DISQUS

Yeah great piece, but don't pretend as if the Cato Institute has nothing to do with control and controlling the message.

Oh and I would pretty much characterize your "job" as a modern day Vassal in service to a Lord. Your job is to protect the Lords borders and to help expand them. Since the early 70's when men of wealth started such "institutes" to promote their title income and wealth inequality have BOOMED! Your job is to paint those who question this massive expansion of private wealth among the few as promoters of morally unserious arbitrary nonsense. You unseriuosly have not thought this through because a return to primacy of private borders to national ones is simply a return to aristocracy or serfdom. Or wait maybe you have thought this through and you are simply writing for the Lord as a Tory in 1776 might have done comfortable with THEIR position in life.

"What justifies the barriers to entry that privelege some members of society at the expense of others. To draw the bounds of society at the border is a completely specious move to ignore the most basic question of justice by defining it away."


So let's imagine strict property rights are finally observed and national boarders are dissolved. 100 years in the future all the land of the 50 states that were once these United States are now each owned by an individual family who accumulated massive wealth and passed it fully to its successive heirs. Serfs return to the scene to toil others land. They must beg and compete with each other to enter the property of the Lords to ask permission to till some soil. One becomes infamous and realizes the injustices all around him. He works in the shadow to distribute a propaganda piece to all his fellow serfs..... he is wanted by the law and by the Lords of all the lands for he dared to ask in his flier, "What justifies the barriers to entry that privelege some members of society at the expense of others." The flier gets wide dispersion, the serfs secretly organize, they revolt... gates are crashed and castles burned. The aristocracy, the affluent and the moneyed are sent fleeing for their lives. A new Nation is born and the Founding Fathers call it The United Club of American States.


"I’m sincerely arguing that nationalist liberal egalitarianism is morally unserious arbitrary nonsense."

Makes me wonder if Will's new home in Iowa has borders that others are to respect. If not I'll be right over I need a few eggs from your fridge as I am all out. However, if as I suspect so, he does who is to enforce those boundary lines? Winston? His private army? the city ? the state? the nation? Each with its own border lines? Morally Unserious? Arbitrary non-sense? Wow! That's pretty demeaning unless indeed you HAVE actually figured it all out like apparently you think you have.

"I'm sort of starting to get tired of even having to defend capitalism as an ideology."


Capitalism in general is not on trial. What needs defending is unbridled capitalism versus well regulated capitalism. The former is about boom and bust economic cycles and 2 class societies. The latter is about improved economic efficiency and a strong middle class.

"Sure, but the problem is that this is the result of an administration that embraced wholeheartedly this ideology. The result is rampant corruption, corporate welfare, crony capitalism—it's really ugly to look at."


She's right in my opinion. Libertarianism is all about an improper intepretation of social darwinism. Libertarianism is selected against in human societies because its un-natural. The reason there are no libertarian sociaties is because they are radiactive and devole into Somolia or Mexico or Russia. We are a social creature and to build societies around individualism makes no sense. If libertarianism is such a great way to set up society such that everyone prospers and the economy is super effieicent don't you think all the developed countries would be running on a model of it rather then the social democratic forms you currently see.

Libertarianism... aa failed ideology...get over it...evolve.

Reading the essays it's clear White and Mulligan have ideologies to protect. White uses the "place blame some where else as best you can" approach and Mulligan tries to invoke the "massive complexity making true knowledge of causal factors impossible" approach... a common Cato approach used and refined to deny climate change as well.

Black states the obvious. People don't make ridiculously bad loans unless they can make a quick profit and pass the risk up the line. MBS's are the catalyst with financial derivatives and CDO's the super-catalyst that allows the whole chain reaction to occur. Lack of regulation and cuts to regulation allowed lax loan standards, derivatives and CDO's to flourish. These occurred specifically at the direction of Wall Street and it's army of lobbyist and politicians giving in to their every whim. Meanwhile conflict of interest, more easy money, peer pressure and stampede effect caused the rating agencies to give piles of crap AAA ratings.

