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Elegy for Kodak: An American Icon Goes Bankrupt

January 20, 2012

First they took our Kodachrome away... now Kodak is going, too. (Source: WebProNews)

It was bound to happen sooner or later. After years of declining revenues and tumbling stock prices, Eastman Kodak has finally filed for Chapter 11 bankruptcy. The venerable company that introduced the world to the snapshot has reached the end of the roll.

Bankruptcy doesn’t always mean certain death, of course. Paramount Studios, Pepsi, Macy’s, MGM and plenty of other American institutions have filed in the past and are still with us today in one form or another. But unless it can be rescued and resurrected by a benevolent corporate behemoth, Kodak will soon join the growing roster of vanished American brands: PanAm and TWA, Look Magazine, Pontiac and Oldsmobile (not to mention Studebaker, Edsel, DeSoto, Plymouth and Pierce-Arrow), Rheingold beer, Ipana toothpaste, Postum,  Uneeda Biscuits and hundreds of other once-familiar names — now alive only in the memories of aging consumers like me (and possibly you).

If you’re over forty, you probably remember stepping into a tourist shop while on vacation, pointing to the shelves of little yellow-orange boxes behind the counter, and grabbing three or four overpriced rolls of Kodachrome or Kodacolor film for your SLR camera. (It was Kodachrome for slides, Kodacolor for prints.) Professional photographers used to stake their reputations on Kodachrome, especially the low-speed Kodachrome 25, which was revered for the depth and richness of its colors.

Kodak entered the American soul like only a select handful of beloved brands. The “Kodak moment” is part of our vocabulary. One of the company’s nostalgic commercials from the early 1960s still lingers in the memories of those of us old enough to have seen it. Viewed today, this tender masterpiece still guarantees at least few furtive sniffles.

Kodak founder George Eastman (l.) with his friend, a movie cameraman named Edison.

Film was the essence of Kodak’s business and its biggest profit center, but of course the company also made the cameras to go with the film. Kodak founder George Eastman invented both film-on-a-roll (1885) and the portable camera (1888); in fact, his ingeniously simple Brownie camera, introduced in 1900, finally brought photography out of the studio and into the homes of millions. In his unassuming way, the man who chose the name Kodak (because he thought the letter K “seems a strong, incisive sort of letter”) had started a revolution.

I still honor the memory of my first camera, a Kodak Instamatic given to me by my parents when I turned sixteen. That little black-and-silvery gizmo accompanied me to New York, the Grand Canyon, California, Mexico City, college and beyond, culminating in a grand two-month post-collegiate European adventure. My Kodak Instamatic looked upon Stonehenge, the Eiffel Tower, the Matterhorn and the ruins of Pompeii. It took perfectly square pictures of dubious resolution, but it was cute and handy and always ready to tag along. I still have it, tucked away in a box somewhere in my vast and disorderly personal archives, current whereabouts unknown. Wherever it is, it won’t leave my possession until I’m lowered into the ground. Maybe they should bury it with me.

The Instamatic was a model of brilliant simplicity: you popped a plastic film cartridge into the back (no unwieldy spools or sprockets), shut the compartment, pointed and clicked. If you were taking pictures indoors or at night, you mounted a little disposable flash cube atop the camera; it rotated as you snapped away and was good for four shots.

Kodak had come up with an unbeatable business model: inexpensive, well-marketed, user-friendly devices — coupled with the need to refill those devices regularly with the company’s own products. (In marketing parlance, this is the razor blade model: sell a good razor, and your customers will keep buying your blades.) Kodak was sitting pretty, and its future seemed as solid as a Mack Truck.

So how could a giant like Kodak go belly-up? How could a company that held a 90 percent share of the American film market in the 1970s find itself at the door of doom today? Was it a simple matter of film losing out to the digital juggernaut, or were there other issues involved?

Yes, Kodak grew complacent as a result of its near-monopoly on camera film. Even before the digital revolution, the company started losing market share to foreign upstarts like Fuji and Agfa. Kodak assumed that its customers would never desert the sacred brand.

And get ready for a shock: the digital camera was actually invented by a Kodak employee, Steven Sasson, back in 1975. That’s right: a company that made its living from film created the very technology that would render most of its product line obsolete. You have to shake your head in disbelief at such a revelation… and at the same time, you have to love a company that would place innovation above its own fortunes in the great hierarchy of priorities.

Down, down, down, from a high of 95 in 1997 to 36 cents at bankruptcy.

But there’s more to the story of Kodak’s collapse. The company enjoyed a brief resurgence as a maker of popular digital cameras that could be docked to a portable instant printer. Just seven years ago, in fact, Kodak ranked number one in camera sales. But there were two emerging problems that didn’t bode well for the company’s future: low profit margins, and a burgeoning smartphone industry that was devouring camera sales. Kodak’s response proved fatal.

Like too many chieftains of faltering companies, Kodak CEO Antonio Perez took the easy route of slashing costs instead of boosting revenues. He shut down the remaining film factories, cut 27,000 jobs and outsourced most of the manufacturing to Asia. Reduced to a shell of its former self, Kodak had lost its soul. It could no longer compete with either the cell phone makers or the robust Japanese camera companies. Checkmate.

Kodak mysteriously kept Perez in the driver’s seat for ten years, right up to the bitter end. Maybe the board believed in his slasher ethic. Or maybe the crippled company had simply lost the will to live. Now Kodak will try to sell its 1100 patents so it can raise enough cash to pay employee pensions. The company created by visionary George Eastman over 120 years ago is pretty much a closed photo album.

Companies are like species, subject to the same ruthless Darwinian laws: compete, find a niche, dominate it, keep adapting and never rest on your laurels. Kodak dominated its niche for over a century — a pretty grand run for any company — but ultimately failed to adapt and was trodden under with the weak and infirm.

Could a better-managed Kodak have survived the transition from film to digital? Maybe, but the challenges of that transition would have taxed and tormented even the most brilliant managers. Film, the very heart of Kodak’s business, had been wiped out by an invasion of pixels — an invasion launched from within the company’s own walls. You can adapt to a gradual change in climate, but Kodak was essentially hit by an asteroid.

So now we’re left with the memories in our photo albums — if any of us still look at photo albums. Under normal conditions, memories are little more than fleeting flashes of light from the past. For over a century, Kodak helped millions of us capture those memories for perpetual viewing and enjoyment. That’s quite a legacy. I like companies that change our lives for the better. More of them should be like Kodak.

188 Comments leave one →
  1. valdobiade permalink
    January 20, 2012 2:27 pm

    … and don’t forget: “Kodak moment!”

    If they had powerful lobbyists and monopoly like oil companies, maybe we will still have analog images…

    … but I guess we will never see fighter aircraft and armored thanks using solar photovoltaic cells…

    … the monopoly of Edison sabotaged Tesla’s business. I still have trouble with this retard Edison’s American DC electric outlet. I finally reach the outlet back of heavy furniture, but damn! I have to turn the cord the other side. Why do you have to have different sizes of electrical socket connectors? It is AC for f**k sake! It doesn’t mater which way you insert the plug. Maybe Edison was smart in inventing the light bulb, but in business… he was a retard.

    Maybe Kodak would be better if they invented first this small scanner that convert 35mm film to digital, then continue heavily investing in digital novelties. I have this kind of scanner and the pictures from analog to digital look better than digital.

    • January 21, 2012 3:29 pm

      Valdo: Well, Edison wasn’t exactly a retard, but you’re right that he was a better inventor than businessman (though he did OK). Why he was so stubborn about DC electricity (other than the fact that he devised it) I don’t really know. I thought Tesla won out, anyway (don’t we use his AC system today?).

      You’re right about Kodak in retrospect; when mass acceptance of digital photography became inevitable, they should have aided the conversion. I thought their portable printers were pretty cool, but utlimately they simply slashed and outsourced jobs to save themselves. Bad move. (Of course, that’s easy for US to say.)

      • valdobiade permalink
        January 23, 2012 2:01 pm

        If Edison knew something about material properties, he wouldn’t test “… no fewer than 6,000 vegetable growths, and ransacked the world for the most suitable filament material.” This is retard.
        If he wouldn’t invent the light-bulb I am sure Tesla would. Tesla invented better luminous sources than Edison.
        Yes, the US uses AC, but Edison tried to discredit Tesla’s intelligence and uses stupid ways to impede the implementing of AC. It was not in the Edison business interest that Tesla be successful.
        Every time I read Edison name I don’t think about him as a great inventor, but a monopolist and greedy businessman not wanting something new to take up his business and using dirty methods. Something that is destroying America today.

        Even if Edison knew that AC can have both electric outlet blades and holes at the same size, he struggled for his unequal types used for DC. He is retard in the sense that he was opposed to other people bright ideas that could take over his business. The same thing is happening today with oil-solar energy.

    • January 21, 2012 11:35 pm

      AC outlets are polarized today, and in most instances it does matter which way you insert the plug, before polarizing the outlets alot of people were electrocuted.

      • valdobiade permalink
        January 23, 2012 2:13 pm

        … and Edison showed how “perilous” and “unwanted” is AC, by giving electric chair example.

        I’ve read “business” analysis about how bad is digital image vs analog.

        I don’t say that Kodak participated in spreading a bad impression about digital technology when it was in its incipient stages, but some corporations did.

        I still read about how electric cars make you a homosexual, while a Hummer is pussy magnet…

      • January 24, 2012 5:35 pm

        We use AC in our homes and power generation and transmission.
        There are very few film cameras made and used anymore
        Few of us drive either electric cars or Hummers.

        I think the market has managed to sort things out pretty well.

  2. January 20, 2012 3:08 pm

    A melancholy but gratifying post, Rick. Thank you. I’m awful with a camera and I can tell you that the best photo I ever snapped was a complete accident — a point-and-shoot “Kodak moment” with a “Brownie” in Mexico in 1973. I’m proud of it — it’s a long view of Acapulco Bay at sunset — and it’s still hanging in my office.

