Thursday, October 16, 2008

A less flippant post

This post is my response to Gaurav's and Kunal's comments on Kunal's post on Amit Varma and Ottoman.

From a first principles stand point I suppose everyone opposes the bail-out. You will be hard pressed to find a person out there who says that he/she supports the bail out cheerfully and without any qualms. It is not hard to discern that whichever way you look at it, the taxpayers are being dished out a raw deal here.

Most are in a catch-22 situation. Or a better analogy would be a Vikram Vetal situation. While they shoulder the burden of the Wall Street fat cats' greed and ponder what their response should be, Wall Street keeps whispering sinister questions in their ear about whether Damocles' sword will fall on them if they cut off the financial thread with which it is hanging on. However, if the taxpayer bails them out then it is a moral hazard and then the Vetal is free to do his shaitani again. Maybe not immediately, but when the memory of the crisis has receded. So you have taxpayers cornered. Not everyone knows economics and its not just lobbyist and Wall Street playing doomsayers but a variety of experts from varying ideological spectrum who think this is a once in a century crisis.


The point I am trying to make is it is futile to talk about this from a first principles standpoint. If we start arguing from that angle then it precludes all discussion. You guys win hands down. Because you will always talk about how things would have been different in an ideal situation where markets were truly free. That has never happened, hadn't happened leading up to the crisis and as such an honest discussion about whether or not your ideology's prescriptions were at least partially responsible for the cause of the crisis can never take place.

A doctor cannot make the argument that the drugs he prescribed to treat a patient for healing a wound did not work because the patient also had diabetes. Especially given that the patient had informed him before hand that he is a diabetic. Similarly, in spite of knowing the areas where there was or there would have been government intervention and voter pressure, if you prescribed policies that proved to be ineffective then you have to accept responsibility.

You cannot shy away from the fact that these were one of the best years for your ideology in terms of favourable public opinion, political muscle and policy backing for your ideological prescriptions. Even if the prescriptions weren't implemented enough to your liking, they were still incrementally better implemented than in previous years. So now to take umbrage under the guise that it was no fault whatsoever of the ideological prescriptions since they were not implemented in their entirety is disingenuous.

When these prescriptions were being advocated you guys knew exactly what the situation on the ground was. It was not as if libertarians were unaware of Fannie and Freddie's existence or the CRA or for that matter of government's agenda for promoting housing for the poor before Greenspan decided to keep the interest rate low or let the markets mess up before any corrective action could be taken. This, purportedly, to avoid unintended consequences. (As an aside. Could you explain why you think the unintended consequences of not increasing interest rates or letting the housing bubble inflate despite knowing that it is a bubble would have been worse than the unintended consequences of letting the market take its own course and now spending trillions to repair the mess. And if possible try to avoid getting into a discussion on how it is impossible to know a bubble before it bursts. There were many voices who were talking about this bubble before it burst.)

Regarding deregulation: Yes, it isn't entirely deregulation's fault as Democrats are shouting from the roof tops. But to deny that lack of regulation played no role in the crisis is not true either. Libertarians keep harping about the fact that banks are the most regulated entities. This is a complete non-sequitor. The crisis didn't happen because of the everyday regulated business of the banks. Rather it happened in the derivatives and credit default swaps markets which were entirely unregulated. There is absolutely no way of knowing what these contracts are, how many of these are there, what their value is, or whether the contracts could be fulfilled. All these because there was no regulation. Isn't transparency in contracts better for capitalism? Or has the defensive position you have to adopt wiped out the memory of your agenda to save capitalism from capitalists?

Another place where you guys need to take a hard look at is the idea that market players can come up with a self-regulatory mechanism because it is in their interest to do so. Well, the rating agencies were supposed to do just that. But we all saw what happened when Moody's and S&P gave triple A ratings to risky mortgage backed securities. So what happened to the libertarian argument here?

