Should the government have bailed out GM?

[emindead]

Yep. Those are still tied to the private sector.

[The King in Crimson]

Yep. Those are still tied to the private sector.

Then I just misunderstood your comment.

Carry on.

[Scheavo]

I thought Capitalism meant private gains and private losses.

But what do you do when the losses cease to become private?

How does that happen?

GM goes bankrupt. This sends a shock-wave through the economy, where you then have the people supplying GM with their supplies takinga huge hit, car dealerships taking a huge hit, truck companies taking a huge it. All of this causes job lose, which of course stimies the economy, and can help lead to further job loss. Because the guy trucking the metal for GM no longer has a job, he can't spend money like he used to, which means less income for other businesses in the area, which can mean they have to lay people off.

So now, GM going bankrupt can mean the server a local restaurant loses his job.

That's how private losses can become public. The idea of some monad-like, individual as an economic entity is ridiculous, and patently absurd.

[jsem]

So, your proposal would be to break GM up into smaller entities to prevent a ripple effect?

[Riceball]

Yep. Those are still tied to the private sector.

ITT: Emindead lives in a world defined in binary code.

[Scheavo]

So, your proposal would be to break GM up into smaller entities to prevent a ripple effect?

I was simply making a point about how private losses can become a public concern. A corporationay be a private thing, but it operates in the public domain. Ideally, you dont have large companies like GM, for numerous reasons not just the one in discussion; sometimes I think it's appropriate for the people to break it up, but there are a variety of ways of getting there. And no, bankruptcy does not address the issue in its entirety.

[Orthogonal]

So, your proposal would be to break GM up into smaller entities to prevent a ripple effect?

I was simply making a point about how private losses can become a public concern. A corporationay be a private thing, but it operates in the public domain.

Bankruptcy does not mean a complete collapse of an industry and supporting infrastructure. In a Chapter 11, it is simply a debt restructuring situation (Like GM would have been). Creditors lose their shirts, but the company continues on and tries to rebuild with renewed focus on sustainability with the extra pain of a poor credit line, but many companies emerge from this to become streamlined and healthy. If it doesn't work out, then they go to Chapter 7 where all assets are sold. This still doesn't necessarily mean tons of ripple effects hurting the "public" at large since existing competitors or new companies can come in and pick up the plant for pennies on the dollar and immediately begin to see an improvement for the "public". Bankruptcy is good for the economy on the whole.

Ideally, you dont have large companies like GM, for numerous reasons not just the one in discussion; sometimes I think it's appropriate for the people to break it up, but there are a variety of ways of getting there. And no, bankruptcy does not address the issue in its entirety.

Companies can only become so large before they lose the ability to effectively calculate profit/loss from vertical integration. The market has a natural growth cap in how big a company can get. The only known way around this is through lobbying for special interests and regulations.

[Scheavo]

So, your proposal would be to break GM up into smaller entities to prevent a ripple effect?

I was simply making a point about how private losses can become a public concern. A corporationay be a private thing, but it operates in the public domain.

Bankruptcy does not mean a complete collapse of an industry and supporting infrastructure. In a Chapter 11, it is simply a debt restructuring situation (Like GM would have been). Creditors lose their shirts, but the company continues on and tries to rebuild with renewed focus on sustainability with the extra pain of a poor credit line, but many companies emerge from this to become streamlined and healthy. If it doesn't work out, then they go to Chapter 7 where all assets are sold. This still doesn't necessarily mean tons of ripple effects hurting the "public" at large since existing competitors or new companies can come in and pick up the plant for pennies on the dollar and immediately begin to see an improvement for the "public". Bankruptcy is good for the economy on the whole.

I know this, which is why I wrote that last sentence that I wrote.

Ideally, you dont have large companies like GM, for numerous reasons not just the one in discussion; sometimes I think it's appropriate for the people to break it up, but there are a variety of ways of getting there. And no, bankruptcy does not address the issue in its entirety.

Companies can only become so large before they lose the ability to effectively calculate profit/loss from vertical integration. The market has a natural growth cap in how big a company can get. The only known way around this is through lobbying for special interests and regulations.

