Penn Jillette's counterintuitive commentary

[Unabogie]

Oh, wiki agrees with you when you look up GDP?

Shucks, you would not be inclined to look up Real GDP, would you?

The, uh, real kind of, uh, GDP?

Now where are we?

I assume we're at the part where you explain why you think the distinction is important.

Addressing one part of your second assertion with your link, which I have read before:

... Now he saw. There weren’t enough Americans with ****** credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running”​

Where are we quibbling?

Thus I repeat my prior assertion supported with evidence from your link.

THAT is a $130B problem. Problem was not with subprimes, and your argument about the current course being the best option is word salad.

Like that of the Admin.​

So you quote my article back to me, repeat your insult, and call it a day?

All while snipping out most of my post?

How about where you explain what your alternative solution is, then we can see if we're in agreement, since honestly I can't understand what you're getting at other than a giant "YAWP".

 

[dudalb]

Last century had hundreds of long-term economic experiments involving roughly 10 billion people, showing a direct correlation between amount of freedom, including economic freedom, and general wealth of nations.

The theory is this economic power derives from freedom since people can be secure in keeping the product of their own efforts. How hard would you run in a 100-m dash if your win was "taxed" away and awarded to someone else?


So I'm a bit confused as to why any theory other than laissez-faire capitalism, a libertarian's economic position, is still considered viable today?

In any other field, every damned one of you skeptics demands proof. But politics is the last great refuge of woo for some of you -- even those who have given up on their own religious beliefs.

We pretty much tried Lasseiz faire Capitalism in the 19th century.
Would you care to defend unsafe and dangerous conditions in mines and factories, five year old kids being put to work in factories, and all the other "benefits" of totally unregulated businesses?
Sounds to me like you are the one who like to ignore evidence in favor of a theory.

 

[mhaze]

I assume we're at the part where you explain why you think the distinction is important.

Where are we quibbling?

So you quote my article back to me, repeat your insult, and call it a day?

All while snipping out most of my post?

How about where you explain what your alternative solution is, then we can see if we're in agreement, since honestly I can't understand what you're getting at other than a giant "YAWP".

noPe. Just covered the first two of your arguments and stopped to see what you'd say. You see, the third falls flat and must be restated with correct premises to be answered. Based on real GDP and actual causes of the collapse.

 

[qwints]

Last century had hundreds of long-term economic experiments involving roughly 10 billion people, showing a direct correlation between amount of freedom, including economic freedom, and general wealth of nations.

The theory is this economic power derives from freedom since people can be secure in keeping the product of their own efforts. How hard would you run in a 100-m dash if your win was "taxed" away and awarded to someone else?

On the first point:
1) Correlation does not equal causation. The US also had vast natural resources, military enforcement of corporate power in Latin America and a currency used as the global means of exchange.
2) Wealth of nations is not a universally agreed upon measure of success. How about life expectancy, civil liberties and quality of life?
3) Western Europe.

On the second point, you're making a false analogy. Money does not equal utility nor should it be a way of keeping score. It's simply a means of exchange. People have plenty of motivations unrelated to financial incentives. The government can't tax away winning the world series or producing a beloved work of art. It can and does tax the profits from doing so without producing an obvious disincentive.

 

[Unabogie]

noPe. Just covered the first two of your arguments and stopped to see what you'd say. You see, the third falls flat and must be restated with correct premises to be answered. Based on real GDP and actual causes of the collapse.

Shorter you: I got nothin'.

Fine, I will assume all of your arguments are true, although I'm having a very difficult time understanding what they are.

Please tell us:

• The actual cause of the crisis (if you think there is a crisis).
• Your solution.

I honestly can't unpack what you're writing here, so I'm interested.

 

[GreyICE]

Hey isn't one of the points of being a skeptic that you follow facts?

Anyone care to tell me if he made a factual statment in that article?

Bunch of nonsense from a blowhard is what it sounded like. Come back when you have facts, figures, and arguments instead of hyperbole and catchy phrases.

 

[Kthulhut Fhtagn]

This is what I don't understand about modern conservatives. Rather than do what's obviously right in this situation, thereby regaining some credibility on the economy, they've decided to completely oppose Obama on everything, regardless of the merits, and to offer no serious plans as an alternative.

Especially since Obama is (to a fault) willing to work with them.

If I was running the RNC, I would be slapping Republican names on as many bills as I could to show that Obama + GOP = effective government.

