ddt said:
Business is perhaps not evil per se, but what about possible tendencies of businesses to co-operate to the detriment of others, how does one prevent massive cartels from forming? In a limited-government situation, competition would be the answer in theory, in practice it would require a firm legal framework with strict enforcement, which again leads us to government and the possibility of the erosion of the beforementioned legislative framework through lobbying, etc.
We already have substantial anti-trust regulatory machinery. They continue to review mergers and generally work to prevent markets from becoming monopolized by a single business. A cartel or conspiracy to fix market prices between peer manufacturers are equally illegal. Enforcement actions happen all the time. This is not inconsistent with limited government. Government needs to diligently prevent the excesses of capitalism, but they do not need to take over business activity that more effectively could be performed by the private sector.
The maga bank mergers that were promoted by government to rescue the banking system would never have been approved by anti-trust regulators in better times. They literally created these bankenstein monsters, so now they must expand their regulatory scope to manage these monsters. Seems a little too neat to me.. Now these mega banks are beholding to their new keepers and will surely feed their re-elcection campaign funds in perpetuity. We would all be better off with banks small enough that they can be allowed to fail. Investment banks don't need depositor's insurance. but I wouldn't be surprised if the depositors insurance needed the investment banks to play along at the time of crisis to prevent a run on the banking system they couldn't fund from insurance.
I am not second guessing the decision that created the Bankensteins, just how we deal with them from here. Perhaps the Dodd-Frank strategy is more clever than I think and trying to regulate them to make them small banks again, with regulatory friction. ;D
I meant cancer more as an analogy to unrestricted expansion… I read an interview with Lloyd Blankfein during the 'first' financial crisis where his answer to a question similar to "but hang on, don't you sort of want too much, with all this quest for profit thing?" was "well, can you have too much of success?", or something like that.
With this sort of mindset, you will never have enough, and will keep going until the weels come off, or you hit a brick wall, or devour the system that you feed off.
One could argue whether the "too big to fail" symptom is a result of the government stepping out of the way and going "oh, you guys do what you want" or then not letting the chips fall where they may, probably both. Avoiding the first scenario might possibly prevent getting to the point where the chips do fall I would say, on the other hand it places requrements on govermnent that are probably far above governments' inherent capabilities (i.e. governemt's generally aren't smart, like you say).
Indeed a little of both with some questionable motives (IMO).
The TBTF banks, were caused by several failures that together brought the system to the edge of the abyss. These failures ranging from legislators pressuring home lender to make loans they shouldn't have, to large investment banks not truly understanding the risk they were creating, rating agencies rubber stamping debt with little clue to the true quality, and very happy to participate world that enjoyed good times while the music kept playing. We are still dealing with the massive loss of wealth that was caused by imprudent spending thanks to easy credit. Now the bill has come due.
Now OTOH, the TBTF car companies are like a record skipping... (how many times does Chrysler get bailed out? ). Again IMO there was some funny business with how debt and share holders were treated in the fast track government bankruptcy reorganization of GM that ends up with unions (and taxpayers) becoming major new stockholders. The reorganization still laid off a bunch of people and closed a bunch of plants but viola we have new winners, and another large business beholding to legislators to feed their campaign kitties.
But at least that then leaves room for something new and potentially better to spring up. A good and responsible government should in theory be able to prevent this point from being reached. A bad one will probably accelerate the process.
There us another less beneficial outcome where government does a gradual takeover of private industry slowly sinking it's tentacles in to gain control over more of the private economy. Banks, car companies, now heath care... I wouldn't mind it so much if the government apparatchniks were the smart guys in the room but it's pretty much the opposite.
Yes. It doesn't really matter how one calls it, or whether it's legal or not, politicians will always be pushed to promote the interests of those powerful and wealthy enough to afford it. A bit like with leverage, you have more to gain, and more to lose.
Dan
I still think the key pressure point is the money trail between business and legislators, we need to break that cycle of influence somehow. A few $B will be spent by both sides in the 2012 campaign... this is just wrong... We could do a lot of good with a few $B and better yet suffer less political manipulation.
But I don't see how to easily do it yet... The answer may be in modern social media or some new technology I can't even imagine yet, but i remain optimistic that we can improve things.,
JR
I haven't seen the report of heard anything like that. .
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