they have not found a way to innovate to bring down prices), have been unable to attract enough consumers and investors to grow.

Furthermore, the less bailout money used, the more power to our dollar. Since the government keeps bailing out companies, they are printing more and more money. The result is less power for a dollar and prices of food and such rise.

This is true.

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them. In times such as these, where one job means the world to our economy, we can't let that happen.

When businesses fold, all assets are not lost. They are sold in the marketplace to more viable enterprises that likely have better management. In this way, the assets are reinvested and new jobs with the ability to create capital appear.

Now onto taxes. I think that Customs Duties (tariffs) should rise, meaning that foreign businesses who export their goods to the United States will have to pay more to get their goods on sale here. This will support more competitiveness among struggling American businesses and prospering foreign businesses. It will also give the government more money to help subsidize struggling businesses.

Legal arguments aside, tariffs are inherently counterproductive as they negate the advantage of international trade to the consumer. So while consumers pay higher prices to American producers, the wages they are earning don't go as far. You seemed concerned with the price level before, but increasing tariffs will see that price level rise drastically.

For example, consider an example in which consumers buy their gaming consoles from Japanese producers and their iPods from American producers. Suppose government then raises tariffs on Japanese electronics to protect the American gaming console industry. One of two things happens according to the preferences of the consumers: either they purchase their gaming consoles from American producers at a higher price but don't have enough money to buy iPods, or they decide gaming consoles are not worth buying at their new prices and purchase only iPods. In the end, one industry will collapse and everyone has a lower standard of living. Thus, tariffs are beneficial to select producers at the detriment of all other producers and consumers.

Frederic Bastiat's Negative Railroad argument is a very famous argument which still stands today against tariffs back in the early 19th century.

These are just my opinions on what the government should do right now to help the economy.

The reality is that the government is incapable of helping the economy.

[Achilles2]

At 12/6/08 08:49 AM, Minarchist wrote: ...

So I see. I do admit that I have little knowledge in the field of economics. So that must mean you follow Bastiat's economics? If ll of what you said is essential to boosting the economy, then we're getting nowhere, fast.

[altanese-mistress]

Let these businesses go bankrupt and the executives in charge lose their investments. There will be some major problems, but that's the short term. It won't be long before smaller companise rise to fill the void, create more jobs, and bring more prosperity. The only government funding should be in easing the fall of the larger companies for the workers, and helping jump start the smaller businesses. It causes more prosperity and stability in the long term.

[Der-Lowe]

At 12/6/08 07:47 AM, Achilles2 wrote: The majority of the jobs lost are coming from small businesses closing their doors. This is why the government needs to stop bailing out every large company, some that can afford to fail, and start subsidizing smaller businesses. With small businesses, less bailout money will be needed; you won't see the government spend billions to save a small food chain. Yet at the same time, the total of jobs saved will be more than what is through bailing out large corporations. Basically, I'm suggesting a stimulus package for smaller businesses and less bailouts for big corporations.

Sounds reasonable, saving small businesses would have a bigger impact on job creation; it would lower the social impact of the crisis.

Furthermore, the less bailout money used, the more power to our dollar. Since the government keeps bailing out companies, they are printing more and more money. The result is less power for a dollar and prices of food and such rise. Subsidizing smaller businesses, who don't need as much money, will require less money being printed and won't hike up the price of things.

I would not be so sure that the amount needed for bailing out many small businesses is smaller than the amount to bail out few large ones. You'd need a source, or an intelligent guess of it.

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them. In times such as these, where one job means the world to our economy, we can't let that happen. Give the Big 3 their bailout. After that: NO MORE BAILOUTS FOR LARGE COMPANIES. Too much money has been used wastefully already.

I disagree on bailing auto makers, they were unprofitable EVEN in the expansionary part of the cycle, they should have gone bankrupt long ago, and more efficient businesses like the Japanese automakers (which are, btw, the only ones that are employing Americans now) take their place.

Now onto taxes. I think that Customs Duties (tariffs) should rise, meaning that foreign businesses who export their goods to the United States will have to pay more to get their goods on sale here. This will support more competitiveness among struggling American businesses and prospering foreign businesses. It will also give the government more money to help subsidize struggling businesses.

