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October 06, 2008

Comments

Does Progressive Regulation include reviving the FCC Fairness Doctrine and Equal Time Rule? And, if so, why is it desirable for the government to regulate any part of the 'marketplace of ideas?'

The argument for what to do about bandwidth hogs is simple - do what Comcast is doing, and what all ISPs here do - cap usage, rather than attempting to otherwise shape traffic. Here you get a certain amount of usage at full speed per month, and then you get your speed reduced after that.

And of course directly targeting bandwidth, rather than simply discriminating against a certain protocol means that it actually works. Other approaches are susceptible to spoofing and masking.

To me, one of the most frustrating aspects of trying to have an economic discussion with a right-winger is that these basic points get ignored.

This is all stuff straight out of a freshman Econ 1 class. Public goods, externalities, monopolies, free riders. Not that complicated.

Now, as you point out above, there are legitimate "zones" for dispute about certain issues -- net neutrality is a pretty good example, so is the tradeoff between a carbon tax and a cap and trade approach to emissions management.

But to pretend that none of these are legitimate issues is to surrender to the right wing propaganda machine.

In this respect, it’s often inaccurate to frame these debates in terms of regulation versus deregulation. Either way, the government is picking sides. It's either consciously allowing parties to impose costs on others with impunity, or it isn’t. "Regulation versus deregulation" is a conservative-friendly framing, but it tends to obscure what’s really at stake.

Sure, although it is worth noting that the Fannie-Freddie debacle is directly tied to Congressional regulation -- not "deregulation" (as that term is commonly understood). Fannie/Freddie were given a Congressional mandate to expand home ownership. They did so. Aggressively. Their efforts included marginal loans to marginal borrowers. This resulted in the growth of the subprime market and, indirectly, price pressure in the housing market as the number of "qualified" buyers increased. Add in a dose of fraud and lack of oversight, and you have a substantial component of the current mess.

Had Freddie/Fannie been purely private entities without a Congressional mandate, they (and, with them, the rest of the banking system) would have fared better. Also an improvement -- although not by as much, IMHO -- would have been to make Freddie/Fannie public entities. The worst of both worlds was the actual result: a public-private "hybrid" that was immune from market pressure.


Fannie/Freddie were given a Congressional mandate to expand home ownership. They did so. Aggressively. Their efforts included marginal loans to marginal borrowers. This resulted in the growth of the subprime market

von,

What percentage of recently orginated (say since 2000) subprime and alt-A loans were GSE sponsored?

I'm assuming that you're not just making this stuff up, so I would think you have a source for this assertion.

Or would you like to take another crack at the question of what was the primary cause behind the growth of the subprime loan pool?

von - agree with that concern. to be clear, this semi-series of posts isn't meant to bash private markets or say "government all the time."

it's just that i'm trying to push back on the demonization of government and deification of the market that i think needs correcting in popular opinion

In this respect, it’s often inaccurate to frame these debates in terms of regulation versus deregulation. Either way, the government is picking sides.

Exactly. I actually think you can take the argument a step further, in that there is rarely (if ever) a "free" market. Government is always behind the scenes to enforce entitlements (e.g. property and other rights) that set the stage, so to speak, for a free market. To be clearer, rights to property are essential to the so-called free market, but this necessarily involves govt. enforcement of those rights.

Really, it's never "free market" vs. regulation; it's more about the level of influence you think appropriate for government.

This isn't to say what we think of as "free markets" aren't appropriate in many circumstances, but I think we clearly see the opposite here.

Freddie and Fannie actively promoted the issuance of under-collateralized loans to people who were poor credit risks. They did so under the impetus of 'government regulation', spurring the current crisis. Now we want these same regulators--the one's who have done such a bang-up job on Medicare, Medicaid, farm subsidies, etc--to straighten out the problem they in large part authored?

Whether the present crisis has a market solution is another question for another day. Limiting the discussion strictly to the issue of competent regulation, why does anyone believe that civil servants with no experience in the private sector are fit to regulate it?

The problem was not the FMacs. No one would have made the quantity of bad loans available if they were not able to send them right out the back door to a largely unregulated securitization process.

A US housing bubble would be incapable of creating a global financial crisis without these impossibly complicated securities and CDSs.

Does Progressive Regulation include reviving the FCC Fairness Doctrine and Equal Time Rule?

In my dreams. Sadly, not going to happen.

You can rest easy, mckinney.

Had Freddie/Fannie been purely private entities without a Congressional mandate, they (and, with them, the rest of the banking system) would have fared better.

Have the purely private entities fared better?

Thanks -

OK. so now we know what the Republican talking points are.

why does anyone believe that civil servants with no experience in the private sector are fit to regulate it?

Good question. I suppose only oilmen are fit to regulate energy markets, only bankers are fit to regulate financial markets, and only Rupert Murdoch could properly chair the FCC.

People like "civil servants" who are merely customers of the energy, banking, and telecom industries in their own daily lives have no business telling the professionals what not to do.

--TP


Freddie and Fannie actively promoted the issuance of under-collateralized loans to people who were poor credit risks. They did so under the impetus of 'government regulation', spurring the current crisis.

Hmmm, looks like somebody gets his financial information from the Fox News / GOP talking points of the day.

