Adieu to the revolution, says French left.

They took their time. Two decades since the collapse of Soviet communism, the French Socialist party has finally decided that it no longer wants a revolution. 

The main opposition party has put aside its feuding to agree on a new charter that for the first time commits it firmly to the market economy. It abandons the "hopes of revolution" that the Socialists proclaimed in their  last version -- drafted in 1990 after the Berlin wall had already disappeared.

Of course there are conditions, but they are shared by the centre-left across continental Europe. "Socialists support a market economy that is socially and environmentally responsible, a market economy that is regulated by public authority and through labour and management groups," it says.

Unusually, almost all the Socialists agree with the charter, which is the fifth since 1905, when the fledgling party committed itself to class struggle and the overthrow of capitalism. It should be passed with no trouble at a June convention, ahead of blood-letting over a new leader next autumn.

The new mission statement is important because the party has clung, at least emotionally, to its old Marxist dogma.

The refusal to modernise their doctrine pleased the significant wing of French voters who still yearn for a radiant revolutionary future. But it sowed confusion when the party won power and ran the country in a pragmatic way, as it did under President François Mitterrand through most of the 1980s and from 1997-2002 under the premiership of Lionel Jospin. They have lost all presidential and parliamentary elections since.

Even last year, Ségolène Royal, the party's presidential candidate, refused to come clean as a modern Social Democrat who supports a market-based economy. The revamped socialism of Tony Blair's New Labour party was held up as the anti-model yet over 10 percent of voters still backed the Trotskyite Olivier Besancenot and other revolutionary candidates to the left of the Socialists.

Alain Bergounioux, co-author of the charter, said: "The Socialist Party is launching a new period of its existence. It was necessary for us to define what socialism means for us.

In its preamble, the charter still lays claim to the heritage of the 1789 revolution and the violent Paris Commune of 1871, but it commits the modern left to a tamed version of the capitalist economy for the sake of humane existence.  "To be a socialist means that one is not complacent with the world as it is," reads Article 1.

The charter should clear the air a little before the battle opens for the succession to François Hollande, the outgoing party leader, and the chance to lead the opposition against Nicolas Sarkozy in the next presidential election.

The party won a handsome victory in town council voting last month but it is far from recovery as a plausible alternative to Sarko. His administration may be deemed a failure by about 60 perecent of the country but the polls also show that people do not believe that the Socialists would do any better.

None of the half dozen contenders for the leadership enjoy anything near a consensus in the party. Royal, 54, who has mounted the most aggressive campaign, remains ahead among Socialist voters, but many in the upper ranks of the party cannot stand her preachy, go-it-alone ways. Favourite in the country at large is Bertrand Delanoe, 58, the newly re-elected Mayor of Paris. Delanoe [below in the picture with Royal] is an excellent manager but it would be hard to see him reaching the presidency with his prickly, uncharismatic character  -- and his publicly assumed homosexuality.

The other candidates, such as Julien Dray, Pierre Moscovici and Claude Bartolone, are all worthy but seem pretty lightweight as contenders to take on Sarkozy next time round. The Socialists have their new, unrevolutionary flag but they have yet to find someone to carry it.

As a footnote, there's a good piece with graphs and charts in this afternoon's Monde on the paradoxes afflicting France and its economy. It's on the strategy mission that Sarkozy has given to Eric Besson, the Socialist economics secretary who defected from the Royal campaign and joined his government last summer.

[Delanoe and Royal]

 

Comments

[dot king]

Here's the poem that goes with the painting - Eugène Delacroix C19.
That's Gavroche from "Les Misérables" to the right of the lady with the torn blouse (and the Tricouleur).

Sur une Barricade (Victor Hugo)

Sur une barricade, au milieu des pavés
Souillés d'un sang coupable et d'un sang pur lavés,
Un enfant de douze ans est pris avec des hommes.
- Es-tu de ceux-là, toi ? - L'enfant dit : Nous en sommes.
- C'est bon, dit l'officier, on va te fusiller.
Attends ton tour. - L'enfant voit des éclairs briller,
Et tous ses compagnons tomber sous la muraille.
Il dit à l'officier : Permettez-vous que j'aille
Rapporter cette montre à ma mère chez nous ?
- Tu veux t'enfuir ? - Je vais revenir. - Ces voyous
Ont peur ! où loges-tu ? - Là, près de la fontaine.
Et je vais revenir, monsieur le capitaine.
- Va-t'en, drôle ! - L'enfant s'en va. - Piège grossier !
Et les soldats riaient avec leur officier,
Et les mourants mêlaient à ce rire leur râle ;
Mais le rire cessa, car soudain l'enfant pâle,
Brusquement reparu, fier comme Viala,
Vint s'adosser au mur et leur dit : Me voilà.

La mort stupide eut honte et l'officier fit grâce.

Learned by heart at least twice, by proxy, this year!

Otherwise, pas de commentaire . . .

[Christine]

Courfeyrac tout à coup aperçut quelqu'un au bas de la barricade, dehors, dans la rue, sous les balles. Gavroche avait pris un panier à bouteilles dans le cabaret, était sorti par la coupure, et était paisiblement occupé à vider dans son panier les gibernes pleines de cartouches des gardes nationaux tués sur le talus de la redoute.
- Qu'est-ce que tu fais là ? dit Courfezrac.
Gavroche leva le nez :
- Citoyen, j'emplis mon panier.
- Tu ne vois donc pas la mitraille ?
Gavroche répondit :
- Eh bien, il pleut. Après ?
Courfeyrac cria :
- Rentre !
- Tout à l'heure, fit Gavroche.
Et d'un bond, il s'enfonça dans la rue. (...)
Il rampait à plat ventre, galopait à quatre pattes, prenait son panier aux dents, se tordait, glissait, ondulait, serpentait d'un mort à l'autre, et vidait la giberne ou la cartouchière comme un singe ouvre une noix.
De la barricade, dont il était encore assez près, on n'osait lui crier de revenir, de peur d'appeler l'attention sur lui.
Sur un cadavre, qui était un caporal, il trouva une poire à poudre.
- Pour la soif, dit-il, en la mettant dans sa poche.
A force d'aller en avant, il parvint au point où le brouillard de la fusillade devenait transparent. Si bien que les tirailleurs de la ligne rangés et à l'affût derrière leur levée de pavés, et les tirailleurs de la banlieue massés à l'angle de la rue, se montrèrent soudainement quelque chose qui remuait dans la fumée.
Au moment où Gavroche débarrassait de ses cartouches un sergent gisant près d'une borne, une balle frappa le cadavre.
- Fichtre ! fit Gavroche. Voilà qu'on me tue mes morts.
Une deuxième balle fit étinceler le pavé à côté de lui. Une troisième renversa son panier. Gavroche regarda, et vit que cela venait de la banlieue.
Il se dressa tout droit, debout, les cheveux au vent, les mains sur les hanches, l'œil fixé sur les gardes nationaux qui tiraient, et il chanta :
On est laid à Nanterre,
C'est la faute à Voltaire,
Et bête à Palaiseau,
C'est la faute à Rousseau.
Puis il ramassa son panier, y remit, sans en perdre une seule, les cartouches qui en étaient tombées, et, avançant vers la fusillade, alla dépouiller une autre giberne. Là une quatrième balle le manqua encore. Gavroche chanta :
Je ne suis pas notaire,
C'est la faute à Voltaire,
Je suis petit oiseau,
C'est la faute à Rousseau.
Une cinquième balle ne réussit qu'à tirer de lui un troisième couplet :
Joie est mon caractère,
C'est la faute à Voltaire,
Misère est mon trousseau,
C'est la faute à Rousseau.
Cela continua ainsi quelque temps.(...)
Une balle pourtant, mieux ajustée ou plus traître que les autres, finit par atteindre l'enfant feu follet. On vit Gavroche chanceler, puis il s'affaissa. Toute la barricade poussa un cri ; mais il y avait de l'Antée dans ce pygmée ; pour le gamin toucher le pavé, c'est comme pour le géant toucher la terre ; Gavroche n'était tombé que pour se redresser ; il resta assis sur son séant, un long filet de sang rayait son visage, il éleva ses deux bras en l'air, regarda du côté d'où était venu le coup, et se mit à chanter :
Je suis tombé par terre,
C'est la faute à Voltaire,
Le nez dans le ruisseau,
C'est la faute à...
Il n'acheva point. Une seconde balle du même tireur l'arrêta court. Cette fois il s'abattit la face contre le pavé, et ne remua plus. Cette petite grande âme venait de s'envoler.