Just like Democrats are blaming deregulation free marketers are blaming Fannie and Freddie. Don't even get me started on the whining about how government forced sub-prime lending. Obviously, the banks didn't lend money to the poor out of any government pressure or out of any benevolence. They thought they could earn a hefty profit through sub-prime lending since the risk would be distributed owing to the trading in mortgage backed securities and derivatives.

I don't get it. I mean how can Freddie and Fannie be solely responsible for this crisis? Partly, yes. They did add fuel to fire by starting to deal with sub prime mortgages since 2004 on the suggestion of Congress. But essentially they were buying up mortgages from the banks, freeing their capital and then bundling a lot of these mortgages together and selling it in the secondary market where Investment Bankers and Hedge Funds were placing speculative bets on their prices. In fact, Fannie and Freddie claim in their defense that it was not just the Congress but market conditions that forced them into dealing with sub prime mortgages because the mortgage lending firms like Countrywide were threatening to take their business lock stock and barrel to the investment bankers who were more than willing to buy sub-prime mortgages and bundle them their selves and sell it in the secondary market. This would have meant a loss in profits for Fannie and Freddie who were answerable to shareholders despite being quasi government entities. It was the secondary market, and the swaps market that was built upon this secondary market to cover the risk of a credit event that has frozen the financial pipes. Fannie and Freddie had an agenda which was known to everybody in the market and that was to inject capital in the markets and aid affordable housing. The fact that they had a government guarantee was known. Yes, they distorted the market. But I would assume the market to be efficient enough to warp around this distortion and in fact leverage it to their advantage. There are several different equilibriums/equilibria where the markets can stabilize, right? This is exactly what the markets had been doing from 1968 since the formation of Fannie Mae. Why wasn't there a crisis before this. It wasn't Fannie or Freddie's agenda that changed but the market's gambling on the securities and the derivatives that changed the game.

One other gnawing issue is banker's compensation. Even Martin Wolf and Raghuram Rajan are writing about how the way the industry designs its compensation plans and bonus, results in perverse incentives to take the kind of short term risks that lead to crises like these. The banks know this is a problem as this has led to many crisis in the past. However, markets haven't come up with self-regulation to correct this. Banks have never changed their pay structure. Partly because if one bank does it and the other bank doesn't, the competitor might steal their best talent. But weren't the markets supposed to learn from their mistakes? This is a situation where no one wants to go first. Yes, you can say that it is the fault of the governments who keep bailing the banks out each time. But given that this (bail-out of banks after crisis) is bound to happen again and again with no change in the structure of compensation from the banks' side, should we just sit and watch repeated crisis unfold as leftists blame banker's greed and free marketers blame the government bailout?

Gaurav your point about boom and bust cycles would have been well taken had the boom been experienced by the general economy. During the Bush years the middle class wages had stagnated. Of course, middle class did benefit in absolute terms because market innovations led to price declines in most items which might have been considered luxuries some time back. I am not disputing that. But when you have financial elite whose wealth grows exponentially, which instead of trickling down gives a semblance of trickling up while the regular Joe does not see his income rise, it is bound to raise questions about whether there really was a boom. The boom benefitted the rich disproportionately because of Bush's tax cuts which libertarians support. And now you find the regular Joe is having to bail out these same fat cats who enjoyed the boom to avoid a bust for themselves.

The real question I think is whether it is better to digest a slight drop in growth with timely government intervention, despite its obvious inefficiencies and unintended consequences or let the growth be unhindered in spite of warning signs and then let everyone bear a massive hangover even though many didn't even get drunk. You guys' have always argued that the latter approach is better. Now in light of this crises I think the onus is on you to explain how and why?

16 comments:

Gaurav said...

The point I am trying to make is it is futile to talk about this from a first principles standpoint. If we start arguing from that angle then it precludes all discussion. You guys win hands down.

Chetan, I have always maintained on my blog that I support libertarianism from a first-principles/moral perspective. It is rather clever of you to admit defeat in that regard, dispose of it summarily, and then try to bury us (at least me) in an avalanche of utilitarian arguments.

