Wall St. Is Winning: Elizabeth Warren "Speechless" About Record Bonuses

Yahoo News ^ | 10-16-2009 | Aaron Task

[Enterprise]

Hey QUARK, I did not, and do not, agree with the stupidity that the Republicans engaged in while they were in power. That being said, IMO, the Democrats currently in power have exceeded the greed and stupidity of the Republicans by huge margins. Now, if financial institutions are taking taxpayer money and acting like it's business as usual, they are indeed acting like Democrats who also take taxpayer money, by the TRILLIONS, and act like it's business as usual because for them, it IS FRIGGIN business as usual.

Tell you what though, if it makes you happy attacking Republicans for past misdeeds, y'all go on and keep attacking them. I prefer attacking the greater evil, who are the Democrats, because their policies are the HERE and NOW danger to this nation.

[TopQuark]

"What better way to remove that signal from the economy than to let them fail?"

A better way is first to state, very firmly, that the present (Bush, Obama) administration has changed its stance; repeat that several times, and THEN let some mid-size firm to fail, thereby showing that we mean business. The markets then have a chance to process this information and adjust accordingly.

In contrast, the freezing of credit in October of 2008 was precipitated by the abrupt change in the government's position --- letting Lehman fail contrary to the decades-long policy. The market understood that the rules of the game have changed. But what were the new rules? Nobody knew, and the markets froze in response to that uncertainty.

Actual policy implementation is much harder than any general truism. The devil is in the details, and unforeseen consequences can ruin any seemingly obvious solution.

[Tublecane]

“There is no black box such as a ‘corporation.’ When one talks about ‘corporate interests,’ one has to be careful and explicit: are you talking about shareholders-owners, management, employees, etc.?”

Very true, and when I talk about Big Business or “the rich,” I keep myself intentionally vague. Because it is of sweeping cultural/political/economic movements of which I speak. And perhaps I’m as guilty as Marxists of treating largely fictitious blocks of my own creation as real, breathing entities.

It is the case that there are tensions between various factions within Big Business, too many for me to enumerate or frankly comprehend. However, there is this movement, and it is real, toward what has been called corporatism, if not fascism. I blame it all on the state, which is what, more than anything else, seperates me from socialists. But that’s beside the point.

The important thing is, I have to have some means of expressing what I think is happening, writ large. And the best way to do that, without writing an extended essay, is to deal with what some might call childish concepts like “the rich” and The People.

One concept I feel comfortable treating as a monolith is the state, although it, too, has various internal contradictions. Damn the contradictions. The Founding Fathers knew as well as I that it is motivated by one obsession (much as humans are motivated by eros or the fear of death): aggrandization and centralization.

By the way, it was from the French philosopher Bertrand de Jouvenel in “On Power” that I cribbed the idea that government is reactionary in its Being and radical in its Becoming. Most interesting to me, personally, he went through all the famous revolutions in European history—the English Civil War, the French Revolution, the Bolshevik coup—and demonstrated that in all cases, a more populous group stood up to an elite group, resulting in a more powerful central government. This holds true for the American Revolution as well, if you stretch it out to the birth of the Constitution.

[TopQuark]

" if financial institutions are taking taxpayer money and acting like it's business as usual,"

They are not, as I said earlier. Whatever follows a false supposition is irrelevant.

"if it makes you happy attacking Republicans"

Another false suppositon: you don't know me and don't know what makes me happy. What you COULD've concluded from my post is that the problem we face is greater and more difficult than Dem vs. Rep battle. The whole country has turned left (and has been turning for a century, with a breaf breake during the Reagan years). Dems are more left than Republicans, but Republicans are no longer conservative either.

"y'all go on and keep attacking them. I prefer attacking the greater evil"

You attack whomever you want. But if you understand the situation better, you'll be more effective. Our real enemy is the CULTURE, where even conservatives don't know how major instiution work and are inflicted with class envy (raving against CEOs, Wall Street, etc.). You can ignore that if you want; evn under Obama, it's still a free country.