    It’s interesting that the YouTube link to that 1960s ad you ref’d elicited the following comment last year — more than a little ironic given Kodak’s Chapter 11…

    “This commercial is an excellent example of why capitalism is such a vastly superior economic system – Kodak wins by profitably selling cameras, which allows them to gainfully employ thousands of people, the songwriter wins by making money from the royalties, the singer wins by being paid, the ad agency wins by making money for their employees, the TV stations win by making money, and the viewers win by enjoying a beautiful work of art for free. Everybody wins, nobody loses!”

    Sometimes, that’s probably true.

    • January 21, 2012 3:45 pm

      Paul: I still have half a closet full of old Kodak slides that I’ll probably never get around to uploading onto my computer. I made prints out of my favorites many years ago, and some of those are still hanging above my desk. But it’s as if the old slides are ancient history now.

      Interesting comment on the Kodak commercial… I’d almost have to agree, too. Capitalism at its best really can deliver the goods for just about everyone. Unfortunately, the kind of capitalism we have today tends to be the “let’s move money around from point A to point B” variety, where point B represents the wallets of those doing the moving.

      • Pat Riot permalink
        January 21, 2012 4:22 pm

        Ah yes, shelll game capitalism…watch my hands…which shell is the current, trendy profit under? Also reminds me of fast-moving card dealers at the casino–where the house wins big consistently, daily, but enough regular folks win occasionally to keep going back, like the populace putting hopes into Democrat and Republican again, but not exactly, it’s just a weak analogy is all, haha, lol.

  3. Kent permalink
    January 20, 2012 5:22 pm

    Paul, Yes, everyone wins….as long as the “driver” of the company can keep up with the technology.

    Otherwise, the money stop “trickling down”. Jobs are cut or shipped overseas and the overhead is sold off to pay the last remaining profits to the top individuals.

    • valdobiade permalink
      January 20, 2012 5:36 pm

      Maybe if we (the US) will switch to metric system (weight, length, etc) and Celsius, we may create jobs here.
      With the best efforts, the “Imperial” system will be just memories like Kodak

      • January 20, 2012 11:59 pm

        After some small initial increase during a conversion, there will be a small net decrease in jobs and an increase in productivity.

        Further a substantial portion of us business and industry is already effectively metric.

  4. Anonymous permalink
    January 20, 2012 9:12 pm

    The median age of US businesses if 7 years. Very few business survive 25 years. Even among those that survive few of the dominant giants remain so for very long.

    Yet TNM is deathly afraid of monopolies and corporate giants. Somehow the giant corporations are going to take over the world, rather than dying like the dinosaurs.

    If Kodak is gone it will be remembered fondly. But birth growth and death are as natural a part of business as human life.

    The process is called creative destruction. It is essential to free markets. Business must grow, be more productive, and innovative all the time – or it will die. there is always someone out there with a better idea, or better able to recognize a better idea – even if it was your idea. Big business is more efficient than small. It is also less redundant, resiliant and less flexible. Often even when it invents and can grasp the significance of disruptive technology, it is just not possible for it to adapt and adopt it.

    If you are not unemployed, self employed or a government employee then you are employed by a business. Each year you want higher wages. But the norm is that each year the price of most goods goes down – even without adjusting for inflation. Unless you do not grasp simple math that means that each year every employee of every business must be more productive – just to earn the same wage. Of course a side benefit is that very slowly each year your money buys slightly more. For the same wage you can afford more wealth.

    The natural trend is down – gradual deflation has been the norm for much of human existence as well as that of this country. Sustained inflation is a very modern concept – primarily driven by the fact that monetary policy depends on a small amount of inflation to work. Yet government is constantly seeking to increase the price of everything.
    We must have higher minimum wages, social security and medicare must rise, government spending must rise, even more than growth.

    This downward trajectory is not only real, it is actually mandatory. It is not possible to grow wealth to increase standards of living without increasing productivity. Without constantly making more for less.

    This is the engine that drives the increase in our standard of living – and except possibly occasionally throwing a monkey wrench into the gears government has absolutely nothing to do with any of it.

    What role if any does government play in this ? The corporate dinosaurs who are easily smart enough to grasp this is the way things are, that relentless competition is the not only the norm, it is there always and everywhere, that no matter what the probability that they will eventually stumble is near certain. Grasping this they seek to buy protection from the market from government – and government all too frequently obliges.

    More recently GM, Chrysler, and myriads of banks could all have failed. GM’s stockholders and bondholders were wiped out regardless. their collapse would have ended myriads of jobs with these companies. But it would not have altered our need for Cars or financial services. If we need 10million cars a year, give or take a thousand we will make 10 million cars. If it takes 500,000 workers to make 10 million cars, giver or take a few hundred it will still take 500,000 workers.

    Normally it is the keynesian left that fixates on demand – yet somehow when it comes to bailouts and bankruptcies, the left becomes supply siders – we must bail out banks and auto companies and make cars – someone will buy them – even if they catch fire and explode.

  5. January 20, 2012 9:25 pm


    Why is competition, evolution, Darwinism, and survival of the fittest all acceptable in the context of Kodak, but unacceptable elsewhere.

    Kodak is people. It is shareholders all of whom are losing, some are losing their life savings. It is workers who may not have a job tomorrow or the next day, or who may be forced to retrain and/or take lower wages. There are bad things all over the place that may happen as a result of Kodak’s demise. And many of these bad things will happen to not the 99%, but the bottom 20%.

    Yet I am not hearing you call to save Kodak – if only for its workers. In this context you seem to gather that this is just part of a natural cycle. That for each lost job, there will be a gained one somewhere else. That there will be winners and losers, but that is just how it is.

    The web is wonderful. It is trivial to find Kodak portrayed as a polluting patent hording anti-competitive evil corporation.

    Yet you are not claiming they have gotten their just deserts or begging government to save them ?

    What gives ? Have you been infected by the free market flu ? Might you actually grasp that all this is a normal facette of free markets.

    Freedom is mostly a win-win, but there are losers. It is required.

    • January 21, 2012 3:58 pm

      Dave: Yes, of course I understand that companies have their life cycles, and some of them won’t be able to adapt effectively enough to survive. The reason I wouldn’t call for a Kodak bailout is that the demise of Kodak won’t sink the economy… it’s that simple.

      • Priscilla permalink
        January 21, 2012 6:18 pm

        The demise of Chrysler would not have sunk the economy. It may have sunk the UAW, I think that is the larger point.

      • January 22, 2012 12:14 am

        i do grasp that in the fall of 2008 we were all scared to death.
        At that time despite my better judgement, and not being nearly so “radical” as I am now almost sort of thought that TARP might not be that horribly bad an idea. Instinctively I still knew it was wrong, knew it would fail, but we just had to do something. We could not just sit on our hands and watch as the world came to an end. Since then I have actually bothered to learn alot more about all of this.

        the most protracted economic messes have directly corresponded with the largest government interventions – see Great Depression, Japan’s lost ….., and now this, the longest recession in US history. but not the worst. Not even the worst economic times in my lifetime.

        Banks have failed before – even before there was an FDIC, even before Roosevelt and the Great depression. Big – huge companies have failed before.

        GM Ford Chrysler were all on the verge of failure before the economic crisis. Even without this recession is was likely that atleast one was going under.
        Ford survived on its own without government assistance – primarily because it grasped the problem before GM and Chrysler, and because the Ford family bet essentially their entire fortune on the company. I have been in that position – though at much smaller scale. That is a very very hard thing to do, and my family was unable to.

        So long as there is a need for more cars, more cars will get made. Who makes them might change, that is all.

        Exactly the same thing is true of the banks.

        I am certain that if Citi,Boa, … all collapsed, that Sorros, The Koch Brothers Bill Gates, Or Warren Buffet or … would have stepped in bought the assets at fire sale prices and re-opened the doors the next day – presuming of course they believed there was still a need for more banks.
        If nothing else the greed you think is so destructive would have driven them to profit from the opportunity.

        Equally important a signal would have pealed throughout the economy – bad decisions result in failure.

        Instead we have created huge moral hazard.

        And you wonder why we have an incredibly weak recovery.

        We had an economic crisis, and government stepped in and picked the winners and losers. It did so at best arbitrarily, at worst it rewarded friends and punished enemies.

        Regardless, we all paid. Those businesses that made good decisions, or atleast did not made decisions not nearly as bad, faired no better than those that made abysmal decisions. The lesson is that if you are big enough or have well placed friends there is no mistake you can make so great the government will not rescue you. and the message to everyone else – there is no level playing field, there is no benefit to doing things right, if your competition is big enough or has the right friends, you can do everything right and go under and they can do everything wrong and still eat you for breakfast.

        Worse still we passed tons of regulations following this and virtually none have anything to do with any of this. Fannie and Freddie are still arround, and still pushing banks and mortgage companies to write the same bad mortgages as before. We have the new CFPB whose job is to correct every single financial problem we did not have, and to ensure that in every area of credit where we did not mis-price risk, that we start doing so as soon as possible.

        Ian and I may not agree on Mr. Arnal’s personal culpability – regardless, there is no new legislation that addresses even Ian’s perception of what went wrong. No matter why you believe bad mortages were issued, there is nothing has been done to prevent the same types of bad mortgages from being written again.

        Why ? Because the real mistakes were with politicians of both parties, and not a single one even grasps they did anything wrong. Their plans did not fail because they were bad policy, it must of been because somebody else screwed up. But lets not dig too hard lest the spotlight fall on a friend or worse still ourselves.

  6. January 21, 2012 12:55 am,8599,2081778,00.html
    Something else that needs to go bankrupt

  7. Pat Riot permalink
    January 21, 2012 9:54 am

    Excellent post, Rick: A proper elegy with nostalgic history, good examples including personal insights, and a light seasoning of cleverness (“…reached the end of the roll.”)