Les Misérables, Cinquième partie, Livre I,
« La guerre entre quatre murs », Chapitre XV « Gavroche dehors »

[John Gregory Flinn]

"Socialists support a market economy that is socially and environmentally responsible, a market economy that is regulated by public authority and through labour and management groups.."

That reads like a green light to privatize everything.
That would be a good idea!

[Ros]

I don't think Delanoe has a particularly "prickly, uncharismatic character" - he might even be a better candidate than the presumptious Hollande - of course, they let the only good man go - Strauss-Kahn ....

[Michel Rose, Londres]

Delanoe, a "prickly, uncharismatic character"?

I find him pretty good at moving crowds. I listened to him at the Sorbonne for Aime Cesaire's ceremony and he made a brilliant speech, loudly applauded by the audience.

[Daniel Strohl]

John Gregory,

"a market economy that is regulated by public authority and through labour and management groups"

May be it is intented to be possibly interpreted as a green light to privatize everything. However, I am less optimistic : "through labour and management groups" still leaves the door wide open to "démocratie participative" à la Royal(e), not to say to soviets à la Besancenot :))

A part of the rank and file of the socialists still holds "the revamped socialism of Tony Blair's New Labour party as the anti-model". It will take time for them to reverse their minds - you can't eradicate deeply seated Pavlovian reflexes in a short period of time ...

[John Styx]

I agree with Ros and Michel. I listened to Delanoë in public rallies several times. He has an old fashioned way to speak and move, which delights photographs, but he's very good with crowds.

[rocket]

Daniel Strohl

http://tinyurl.com/5c3l34

Please read.

Regards

[Marguerite.]

Merci Charles Bremner, grace a votre blog, j'ai relu avec plus d'attention le Monde date mardi 22 avril, y compris l'edito, et j'ai appris plein de choses sur le socialisme francais, anglais, allemand.

Pour ROS : ne vous inquietez pas, il reviendra Strauss-Kahn...pour la prochaine election presidentielle.

[Daniel Strohl]

Rocket,

Good link, however in the wrong thread - thanks nevertheless :))

[Romain]

While the Socialist Ministers are priding themselves on doing the same sort of thing that Liberal and Conservative Governments would have done, while they have put themselves off in practice and in office from their wild theories, they tell us in the same breath that they believe in those theories as ardently as ever, and that they are only waiting for an opportunity to put them into force. Somebody is being deceived. [Cheers.] Either it is the public, who are lulled into a sense of false security, or it is the Socialist party, if they allow their creed to be repudiated by their leaders for the sake of office. (Winston Churchill)

That is what we know from le Parti Socialiste past governements.
There is a serious need of a credible opposition in France.

[rocket]

Daniel

"A part of the rank and file of the socialists still holds "the revamped socialism of Tony Blair's New Labour party as the anti-model". It will take time for them to reverse their minds - you can't eradicate deeply seated Pavlovian reflexes in a short period of time ..."

I am in total agreement with this analysis.

[rocket]

Daniel

I was afraid that the link wouldn't be read if I had put it on the appropriate link as it was rather old.

[stephen Bull]

"Socialists ...support a market economy that is regulated...through labour and management groups."
This is the corporatism which was superbly analysed last year in the monograph of Yann Algan and Pierre Cahuc in "la société de méfiance" which I found thanks to you.
To come out of the 19th century into the 2nd half of the 20th century will not be enough for the PS. They should jump to Blairism and still be behind the game.

[thinknoworpaylater]

Dot KING - I think Terry means you! Im no linguist whereas you teach languages and to Terry anyone of a Liberal Democrat colour (say you) is a lefty. (sorry I know this is from a previous thread - I just caught up with it). Remember the Left does not exist any longer in the U.S.A. The destruction by violence State intervention and Congressional Committee is well known. The country of free speech does not allow it in certain ways: ironically the very thing they accuse the Chinese Govt. of doing. (But they are no friend of mine). If you think Obama or Hillary C. are *lefty* think again. There probably isnt even room for liberal social democrats of the kind we find in Europe normally. On a seperate issue - REALLY DANIEL STROHL I had come to expect better of you than that. Using Pavlovian reflex as an image is abit cheap.It reduces principles (however misguided) to an animal reflex. You can do better. ROCKET you may agree with Daniel S. and your sympathy for his *analysis* is perhaps symptomatic of your view but in fact there is already a reaction to Tony Blairs New Labour which may well lead to its defeat at the next election in the U.K. What it will be replaced by is another matter. As regards the Parti Socialiste I agree that they no longer function as they should. But to assume the banner of Tony Blair in present global economic circumstances is maybe not the solution. Tony had it easy. The next economic epoch is something else.

[john o'doe]

It strikes me that the PS is at the same stage as the Labour party was when, after much handwringing, it finally decided to drop Clause 4 (which called for wholescale nationalisation).
That was back in the stone-age.

[John Gregory Flinn]

The left developed many cunning strategies during, and after the cold war, as it became clear they had to survive the success of market economics and hopefully, even prosper.