[Tublecane]

“In contrast, the freezing of credit in October of 2008 was precipitated by the abrupt change in the government’s position -— letting Lehman fail contrary to the decades-long policy. The market understood that the rules of the game have changed. But what were the new rules? Nobody knew, and the markets froze in response to that uncertainty.”

I can see the argument for the bailouts. Better to choose the evil you know, or whatever it is they say. However, I do not buy into the Lehman Brothers game-changer argument. I think it’s a weak excuse for a way to blame the free market on the financial disaster. It is my belief that credit would have frozen anyway, and indeed it did, even with all the bailouts.

The argument is always that it would have been worse, and yeah, I guess it would have. But that’s not all we have to bear in mind. There’s also the fact that the markets have to liquidate, have to go down before they can go back up. Have to. Aversion to risk and unwillingness to further overextend finance is a necessary part of returning to prosperity. With the bailouts, this process takes a while. Without, it’s swifter. Of course, it’s aslo more terrifying.

The question, then, is how horrible would the crash have been? Doesn’t much help the anti-bailout cause that the stock market tumbled and unemployment shot up. Again, people are more willing to bear those evils they know. So you had Paulson warning about martial law and Bernanke wringing his hands about a second Great Depression. You had rumors about a few guys in nice suits selling and selling, to the point that the entire world was about to be ripped of their wealth. Can’t very well confirm or deny such claims.

That brings us back, once again, to Lehman Brothers. Free marketeers must argue that it happened, and it wasn’t so bad, was it? We didn’t all starve. Interventionists shoot back, what are you talking about, have you not noticed the recession? Yes, the other side responds, a recession which would have been shorter had we chosen a different path. Longer, say the interventionists, had we taken your path.

It all depends on whether you’re a Monetarist, a Keynesian, an Austrian, or what-have-you. That’ll give you your answer.

By the way, I think you overstate the inevitable bailout signal. That Fannie and Freddy would be bailed out was undeniably clear. And by extension, certainly most people thought this would help save their asses. However, the ‘08 bailouts were, if I’m not wrong, completely unprecedented. I doubt the signal had been out there all along that the entire financial industry, and every business within it, was too big to fail.

There were all sorts of bad signals out there, from the interest rate to the Right to Own a Home movement, but I’m not sure “We won’t let you fail” was one of them. They did let people fail during the S&L scandal, by the way. So your assertion that the government’s position abruptly changed with Lehman is dubious.

[TopQuark]

"there is this movement, and it is real, toward what has been called corporatism, if not fascism. I blame it all on the state,"

I completely agree. The implication that follows, at least in my mind, that one has to focus on the government. It is true that large corporations' RESPONSE to the government results in less than desirable consequences. But, as you yourself has observed astutely, they have no choice; they do the best they can. Fighting the corporatist (fascist) behavior of the government has to be the main focus.

It has to be the SOLE focus, moreover. This is because any attacks on the abstract "rich" and "corporations" puts one, regardless of intentions, in complete alliance with Marxists. It also damages those that are still uneducated and/or still undecided. When someone without sufficient knowledge hears anti-Wall Street, anti-capitalist, anti-corporate rants from ALL sides, one concludes that that is a UNIVERSAL truth, whereas it is a complete falsehood. We are responsible for our actions. In sum, undeservedly attacking innocent people is not only a defamation (hence immoral) but runs contrary to your own intentions.

"best way to do that, without writing an extended essay, is to deal with what some might call childish concepts like “the rich” and The People."

Concepts may well be "childish" or simplistic --- we all have but limited knowledge. They should not be so simplistic, however, as to be false and devoid of content. Observe that the concept of The People, although not precisely defined, has quite a bit of content: we may not know exactly where it end, but we know that a very large part of the population is included in it. The concept of the "rich," in stark contrast, is almost empty and grossly misleading. As I mentioned earlier, it inadvertently includes the poorest and unfortunate people --- widows, orphans and retirees that own American corporations. When you speak of poor as rich, the concept loose whatever meaning one could try to give it.