    Since Kodak led to the digital camera (and how great is the virtually endless capacity of digital cameras, i.e. not having to buy overpriced film, and the transferability between devices, e.g. grandparents seeing pictures of newborns on their iPhones, et cetera???), I’m able to think of this particular bankruptcy as not just an end, but as a passing the baton to a new generation…pasting appropriate images and links to moving images into a blog for instance…


    • January 21, 2012 3:54 pm

      Thanks, Pat… well do I remember the sinking feeling of unexpectedly reaching the last frame on a roll of Kodak film, just as I was about to capture a spectacular sunset or a sweeping vista. But you know, that’s happened to me even with my digital camera. I’d suddenly see a “card full” message and have to delete a dozen or so of my less impressive shots. And of course, there’s the ever-present dead battery issue. A little planning can remedy these problems, but I’ve never been much of a planner.

      And you’re right… the end of Kodak is sad, but we can view the company as a pioneer passing the baton to its successors. It’s a brave new world out there, though sometimes I wonder if we really need to keep upgrading our technology at such a terrifying pace,. (I’d like to keep my Apple 3.0 cell phone a few more years.)

  8. Pat Riot permalink
    January 21, 2012 4:34 pm

    I also wish technology would slow down a bit. Some portion of the fast paced changes at our expense because of “Planned Obselescence” and “Perceived Obsolescence.” There’s a funny quote in Annie Leonard’s viral “Story of Stuff” video where she still has a fully functional bulky white monitor on her desk and not a sleek flat screen like her co-worker, and it makes her feel that she’s got “a washing machine up on my desk…” Some changes also due to good ‘ole innovation and supply and demand too. ..fre(Threw that bone out there for the free-market hounds!.)

    • January 21, 2012 11:27 pm

      I viewed “the Story of Stuff”, and started a detailed point by point refutation, but the entire thing is just constant repetition of the same Malthusian fallacy. I would be happy to specifically address any individual idiotic claim in it you wish.
      but if we are on this ski slope to hell – how come everything is getting better ?
      Pick the time frame you wish – a decade, a century, two ?
      Pick the area you wish, air quality, water, wealth, natural resources.

      For the most part the entire video is just a rehash of similar works from the sixties – the population bomb, Silent Spring, ….

      How many times can you be fed the same impending armegedon story and still believe it.
      Ms. Leonard can join Harold Camping waiting for the end of the world.

      I wish I had a time machine to transport Ms. Leonard back to 19th century London so she could breath the clean air, and bath in the clean water of the Thames, and not have to suffer the short live span that all that exposure to the modern toxic chemical world brings.
      And of course as the US, England, and Europe transformed themselves from agrarian to urban societies, the entire western world collapsed in poverty.

      What has fundamentally changed in the past 200 years ?
      Are the rich even more greedy than before ?
      Are we less sensitive to our environment, more willing to rape pillage and burn the planet, the poor, are our politicians even more corrupt ?

  9. Pat Riot permalink
    January 21, 2012 4:41 pm

    …wish technology woiuld slow down somewhat–some moderation–to allow human social skills to catch up…somewhat…so to speak…so we’d know better what to do with the gadgets for our survival and reall happiness rather than destruction…generally speaking…

    Kodak wasn’t just some company making pies or widgets. We’re talking pioneers of cameras–images–communication. Good choice for a well-written elegy. Momentous I think.

    • January 21, 2012 6:01 pm

      It is not specifically technology, it is just innovation in any form. And it has to continue at a fairly strong pace. The improvement of our world depends on it. If we do not continually produce more and more for less and less, or standard of living stalls or even declines.

      The promise of free markets that there are on the whole far more winners than losers is rooted in the fact that this is not a zero sum game. If you even reduce the rate of growth and innovation too much – we risk slipping backward.

      While the economy is not as bad as it was two years ago – it is not good either. this is what only 2% growth looks like – not that good.

      Every argument for slowing down – whether it be the environment, global warming, or whatever, is an argument for a lower standard of living, for worsening conditions for the poor. That alone does not disprove the claim, but it is something we must remember. Contrary to perception there is substantial and knowable harm in just standing still – look how bad 2% growth feels.

      We must also continue to grow as people. To have a higher standard of living you must earn one. While free markets are not a strict meritocracy on an individual basis, the totality of benefits must be paid by the totality of production. If we do not produce more we can not each have more.

      This is also part of the stupidity of the class warfare crap. People get and stay rich by producing – the only other way is theft. Again it is not a perfect meritocracy – but the income of the rich must be paid for by their investments. Even taking the most extreme view that they contributed nothing but their money – absent their investment jobs and products disappear. Absent Steve Jobs the world would have been/had less. Even if someone else took his place – there would still be the hole they left.

      Everything that impedes or slows our never ending growth costs all of us.

      What happens if tomorrow Warren Buffet decides – I am done. i have more money than I could ever possibly spend, there is no need for me to continue. I am going to take it all convert it to gold and store it in my basement.

      It is unlikely the businesses he has invested in will fail, but the 50B he removes from the market will be replaced – coming from other investments. Ultimately $50B of investment and jobs will just disappear. Maybe not at Gieco or Clayton Homes, but somewhere.

      If instead of quitting his job government decides to tax 10% of his wealth, there are several things that can happen – but none are good.
      He can say the hell with it Why should I make so much – I certainly am not benefiting from it – who really needs $50B ?
      Or he can increase the price of the products he sells to maintain his wealth – there are real limits to that, but reach the limits and we revert to option 1. If his prices can and do increase – it is not he who suffers – it is us. Government had sure better make certain that the $5B they took results in $5B in benefits – because the rest of us lost $5B.
      Or he can say fine, I will just live on less. No skin off his nose, who can not live quite well on $45B. But $5B is still missing, There is $5B less invested in his businesses – and even if that void is filled by others it comes from somewhere. It still comes at our expense.

      I have never argued trickle down economics here – there is no such thing, wealth trickles up, not down. You must create far more at the bottom than you can take out at the top.

      But taxes on wealth do actually trickle down (snowballing on the way down).

  10. January 21, 2012 6:10 pm

    2009 Study on Capital Gains taxes – using data from 1976 through 2004, the revenue maximizing value of capital gains taxes was calculated – the value that produces the greatest government revenue, any increase or decrease from that point results in less total government revenue.
    That value was 9.69% – the optimal value – the value producing the greatest benefit to everyone was even lower.

    Click to access CapitalGains-2.pdf

  11. Pat Riot permalink
    January 21, 2012 6:54 pm

    Above, Asmith actually said, “If we do not continually produce more and more for less and less, or (sic) standard of living stalls or even declines.”

    Man you are stuck in a box, an old paradigm.

    • January 21, 2012 8:56 pm

      The alternative paradigm failed – predictably. the laws of conservation of matter and energy still hold, you can not make gold from lead.

      If standard of living is Sum (wealth)/number of people. To increase the standard of living you must either increase wealth of decrease people.

      I would be very interested to hear how you plan on raising the standard of living without producing more. I would also be interested to hear how you plan to halt the forces ultimately driving all prices down.

  12. Pat Riot permalink
    January 21, 2012 7:03 pm

    How about we learn to use less and less?

    How about many of us transition to technologically-advanced local communities where friends and neighbors produce much of the world-class things we need? Just as now we have our own laser printers and don’t have to run down to the off-set printer to make a flyer, local people will have CNC machines and other equipment to make what their region needs.

    A few national and global giants could remain, but why should a few global giants produce all our stuff and require all that shipping and trucking and marketing bull, while our own neighbors can’t find jobs? We’ll be happier back in real communities and we’ll crave less bologna.

    The times they are a-changing.

    • January 21, 2012 9:23 pm

      I do not see how you are not making my point – except that we are using more and more not less and less – and by the way it is using more and more that helps make things cost less and less. Imagine what an iPhone would cost if Apple could only sell 100,000/year.

      The laser printer destroyed the offset industry – things got cheaper – and we made more and more of them.

      US Manufacturing is larger than it has ever been in US history.
      First or second in the world and growing.
      but US manufacturing jobs are fewer than they have ever been.
      Making more and more for less and less.

      I have no idea whether we will all have a CNC machine in our homes – quite possibly.
      I would like to believe that we will make more and more for less and less in smaller and smaller businesses – and maybe we will – and there are some trends that way though government acts strongly to thwart them.

      I strongly suspect that the smaller government gets the smaller business will get.

      Regardless, I will be happy to predict that:
      The US and Worldwide production of wealth – regardless of how it is produced, will increase.
      The prices for most goods – particularly those farthest from government regulation or control will decline.
      That we will use energy more and more efficiently AND our energy consumption per capita US and Worldwide will continuously increase.

      And I would sugest learning about

  13. Pat Riot permalink
    January 21, 2012 7:08 pm

    …and I’m not suggesting “standing still.” I’m talking about making changes, re-channeling our energies, realizing what we need and what we don’t need…

    to say we have to continually produce more and more for less and less is like…
    putting out fire with gasoline!

    • January 21, 2012 9:44 pm

      It is not even economics, it is just basic math.

      You seem to be explicitly accepting that things are getting cheaper – atleast that portion of price declines caused by the introduction of disruptive technology. In another era that was spinning looms.

      Though I am less committed to the specific details of the future than you are I am not in basic disagreement that your view is plausible.

      I am having some difficulty wrapping my head around the correct argument, but essentially the part of what I am saying that you disagree with is going to happen even in your prediction.

      I think you are making an error that is basically mathematical rather than ideological.
      Possibly you believe that we will have more and more – at a more local scale, for less and less, with some great deflation driving our apparent standard of living down – and our happiness up. but if you adjust for that deflation – we are still producing more and more for less and less, and have a higher real standard of living.

      There are many ways to reach that particular end – and I do not have any serious problems with yours. I also suspect that acheiving the positives you postulate will actually increase many of the things you consider negative, like shipping and energy consumption.

