||Home||Switchboard||Unix Administration||Red Hat||TCP/IP Networks||Neoliberalism||Toxic Managers|
|(slightly skeptical) Educational society promoting "Back to basics" movement against IT overcomplexity and bastardization of classic Unix|
|News||Criminogenic effects of neoliberalism||Recommended Links||Audacioues Oligarchy and Loss of Trust|
|Criminogenic effects of neoliberalism||Corporatist Corruption: Systemic Fraud under Clinton-Bush-Obama Regime||Elite [Dominance] Theory And the Revolt of the Elite||The Iron Law of Oligarchy||Amorality and criminality of neoliberal elite||Neoclassical Pseudo Theories and Crooked and Bought Economists|
|Corruption of Congress||Corruption of SEC||Corruption of FED||Corruption of Treasury||Corruption of CFTC||Corruption of Office of Comptroller of currency|
|Amorality and criminality of neoliberal elite||Glass-Steagall repeal||Brooksley Born and Three Marketeers||Greenspan||Lawrence Summers||Helicopter Ben|
|Neoclassical Pseudo Theories and Crooked and Bought Economists||Invisible Hand Hypothesys: The Theory of Self-regulation of the Markets||Insider Trading||Banking Bonuses as Money Laundering||Financial Sector Induced Systemic Instability of Economy||Lack of transparency|
|In Goldman Sachs we trust||Numbers racket||Greenspan humor||Financial Quotes||Humor||Etc|
August 20, 2009
Jesse of Jesse’s Café Américain posted on the important subject of deregulation in his last post, “Why the Austrian, Keynesian, Marxist, Monetarist, and Neo-Liberal Economists Are All Wrong.” In it, he opined that it is entirely wrong-headed to assume everything will be alright if we just let free markets work their magic. I want to take his thoughts one step further because I think there is a misperception about what the free market entails and why the deregulation movement went astray.
First, a framework.
Last March, I posted an article called “A populist interpretation of the latest Boom-Bust cycle” in which I used Jared’ Diamond’s viewpoint of stratified societies as Kleptocracies as a lens through which to understand the secular trends which have characterized the last generation of western economic history.
To review, Diamond won a Pulitzer Prize in 1998 for his book Guns, Germ and Steel, which is a narrative of how Eurasian societies as a whole have dominated others throughout the last 10,000-odd years. One of his basic premises is that Eurasian societies are stratified, and hence less egalitarian, allowing individuals to specialize. The hierarchy and specialization have combined to give these societies advantages that less stratified (and less resource-rich) societies do not have.
The corollary of this – and where I want to concentrate – is that advanced societies are not egalitarian. Some will de facto have more, and others will have less. Moreover, as Diamond asserts, this lack of equality becomes, in essence, a kleptocracy i.e. a reverse Robin Hood organization where the elites enrich themselves at the expense of the others.
This has been the reality in all advanced societies based on agriculture, manufacturing and services for the last 10,000-odd years. This social structure has been net beneficial to the societies employing it in comparison to more simple societies – a case of a rising tide lifting all boats. So, on some level, kleptocracy is nothing about which to get irate.
The problem is that not all kleptocracies are created equal. At some point, the ruling class overreaches in a way that subtracts from rather than adds to the overall prosperity of the society. Cries of “throw the bums out” are heard, an uprising ensues and a new elite is installed who themselves turn to the same methods of kleptocracy to ensure their own power.
I suggest you read my ‘populist’ post or Diamond’s book in full for more on this. His book is quite enlightening.
Where free market ideology fits in
Obviously, if some always have more power and wealth than others, there is never a situation in which the economic playing field is level. Moreover, it is axiomatic that those with the means and access will always have greater influence over government than those without. So, in a very real sense, the socioeconomic elite of any advanced, stratified society will always have disproportionate control of the economic and political system.
Now, I happen to be a Libertarian-minded individual, so I have nothing against the free markets or the concept of small government and deregulation. Freer markets and smaller government are my preferred ideal. However, I am a realist. I understand that markets are never truly free and government fulfills a necessary function.