"One concept I feel comfortable treating as a monolith is the state,"

This comfort stems from the lack of proper models and proper analysis. I don't blame anyone here: just as game theory is a recent phenomenon, proper analysis of governments is only recently began in political science and economics. It has been recognized (since 1980s) that people signing contracts have incentives to violate them. (This is the central observation of agency theory.) Managers of corporations have incentives to diverge from the interests of shareholders that hired those managers. (This is why "bonuses" and stock options have become widespread in the last two decades: they help align managers' interests with those of shareholders). What's the point here? Governments are organizations just as corporations. Its members (politicians) have incentives to diverge from teh interests of stakeholders (the people of the United States) that put them in power. The study of incentives here --- that is, viewing governments as organizations rather than monoliths -- is equally appropriate. Our Founding Fathers did just that, at the intuitive level, in our Constitution.

I am not suggesting, of course, that one cannot have preliminary opinions (working hypothesis) without full knowledge of these matters. I mention these things to you, who is clearly a very careful thinker not vulnerable to hasty conclusions, only to suggest the paths for further analysis.

"By the way, it was from the French philosopher Bertrand de Jouvenel in “On Power” that I cribbed the idea that government is reactionary in its Being and radical in its Becoming."

I have not read that apparently interesting work. Thank you for mentioning it; I will get to reading it as soon as I can.

[TopQuark]

"The argument is always that it would have been worse,"

That is the statement of a belief that we were supposed to accept. I personally have never heard an ARGUMENT. As a consequence, I suspend judgment: I don't know and cannot even estimate whether things would be worse.

What I do accept that some intervention (by a doctor, the government) into the financial sector (a patient made previously sick by the same doctor) was necessary. Whether it was a bailout, whether that bailout had to have the form it did --- I don't know that (and have serious doubts).

"But that’s not all we have to bear in mind. There’s also the fact that the markets have to liquidate,"

For the sake of truth, the point of the bailout was not to have in place of liquidation but to make that liquidation orderly. They have recognized the point you make.

"With the bailouts, this process takes a while. Without, it’s swifter. Of course, it’s also more terrifying."

I agree. And not only terrifying. If the recession is deeper, there is something to be said --- even by free-market proponents --- about unemployment and related misery.

"The question, then, is how horrible would the crash have been? Doesn’t much help the anti-bailout cause that the stock market tumbled and unemployment shot up."

You and I know that the same would've happened without the bailout. The real question is what the size of those effects would be.

"nice suits selling and selling,"

You will have scum violating laws and ethics in any system. That by itself is not an issue to me, because the economic effect of what you mention in negligible.

"Free marketeers must argue that it happened,"

Well, a free-market proponent would say that that too was a government failure: it is the idiotic mark-to-market regulation that brought down Lehman (the run on its assets, which was exploited by short-sellers of stock).

"It all depends on whether you’re a Monetarist, a Keynesian, an Austrian, or what-have-you. That’ll give you your answer."

Beliefs about the unknown do indeed depend in part on the overall philosophy. I have no problem with that. To me the real issue is to refrain from IRREVERSIBLE changes. I don't mind an opposing "school of thought" proving me wrong on some small policy issue. Neither monetarists nor Austrians have an agenda of changing American forever; Keynesians, the intellectual enablers of fascism, do have such intentions. That happened during 1930s, when they turned a recession into Great Depression, and this is happening now.

"That Fannie and Freddy would be bailed out was undeniably clear. And by extension, certainly most people thought this would help save their asses."

Yes, but nobody I know or read about expected that they would let Lehman go down.

"the ‘08 bailouts were, if I’m not wrong, completely unprecedented."

Not at all. They pale in comparison with FDR takeovers, price-fixing and other control of the economy, and changes in law. [YOu may be interested in two excellent books: "FDR's Folly" and "New Deal or Raw Deal"]

"the signal had been out there all along that the entire financial industry, and every business within it, was too big to fail." Exactly, and that was my point. This signal was there for decades. But then the government send an opposite signal by letting Lehman to fail. THAT created a shock and froze the market. Subsequently, the government reversed itself again and went back to the previous routine of bailing out those that are too big.

[TopQuark]

"Goldman Sachs participated in and profited from the fascism probably more than any other company."