You're forgetting that the US is a major player in international trade, and its moves will not go unnoticed. The rest of the nations would "counter-attack", and all good would become more expensive, and all industries and consumers will be worse off.
In anyway, hurting the neighbor to enjoy more prosperity is not very ethical.

At 12/6/08 07:59 AM, Garthredbunlove wrote: IMO that's a very bad idea, and you've got very little knowledge of economics.

IMO you're a troll.
---------------------------
Achilles2, I think ur kewl. It's not common to see a humble, polite, curious poster like you :3

Max Weber said, that in order to be neutral in Social Sciences (like Economics) one has to, before talking about a subject, first say which view one holds.
I believe in Keynesianism and the Welfare State. Our fella minarchist here is keen on the Austrian School of Economics; he follows Mises, and I follow Samuelson, minarchist has a view quite opposite of mine, so it should not surprise you that he and I will have opposing views in this and many other Economic discussions.

Now, onto minarchist

At 12/6/08 08:49 AM, Minarchist wrote:

At 12/6/08 07:47 AM, Achilles2 wrote: The majority of the jobs lost are coming from small businesses closing their doors. This is why the government needs to stop bailing out every large company, some that can afford to fail, and start subsidizing smaller businesses.

The idea that full employment is optimal in an economy is a fallacy. If full employment was optimal, then the government could just employ everyone like under FDR. It's actually full production that is optimal, and this does not necessarily occur at full employment although as production increases, so does capital, which in turn is reinvested, creating more jobs. Therefore, government should intervene in the economy only to promote full production. This means creating a fair marketplace by penalizing those who commit aggressive acts or fraud and nothing more.

You forgot public goods, and promoting macroeconomic stability, and sufficient social equality.

hur hur hur

Bailouts of any form for any industry are silly for one principal reason: governments have no money. Government only takes money from the market and diverts it somewhere else, usually at a loss. So what you're suggesting is to divert capital from successful, job and capital producing industries, to small businesses, which for whatever reason (likely because they have not found a way to innovate to bring down prices), have been unable to attract enough consumers and investors to grow.

Or maybe because of scale conditions, or the characteristics of demand (diversity requirements).

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them. In times such as these, where one job means the world to our economy, we can't let that happen.

When businesses fold, all assets are not lost. They are sold in the marketplace to more viable enterprises that likely have better management. In this way, the assets are reinvested and new jobs with the ability to create capital appear.

This is not always the case; Capital ages, and it is not full mobility; you cannot the machines of an auto factory into an ice-cream parlor. Transition costs money, and if not done smoothly, it can be very harmful both in the short and in the long run.

These are just my opinions on what the government should do right now to help the economy.

The reality is that the government is incapable of helping the economy.

Oh, you.

At 12/6/08 02:11 PM, altanese-mistress wrote: Let these businesses go bankrupt and the executives in charge lose their investments.

Executive in charge own little of the capital of the firm, it'll be small shareholders that will lose their investment.
About the rest you have said, I agree.

[InsertFunnyUserName]

At 12/6/08 07:47 AM, Achilles2 wrote: The majority of the jobs lost are coming from small businesses closing their doors.

I'm not quite sure that's an accurate statement, but it could be.

But even if it is, it's misleading. If big companies and fast food chains like Macy's, Mcdonalds, Burger King, JCPenny, Hershy's, etc went out of business, the number of jobs lost would be in the millions. Economically, small businesses aren't as important because they are small.

If a small business goes out of business, a hundred people lose their jobs. If a large cooperation goes out of business, 100,000 people lose their jobs.

Furthermore, the less bailout money used, the more power to our dollar. Since the government keeps bailing out companies, they are printing more and more money. The result is less power for a dollar and prices of food and such rise. Subsidizing smaller businesses, who don't need as much money, will require less money being printed and won't hike up the price of things.

I doubt they're paying the companies in hard cash.

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them.

So will other companies.

Now onto taxes. I think that Customs Duties (tariffs) should rise, meaning that foreign businesses who export their goods to the United States will have to pay more to get their goods on sale here. This will support more competitiveness among struggling American businesses and prospering foreign businesses. It will also give the government more money to help subsidize struggling businesses.

This is a pretty good idea. It will also mean that consumers will have to pay more for imported goods and it may deter them from buying them. This means more money circulating in our economy, rather than China's.