Public ownership and taxation are two old favourites in this context and a rearguard battle to retain as much of the former continues. But support is dwindling inexorably as market economics proves to be more efficient, more competent, less costly and generally superior in many respects.

However some public sectors are more efficient than others, which I believe applies in France. Hence there is not the same pressure for privatization here as, for example, there was in the UK at the end of the 1970s.

So, to cater for a gradual decline of public ownership and the control it provided, the left will increasingly turn to regulation.
Inventing rules, procedures, systems and associated inspections including the title 'Quality' or 'Quality Assurance', is an ideal solution for them. They can cloak their political goals in issues of Health and Safety, Quality Assurance etc.
And render any industry a bureaucratic minefield if permitted (cf. India).

BTW, THINKNOWORPAYLATER, I'm not sure if you really believe "Remember the Left does not exist any longer in the U.S.A."
There are socialized systems in welfare, medicine and education that rival those in Europe. Then there are the 'greens', aka the left, or is it vice versa....!?
I think Hilary has more plans along those lines.

[Daniel Strohl]

Thinknoworplaylater,

"The next economic epoch is something else"

I agree with that, and there will be no simple solution(s) worldwide. However, regarding specifically France, we have right now a crude example of what should absolutely not happen: it is the new strike of the dockers in Marseille and other harbours. France is already avoided as much as possible by foreign shipping due to many strikes which had and have again a desastrous impact on the reliability reputation of our harbours. Traffic will continue to be more and more (permanently) rerouted to Genoa, Valencia, Anvers, Dutch and even German ports - meanwhile, our dockers continue to strike against "privatisation", whereas their (privatized) foreign colleagues and their bosses battle to absorb the surplus of business, which didn’t cost them a single cent spent in commercial efforts to lure new customers.

Privatisation is the officially invoked reason for the present strikes; the real reason (at least in my opinion) is that the CGT union wants to keep at statu quo ante their “monopole d’embauche” – in clear, nobody is authorized to work in a harbour unless they carry a CGT member card and, of course, pay duly their membership fee to the union and fill the orders of their (CGT) “management” strictly.

The above is just an example. Similar things have happened for instance in Le Livre CGT (printing business). This “worked” in the past, but is totally unadequate now in the changing world. I am not sure that the CGT or, BTW, some teacher unions have already “got it”.

You are right; my expression with the Pavlovian reflexes was harsh. However, I didn’t intent to hurt anybody; but we live in a dangerous and fast changing world, and many of our politicians and close followers continue “comme si de rien n’était” à dire comme avant – “demain, on rase gratis”. Et pas seulement à gauche …

[rocket]

Daniel

You said

"You are right; my expression with the Pavlovian reflexes was harsh."

As the companies listed below I also have a motto which you should consider

Never apologize.

LOL

* Adidas: Impossible is Nothing
* Apple Computer: Think Different
* Audi: Vorsprung durch Technik (Advantage through technique)
* BBC: Nation Shall Speak Peace Unto Nation
* Dell: Easy as Dell
* Google: Search, Ads and Apps (before: Don't be evil)
* Harrods: Omnia Omnibus Ubique (All Things, For All People, Everywhere)
* Intel: Leap Ahead
* LG: Life's Good.
* Metro-Goldwyn-Mayer: Ars Gratia Artis (Art for Art's Sake)
* Microsoft: Where do you want to go today? / Your potential, our passion.
* Motorola: Hellomoto
* Nokia: Connecting People
* Nike: Just do it
* Nutella: Che mondo sarebbe senza nutella
* Tesco: Every Little Helps
* Toyota: Moving Forward

[rockinred]

@John Gregory Flinn and others:
Quite how you interpret "a market economy that is socially and environmentally responsible, a market economy that is regulated by public authority and through labour and management groups" as a green light to privatisation is hard to comprehend. It just doesn't say that. Perhaps your devotion to Chicago-school free-market dogma has blinded you to the fact that the neoliberal economic experiment is imploding and that unregulated capitalism has run its course. Free-for-all privatisation won't happen in France - certainly not under Socialism, not even under Sarkozy. What's far more interesting is that the Left is - at last - reinventing itself in a form that's relevant to the modern world. Which is a whole lot more than the neoliberal dinosaurs are capable of doing.

[John Gregory Flinn]

DANIEL - with your last post on certain French dockers who are behaving like 'dogs in the manger', the connection with Pavlov is demonstrably quite apt....!

ROCKINRED - I agree that more regulation is likely following the current bear market (see previous thread), but that's all the left can ever do - tax and regulate others' inventions!

[Daniel Strohl]

John Gregory,

I didn't know the expression "dogs in the manger" - it is quite adequate in the CGT dockers case.

[Terry]

"What's far more interesting is that the Left is - at last - reinventing itself in a form that's relevant to the modern world. "

What nonsense. All this is rearranging the deck chairs on the Titanic. As you note, there is no actual change in socialist belief. This the rather cynical repackaging of the same failed notions designed to fool the voter into voting socialist. As I said before, you can shine sh@te.

Rockinred:

As to free markets failing, what free markets are those? Not even in America do we have free markets with agricultural subsidies and health care prices determined by bureaucrats. I love when socialist/leftist policies result in economic disruptions and the left says it must be free market capitalism. The current food crisis, my socialist friend, is caused by the leftist notion that using food as fuel is a good idea. THEN government subsidizes it. Then lefties start screaming how free markets are the problem.

Lefties are not economically (or socially) smart people. But they are relentless.

[rockinred]

Terry - I really can't be arsed to take up your bizarre and fallacious arguments. However it ill behoves someone who's so clearly intent on swimming against the tide to describe others as 'not...smart'. Not as smart as you, I presume? In which case, I'm glad to be dumb.

[Terry]

"Terry - I really can't be arsed to take up your bizarre and fallacious arguments."

That's really only because you are incapable of doing so. If socialists are anything, they are economic illiterates. :) And, since you are incapable of intelligently opposing my arguments, you simply try to dismiss them. The usual socialist tactic. Thanks for proving my point.

Socialism is a combination of so many things, jealousy of others who succeed, fear that they are incapable of competing in a market economy, disdain for individual freedom and property, contempt for the idea that people are smart enough to govern their own affairs without government intervention and, always, a big streak of totalitarianism.

Socialism is about power, not distribution of goods and services or freedom.