And Jews started WW I and made Germany lose it. That's what the Nazis said. I don't respond to such broad, unsupported and vague statements, which prove to be false, of course, upon examination. Your statement says nothing but "I hate Goldman Sachs."

You are free to hate if you so choose, but there is nothing to discuss here.

"And of course Wall Street was lobbying for bailouts."

Nonsense. Why don't you check the date of the article to which you linked? The point was that the INITIAL bailout, in the fall 2008, was forced on the banks.

I guess, you don't seek the truth but look at the items that seem to confirm the position you already have, not matter how irrelevant those items are. I cannot contribute to this process, sorry.

[mysterio]

Way to work the Nazi thing in there.

Your statement says nothing but "I hate Goldman Sachs."

I don't hate them. I disapprove of them leveraging themselves to make money from the fascist bailouts that were lobbied for by the banks.

[Tublecane]

“The concept of the ‘rich,’ in stark contrast, is almost empty and grossly misleading. As I mentioned earlier, it inadvertently includes the poorest and unfortunate people -— widows, orphans and retirees that own American corporations. When you speak of poor as rich, the concept loose whatever meaning one could try to give it.”

While it is true that corporations benefit all sorts of people, including the poor. Also, that some of whom we might term the poor have say in corporate policy. But it is my aim to isolate, as accurately as possible, whatever private power exists in our society. That is, groups and individuals with the ability, if not the propensity, to act as counterbalance to central power. Traditionally, this includes landowners and the Church (which owned land too, of course) foremost, and capitalists secondarily. The poor no doubt have some private authority, if only over their own families.

But the sort of authority held by capitalists (again, for lack of a better term) are of a different quality. They have extra power, granted them by their ability to market goods and services. In the olden days, their power derived from an original grant of land by the state (which won it through violence), which subsequently supported them. Herein, perhaps, lies the key to what I’m talking about. “The rich,” whoever they are, are by my definition the ones who not only hold social authority outside of the government. They are the group that benefits most from government AS IT IS. That is, in its static state.

They are the ones who own the most property, and have the most to fear from the rule of law breaking down. It wouldn’t so much be accurate to say that they are the ones who run corporations, since of course corporations are ultimately run by the shareholders. But let’s say they’re the ones who benefit most from and have the most say in corporations. Private authority includes others, as well. The more and more intrusive becomes the government, and the more and more it benefits different strata, the less clear it becomes who stands in for “the aristocracy”. Used to be much clearer. Is he a landowner? Then he’s gentry, and therefore not a peasant.

The peasantry, on the other hand, are the ones who stand to benefit the most from an expansion of the central government. They have nothing to lose but their chains, as someone once said. Well, not really, but they have less to lose than others, which makes them natural allies for the state AS IT EVOLVES.

So we have three groups: the state, the people, and the rich. Or if you don’t like to call them rich, let’s call them aristocrats. Today’s aristocrats are not yesterday’s, but they share some things in common. They are the ones who benefit now, and stand to lose in the future, as the state grows. It is in the state’s self-interest to use the larger group, The People (i.e. the ones who pull less benefit from the state as it is, and have most to gain through expansion of state power), against the smaller group, the aristocrats.

If these terms are all too imprecise, I’m sorry. The ideas behind them are clearer. If not in my head, then in the heads of those from whom I’ve learned.

“Governments are organizations just as corporations. Its members (politicians) have incentives to diverge from teh interests of stakeholders (the people of the United States) that put them in power. The study of incentives here -— that is, viewing governments as organizations rather than monoliths — is equally appropriate.”

I have a problem with identifying government’s stakeholders as the people, or even the electorate. But let’s assume for a moment that they are. It can’t be accurately said that the aim of government is to provide for the best possible society, be it through decreasing or increasing its authority. They are monolithic in goal, which is what I was getting at. I hold that the state has but one goal, or rather one cumulative goal, and that is self-aggrandizement.

When I say they’re monolithic, perhaps I’m being careless, you’re right. They’re no more monolithic in goal then is Big Business. Only business wants profit, whereas government wants power. So nevermind the monolithic stuff. I simply want to get across the idea that the state acts for its own benefit, at least in the long term. I misspoke earlier, and didn’t mean what I said.

