"Only with law, and courts, and government power to enforce property rights and contracts, can private enterprise work. Without that, capitalism cannot amount to much--a system of economic organization controlled only by trust and private forces will not thrive."
totally unjustified. the writer is counting on the reader agreeing with this without close examination.
there has been no opportunity in history for this to happen. It is only with modern cryptographic techniques and electronic banking that a true non-coercive economy is possible. seasteading should provide an opportunity to try it. If the free-market extremists such as myself are right, these communities should quickly outperform traditional governments. We'll see what happens then.
China 10 years ago, maybe even now. Every society has laws, but rule of law requires that they be reliably and equitably imposed. Anytime you regularly have to resort to bribes and shakedowns from government official to get business permits and adjudication of conflicts, rule of law is on shaky ground.
Yes, and the further China has moved toward an equitable legal system, the more developed its economy has become. Corruption and crime are checks on economic activity, just as Rosenfield's original assertion would suggest.
What if the phrase "government power" were left out? I think that 'enforcement' is the key concept here, rather than an assumption that it has to be a government doing the enforcing.
right but I think the author was hinging it on governmental forms of enforcement. most people take issue with the idea of private police and private courts, even though you can simply view the government as a private corporation that provides those services as a monopoly (and thus provides them poorly).
It may be that some forms of govt security are superior to some forms of private security in some way, but that doesn't make govt security qualitatively different. It's still an expense.
An interesting claim I haven't seen before: nationalization of failing banks does not constitute socialism. Rather, it's the legal--and responsible--outcome under normal bankruptcy law.
I agree with what he said about bankruptcy, but then he said banks should not go through that process, they should just be owned and run by the government, and he defended that position with nothing more than the standard "too big to fail" and calling it capitalism. Bankruptcy is a well-understood procedure, not calls to put random people in charge, even after admitting the government doesn't have anyone experienced to put in charge. Legislating this solution won't make it successful, which is why socialism and fascism don't work.
Without arguing whether the government should have become a creditor to all banks (which I would disagree with), I understand his claim to be: the system fails if creditors do not take action to recoup their investments in failing institutions--and in this case the major creditor is the government.
IANAL, but a bank being taken into administration by the central bank is what should happen, rather than a huge injection of taxpayer's money. Having said that, if the taxpayer is going to do that and isn't getting equity (and wiping out existing shareholders, they knew the risks, yadda yadda) then something has gone badly wrong.
The perfect bailout (assuming one was to happen anyway) would have been to refund everyone a year's income tax. The money would have gone into the banks via people's current accounts, and the rightful owners of that money, the taxpayer, would have maintained control of what's theirs.
Huh? The govt doesn't "normally" take over when a company is insolvent. Even with banks, the SOP until recently was shut-down (often via sale to another bank).
He's distorting the truth, though. What he says happened: we helped prop up banks when they needed it most. What actually happened: we gave banks money to prop them up, and they used to do things like buy out their competitors and give upper management new rounds of large bonuses.
'Bankruptcy could become, in effect, a massive bank recapitalization. Essentially, the equity holders are told, "Go away, you have been zeroed out." The debt holders are told, "Congratulations, you are the new equity holders." Suddenly, these financial organizations have a lot more equity capital and not a shred of debt! And all done without a penny of taxpayer money!'
Not all socialism entails government ownership there is also direct collective ownership. To answer OA's question there are many successful countries with socialist aspects to their economies (esp compared to US's extreme capitalism) Europe, esp Scandinavia, China, India. The countries that mix ideologies seem to have it the best.
This whole article sounds like a shell game just to avoid associating the bail-out with the word "socialist" which has a ridiculously despised reputation amongst Old White Rich Guys in USA.
And re "Why we're Not Socialists". Um, don't know what we you're talking about. I am a socialist.
He says that the government taking control of the banks isn't socialism. Instead it is a fundamental aspect of capitalism that when equity holders can't repay creditors, the creditors become the owners of the company. Due to the unusual structure of banks, the government becomes the owner. Even though the government ends up owning the bank it is not socialism because of the mechanism through which that occurred.
So if I get the gist of his argument, when an aspiring tyrant-king decides to take over a democracy "due to the unsual structure of [congress]," the new structure "is not [a fascist dictatorship] because of the mechanism through which [it] occurred."
(By the way, I support taking over the banks due to their unusual structure, the systemic risks they represent but do not properly account for due to a tragedy of the commons problem--where the commons is the system they are a part of--and for other reasons. I just don't think its not socialism.)
totally unjustified. the writer is counting on the reader agreeing with this without close examination.