[/quote]

This is a pure conjecture, and begs numerous questions about how "government" should be defined. I might argue that, in the end, it's still better for a democratic government to get corrupted, than for there to be anarchy, and eventually a monarchy. To say that monopolies only form because they corrupt the government, is to massively ignore the role the government has in creating a truly fair market, and what the world would look like if there wasn't democratic government at all.

Also, that's one reason why I think the government needs to be involved in breaking up a monopoly. Even if I accept that monopolies only form as a result of the government, this ignores the question of what to do once there are already monopolies. The market won't work. So what then? Uncorrupted the government, and taking away governmental regulations, is still a governmental action.

[Super Dude]

Not to mention government is the reason we have anti-trust, anti-monopoly, and anti-cartel laws in the first place.

[Orthogonal]

Also, that's one reason why I think the government needs to be involved in breaking up a monopoly. Even if I accept that monopolies only form as a result of the government, this ignores the question of what to do once there are already monopolies. The market won't work. So what then? Uncorrupted the government, and taking away governmental regulations, is still a governmental action.

That would be quite the contradiction. IF you accept monopolies can only result under government, we should therefore keep government to stop monopolies? The whole point of a free-market is to abolish the concept of a monopoly. If there is a free-market, a new competitor can enter the field at any time. There are no restrictions. If there is a single source supplier in a free-market they are not a monopoly, they are just the sole provider of a good. If they are making a lot of money, that is a lot of incentive to enter the market which will inevitably occur. If it is a free market, there is nothing the extant company can do to prevent it other than lower prices and be competitive. A government does nothing to "help" or expedite this process, it can only interfere by placing artificial barriers, usually to harm the smaller companies for the benefit of the larger ones. The same argument applies for so called oligopolies or cartel's. As long as there are no artifical barriers to entry, an entreprenuer will under-cut them to make a profit. Only a government can establish or maintain monopolies and cartel's.

Not to mention government is the reason we have anti-trust, anti-monopoly, and anti-cartel laws in the first place.

See above, it's funny because all of those terms are oxy-morons in Government parlance. Anti-Trust, Anti-monopoly laws only perpetuate anti-competitive and monopolistic practices. Do you want some examples?

[Scheavo]

 

It's not a contradiction, because it's a question of what you do from here. We live in a society of concentrated power, and it doesn't matter how we got here south as how do we get out.

The milks been spilled, and youre stuck on why it got spilled instead of cleaning it up.

[Orthogonal]

It's not a contradiction, because it's a question of what you do from here. We live in a society of concentrated power, and it doesn't matter how we got here south as how do we get out.

The milks been spilled, and youre stuck on why it got spilled instead of cleaning it up.

Ok, so you're asking how we clean it up from the state of things now?

Shutter the FTC, DoJ, SEC, FDA, USDA, FCC repeal the Federal Reserve Act and wait about 2 years. Problem solved.

[Super Dude]

It's not a contradiction, because it's a question of what you do from here. We live in a society of concentrated power, and it doesn't matter how we got here south as how do we get out.

The milks been spilled, and youre stuck on why it got spilled instead of cleaning it up.

Ok, so you're asking how we clean it up from the state of things now?

Shutter the FTC, DoJ, SEC, FDA, USDA, FCC repeal the Federal Reserve Act and wait about 2 years. Problem solved.

Hooray! E. Coli for everyone!

[Orthogonal]

Hooray! E. Coli for everyone!

Hooray for Straw Man arguments!

[Super Dude]

The fact of the matter is not all government is bad. Where it is bad, the solution in order should be improvement and refinement, not just mindlessly tearing down imagined monsters. Even policy failures can have unforeseen positive side effects, and flaws coexisting with boons should not be enough to condemn an entire program. A flaw in a program is not an excuse to indiscriminately and unceremoniously cut a program, but to try to understand what went wrong and fix it. And just cutting a program doesn't really teach us anything.

[hefdaddy42]

It's not a contradiction, because it's a question of what you do from here. We live in a society of concentrated power, and it doesn't matter how we got here south as how do we get out.

The milks been spilled, and youre stuck on why it got spilled instead of cleaning it up.

Ok, so you're asking how we clean it up from the state of things now?