Here's a hint: what does the term "conforming", as in "conforming loan" refer to? What was the maximum LTV ratio allowed under conforming GSE sponsored loans for the years in question? What was the maximum LTV allowed for non-GSE loans in the same period? What are the current default rates on GSE sponsored loans compared with non-GSE?

If you don't know, perhaps it would be good to get an education first before spouting the talking points du jour.

You could try here for starters. As there are dozens of relevant articles written by a pair of experts in the field of mortgage origination and servicing, it might take you a while to work through them, but I’m willing to wait.

Or if that is too much time and effort, for a quick read see here for a concise nonpartisan summary of arguments pro- and con- regarding how central the GSEs were to the development of the default and foreclosure crisis in the subprime and Alt-A pools.

Actually, my source is the NYT: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=facebook&exprod=facebook.

The larger question remains, why is the government competent to regulate the private sector? What special talent does it have? The 'progressive' premise seems to be that government is equipped and capable to manage such things as delivering health care to 300,000,000 citizens and regulating their economic functions. To rephrase the basic question: what has government done well enough to justify the great confidence you are now willing to place in it?

I don't have the financial or economic chops, frankly, to wade in on the gory details of how and why we got where we are now. I'll offer my *opinion* that a lot more appears to be involved than just defaults on shaky mortgages -- unregulated CDS's, for example, courtesy of Phil Gramm -- but basically I will be happy to leave the heavy lifting to the very many people on this blog who know lots more about it than me, and will look forward to reading their thoughts. It's a free education, and I'm grateful for it.

On the general topic of talking with conservatives about regulation, I will offer this brief personal story.

I have an uncle who, a few years ago, was getting ready to sell his house and retire. The house was built in the late 50's, and had a septic system that was not compliant with modern code. This is on Long Island, where the public drinking water comes from the water table.

The town told my uncle that he had to upgrade his septic before he could sell. Uncle is a strong conservative, and this upset him quite a bit.

The damned government is interfering with his private property! Again!

It occurred to me to point out to uncle that, in fact, the issue might be that his neighbors just didn't really care to drink his piss.

It was a family event, however -- my mother's funeral as it happens -- and I like my uncle quite a lot, so I just didn't really feel like getting into it. I just let it go.

IMO, a lot of this stuff just comes down to the fact that everybody else shouldn't be expected to drink your damned piss. That may create an inconvenience for you. So be it. There are other people in the world besides you.

If you can't get your head around that, you need to move somewhere where everyone else's drinking water isn't downstream of your toilet. Those places exist. They're not always very convenient, but they're out there just waiting for you if that's what you want.

If that doesn't suit, then you need to just STFU and deal. That, and quit pissing in everyone else's water.

Thanks -

what has government done well enough to justify the great confidence you are now willing to place in it?

Hmm...you've convinced me. We MUST disband all American military forces at once. After all, if we can't trust the government to regulate mortgages or provide healthcare, we surely can't trust them with nuclear weapons and tanks and bombers.

The larger question remains, why is the government competent to regulate the private sector?

Who else, since the private sector obviously can't manage itself.

To rephrase the basic question: what has government done well enough to justify the great confidence you are now willing to place in it?

How much time do you have?

mckinney, if in fact you're actually in Texas, I suggest you get your behind out of there and go somewhere where there actually is a competent, functional government.

Maybe your opinion will change.

Thanks -

why is the government competent to regulate the private sector?

You're still asking the wrong question. The government is involved in picking sides (or "regulating") regardless of which side it's on. It is, in effect, allowing these companies to induce large negative effects on the rest of us (a gross overgeneralization, but it makes the point).

To rephrase the basic question: what has government done well enough to justify the great confidence you are now willing to place in it?

To play the game (though it's still the wrong frame), I'd say it does national security fairly well, and to a lesser extent Medicare and Social Security have achieved their basic aims. But let's flip the question: what has the "free market" done well enough to justify your faith in it? Without any government oversight (as you seem to suggest), we get the current crisis and the Robber Barons of the 19th Century (which BTW basically led to US regulation in the first place). So why do you trust the free market to be absolutely rght?

Still waiting for a responsive answer. I am, in fact, in Texas and I am no fan of our present government, and that actually makes my point, thanks very much: the last thing I want is the current crop of jerkies running anything, but I have no reason to believe the next round of control freaks will be any better. One poster makes a valid point about building codes, which in fact are the product of more than a century of collaboration between private and government, usually at the state and local level. There are plenty of other areas where, after much time and much experience, regulations have been put in place that make sense, but were also a product of private sector/governmental collaboration, e.g. transportation regs affecting interstate trucking, railroads, etc. But what Publius is talking about is government intervention in macro-level human endeavor which has never worked before anywhere else it has been tried. And simply because there is a crisis that the private sector seemingly cannot fix (and this itself is an assumption since the private sector is not going to get an opportunity to fix it) does not, ipso facto, qualify the feds to manage the problem. Anyone who thinks the feds can't take a bad situation and make it worse need only look at Medicare and Medicaid.

So mckinneytexas, do you agree with me that we should disband all US military forces immediately since the federal government can't do anything right? If not, can you explain why the government can run an Army well but can't run medicare well?

"The larger question remains, why is the government competent to regulate the private sector? What special talent does it have? The 'progressive' premise seems to be that government is equipped and capable to manage such things as delivering health care to 300,000,000 citizens and regulating their economic functions. To rephrase the basic question: what has government done well enough to justify the great confidence you are now willing to place in it?"