No long winded explanations needed unless you have a think tank with an ideological charter to uphold and a need for papers to write.

"Before the meltdown, a few perpetually dour forecasters saw disaster on the horizon, because they always see disaster on the horizon. Yet no one predicted the disaster we got."


Balony. The perpetrators themselves knew what was happening, as the linked memo below shows. This idea of a need for deep intellectual analysis is all about propping an ideology. This is indeed about groping about a room with the lights on and an elephant on the couch wondering what the smell is.

Deregulation of the financial industry that allowed investment and commercial banks to merge and allowed for opaque complex finacial products like CDO's and OTC derivatives explain the results. They were the catalyst that was required for bad loans to be made and passed off up the line. Warren Buffet and others predicted this catastrphe long ago.

With out these Wall Street creations the whole massive over-leveraging never happens.
And this flow diagram doesn't flow.

Watch the NOW episode
and at 18:03 mark you'll see the answer to the above question. An internal memo from a Standard and Poor's employee dated in 2006
..."rating agencies continue to create [an] even bigger monster - the CDO [collateralized debt obligation] market. Let's hope we are all wealthy and retired by the time this house of cards falters."

Tax cuts for the rich, setting up the economy so the cash and wealth flows up while the middle class flounders and then topping it off with a deregulatory environment that leaves only speculation and ponzi schemes to continue the wealth flow a little longer repeatedly, predictably results in boom and bust cycles that are ultimatly massively economically ineffecient , undemocratic and result in reduced liberties.

GM is going under for not because it paid labor a living wage but because Wall Street paid white collar workers incredible amounts for pushing toxic paper. But yeah lets look for some one else to scape goat and blame.

And of course $25 billion to bail out laborers in the auto industry makes no sense but $750 billion to bail out the bad money that pushed out the good apparently does to those pulling levers.

Interesting is that expansionary monetary policy helped us out of the last depression but it seems to have gotten us into this one.

Bottom line set up the system so workers get paid a decent wage and income does not accumulate at the top and we will all be better off. The idea that policy does not effect wages, income distribution and economic productivity seems so at odds with historical facts.

Set up a system where bad money chases out good and this will predictably happen again.

Yep that really helped me to understand the need to regulate companies. They do their job by maximizing the profit without regard for externalizes. When their externalities are negative and impose on those around hem then it's time to bring out the regulators.

I see the lack of trust more one sided.

A person of religion threatens me not at all as I'd love for them to be right on some level and I encourage my children to explore all sides of the issue and will even attend church with them. The person of relgion is generally deeply commited to having their children believe as they do and threatened by views like mine. My discomfort being around people of faiths is the need to walk on pins and needles not to offend them while I gladly share in grace or head bowing ect when they might request.

Nuance is a deterrent to happiness. If I thought all the poor were to inherit the Earth and all justices were righted after we died I'd be happy as a lark. Then again my cat is an atheist who suffers no nuance (except something about crossing the door jam coming and going into the house) and is the happiest being I know. Anyway I see nothing happy about ignorance and self deception. If I needed that kind of happiness I'd start smoking pot again.

you claim a desire to believe policy doesn't effect economics or distribution.

"Is that really what I'm saying? No. It isn't. Once again, a strawman. I said there is no partisan cohesion to policy over the decades and nothing to point to across the board that substantiates such a trend.? John V


Well very good. I'm glad you clarified your claim As stated above it's very easy to disprove. There most definitely are consistent policies that explain the economic outcomes of the 2 parties. Quite simply Democratic regimes favor the middle class and the Republican regimes favor wealth.

From tax laws, to corporate and regulatory laws to education and support for labor the differences are clear.


There's simply little to debate here. You'll clearly want to mince details but most people are pretty clear of the obvious policy differences between the 2 parties. And anyone who looks a little deeper will see what are even more glaring differences.

John,


I read your debate with Bruce Wilder on Economists View and he defended the same position as I ( although much better). Over there and as here you claim a desire to believe policy doesn't effect economics or distribution.