Shutter the FTC, DoJ, SEC, FDA, USDA, FCC repeal the Federal Reserve Act and wait about 2 years. Problem solved.

That's an awful idea.

[El Barto]

That would be quite the contradiction. IF you accept monopolies can only result under government, we should therefore keep government to stop monopolies? The whole point of a free-market is to abolish the concept of a monopoly. If there is a free-market, a new competitor can enter the field at any time. There are no restrictions. If there is a single source supplier in a free-market they are not a monopoly, they are just the sole provider of a good. If they are making a lot of money, that is a lot of incentive to enter the market which will inevitably occur. If it is a free market, there is nothing the extant company can do to prevent it other than lower prices and be competitive. A government does nothing to "help" or expedite this process, it can only interfere by placing artificial barriers, usually to harm the smaller companies for the benefit of the larger ones. The same argument applies for so called oligopolies or cartel's. As long as there are no artifical barriers to entry, an entreprenuer will under-cut them to make a profit. Only a government can establish or maintain monopolies and cartel's.

Ok, so you're asking how we clean it up from the state of things now?

Shutter the FTC, DoJ, SEC, FDA, USDA, FCC repeal the Federal Reserve Act and wait about 2 years. Problem solved.

You're making the same mistake people of your particular bent always make,  which is to limit everything to binary, all or nothing options.  The free market is the only solution.  The free market is the solution to all of the problems.  A free market has to be 100% free.  I'm actually inclined to agree with you for the most part, that the free market usually is the best option, but there are definitely exceptions, which is where we usually part ways.  In the case of monopolies, there will always be companies who manage to get to a point of market dominance that they can put up barriers to any competition arising.  This is not good for anybody.

Likewise with your idea of shuttering all government agencies.  The market would likely do a pretty good job of regulating itself without all that oversight, but there will absolutely be exceptions, and those exceptions could very well get people killed.  The fact that Union Carbide's stock will take a major hit, and they might even go out of business, is of little consolation to the thousands of people who die when they try to cut corners.

Honestly,  as long as the die-hard libertarian set continues to look at things in strictly black and white, all or nothing terms, most people will continue to think of them as falling somewhere between naive and just plain fucking crazy.  A real shame as much of what they're after really would benefit us.     


BTW, you should post here more often.  I usually disagree with you, but your posts are generally solid contributions.

[Orthogonal]

You're making the same mistake people of your particular bent always make,  which is to limit everything to binary, all or nothing options.  The free market is the only solution.  The free market is the solution to all of the problems.  A free market has to be 100% free.  I'm actually inclined to agree with you for the most part, that the free market usually is the best option, but there are definitely exceptions, which is where we usually part ways.  In the case of monopolies, there will always be companies who manage to get to a point of market dominance that they can put up barriers to any competition arising.  This is not good for anybody.

Likewise with your idea of shuttering all government agencies.  The market would likely do a pretty good job of regulating itself without all that oversight, but there will absolutely be exceptions, and those exceptions could very well get people killed.  The fact that Union Carbide's stock will take a major hit, and they might even go out of business, is of little consolation to the thousands of people who die when they try to cut corners.

I understand why you think I view it as a binary issue, but there's a lot more to it than that. The reason all these agencies were created were to serve some function of oversight or control on safety, fairness, competitiveness and especially to curb monopolistic/cartel practices etc... However, there is a fatal flaw in this approach that escapes most everyone. By creating an agency like the FTC or FDA to regulate companies and ensure fairness, they have not really fixed anything. All that has been done is we created a new monopoly to oversee some market function. The monopoly has been shifted to a different level. Now, instead of just the potential of a monopoly, we have a guaranteed monopoly covering every possible aspect of the economy. These agencies are subject to the same problems and ills of an industrial monopoly.

Government agencies amount to a monocentric view of the economy. Sure, policies can change things and the appearance of pragmatism can take shape, but it is ultimately a single economic world view applied to everyone at a given time. It is then up to bureaucrats (occasionally congress) to make changes which are very slow and roadblocked by partisan politics. It is in a word, a mess.