These are just my opinions on what the government should do right now to help the economy. What are your thoughts on what should be done? Do you think the methods I introduced would help?

I wish your ideas would work, because that would mean America would be less dependent on large businesses and small businesses would have a chance to prosper. It would also mean a solution to the bailout debate.

However, I doubt that they can. I don't support the bailout, but I do understand the economic importance of it.

[Achilles2]

After doing some more research, I have new ideas for the economy. What do you think will be the effects if the government were to...

Lower the Interest Rates for Fixed-Rate Mortgages?

Lower the Capital Gains tax significantly for investments in small businesses, and lower them slightly for investments in bigger businesses (eg. corporations)?

Lower the marginal tax rate on income from labor?

[RWT]

RWT makes his grand enterance to the Politics forum. Try to figure out if I'm a conservative or a liberal.

At 12/6/08 07:47 AM, Achilles2 wrote: Here's my thoughts on the matter.

The majority of the jobs lost are coming from small businesses closing their doors. This is why the government needs to stop bailing out every large company, some that can afford to fail, and start subsidizing smaller businesses. With small businesses, less bailout money will be needed; you won't see the government spend billions to save a small food chain. Yet at the same time, the total of jobs saved will be more than what is through bailing out large corporations. Basically, I'm suggesting a stimulus package for smaller businesses and less bailouts for big corporations.

Bailing out anyone isn't a good idea. It hurts our economy, and selectively grows certain markets. It's unfair is what it is.

Furthermore, the less bailout money used, the more power to our dollar. Since the government keeps bailing out companies, they are printing more and more money. The result is less power for a dollar and prices of food and such rise. Subsidizing smaller businesses, who don't need as much money, will require less money being printed and won't hike up the price of things.

The amount of money to bail out small businesses would be comprable to what they're spending now. It's pork is what it is.

For reasons for the economy, I say that the Big 3 Automakers also need a bailout. Even though they've ran their businesses into the ground, they will also take millions of jobs with them. In times such as these, where one job means the world to our economy, we can't let that happen. Give the Big 3 their bailout. After that: NO MORE BAILOUTS FOR LARGE COMPANIES. Too much money has been used wastefully already.

People seem to have a misconception that losing your job is a bad thing (No irony intended, I'm talking about the big picture). If people aren't buying, then there's no market for something. Subsidising an unneccesary business hurts the economy by wasting money. These workers need to be employed at places where they can be useful, at companies that are doing better. The economy is taking a routine downturn (accelerated somwhat) and people must be prepared to make more trade-offs.

Now onto taxes. I think that Customs Duties (tariffs) should rise, meaning that foreign businesses who export their goods to the United States will have to pay more to get their goods on sale here. This will support more competitiveness among struggling American businesses and prospering foreign businesses. It will also give the government more money to help subsidize struggling businesses.

Look at me, I know the definition of tarriff.

Let me get this straight- taxing foreign companies just because they're foreign makes things fair?

These are just my opinions on what the government should do right now to help the economy. What are your thoughts on what should be done? Do you think the methods I introduced would help?

I suggest stepping the hell away from the economy, and allow it to do its thing. This isn't a bad economy. It does this every 11 years or so. We've added the credit bubble, but there's no need to freak out and attempt to save the free world from going under.

De-regulate!

(P.S.- I'm a liberal.)

[Achilles2]

At 12/7/08 02:47 PM, RWT wrote: De-regulate!

Yeah, I realized the mistakes in my first post. But what do you think about my new ideas (presented in the post above yours)?

(P.S.- I'm a liberal.)

I could tell

[RWT]

At 12/7/08 02:52 PM, Achilles2 wrote:

At 12/7/08 02:47 PM, RWT wrote: De-regulate!

Yeah, I realized the mistakes in my first post. But what do you think about my new ideas (presented in the post above yours)?

(P.S.- I'm a liberal.)

I could tell

I'm a fiscal conservative-liberal who thinks global warming is natural and that FDR messed up the economy.

I'm a thinker.

After doing some more research, I have new ideas for the economy. What do you think will be the effects if the government were to...

Lower the Interest Rates for Fixed-Rate Mortgages?

I don't care for interest rate adjustment. The government shouldn't fundamentally change the economy. That's just me, mr. de-regulation.