I am not qualified or knowledgeable enough to enter that argument. More importantly, I am not interested in that argument.

I understand that like everyone else, you feel the need to search for scapegoats that are not abstract or distant, but easily identifiable among you near-to-not-too-far circle of acquaintances. I empathize. At the end of the day, for whatever reason you are making it, it is still a "jao pehle uss aadmi ka sign lekar aao" argument.

musefree said...

"So now to take umbrage under the guise that it was no fault whatsoever of the ideological prescriptions since they were not implemented in their entirety is disingenuous."

I disagree. It is not just about implementing the ideological prescriptions to their entirety (something thats not going to happen for political reasons). It is also about implementing them smartly.

It is simply not true that the past few years were the best for libertarian ideology. If anything, the last eight years have seen some of the most unlibertarian policies anywhere. I'll give an example -- libertarians generally agree that taxes are bad. However when there is massive spending, as in Iraq, keeping taxes (for the very rich) low is not libertarian, it is stupid!

When you implement only part of the ideology, you have to select them smartly. If that were done, we would have been much better off.

So yes, both from a first-principles as well as from a consequentialist viewpoint, I continue to maintain that libertarian policies are the way to go.

As for Fannie and Freddie, yes they were were heavily regulated and that contributed to the crisis. But I will give another example, which not many seem to be making. Guess what kinds of funds have done the best in the current kind crisis. Hedge funds, which also happen to be the most unregulated ones in the sector currently.

As for my personal, pragmatic reaction to the bail-out, I support it, but not for the obvious reasons.

Chetan said...

@musefree:

I will borrow a libertarian quip that is constantly thrown at leftists. "Dude, you are confusing correlation and causation." That too big time!

For one, what has government spending got to do with the current financial crisis? If you think so, do enlighten me as to how reigning in spending would have averted what is happening in the financial markets right now. While you are at it, you might also want to explain how the Iraq war has led to the financial crisis?

I never said the last few years were the best for libertarian ideology. I said that they were incrementally better than previous years. Starting in 1996 with a republican majority Congress, free market ideology has gotten a boost. If you think that compared to pre-1996 years libertarianism's policies have received a set back, then let me know and I could forward you suggested readings. In fact, even before the Bush years you got the repealing of Glass Steagall Act during the Clinton years in 1999 which many are blaming for the failure of Investment banks. Also, a lot of libertarians supported Bush tax cuts. Here is one of the most prominent ones. In general most libertarians, in spite of having moral qualms, supported the tax cuts based on their theory of starving the beast. Which I hope they must have realised, after increase in spending in Bush years, never works.

As far as the libertarian talking point about hedge funds doing great, its just that - a talking point. First of all, it is incorrect to say that hedge funds are doing great. Read this Wall Street Journal story on how small hedge funds are failing. Mind you this story is from Wall Street Journal, not the Nation.

Secondly, even if hedge funds were doing great, how does that prove that they are doing great because they were not regulated? It only means that the Investment Managers running them were smart with their investments. Smarter than the guys running Investment Banks. One can point to skewed incentives owing to the enormmous size of the Investment Banks compared to the small and nimble hedge funds. The incentive structure in hedge funds is far better than in Investment Banks, where short term risk taking is rewarded. In case of hedge funds, your long term reputation determines the premium you can charge and the amount of money you can borrow from Pension Funds and other private investors. Besides, most hedge funds are not publicly traded and stock price volatality does not affect them as much as the publicly traded Investment Banks.

You are free to maintain whatever about libertarianism from first principles or consequentialist point of view. I just urge you to come up with convicing reasons for doing so and not drink the cool aid offered by right wing op-eds without ever challenging what those guys repeat ad nauseum.

musefree said...

@ Chetan

Thanks for your comment about correlation vs causation. It was precisely what I was getting at.

Much of the "deregulation caused the crisis" is based on exactly this kind of logic. The Glass-Steagall act was repealed, hence banks are doing badly! Never mind that without the repeal of that act, acquisitions like those that have happened over the last month would never have been possible. Never mind that studies have shown that unified banking is actually safer.