      But standard of living is only going up if we produce more wealth.
      And by both disruptive and ordinary competitive means in real terms prices are going down.

  14. AMAC permalink
    January 21, 2012 8:51 pm

    My first camera was a Kodak. I do not remember the brand or product name. We still have the memories, even if we don’t have the jobs! One of my favorite Simon and Garfunkle songs is still “Kodachrome”. The technology industries will continue to put business’ that don’t adapt out of business. The country and business need to adapt. How about video chat and web conferences in place of congressional meetings? If we can’t get the lobbyists out of D.C., lets get the congressmen and women out. How about using technology to make representatives and senators more accessible to their constituents and less to the lobbyists?

    • January 21, 2012 9:57 pm

      I will be absolutely ecstatic to support any proposals that you wish to make to open government further.

      With only one caveat, When I say more open and transparent government, it is only government that I mean.

      I do not know all the details, but it is my understanding that the State of Nebraska provides in near real time a searchable web accessible database of every dime that the state government spends.

      We need more than Freedom of Information Act requests. We need government to just put almost the entirety of its work out in the open where we can all get at it.
      Every contract, every email, every proposal, all meeting minutes, the entirety of everything government does.

      One of my disagreements with Rick is that he attacks the problem of political corruption on the wrong side.

      I have no right to know or restrict what other private citizens or businesses spend for what purposes.

      But I have every right to impose whatever burdens I wish on my representatives.
      There is no right to be a public servant. It is a choice and one that can be declined if the requirements are too burdensome.

  15. Pat Riot permalink
    January 22, 2012 9:06 am

    More is not always better. More things are not always better and more words are not always better.

    Like many people, I have at times loved driving a car. I think the internal combustion engine is a marvel of engineering. In crowded cities there are roads that are jammed with sickening stop-and-crawl traffic every weekkday. Fahgettabout it if a vehicle breaks down. It’s a pathetic failure. There are too many cars on those roads. We could build beautiful public transit, not as something to force upon people but as a sensible voluntary option. We could have high-speed trains that cross the U.S. as a viable option to flying. We don’t spend our money and time on these things that citizens want and need because self-serving Big Business has hijacked our government and our military to assist with profit-making ventures. To many at the very top of the Plutarchy, the American People are not an essential component of their plans.

    “Standard of Living” and “Wealth” are quantitative measures that don’t necessarily reflect “Quality of Life.” .

    Now don’t get polar or bifurcated on me here, as if there’s just one extreme or the other as options: Just becasue I realize the American People are being duped doesn’t mean I’m agains business and industry or against innovation or technology or that I don’t see how supply and demand work. Moderation is the key.

    • January 22, 2012 9:46 am

      Wealth is a qualitative measure and therefore standard of living is to. We measure wealth in money which is quantitative.

      But Wealth is what we want and need, it is also what we produce – what someone else wants in order to get what we want and need.

      Wealth encompasses all the purported qualitative of life issues – if we want leisure time, vacations, entertainment, love, children, …… we still have to produce what others want in order to get what we want.

      Neither government nor any other organized body or system decides what wealth is – each of us make that decision for ourselves individually. Each of us performs our own personal calculus with respect to what we want and need and what we can and will produce to secure that.

      This is one of the most misunderstood aspects of economics. Money is how we measure things, it is not an end in an of itself. Money has no value beyond its use to get whatever we want and need.

      Regardless, Wealth and Standard of living are the measures of our the extent to which humans have obtained what they want and need.

      If your complaint against them has any point it would be that money is a less than perfect measure. Some things slip through the cracks. That is certain true – but not much. If there were things that we want and need that we could get without producing – we would work less. Essentially for money to completely miss a part of human satisfaction and quality of life, you must find something that we can secure without any facet of it passing through the economic system – air to breath, more weakly love and companionship.

    • January 22, 2012 9:59 am

      If we actually wanted mass transit – we would have it, and it would become cost effective and efficient. That is how the market works. Part of the reason for myriads of government failures in areas like this, is that government confuses the inefficiencies of the economies of scale, with the driving force which is our wanting something enough.

      There is only one high speed passenger train in the entire world that has proven economically self sufficient. Please grasp what that means – even with government footing the bill and taking all the risks and providing something on a scale that it was possible to be cost effective we do not want it badly enough to make it pay for itself.

      Don’t get me wrong – I love trains, but that does not make them a viable solution.

      Busses, light rail, subways, other forms of short range mass transportation actually work – primarily because other resources are sufficiently limited that cost fails to be a factor.
      Manhattan does not have the space for the infrastructure necessary for any other solution.

      Voluntary public transportation is an oxymoron. We have to pay for it whether we use it or not – that is what the “public” part means.

      • Ian CSE permalink
        January 22, 2012 10:36 am

        Actually, you have brilliantly exposed how the market sometimes DOESN’T WORK, i.e., FAILS with your mass transit example. Only Government can build mass transit in the real world and we need it.

      • Anonymous permalink
        January 22, 2012 3:34 pm

        No what my example proves is that we do not really want it.
        It also proves that government fails, because as delivered by government it costs several times more per passenger mile than any other form of transportation.

        Not so long ago we had a passenger rail system. Though it was not entirely private – it was essentially created as part of a very early public-private partnership, but unlike todays, most of the costs and most of the risk was on the private side. Regardless, for nearly a century it was the best means of transporting people distances in this country. Inside of cities we had trolley systems – many of which were private. As cars emerged we moved away from those forms of transportation. There are myriads of reasons, some are cost based some are preference based.

        There is absolutely no reason we can not chose to move back to that system, nor is there a reason why if that was our choice it would not function privately and profitably. The fact that such a private system does not exists, means that there is not a sufficient market for it.
        The fact that such a system did once exist is proof that if that is what we wanted that is what we would have.

        Private mass transit would likely work in places such as Manhattan where there are other considerations to justify the additional costs.
        But as with myriads of other similar systems we do not have private mass transit because government does not allow it to exist.

        Look at the cost of a taxi medallion in NYC – and why does one need the states permission to transport another person anyway ?

        The Brooklyn as well as myriads of other 19th century bridges started as private companies – the Brooklyn bridge is an imperfect example as it became PUBLICLY entangled with Boss Tweed and Tammeny Hall, but like many others it started private.

        The utility grid in this country started privately, and continued successfully and privately even after government stepped in. The private companies eventually failed because as they were serving more customers cheaper and harming the public companies they were eventually regulated out of business.

        There are myriads of instances throughout the world and in this countries history where tasks that purportedly only government is able to do, were accomplished successfully privately. Including some such as police and fire that most of us would consider indisputably public functions.

        There may be legitimate reasons why some functions should be public and some should be private – but there is never an economic one.

        The total estimated resources in the Shadow Banking System exceed $51T today – this is among other things the collective value of our invested IRA’s and pensions. This would also be an order of magnitude large absent social security. Instead of facing a $50T to 75T shortfall, there would be a much larger body of invested capitol, raising the standard of living for all of us, as well as transferring enormous wealth to our children.

        Regardless, what economically viable project can be accomplished by a $4T federal government with $16T of debt, that can not be accomplished by $50T+ of private capitol.

    • January 22, 2012 8:14 pm

      The negative railroad

  16. Ian CSE permalink
    January 22, 2012 4:42 pm

    We do not want it? Who is this “we”? If its a majority of Americans, you may be correct for all I know. If its the majority of city dwellers you are quite incorrect. Shut down the public mass transport system in just about any major city and you would have chaos. The system exists in the only way it can exist today, as a public mass transport system. We did not as a group wish to go to Ohio by train over a 3 day period. But when in a city we sure as heck DO wish to get to around the city by the public mass transit, and cities themselves would be an inviable concept without them, the vehicle traffic would not permit commerce to function.

    OK, in some far away past somewhere with horses and carriages we could live without a public mass transport. But not today. By your own logic if we wanted a private mass transport system we would have. As you say, extinct. We did not want it that way. People choose via democracy to have the government run the mass transport systems in major cities.

    Is there a major city in the world where the mass transport is privately owned? Not some little part of it, but the system itself? Democratic government is simply people choosing to do as a group what they cannot do separately.

    • January 22, 2012 7:34 pm

      I did not say cities did not need mass transit – though it is still extremely expensive, but all transportation is extremely expensive in cities.
      What I said is that if they needed mass transit the private markets would have (and in the past did). The first Subway in NYC was privately built and destroyed by Government.
      The fact that you can not find something that government refuses to allow to exist is the most abysmal case for the need of government I can possibly conceive of.
      I suspect if I bothered there are plenty of cities in the world with complete private transit systems. But I know there were places in the US in the past where that was true.
      Bus systems throughout this country were mostly private atleast through my youth.
      It is possible many or most still are. In my city the private bus service was “aquired” by the city in 1976. The “public” transit system in NYC was initially entirely private – despite myriads of legal obstacle errected by politicians. Even well into the 20th century more than half of NYC’s mass transit was private. Most of the mass transit in this country was initally constructed and operated privately.

      There is actually some movement – even by progressives, to re-privatize mass transit systems. It seems that government is not only unable to operate them efficiently, it can not expand them or convince manufacturers to produce the parts and equipment needed to run them. But there are complexities as public mass transit has some of the most arcane and complex work rules of anything in the country. If a city with a public mass transit system as an example allows private competition and a public trasnit employee claims to have lost their job as a result, they are entitled to their full salary for the next zix years by federal law.

      We are slowly seeing the privatization or atleast market pricing of services previously deemed “public”. The people republic of San Fransico is experimenting with demand based parking meter rates.

      Since the 1964 Johnson Urban Mass Transit act the Federal government has contributed $200B to public mass transit, ridership has declined 15% and inflation adjusted costs have more than doubled.