What I really meant to get at was that corporations have roughly two options to attain their goal of higher profits: playing along with government and going it alone. Government, on the other hand, largely has one option, in the long term, for attaining its stated goal of producing the best society possible: increasing its own power. If occasionally a man like Reagan comes along and says government is the problem, you can bet his message will slip away over time, and that he personally won’t be very effective anyway.

As long as it’s understood that I mean the central government, as opposed to peripheries which from time to time attempt to grab power for themselves, I think this holds true in the test lab of history. Whatever organizational frictions and internal tensions there are, the tendency is always more and bigger. Whenever the center of power recedes, the state is said to be in decline. Or, better yet, dying.

So when I say the state is monolithic, I mean it is monolithic in its ultimate goal. That as time passes, the likelihood that more and more power will be centralized approaches 100%. To what degree and how fast the process takes varies, depending on the culture, how strong the private counterbalance is, how strong the competing interests within government are, etc. I don’t exactly know why this is so. Perhaps it has something to do with the nature of power, based as it is in violence and compulsion.

“Our Founding Fathers did just that, at the intuitive level, in our Constitution.”

They did indeed, especially as regards the competition between the periphery and the center of government, which is second only to the competition between the king and the aristocracy in forestalling the center’s tendency to grow. I think they vastly overrated the importance of counterbalances within the center (the famous “checks and balances”). I’m sure courtiers of Louis XIV quibbled with one another, but whole lotta good it did.

Even in the U.S., where an appreciation of what you term its organizational tendencies was perhaps more accute than at any other time in history at the inception of its political form, proves the case that the center tends to grow. For all there careful planning, did the Framers succeed in their goal of empowering but limiting the federal government? Absolutely not. There were stops, reversals, and stutter-steps, but eventually, the center had its way. The only question remains when the balance was tipped. Was it right away under the Hamiltonians, during the Civil War, the progressive age, the New Deal? I don’t know.

Perhaps I’m reading too much in to quotes from Madison like, “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.” Maybe he didn’t realize that encroachments, gradual or not, are inevitable according to the natural course of things. But I think he did, which is why, above all his little legal and institutional tricks, he accentuated the need for leaders among the citizenry, men educated in the necessity for liberty, to stand up and limit the government. He stresses this fact over and over, and indeed it is one of the main arguments for the efficacy of the Electoral College.

[Tublecane]

“In the olden days, their power derived from an original grant of land by the state (which won it through violence), which subsequently supported them.”

By “their,” I meant “the rich,” not necessarily capitalists, as it might seem. Although, it has been argued that capitalism rose, at least initially, from the wealth of feudal lords. But that’s not important here. I was simply explaining that in the past, feudal lords held the same position that is now held by capitalists. Of course, feudal lords were more powerful than capitalists. And capitalists are less akin to the state than were the lords, who ruled over their serfs because of voilent conquest, and continued to do so through violence and the threat thereof.

[TopQuark]

Thank you for the clarification. I am a bit confused by the following, however:

"lords, who ruled over their serfs because of voilent conquest"

It's so common now (since Marx) to blame the wealthy for all the sins under the sun.

From what I read about the Middle Ages, I remember feudal relationships arising as a true, mutually beneficial union, wherein the lord gave physical protection in exchange for services rendered. Western European society was incredibly violent, with robbery and murder being truly commonplace. I do not recall that serfs being acquired in a violent conquest.

[Tublecane]

“Not at all. They pale in comparison with FDR takeovers, price-fixing and other control of the economy, and changes in law.”

Various fiscal and monetary interventions to save the market from itself, yes. Bailing out banks and other financial enterprises? I realize FDR instituted a banking holiday and took us off the pure gold standard, but wasn’t it Bernanke’s stated goal that he wanted to correct the mistakes that had been made in the early days of the Great Depression? Wasn’t his crusade to do what the fed back then had not done, and inject cash into the system willy-nilly?

In think you’ll find that previous intervention was of a similar kind to that undertaken in ‘08, but that never before was it so concerted, so vast, and so deliberate.