Well, the government is composed of people. And those people have all sorts of different expertise. In fact, the same sorts of expertise as people in the private sector have.

Is there some reason that accepting a government job should cause all that expertise to fly out of their heads, never to be heard from again?

Still waiting for a responsive answer.

The reason folks haven't given you a solid, responsive answer is because the question is kind of wacky. It's so broad that any of 100 reasonable answers are possible, each of which could take days to outline.

Are you asking for every example of governmental competence? Again, I ask, how much time do you have?

As you yourself note, government has proven to be competent to regulate an enormously broad set of public activities. I would only add that, historically, the reason government is involved in many of those areas in the first place is because, in their unregulated forms, they were prone to periodic abuses and disasters that cost lots of people their money and their lives.

In the case of the directives for Freddie and Fannie to expand lending to folks with less-solid credit, you have a point. Some loans to folks with weaker credit are among the loans that are now in default.

Many sub-prime loans, however, are not considered sub-prime because the borrowers were not credit worthy, but because they are non-conforming for other reasons -- they were very large, or they were for investment property, for example. Many of those are in default, too.

Other factors that you are ignoring here are the way in which risk was deferred from the loan originator through securitization, and the even more exotic financial vehicles that were piled on top of those, such as the CDS's I referred to above.

Those factors are notable for the fact that government regulation there has either been nonexistent, or has been significantly loosened in recent years.

I've now achieved the limit of what I can intelligently say about the causes of the present financial crisis, specifically.

Hope that's a more satisfying reply.

Thanks -

Shouldn't the question not be what government has done well but rather what things would be much worse were it not for government regulation and what things would be better if left unregulated?

In light of the latter standard I'd say that Social Security is a success on-balance, as is the EPA and OSHA. Civil rights legislation seems to be another positive example. The Fed and the SEC and FDIC are better than an uninsured and unregulated economy -- just look at the catastrophic boom/crash pattern of the 1800s.

They could all be better, but they all beat the conditions that existed prior to regulation.

Anyone who thinks the feds can't take a bad situation and make it worse need only look at Medicare and Medicaid.

Assuming mckinneytexas is sincere, s/he will have to explain to us simpletons what "bad situation" Medicare and Medicaid made "worse".

"I am in fact in Texas," says mckinney. If that implies having lived there for some decades, I wonder what mckinneytexas's opinion of the Texas Railroad Commission was, back in the day when the major problem for the US oil industry was too much oil and rock-bottom prices, and the Texas Railroad Commission saved the oilmen from themselves by effectively imposing production limits.

--TP

fer the luvva pete, regulating private activity is the fncking reason we have governments.

don't like governments regulating private affairs? move to Somalia. it's a libertarian paradise over there. bring lots of ammo, though.

Agreed that the feds do a very solid job in the military arena; however, this is not a regulatory function--and not a function of bureaucrats telling generals how to train troops and fight battles--and the present level of expertise is the product of centuries of trial and error. Further, military service, law enforcement and teaching are three areas (the only three I can think of, off hand but scientific research is probably in there somewhere) where you find an abundance of competence (but still plenty of incompetence) but the attraction is almost always to the best of our citizenry who are called to a higher service.

The answers remain, by and large, non-responsive: the question relates to regulation on a macro, not a micro, level. Social security is not a regulatory process, it is a distributive scheme. Medicare and Medicaid are, in many respects regulatory at the macro level, and in time, we will come to see that the ever present law of unintended consequences is well and truly at play. For instance, it takes roughly 14 years to become a Fellow in Spine Surgery (this is the kind of high-end specialist you want cutting on your spine, when, as often happens to people north of 50 or younger people with congenitally bad backs, a disc ruptures). Medicare limits payment for a procedure known as a laminectomy, regardless of the skill level of the surgeon, to $918.47 in Houston, Tx. For a disc fusion, the surgeon today receives $1,529.14. Private health insurers contract with surgeons and pay modest multiples of Medicare rates, e.g. Carrier X might contract to pay Dr. Y 120% of Medicare.

Ten years ago, the same surgeon recieved $3500 and $5000 respectively for those procedures. A regulation-friendly person, i.e. pretty much everyone on this site, would say, "Excellent, see how the gov't has driven down those outrageous doctor fees!" And they would be right to a very limited extent. Current Spine Surgery Fellows continue to operate at substantially reduced rates because that is all they know how to do. However, the horizon for medical consumers, when the current crop of appropriately trained physicians retires or finds a less demanding or more remunerative way of making a living, is bleak. Thirty years hence, spine surgery will be performed by under-trained, underpaid and under-motivated doctors. The market will have, in fact, prevailed in that the consumer will get exactly what they paid for--a substandard product.

Hilzoy writes: Well, the government is composed of people. And those people have all sorts of different expertise. In fact, the same sorts of expertise as people in the private sector have.

This statement could not be more wrong. Entry level government employees have entry level skills. Skilled private sector people stay in the private sector where their skills are almost always better compensated. Unskilled people, by definition, are unskilled. How many doctors, electricians, welders, farmers, truck drivers, merchants, designers, artists, musicians, etc., etc. opt for government employment? If Hilzoy's statement were valid, government would be the employer of choice, rather than the employer of last resort. Expertise, by definition, is acquired through a blend of talent, self-application and experience. The more specialized the experience and the more talented and driven the individual, the higher the wages are that can be demanded by that person. There is no home in the civil service for people like that.