      Given that they do not believe they will have to pay for it, nearly all people can be found to favor most anything. What people want is only meaningful when they are willing to pay for.
      Shifting between what people say they want or need and what they actually want and need based on the actual value they place on it is what the marketplace does extremely well and what government does abysmally.

      Voting to spend someone else’s money to acquire for yourself a benefit you are unwilling to pay for yourself is precisely what is wrong with democracy.

    • January 22, 2012 7:43 pm

      I do not claim to be able to read peoples minds. What I claim is that what the market place provides is an accurate measure of what people want prioritized by what they are willing to pay for it. If something can be done for the price people are willing to pay then absent government intervention to prevent it, it exists. Even if it can not be done today if either peoples willingness to pay or the cost to produce changes bringing something back to possible – then it will exist.

      This is not actually libertarian economics, it is just market economics 101.

      There are some things that i say here that generate intense criticism and debate that are ideological and libertarian. But a surprising number of things that I say here that are just basics that virtually all economists – including Krugman when he is actually speaking as an economists rather than a political hack, accept.

      One of the reasons I accuse this blog of being liberal, is because pretending that you can legislate to change natural law is primarily a liberal trait.

  17. Pat Riot permalink
    January 22, 2012 8:18 pm

    Dave A. Smith,
    You can’t see the forest for the tree. The forest is the cause and effect interplay between business, government, education, altruism, selfishness, intelligence, ignorance, individuals, groups, and wild cards such as natural disasters and disease.

    The tree you can’t see around is economics. You see everything in terms of economics. You don’t seem to see how individuals and groups can manipulate and control the playing field, can control markets, so that whole swaths of the population don’t have their needs met no matter how much they want them met. You don’t seem to see that many people don’t know how to go about getting what they want and need, or that they’ve given up on their government. What are the approval ratings?
    Many tune out and focus on their own private struggles because they see that the swindlers at the top do what they want anyway. It’s not worth my time to give examples. I’ve given solid examples before but you lapse into the same economic dogma.

    Americans don’t want clean, modern public transit and cross-country bullet trains? Americans don’t have them because they don’t want them? C’mone maaan! Infrastructure in great societies took people with vision for posterity. Too many in high places in America in recent decades have a vision of their own private yachts, etc., rather than the maintenance and improvement of American society.

    No one will ever budge you much from your religion, but be reasonable man. C’mon, maaan!

    • January 23, 2012 1:14 am

      The Egyptian people desperately wanted the pyramids ?

      Free markets are exactly how we get what we want. And because all of us place our demands ranked by what things are worth to us, what comes out is pretty close to what we actually want, rather than what some politicians persuaded us we wanted – with promises that we would not have to pay for it.

      When government gets into the game of giving us things. It is pretty much by definition either something only some of us want, or something we are unwilling to pay for – otherwise we would already have it.

      Of course americans want clean modern mass transportation and bullet trains – but do they want them bad enough to pay for them ? Clearly they do not – and frankly that is a pretty wise choice, There is only one bullet train run in the entire world that pays for itself.

      you complain about subsidies to big business – but that is all this is, some busnesses get alot of money from the government, and the people get a fast shiny new white elephant that will take generations to pay itself off.

      But this idiocy is not limited to bullet trains, we have convention centers, sports stadiums – just all kinds of toys that government buys for us – with our own money – no not really with our money, more like on credit, so that for the next several generations we will have to pay it off.

      Until the 20th century very little of modern infrastructure was actually built by government.
      Those passenger trains that were once the best and most cost effective means of travel were built and run privately – until they were no longer the best and most cost effective means of travel. Now when they are clearly an antique the government takes them over – does that make sense to you ? Maybe we should re-open the Erie Canal while we are at it ?
      I am sure there is plenty of room outwest to build a few pyramids.

      I am not the one who made these decisions – all of us did, when we slowly moved to cars and planes.

      The US still has the most incredible rail system in the world – for freight. Government has nothing to do with it and it runs perfectly well and cost effectively. Maybe it will die someday too – when something that works better comes arround – if that happens does government have to buy and subsidize that too ?

      We can have alot of things, but we can only have as much as the wealth we produce allows us to afford. When government steps in and buys those shiny new bullet trains for us, they not only cost whatever government spends, but they also cost us the things we would have done ourselves, that we can no longer do, because government made the choices for us.

      Who knows what we would have done, maybe cure cancer, maybe more reality TV. I don’t know. I do not even know that I would have liked or agreed with most of the choices, but I would have been happy with the ones I made.

      Yes, the great things in this country took vision – the vision of men like Jobs, or Roebling, or Carnegie, or Ford, or ….

      For the most part these men spent their own money or alteast private money.

      When I started this thread I assumed that if mass transit was really valueable – it would have been created privately. What I learned is that all across this country – it was created privately. And then government came in and took over. Either because politicians wanted control, or because it was competing with something they created, or like passenger trains because its time had passed and government can not accept that.

      I do not that actually affordable rail travel is dead. But I do know that so long as government runs the passenger trains we will not find out. What we get will be extremely expansive and take lifetimes to pay off.

  18. Pat Riot permalink
    January 22, 2012 8:52 pm

    Further down, past economics, underpinning economics, are people making decisions and not making decisions.

    Sometimes the decisions people make, e.g. decisions by the makers of products and by marketers, are devious and immoral. What we end up getting as our reality is not merely a matter of what we’re willing to pay for. It’s also about what we’re stuck with and what we’re too busy or distracted or powerless to change for the better. Sometimes people rise up, like Mothers Against Drunk Driving, or Rosa Parks, or the Occupy Movement, when they’ve had enough. Sometimes well-meaning college students get pepper smirking policemen. Sometimes good police officers get gunned down by worthless thugs. What in the world do these things have to do with pricing and consumers? Do you really think everything works by the laws of economics?

    • January 23, 2012 1:42 am

      I have not said that economics is everything, only that the market place is how we establish the price – the value of those things that can be valued – and most can.
      At the same time if not everything very nearly everything involving money is economics.
      Further, you are under the delusion that economics is actually about money. Economic things involve money, but money is not what they are about.
      As I recall Rosa Parks started a Bus Boycott. Isn’t that saying I am not going to pay to ride in the back of the bus anymore ? As I recall she eventually won.
      Go ahead Boycott anything you want for whatever reason you wish whether I think it is wise or stupid. If enough people are actually serious it actually works. And if they are not things do not change – which means whatever you were boycottting for was not really important enough for most of us.
      Rosa Parks placed an economic value on her personal dignity. The economic value of being able to get around by bus was not worth the price in human dignity. It subsequently became clear to all of us exactly what the cost of not being able to sit anywhere on the bus was worth to black people, and what forcing them to do so was worth to the city of Montgomery.
      Was Rosa Parks powerless ?

      Regardless, every consumer has some power over those who sell the products they consume – rarely much individual power, but collectively enormous power. And that is exactly as it should be. We do not want the .01% dictating to all of us. But any company that has ticked off even a small percentage or its market is in trouble. Few businesses make more than 10% in net profits. Stockholders will start casting their votes by devaluing a businesses stock on fraction of a percent changes in profits.

      Yes, sometimes – particularly where it involves governments these battles are not fought over money. But are you as an individual willing to get pepper sprayed or go to jail, or get beaten for something you believe in. These confrontations that involve how much our values are worth are generally paid in violence and blood when government is involved, because we can not easily economically boycott government, we must change the currency to an arena where government may be unwilling to pay the price

  19. Pat Riot permalink
    January 22, 2012 9:07 pm

    The benefits of self-interest. I get that. Nobody cares quite as much about their own business as the individuals themselves. People can pursue their passions and excel and it raises up society because we get butchers, bakers, and laptop makers.I get that and I agree with that.

    But there are limits. Selfishness can get out of control. That’s why people stand up as individuals and through their government. They say “Hold on, that won’t be healthy,” “No, we don’t want that.”

    “…the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.”

    Were the Founding Fathers liberals?

    This site is not liberal; it’s MODERATE.

    • January 23, 2012 2:13 am

      Have you read our founding fathers ? They make Ron Paul sound liberal.

      “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.” Thomas Jefferson

      Calling something moderate does not make it so.
      In a head to head match Ron Paul is in a dead heat with Pres. Obama in national polls.
      What do you think the outcome would be among TNM posters ?
      Ron Paul would get 5 independent votes for every 4 Obama got.
      I am not trying to call Ron Paul moderate, But I am noting that a slight majority of independents find him more paletable than Obama. I doubt more than three posters here out of 20 would pick Paul over Obama – that is approximately the margin by which voters on the left would pick Obama over Paul.

      Grievances are not trains. Rights are not something you must take from someone else.

      And no I do not really think you get self interest – though it is about more than self interest.
      First self-interest dictates that you do not “foul your own nest”. Poison your customers. What you call greed is almost always NOT in ones self interest, motives that drive people to chose violence or fraud are contrary to their self interests.
      Second while self interest is important, it is lunatic to presume it is the sole motivation for what we do – even what businesses do.

      Mellon gave us the National Gallery of art, the building and most of the art within. Not only doesn’t his name appear anywhere on or in the building – but neither does anyone else’s.
      Most works in the national gallery belong to the people, without respect or reference to where they came from. Is that self interest ?

      Am I getting wealthy from posting here ? Are you ?

      I am no mother Theresa, but I contribute far more of my time and money than the average american to helping those in need – yet Jeffrey Sack’s claims libertarian-ism is about screwing those in need. I also do not get to deduct most of my altrusim from my taxes, I do not give much to charitable organizations, I give food to the hungry. I give cash to people who ask for it, and homeless people do not generally issue contribution letters. And …..
      A liberal friend tells me I am a closet atheist – I am pretty sure he is wrong, but I am not pursuing some kind of afterlife self-interest.

      When I was running a business, I cut my pay to zero, to avoid laying off several others. Maybe that was self interest, but I am not so sure. Ultimately I think it was good business.