“YOu may be interested in two excellent books: ‘FDR’s Folly’ and ‘New Deal or Raw Deal’”

I’ve read the latter. I also enjoy John Flynn’s old standby “The Roosevelt Myth”. He was a muckracker and an enemy of big business, but saw Roosevely clearly enough. I don’t agree with the economics of it, in other words, but I like the general drift.

[TopQuark]

"But it is my aim to isolate, as accurately as possible, whatever private power exists in our society. That is, groups and individuals with the ability, if not the propensity, to act as counterbalance to central power."

That is a very interesting research problem. Very interesting.

------

“`The rich'...are the group that benefits most from government AS IT IS. That is, in its static state. They are the ones who own the most property, and have the most to fear from the rule of law breaking down."

I don't think this is true. In a market-based society, the government has a responsibility to enforce property rights. Capitalism may even be defined as enforcement of such rights.

It highly questionable to differentiate individuals that benefit more or less from that enforcement. You make a tacit supposition that the one who has more of something has more to lose. This is false: whereas a wealthy individual's estate can be halved by the loss of a summer house, say, a a poor individual may die from hunger if his meager income is reduced in the same proportion. Who benefits more from the enforcement of property rights?

" It wouldn’t so much be accurate to say that they are the ones who run corporations, since of course corporations are ultimately run by the shareholders."

You are right. Most of shareholders' power is exercised by large holders, and those are large pension or mutual funds. Of course, in some cases there wealthy investors (Icahn, etc.) that hold 5-10% of the company, and their voices are accordingly heard.

"The peasantry, on the other hand, are the ones who stand to benefit the most from an expansion of the central government."

Well, only the expansion of a DEMOCRATIC government. I forgot who actually said that "democracy is two wolves and a sheep getting together and voting whom they are going to have for dinner."

Indeed, the "poor" have all the incentives to rob the wealthy through the government. One half of Americans have one half of voted but contribute no tax revenue. They have incentives to fleece the wealthy. This is in a static society, where the question is of dividing an EXISTING pizza pie. The "poors'" actions remove incentives to produce a new pizza pie. So in the end, in a dynamic society, all people, including the poor, go hungry because the new pizza pie is not produced. In a nutshell, this is the main logical deficiency of Marxism and socialism in general: to the best of my knowledge, it NEVER addresses the dynamics and incentives that are required; it's all about "fairness" and "equity" of dividing what has already been produced.

"So we have three groups: the state, the people, and the rich."

This does NOT follow from your argument. As you yourself have acknowledged, people can unite in groups, and those groups wield power.

In fact, if you look at our society it's not the wealthy that wield the real power. It's the Sierra Clubs, the "progressives," trade unions. Proof? Readily available. "Rich" could make a ton of money (and do something good for the country, as many of them care to do) by building an oil refinery. None was built since 1970 because they lose to Sierra Club and other environmentalist.

The "rich" could make a ton of money by opening private schools and giving true education. They are opposed by teachers' union, which is a monopoly on the supply of labor. Only recently did charter schools started to make inroads.

I am sure you could supply many similar examples (think of the media, for instance).

Your reduction too only thee entities is too simplistic and, I believe, incorrect. There is also a logical problem here. Please don't read any offense in these words, but the very idea of explaining the views of persons and groups by their economics is due to Marx. It is fundamentally flawed. Economics, just as Church membership, may affect values but they do not determine those values. Sierra Club serves once again as an example: it unites people of all income levels. Political parties are anther example: Dems get support from inner city poor neighborhoods and Wall Street super-wealthy. It's not ONLY and not MAINLY economics.

And this is what makes the question you posed so difficult: it is unclear on what dimensions even to arrange (identify) relevant groups. Marx has proposed a single dimension --- relationship of a person of group to means of production --- which is not only wrong, but any other single dimension would be insufficient.

I enjoyed our interactions but am afraid I cannot continue for the lack of time.

Best, TQ.

[TopQuark]

"In think you’ll find that previous intervention was of a similar kind to that undertaken in ‘08, but that never before was it so concerted, so vast, and so deliberate"

You've read ‘New Deal or Raw Deal’, so you know that monetary intervention was the least FDR has done. And that is what I meant: while monetary actions may be debated, the takeover of the economy (250,000 fixed prices in the steal industry alone, prison sentences for giving a discount on dry-cleaning a suit, etc.) was as fascist as control of Italian and Gernan economies at the time.