[thinknoworpaylater]

JOHN GREGORY FLINN - By the Left I meant all those groups wo were politically orientated to the lEFT inthe 2os 30s and 40s. Many were broken up by State supported violence : strike-breakers were helped by the police and the State. The un-American tendency (McCarthyism done largely for his political career) destroyed the lives of dozens of people in literature and the media (many of whom moved to Europe). Tjhe Greens are nothing to do with it because this is a class-gender issue and negotiations takeplace locally. I repeat from an earlier thread: the avareage worker in the U.S. has not increased their economic position since the 1960s-1970s in real terms. Some American economists would say it has declined. DANIEL S. thank you for your remarks. I think well keep this up ; its civilized and apologizing is civilized. Actually I think ROCKET is quite civilized most of the time: the problem is bravado. TERRY - I wrote a long text about free markets a year ago (or thereabouts) : of course they are not free. Apart from government regulation there are also inelasticities in the system: the current problems with the price of oil and cereals is an example as well as the rampant market in futures. A free market is an idealist position ( note I did not say idealistic) it just isnt possible. But nonetheless answer this: Everyone is saying its the banks fault that we have a credit problem. O.K. but the banks are a reification.(Look it up ). IN fact its senior managers who are paid massive rewards for being *clever* and taking risks who have created the current problems. Of course the banks are greedy but the real AGENTS are individuals who are highly rewarded by the system (on a short term basis) Ultimately this short termism given millions of dosh to the individuals isnt an issue for them. If the banks reward speculation (Im talking big money) whatwill stop it. Terry - you would say no further regulation I would say Im not so sure. ROCKINRED - of course you are right but with TERRY you are wasting your time. TINA as we used to say in the U.K. (under Thatcher). There Is No Alternative. There is no alternative for Terry: its unimagineable and literally unspeakable.

[dwayne]

Anyone who is a socalled 'leftist' and who wants market capitalism is a class traitor to the international working class. YOUR A REVISIONIST IF YOU DON'T WANT THE WORKING CLASS TO HOLD STATE POWER IN A REVOLUTION . LENIN WARNED ABOUT SUCH TRAITORS LONG AGO! DWAYNE

[rockinred]

THINKNOWORPAYLATER |

Thanks! Made me laugh, which is the best reaction to Terry. Good post too, especially re the effect of over-rewarded individuals in the banking industry.

[Terry]

Thinknow:

To be honest, I have trouble understanding the point you are trying to make and I think it's the language barrier.

I cannot speak for the Europe banks, but in the US the "subprime" was actually caused by government intervention. In the late 90s, the government thought that banks were "redlining" poor neighborhoods. THis means that the banks would not lend to poor people for racist reasons. Of course, banks will lend to anyone if they can make a profit. The banks were lending to these people because they were bad credit risks. Anyway, the government passed a law forcing the banks to make a percantage of their loans to poor people who were extreme credit risks. The banks did exactly what government regulations forced them to do, i.e. make loans to bad credit risks.

And this highlights my point, government regulation always leads to bad unintended consequences. The food shortage caused by ethanol shortage is another perfect example how government regulation causes price disruption. Then you lefties start screaming we need more of it. Of course, that's what you want because leftist thought is usually totalitarian. Your models are Stalin, Hitler, Mao, Castro, Ho Chi Mihn and Mussolini.

Rockinred said:

"Thanks! Made me laugh, which is the best reaction to Terry."

At least Thinknow made a modest attempt (however feeble) to use an argument. You are out of your league Rockinred. Do you want Dominique's email?

BTW: You all forgot to wish Sandrine a happy 50th birthday on April 14, 2008. She is very upset.

[thinknoworpaylater]

TERRY- Its not just the language barrier. Im saying two things in the post: Banking problems in Europe are a consequence ot the (natural) tendency of banks to massively reward senior people in the system who make large short-term profits for the banks (good for share prices). These rewards are pretty major and even those who later depart from the bank gain enormous sums. The mechanism of reward to individuals is out of control in the sense that what they do is speculation (gambling to you and me). But the effects on the economy and the financial system can be serious while the guys who did it can walk away well loaded. The second point is that in classical economics increased demand creates increased supply by the price mechanism. BUT remember that OPEC (the producers) have no incentive to increase supply at current high prices and anyway they have a limited resource (hence inelasticity of supply). Classical economics does envisage this possibility but didnt imagine a global futures market where profits are short-term and basically gambling (or even manipulation of the shares market which happened recently in the U.K. around bank shares) for profit. But Terry you should really look at Euro-Tribune - there are people there (not all lefties) with a very good grasp of economics business, banking and commerce (they work there) who aregreat critics of the system and offer more elaborate accounts of the mechanisms in play than was contained in ROCKINREDS brief and terse account. But you will find similar views there albeit longer. Of course if this is uncongenial (lengthy and sophisticated and often detailed) dont bother. As forthe usual slander against the left (Stalin to mussolini) I think we can forget that. Social leftists who are largely democratic really shouldnt be smeared in that way.

[Terry]

Thinknow:

You raise two points. Many industries massively overpay C.E.O.s, high level employees, etc. If companies want to do this, it is their right. HOwever, when these banks fail, we should not be propping them up with government intervention. A perfect example is Delta Airlines. THey pay their CEO 350 million or so. They want to reduce the salaries of stewardesses which is about $21K. So, they file for bankruptcy to get the judge to void the contracts with the stewardesses saying they cant afford to pay those salaries. Meanwhile, the CEO is making 350 million. The problem isnt capitalism, it's government. In this case, Delta used government intervention to void it's contracts. The same thing happens with the banking system being bailed out by the governmrnt, Taxpayers are subsidizing those salaries. But this the result of government intervention, not capitalism.

As for oil, I have a friend who is VERY big in the "price of oil prediction" business. He informs me it's not that there is not enough oil coming out of the ground. It's that there are enough refiniries to produce oil. That is a large part of why we have high prices right now. THe US hasnt built a refinery in over 30 years. Why? Environmental regulations. The overall point it's not capitalism that's the problem, it's governmental regulation of capitalism that causes price distortions.

You getting this Rockinred. Thinknow makes some good arguments. Why dont you try it sometime?

[Daniel Strohl]

Terry,

"Many industries massively overpay C.E.O.s, high level employees, etc."

We have the same in France. There were a few conspicuous cases here in a recent past. For me, it is not a problem if successful managers are highly rewarded. However, if they fail, they should have the decency to resign instead of clinging to their seats and meanwhile trying to shift the responsibility of the errors on subordinates.

And if they use their internal knowledge of their companies operations to sell their generally huge stock options a few weeks prior to a (foreseable) severe drop of their companies shares, due partly at least to their mismanagement or internal feuds, they should be heavily fined, according to existing laws, and even fired. I am however not sure that this will actually happen in the specific case I have in mind ...

What is also unbearable is the intellectual arrogance of some of these gentlemen. Ils n'ont aucune vergogne.

PS : Terry, don't be afraid, I am not turning red! But when the economy is not in a good shape, everybody has to make efforts, and the managers should be the first, and not the last, to do that.

[Terry]

Thinknow:

"As for the usual slander against the left (Stalin to mussolini) I think we can forget that. Social leftists who are largely democratic really shouldnt be smeared in that way."