      Self-interest is just one of many motivations we have for what we do.
      That market system that assigns values to anything that can be valued – weighs all our values not just the self interest ones.

    • January 23, 2012 2:16 am

      Oh and sometimes, when government fails we are force to price our rights economically, or in blood.

      But just as the sole distinction between government and private associations is the initiation of force, the sole purpose of government is to secure our rights.

      Rights are the only thing supposed to be priceless.

  20. Pat Riot permalink
    January 23, 2012 8:47 am

    I believe you are a good American, a thoughtful person, a patriot. If parts of your posts continue to get a rise out of me and frustrate me, know that it is for the views expressed and not against you personally.

    As I have stated numerous times, I share your disdain for the corruption, ineptitude, and over-reach of government, and I have more faith and confidence in capitalism and individuals than in socialism or government programs, etc.

    But when you say “When government steps in and buys those shiny new bullet trains for us, they not only cost whatever government spends, but they also cost us the things we would have done ourselves…” you are talking about government as though it were a separate harmful entitity, which sadly it is, increasingly, and you seem to be forgetting that government is supposed to be an instrument through which we the people ARE doing it ourselves–through govenment–which is supposed to be giving we the people what we want that business can’t or won’t provide, and not just traffic lights for billioinaires. Do you forget that government is supposed to be the will of the people, or do you just give up on the idea of effective government altogether because of government’s failures?

    got to get to work. good luck with your other endeavors. will check back as able.

    • January 23, 2012 10:40 am

      No, I am actually talking basic economics.

      The good news is that much of the world – economics included is not zero-sum – many things can grow and that is usually good, though not without problems. The growth in populations in cities in the 19th century meant more horses, and more soot from coal heat.
      The advent of the automobile and the decrease in cost of oil,. gas and electricity eliminated all that pollution. But ultimately more cars resulted in an increase in air pollution – though still lower than in the 19th century. Are environmental problems are not new – the specifics are, but the fact that all aspects of life result in waste – though generally decreasing proportionate to what we produce as we move forward, is not new. Once in a while some simon legree actually does do something incredibly heinous – though there is a disproporationate number of simon legree’s on the government side of the equation. Regardless, waste is not a new problem, and rarely the result of extreme avarice.

      That the world is not zero sum does not mean growth is automatic or free. When government spends and all government spending must come from the economy, we automatically start with a negative balance sheet. This is not true of private spending – because the money is already their and pretty much no matter what is done with it, the odds favor a positive benefit.

      So even if government – as it on rare occasions does, efficiently spends the money it collects, for things that are important and beneficial too all, at the very best you must weigh the positive value of whatever government did against the what would have occurred privately. This is Bastiats seen vs. unseen or “The Broken Window” fallacy. I do not believe that any economist of any persuasion contests this. There are claims that under some circumstances specific ways the government does something can alter the effects with respect to time in a way that is net positive because it triggers growth that might not have occured otherwise (Keynesian stimulus), but those are narrow cases, not broad ones, and there is debate over whether they are even real. The current counter argument whihc I favor is that government stimulus actually decreases growth, and there is a building body of evidence to support that.

      So ultimately, government must achieve atleast unity in anything it spends for purely economic reasons, to not be net harmful. The most favorable progressive data today is suggesting best case government spending multipliers of 1.2 to 1.6 – that is best case.
      More mainstream economists are finding the norm is from .3 to .8 – with .8 being the best case economic multiplier for war. While this information is fodder for my libertarian cannon, it is not the data of libertarian or conservative organizations that beleive that have numbers even lower.

      This is also consistent with the public view that government wastes more than 50 cents of each dollar. This result is not because government is evil, but because almost everything that works towards efficiency in the free market is absent in government. Charities actually suffer from similar disincentive problems – though not to the extent that government does. Nor are these problems particularly unique to the modern era. Government waste has been criticized wherever there has been government and sufficient free speech to criticize.

      The point is not that every single government project ever undertaken has been a failure, but that the presumption of a net positive economic benefit from government action is false. The overwhelming majority of government actions are economically net negative.

      The economic data that each 10% of GDP that government consumes reduces growth in GDP by 1%/year is just another empirical demonstration that the economic benefits of government spending universally average far lower than the same spending within the market.

      The argument may still exist that government should do something for non-economic reasons. Some of the arguments for social safety-net programs are essentially non-economic – we should do X to benefit the poor, the unemployed, the ….
      But the norm is that advocates of those programs claim net positive economic benefits, and that is always false. In fact my primary counter argument against re-distributive programs is that the increase in economic growth that would result if government did not spend for social safety-net programs over the course of a single generation would benefit the very people government aimed help much more than those government programs did. That is a hard sell – the seen benefits of government programs are clear, tangible and immediate. The doubling of standard of living takes years, occurs slowly and imperceptibly, But it is still true as always that the unseen is greater than the seen.

      When I note that the sole distinction between government and private organizations is the legitimate ability to use force, and that the sole purpose of government is to protect our natural rights, I am really asking you to think about these.

      If the legitimate use of force is the only thing that distinguishes government from any other voluntary organization we can form – and it is, then you claim that the choices of a democratic government are OUR choices, is wrong. The are representative of a different fallacy – the forgotten man fallacy. That is when A and B get together to decide what C will do for the benefit of X.

      If government is really just acting on the will of the people – then why do we need government – its only distinguishing attribute is the ability to use force.
      If this is what we all want, then why do we need force to accomplish it.
      Rather than ask congress to build your bullet trains or whatever great work you think needs done, start a charity, or a corporation, or organize all the people who want something in whatever voluntary way you wish.

      I do not think government is inherently evil or wrong. I just grasp that the whole point of government is the use of force. The force to compel a minority to conform to the will of the majority. Whenever we ask government to do something, that must be something we are willing to FORCE those who disagree to conform to.

      There are many legitimate exercises of government force. But that use of force is NOT justified solely by the whims of a majority.

      It is those purposes that require the use of force against the minority that justify the existence of government, and it is the ability to use force that requires government be limited only to those tasks that justify the use of force.

      That is one of the

  21. Ian CSE permalink
    January 23, 2012 4:05 pm

    Force is part of government, otherwise everything would be voluntary including and especially paying for it. Government has existed on this same principle since the days when the “government” was Uggg, the largest caveman in the cave. The words voluntary and government do not go together.

    I am a pretty damned free spirit but I am quite willing to accept that government taxes me and does things I approve of and many things I disapprove of. How could it be otherwise?

    No one is going to be more than about 50% happy with the things their government does. I do not, as dhlii implied, love my government, I accept it, as I accept dentistry. I do not love dentistry or dentists, but I’m glad they exist all the same. What I DO love is living in the USA instead of Russia or Somalia or Myanmar or China. Which has to do most of all with the kind of government we have and the US culture, which up until now has been a culture of people who are governable, which is more than I can say for, say, Russian culture. Libertarians are trying to change that, to persuade us to be ungovernable. No thanks, I’m smarter and more mature than that.

    The idea that we must all regret every detail of society we disagree with that is forced on us by virtue of being tax-paying US citizens is actually one of the most childish ideas I can think of. We should examine government tenaciously, protest those decisions we disagree with at the top of our lungs if necessary, but at the end of the day we have to accept that we are US citizens and damned lucky. If the US Government devolves in my lifetime into something more evil than good, I am probably one of the most likely people to take up arms.

    In spite of all the coercive force of the US government, Libertarians are not moving en masse to Hong Cong, where they would be much more free of oppressive government. Curious, isn’t it? I think the basic libertarian take on government is a sort of a self centered, childish, whining, “why can’t I have everything be the way I think it should be” sort of nonsense. Ya know, get over yourselves, grow up, or go live in an abandoned mine somewhere as free hermits.

    • valdobiade permalink
      January 23, 2012 8:09 pm

      Ian wrote: Government has existed on this same principle since the days when the “government” was Uggg, the largest caveman in the cave.
      Actually, government exists since God said: “Don’t eat from this tree”.
      Then Adam (not Smith) said that better eat and get out from God tyrannical government.
      Nowadays the “Invisible Hand” is still pestering us…

      • January 23, 2012 11:43 pm

        Are you really proposing God’s will as the criteria for determining the role of government ?

    • January 23, 2012 11:41 pm

      Great we are getting somewhere,

      So if the only distinction between government and private entities is force, then why does it not follow that we should only use government to do those things that only government can do ?

      At the very least why are we willy nilly using force in myriads of instance where it is atleast arguably unnecessary ?

      If essentially forced charity is so desirable, why don’t we bestow the right to initiate force to say the red cross ?

      If the whims of the majority are sufficient to exercise government force, then is there anything that 51% of the people want that government can not do ?

      On what basis do you distinguish between what is a legitimate exercise of government force and what is not ?

      Is your sole criteria a simple majority ?
      If so a simple majority could bring slavery back if they so desired.

      I have provided you with a simple limiting principle for government power – it should only be used for that task it was created for in the first place – securing our rights.

      If you disagree come up with something yourself,

  22. Pat Riot permalink
    January 23, 2012 8:14 pm

    Ian, you bring up an idea/angle I haven’t thought of in ages–the idea of being “governable.” Stopped me in my tracks. I’ve been seeing things for so long from the point of view of governmental over-reach and trampling of rights, and even though I know government can be better and work, and does sometimes, I think I’ve forgotten about good ‘ole cooperation, compromise, accepting differences, etc.,

    Makes me think of my Trades Instructor days when some trainees could be put on any work crew and get along and work things out becasue they didn’t expect perfection and allowed for differences, and so work got done, but some other individuals were more or less “untrainable” because they had non-stop issues about wanting things their way, and the crew bickered and much less work got done.

    Still free individuals but governable. Wow. What a concept. I’ll have to digest it a little further.