Lower the Capital Gains tax significantly for investments in small businesses, and lower them slightly for investments in bigger businesses (eg. corporations)?

I hate the capital gains tax.

Lower the marginal tax rate on income from labor?

Across the board? It's really a Capital Hill decision, and we can afford it. But the government would use it as an excuse to cut funding everywhere; i.e. education & healthcare.

The key thing to know is that small businesses do not make up the majority of employment, anywhere. I live in small town America- let me see if I can find my copy of the 4 year comprehensive plan. Here we go- the top three employers in my town of 3,000 people are the paper mill here, Food lion, and Walmart. More people work at Fast Food than small businesses. There's a drug store, two mechanics, a hairdresser, a laundromat, three restaurants, and two kitschy stores. Collectively, small businesses make up a tenth of the jobs of a single manufacturing plant, no matter where you go. Main street America is just for show.

[bkdude]

The US will be socialist in the next ~50 years, so none of this will really matter in the future.

the machines will do our work for us...

[Der-Lowe]

At 12/7/08 02:07 PM, Achilles2 wrote: After doing some more research, I have new ideas for the economy. What do you think will be the effects if the government were to...

Lower the Interest Rates for Fixed-Rate Mortgages?

The Fed is already doing this; he's in ur financial system, injecting its liquidity, as ThePretenders once said. More money->lower rates.

Lower the Capital Gains tax significantly for investments in small businesses, and lower them slightly for investments in bigger businesses (eg. corporations)?

Why would you want to punish corporations and benefit small businesses?

Lower the marginal tax rate on income from labor?

I agree, I believe Obama had proposed this.

[Minarchist]

At 12/7/08 02:07 PM, Achilles2 wrote: Lower the Interest Rates for Fixed-Rate Mortgages?

The market is perfectly capable of determining its own interest rates. In fact, it was these artificial interest rates that created the bubble in the first place. The "business cycle" is not a natural phenomenon, but rather it's a consequence of fractional-reserve banking and artificial interest rates.

There's an amusing quote by a Soviet economic adviser that I'm having trouble finding right now, but I'll paraphrase. "When the whole world is communist let's leave one little country as capitalist so we know what prices should look like." The same is true for interest rates.

Lower the Capital Gains tax significantly for investments in small businesses, and lower them slightly for investments in bigger businesses (eg. corporations)?

Lower the marginal tax rate on income from labor?

The problem with any decrease in tax rate is that if it doesn't accompany a decrease in spending, it's completely worthless. Otherwise we run up a deficit, and then the Federal Reserve must creates more money out of thin air. This new money begets inflation as it moves through the economy, functioning exactly like a tax. It's worse than a normal tax though because no one knows who it will affect the most. All we know is who will be affected the least: those who get the money first. In other words, only those who are so privileged to be chosen by the central bank for a bailout or credit infusion.

Due to the surreptitious nature of this inflation tax, I would prefer an overt tax acquired by any means. This way we know exactly who our government is hurting and who it is helping. Right now, our economy is in a high deflationary period as all the malinvestments originating from the government-induced credit bubble must be liquidated. However, in some indefinite period of time we will experience massive inflation due to all the money that the Federal Reserve has created during this period in an attempt to turn failed banks into Zombies.

[Zeistro]

Here's my simple solution. Cut government subsidies and get rid of all this red tape( regulation). Allow the free market to run its course. The weak will be devoured while the strong survive giving us the benefit of cheap goods provided at competitive prices.

[Der-Lowe]

At 12/7/08 07:47 PM, Zeistro wrote: Allow the free market to run its course.

Yeah, credit crunch, deflation and depression.

[JudgeDredd]

At 12/8/08 09:35 AM, Der-Lowe wrote:

At 12/7/08 07:47 PM, Zeistro wrote: Allow the free market to run its course.

Yeah, credit crunch, deflation and depression.

With the alternative being; unmanageable debt, printing money, hyper-inflation, world war aka total economic collapse.

[yinyangman]

At 12/6/08 07:59 AM, Garthredbunlove wrote: IMO that's a very bad idea, and you've got very little knowledge of economics.

In MOI opinion, I think Barack Obama wants the economy fixed as quick as possible and that's not a bad idea... It's a good idea.

