[quote=“Mucha Man”]
I know some complained. I am rolling my eyes at your gratuitous use of the phrase “of course”. Now I am rolling them at your scrambling attempt to appear neutral. 
[/quote]
Maybe you could just agree they were wrong for opposing a very sensible measure aimed at improving safety on Taiwan’s inter-city buses.
[quote=“Mawvellous”][quote=“Muzha Man”]
I know some complained. I am rolling my eyes at your gratuitous use of the phrase “of course”. Now I am rolling them at your scrambling attempt to appear neutral. [/quote]
Maybe you could just agree they were wrong for opposing a very sensible measure aimed at improving safety on Taiwan’s inter-city buses.
[/quote]
I’m just egging you on. Haven’t had a good argument in a while. Getting bored. 
Two different issues.
Two different issues.[/quote]
But the underlying idea is the same. Both financial markets in London and long distance buses in Taiwan have shown themselves incapable of self-regulation.
Self-regulating markets are nothing more than a myth.
In the case of Taiwan long distance buses the whole market should be taken under government control with prices fixed centrally. Private operators could then be licensed to operate the routes (rather like the city buses are operated). This would lead to a fall in the accident rate.
In the case of financial markets, the banks should be broken up, and retail and investment arms should be separated. Bonuses should be strictly controlled to prevent moral hazard. This would lead to a fall in bank failures.
You know, there are a few bus companies operating local lines in Taipei that I try to avoid because their vehicles tend to be older, dirtier, and driven recklessly. Yesterday I was on one of the other sort - clean, well-maintained - and the driver was being a real ass. I was tempted to get off simply for safety’s sake. It occurred to me that iBus Taipei, or some other app, would be wise to add a ‘rate your driver’ feature. The companies already have “how am I driving” numbers plastered to the rear of the vehicle: give passengers an opportunity to tag specific vehicles as hazardous or filthy. That might drive some improvements.
Two different issues.[/quote]
But the underlying idea is the same. Both financial markets in London and long distance buses in Taiwan have shown themselves incapable of self-regulation.
Self-regulating markets are nothing more than a myth.
In the case of Taiwan long distance buses the whole market should be taken under government control with prices fixed centrally. Private operators could then be licensed to operate the routes (rather like the city buses are operated). This would lead to a fall in the accident rate.
In the case of financial markets, the banks should be broken up, and retail and investment arms should be separated. Bonuses should be strictly controlled to prevent moral hazard. This would lead to a fall in bank failures.[/quote]
I should let Okami or itakitez handle this since I think they’d do it better, but here goes.
Government is really bad at running or regulating any kind of financial market because these are incredibly complex. Whenever government tries this, it simply perverts various incentives. Two possible effects of this are capital (and talent) flight and creating the next bubble, probably in another asset class.
If, for instance, you separated retail and investment services, this wouldn’t necessarily prevent anyone from giving out loans to people who lacked the ability to repay the loans successfully. Yes, there’s been greed, recklessness, ridiculous bonuses and a whole lot of other things from bankers in this crisis, but the core of the problem is an asset bubble (caused by the last round of government intervention, no less) driven by greed and a lack of foresight on the part of homeowners (many of whom should never have received loans in the first place) who used this bubble as an ATM or for further speculation. People set themselves up for this fall and a huge amount of the blame in all of this should lie squarely at the feet of ordinary people. Anyone should have seen all of this coming, but they thought they’d found the equivalent to a financial Fountain of Youth. Some people, such as Kyle Bass, did and made a huge amount of money from it.
You could perhaps make it extremely difficult to get a loan, but then all that would do is mean banks would become these incredibly rigid structures and no one would give them their money (since they’d get a poor return on it) and no one would be able to borrow any money, which would actually slow down the economy because it would make it hard to setup and run a business. Economies need fairly free flowing capital. Sure, you can legislate and regulate away risk, but in so doing, you legislate and regulate the ability for anyone to get money from anyone else. There would be all sorts of unintended consequences, and then the risk becomes putting the economy in a straightjacket.
Again, if you strictly controlled bonuses, you’d probably find those people would just go elsewhere to work. These kinds of heavy regulations or outright nationalisations of banks are a fantastic way to not only kill a country’s financial sector, but to grind its economy to halt in general.