To come around to the present economic crisis, the solution lies mostly with the market (I say this as small business owner whose net worth is down more than 20% and it was never that damned high in the first place) but to the extent, and only to the extent and only after careful study, one or more specific vices can be identified, then regulation to deal only with those actual vices identified is appropriate.

An 850 million dollar pork fest passed in the absolute heat and fog of panic is a near certain long term disaster.

nous writes, "In light of the latter standard I'd say that Social Security is a success on-balance, as is the EPA and OSHA. Civil rights legislation seems to be another positive example. The Fed and the SEC and FDIC are better than an uninsured and unregulated economy."

Social security is not a regulatory function, nor is civil rights legislation, the Fed, or the FDIC. The EPA, OSHA and the SEC are regulatory. All three are micro, i.e. vice-specific regulatory functions.

Thirty years hence, spine surgery will be performed by under-trained, underpaid and under-motivated doctors.

phht. nobody knows what is going to happen 30 years from now.

Entry level government employees have entry level skills.

entry level employees everywhere have entry level skills. but not every new employee is entry level - not in the private sector, not in government.

As suggested in the OP, one of the government's primary roles in the private market is to identify and regulate externalities, mckinneytexas.

Drugs and food must be evaluated for risk to the public is unable to reasonably acertain for itself (e.g. Sinclair's The Jungle).

Our water and sewer are regulated so the neighbors of russell's uncle don't have to drink urine. Our roads and highways are regulated quite well, thank you very much.

Six year olds can't work in coal mines anymore thanks to government regulation of the free market.

The skilled spinal surgeon you referred to is regulated by the goverment, as well. I cannot wake up one day and put an ad in the phonebook for "Cheap Surgeon", then start cutting into people until enough die that the 'free market' puts my practice out of business.

There are just a few examples of good government regulation. I have trouble believing you did not already know these things, or are incapable of coming of countless examples of good regulation on your own.

Look, mckinney, if McCain doesn't win the election, you can always move to Wasilla, which seems to have a government more to your tastes

Here’s an interesting take on this issue (at the level of broad generalities rather than details) " Thatcher vs Bloomberg?" from Sullivan, who whatever his idiosyncratic positions with regard to other issues (Bush, Iraq, social conservative issues, etc.) has remained a faithful Thatcherite/Reaganite on fiscal conservative and regulatory issues:

…today, there are different challenges that require different solutions. I'm a free market conservative, but I cannot defend the speculation and recklessness of the financial markets in the past decade. I'm a fiscal conservative, but I cannot defend the GOP in the 21st century. I'm for low taxes, but realistically there's no way to get back to fiscal sanity without someone paying higher taxes at some point.

The point he is making (as I see it) is that the size of government is only one metric, and a very crude one at that, for us to watch. Quality matters as much as quantity, and at the present time we have a crisis in quality rather than a problem with quantity, and furthermore those people who are so ideologically hidebound that they prefer to continue looking at the latter (quantity) rather than the former (quality) - like the drunk looking for his keys under the lamp post because that is where the light is - have gotten so out of touch with our present challenges that they are part of the problem rather than part of the solution.

To borrow and adapt what Bill Clinton said about the era of Big Govt., it is time to say that the Era of Stupid Govt. is over.

Andrew: apparently nuance doesn't have much traction around here: there is macro regulation and micro regulation, there is a bias in favor of regulation, i.e. regulation is inherently good, and a prejudice against it, i.e. it is a necessary evil. At the extreme, there is the libertarian view which I am not advocating by any means. Building codes, labor codes up to a point, safety codes, securities regulations, etc. are all examples of regulatory schemes adopted to address reasonably well defined and identified vices that have a vice-specific solution. And still, you get bad results from supposedly good regulations.

As for bad doctors, that particular vice was regulated by the tort system until bad regulations, i.e. excessive tort reform, came along and made medical malpractice a doctor's god-given right. The state, Texas or any other state, pulls a doctor's license only when the body count approaches My Lai proportions. And virtually no doctor gets his license yanked because of mere surgical butchery, more's the pity.

And to repeat a point I've made several times: most reasonably competent regulatory schemes are a product of private sector and governmental collaboration. Publius and most 'progressive regulators' seem to view regulation, particularly at the federal level as an inherently good thing. Regulating the economic activity, or health care delivery, in any appreciable detail for 300,000,000 people is simply beyond the capacity of human enterprise.

Okay, mckinney, you got me.

I referred to the FDA, water and sewer, our automotive transportation system, and labor laws. If these are not macro, then please identify specific macro regulatory systems which you would like addressed.

Skilled private sector people stay in the private sector where their skills are almost always better compensated.

This is going to require an explanation vis a vis Dick Cheney and George W. Bush, for starters.


Unskilled people, by definition, are unskilled. How many doctors, electricians, welders, farmers, truck drivers, merchants, designers, artists, musicians, etc., etc. opt for government employment?

Well, aside from the fact that there are a few MD's in Congress, which government bodies agencies, exactly, employ those fields? Let's start with that, and we can probably give you a more exact answer.

To borrow and adapt what Bill Clinton said about the era of Big Govt., it is time to say that the Era of Stupid Govt. is over.