[TopQuark]

"I don't hate them." Hate may be too strong of a word --- I am sorry. But if you were not biased, you'd simply have no opinion about things you have not sufficiently studied.

Instead you repeat falsehoods perpetrated on you by the leftist media, such as:

"I disapprove of them leveraging themselves to make money from the fascist bailout that were lobbied for by the banks."

As I told you, (i) Goldman was the only banks that identified the situation as risky in April-May of 2008 and was in good shape, unlike most other banks, so that (ii) it did not need a bailout, the position taken by other banks, (iii) the government FORCED the banks to take the money.

But facts don't matter to you, no matter how many are pointed out. So you opinion is clearly biased. Nor does it bother you that you are in a "great" company of leftists that USE every crises (starting from 1800s) to entice the populous against the "speculators," the "rich," the "capitalists." That's what I tried to tell you to make you stop and think, and realized that you've been had --- by the socialists that taught in your school/college and by the leftist media. It's your choice whether to keep that company or to become concerned about that.

[Tublecane]

“It’s so common now (since Marx) to blame the wealthy for all the sins under the sun.”

It didn’t originate with Marx, though he is probably the most popular exponent of the rich-as-constant-exploiters outlook. An economist, I’m not sure who, maybe Schumpeter, once said that you can agree with everything Marx said without thinking exploitation is a bad thing. That’s obviously what he thought, but so long as you say to yourself “Fine, they are exploiters. Now, what’s so bad about that?”

I take a more libertarian bent, as informed by books like Franz Oppenheimer’s “The State”. Unfortunately, a libertarian can sound an awful lot like a socialist out of context. Not that Oppenheimer is a libertarian, I frankly don’t know. But I do know libertarians like this book. (They’re not the only ones. His conclusions are very similar to those drawn today, even by authors liberals love, like Jared Diamond.)

The book’s thesis is that the state arose, everywhere and uniformly, from the conquest of agrarian people by herdsmen. Hunter-gatherers are subsequently left out, because they can’t be so easily conquered. Hence civilization’s scorn for nomads. Or pirates, as is the case with coastal societies. What start as raids eventually settle into regular taxation or tribute. Custom follows, building an elaborate justification for and defense of the ruling class.

It may smell of the materialistic view of history, but it stands to reason. Farmers are spread out; herdsmen are close-knit. Farmers are stationary; herdsmen are mobile. Herdsmen’s lifestyle is amenable to combat; farmers to peace. Anyway, a materialistic interpretation is acceptable, on the fringes of our knowledge. We know very little of the origins of civilization, since it is so remote. Best to go with the most obvious, and most universal, turns of events.

What I gather from the story is that those who were in on the ground floor of conquest (conquest by blood, as it were) become the first aristocracy. They either take land for themselves or are granted land by whatever stands in for central government at the time. Eventually, from among the landowners, a leader among equals emerges, and he eventually becomes the king. Then, as the peasantry coalesces in cities, and lords lose their power over them, the king’s power grows and grows. Until such time as commercial society—which owes its freedom to the protection provided by the central government, or so it sees the situation—renders feudalism obsolete, and the lords disappear. There are as many subtle variations across cultures as there are cultures, but this is the basic form.

“I do not recall that serfs being acquired in a violent conquest.”

I’m sure if you do the research, look at all the evidence, you’ll find that lords gained serfs by direct conquest, by grant from some other authority, or by purchasing them, after they have earned money from previous conquest. That is, at the beginning. Successful merchants can buy slaves in later periods of development.

Lords have serfs because the serfs have been conquered. How else do you imagine lords ever got farmers to pay tribute to them in the first place? Did they gather together and petitition the strong for their help? I find that highly unlikely.

It comes down to the fact that there are two means of thriving, as the book mentions: the economic means and the political means. The political means involves taking from others, by force or by their consent, which is usually based on the threat of force. The economic means is by work and trade. The state and the feudal system alike have their origin in the political means.