I have not seen much at ET that demostrates otherwise. The rub is how leftists define democracy. Socialists, in fact, like to define themselves as "democratic" when they are not. If you go to the USA Socialist party website, you will see that they say that the socialists say you can have "personal property". Of course, the socialist party will tell you what and how much personal property you can have. Most at ET that Ive read dont sway far from this line of thinking. And Im not just talking about mon ami Frank, who thinks Cuba is a "one party" democracy. A number of people at ET seem to believe egypt, jordan, china, syria, etc are democracies. I once commented there how private property is the cornerstone to freedom. The response I got was vitriolic. Apparently, the right to own a home or keep what you earn is widely believed there to be repugnant. Of course, the point of almost ALL civil law in democratic societies is to protect property. That is why we have government. To protect, life, liberty but mostly property.

My problem with leftist thinking is that is based on a malevolent world view. People are evil, greedy, stupid and need to be told what to do. This leads to the notion that all activity must be controlled by the state, which is somehow never evil, greedy, stupid and never needs to be controlled. This is quite funny since the government is nothing more than a collection of people.

Surely, there are many leftists who dont want a Stalin or a Mussolini. Unfortunately, the leftist views they cherish like controlling human behavior and private property often lead to one. Read F. Hayek on why this always occurs.

[thinknoworpaylater]

Terry - You would have to use the *socialist* website as *evidence* from the U,S,A, Try some socialist sites in Europe. Your imagination is once again running away with you. The Red Menace is not what that you think it is ( would that it were) The question remains: is capitalism the only system or just one that exists and is very powerful. Is there no alternative? Still you are always serious in your arguments - Ill give you that.

[Terry]

Daniel:

"they should be heavily fined, according to existing laws, and even fired."

I dont think it's the government's role to fine these people or pass laws about private compensation. It is not the role of government to determine what is "just" compensation. Nor is capable of doing so. This is for companies to decide for themselves. If they want to pay exhorbant salaries, that is their business. And if these companies suffer because they overpay managers/owners/board members, then they should also suffer the consquences. I dont like the government subsidizing these companies or propping them up because "they are too big to fail". Capitalism means that companies sometime go bankrupt or close because of mismanagement. In the end, that is good for everyone. Whether it is good times or bad times, the government really needs to stay out of the business of business.

BTW: I know you're not red.

[Terry]

Thinknow:

"The question remains: is capitalism the only system or just one that exists and is very powerful. Is there no alternative?"

Capitalism is merely when the means of production are owned privately. It is not the only system. Socialism is when the state controls the means of production. Communism is when the people own it. It is the most effecient (and powerful) of the three. Mostly, this is because people act out of their own self-interest. Leftists often describe a negative connotation to self-interest. But it is human nature and there is nothing wrong with self-interest. We all want to advance and do better in life.

Whether it's capitalism, socialism or communism, these systems all operate under the same rules of economics, such as the law of supply and demand. So, take my favorite socialist Chavez for example. He arbitrally decided to set the price of milk at a certain level. The price he set was below what it costs to make milk. As such, the people who produce it could only do so at a loss. The result: They stop producing milk, they let their fields go fallow, they sold their cows or tried to sell there milk elsewhere. Now, Venezuelans cant get milk at any price in the stores. There are shortages. Government regulation of the prices caused the shortage. And this is the point, socialism can pass whatever economic regulations it wants. But it cannot make itself immune from the laws of economics.

Chavez is blaming the shortages on greedy milk farmers and is now threatening to nationalize the milk industry. But the problems were caused by his failure to understand both human nature and economics. The milk producers have their own families to feed. What are they supposed to do?

http://www.washingtonpost.com/wp-dyn/content/article/2007/02/08/AR2007020801240.html

[Daniel Strohl]

Terry,

"This is for companies to decide for themselves. If they want to pay exhorbant salaries, that is their business"

Yes, this is true for my first example above. In the second one, government has directly or indirectly money in the company.

In all these cases, the (mis)managers are employees, i.e they do not incur any risk with their OWN money. This is the problem.

Regarding the "délit d'initié" (I don't know the technical translation; "délit" means offence - "initié" could be translated by "insider", i.e knowing all secrets of the company), there are existing laws with heavy financial penalties for the offenders. But things are hard to prove.

PS : I used the word "employees"; may be some concerned gentlemen will not like it and would prefer "capitalists". But this does not apply here. A capitalist is somebody who risks his OWN (big :)) money to make business - and to earn even more money. This of course is also the aim of the "employees".

[thinknoworpaylater]

TERRY- people act but its not only or mostly that they act out of their own self interest. Their reasons are always framed by an intenttoact forthe *best*. Human nature is another question. Sooner than me. For me behaviour and Anthropology tell me that human beings are extremely fluid ( their strength in evolutionary terms - Im sure Ayn Rand would agree) - both intense co-operation AND intense competition. I prefer to emphasise conscious co-operation - you like to emphasise the market - unconscious competition. But why do people die for their country in wars - its not simple self-interest. You seem never to have recognised dis-interestedness, magnanimity of those in power and so on. These are also human nature. There are more things in the Universe than you think Horatio.(I misquote but you what know what I mean).

[Valentin]

TERRY:
"This is for companies to decide for themselves. If they want to pay exhorbant salaries, that is their business."

This is all very nice - except that, as Daniel says, there are also the employees. The balance of power between employees and managers is often awkward. There are often no unions, and when they exist, they're of Red influence, or populist, or bought by managers, and when they're ok, their only recourse is strike, which is a terrible means of persuasion, let alone negotiation.

So managers and shareholders can fix themselves salaries regardless of performance, they can bring the company to its knees and be thanked, without any real consequence whatsoever.
Meanwhile, mere employees see their wages cut or get fired.

I'm all for capitalism, but when Terry speaks against any government intervention in economy, I'd like him to explain how employees get protected by the free-market rules.

(free market is all and only about profit, which is why some private hospitals threw patients out when it was clear they're too poor to foot the bill - Terry might wanna show us a free-market solution to that too)

[Terry]

Thinknow:

"Anthropology tell me that human beings are extremely fluid both intense co-operation AND intense competition. I prefer to emphasise conscious co-operation - you like to emphasise the market - unconscious competition. But why do people die for their country in wars - its not simple self-interest."

I think every action a human takes is out of self-interest no matter how selfless it might seem. Both cooperation and competition are not incompatible. Both can be in the self interest of an individual. Also, people often give money to charity. They do it to help others. But it would be foolish to think that they also dont do it for themselves. It feels good to do something for someone else. People dont join the army to die for others. They have made a choice that they value fighting for something worth more than their life. Pure self interest.

[Terry]

Valentin:

Where you've been? This is red meat for you. Sleeping at the wheel again?

"So managers and shareholders can fix themselves salaries regardless of performance, they can bring the company to its knees and be thanked, without any real consequence whatsoever.
Meanwhile, mere employees see their wages cut or get fired."