Terrific! Although I can never decide whether it's 'Stupid' Government or 'Corrupt'.

Macro--health care and insurance, the notion generally that government inaction is regulation in the sense that by failing to act, the government is picking sides by permitting people to function unregulated, the tax code and attendant regulations, and we'll have to wait and see what the feds have done/will do with the current market situation--but with progressives salivating at the notion of getting their hands on the economy at that level, I am not optimistic. These are a few examples.

necessary evil: n. - that which we would prefer not to be good.

The larger question remains, why is the government competent to regulate the private sector?

It was not a matter of conscious choice. The free government is something that developed spontaneously, and which adjusts itself to changes in the private sector.

According to Wikipedia:

"In the public sphere the value of a regulation or service helps communicate citizen demand to officials and thus directs the allocation of resources toward citizen, as well as corporation, satisfaction. In a free government, value is a result of a plethora of voluntary transactions, rather than corporate decree as in a controlled government."

Macro--health care and insurance

Let me guess. You've never lived outside the US in another OECD country, have you?

"How many doctors, electricians, welders, farmers, truck drivers, merchants, designers, artists, musicians, etc., etc. opt for government employment?"

In the NIH, there are plenty of doctors. I'm less certain about welders, etc. But there are some very good lawyers in Justice, or were until Bush came along; there are very good scientists at NASA and in a lot of the more scientific agencies (FDA, etc.), and I know there are a lot of truck drivers in the army.

Shall I go on?

Insurance is heavily regulated, just at the state level.

If anyone wants to get a sense of all the areas in which federal regulations are issued, pick up a few issues of the daily Federal Register (available online at a number of websites). Or the Code of Federal Regulations, where regs published in the Fed. Reg. are codified. (also available online.) Alternatively, start browing through the websites of the 15 executive departments and the 70 or so independent agencies and government corporations. I believe that the IRS and the EPA are way out ahead of all the other agencies in terms of total volume of published regulations but it's been a while since I've seen statistics.

Using macro v. micro is like talking about macroevolution vs. microevolution -- the words have no meaning.

I know there are a lot of truck drivers in the army

i think there are a handful in the USPS, too. maybe a pilot or two, also.

"Freddie and Fannie actively promoted the issuance of under-collateralized loans to people who were poor credit risks."

Do you have a cite on that? I trust you're not referring to the sort of crackpotty notions about that CRA that Rick Perlstein, among many others have responded to, which I linked to here.

"Freddie and Fannie actively promoted the issuance of under-collateralized loans to people who were poor credit risks."

Do you have a cite on that? I trust you're not referring to the sort of crackpotty notions about that CRA that Rick Perlstein, among many others have responded to, which I linked to here.

"Limiting the discussion strictly to the issue of competent regulation, why does anyone believe that civil servants with no experience in the private sector are fit to regulate it?"

Are you saying you think the SEC, FDA, and so on, should be eliminated, because civil servants are inherently incapable -- because of "lack of experience in the private secotr" -- of doing their jobs well?

Or what? Because I don't know the basis is for any such assumption. If that's not what you're suggesting, I don't know what you're suggesting.

"The larger question remains, why is the government competent to regulate the private sector? What special talent does it have?"

What "special talent" does "the private sector" have to do anything? This is bizarre: one develops expertise through learning and experience, and one judges whether a good or bad job is being done. This isn't a revelation.

"The 'progressive' premise seems to be that government is equipped and capable to manage such things as delivering health care to 300,000,000 citizens and regulating their economic functions."

What on earth are you talking about? Is someone proposing a Soviet economy? Talking at this level of bizarre abstraction is nuts.

"To rephrase the basic question: what has government done well enough to justify the great confidence you are now willing to place in it?"

Won WWII, built Hoover Dam, saved endless people's lives via Social Security, Medicare, and Medicaid, saved the stock market and economy from collapse via the creation of the SEC and other regulatory agencies, cleaned up our horrifically polluted skies and water, sent men to the moon, and the list goes on and on. Near infinitely.

But I'm not interested in discussing abstract ideology with an idealogue, myself. I'm interested in pragmatic solutions to problems. Discussing abstract ideology doesn't get one very far in finding such solutions, whether it's talking to a communist, or their mirror image.

"Actually, my source is the NYT: http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&partner=facebook&exprod=facebook."

So where's your cite that demonstates that that has anything to do with the current problem? Are you just assuming it? If not, cite, please?

"Anyone who thinks the feds can't take a bad situation and make it worse need only look at Medicare and Medicaid."

Huh? You think that the endless millions of people who have received Medicare and Medicaid would be better off left to just die? Wtf?

"Further, military service, law enforcement and teaching are three areas (the only three I can think of, off hand but scientific research is probably in there somewhere) where you find an abundance of competence (but still plenty of incompetence) but the attraction is almost always to the best of our citizenry who are called to a higher service."

If law enforcement isn't a "regulatory" scheme, what the heck is it?

"there is a bias in favor of regulation, i.e. regulation is inherently good, and a prejudice against it, i.e. it is a necessary evil."

And there's the view that anyone who thinks either is an idiot. Regulation, like most things in the universe, is neither inherently good nor bad. It just depends.

"Publius and most 'progressive regulators' seem to view regulation, particularly at the federal level as an inherently good thing."