  23. Ian CSE permalink
    January 23, 2012 9:42 pm

    Hi Pat,

    There are definitely cultures that are nearly ungovernable. I’ve heard suggestions that California is headed there. We have been very lucky with government since day 1 in so many ways in the US, I just think it good if we all try to remember that.

  24. AMAC permalink
    January 23, 2012 10:57 pm

    I am going to post “War and Peace” in its’ full text and see if I match word counts with Dave. Sooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooooo lengthy.

    • January 23, 2012 11:41 pm

      AMAC: Ha, I can relate. (I love the way the word “so” runs clean off the screen to the right.)

      Guys: This article was about the fall of Kodak. I saw a few good themes emerging from it: how a corporate giant can actually bring positive value into our lives, how it can falter like a doomed species or a maladjusted individual when it fails to adapt, and how cutting costs to the bone can do more harm than good. Believe me, I’m flattered and pleased when I see our comment count run past 100 on every recent article, but we really should try to stay on topic as much as possible.

      I’d say that as a rule of thumb, when the discussion turns to the merits/evils of government vs. the free market, maybe it’s time to move it to our “Wild Card Debate.” Thanks for keeping it civil, though.

      • January 23, 2012 11:53 pm

        While I found your eulogy for Kodak interesting, I am unclear as to why Kodak deserves more favourable attention than the myriads of greedy corporations you have attacked, There is plenty of information on the web that would lead someone with your values to shred Kodak if you so wished.,

        The truth is they are just another business that has made both positive and negative contributions to our world. More recently they have made a string of bad decisions resulting in their demise.

        I have no problem with the nostalgia. I have my own good memories to,

        But I have serious problems with the arbitrariness of your assignment of labels of good and evil.

        Kodak’s management made serious mistakes and stockholders will lose alot of money, and employees lose their jobs – much like enron.

        Why is Kodak good and Enron or ameriquest evil ?

      • January 24, 2012 11:48 am

        Dave: Enron blatantly deceived the government (and investors) about its business activities, then forced employees to hold company stock as the share price tanked. EVIL. Kodak simply failed to adapt. NOT EVIL. ‘Nuff said.

      • Priscilla permalink
        January 24, 2012 5:04 pm

        Let me try and stay on topic here, while still venturing into the government vs. free market debate……

        I don’t know if I am entirely comfortable using the word “evil” to describe actions in the marketplace….but, what the hell, let’s go with it. I do agree that corporations – or more specifically, those who run corporations – have ethical responsibility, to both their investors and their employees.

        My question would be then, how do you feel about the case of Solyndra, a corporation owned by one of Obama’s biggest donors and financed through government investment of $600 million tax dollars, in the form of a guaranteed loan (making us all “forced investors” in a way), despite an OMB report that showed the company to be a poor investment and likely failure? Solyndra executives cashed in big-time in the days just before filing for bankruptcy. The company’s CFO, for example, who pleaded the 5th before Congress, got over $120,000 in bonuses on top of his $367,000 salary….

        Would you be willing to call what the administration did in arm-twisting to get stimulus cash for Solyndra “evil”? Over a half-billion to a bunch of FOO’s (‘friends of Obama”) for a company that all agreeed was likely to fail……

        My question is not so much a challenge, as it is a genuine query as to what qualifies as “evil” in economic terms.

  25. January 24, 2012 12:27 am

    Back to Kodak.

    You seem to believe that perfect decision making is possible.
    Kodak’s failure is actually necessary – just as those participants in the financial crisis needed to be allowed to fail.

    There are myriads of ways the rest of the market acquires information – one is by seeing the failure that results from bad decisions. Without failure there is no learning.

    You have also complained about CEO salaries. I have no idea what Perez was paid – but would he have been worth twice, three times, ten, even a hundred times as much had he been able to preserve Kodak’s value.

    I have been involved with laying people off and cutting costs far more than I owuld have wished, Absolutely raising revenue is a better choice, but cutting costs is something that you absolutely know you can succeed at. Further you can cut costs while seeking new revenue, At worst cutting costs, buys time. At best it gets you to a point where the company is viable – atleast for the moment. On your graph it appears that for atleast seven straight years of the past 14 Kodak was holding its own. Further you berate Perez for cutting costs, and not raising revenues and then praise Kodak for coming up with dock-able digital cameras – that certainly sounds like an effort to raise revenue to me.

    I hope you are never in the position of having to hack away at costs to get through the next month, quarter, year. I hope you never have to try to figure out how many jobs you need to cut to stand a chance of saving the rest.

    For humans bankruptcy is tough, it means serious loss and radical lifestyle changes, it means changing social and economic class. For business it is the end of existence.
    Our lifespan is a bit over 80 years. The life expectancy of a fortune 500 company is 40-50 years. For smaller companies it is shorter.

    There is no corporate right to life,

    Yet TNM is deeply concerned that institutions that are clearly far more fragile than humans are preparing to rule us all.

    TNM has looked at corporations from both sides now
    from win and lose and still somehome
    It is corporate illusions TBN recalls
    TNM does not know corporations at all.

    • January 24, 2012 11:59 am

      Kodak was doing fine when it developed those dockable printers; the slashing (and faltering) began afterward. Like so many American CEOs, Perez looked to overseas labor to cut costs, and in doing so cut the heart out of the company. I think it would have been an uphill struggle for Kodak regardless of what decisions Perez made (ultimately smartphones ate into the low-end digital camera business). But he dumped 27,000 American Kodak workers onto the unemployment line and STILL didn’t save the company. In short, disaster.

      As for his salary… no CEO can run a corporation on his own; if he did, he’d be a mom-and-pop outfit. As long as a CEO depends on the smarts and productivity of thousands of workers, those workers deserve a healthy share of the spoils. No CEO should be earning more than 20 or 30 times the median salary at his company.

      • January 24, 2012 5:11 pm

        I have not followed Kodak in enormous detail over the past several decades.
        But the Kodak Stock Price chart you provided has the value of Kodak nearly stable for half the time you say Perez was running it.

        As to your latter claim, We entrust running the most significant entity in the world – the US government to a single man – the president. Certainly, he has myriads of advisers and support or opposition from the courts and congress. But ultimately that one person has enormous impact not only on the government but on the country as a whole.

        Exactly the same thing is true of CEO’s. Certainly they have help, and advice. And Corporate Boards may choose to empower them or oppose them. But ultimately the decisions that they make have consequences many orders of magnitude out of scale with ordinary workers.

        A huge mistake of the left is adopting essentially a “labor theory of value”, or any of myriads of other theories of value somehow tied to some tangible construct. The earliest economists the French Physiocratic believed that all value was somehow tied to soil. Even Smith very nearly proposed a labor theory of Value. Myriads today – confuse value with concrete production – those who grow food produce value, those who form steel produce value, but sales, marketing distribution and finance are all parasites.

        Value is whatever the market – us, determine it is, and it is set by the price we are willing to pay. Nothing else. If we chose to place no value on material goods or food, clothing and shelter, and value only intangibles like entertainment, then that is what is valuable. If we actually do so to our detriment starvation is likely to motivate us to new values, Regardless, there is no such thing as intrinsic value.

        This also means that if Corporate Boards – which are to stockholders as the legislatute is to the general public, chose as a whole to pay CEO’s exhorbitant sums – then that is what their value is. That does not mean that Perez’s value is precisely what the Kodak Board paid him, the market place is not actually perfect, it is just better than any alternative.

        Basically the only correct theory of value is that value is what the marketplace decides. There may not be intrinsic value, but there is relative value. The value of everything is measure relative to the strength of each of our changing wants and needs.

        Government interference in the market place fails because:
        There is absolutely no possibility in the world that government can respond quickly enough as out wants and needs and their strength are constantly changing.
        Pretty much everything in existence has its value established in the market. There are far too many things in existence for government to ever get the complex interrelationships right.

        Government economic management works in times of war because survival becomes the primary value above all other values and every other value is both subordinate and can be at least roughly ranked relative to that. But absent a threat to survival there is no shared primary value, and even understanding the complex inter-relationships is beyond
        and formally organized top down structure.

        If we started from scratch and wished to construct a system to establish values consciously understanding that was our purpose we would ultimately grasp that the task can not be done though any hierarchically structured system. It is too complex and changes too rapidly – and it is only getting more complex and changing faster.

        Every business depends on the value produced by each and every person working their. Compensation is not set perfectly based on each’s real value to the company, but it is not nearly so far off as you presume.
        Few people on a production line are worth half or three times their pay. If that were true they would be gone – either to a better or worse job.

        The same thing is true of CEOs and celebraties.
        Tim Tebow’s value is not his ability to play footbal, it is what people are willing to pay to see Tim Tebow play football.
        Given Kodak’s bankruptcy Perez was almost certainly overpaid. At the same time, had he succeeded he would have been worth far more.

        Though myriads of people share blame in Kodak’s failure, the primary responsibility really is Perez’s. Had the actions he took saved the company no one rational would be arguing their value.
        Though I am sure there would be plenty possibly you weeping that he should have been able to do so without cutting so many jobs.

        Regardless, the responsibility for Kodak’s success or failure falls at Perez’s feet, an every CEO’s pay is and should be commensurate with that fact.

        I personally would have made a larger portion of all CEOs pay actually commensurate on real success. But my preference is irrelevant, i am neither a board member or shareholder of Kodak. It is their company, not mine. And if they paid Perez too much or made the wrong choice – it is the shareholders that are paying for that decision.

  26. January 24, 2012 12:32 am

    And to seg back to government the possibility of failure is not only a real, but an important part of free markets.

    One of the reasons we should keep government out of the marketplace, is because we can not allow government to fail, it is too important. Government should never enter into n activity it does not need to, where failure is a possibility.

  27. valdobiade permalink
    January 24, 2012 3:14 pm

    dhilii wrote: “Are you really proposing God’s will as the criteria for determining the role of government ?”


    dhilii, I do really understand all your points you’re posting, but sometime I think you’re out of this world. Your question above is an example. According to the bible, god was the first being to govern its subjects. Even if Adam & Ever were kicked out from god’s country, for not listening to the great Govn’er, god is still meddling in the human affairs – political or economic.

