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An article in today's Financial Times entitled"Homeowner bail-out hits resistance" caught my eye, and it's every bit as fascinating as the title suggests.
Above the story is a picture of protesters outside Bear Stearns and three paragraphs down readers are told,"Opposition to government aid to homeowners also has a broad base - pitting renters against homeowners, the young against the old and prudent savers against ambitious housing entrepreneurs."
"A poll last week found that 53 per cent of Americans reckoned the government should not help out homeowners who borrowed more than they could afford, with only 29 per cent in disagreement and 17 per cent unsure. Opposition to government help for banks that made bad loans was even stronger, with naysayers outnumbering proponents four to one, the Rasmussen Reports survey reckoned."
"Patrick Killelea, 42, a computer programmer and part-time blogger in Silicon Valley, is unconvinced [by the proposed homeowner bail-out].
"He has never voted Republican but said he might vote for John McCain, the Arizona Republican, in the November presidential election purely because of his cautious opposition to the bail-out issue."
Should libertarians (and Libertarian Party activists) be reaching out to this popular majority against the bail-out? And if so, what's the best way we (and they) might do this?
Gus, you really should go back and read what William Stepp actually writes.
Having known Bill for nearly thirty years, I can assure you that he is no right-winger.
I try hard to see merit in your posts but this one defeated me.
Frank meyers -
4/8/2008
Michael Jingozian Libertarian candidate is very clear on his website www.resetamerica.com that government must stop subsidizing us out of existence. The lenders, brokers and borrowers all sought to make a profit buy getting these loans knowing full well they were going to adjust. If you gamble in vegas the casino's dont bail you out. this is why we need new leadership, leadrership who is willing to make the hard choices and decisions. Like Michael Jingozian
Gus diZerega -
4/8/2008
Right wingers are masters at changing the subject. Now we get Stepp raving on about LBJ. Pray tell us what LBJ has to do with elections in 2008.
I invite you to come back to the discussion when you are willing to address the issues.
Till then bye. I have more interesting things to do. Go support the blood covered candidates you equate with less "socialism" and more "freedom." It is, after all, what the right does these days.
Anthony Gregory -
4/7/2008
"Btw, in 2005 the lowest 40% of American income recipients actually paid a negative tax rate."
Including payroll taxes, inflation, tariffs and other federal taxes??
Mark Brady -
4/7/2008
Gus, you're being too kind to the Democratic party candidates.
"Further, there are kinds of government involvement that do not seek to replace market mechanisms, but rather tweak them to support one value or another. Here McCain is as much an advocate of government action as Clinton or Obama. He wants privileges for corporations over consumers, for example. Why is that less 'socialistic' than privileging consumers over corporations?"
I suggest you're assuming the proclaimed intentions of the politicians accurately reflects the consequences of their proposals. It's a common error across the political spectrum. The fact is that any particular law may serve specific consumer interests, specific worker interests, and specific corporate interests. Consider, for example, a rise in the federal minimum wage which advantages employers in high-wage states at the expense of employers in low-wage states.
"The chief difference between McCain and the two Democrats is that his kinds of tweaking will kill and incarcerate vastly more people."
Where is the hard evidence that McCain would kill fewer people than either Clinton or Obama? Consider, for example, the record of the sanctions against Iraq during the Clinton presidency. And consider the statements of Clinton and Obama on Israel and Iran.
"The Democrats will raise taxes on people today, McCain, like Bush, will raise taxes on future generations."
Again, it's not as simple as that. So much depends on Congress.
"Both will expand government programs, but they will often expand different ones."
I'm not clear there's much, if any, significant differences in the spending programs of present-day Democrats and present-day Republicans despite their rhetoric to keep their supporters in line.
"If I had to choose between being dead or incarcerated, or paying more taxes, you can be assured I’ll take the taxes - and so will you. If I had to choose between more secret incarcerations and torture or more environmental legislation, I'll take the latter, thank you, as I think would any decent person."
But where is the hard evidence that is the choice?