This is either a mindreading claim, or you have a cite. Do you have a cite proving what Publius and "most 'progressive regulators'" believe?

If not, you're making an unsupported claim.

"Regulating the economic activity, or health care delivery, in any appreciable detail for 300,000,000 people is simply beyond the capacity of human enterprise."

I don't know what you're referring to: who is proposing something so vague and an ominious as "regulating the economic activity" in a completely vague and unspecified way? What are you talking about?

"...but with progressives salivating at the notion of getting their hands on the economy at that level, I am not optimistic."

What are you talking about?

Are we voting for Lenin in this election, and I hadn't noticed?

mckinneytexas: "Agreed that the feds do a very solid job in the military arena; however, this is not a regulatory function--and not a function of bureaucrats telling generals how to train troops and fight battles..."

Nonsense, at least to the argument that the military is not regulated. Numbers of troops, salaries and benefits are all set by Congress. IIRC, officers above a certain level must be approved by Congress (although this appears to be largely a matter of form). The military has no freedom to procure new weapons systems w/o oversight.

Imagine the same degree of regulation applied to the finance industry. Bank CEOs must be approved by Congress. New financial instruments -- eg, mortgage-backed securities issued by anyone but Fannie and Freddie -- must be approved by Congress. Congress determining that 400,000 loan officers are sufficient, and the industry cannot hire more.

At that point, sure, I'm perfectly willing to trust the CEOs to determine how to train the loan officers, determine what hours to keep, and the rest of the daily routine of conducting the business...

How many doctors, electricians, welders, farmers, truck drivers, merchants, designers, artists, musicians, etc., etc. opt for government employment?

And just to round this out, I'll add that lots of musicians work for government via the armed service bands and orchestras, which are, BTW, extremely good. It's not an easy gig to get, and those cats are sharp.

I'll also add that everyone is not motivated solely by the freaking almighty dollar, some folks enjoy actually providing a public service, and if government employees were actually treated with a speck of respect by the folks they are attempting to serve it might be easier to attract folks into government careers.

Never mind the money, why should somebody with solid professional credentials work their asses off and then listen to a guy like you putting them down on a damned blog post? Who needs that crap?

Inspect your own damned beef, dude, and if you die, it's on your own head. Or take that drug, or invest in that company, or drink that water, or live in that house, or go to that doctor, or drive on that road, in that car.

Do your own due diligence if you think my work sucks, and if it doesn't work out for you, well then you just had a bad day pal. TFB for you.

That'd be my response.

Be glad there are folks that are more patient than I am, who are willing to work for your good in spite of your crappy attitude toward them.

To come around to the present economic crisis, the solution lies mostly with the market... but to the extent, and only to the extent and only after careful study, one or more specific vices can be identified, then regulation to deal only with those actual vices identified is appropriate.

An 850 million dollar pork fest passed in the absolute heat and fog of panic is a near certain long term disaster.

OK, now that we've actually gotten past the Fairness Doctrine, under-collateralized loans from the GSEs, health care for 300M people, spinal surgery, the professional qualifications of civil servants, and a request for an enumeration of every case of government competence, and have arrived at a topic that is both to the point and specific enough to discuss, I don't have all that much to object to in what you say here.

As far as "specific vices" I would, personally, start with limiting the degree of leverage that any financial institution is allowed to have. If they want to gamble, live it up, but do it with their own money, not everybody elses.

Just my two cents, speaking as a layman.

Thanks -

The Army's not run by bureaucrats? I'm fairly sure it is, just ask any grunt, NCO, supply sergeant, officer, or anybody of any rank about military bureaucracy and red tape.

The bureaucrats are trained with assault rifles first though.

But the military is a VERY large organization. And like any VERY large organization, it's FULL of bureaucracy, because that's what happens with VERY large organizations. I suspect it's an emergent property of the division of labor between a certain number of people and a certain number of jobs. Once you have enough people that everybody can't know everybody, and doing enough stuff that everyone can't know everything, rules and regulations and hierarchies have a distinct tendency to form.

Milton Friedman was a Federal employee .... twice.

Albert Einstein and Edwin Teller were Federal employees.

General Petraeus --- Federal employee.

Our current Treasury Secretary is a Federal employee, after having garnered entry-level pay at Goldman Sachs.

I'm sorry, I can't tell whose point I'm proving. Maybe the guy's who thinks private and public are equally effing stupid.

mckinneytexas, do you know who won't be a government employee -- you.

You wouldn't qualify. Even though by the end of this economic debacle the government will be the only place to find a job, unless you're somehow screwing the poor through some sort of private mercenary scheme with tax rebates.

You might be up to that.

I agree that the 850 billion regulatory scheme might be a disaster. But only because it was conceptualized by the private sector.

As OCSTEVE might ask, what's the difference between a General and a bureaucrat?

Spine surgeons: Let me get this right. You machismo spine surgeons in the private sector can't do a competent procedure because you're .... undercompensated? Not incentivized enough?

Then quit, ya big effing babies. Collect my garbage and kiss my ass.

mckinneytexas: "An 850 million dollar pork fest passed in the absolute heat and fog of panic is a near certain long term disaster."

I haven't waded into the discussion yet -- but from what I can tell, russell and mckinney have found a point of agreement.

I thought this would be a good time to join the discussion because I just heard Paul Krugman tell Rachel Maddow: "The bailout was a bad plan."