Some banks need to fail and some people need to lose their houses. Capitalism is about creative destruction. By propping them up, governments have shown that there are no consequences for being reckless and irresponsible. Watch in the next few years as all this government meddling via bailouts and stimulus packages turns into ravaging inflation that will affect the rest of us. Maybe people’s money will really be safe now (I doubt it), but watch as it gets eaten away by inflation.
Regarding nationalising the buses, has that worked really well elsewhere? Also, given the government’s inability or unwillingness to apply the current set of regulations, what makes you think they would be any more effective or motivated to do so under a nationalised system, especially if they had no competitors? Do you think that wouldn’t be massively open to corruption and abuse?
But the government has decided the banks are “too big to fail.” If they are not allowed to fail, this creates the problem of moral hazard. The government needs to intervene to deal with this. Read Mervyn King’s recent comments on the financial crisis.
Also- a strong government role in the economy (and financial sector) is often helpful. The state played a big role in the growth of Japan, Korea, and Taiwan. In continental Europe, corporatism and coordinated market economies have proven more effective than Anglo-Saxon liberal capitalism in many ways.
If you get a chance, I would also recommend Karl Polayni’s “The Great Transformation.”
The buses can still be run by private operators, but the government takes on a coordinating role. In the UK the best bus system is in London where this happens, everywhere else the buses are deregulated and there is chaos.
Politicians are also publicly accountable. CEOs are only accountable to shareholders.
Do you actually think Taiwan’s long distance buses are a good example of the benefits of free market competition?
Aren’t the coaches here are subject to a lot more regulation than they were ten fifteen years ago? Remember the wild chicken buses? Haven’t heard anyone mention yeji che in a long time.
In recent months all the coaches have acquired 4 digit route numbers. Something is afoot.
Excellent post GiT, about what I would say.
Mawvellous-time to go to the woodshed 
Banks had to make a certain number of bad loans in order to make good loans. With property rising, people could flip houses have stellar credit and living large. the problem was when the musical chair game of house flipping came to a stop and then we got to see all the worst excesses, like homes to illegal immigrants, people who shouldn’t even be loaned enough money for a coke, etc because if they didn’t loan money to them then the govt regulators would say that they were redlining and make them either pay fines, make bad loans or infringe on their business. ACORN was huge in this.
[quote]Also- a strong government role in the economy (and financial sector) is often helpful. The state played a big role in the growth of Japan, Korea, and Taiwan.[/quote]Lets see, Japan has lost not 1 but almost 2 decades of growth from “strong govt role”; South Korea went bankrupt literally and had to be bailed out by the IMF; and Taiwan has too many banks with a lot of questionable loans. What were you saying again? :ohreally:
[quote]In continental Europe, corporatism and coordinated market economies have proven more effective than Anglo-Saxon liberal capitalism in many ways.[/quote] :roflmao:
The reason why continental Europe looks so good is because they shoveled money hand over fist into their banks to keep them from imploding in Belgium and France. They are also such piss poor 10% plus unemployment and low growth countries with a stifling bureaucracy that no one even wants to do business there with out govt protection. How is Spain and it’s 20% unemployment thanks to a quixotic quest for green energy? Germany had huge problems earlier this year with banks cutting back on lending. Do you want me to even embarrass you with Italy?
[quote]Regarding nationalising the buses, has that worked really well elsewhere? Also, given the government’s inability or unwillingness to apply the current set of regulations, what makes you think they would be any more effective or motivated to do so under a nationalised system, especially if they had no competitors? Do you think that wouldn’t be massively open to corruption and abuse?[/quote]Large US cities and Latin America, absolute failure every time. De Soto does a great job explaining it in “The Other Path”.
Most economists do not believe that was the cause of the crisis, but the theory is popular in US conservative circles. I know who I am inclined to believe.
Lending to coke addicts and illegal immigrants bought down the banking system–really
And what did they have to do with the banks in the US and UK again? 
Which country has the strongest industrial base in Europe?
What countries in Europe have the highest GDP per capita (surpassing both the US and UK)?
Strongest economic growth in Western Europe? (hint: not the UK which has now had 5 consecutive quarters of negative growth)
Europe has excellent government-run public transport, the UK has a dreadful privatized railway system?
And how about those well-regulated Canadian banks?
[quote=“Mawvellous”]But the government has decided the banks are “too big to fail.” If they are not allowed to fail, this creates the problem of moral hazard. The government needs to intervene to deal with this. Read Mervyn King’s recent comments on the financial crisis.