The problem is that government props up these companies. Did not the EU bail out yet another bank? If companies overpay managers or CEOS and cut employees at the expense of service, the company wont do well. That means less profits. Companies who operate under mismanagement should fail. The problem is that these companies are propped up by government intervention. Read my Delta example mentioned prevously.

The idea that government can somehow determine what are fair compensation for employees in any particular industry would be quite silly. Government cant even run itself properly.

As for profit, everyone works for profit. It is a fact of life. You do, Valentin. YOu sell your labor for euros. You actually sell your labor for more than it's worth. Your wages include your rent, food, etc. That's profit. Like it or not, medicine is a commodity. Doctors, hospitals, nurses work to make a profit. Is that somehow evil? The problem with health care is that the government and the government regulated health insurance industry has distorted the pricing system. The problem is that doctors cant charge market value for their services. This causes absurdities. A friend who is a doctor was paid $75 for a spinal tap. My father in law spent 10 days in the hospital for OBSERVATION only. The bill $65,000.00.

http://www.latimes.com/news/opinion/la-oe-fuchs16apr16,0,4998001.story

[azloon]

Thinknow, Vee

Healthcare is an area where Terry's libertarian gusto runs into a wall.

His proposals in this area would lead to situations such as exist in 'communist' china where if you have cancer, but no cash, NO TREATMENT pour petite toi !! and i mean cash, on the barrelhead, in a suitcase. not a promissary note, nor security of some sort. cash, cold hard yuan. harsh.

it's a disgrace.

[Alicia]

Just a small note: Delacroix's Liberty Leading the People was painted in 1830 commemorating the revolution to overthrow the July Monarchy, which was a bourgeois-led revolution, not a proletarian one. You can see the deliberate mixing of classes in the painting, which was more of an ideal than actual situation in the aftermath of 1830. In short, this painting is not appropriate to a story on the Socialist party.

[Terry]

Azloon:

"Healthcare is an area where Terry's libertarian gusto runs into a wall. His proposals in this area would lead to situations such as exist in 'communist' china"

Really? There was no healthcare insurance in this country really until after WWII. So, we were communist China before then?

Somehow we managed to live without health care insurance for most of our existence as a country. One of the biggest problems with health care insurance is that it pays for EVERY single visit. The whole point of insurance is to pay for a calamity, not every single time someone needs a checkup. Most people need insurance solely in the event if they have to enter the hospital.

Alas, not many people think these things through. They just run to their emotional barricade screaming "everyone should have healthcare" without too much thought on the best manner of providing it. The government has difficulty operating the Division of Motor Vehicles. DO you want these morons in charge of your healthcare?

[Daniel Strohl]

Alicia,

A more appropriate painting could be La tour de Babel, by Pieter Bruegel l'Ancien; le PS is still in (re)construction, and there are as many opinions voiced as there are socialists ... :))

[qwerty]

Terry & Azloon: guess in which country the doctors deliver the largest prescriptions filled with unnecessary medication nonetheless reimbursed by Social Security? You got it.

[Valentin]

TERRY:
"As for profit, everyone works for profit. It is a fact of life. You do, Valentin. YOu sell your labor for euros."

Of course the economy is fueled by desire to make profit: the purpose of building a company is not to help lower the unemployment rate, but to make money!
That's not the issue, but the fact that people are a mere "resource" for companies. Whoever held management positions in a firm knows that the employees are not much more than machines supposed to make products. The only thing that matters is productivity and the man-days, no one cares about anything else. "Corporate culture" and Google's camps don't change this situation.

Or people cannot be fired or their salaries cut the way a machine is replaced or underused. A company paying the CEOs tens of millions and cutting wages will NOT be penalized by the market, Terry. The market only cares about the products - features, qualities, costs. You give the CEO one million more, and cut 5000 wages x $200 each : balance is ok, and as long as people don't sabotage the place by working worse or less, everything's ok.

The market should make employees quit and look for another job. The problem is that people are human and fear for their families' safety. The problem is also that the job market has NEVER (except "niche" situations) pulled in favour of employees. Job market is ALWAYS in favour of employers, Terry, I hardly ever saw Ford or General Motors employees capable of weighing in by menacing to move to another company. So employees have no leverage. Market would crush them, were it not for state-imposed work regulations.

Are you in favour of abolishing all work regulations, then (8 hour week, payed holidays etc) ?

And I'm not even speaking about firms threatening to move to China (a savage market with near slave employees) if western work force don't give in.

[Valentin]

TERRY:
"The whole point of insurance is to pay for a calamity, not every single time someone needs a checkup. Most people need insurance solely in the event if they have to enter the hospital"

True. This is the mistake they make in France: instead of insuring for calamities, exceptional cases, very poor people, they pay back everything and for everybody, without any check for abuses - with the obvious result: public healthcare accounts are a big black hole.

[Terry]

"Are you in favour of abolishing all work regulations, then (8 hour week, payed holidays etc)?"

8 "hour" week. My France has gotten lazy.

Ford and GM are perfect examples of mismanaged companies with overcompensation of management. And what did the US do a while back? They bailed out GM because it was too big too fail? That means the US subsidized it's mismanagement.

Back to your question, I dont believe government should be involved in propping up the company or determing what is a fair salary for the CEO or the employee. Or work hours or paid holidays. I approach it this way. No one is entitled to a job or a living. These companies do not owe you anything. People choose to work there in return for money. If you do not like what they pay, improve your work skills, work somewhere else or start your own business. The companies that we are bad mouthing provide a means of living to many people. If they choose to overpay their CEO, that's their business. It's their company, not yours. If you are a shareholder, then you have the right to squawk about it.

Like everything, labor is a commodity. People have a way of leveling things out. If companies pay poorly, employees dont put much effort in. We have all said "#$#%# this, Im not getting paid enough to care" at some point on the job. Poor pay brings it's own revenge.

What do we want? Laws telling companies what they should pay CEOs and employees? This is something the government is capable of doing?

[Terry]

QWERTY:

"guess in which country the doctors deliver the largest prescriptions filled with unnecessary medication nonetheless reimbursed by Social Security?"

Of course. Milton Friedman would say this is the natural result of when you have someone (the US government) paying the bills for someone else (the elderly) with other people's money (the taxpayers).

http://youtube.com/watch?v=Un4-eI1T71E

[Alicia]

Correction to myself on the painting: 1830 was the July Revolution putting the July Monarchy (a constitutional monarchy) in power, then to be overthrown in 1848 (a successful 3rd Estate revolt in February followed by the crushed proletariat revolt in June). My point in bringing up the artwork is that the bourgeois-led revolutions are heavily commemorated (like in Delacroix's Liberty Leading the People) while there is an attempt at amnesia with the true proletariat revolutions (June 1848 and the Commune in 1871). Just think, after the Commune fell the Impressionists (who almost exclusively were bourgeois and often moderate republicans), painting scenes of bourgeois leisure and concerned with optical experience, had their heyday. Not that art always has to be accountable to politics, but it does seem to be connected. Coincidence?