A free market is a polycentric view of the economy. It would not mean a lack of oversight on quality, safety, working conditions and competitiveness. Instead, competing agencies of varying degrees of scope would audit/inspect and insure public safety. No longer will we have a one-size fits all, but a graded and heterogeneous approach allowing the best solutions for "regulation" to rise to the top. The key is to create business model's where profitability is tied to consumer preference. Not the other way around which is what we currently have in numerous industries regulated by government agencies.

BTW, you should post here more often.  I usually disagree with you, but your posts are generally solid contributions.

I'd like to post more, but my work and personal life have been very busy as of late. Hopefully it gets better.

[Super Dude]

Two things:

competing agencies of varying degrees of scope would audit/inspect and insure public safety.

Problems that I see with this approach are: by whom are these competing agencies delegated? Are they just businesspeople who decide they have a passion for ensuring public safety and so they start a business? What incentives are there for people entering such an "industry" in the first place? How would the oversight costs involved be enough to keep such an agency afloat? How would you measure demand and willingness-to-pay from as public a good as public safety? Most problematic of all, in my opinion, what sort of wherewithal do such agencies possess to impose themselves upon subject firms? After all, the point of the government delegating an agency to oversee firm operations is that they're the law, and as such have the authority to say that they can oversee and assess the measures taken by that firm. What sort of authority would competitive agencies have over firms?

No longer will we have a one-size fits all

That, sadly, is more an effect of the political game than anything. From what I've learned so far about policy analysis and implementation, technocrats and policymakers actually try very hard to avoid the "one-size fits all" problem, as evident in the design of carbon cap-and-trade schemes. In fact, cap-and-trade is very much in the polycentric vein, which is why environmental and economic supporters were so keen on it. Unfortunately, no attempt at dynamic policy design will ever be perfect, and even those that are often become victims of Congressional mutilation before signed into increasingly less satisfactory forms when they become law.

[El Barto]

Competing regulatory bodies, which I gather is what you're suggesting,  would suffer from many of the same faults.  The goal of any private interest is profit.  You can take the Gordon Gecko approach and say that's a great motivator for change and improvement, but there are plenty of instances where operating at a loss to serve a public interest is better for the consumer. 

In areas where safety is a concern, I see three options.  One, let businesses self regulate under the notion that market forces would compel them to not let planes fall out of the sky.  Bad choice, as their interest is in toeing the line between safety and profitability leaving zero margin for error.  If I understand what you're getting at, you're option two is private sector certification.  Delta Airlines, now sporting Dave and Bob's seal of airworthiness.  It seems to me that you're merely trading government bureaucracy and corruption for private bureaucracy and corruption.  Dave and Bob are in it for the money as well, and keep in mind that their customer is Delta, not you and I.  Option three is an organization that has a goal outside of profit, namely to regulate the industry which it does at a loss.  In this instance, I see noble intentions as being preferable to business acumen.  If the FAA turns into a bloated and corrupt agency, then you deal with that.  (Another binary that I keep seeing is that if something goes astray, it has to be scrapped.  Not every failure is a mistake.)

[Scheavo]

It's not a contradiction, because it's a question of what you do from here. We live in a society of concentrated power, and it doesn't matter how we got here south as how do we get out.

The milks been spilled, and youre stuck on why it got spilled instead of cleaning it up.

Ok, so you're asking how we clean it up from the state of things now?

Shutter the FTC, DoJ, SEC, FDA, USDA, FCC repeal the Federal Reserve Act and wait about 2 years. Problem solved.

Creating a power vacuum is hardly a good idea, and I'd garner would make things worse.

I think everyone has already basically said what I would say.

[rumborak]

Even more to the point, what Paulists fail to see in their zeal is that the USA doesn't live in isolation. The international markets are chock full of Keynesians, like it or not, and when they see a guy becoming president whose platform is to dismantle the US government, they will pull their investments out of the US. The first thing Ron Paul would face is a massively devalued US dollar and lack of liquidity.

rumborak

[Orthogonal]

I'm not sure what Ron Paul has to do with anything I've said, but I'll do my best to address all the responses so far in one post. This is a big wall of text, so I'll understand if you tl;dr.