Coming back to hedge funds. I simply said they are doing better than the rest of the sector. Does that prove that excessive regulation was to blame for the crisis? By itself, no. But it simply shows that more careful analysis is necessary and that blind adherence to the "deregulation caused it" can be flawed. Much of the left's slogun's are based on precisely this kind of flawed corelation logic that you criticize.

My point about Iraq was related to spending. The deficit that has more than doubled under Bush. As for the tax cuts, there have been libertarians on both sides. Your quoting one article does not change the facts. A broader viewpoint is obtained by regularly reading the libertarian blogs and magazines like Reason.

As for excessive spending and a larger deficit and how it is related to the crisis -- such spending forces greater borrowing from other nations and the population itself. There is artificial creation of money by the central bank, which has several negative effects. It encourages "Cantillon effects." It also causes investors to invest in longer-term projects that are unsustainable; when they realise this, there is a bust.

Indirectly, greater spending is closely correlated with a bigger government. And that is bad for the ecomony for other reasons, most of which are well documented.

Finally I am not drink the cool aid offered by right wing op-eds. I often disagree with them. I don't even support the Republicans. Please don't make assumptions without checking them first.

Chetan said...

Ok, my bad. I should not have been snarky there. Generally I do some leg pulling in my comments. I was being facetious about the cool-aid part. I didn't mean to get personal. That being said the hedge fund example that you gave is always found in right wing op-eds and was asking to be skewered. It is a complete load of bull, and that is putting it politely, to suggest hedge funds are doing better because of benefits of deregulation.

Now, lets concentrate on the facts.
>>But it simply shows that more careful analysis is necessary and that blind adherence to the "deregulation caused it" can be flawed. Much of the left's slogun's are based on precisely this kind of flawed corelation logic that you criticize

Dude, I did call out the left on that didn't I? I wrote, "Regarding deregulation: Yes, it isn't entirely deregulation's fault as Democrats are shouting from the roof tops."

Why are you insinuating that I am claiming that deregulation was the sole cause of this crisis? I have clearly stated in my post that it was because equity derivative and swap market wasn't allowed to be regulated that has made this crisis so much worse. Almost nobody now disputes this fact. Do you?

Transparency of contracts is good for the free markets. Lack of it results in crony capitalism.

>>As for the tax cuts, there have been libertarians on both sides. Your quoting one article does not change the facts. A broader viewpoint is obtained by regularly reading the libertarian blogs and magazines like Reason.

I don't doubt that there have been libertarians on both sides but they keep supporting for candidates who favour Bush tax cuts. I think it is you who needs to read Reason and its hit and run blog more than I do. Do you remember who Reason was rooting for in the primaries? Ron Paul, who voted for making those taxes permanent. You may say he also talked about cutting spending. But then Obama does that too.

I tried to read up on Cantillon effects and from the minimal information available on the net about it I could not figure out a causal link between government spending and freezing of financial markets. Maybe there is, maybe there isn't. I don't think I know or I am qualified enough to understand.

I noticed that you didn't answer any of the questions I asked in the original post. Would love to hear your views on those going forward!

1) Could you explain why you think the unintended consequences of not increasing interest rates or letting the housing bubble inflate despite knowing that it is a bubble would have been worse than the unintended consequences of letting the market take its own course and now spending trillions to repair the mess. And if possible try to avoid getting into a discussion on how it is impossible to know a bubble before it bursts. There were many voices who were talking about this bubble before it burst.

2) Isn't transparency in contracts better for capitalism? Or has the defensive position you have to adopt wiped out the memory of your agenda to save capitalism from capitalists?

Do you still think that not having even the minimal regulation for the derivative markets to ensure, transparency of contracts, a clearing house etc was a good idea?

3) Why did the supposedly self regulatory mechanism (this was once a showcase example) of credit rating agencies fail so miserably?