Instead, the argument in 2010 will be "VOTE FOR GRIDLOCK!"

Is this really wise?

Really?

Sadly in the world of partisan thinking "willing to work with them" usually means in so far as they (the minority party) are willing to do what we say and vote along the lines we want. There are some great examples of political double-speak and flip-flopping coming around now. Specifically in areas where Democrats opposed bills proposed while they were a minority but now have no problem with while the majority.

We pretty much tried Lasseiz faire Capitalism in the 19th century.
Would you care to defend unsafe and dangerous conditions in mines and factories, five year old kids being put to work in factories, and all the other "benefits" of totally unregulated businesses?
Sounds to me like you are the one who like to ignore evidence in favor of a theory.

This is one I hear alot from people opposed to lasseiz faire Capitalism. But I disagree that the evidence points to laisseiz faire capitalism leading to "unsafe" and "dangerous" conditions in mines and factories. Rather I think that was simple a product of the times (namely rapid industrial growth where regulations designed to protect people from such conditions were not previously needed, it wasn't considered a bad thing to have children helping you bring in the crop in an agrarian society that many people were just coming out of) and not the influence of lasseiz faire capitalism, I've yet to notice a trend which suggests that freerer market economies correlate positively with horrid working conditions. In fact I'd say it correlates positively with closed market or centrally planned economies.

Consider Hong Kong for example, which has been considered one of the most successful economies in the world and has been consistently rated the freest economy in the world for the past fifteen years. Direct your attention please to this chart from the Index of Economic Freedom. The ideal economic balance I see is a hand's-off approach to business and intervening only to enforce regulations designed to defend its citizens.

 

[Dr Adequate]

But the error Jillette is clearly making is that Obama is not proposing to "spend money to get out of debt".

He's proposing to spend money to get out of recession.

The debt has to be paid off in the usual way.

No-one at all in the entire universe is claiming that the stimulus plan will reduce the debt.

 

[Unabogie]

Sadly in the world of partisan thinking "willing to work with them" usually means in so far as they (the minority party) are willing to do what we say and vote along the lines we want. There are some great examples of political double-speak and flip-flopping coming around now. Specifically in areas where Democrats opposed bills proposed while they were a minority but now have no problem with while the majority.

Yeah, there's always plenty of that on both sides. I could list examples but I suspect that will hinder the discussion. But Obama is really into this middle ground, as he's shown in the past, most notably with the stimulus. He's just not wedded to his ideas, which I think is a good thing.

I think the atmosphere was really ripe for the GOP to steal the show from the Senate Democrats and ram through a lot of legislation that Obama would sign.

A great example would have been military procurement reform spearheaded by John McCain.

Another would be a set of rules for merit pay for teachers, which Obama supports, but I don't.

A slew of those could have been substantially more effective than "hoping Obama fails". As a partisan Democrat, I ought to be thrilled with this, but I can't escape the feeling that we'll all pay for this obstructionism since our country has some pretty serious problems to fix.

 

[mhaze]

Shorter you: I got nothin'.

Fine, I will assume all of your arguments are true, although I'm having a very difficult time understanding what they are.

Please tell us:

• The actual cause of the crisis (if you think there is a crisis).
• Your solution.

I honestly can't unpack what you're writing here, so I'm interested.

The original cause was the Fed holding interest rates abnormally low for the 1990s-2008 period, leading to the "bubble". That's all normal economy up and down, more or less. Therein is a recession, not a depression. Go compute it.

The propping up by the administration of false value in credit default swaps and other derivatives by pouring large fractions of total money supply (1T is > 10%) is the current problem which can generate a prolonged depression. False value and false markets always collapse.

This is further worsened by two things

1. The demonstration of incompetence in the administration essentially going around every week putting out the latest fire. Shows little medium or long term planning and strategy.
2. The weekly demands/requests for more control over more industries by the White House (banking, auto, insurance, investments).

"Better" will happen only when the government gets out of the largest number of industries possible, not when it gets into the largest number possible. Recently we've been told we (Obama et al) were screwing up by Chavez, Germany, Russia, China....the list is quite long.

It is quite clear to outsiders that we have an administration that does not exercise restraint in spending, and who is spending outside their means to repay. They have warned us of consequences to that. Those should be quite obvious.

 

[Darat]

...snip..