So, when you hear someone talking about getting government out of the way and allowing the free markets to work, you should be thinking about the influence and control this would naturally engender.
Think crony capitalism
In fact, I would argue that the deregulation and free market capitalism that these individuals refer to is really crony capitalism in disguise. I will explain.
When I think of deregulation, I think of two related but distinct concepts. The one is the actual de-regulation, which is the permission of economic actors to compete in markets previously unavailable to them by order of legislation or de facto government intervention and coercion. The other is regulatory oversight, which is the maintenance of specific rules of engagement under threat of penalty on economic actors by government. De-regulation and regulatory oversight are related concepts but they are not the same.
I am a proponent of deregulation – a major reason I don’t see the re-imposition of the Glass-Steagall Act as the solution to what ails us. When you look across industries that have been deregulated, from energy to transportation to finance, invariably competition has increased and prices have come down, benefitting consumers. That is what deregulation is supposed to do.
On the other hand, whenever you have witnessed lax regulatory oversight after deregulation, it has always been an unmitigated disaster (examples include finance in Sweden, the US and the UK, air travel in the US, energy markets in the US). De-regulation and lax oversight make for a particularly potent cocktail. It’s like allowing your twenty-year old and his friends to drink beer at home under your supervision, but then telling him he can raid the liquor cabinet when you go away for a week-long vacation. What do you think is going to happen?
But, if you mix a lack of oversight with deregulation knowing that the political and economic playing field is not even, you are inviting corruption aka crony capitalism. Why do you think the Washington Post was trying to sell access to politicians on health care reform? Why was Lloyd Blankfein the only CEO in the room when AIG’s fate was being decided? Why did the Obama Administration make a secret deal with the pharmaceutical lobby on health care? You might answer that these examples show isolated cases of crony capitalism in an age of special interests. I would argue that you are just seeing the kleptocracy pendulum swing too far. This type of cozy relationship between government and industry has always existed. This is the reason a codified and robust structure for regulatory oversight exists – to prevent this type of thing from tilting the playing field too far.
So, if you want to boil this post down into a sound bite, think: deregulation good, but regulatory oversight necessary. Without the necessary check on the power of special interests that adequate regulatory oversight provides, deregulation is simply another word for crony capitalism.
Groupthink : Two Party System as Polyarchy : Corruption of Regulators : Bureaucracies : Understanding Micromanagers and Control Freaks : Toxic Managers : Harvard Mafia : Diplomatic Communication : Surviving a Bad Performance Review : Insufficient Retirement Funds as Immanent Problem of Neoliberal Regime : PseudoScience : Who Rules America : Neoliberalism : The Iron Law of Oligarchy : Libertarian Philosophy
War and Peace : Skeptical Finance : John Kenneth Galbraith :Talleyrand : Oscar Wilde : Otto Von Bismarck : Keynes : George Carlin : Skeptics : Propaganda : SE quotes : Language Design and Programming Quotes : Random IT-related quotes : Somerset Maugham : Marcus Aurelius : Kurt Vonnegut : Eric Hoffer : Winston Churchill : Napoleon Bonaparte : Ambrose Bierce : Bernard Shaw : Mark Twain Quotes