Also- a strong government role in the economy (and financial sector) is often helpful. The state played a big role in the growth of Japan, Korea, and Taiwan. In continental Europe, corporatism and coordinated market economies have proven more effective than Anglo-Saxon liberal capitalism in many ways.
If you get a chance, I would also recommend Karl Polayni’s “The Great Transformation.”[/quote]
Deciding these banks are too big to fail is a huge problem. Like I’ve already said, it completely perverts incentives. You are saying the government needs to intervene to fix this problem, but it’s precisely because the government has intervened before (what do you think is going on every time any country’s reserve bank changes the official rate?) that there is a problem to begin with. Isn’t that kind of like having a potato chip company do open heart surgery?
[quote]The buses can still be run by private operators, but the government takes on a coordinating role. In the UK the best bus system is in London where this happens, everywhere else the buses are deregulated and there is chaos.
Politicians are also publicly accountable. CEOs are only accountable to shareholders.
Do you actually think Taiwan’s long distance buses are a good example of the benefits of free market competition?[/quote]
I think the buses are a good example of free market competition. They provide a particular level of service at a particular price. People are free to investigate the relative merits and risks of travelling with a particular bus company, or by bus in general, and then compare what they find to other modes of transport, and then choose their preferred mix of cost, safety, travel times, etc.
The point is that like a lot of things, people are too lazy to do their homework and choose the cheapest/easiest option and then complain when it all goes pear-shaped. I know what’s what with a whole lot of things from buses to fast food to investments that sound too good to be true, and I partake of such things at my own risk. You can’t get the perceived return in a vacuum, and if you do legislate against it, you reduce your returns. If the Taiwanese government really wanted to make everything incredibly safe, it would make everyone travel only by train for long distances and by armoured personnel carrier everywhere else, yet obviously we can see massive drawbacks from that level of government over-regulation.
People who didn’t understand the loans they were getting or who didn’t really know (or seriously believe) that they could repay them (especially after any honeymoon period) shouldn’t have applied for, let alone accepted, such loans. Likewise, people (and I’m thinking of that classic case of that town in Norway whose government bought such investments) who didn’t understand what they were investing in shouldn’t have invested in such things. Everyone thought they’d found the pot at the end of the rainbow though. If something sounds too good to be true, then it probably is. Do you know why Buffett didn’t get burnt during the dot com bust? One of his simplest investment philosophies is that if he doesn’t understand something (i.e. how it makes its money), he doesn’t invest in it.
What I want is government interference for the things that are out of my control. By that, I mean I want some clown who runs a red light to get in trouble and I want someone who steals my credit card details to get in trouble. However, I don’t want any higher levels of government interference to prevent “moral hazard”. I’m a grown up. I’m a “moral free agent”.
I know. It’s like the lessons of the last two years for some are that the Ayn Randian policies of the preceeding ten held the right way to pursue economic growth and stability. 
I know. It’s like the lessons of the last two years for some are that the Ayn Randian policies of the preceeding ten held the right way to pursue economic growth and stability. [/quote]
Of course, because Ayn Rand would have been a huge fan of Alan Greenspan and the Federal Reserve… 
I know. It’s like the lessons of the last two years for some are that the Ayn Randian policies of the preceeding ten held the right way to pursue economic growth and stability. [/quote]
Of course, because Ayn Rand would have been a huge fan of Alan Greenspan and the Federal Reserve… [/quote]
Meaning?
I know. It’s like the lessons of the last two years for some are that the Ayn Randian policies of the preceeding ten held the right way to pursue economic growth and stability. [/quote]
Of course, because Ayn Rand would have been a huge fan of Alan Greenspan and the Federal Reserve… [/quote]
Actually, it’s the other way around. He knew and admired her greatly. Was a member of her inner circle. She called him her ‘acolyte’ and stood by him during one swearing in ceremony.
Shh. You were supposed to let GiT hang himself there.
Maybe he supposedly was, but isn’t there something somewhat oxymoronic about someone being an Ayn Rand acolyte and also being a government bureaucrat?
From wikipedia.org:
Also note that he didn’t become Chairman of the Fed until 1987, so I wonder what Ayn would have made of that and if she still would have considered him her acolyte.
Mucha Man: That’s the first time I’ve ever seen anyone publically beat themselves on this site!
What’s next, claiming that Colonel Sanders was a vegetarian?