Sometimes, the right thing is counterintuitive. I hope this is one of those times, because my intuition tells me that spending this huge amount of money without raising the taxes to pay for it will end up quite badly.

I've seen two ways of arguing this. One is that taxes will at some time have to be raised to pay back this money but that will happen once growth is restarted. The other is that it can be paid back out of the growth without having to raise taxes specifically to pay for today's spending. I don't think anyone (in actual authority) has said that the debt won't have to paid back!

 

[Unabogie]

The original cause was the Fed holding interest rates abnormally low for the 1990s-2008 period, leading to the "bubble". That's all normal economy up and down, more or less. Therein is a recession, not a depression. Go compute it.

The propping up by the administration of false value in credit default swaps and other derivatives by pouring large fractions of total money supply (1T is > 10%) is the current problem which can generate a prolonged depression. False value and false markets always collapse.

This is further worsened by two things

1. The demonstration of incompetence in the administration essentially going around every week putting out the latest fire. Shows little medium or long term planning and strategy.
2. The weekly demands/requests for more control over more industries by the White House (banking, auto, insurance, investments).

"Better" will happen only when the government gets out of the largest number of industries possible, not when it gets into the largest number possible. Recently we've been told we (Obama et al) were screwing up by Chavez, Germany, Russia, China....the list is quite long.

It is quite clear to outsiders that we have an administration that does not exercise restraint in spending, and who is spending outside their means to repay. They have warned us of consequences to that. Those should be quite obvious.

Thank you for this. So you are actually arguing for doing nothing, allowing the insurance companies and exposed banks to fail, then letting the market adjust afterward.

But your position is completely out of the mainstream. Even Mitt Romney is in favor of new regulation. And the G20 just agreed.

The Group of 20 developed and developing nations said Thursday all systematically important institutions and markets should be regulated, and urged members to complete the implementation of the Basel II capital framework.

"We have agreed that all systemically important financial institutions, markets and instruments should be subject to an appropriate degree of regulation and oversight," the G20 said in an annex to the communique following its summit Thursday.

The group said hedge funds or their managers must be registered and will be required to disclose "appropriate information on an ongoing basis to supervisors or regulators," including on their leverage.

The group called on all G20 countries to "progressively adopt" the Basel II capital framework, which hasn't been agreed by the U.S. among others.
The G20 endorsed the Financial Stability Forum's recommendations on reducing procyclicality of accounting rules and also endorsed new principles on pay and compensation, which aim to ensure compensation structures are consistent with "long-term goals and prudent risk-taking."

These principles should be integrated into risk management guidance by the coming fall, the G20 said.

The group also called for "the standardization and resilience" of credit derivative markets, mainly through the establishment of regulated central clearing counterparties.

It called on the industry to develop an action plan on standardization by autumn 2009.

So clearly, all of the major nations favor more regulation, not less. But at least you've stated your plan (do nothing) which is more than most people have.

 

[Beerina]

laissez-faire cannot succeed in the USA, its french

Well, call it freedom-faire then!

 

[Beerina]

Because it overlooks the restriction of freedom that comes from corporations and/or individuals who control vast sums of wealth. It assumes the only entity that can restrict freedom is the government. That simply isn't the case.

The government is the only entity that can restrict freedom. They're the only ones who can send police to round you up if you refuse to "buy" their product. That's why I have to laugh at the concept of "political science" -- it's the only "science" that finds it ethical to experiment on unwilling test subjects.

In any case, historically, the big problems are always traceable to people with guns forcing their will on people. "Sugar trusts" and whatnot (I can hear the meme defense mechanisms prepping to regurgitate stuff like this) are, historically, incredibly minor as far as detracting from "quality of life". You have to think to yourself, a trust is bad...compared to what?

 

[Unabogie]

David Brooks wants to regulate the situation.

On the greed theory vs. the stupidity theory:

Both schools agree on one thing, however. Both believe that banks are too big. Both narratives suggest we should return to the day when banks were focused institutions — when savings banks, insurance companies, brokerages and investment banks lived separate lives.

We can agree on that reform.

 

[Beerina]

We pretty much tried Lasseiz faire Capitalism in the 19th century.
Would you care to defend unsafe and dangerous conditions in mines and factories, five year old kids being put to work in factories, and all the other "benefits" of totally unregulated businesses?
Sounds to me like you are the one who like to ignore evidence in favor of a theory.

