Govt' Bailouts Disruptive, Politicized - Richard Epstein

[ieodksnw787]

just me or racist commercial? (super guillermo)

[MSimky]

Why is the stock market the best indicator of how the country is doing? How about health, longevity, happiness, education (literacy rates, math scores), quality of infrastructure, state of the environment?

Even if all you care about is corporations, most of the capital comes from debt, not equity.

So why should we focus only on the stock market?

The stock market was booming while banks were making loans that would never be repaid. It's not a good indicator of economic health.

[smmclaug75]

@MSimky Epstein is a lot smarter than that. He does not indicate that the Dow is the best indicator for how the country is doing, but rather the general financial climate--incentives, confidence, etc.--for businesses in America. The whole lead-in to the question isn't shown here.

[beancube2008]

He sounds to me an addicted gambler. He tried to dig anything that lead people a shot, but just one shot. He is fantasizing that glamorous prediction. When people see all these trap those upper management had device, do you think honestly people would just go there to work? There would be a mop scene and people would try to loot anything they can put their on.

[DavidWillB]

Aside from the obvious problems of trying to measure anything other than investor opinion with the DOW, he is ignoring the problems posed by credit default swaps.

In a few years when the credit default swaps expire, we can afford to let AIG and the Big 3 die.

Until they expire, we can't.

[humanist7117]

Never trust the Dow or Wall Street, Tey are bi-polar!!

[funkalunatic]

As soon as Epstein says "The single best indicator is the Dow," we know this man is an idiot. Peter Robinson is an idiot too for assuming the administration is ignorant. The only thing they're right about is that the insolvent banks should have been put into receivership.

[tucciproducer]

This guy is a senior fellow of the Hoover Institute. Hoover being the President who brought us the Great Depression. This seems rigged.

[GreenDesert]

"Congressional Clowns" huh?....And the so-called expert economists aren't clowns?

And since when are corporations not politicized?

[shoogie06]

We need more regulation. We need to enforce the laws that we have and bring banking regulations back to the levels of regulation that we had in the 1950's.

[danboone143]

I used to think just that but upon further investigation of the facts, I'm convinced that the problem is that our politicians have taken billions in campaign contributions (aka bribes) in exchange for ignoring the nearly 75,000 pages of regulations. Having stolen our past and present wealth, having also stolen future wealth (debt and inflation), the last thing to loot was the public treasury. Our politicians joined hand in hand with Wall Street all along the way.

[mushmouth4life]

wait, what? the 50s were the golden decade because the US didnt have the great society or a quagmire war, not because of regulation.

[silversalvo]

The only reason why america was prosperous in the fifties was because its industrial infrastructure wasn't bombed to nothingness like the rest of the world was (Europe and Asia predominately). Furthermore the massive amount of government expenditure in the war movement created lasting labor potential , which incidentally was turned into the MID by corporate takeovers. Not surprisingly , when the German and Japanese industry reemerged in the 70's , american economics changed considerably.

[mushmouth4life]

Oh because massive government spending during the 1960s had no hand in the consequences of the 1970s?

[silversalvo]

Of course it had an effect , but only in a marginal sense. In any event , its irrelevant and your comment beside the point.

The question at hand is: "Why was america prosperous in the 50's ? Was it regulation , deregulation, government involvement of lack there of?the answer is: Neither.

Regardless of the socio-economic mind set of the time, it would have inherited the spoils of war.Any assessment of ideological merit is void without accounting for the means and relations of production .

[merdufer]

Oh my those idealogical idiots at Hoover with their automatic gainsay of anything that doesn't fit into their little behind-the-times free market theories.

[AllieCaulfield]

This guy is living in a bubble and has no real understanding how people outside his gated community live. We the people need to take control away from these wackos.

[eirefrance]

Typical libertarian response: "No, no, you don't understand economics. Ignore reality, my textbooks say we should do this".

[snowtrot]

That might be a poor characteristic. All I found in my college textbooks were Keynesian and neoclassical theories and models. What attracted me so much to the Libertarian side (that is, Austrian economics) was reality and what I actually saw in the facts.

[eirefrance]

All economists, to a non-economist, seem to suffer from a disconnect from reality, as if they are unable to understand that human beings don't always act predictable or rational. Besides, reality? The Austrian School easiest criticism is that it bases none of its claims on testable realities, but rather that a priori truths are self-evident and if reality doesn't match the truth, some anomaly must be

[eirefrance]

...unaccounted for, as supposed by Mises and Rothbard saying that history can only illustrate theory, never test theory.

[neniuki]

Oh wow. You sure showed that straw man! Never test theory? :D

[eirefrance]

It was Hayek who said 'economic theories can "never be verified or falsified by reference to facts. All that we can and must verify is the presence of our assumptions in the particular case." '

[neniuki]

Yes, and that is true, but first of all, Hayek wasn't really an apriorist, but a general equilibrium economist, but let's put that aside for now. You were implying that the Austrians say that all economical theorems are necessarily true; this is not the case. You can, and you must, test your theory, and to do this you must see if it is logically coherent. This is the most rigorous of all tests.

[neniuki]

And just to touch on the disconnect with reality part - there's no such disconnect. Rationality, in the context of economics, just says that people act in order to satisfy their preferences. What those preferences are, or how they might change in time, is beyond the scope of economics. The eternal truth of man as an actor does not change, though.

[eirefrance]

Except Hayek advocated changing the political climate based on one important a priori notion; that the rationality of human society (unsupported by the evidence but assumed by Austrian School economists) will lead us into a better world if only the govt weren't there keeping people from doing good. And, yes, I simplify. After all, there are only 500 characters to use.

[smmclaug75]

@eirefrance I know of absolutely no instance in which Hayek made a general claim advancing the "rationality of human society" as something that can "lead to a better world." That's not a simplification, it's a complete fabrication. It doesn't take more than 500 words to get the core essentials right.

[hannel19]

@neniuki What do you mean?

[Vodka2389]

No, Hayek was a rationalist, more specifically, praxeologist, and not a general equilibrium economist.

May be later in life he moved toward Popperism, but that's not the work for which he's mostly recognized.

[magichandpuppet]

Wow... anyone that says the DOW is the biggest factor when assessing a president's performance is not very insightful. What if the value of the dollar crashes... will you still look to the DOW as an indicator? Lame.

[jbryant13]

I stopped it as soon as I heard that - NOTHING he had to say after that would have any credence

[snowtrot]

Epstein is a genius.

[jbryant13]

So were Ken Lay and Jeff Skilling - right until Enron went bankrupt that is.

[snowtrot]

Different context I'd say. Anyways, my argument ultimately stems from what Epstein actually says here, not any label. Look at his performance, too.