4) I read the other day about a word Mamihlapinatapais, from the Yaghan language of Tierra del Fuego. It is considered the world's most succinct word — and the hardest to translate.

It means "a look shared by two people, each wishing that the other will initiate something that both desire but that neither one wants to start."

5) Given that Bankers indulge in Mamihlapinatapais about restructuring their incentives in salaries and bonuses to avoid reckless short term risk taking, and the government has no choice but to bail them out if they fail because of these incentives, should we just keep watching while history repeats again and again? All this under the fervent belief that the markets will settle this by themselves. Do read up on Martin Wolf's and Raghuram Rajan's pieces on this issue.

6) And finally and most importantly, whether it is better to digest a slight drop in growth with timely government intervention, despite its obvious inefficiencies and unintended consequences or let the growth be unhindered in spite of warning signs and then let everyone bear a massive hangover even though many didn't even get drunk. You guys' have always argued that the latter approach is better. Now in light of this crises I think the onus is on you to explain how and why?

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musefree said...

@ Chetan

I actually agree with much of what you wrote. But let's go through some of them.

"Transparency of contracts is good for the free markets. Lack of it results in crony capitalism."

I completely agree. This kind of 'light-touch regulation', which basically makes sure both parties understand the contract they are getting into, I have little issue with. No libertarian will defend fraud or dishonesty.

But here's the thing, regulation is a vague word. If transparency of contract is all you want, you won't find me protesting. Unfortunately, most people want and mean much more than that when they use the word.


"I think it is you who needs to read Reason and its hit and run blog more than I do. Do you remember who Reason was rooting for in the primaries? Ron Paul, who voted for making those taxes permanent. You may say he also talked about cutting spending. But then Obama does that too."

Now, now. You are not serious, are you? The Ron Paul folks hate Reason for not supporting their guy strongly enough. Yes, Reason did put some nice pieces on him (after all, RP was by far the most libertarian candidate in the running) but they also criticised him on many issues, particularly immigration. RP was slaughtered by the Reason coverage in the aftermath of the newsletter scandal.

And even if we accept that Reason supported RP, defining him by his support for the Bush tax cuts is ridiculous. Ron Paul also supports ending the goddamn war on drugs, legalizing all victimless crimes, and shrinking government hugely. I mean, the guy wants to close down almost every other government department. His plans would have led to hugespending reductions, way way more than those cuts. Obama? Look, I actually support Obama over McCain. But I have gone through his plan. Saying he will reduce spending just doesn't cut it.

I have never really been a Ron Paul supporter (read this old post of mine). But to compare his spending plans to Obama's promises of reducing the deficit is a little far-fetched.

By the way, you might want to look at this clip of RP talking about excessive spending and bad monetary policy. It goes into some stuff that I commented on in my last post (how spending is related to the crisis etc.)

And yes, I do read Hit and Run everyday.

"1) Could you explain why you think the unintended consequences of not increasing interest rates or letting the housing bubble inflate despite knowing that it is a bubble would have been worse than the unintended consequences of letting the market take its own course and now spending trillions to repair the mess. And if possible try to avoid getting into a discussion on how it is impossible to know a bubble before it bursts. There were many voices who were talking about this bubble before it burst."

There are unintended consequences of heavy regulation which are bad. I will touch upon them in my last reply. On the other hand light regulation or increasing interest rates is iffy and depends on the situation at hand. In this particular instance, I will not defend Greenspan. I'll just make sure you understand that it is is important to keep liquidity flowing. That's a lesson of the great depression. Secondly, if the government had actually listened to libertarians, we would not have been in such a big mess. All this said, I am not passing a judgement on how high interest rates should have been. I am not an expert on that. Do however note that according to many libertarians, interest rate lowering by the Central Bank is counter-productive, particularly when there is also heavy spending. You may wish to read up some works of Austrian economics to understand this viewpoint.

"Isn't transparency in contracts better for capitalism? Or has the defensive position you have to adopt wiped out the memory of your agenda to save capitalism from capitalists?"