That is your position which for some reason you WANT to believe. But it is frankly absurd.

From North Korean policy to Swedish policy to that of Brazilian policy... policy is the big picture item that drowns out the significance of the business cycle.

The idea that there is no difference is policy effects from conservative American policies and Liberal/progressive American policies is simply some desire on your part to elevate the importance of the business cycle. For as one who believes free markets are the best answer you must negate the significance of "minor policy differences" to defend and provide a base for your own ideology. Particularly if the minor party policy differences favor slightly leftward solutions. Best just to obscure and muddle up the data the same way global warming deniers do. (And coincidentally for the same reason... to defend libertarianism).


Don't tell us you have non-partisan interest in the subject. That's only true in that their are no libertarians that exist in power but if they did boy would you ever support them in a partisan manor as you do here.

Nope your position on these inequality and policy issues is simply a defense of you own partisan position. Of course there is NO DATA on your position just theory and belief.

John V,


Your only defense is to claim straw man or troll. I think everyone reading can clearly understand that.

There is nothing straw-man about me asking on what factual basis you propose a libertarian economy as some how superior. The fact is you can't answer the question outside of polemics and hand-waving. You have no data to even present such as the data I present which you like to simply deny with a wave of the hand.


I can give logical , factual, data driven, historical and theoretical reasons for why I believe demand side economics works as well as why libertarianism is a faith based belief.

You have nothing but trolls and straw men to defend your pitiful self. You have no supporting data so all you are left with is to deny the data that does exist as imperfect.


John if you don't like what I write and you can't defend yourself skip my post and don't reply. But if you do reply at least be a man and attempt a counter point rather then to lamely throw names and labels about with no back up for you assertions.

"What do Truman, JFK, LBJ and Clinton have in common beyond being Democrats in terms of policy that could possibly do anything even remotely close to causing certain economic outcomes that provoke or hinder inequality and GDP growth? "

Ditto for the GOP...

Here's the answer:

Nothing. Zip. Nada!"
John V


John V,

Just you claiming something doesn't make it true.
To deny the different economic milieu from the 3 major economic periods of modern America is intellectually dishonest. From the differences in support for labor unions, minimum wages, social programs, trade policies and tax and regulatory structure structure.

The significant macro economic effects of democratic policies that push down employment while allowing less concern for inflation specifically effect workers wages which specifically effects demand and grows the economy better then Republican policies that general lead to accumulations of wealth at the top , stagnation of others wages and eventual decreases in demand and less economic growth.


That you think Bartles numbers are mere happenstance or that this trend is not policy related is likely more a problem with you being unreasonable than of me being overly assuming.


But here's the good news. It looks like Demand side economics might get a good run to provide a fourth episode of which we can compare macro economic performance and presidential policy. I have every reason to be optimistic considering what the past data suggest.

But you have the supposed superior belief that claims doing nothing would be the best policy to get us out of this mess we are in. You belittle me for interpreting the data the way I do but no significant serious economist believes doing nothing would be the best solution. In fact , most suggest it would be phenomenally disastrous. So I suggest you tone down your smugness, re-evaluate the evidence and your own beliefs and sit down and enjoy the ride as the future push to reward work and real productivity over interest earnings, market manipulation and speculation grow us out of this laissez faire economic crap-fest.

"Knowing how the economy works at the most rudimentary level and honoring all of its complexity prevents any semi-serious thinker from embracing such nonsensical brain candy like Bartels's" John V


Then there seems to be an obvious absurdity to your position. You claim policy differences don't effect economic function or performance. If we can't untie the effects of real life policy on economics on what basis are you a libertarian? Simply on a theoretical basis? Or is your position faith based?

We've all come to an agreement on the successes of regulated capitalism over socialism/communism but where does the idea of free market superiority over regulated capitalism come from?


I can't imagine you'd point to the 1880- 1929 period as a success for free markets or a failure of regulated ones... how about the 40 years that followed with increased regulation and a growing economy that was relatively stable? Then this followed by the last 30 years of deregulatory policy and the current massive economic collapse.