Perhaps La tour de Babel would be better!

[Maggie]

"guess in which country the doctors deliver the largest prescriptions filled with unnecessary medication nonetheless reimbursed by Social Security?"

Terry seems to think Qwerty was referring to the US here, but I thought it was France. Anyone know for sure?

[Daniel Strohl]

Alicia,

"an attempt at amnesia with the true proletariat revolutions (June 1848 and the Commune in 1871)"

Regarding the Commune in 1871, our friend Dominique has often mentioned it. But since you are new on the blog, may be you don't know Dominique. He seems to be quite silent for the moment being ...

Maggie,

"but I thought it was France. Anyone know for sure?"

It was indeed France. The same is not possible in any other reasonable country ...

[qwerty]

Maggie, Terry, Daniel, sorry for leaving you in the lurch on this wonderful weekend: yes it's France. It's a statistical fact. The British and the Dutch are always amazed at the number of remedies a French doctor will prescribe to patients (I personally leave out half when I go to the pharmacy). Also, French doctors are very easy in prescribing "arrêt maladie". I once got one for a sprained ankle, but of course did not use it.

This is not a criticism of French Social Security, but of the irresponsible attitude of people who are not payers (doctors & patients who go see a doctor pour le moindre rhume).

It's great that in France you can get very good medical assistance and if you are seriously ill (cancer, heart) coverage is 100%.

[V]

Labour is not just a commodity, health is certainly not one, and food is not one also. I also wouldn't want Britain's privatised railways - or airports for that matter. If I think well, electricity should not be a free-market subject either. Lawyers should not be free market either, for they're absolutely indispensable for anyone having anything to do with courts - as any other truly indispensable and vital service.

I don't even see this as a question of incompetent capitalism, but as a fundamental issue. Communists say the same thing: communism was mismanaged (like Enron, or the British railways) and so we didn't see the REAL communism, but the mistakes of clumsy practicians.

The same for capitalism: there are some inherent, fundamentally flawed points about the free-market. You can't allow it where you can't create a balanced market and true competition all while protecting people from pressure amounting to blackmail and ensuring the continuity of those vital services no matter the moods and the quirks of the market.

Communism (and collectivism) is flawed because it aims to model the society according to grand plans as if we were small lifeless parts in a big machine.
Capitalism is flawed when it sees everything in terms of profit in cases when life cannot be reduced to matters of profit (or self-interest). These are but reductive ideologies.

But isn't so any ideology, any philosophic system - a limited mind trying to explain the world, and ending up closing it in a cage of reductive concepts.

[Terry]

Valentin:

Food, legal representation, medical care, utilities? All these shouldnt be commodities? Why? Because you need them so they should be provided to you at minimal cost? This is nothing more than hybrid form of socialism. It's sounds to me that you just want someone else to pay for goods and services you cannot produce on your own.

As long as these things have costs attached to them, they are commodities. Doctors and lawyers have to pay a lot of money to be educated and have a specialized skill. That's why they cost more. Food, electricity, these things cost money too. Should the farmer get less money just because you need to eat. The people in these industries put the food on your table and turn the lights on in your apartment. They are entitled to earn a living and reap the rewards for their services as those people who work in other fields.

Capitalism is merely people trading for goods and services. Profit is always involved and there is nothing dirty about it.

[Daniel Strohl]

Qwerty,

"patients who go see a doctor pour le moindre rhume)".

Some patients go see a doctor (or doctors) in the same way they would go to the "Centre Commercial" to spend free time. Most of them have a "mutuelle complémentaire" to their "Sécurité Sociale"; therefore the visits to the doctor(s) are rather cheap if not totally free of charge. And if they have spent money for their "mutuelle", they want it back (at least) in terms of doctor's visits and medicaments ... Crazy!

The system is partly rotten and therefore much too expensive. The goverment tries to reform things at the "Sécurité Sociale", but it is not an easy task. Too many people (doctors, pharmacists, laboratories, patients) earn a (good) living with this system or enjoy it or make abuse of it. Il faut attaquer ceux qui abusent là où ça fait mal, c'est-à-dire au portefeuille.

Terry,

"there is nothing dirty about it".

You should try to explain this to our "peuple de gauche". Even Hercules would not be able to succeed in this task ...

Of course, what is dirty in the profits are the profits made by others. Own profits are legitimate and are not due to be shared with anybody else. The "rich" have to be taxed, and only the "rich".

[Terry]

Daniel:

C'est drole. And who are the rich? Probably everyone else.

TERRY:
"Profit is always involved and there is nothing dirty about it."

I agree on both points. That's not the problem.

"It sounds to me that you just want someone else to pay for goods and services you cannot produce on your own."

No, what I would like, is a true liberal capitalism, genuine competition, without unbalanced market situations.
Unchained capitalism leads to people killing and enslaving other people for profit (colonisation), throwing patients out of hospital for profit (US), blackmailing people by monopolies (French mobile telephony market) for a profit, hurting economies and ruining people's lives by speculators (Northern Rock, subprimes) for a profit, ruining vital public service for a profit (British railways).

Free market does not regulate itself, does not balance or adjust itself, but always and only seeks to optimize profit, fair or not, competition or not, no matter the means and the collateral casualties.
What I'd like is fair capitalism. There's no fair game without rules, and without referees to enforce them.

[Terry]

V:

"There's no fair game without rules, and without referees to enforce them."

You're assuming the government is a fair referee. It's not. The government chooses sides. It subsidizes agriculture and other businesses. It creates monopolies. It gives certain corporate friends an edge over it's competitors through law, taxes and regulation. It will pass laws to protect big business over little business.

[azloon]

Terry, N.B.

from: Edmund Burke, Reflections on the Revolution in France (1790)

BURKE: "Society is indeed a contract. Subordinate contracts for objects of mere occasional interest may be dissolved at pleasure -- but the state ought not to be considered as nothing better than a partnership agreement in a trade of pepper and coffee, callico or tobacco, or some other such low concern, to be taken up for a little temporary interest, and to be dissolved by the fancy of the parties. It is to be looked on with other reverence; because it is not a partnership in things subservient only to the gross animal existence of a temporary and perishable nature. It is a partnership in all science; a partnership in all art; a partnership in every virtue, and in all perfection. As the ends of such a partnership cannot be obtained in many generations, it becomes a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born. Each contract of each particular state is but a clause in the great primaeval contract of eternal society, linking the lower with the higher natures, connecting the visible and invisible world, according to a fixed compact sanctioned by the inviolable oath which holds all physical and moral natures, each in their appointed place."