William J. Stepp -
4/7/2008
I guess I prefer facts.
We had a "war on poverty" a while back that was a failure, but hardly led to as much damage to the country as the Iraq war McCain loves so much (occupy 100 years? a million years?) nor as much damage to basic morality as torture nor as much damage to the constitution as McCain's cheerleading for Bush.
You claim to prefer facts, but omit LBJ's role in the Vietnam War. Between that and the war on poverty, LBJ did far more damage to the economy than Bush.
The U.S. will not be in Iraq for 100 years, McCain's bloviating aside.
As for taxes, if the U.S. tax state didn't have an income tax on both personal and corporate incomes and had to rely on a tariff and excise taxes, maybe waging foreign wars would be less likely, if not impossible. In such a society, maybe more people would be opposed to invading other states and having military bases and naval fleets in other parts of the world.
Btw, in 2005 the lowest 40% of American income recipients actually paid a negative tax rate.
They were net tax consumers thanks to the Earned Income Tax Credit. Their taxes fell under Bush even more than higher income earners. Krugman won't ever report this.
William J. Stepp -
4/6/2008
I didn't propose anything, contrary to your assertion that I did.
All I did was elaborate a bit this point you made:
There are many steps between socialism and laissez faire.
And point out that, strictly speaking, socialism doesn't exist as a full-fledged system, but that there are degrees of socialism.
I don't see what's controversial about this, especially in places where most of the readers know Austrian economics.
And it is far from me to deny that McCain ("bomb, bomb, bomb, bomb bomb Irag") is a warmonger.
Also don't underestimate Hillary's ability to assault the Constitution, and to make war, upon both foreign peoples, and the rights and liberties of Americans.
Gus diZerega -
4/6/2008
In all honesty I would imagine you would not.
You have managed to ignore my basic argument - as seems to be your want - and focus on a vague proposal with no details.
I guess I prefer facts.
We had a "war on poverty" a while back that was a failure, but hardly led to as much damage to the country as the Iraq war McCain loves so much (occupy 100 years? a million years?) nor as much damage to basic morality as torture nor as much damage to the constitution as McCain's cheerleading for Bush.
But for right wingers taxes count for far more than bodies or civil liberties.
Take your choice.
William J. Stepp -
4/6/2008
Strictly speaking, socialism doesn't exist because it can't actually work for reasons pointed out in the socialist calculation debate before WW II.
Cuba is generally held up as an example of a socialist nation, but there have been pockets of more or less free exchange there, if not full-fledged free markets, for many years.
A libertarian friend skirted the rules making it difficult for Americans to visit Cuba, and took a vacation there a few years ago.
He had stories about the market haggling he saw in the streets.
Hillary Clinton might not be a socialist in the sense that Castro is, but she tried to enlarge the government's role in the healthcare market early in the Clinton clique-junta. Now she is calling for a poverty czar, and we know what that means. More government planning and more interference with the market.
In actual practice, socialism (or some facsimile) isn't something that was ever imposed on a society at one fell swooop, assuming, contrary to the Austrians, that it could have been imposed at all. Instead it was bolted on piecemeal, with some pieces being bigger than others. The bolting on process consisted of outlawing voluntary exchanges in various markets and private land ownership, and imposing other controls, such as on currency transactions, holding foreign exchange, etc., and replacing them with planners, bureaucrats and jury-rigged substitutes. It was always a piecemeal process and never as comprehensive as the planners would have liked. It was always undermined by the existence of outside markets and people determined to avoid controls.
So maybe it's more accurate to say that there have been degrees of socialism, but never the whole enchilada. If that is the case, than it might be accurate to say that McCain is the least socialistic of the candidates. I see nothing wrong with it.
Gus diZerega -
4/6/2008
Allan-
I want to address one point you make because it is a common meme on the right.
You write that McCain is the “least socialistic.” I want to disagree and argue that this kind of argument makes little analytical sense and radically confuses political understanding. You are buying into the great right wing effort to make it difficult to think outside of slogans. I used to.