I mentioned elsewhere that I thought we were bamboozled into bailing out Wall Street. Now I really, really think this.

Krugman added that he thinks there will have to be another bailout of some kind right after election day -- a bailout that is done right -- and that the economic situation will become so dire that we cannot wait until Obama takes office.

I don't know about the rest of you, but I am very, very scared.

For three weeks, I have come home pennyless after work. And now I came home to a dinner that looks like we are already in a Depression.

I'm hungry. Do I take a drive to McDonalds for a dollar doublecheeseburger or do I just go to bed hungry?

Krugman said Paulson and Company never properly explained how the bill was going to work once it passed -- and now we are freakin' stuck with it.

McCain and Obama are to both to blame -- and so is the Democratic Congress -- for allowing the bailout bill to become a political football. As Krugman said, the debate on this subject was empty.

We weren't playing beat-the-clock to avoid a financial meltdown. We were playing beat-the-clock so Congress could adjourn.

One survey out today said that 6 in 10 thinks we could be headed for another Depression. Laugh if you will. But with public sentiment like that, I'd better get used to being hungry.

"I'm sorry, I can't tell whose point I'm proving. Maybe the guy's who thinks private and public are equally effing stupid."

As usual, as I was writing, John Thullen voiced my concerns and then some more eloquently than I.

F*ck it. F*ck McDonalds. F*ck my customers. F*ck Paulson. F*ck Wall Street. F*ck everything.

I'm going to bed.

Good night, all.

In a "What have the Romans ever done for us?" sort of way, let us not forget the ultimate in the way of regulatory nanny-state intrusion into the otherwise beneficent free market:

Building codes.

Structural, mechanical, plumbing, and electrical codes.
Also, actual enforcement of those codes.

With such a smothering swath of red tape it is a wonder any actual houses ever get built in this country. Too bad we are currently suffering from such a severe shortage of housing - if only those pesky bureaucrats would just get out of the way and let builders do what they want, we could enjoy the benefits of the sort of construction they had in say Turkey.

Who really needs building codes after all? It isn't as if we have any earthquakes, hurricanes, or just garden variety electrical fires in this country.

"And like any VERY large organization, it's FULL of bureaucracy, because that's what happens with VERY large organizations."

Including corporations and private businesses.

"Albert Einstein and Edwin Teller were Federal employees"

Wait, what? (I feel like Boone should tell me never to interupt Bluto Blutarsky when he's rolling.) When was Albert Einstein on the U.S. government payroll? He worked for the Swiss patent office, but otherwise, he was never an employee of the U.S. government at any time; California Institute of Technology, and Princeton, yes. Federal government, no.

And I think you mean Edward Teller.

""And like any VERY large organization, it's FULL of bureaucracy, because that's what happens with VERY large organizations."

Including corporations and private businesses."

Heh. Indeed.


Aren't 90% of Dilbert strips based on stories people send in these days? Private business is just as inefficient and wasteful as government, if not moreso.
The difference between government and private enterprise is that we are all theoretically shareholders in the government. It doesn't always work that way (see the last eight years), but government has more incentive to work for me than a private business does.

bedtime: *hugs*

btfb,

what hilzoy said.

If there is anything concrete I can do to help, please ask. I think about the people here and hope for the best for them on a daily basis, even on the days when I don't have a chance to comment.

Private business is just as inefficient and wasteful as government, if not moreso.

Lehman Brothers just rewarded 1,000 of its NYC employees with $2.5 billion in bonuses. That's a "b", not an "m", and it amounts to a quarter million apiece, on average.

Of course, that will actually turn into a nice $5K bonus for the secretaries and millions for the higher ups.

All for driving a 150 year old company over a cliff.

Please, nobody talk to me about wasteful government spending.

My wife and I have two good friends who died in the last few years from cancers resulting from exposures to toxic heavy metals in Salem Harbor. These were both otherwise healthy guys in their 50's who left families behind. They just liked sailing, so they were in the water a lot. Salem is downstream from Danvers, MA, which was the center of the tanning industry in this area for decades.

We live about two miles as the crow flies from a non-conforming coal-fired electric power plant. They almost got shut down a few years ago for burying fly ash containing poisonous chemicals in the watershed of the water supply of Beverly, MA, two town and six miles away from me. They didn't get shut down then, but they did shut down when a steam pipe burst and boiled three guys alive like lobsters.

We also have a brownfield site in my town. It's contaminated with very heavy concentrations of lead, because there was a lead mill there for many decades in the 19th Century. The town and some private developers have been playing hot potato with that parcel of land for years. Nobody wants to be on the hook for cleaning it up, because it will cost a fortune.

Believe me, nobody needs to talk to me about private industries imposing externalities on the public at large.

My wife has spent, conservatively, a hundred hours of her time trying to get Quicken to work properly with our bank's online services. Whenever she calls, she talks to somebody in Bangalore named "Brad" or "Eddy", who explains to her how stupid she is for not being able to get the damned software to work, and how it's not really their problem or responsibility.

My wife has a thirty year career in retail marketing and merchandising. Her work has been reviewed favorably on page 1 of the WSJ, above the fold. Trust me, she does not need "Brad" or "Eddie" telling her how dumb she is. Her standard billing rate is $100/hour. "Brad" and "Eddie", which is to say Quicken, have pissed away $10K of her time. And the damned software still doesn't work.