It is funny you utter Keynesian talking points like saving capitalism from the capitalist. That's much worse than my hedge funds example for it doesn't even make a rhetorical point. Capitalism does not need to be saved from capitalists, only from corporatists. They are not the same thing, though in the Bush era, one would be hard-pressed to recognize that.

That said, I completely agree that there needs to be transparency in contracts. And yes, the government can have a role there, for after all, one of its primary functions (in the libertarian worldview) is enforcement of contracts. What we do not need, however, is heavy-handed coercion. Unfortunately, once the government enters the scene, it never goes away.

"Why did the supposedly self regulatory mechanism (this was once a showcase example) of credit rating agencies fail so miserably?"

They were dumb. But if the government was less involved, investors would have been less willing to invest in longer-term projects that are unsustainable. Also, in the absence of a history of government help, this dumbness of the rating agencies may have shown itself earlier and we would not have entered this mess.

I am not a denier. If there is sufficient proof that the market cannot come up with efficient rating schemes, I will bite the bullet and let the government do the job. But here's the thing, the government rating agencies (in other sectors) have a long history of failure. By contrast, the market has fairly often come up with good rating schemes. Given this fact, what makes you think the government would have done a better job?


"I read the other day about a word Mamihlapinatapais, from the Yaghan language of Tierra del Fuego. It is considered the world's most succinct word — and the hardest to translate.

It means "a look shared by two people, each wishing that the other will initiate something that both desire but that neither one wants to start."

Given that Bankers indulge in Mamihlapinatapais about restructuring their incentives in salaries and bonuses to avoid reckless short term risk taking, and the government has no choice but to bail them out if they fail because of these incentives, should we just keep watching while history repeats again and again? All this under the fervent belief that the markets will settle this by themselves. Do read up on Martin Wolf's and Raghuram Rajan's pieces on this issue. "

Can you come up with a good solution to this problem without creating a worse moral hazard?

Look, one of the recurring themes in many criticisms is that "Libertarian solution X leads to problem Y". Of course that is true. There is no utopia, and libertarians don't promise one. If anything libertarians are extremely realistic about their goals and their assessment of human nature. All we claim is that the consequences of our policies, will, in general be better than the big government alternative.

So what's your proposal about getting rid of the bank pay structure problem? Heavy regulation that would mandate a certain practice? The consequences of that, not just economically but also morally, and not just in banking but also on general notions of property rights will be much worse than any gains.

Always consider the alternative.

The markets cannot solve everything. But on the whole, they usually do a better job than the government.


"6) And finally and most importantly, whether it is better to digest a slight drop in growth with timely government intervention, despite its obvious inefficiencies and unintended consequences or let the growth be unhindered in spite of warning signs and then let everyone bear a massive hangover even though many didn't even get drunk. You guys' have always argued that the latter approach is better. Now in light of this crises I think the onus is on you to explain how and why?"

I have already supported light touch regulation which ensures transparency of contracts (but not make any mandates on the contracts themselves). I presume when you use the word 'intervention' you mean something more heavy-handed.

There are consequences of that which go beyond economics.

There is a quote by Brand Blanshard:
"Many philosophers of the present day are convinced that every existing thing and event is logically unconnected with any other and could disappear from the world without necessarily affecting anything else. Such a rubbish-heap view of the world I cannot accept."

When it becomes an accepted fact that the government should continually intervene, it creates a moral hazard by which other things also become more legitimate. It spills over into social issues, into everything really. And there is also a question of slipper slopes; how much intervention is enough?

In fact, in a sense this whole thing goes into the heart of libertarianism. Government power manifests itself in the seen -- sorry Bastiat -- and the unseen. The unseen is seldom recognized till it is entrenched. There are so many examples to give that I don't even know where to begin.

Having said all that, I do not have an answer to your question in a current, real-world scenario. It is like asking, your ideas are not going to get implemented anyway, and you know you are f*cked, what would you choose out of the remaining bad alternatives? In the real world, at least in the near future, we know that libertarian policies will not be effected.