The conquerors over time stop raiding and regularize taxation, as I’ve indicated. It’s just easier than constantly waging war. Only after the conquerors have been protecting the farmers for a while (tending to their investment, as it were) do the serfs start to see that it’s to their benefit. And don’t get me wrong, it is to their benefit. Just like the federal government is to our benefit, even if it occasionally feels as if we’ve been conquered.

The relationship is all bad. The origin does not taint the whole of the system’s lifespan. Lords live off their serfs, but they also, as you indicate, grant them benefits. It so happens that more of mankind is content to live in civilization that without it. The instinct for security is stronger than that for freedom in most cases. Lords provided a real, solid advantage, of which you already spoke: physical protection. Of course, it’s physical protection against other Lords, which makes it sort of like a mafia shakedown. The serfs come to like it, but they didn’t exactly have a choice in the first place.

Deciding whether to pain the system as exploitation or mutual benefit or both is difficult. Which speaks to the whole problem of liberty, which is civilization’s enduring dilemma. We wouldn’t need government to monopolize force and control us if everyone weren’t trying to use force to become the government themselves. But they are, so we do.

The same sort of relationship exists between citizens of the modern U.S. and their government. We pay taxes and follow laws so they’ll protect us. In many ways, the feudal system was better, since fealty was more honest and authority had more a mystical, and therefore more appealing and more eternal, rationale. Then again, it had its drawbacks, socially speaking. It prevented people from pursuing the economic means of life, which led to a much lower standard of living than exists now. Then again again, perhaps capitalism is impossible without civilization first being there, and civilization is probably impossible without the state.

[TopQuark]

"Way to work the Nazi thing in there."

I certainly did not mean, in any way, to offend you. But the reference is relevant. In 1930s, Roosevelt and his socialist cronies, as all European socialists and communists, blamed "Wall Street speculators" for all the calamities --- the market crash of 1929, the unemployment, etc. The ONLY difference introduced by the Nazis (and NOT followed by the Italian fascists) was to focus on "Jewish speculators."

I was trying to tell you that we are witnessing a repetition of a pretty old phenomenon: the leftists use crises to manipulate (by enticing hatred) the public opinion to drive their REFORM of society towards socialism. People like you get angry in crisis --- against wrong people -- and make it possible. Rham Emmanual, Obama's advisor, has recently said, "Don't let a crisis to go to waste." That is what he meant and that is in what he gets help from the media: make us angry at EVERYTING that represents capitalism --- and what better than Wall Street! --- so that they can drive their REFORMS ("change") over our heads.

You, as many on this forum and as many in 1930s, are angry at a completely wrong party.

The comparison with the Nazis is relevant and factual more than you can imagine. In any case, it was not intended as any kind offense, I assure. Please accept my apology if I had not made it clear in my previous post.

Regards, TQ.

[Tublecane]

“This is in a static society, where the question is of dividing an EXISTING pizza pie. The ‘poors’ actions remove incentives to produce a new pizza pie. So in the end, in a dynamic society, all people, including the poor, go hungry because the new pizza pie is not produced.”

What you say goes toward the essence of government. They cannot grow the pie. All they can do is serve it. Or, if you will, switch the pieces around. The only way the pie grows is if they by pure happenstance bet on the right horse, or, more likely, if they step out of the way.

I am reminded of one of the main problems of Keynesian economics. Namely, government is slower than the market. Politicians take a snapshot, freezing things as they are at any one moment, and move to make things better. But by the time their action takes effect, the picture is inaccurate. Things have changed.

Businessmen suffer from similar constraints. An ignorance of the future and a lag in reaction time. Fortunately, the economy is made up of millions of little decisions by businessmen, all of which are more or less accurate. The government has less ability to make little decisions, and rather too much impinging on each of their moves.

[Tublecane]

“You’ve read ‘New Deal or Raw Deal’, so you know that monetary intervention was the least FDR has done.”

Yes, but weren’t we talking about monetary policy? Obviously, the Fed acts monetarily. TARP was a creation of Congress, surely, but it wasn’t so much fiscal stimulation as a ploy to keep credit markets afloat.