What I'm proposing is a little different than what you would normally think of as private "regulation". I put it in quotes because it's function is different than what you are traditionally familiar with. It takes some time to wrap your head around this concept because you've been conditioned to see it in different terms. I'll do my best to explain it properly. I'm not arguing for a privatization of regulatory agencies in the way they exist now, that would most likely be an abysmal failure. There would be no "delegation" between agencies, since that would require a final authority and ultimately lead back to a monocentric approach.

El Barto listed 3 general approaches with the pros'/cons' of each, and I don't have any problem with how they are spelled out, but there is a fourth approach. I agree that option 1 is a non-statrter. Option 2 is also not going to work for the reasons you listed. For option 3, When considering the current Public agencies operating at a loss for the "good of the public", this has some problems on several levels. If you say they are operating "at a loss", what you are really saying is they are financed from taxes which everyone pays. So, you are already financially invested in this system, the problem is, the customer's have very little say in how regulations are directly applied. There is an additional complication where companies can lobby regulators, or a regulator may be guided by a personal agenda or bias. All of this makes your contribution to the system negligable. Consumer feedback is virtually non-existent and any types of changes in this approach are only reactionary and significantly delayed by bureacracy. There is also the question of, how much is too little or too much to pay for this oversight and how do we know if it is being spent wisely at all? There is no profit/loss mechanism to calculate efficiency so it has little chance to succeed.

There is a Fourth option to consider. In this system, a seller and a buyer would both agree to an independent third-party as an arbitrator and the terms of their business. This way they are the customer of both parties, and are impartial to both. This helps build a public reputation for the seller/buyer by honoring their agreements, as well as the reputation of the arbitrator for making fair assessments (otherwise no one would use them). Your reputation is your life-blood in a free society. Regardless of which system is used, there is a cost involved for oversight and regulation, but in this way, costs are upfront and efficiency can be calculated. This system isn't necessary for all transactions but would be useful for many situations. Before you jump to conclusions and write this off as non-sense, consider that this system is already in use in some limited capacities.

Ebay is a prime example of this system at work. It features a rating/feedback system to assess the reputability of each participant and they offer arbitration and loss insurance for transactions gone awry. Folks who do not honor their obligations are quickly weeded out and ostracized.

Not every situation requires a mutually agreed upon arbitrator and there are several other ways of improving customer feedback and improving ratings that are essentially free (or ad based). Some things are as cursory and informal as getting updates from friends and family by word of mouth or via facebook/twitter and blogs. Others are more structured and focused like Yelp and Angie's List. The list goes on and on and this form of communication and feedback is growing at a rapid pace. It is nearly real-time and as an aggregate beats anything a formal regulatory agency could ever hope to achieve.

This is just the tip of the iceberg, as these types of platforms improve and expand through the entire structure of production, in time, people will begin to realize how anachronistic the current regulatory paradigm really is and brush them aside to the trashbin of history.

[El Barto]

A couple of points.  For one thing, I'd suggest that Consumer feedback is virtually non-existent isn't necessarily a bad thing.  Customer feedback often results in lowest common denominators.  When trying to decide which TV you want to buy that's not a problem.  When trying to insure that your plane isn't going to disintegrate mid-flight, it's somewhat of a concern.  I'd just as soon see arbitrary standards set by people who's concern is safety rather than dollars. 

The LCD issue is actually a big component in your example of eBay ratings.  GREAT SELLER! A++++++++++++++.  Leaving feedback is reflexive now.  You get emails from people asking where the hell their A+++++ is.  It's nice to be able to see negative ratings, but with people handling 300 transactions a day, it's not really all that informative.  Furthermore, when sellers rack up enough negative feedback, they just start a new account (sort of like Valuejet!).

And while I agree that there are issues with the current system, lobbyists, corruption, graft, etc., I'd go back to my point before about fixing those problems rather than scrapping the system.

Lastly, I'm having a hard time seeing how your fourth option applies to situations that aren't made up of tons of individual transactions.  Airlines fit the bill here.  Are you suggesting that everybody would purchase their tickets through a vendor who has deemed Delta to be safer than the others?  I don't honestly see that working, for a variety of reasons.

[Orthogonal]

A couple of points.  For one thing, I'd suggest that Consumer feedback is virtually non-existent isn't necessarily a bad thing.  Customer feedback often results in lowest common denominators.  When trying to decide which TV you want to buy that's not a problem.  When trying to insure that your plane isn't going to disintegrate mid-flight, it's somewhat of a concern.  I'd just as soon see arbitrary standards set by people who's concern is safety rather than dollars. 