See, you are falling into the trap of fraudulently pretending the choice was between more dangerous factories and less dangerous, and with the attendant facade that hey, the government is here to save the day!

What happened in reality was capitalism offered a new choice -- but it was between starving farm life and a more modern life of plenty. That some factories were dangerous or had long hours still wasn't as bad as what went before, with few exceptions. And people freely chose to move to the cities.


Now, if you want to say government makes a good kibitzer to prod safer working conditions, that's different (though I wouldn't necessarily agree to the idea.) But don't pretend that the core of capitalism isn't what's driving it all. Furthermore, we know that too much involvement (aside from being a massive source of corruption in government as it's often planned that way for the purpose of kickbacks, illegal or legal, just to get the politicians out of the way just so business can get done) will slow down capitalism's progress, and the net slowdown will be responsible for much more severe problems than would have occurred without the regulations, good or bad.

 

[Beerina]

The "issue at hand" is, I'm guessing, the current economic crisis.

You're question, which is what I was answering, was why any theory other than laissez faire capitalism is still viable.

I will say that laissez faire capitalism will not result in the greatest degree of economic and other freedom, and that is why it is not the only viable theory.

Laissez-faire capitalism derives, properly, from freedom. It is what people freely do with their own money, property, and personal associations.

Anything other than this is not freedom. So to say laissez-faire capitalism will not result in the greatest degree of economic and other freedom is identical to saying "freedom will not result in the greatest degree of economic or other freedom." Capitalism arises naturally from freedom, and benefits everybody a hell of a lot more than other "systems".

Keep in mind "other systems" is a euphemism for not-freedom.

The East India company?

From the introduction to it on Wikipedia:

The Company long held a privileged position in relation to the English, and later the British, government. As a result, it was frequently granted special rights and privileges, including trade monopolies and exemptions.

This is not laissez-faire capitalism. This is favoritism and rent seeking and using the power of police to, quite literally, force your competition out of business.


What were we talking about again?

 

[qwints]

The government is the only entity that can restrict freedom.

This is ludicrously wrong. It is trivially easy to provide examples of other entities which do so (e.g. organized crime). Furthermore, it's all too easy to forget that people are compelled to fulfill their basic needs in order to survive. Conditioning employment based on out-of-work behavior limits freedom (see loyalty oaths in the fifties.) Finally, let's not forget the systemic discrimination against racial and religious minorities that laissez-faire capitalism was unable to solve.

 

[Unabogie]

This is ludicrously wrong. It is trivially easy to provide examples of other entities which do so (e.g. organized crime). Furthermore, it's all too easy to forget that people are compelled to fulfill their basic needs in order to survive. Conditioning employment based on out-of-work behavior limits freedom (see loyalty oaths in the fifties.) Finally, let's not forget the systemic discrimination against racial and religious minorities that laissez-faire capitalism was unable to solve.

Or, to provide another obvious example, private prisons are allowed to donate huge sums of money to politicians who pass harsher laws which generate more profits for the prisons.

Now, true, these are government laws, but it's clearly the product of the private entity pressuring or rewarding the public one to curtail freedoms.

 

[Meadmaker]

The government is the only entity that can restrict freedom.

A common error, but an error nonetheless.

I was once held hostage at gunpoint. I'm pretty sure that guy wasn't working for the government.

My boss restricts my freedom in a big way. Oh, sure, I could just stop working for him. It's a bargain I made. I will do certain things, like not telling him that he is a total moron, in exchange for some money. I have complete freedom in this matter. I can simply choose to make a different bargain with someone else. Right?

In the not very recent past, one of the things that was part of that bargain was that I would not admit to homosexuality. If I said, "By the way, I'm gay," he could fire me. Today, he can't do that. Laissez-faire capitalism would say he ought to have that right, but in our system of government, today, he can't. I like our system better.

Lots of entities can and do restrict my freedom. Some are more effective at it than others. Government is the entity which has the greatest ability to do so, and so we must be vigilant about not letting them do that. However, any entity that gets too powerful can, and probably will, use their power to restrict freedom.

In any case, historically, the big problems are always traceable to people with guns forcing their will on people. "Sugar trusts" and whatnot (I can hear the meme defense mechanisms prepping to regurgitate stuff like this) are, historically, incredibly minor as far as detracting from "quality of life". You have to think to yourself, a trust is bad...compared to what?

Apply this logic to Homestead Pennsylvania, 1892.