Society is more than an unwritten contract to buy and sell anything and everything with no interference from government (which seems to be your version of the Libertarian Creed).

and government isn't the ever-present 'boogie man' you make it out to be. after all, it is government that has had to bail out the so-called 'free markets' during the current financial crisis.

so for you to make the astounding assertion that the government can't be trusted to do 'anything about anything' and that interference in any market, ipso facto, is wrong-headed is to exhibit on your part a bit of cranial-rectal inversion, i'm afraid.

below is george soros speaking recently (after 1790) on the subject of regulation of markets (so they won't implode and take you, me, and most of the rest of us down the toilet):

SOROS: "[The system, as it currently operates, is built on false premises. Unfortunately, we have an idea of market fundamentalism, which is now the dominant ideology, holding that markets are self-correcting; and this is false because it's generally the intervention of the authorities that saves the markets when they get into trouble. Since 1980, we have had about five or six crises: the international banking crisis in 1982, the bankruptcy of Continental Illinois in 1984, and the failure of Long Term Capital Management in 1998, to name only three. Each time, it's the authorities that bail out the market, or organize companies to do so. So the regulators have precedents they should be aware of. But somehow this idea that markets tend to equilibrium and that deviations are random has gained acceptance and all of these fancy instruments for investment have been built on them."]

i have to say that Libertarians (if you speak for them) come off a bit like Jesus freaks/Islamist extremists: there appears to be only one answer/solution for every conceivable question or problem.

If only life were as simple and clear as your lawyerly, cocksure responses suggest.

[Terry]

"it is government that has had to bail out the so-called 'free markets' during the current financial crisis."

I dont know how closely you've read what I've written, but I am against the so called bail out of the free market. In capitalism, there are losers. The losers are people and companies who make poor business decisions. Sometimes these companies go bankrupt or out of business. This is exactly as it should be. But then the government gets involved and bails out these losers. This is asinine. It rewards poor business decisions. Worse, it encourages businesses to take even more stupid risks and make more bad business decisions knowing that the government will bail them out in the end.

The people who suffered losses in the "subprime" problem were limited to banks and people who made bad decisions. Government intervention by continuing to lowering the rates has exacerbated the problem. The banks did not lower their mortgage rates to borrowers. So, they are reaping the benefits without passing it on to the consumers. The banks, though, lowered the savings rate on interest substantially. So, now EVERYONE is paying for the banks bad choices thanks to the US government and the Fed.

Markets do self correct. But it is not painless and it takes time. Plus, politicians feel pressure to do something that they know nothing about. The increased foreclosures eventually leads to cheaper housing prices to purchasers and investors. That is, until the government gets involved.

BTW: New Jersey increased (or is about to) the fees to foreclose from $250 to $2,000.00. I guess the idea was to make banks pay for their bad decisions. However, most people come out of foreclosure at some point. But, to come out of the foreclosure you have to pay the bank all the costs and fees and litigation. Guess who has to pay the $2000? In government's infinite wisdom, it just passed a law making it more expensive for the homeowner to get out of foreclosure. Well done New Jersey.

So much for government intervention helping.

[Valentin]

Terry:
"You're assuming the government is a fair referee. It's not."

I don't say governments should bail out speculators, or intervene in the prices; they should set the rules of the game and enforce them - not ideologically(Marx, Milton etc), but pragmatically.
Take the subprime crisis. Government and financial authorities only chose to set a minimum of rules, and leave the rest to the free market.
Also, the rating agencies often gave their clients high marks.

Two examples of failing referees - with the result we all know.

[Terry]

V:

"Take the subprime crisis. Government and financial authorities only chose to set a minimum of rules, and leave the rest to the free market."

Not correct. In 1996, civil rights groups and (american) liberals were screaming that banks refused to make loans to people in poor neighborhoods. A process called "redlining". Banks didnt do this because they were racist, but because these people were bad credit risks. In response, the government passed a law FORCING banks to make a 5% percentage of there loans within these neighborhoods. What you see now is the inevitable outcome. Government forced banks to make bad loans. Mortgage brokers game the government created system to "help" banks meet their quotas and Voila-subprime problem. Oh, and out of the 100% of oustanding mortgages, 5% are in foreclosure. What a coincidence.

Also, the subrime thing was not caused by lack of regulation. It was caused by mismanagement. Among other things, I do a lot of real estate representing some modestly sized developers. Banks just happen to employ very stupid people. I know because they call my office alot. Next to government, they are one of the worst run institutions. The left hand never knows what the right hand is doing. When the government bails them out, it prevents banks from internally fixing their problem. That is something regulation cant address.

The problem with what you are saying V is that government NEVER is a neutral referee. They come in, take sides and pass laws to stomp competition. Usually, for whoever gives them more money. Sometimes, they take BOTH sides.

[azloon]

Terry -- your mind wanders in a theoretical vacuum. you are not in the real world, i am afraid,

[Terry]

Azloon:

"Terry -- your mind wanders in a theoretical vacuum. you are not in the real world, i am afraid,"

Yes. My last post was all vagueries. No specifics.

Methinks you've been sampling the peyote again.

[azloon]

Terry--

you have to be a member of a recognized tribal religious congregation to legally possess and use peyote. that leaves me out.

and i'm told, with peyote, you have to suffer thru major nausea before the onset of hallucinations. i have found i can achieve the same effect cold sober, with a cuban cigar (nausea and hallucinations).

you are, if nothing else, bright and rigorously consistent.

:)

[Daniel Strohl]

Azloon,

This reminds me of a funny spy film during the cold war. American and Russian agents meet in a bar for negociations.

The boss of the Russians offers Cuban cigars to the Americans. The latter begin to smoke them, but don't seem to be extremely pleased.

The Russian says : "But we have offered you Cuban cigars". Answer : "Yes, but your friends didn't deliver you their best quality". The Russian : "Yes, but we didn't supply them with our best missiles either!"

[Valentin]

Terry,

I agree there are social measures that may seem odd to a free marketeer. The problem is governments represent the poor too, and they happen to be quite numerous, even in our rich countries. What financial people or free-market supporters don't understand is that governments must take into account the disadvantaged too (who are not always responsible of their handicaps).
If a majority votes 5% credits should go to the poor, bankers should shut up and submit, not rant about the free market. That's why I dislike technocrats who think their science is above all, so we should probably be governed by a robot in which we stored all economical, financial and mathematical rules.

Only this is about 5%. 5% would have never brought the market down. The market was brought down because BANKS were too eager to PROFIT from risky mortgages hidden inside complicated financial products rated AAA by Fitch, Moody's and the others. It's that simple.

Governments are not neuter in that they can give in to populisms. But the Fed and the SEC could have done a much better job at not allowing the banks take so much risk with subprimes, and then to shift that credit risk to the twilight zone ('cos unregulated!) of derivative products.