Historically socialism has meant replacing the market and contractually determined prices with government planning and ownership. None of the major candidates are socialists in this sense. And this is the only sense of the term that is free from very fuzzy thinking.
There are many steps between socialism and laissez faire. For example, that we have a government owned postal service does not make us a socialist nation. Having national parks does not make us socialist. The BBC does not make Britain socialist. Nor are people and political leaders who advocate these policies necessarily socialists.
Further, there are kinds of government involvement that do not seek to replace market mechanisms, but rather tweak them to support one value or another. Here McCain is as much an advocate of government action as Clinton or Obama. He wants privileges for corporations over consumers, for example. Why is that less “socialistic” than privileging consumers over corporations?
The chief difference between McCain and the two Democrats is that his kinds of tweaking will kill and incarcerate vastly more people. The Democrats will raise taxes on people today, McCain, like Bush, will raise taxes on future generations. Both will expand government programs, but they will often expand different ones. If I had to choose between being dead or incarcerated, or paying more taxes, you can be assured I’ll take the taxes - and so will you. If I had to choose between more secret incarcerations and torture or more environmental legislation, I'll take the latter, thank you, as I think would any decent person.
I think putting the differences between them in terms of a non-existent dichotomy of more or less "socialist" prevents clear thinking here.
Allan Walstad -
4/6/2008
Good point about McCain. What a sad state of affairs when the least socialistic candidate is a complete warmonger. The best political outcome would be gridlock, with a President from one party and at least one house of Congress in the hands of the other. Theoretically, the Democrats should be able to use the power of the purse to get us out of Iraq even if McCain wins, but they haven't demonstrated any backbone yet against Bush.
No, the feds shouldn't be in the business of bailing out individuals or firms that made bad financial decisions. People who understand that may be receptive to the broader libertarian message, an integral part of which is the necessity of personal responsibility.
Nevertheless, we can thank the post by Besch, as ridiculous as it is, for highlighting the obstacles we face. In the hands of collectivist propagandists, personal responsibility morphs into "cold-heartedness." Libertarians are portrayed as agents of big business. Free markets get blamed for problems caused by government intervention.
Statism is the easier sell, because the connection between government programs and their benefits is obvious, while the connection between those same government programs and their inevitable, unintended negative consequences is generally not. Our job is to shine a light on that latter connection. We should concentrate our efforts where the case is easiest to make, which almost always means retrospectively. If we can show where past government action has had negative consequences, the expectation will follow that more government action will probably have more negative consequences.
So, if I'm looking for where to take an initiative, I wouldn't focus the message on how homeowners should be stuck with the consequences of ill-advised loans. I'd focus it on how past government action has warped the market, created false expectations, and given people short-term incentives to act in ways detrimental to their interests in the long term, leaving us with a mess: how many more government-created messes will take for us to learn our lesson?
Anthony Gregory -
4/6/2008
Wait, are you joking? Do you really think that free markets led to this? Really??
Wow, I love the pro-government argument: Thanks to big government, the Fed, and a million laws and regulations, the economy is doing well. Oh, it's not doing well anymore? Must be the free market! Please.
Randll Reese Besch -
4/5/2008
And they wonder why so many consider Libertarians to be so cold hearted and selfish? I like the idea of allowing the homeowners to go back to the low rate they started with. Give them some break considering their homes are now worth less than they were originally.Such equity deflation must be a heavy burden on those enticed into homes they origionally couldn't afford in the first place.
This whole debacle was caused by such Libertarianism anyway. No regulation is what they promote isn't it?
Hosannahs to St.M.Friedman,his ghastly spirit hovers over us in our hour of need.
Gus diZerega -
4/5/2008
Great guy, this fellow. Vote McCain because he opposes a bailout of the stupid and the manipulated but has no problem with the rather more truncated freedom of hundreds of thousands of dead Iraqis and thousands of dead and tens of thousands of maimed Americans and he Gods know how many Iraqis.
Right wing freedom lovers are a wonderful thing, are they not?