When trying to decide on what TV to buy, consumer feedback is just one of many sources of information. People will also rely on technical reviews and other consumer reports. With regards to an airplane, everyone involved has a vested interest in keeping them from falling out of the sky. The airline, the crew and the passenger's, thus they will ALL be involved in demanding rigorous audits and standards that meet certain minimum requirements. People need to take more responsibility for their actions and own their own safety. Look at it this way, if you go through life just assuming the FAA is going to take care of it and they are wrong, they get some egg on their face, but you still die. If no one assumed this and took a more active role in determining safety standards, there would be a lot better systems in place. Accidents will still happen, but they will happen in spite of everyone's best efforts to prevent it. The FAA is a moral hazard.

The LCD issue is actually a big component in your example of eBay ratings.  GREAT SELLER! A++++++++++++++.  Leaving feedback is reflexive now.  You get emails from people asking where the hell their A+++++ is.  It's nice to be able to see negative ratings, but with people handling 300 transactions a day, it's not really all that informative.  Furthermore, when sellers rack up enough negative feedback, they just start a new account (sort of like Valuejet!).

Few will read all the reviews and feedback, the point is to get an aggregate. You'll notice that seller's who try to abuse the system like this are not nearly as successful as those who have a higher standard of business practices. Companies that have 10,000+ ratings and 99+% approval ratings charge a premium over those who have fewer ratings and 95ish% positive feedback. Buyer's are willing more likely to forgo the eBay provided loss insurance when purchasing from the highly successful seller's because they have established a stellar reputation. People will pay a little more for it.

Lastly, I'm having a hard time seeing how your fourth option applies to situations that aren't made up of tons of individual transactions.  Airlines fit the bill here.  Are you suggesting that everybody would purchase their tickets through a vendor who has deemed Delta to be safer than the others?  I don't honestly see that working, for a variety of reasons.

Not "safer than the others", but Safe to the minimum standards they have published and are verified by independent third parties. You would then choose whether those standards meet your expectations for Safety at the time of purchase. If you purchase a ticket, all parties agree to that level of safety expectation. People will then vote with their wallets on what is acceptable levels of safety and it would establish industry standards of safety expectations from input from all participants.

[emindead]

I thought Capitalism meant private gains and private losses.

But what do you do when the losses cease to become private?

How does that happen?

GM goes bankrupt. This sends a shock-wave through the economy, where you then have the people supplying GM with their supplies takinga huge hit, car dealerships taking a huge hit, truck companies taking a huge it. All of this causes job lose, which of course stimies the economy, and can help lead to further job loss. Because the guy trucking the metal for GM no longer has a job, he can't spend money like he used to, which means less income for other businesses in the area, which can mean they have to lay people off.

So now, GM going bankrupt can mean the server a local restaurant loses his job.

That's how private losses can become public. The idea of some monad-like, individual as an economic entity is ridiculous, and patently absurd.

Not a single part in your paragraph proves that private losses become public. All of those loses are still tied to the private sector. How many times have GM been in dire straits? Giving them tax money as bailouts so you can "save" some jobs is not good. Every time that GM leads themselves to this point it costs more money to save them. THAT'S a PUBLIC LOSS going to the private sector.

Yep. Those are still tied to the private sector.

ITT: Emindead lives in a world defined in binary code.

True. Black or white. Doesn't matter. Facts are right or wrong. There's no middle ground.

[PraXis]

Even more to the point, what Paulists fail to see in their zeal is that the USA doesn't live in isolation. The international markets are chock full of Keynesians, like it or not, and when they see a guy becoming president whose platform is to dismantle the US government, they will pull their investments out of the US. The first thing Ron Paul would face is a massively devalued US dollar and lack of liquidity.

rumborak

Ron Paul is not an isolationist. He is a non-interventionist...huge difference. He is for more free trade and wants to establish peace through trade, instead of imperalism, invasion, and nation building..essentially dismantling the military-industrial complex, which Eisenhower warned us about years ago.