[Der-Lowe]

At 12/8/08 10:06 AM, JudgeDredd wrote:

At 12/8/08 09:35 AM, Der-Lowe wrote:

At 12/7/08 07:47 PM, Zeistro wrote: Allow the free market to run its course.

Yeah, credit crunch, deflation and depression.

With the alternative being; unmanageable debt, printing money, hyper-inflation, world war aka total economic collapse.

Your unmanageable debt came from constant regressive tax cuts, not from a one-in-a-century fiscal stimulus plan. These sort of plans do not trigger hyperinflations, those come from a ridiculous monetary expansion; the worst they have created, when maintained well after their mission was accomplished, was galloping inflation.

[Achilles2]

At 12/6/08 08:49 AM, Minarchist wrote: When businesses fold, all assets are not lost. They are sold in the marketplace to more viable enterprises that likely have better management. In this way, the assets are reinvested and new jobs with the ability to create capital appear.

This happens under Chapter 7 Bankruptcy, right? So why not just suggest for these companies to file for Chapter 13 Bankruptcy?

A lot of Republican Senators are arguing against a bailout and for Chapter 11 Bankruptcy, which allows one to reorganize and refinance, while their assets are not liquidated. The company also continues to run, and its assets will be protected until it is finished reorganizing. This will prevent many jobs from being loss, while at the same time preventing the government from printing more money and causing inflation.

Chapter 13 is even better for these companies. It's basically the same as Chapter 11, except it requires the company to follow a court-ordered plan for refinancing themselves. This will ensure that we know what they will do with their money, while at the same time not needing a bailout and not losing any jobs.

[Minarchist]

At 12/8/08 05:20 PM, Achilles2 wrote:

At 12/6/08 08:49 AM, Minarchist wrote: When businesses fold, all assets are not lost. They are sold in the marketplace to more viable enterprises that likely have better management. In this way, the assets are reinvested and new jobs with the ability to create capital appear.

This happens under Chapter 7 Bankruptcy, right? So why not just suggest for these companies to file for Chapter 13 Bankruptcy?

I'm not really very knowledgeable on the subject of law, but it's my understanding that Chapter 13 is for individuals only.

A lot of Republican Senators are arguing against a bailout and for Chapter 11 Bankruptcy, which allows one to reorganize and refinance, while their assets are not liquidated. The company also continues to run, and its assets will be protected until it is finished reorganizing. This will prevent many jobs from being loss, while at the same time preventing the government from printing more money and causing inflation.

I think it's a better solution than a "no strings attached" bailout or partial nationalization, but it's still a socialization of failure. If it was in the interest of the creditors, then they would have already refinanced under conditions they felt appropriate. If it was in the interest of the consumer, it's unlikely that these corporations would be entering bankruptcy in the first place.

The freedom to fail is ESSENTIAL to capitalism. Government should not dissolve private contracts under any circumstances except those of acts of aggression and fraud. Business contracts generally contain provisions in the event that one party fails to meet its obligations. Companies make long term decisions based on the risk involved in these contracts and the provisions they contain. To forcibly dissolve a contract means that some obligations have not been met, generally meaning a loss of capital to one of the parties, resulting in the loss of jobs for that company.

This principle scales with size. Although there are many jobs in the auto industry, there are also many jobs in the financial industry that rely on the provisions of those contracts to be fulfilled. As I already said, if it was in the creditors interests, they would allow the debts to be refinanced on their own without any government action. Since they have not done this, it's likely the case that they expect to take ownership of the company's assets for liquidation. Even in the case of Chapter 13 bankruptcy, this is a massive government intervention given the size of the industry. The financial institutions will lose a lot of capital, and as a result, many people in the financial industry will lose their jobs. This cannot be justified.

the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.

Chapter 13 is even better for these companies. It's basically the same as Chapter 11, except it requires the company to follow a court-ordered plan for refinancing themselves. This will ensure that we know what they will do with their money, while at the same time not needing a bailout and not losing any jobs.

And what makes you think the government will have better oversight than the private individuals? Bureaucrats have nothing to lose; they have no stake in the companies. The long history of government is filled with abuses, misuses, and mismanagement of money to a far greater degree than that of private entities.