If I ever meet "Brad" or "Eddie" I will kick their asses for them but good. Trust me.

When I go to the RMV, I'm in and out in 15 minutes.

When I call the Registry of Deeds for information about my house, they're pleasant, polite, and helpful.

When I call my Congressman about any issue of interest to me, the folks in his office are extremely attentive and more or less immediately give me a thorough briefing on the Congressman's positions. If there is something I need from him, and it's reasonable for him to provide it, I get it.

My trash gets picked up every Friday like clockwork. When I go to the transfer station with my lawn debris, I'm in and out of there in 10 minutes. I've had dealings with the town building inspector on a few occasions, and he has always given me excellent information, and has never been late for an appointment. When I've had business with the selectmen, I've had their full and prompt attention.

The zoning board, alas, are a royal PITA.

I just do not want to hear about how government gets in my way. It does not get in my way. Government, if anything, goes to bat for me in getting the god damn lazy SOBs who own the tanneries and power plant to straighten up and fly right.

Sadly, they've been unable to do much about the folks at Quicken.

Maybe your experience is different, but in my life, personally, government just gets things done. It's bureaucratic, but it works. And they never take my money and then tell me to screw off.

I'll take that over "Brad" and "Eddie" any day of the week.

Thanks -

I got my State ID at the NC Department of Motor Vehicles a couple of months ago. I walked in, immediately spoke to the information person, who told me to wait to speak to the person I needed to speak to; I had to wait two minutes. Saw her, got given a number to wait to speak to the other guy. Waited 3 minutes for that. Saw that cheerful fellow, and was done in two more minutes; took my info back to the woman who took my picture, and then handed me my ID card immediately. Total turn-around time: 7 minutes. Everyone was very friendly and cheerful and completely efficient.

Now let me tell you about trying to get the cable company on the phone....

my first trip to an NC DMV turned into a shouting match between me and the guy who wouldn't reach over to the desk next to retrieve my NY ID from the desk of the woman who had gone to lunch in the middle of processing my forms.

all the other times have been much better.

Ah, the old "What expertise does the government have to interfere in the market?" nonsense.

You might as well ask what expertise the referee has to interfere in the football match. After all, he isn't a player.

And in my experience of dealing with big business and with government, most government employees IME actually want to help (most people are nice when there's no good reason not to be). On the other hand, business often pays its people to be deliberately unhelpful and to tangle you up so you can't get anything out of the business. I know which I'd prefer to deal with.

Sure, bits of government are corrupt (notably planning authorities). So was Enron. So by any sane standard are Leheman. And many, many other companies. I'd be interested in a comparison if there are any to hand. (The only one I can recall was a study of the amount of sick leave taken by employees. Which found that government workers took a few days average more per year than those employed by the private sector - but less than those in the private sector employed by companies with more than 500 people*).

* IIRC, the worst public sector offender in Britain was the NHS. The worst private sector employees (and worse than the NHS) were call centres.

Francis: IIRC, the worst public sector offender in Britain was the NHS. The worst private sector employees (and worse than the NHS) were call centres.

I remember that too: it seemed fairly clear that if you spend your working days in an environment with a high proportion of sick people, you will very likely take a higher proportion of sick days.

Same deal with call centres: employees work in very large very air-conditioned rooms and are discouraged from calling in sick for every "little sniffle". One employee with a "little sniffle" will therefore pass their germs on via the air conditioning to as many as a thousand other employees.

The other factor for sick days seemed to be long hours/low pay/stressful work, which also fits for NHS employees and call centre employes.

From what the fellow said upthread, skilled workers who enjoy their work will opt for government employment rather than private sector even if the private sector can pay more for three factors:

1. Public service: wanting to feel that their skills are doing some general good rather than just contributing to private wealth

1.5 Related to 1, but not identical: preferring to use their skills in the kind of work the public sector does than in the private sector (for example, a scientist interested in pure research of the sort that only government grants fund, or a teacher who wants to teach in a sector that private education doesn't operate in)

2. Job security: this applies less now than it did once, but in general someone who opts for a career in government work would find themselves less likely to be made redundant or sacked arbitrarily than someone in the private sector

3. Reliable pension: this applies less now than it did once, but certainly used to be a factor in people thinking long term.

It would be a mistake to disregard 1 (and certainly 1.5) as an inconsiderable factors: for many government workers, 1 and 1.5 were the deciding factors, and 2 and 3 were regarded as compensation for the public sector paying less.

I'm really considering looking at government work once I finish my engineering degree, because the kinds of work I do at my internship, while interesting enough, isn't really what I want to be doing. For infrastructure work and planning, specifically. Most private engineering companies focus from project to project, at projects created by local, state, and federal governments.

LeftTurn: "I think about the people here and hope for the best for them on a daily basis, even on the days when I don't have a chance to comment."

Yeah, I feel the same way.

Hilzoy: Your hugs are very corny, but nice.

This is a very frustrating time and what scares me is people like Krugman saying it's just the beginning.

I don't want anyone thinking we are destitude, but we are in a major penny-pinching mode. And it's putting a lot of stress on the homefront and my wife, as she's not used to playing the role of breadwinner.

Thank goodness we can still laugh. Somebody at work just said something very stupid about nothing in particular and we all let out a big belly laugh.

Thanks.

Well, I am certainly not alone.

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