Sure you don't want to claim any of these as yours. But what do you claim as yours? What real world examples support your beliefs? You sure like to point to me as one who is over simplifying how the economy works but I think you have to look at your own beliefs as well. You sure you are not even more guilty then me of over simplifying?


What I tout IS well described in the economic literature. It's called demand side economics and while I'm no expert it seems to make sense and to be applicable to the real world and supported by real world data.

Maybe my presentation is not the best. Maybe my understanding is not the best but you call me a troll more as a convenience to yourself rather then having to do the hard work of questioning your own beliefs and trying to defend them.


I'm the atheist here. You're the one with the radical dogmatic belief system that doesn't like to have to defend itself. You are the one that seems to claim he knows the mind of god or in this case the economy and thus should not be questioned by heathens like myself.

Where John where is the evidence for your free market capitalism thats more rigid then Bartels evidence of the difference between conservative and modern liberal American economies?

No John no one sees what you mean because you never try to counter a point. You simply claim outright that no point was made. So what you mean is nothing cause you haven't said anything.

The evidence clearly shows increasing inequality with republican policies and the opposite with democratic policies. Show some counter evidence... so we can see what you mean.

My claim is very logical , supported by many experts opinions, supported by data and should be falsifiable.

I represent a counter position on the issue while you in fact are the troll making claims with NO support and not advancing or even willing to attempt a refutation.

"Which Party Wins from Inequality?"


It's not the issue which party wins from inequality. This issue is which party more likely creates inequality. Increasing inequality is economically less effecient at all income levels and in large degrees results in economic collapse so NO PARTY wins with increasing inequality.

The meme that needs to be sent to sea is the one that suggest increasing inequality is associated with good economic policy or economic growth. It's not with either.

"explain why divergence in material circumstances poses more of a political problem for Republican coalition-building than it does for the Democrats–the more economically unequal coalition"



Because policy matters.... one policy leads to divergence and economic collapse and one leads to shared prosperity and better actual economic performance over all.

Why on Earth would some one choose policies that create the lower overall yet more inequitable growth as consistently seen in Republican administrations?

Do you need more data? Give me 8 years.

The presumption is that the only way to decrease income inequality is to crash the economy. Which along with the "For your consideration…." is a bit insulting. The evidence of history in our country and in others is clear that such a presumption is unfounded.

From the 40's to the 70's inequality was decreasing and economic growth was as good as ever.

Man is this debate on inequality getting old. Especially considering the data.

The problem was opaque complex financial products developed by Wall Street outside of regulations. These were the ingredients require to leverage 60 trillion dollars over 100 billion.

Wall Street was supposed to be in charge of reducing risk and effectively allocating capital. They were effectively left to their own to do so. Instead of being responsible they came up with a pyramid scheme that hid risk, increased risk, skirted competition, monopolized markets and mis-allocated capital. No one in the government made them do that. But they certainly took every advantage to raid the peoples treasury and to spend massive amounts of dollars to change the lobbying system as well as to fund it to buy off all the favors they could need from the government. Oh and they also used their extra money to fund "think"tanks designed solely to sway and inculcate public perceptions to amass an army of Orks to believe in and to help advance their cause.

In the process of letting the Wall Street Cowboys innovate toxic financial products which roughly started with Reagan we saw their share of the nations corporate profits go from 10% to 40%. They got rich producing nothing but bad debt and toxic pieces of paper designed to pull money from the truly productive economy (what was left of it after outsourcing) and to bankrupt the middle and lower classes.

They failed to raid the social security stash and needed to find some other source to fund their CEO's billion dollar salaries. With consumer savings all spent and credit debt totaled out the only equity left in the system was college students needing loans, people needing pay day advance and equity in peoples houses. On they charged...pirates with some more treasure to raid. They lobbied and pressed and changed the system and the rules to get the maximum return with the least amount of effort. No planning for the future or the good of society only short term profits. The computer age and high tech physics, math and computer Phd's could all come together and design "efficient" wealth creating productivity stealing products.