[RWT]

And what makes you think the government will have better oversight than the private individuals? Bureaucrats have nothing to lose; they have no stake in the companies. The long history of government is filled with abuses, misuses, and mismanagement of money to a far greater degree than that of private entities.

That's exactly my point- market share in a capitalist system is a zero-sum game. Preserving auto industry jobs is not forming a new market- it detracts from the job pool. Resources are wasted when the government attempts to subsidize markets. If a market is dwindling, it is because there is no demand for it. Jobs are a resource, like a computer or a saw.

Stop looking at the credit crunch as an example of a "bad" economy. This isn't a bad thing! It's a perfectly normal fluctuation made a little stronger by market trends. Buy! This is a great market for buyers!

[Zeistro]

At 12/8/08 09:35 AM, Der-Lowe wrote:

At 12/7/08 07:47 PM, Zeistro wrote: Allow the free market to run its course.

Yeah, credit crunch,

Umm, there's going to be a credit crunch regardless if the economy is runned under a socialist model, mixed-economy, or just laissez-faire. Banks are out for their own interests whether or not there's government pressure on them.

Of course, what we have in the US(subprime mortgage crisis) where banks were encouraged(forced) to give loans and mortgages to low-income familes who will certainly going to default on their debt. Hmm, banks losing money because of careless and unsagacious lending(All being encouraged by the government). I wonder what that's going to possibly lead to.......?

deflation

Deflation is generally good because it lowers prices and adds greater monetary value to currency. What isn't good is drastic deflation better known as deflationary spiral, but even so its temporary. Loss in money supply isn't a good thing either, but is also temporary and produces lots of positive results.

and depression.

Interesting fact, many of Woodrow Wilson's policy worsened the Great Depression and the agricultural crisis such as his efforts to turn the Midwest into the "bread basket of the world." Not only that, but FDR's legislature prolonged it further.

http://businessandmedia.org/articles/200 8/20081027150030.aspx

Had government simply minded its own business, the market would of healed itself in the same way the human body mends an injury sustained to itself. There's is no economic model immune to negative occurences such as inflation, credit crunch, recession, etc, but I'm willing to bet my life the businessmen, entrepreneurs, investers and the market itself are better at dealing with these kind of problems than egomaniacal politicians looking for votes.

[Der-Lowe]

At 12/9/08 07:53 PM, RWT wrote:

And what makes you think the government will have better oversight than the private individuals? Bureaucrats have nothing to lose; they have no stake in the companies. The long history of government is filled with abuses, misuses, and mismanagement of money to a far greater degree than that of private entities.

That's exactly my point- market share in a capitalist system is a zero-sum game.

What are you referring to with "market share"?

Preserving auto industry jobs is not forming a new market- it detracts from the job pool. Resources are wasted when the government attempts to subsidize markets. If a market is dwindling, it is because there is no demand for it.

Indeed.

Jobs are a resource, like a computer or a saw.

Not at all, not even neo-classical economics considers labor as a mere input; there are people and families behind it.

Stop looking at the credit crunch as an example of a "bad" economy. This isn't a bad thing!

Losing homes, being unemployed, not being able to take credit is teh fun.

It's a perfectly normal fluctuation

No, financial crisis in the developed world were a thing in the past, when the financial markets were left unchecked by the government. Now we are facing a crisis a lá 19th century, only that much more dangerous, given the development of capital markets, and globalization (eg the subprime crisis in the US makes Iceland's banking system collapse)

made a little stronger by market trends.

And hopefully made a lot softer by govt intervention.

Buy! This is a great market for buyers!

That's what people said in the middle of the Great Depression, and stocks kept falling.

[Der-Lowe]

At 12/9/08 08:16 PM, Zeistro wrote:

At 12/8/08 09:35 AM, Der-Lowe wrote:

At 12/7/08 07:47 PM, Zeistro wrote: Allow the free market to run its course.

Yeah, credit crunch,

Umm, there's going to be a credit crunch regardless if the economy is runned under a socialist model,

being run*

mixed-economy, or just laissez-faire.

No. A neat regulation avoids the collapse of the financial systems, as in the period 1929-1980

Banks are out for their own interests whether or not there's government pressure on them.

And, in their own interest, screw up, big time, and systematically.