As I said, I want transparency if contracts and other light-touch, non coercive regulation. I want the government to shrink and spending to drastically reduce. I want a mindset, of the government, as well as the people, based on individual liberty. I think it is immoral to tell others how to use their private property. I think if the world moved more to my direction, it would be a better place. Yes, many problems will remain, but on the whole, there will be less mess.

There will be no war on drugs in that world, and no laws that protect you from yourself. No restrictions on freedom of speech and absolute property rights, including the right to discriminate.

Why am I mentioning these things. Because they are connected. By the underlying mindset, about what we think the proper role of government is. Once this mindset changes in one field -- say it becomes ok to mandate salary structures -- it changes everywhere.

There will be booms and busts in such a world, but they will be small and manageable, because people will know that the government won't usually bail out the stupid.

We don't live in such a world currently. So given that we will have intervention, and it will be bad, what kind of intervention should we choose? Smaller, more frequent ones, or larger, more infrequent ones?

Can I say neither? Can i say I will continue to advocate for a better and more moral world, rather than spend my time making an utilitarian analysis of two bad (and in my view unnecessary) alternatives, forced upon us not by a basic truth but simply some bad assumptions and political expediencies we take for granted?

I am not being unrealistic. Every freedom libertarians want have been successfully implemented somewhere in the past, just not together and not at the same time.

If you asked Harriet Stowe whether the law should limit the number of slaves one can own to five or ten, what would she say?

Gaurav said...

Looks like someone has met his match. :)

Seriously though, nice one, musefree.

Kunal said...

>>This post is my response to Gaurav's and Kunal's comments on Kunal's post on Amit Varma and Ottoman.

Dude, please. Thats not Amit Varma and Ottoman. Its Amit Varma the Ottoman. Or Amit Pasha Ottomanbashi. Get it right, please.

Chetan said...

@Abhishek

Thanks for your honest attempt at answering the questions I posed. I mulled over posting a response to those. But I realised I will be entering scoring ideological points territory than a reasoned discussion that I intended the post to provoke. That prospect used to excite me no end once upon a time and probably will excite me again once someone from the cartel starts acting prickly. But it doesn't seem appropriate anymore given the visceral nature in which the crises has affected people I know personally.

My questions had a hint of the plausible answers I thought were appropriate (given my ideological biases) embedded within them. Your vigorous defense of libertarian positions and your responses are there to read for anyone who is interested in forming his/her own opinion.

So, thanks again for indulging me with your time and thought.

musefree said...

On a side note, did people read the recent Weisberg article where he declares the death of libertarianism?

From Weisberg's article:

"Like other ideologues, libertarians react to the world's failing to conform to their model by asking where the world went wrong. Their heroic view of capitalism makes it difficult for them to accept that markets can be irrational, misunderstand risk, and misallocate resources or that financial systems without vigorous government oversight and the capacity for pragmatic intervention constitute a recipe for disaster. They are bankrupt, and this time, there will be no bailout."

This post at Reason has a nice collection of responses to his article, including mine.

?! said...

Gaurav : At the end of the day, for whatever reason you are making it, it is still a "jao pehle uss aadmi ka sign lekar aao" argument.

When you say that your idea is morally perfect, but it is the implementation /external factors/ human imperfections etc that screw it up, YOU are seeking identifiable reasons for failure. Instead of admitting that an economic policy that has only alleged moral perfection to commend it is intrinsically flawed. And as very well put, you are, in effect saying, pehle uss aadmi ka sign lekar aao.

doubtinggaurav said...

Are you dead ??

Chetan said...

I am alive Gaurav. Thanks for the concern. I have been following you on twitter. I am glad that you discovered the essay by Ashis Nandy on Secularism. If you get a chance read his books. If you are willing to overlook his bias against Hindutva there is a lot of common ground you will be able to find in his views and your conservative ideals.

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