CRA, ACORN and poor people did not do this... yes indeed Ayn Rand and her cult of unrepentant misanthropes played a big role.

Republican massive debt accumulation and Republicans breaking the government as well described in The Wrecking Crew by Thomas Frank pretty much explains the other ingredients needed to create yet another Republican lead disaster bring our country and even the world to its knees.

And on and on the Cheerleaders cheer and indeed the hackery abounds!

Absolutely the Fannie/ Freddie privatization was a mistake.

But this is the question I ask all the Neoliberals not willing to own up to their disaster.

Tell me how this crisis would have happened with out the repeal of The Glass Steagall Act.

I can see no way this would have happened if we kept banking and investment institutions sperate.

But Wall Street didn't like the boring consistent good old fashion returns they were getting.. They needed more....More ..MOre..MORe...MORE.... and after 8 or 9 lobbying efforts too big too fail institutions were allowed to grow... loans securitization was allowed and financial pyramidal products like derivative and credit defaults swaps ( completely the creation of unattended marketeers) were allowed to infest the market just as Wall Street wanted.

We left the Wall Street Babies alone to play with their loaded gun and the predicatable results have occured once again.
Now their system is crashing and you're left making boldly obviously lame excuses to protect a bankrupt ideology.


Recovery this time may suck worse then the last deprssion you guys caused because you guys got your way with globalization and now we don't make anything to grow the economy. We shipped all our manufacturing overseas in the interst of FREE MARKETS. The only thing we have been making at your ideologies advice is debt and credit. And now the wall has been hit.

Wake up dunder brains and kepp your Free hand of the market off of me!

"But financial markets are perhaps the most thoroughly saturated with government regulation."

This is simply cognitive dissonance on display.

"— the kind in which a central monetary authority manipulates money and credit"

That's been going on since 1917.... it got bad when the Libertarian Greenspan took over. I'm all for nationalizing the Fed. I can guarantee you the Wall Street gangs was never for it.

-the central government taxes and redistributes $3 trillion a year

Nothing new here to explain the current problem except for a shift in re-distribution choking off the middle class and wealth inequality approaching that seen prior to the last Great Depression


-huge government-sponsored enterprises create a taxpayer-backed duopoly in the mortgage business, tax laws encourage excessive use of debt financing, and government pressures banks to make bad loans

Wall Street lobbyist were behind all the changes because they saw easy money. These loans would never have been an issue without giving into wall Streets desire to securitize them and to do so in an opaque unregulated fashion.

The real changer in the room was a de-regulatory change allowing securitization of mortgages and other assets that wasn't legal before and then allowing unregulated complex financial instruments to run rampant on wall Street.


Wall Street got its way on all these things. The disaster was caused by decreasing regulations and oversight. Those facts are so clearly obvious.

It's time for you all to stop the insulting insinuations that deregulation had nothing to do with this and own up to the fact that you are possessed of a failed politico-social ideology.

How many times is history going to have to repeat itself before you all realize this?

What a bunch of tripe. The successful post FDR economy was NOT watered down Freidmanism. It is the opponent of Freidmanism, Keyesianism. It rescued the world from the last " Friedman" like debacle the Great Depression. Now once again Friedmanism has brought the economy to it's knees and everyone is a Keyensian again.

Neoliberalism is simply a return to the belief that laissez faire economies are some how better, more efficient or stable when in fact they are not and you should have known thaat by a brief study of past history. That's the main reason for the "Neo" label. How many times are we going to have to repeat this experiment?


Losing your ideology is hard... I know... I used to vote Republican and Libertarian. But I worked my way through it. It's a difficult process but once you break through you feel liberated. You become a Free-thinker again. I think some one could make a lot of money opening up a 12 step reform program for neoliberals. But remember the first step is to admit you have a problem.

You say, " Hi I'm Joe Schmoe and I'm a Neoliberal....