Of course, what we have in the US(subprime mortgage crisis) where banks were encouraged(forced) to give loans and mortgages to low-income familes who will certainly going to default on their debt. Hmm, banks losing money because of careless and unsagacious lending(All being encouraged by the government). I wonder what that's going to possibly lead to.......?

deflation

Deflation is generally good because it lowers prices and adds greater monetary value to currency.

Deflation is never good, even kids who watch the ECB cartoons know that. Deflation reduces consumption, which in turns reduces investment, which in turn reduces consumption, und so weiter und so fort.

What isn't good is drastic deflation better known as deflationary spiral, but even so its temporary.
Loss in money supply isn't a good thing either, but is also temporary and produces lots of positive results.

Tell the Japanese. Tell the Argentinians.
Deflation is never positive; that's why every major central Bank has been avoiding it since 1929.

and depression.

Interesting fact,

Wrong. There are no facts in social sciences, there are different views on a specific social phenomenon, that are determined by our values. One could doubt (as philosophers have) that there are no facts at all since even math is limited and transformed by our perception. You must also remember that all knowledge is science is fallible.

many of Woodrow Wilson's policy worsened the Great Depression and the agricultural crisis such as his efforts to turn the Midwest into the "bread basket of the world." Not only that, but FDR's legislature prolonged it further.

http://businessandmedia.org/articles/200 8/20081027150030.aspx

Had government simply minded its own business, the market would of healed itself in the same way the human body mends an injury sustained to itself. There's is no economic model immune to negative occurences such as inflation, credit crunch, recession, etc, but I'm willing to bet my life the businessmen, entrepreneurs, investers and the market itself are better at dealing with these kind of problems than egomaniacal politicians looking for votes.

blah blah blah, conservatives have conservative views.
FDR did whatever he could do to get America out of the Depression. Sure, he screwed some things up, many of his decisions were terribly incorrect, but he got America out of the recession finally, and the country experienced, stable, unprecedented growth and equality afterwards.

[Minarchist]

At 12/10/08 05:13 PM, Der-Lowe wrote: single lines of text

It's silly that, on economic topics, you only compose single line rebuttals and expect anyone to care or try to refute you. Why do you even bother?

[KeithHybrid]

Wanna know how to fix the economy?
Un-ban gay marriage!

If Jack Black is to be believed...

[Der-Lowe]

At 12/10/08 06:22 PM, Minarchist wrote:

At 12/10/08 05:13 PM, Der-Lowe wrote: single lines of text

It's silly that, on economic topics, you only compose single line rebuttals and expect anyone to care or try to refute you. Why do you even bother?

I'm a lazy poster :\

[Battl3Mast3r]

Has anyone considered that letting businesses go bankrupt is apart of a healthy economy?

Take this example, at heart, with a real-time example of biogeography and endemic species (don't worry, it will make sense):

On the island of Guam, you have endemic species--most of which, are birds. The definition of being endemic, is being found in one place, and one place only--no where else in the world. There were several kinds of bird species on Guam throughout the 20th century--then they start disappearing, going extinct, if you will.

In 1952, the Brown Tree Snake invades Guam, since someone accidentally brought them over. Over the decades, the arboreal snake wrecked havoc and made 50% give or take, of the Bird Species go extinct, and the others are now extinct in the wild--only to be found present in Zoos across the US and other places.

So who cares? What's my point? The point is that islands are the last place for an animal, insect, etc. to exist because they evolve without predators, and will eventually meet extinction there. They evolved to be unable to respond to competition and predators, since they didn't have any. Once a predator comes, they die. It happens, and we must learn to deal with it. Zoos have given sanctuary to them--but you can trust your bottom dollar that all of these birds will never return to Guam, and are bound to become extinct very soon.

My point--think of the Birds as if they were American Businesses in the US. Predators and competition have come, and have put them in a very vulnerable position where they can't really compete. Luckily, they can evolve faster than the Birds on Guam, but thats their only saving grace. The zoo (the gov't) can take them in if they like, but they cant survive in the wild, per se. They need to learn to survive without the zoo.

Let the birds die, I don't know what else to tell you. The Zoo can only do so much, the birds have to learn to evolve (not the real birds, thats impossible due to evolution's speed, I mean the proverbial birds), or else they will die. It's that simple.

When the birds die, another species will take it's place. The zoo can only do so much, so don't expect it to do everything.