[rumborak]

That's not what I mean. I'm saying that international investors look at the US internally and judge the value of the dollar and their investments based on their perception of the ability of the US to produce/consume etc. Remember when the US dollar dropped when Congress couldn't agree on the debt limit raise?
Now imagine the international markets reacting to a president who pledged to, within one year, essentially dismantle half of the US federal departments. Like it or not, but the international community overall is FAR less libertarian (in your view, much more Keynesian) than RP. Their perception would be that the US is committing Seppuku, with the result of a major drop in the US dollar value. The first thing RP would face would be a massive devaluation of the dollar.

rumborak

[emindead]

Every time a dollar is printed it is automatically devalued. Inflation does that.

[rumborak]

 

rumborak

[emindead]

The point is that your paranoia of the dollar losing value if RP comes to that is that, crazy. Crazy because it's happening every single day and you walk around not giving a single damn. But if someone steps in to fix it you THEN get scared of what may happen.

[rumborak]

Are you seriously comparing the predictable, low inflation due to money printing to the massive drops the EU and the US have seen for their inability of making sound political judgments?

And besides, for you inflation is the scourge of the earth, but a RP-induced massive drop in international market trust is something you just shrug off? Double-standard much?

rumborak

[Scheavo]

I thought Capitalism meant private gains and private losses.

But what do you do when the losses cease to become private?

How does that happen?

GM goes bankrupt. This sends a shock-wave through the economy, where you then have the people supplying GM with their supplies takinga huge hit, car dealerships taking a huge hit, truck companies taking a huge it. All of this causes job lose, which of course stimies the economy, and can help lead to further job loss. Because the guy trucking the metal for GM no longer has a job, he can't spend money like he used to, which means less income for other businesses in the area, which can mean they have to lay people off.

So now, GM going bankrupt can mean the server a local restaurant loses his job.

That's how private losses can become public. The idea of some monad-like, individual as an economic entity is ridiculous, and patently absurd.

Not a single part in your paragraph proves that private losses become public. All of those loses are still tied to the private sector. How many times have GM been in dire straits? Giving them tax money as bailouts so you can "save" some jobs is not good. Every time that GM leads themselves to this point it costs more money to save them. THAT'S a PUBLIC LOSS going to the private sector.

How exactly do you define "private" and "public"? See, I tend to view private at something that is, ya know, mine. Public is other people. Just because the server is owned by a private institution, doesn't mean that when GM goes bankrupt, it's still a private loss for that server to get fired. GM going bankrupt is a public affect, even if it's a private institution. How else do you argue that GM doing well is publicly beneficial (rising tides raise all boats), as you do?

By the way, does the fact that it's a loan mean nothing? It's not just "giving" money to them, it's lending them money. I wish I could go to the bank, and they would just give me money. Depending on who I listen to, we've either made that money back, or lost nearly all of it, but that doesn't mean it's impossible for the public to get it's money back, or even benefit from it - which makes it incredibly hard to say that this is purely and only a public loss.

By the way, GM was the #1 car seller in the world last year, after losing the number one slot. Doesn't your free-market ideology mean that said company is doing good, selling the best product, and wouldn't that lead to the conclusion that government intervention does not lead to a bad product, and does not mean bad news for the consumers, contrary to how you would argue?

[Super Dude]

And conversely, given the scenario played out in the quoted Scheavo post, consequences from the failure to intervene would have been severe, not only for Detroit or Michigan but the entire country. We're talking persistent 15% unemployment rates nationwide, a deficit through the roof, a much earlier default crisis, all that good stuff.

Honestly I think debating this is pretty ridiculous, because this isn't even a matter of ideology. Bailing out GM was a necessity for the survival of the American economy, no matter what your views on government intervention or Keynesian vs. Miltonian vs. Austrian economics.

[eric42434224]

No. They're no more special than any other private company that succeeds or fails. They would be better off with a real chapter 11 where there would be an actual restructuring, and not screwing over the bond holders in favor or the parasitic UAW.

Bond holders cant get screwed over in a bankruptcy?  I am not sure you understand what you are talking about.  Bondholders are creditors.  A client of mine had his Arline Bonds default when the Arline went through bankruptcy restructuring.