Vol 25, No.12 (December, 2013) Rational Fools vs. Efficient Crooks The efficient markets hypothesis : Political Skeptic Bulletin, 2013 : Unemployment Bulletin, 2010 : Vol 23, No.10 (October, 2011) An observation about corporate security departments : Slightly Skeptical Euromaydan Chronicles, June 2014 : Greenspan legacy bulletin, 2008 : Vol 25, No.10 (October, 2013) Cryptolocker Trojan (Win32/Crilock.A) : Vol 25, No.08 (August, 2013) Cloud providers as intelligence collection hubs : Financial Humor Bulletin, 2010 : Inequality Bulletin, 2009 : Financial Humor Bulletin, 2008 : Copyleft Problems Bulletin, 2004 : Financial Humor Bulletin, 2011 : Energy Bulletin, 2010 : Malware Protection Bulletin, 2010 : Vol 26, No.1 (January, 2013) Object-Oriented Cult : Political Skeptic Bulletin, 2011 : Vol 23, No.11 (November, 2011) Softpanorama classification of sysadmin horror stories : Vol 25, No.05 (May, 2013) Corporate bullshit as a communication method : Vol 25, No.06 (June, 2013) A Note on the Relationship of Brooks Law and Conway Law
Fifty glorious years (1950-2000): the triumph of the US computer engineering : Donald Knuth : TAoCP and its Influence of Computer Science : Richard Stallman : Linus Torvalds : Larry Wall : John K. Ousterhout : CTSS : Multix OS Unix History : Unix shell history : VI editor : History of pipes concept : Solaris : MS DOS : Programming Languages History : PL/1 : Simula 67 : C : History of GCC development : Scripting Languages : Perl history : OS History : Mail : DNS : SSH : CPU Instruction Sets : SPARC systems 1987-2006 : Norton Commander : Norton Utilities : Norton Ghost : Frontpage history : Malware Defense History : GNU Screen : OSS early history
The Peter Principle : Parkinson Law : 1984 : The Mythical Man-Month : How to Solve It by George Polya : The Art of Computer Programming : The Elements of Programming Style : The Unix Hater’s Handbook : The Jargon file : The True Believer : Programming Pearls : The Good Soldier Svejk : The Power Elite
Most popular humor pages:
Manifest of the Softpanorama IT Slacker Society : Ten Commandments of the IT Slackers Society : Computer Humor Collection : BSD Logo Story : The Cuckoo's Egg : IT Slang : C++ Humor : ARE YOU A BBS ADDICT? : The Perl Purity Test : Object oriented programmers of all nations : Financial Humor : Financial Humor Bulletin, 2008 : Financial Humor Bulletin, 2010 : The Most Comprehensive Collection of Editor-related Humor : Programming Language Humor : Goldman Sachs related humor : Greenspan humor : C Humor : Scripting Humor : Real Programmers Humor : Web Humor : GPL-related Humor : OFM Humor : Politically Incorrect Humor : IDS Humor : "Linux Sucks" Humor : Russian Musical Humor : Best Russian Programmer Humor : Microsoft plans to buy Catholic Church : Richard Stallman Related Humor : Admin Humor : Perl-related Humor : Linus Torvalds Related humor : PseudoScience Related Humor : Networking Humor : Shell Humor : Financial Humor Bulletin, 2011 : Financial Humor Bulletin, 2012 : Financial Humor Bulletin, 2013 : Java Humor : Software Engineering Humor : Sun Solaris Related Humor : Education Humor : IBM Humor : Assembler-related Humor : VIM Humor : Computer Viruses Humor : Bright tomorrow is rescheduled to a day after tomorrow : Classic Computer Humor
The Last but not Least Technology is dominated by two types of people: those who understand what they do not manage and those who manage what they do not understand ~Archibald Putt. Ph.D
Copyright © 1996-2021 by Softpanorama Society. www.softpanorama.org was initially created as a service to the (now defunct) UN Sustainable Development Networking Programme (SDNP) without any remuneration. This document is an industrial compilation designed and created exclusively for educational use and is distributed under the Softpanorama Content License. Original materials copyright belong to respective owners. Quotes are made for educational purposes only in compliance with the fair use doctrine.
FAIR USE NOTICE This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available to advance understanding of computer science, IT technology, economic, scientific, and social issues. We believe this constitutes a 'fair use' of any such copyrighted material as provided by section 107 of the US Copyright Law according to which such material can be distributed without profit exclusively for research and educational purposes.
This is a Spartan WHYFF (We Help You For Free) site written by people for whom English is not a native language. Grammar and spelling errors should be expected. The site contain some broken links as it develops like a living tree...
|You can use PayPal to to buy a cup of coffee for authors of this site|
Last modified: January 02, 2020