    Politically, humanity is trying to get out god’s role in the government. Armenia was the fist country to impose state religion. That meant the government dictated the deity you have to believe in if you were born in said country. (Sorry Rick!)

    Economically, a lot of people try to get rid of the “Invisible Hand” that makes them buy Christmas, Hanukkah, or other religious things that sustain the multimillion religious business.

    Kodak failed to take analog pictures of god, while in digital pictures you can “see” god. Final score,
    Analog = 0, Digital =1. 🙂

    • Anonymous permalink
      January 24, 2012 3:57 pm

      You brought Adam (not Smith), Forbidden Fruit, God and the Garden of Eden into it. I was just trying to make some kind of sense of your remarks in the context of the thread.

      I don’t have a horse in the religion topic. I do not really care what anyone here believes so long as they do not chose to force it on me. Though i make no distinction between Christian Fundamentalists forcing their values on us through government and progressives forcing their values on us through government. Except the formal deity there is really no difference.

      Gee managed to seg that into another argument for small government.

      At the same time, I think that Israel has Armenia beat for state sponsored religion by several millennia, and honestly I think pretty much every government outside the modern era was absent any separation of church and state and virtually all had official religions that you had to accept pretty much at birth.

      But religious issues are definitely NOT the hill I want to die on.

      • valdobiade permalink
        January 24, 2012 4:18 pm

        … formal deity:

        “Oh my God, Kodak is bankrupt! What is Government doing about it?”

      • January 24, 2012 11:16 pm

        Thank God !

    • Anonymous permalink
      January 24, 2012 4:11 pm

      You are constantly referencing the “invisible hand” in contexts and ways that make no sense to me.

      The “invisible hand” is a misnomer. A better analogy would be Newton’s third law of motion.
      Except that the reaction is opposed rather than opposite, and likely larger rather than equal. Essentially when an exogenous force acts in the market (usually government – but asteroid strickes, floods, whatever will do) redistributing priorities, signals etc. The market responds usually attempting to restore the prior circumstances. The “invisible Hand” is not actually omniscient, nor are its effects inherently positive – the current economic mess is essentially the result of the markets re-action to government policies. Government artificially lowered the cost of credit, the market destroyed the value of assets to restore things.
      Just like Newtons Third Law, this is not exactly a reaction – the creation of a force vector required the simultaneous creation of the opposite.

      Regardless, I would like to know what your view of the “Invisible Hand” is as i can not find some theme in your use of the term.

      • valdobiade permalink
        January 24, 2012 4:19 pm

        I know, but I like to make fun about “Invisible Hand”. He, he, he 🙂

      • January 24, 2012 11:14 pm

        Fine, but it is more meaningful if you make sense while having fun. Otherwise it is just kind of juvenile.
        I don’t mind biting humor, but pointless is just well pointless and not especially funny.

  28. January 24, 2012 6:37 pm


    Do you really think the people running Enron deliberately created schemes they thought were going to fail ?

    It is not deceit to discover after the fact that something you did was stupid.

    It does appear to be that case that Enron executives eventually recognized they had screwed up, and then starting looking for both ways of fixing and ways of hiding that mistake and failed.

    But I have not actually heard a credible claim that Enron deliberately destroyed their own company.

    There is a fairly good case for egregious stupidity and maybe even recklessness.
    I do not consider successful criminal prosecutions the standard to measure fraud – I know of too many instances – some close enough to actually know what was going on, where people have gone to jail either for being stupid enough to stand up to government, or like Enron executives for having lost an awful lot of other peoples money entrusted to them.
    Bit I am pretty sure despite myriads of criminal prosecutions no one went to jail over Enron.

    In the US there are just under 30 million businesses. Just over 20 million of these have no employees. 20% of all employment is with firms under 20 employees. 40% is with firms under 100.

    Given the 10 million businesses with employees what percent do you think made absolutely idiotically stupid decisions last year that destroyed the business and put everyone out of work – without having engaged in anything criminal beyond stupidity ?

    I do not know what the answer is, but it must be much greater than 1. In 2001 that business was Enron. All that was unusual is that businesses the size of Enron do not usually fail that dramatically and catastrophically. It does happen, but not often.
    Large businesses are more fragile than small ones, they have far less redundnacy, but they are also usually far more risk averse. Large businesses typically fail much like Kodak – by being too conservative to see the next disruptive technology – even when they invented it.

    • January 25, 2012 12:25 pm

      Dave: I think the people running Enron deliberately created schemes they thought would successfully deceive investors, the government, the public and (maybe worst of all) their own employees. They created fictitious “shell companies” to conceal their debt. They “persuaded” their auditor, Arthur Andersen, to falsify information, which resulted in the immediate destruction of one of the world’s top accounting firms. And as I already mentioned, they forbade their own employees from bailing out of company stock as it crashed following the revelations of corporate misconduct.

      So the Enron case was clearly more egregious than mere “stupidity.” Stupidity implies a degree of innocence. So does “failure.” Enron’s top execs were far from innocent failures; they were white-collar criminals. And yes, several Enron executives did time.

      I like your final assessment of Kodak, though. Well put. They were “too conservative to see the next disruptive technology — even when they invented it.”

  29. valdobiade permalink
    January 24, 2012 8:39 pm

    Priscilla wrote: “My question would be then, how do you feel about the case of Solyndra”

    I’ve been working for Solyndra for 3 years. It is not about that Solyndra products are not working. It’s just about Chinesse being more competitive. Solar technology from the US transpired by giving Chinesse “how to” methods when we sent parts to be done in China, in this process of getting cheaper labor. Obama just tried to keep jobs in the US.

    Wow! we lost 2 billions with Solyndra.
    To fix the BP oil spill cost more than 10 billions.

    I hope we are not detered in finding energy solutions through spending in solar and wind technologies.

    Maybe analog pictures are like oil, and digital like solar… When do we see “oil companies going bankrupt, no more political tensions between the US and Arab countries”?

    • January 24, 2012 11:12 pm

      Horse and buggies work too, but we do not subsidize them.

      The holy grail of solar (or wind or …) is cost effective. If Solyandra’s solution is not cost effective – then it really is not a solution – essentially it does not work, because working means being cost effective.

      I don’t recall the US government paying for BP. But we sure know who is going to have pay for Solyandra and the half dozen other failed solar factories we got suckered into.

      Besides whose idea was it to make a not especially complex product in the most expensive manufacturing area on the planet ?

      There is a reason some jobs go to China and some don’t. Trying to do it backwards just screws things up for everybody.

      Alternative energy will likely be important. In the long run everything is solar. Of course the one thing we can do that will make sure that the long run is really really long, is have the government subsidize it.

      • valdobiade permalink
        January 25, 2012 1:45 pm

        asmith wrote: I don’t recall the US government paying for BP.

        Sure, but I remember that “I” pay more at the gas pump. If you don’t want to pay to government, then be sure that you’ll pay to the monopolistic corporations. Yes,
        they are successful in taking your money. You have to appreciate them 😉

      • January 25, 2012 2:20 pm

        Unless the gas you bought at the pump was BP and the price was far higher than from any other gas station then your argument does nto work.

        As I recall gas prices actually went down during the spill – because they were collection all this crude and they needed to get it refined and sold because they did not wish to have store either the collected crude or the refined gasoline.

        The primary losers from the oil spill were the BP stockholders – and that is perfectly appropriate, it is their responsibility to hold their boards and CEO’s accountable.

        Regardless, despite the media hype the BP spill was nearly a non event. Despite a far larger oil spill, the environmental consequences were nearly negligable. Obama went down to the gulf hoping for a photo-op with oil covering the beaches and animals, and they had to work incredibly had to find any oil on the land at all.

        There is still an enormous debate withing the scientific community which is still trying to figure out why this was so much of a non-event, and there are myriads of theories that there is still some hidden environmental damage we do not know about – but no actual evidence.

        There were too major and related factors here:
        This occured reasonably close to both resources to clean the spills and to refineries where the curde could be quickly processed.
        It occured in a very warm ocean much different from Exon Valdez.

        As to the cleanup cost, Oil Companies have been paying Billions to the federal government in fees specifically to deal with an event like this.
        We though higher gas prices paid these fees.
        When the time came that we needed the cleanup assets that these fees were supposed to provide, it turns out government had pocketed the money.

        There were minimal government resources involved in anyway in this cleanup. Most everything – including damages to those Gulf businesses that were harmed were paid by BP. This is exactly how libertarians tell you things should work – and they did. Government had little or nothing to do with this – aside from facilitating the disaster, stealing money, interfering with the cleanup, and cutting off all gulf oil.

    • Priscilla permalink
      January 25, 2012 12:04 am

      Well, yeah, valdo, the Chinese are way more competitive in solar cells, and we knew that way before Solyndra got a half billion dollars of taxpayer money. So why did the givernment invest that money, knowing full well that Solyndra could not compete (I know the answer, btw ;))

      Seriously, though, you worked there? I didn’t know you were in California – did you meet Obama when he came out to do his photo op?

      • Priscilla permalink
        January 25, 2012 12:11 am

        Oh, and valdo…you and I are the only ones who use emoticons. I won’t apologize 🙂

      • valdobiade permalink
        January 25, 2012 1:55 pm

        I live in California and I see crowded streets with cars that can use electric power when people go to work or nearby malls. On city streets you don’t get more than 30-40 miles per hour and you keep the cars idle waiting at red lights. I see a better life if at least half of the cars in the US will be electric.
        India and China are more competitive than the US in this domain, but there is no encouragement for American to buy electric…. it is sooooo Gay Communist.

        About US Presidents taking photo op, I remember Bush on a boat with a big graffiti over his head reading: “Mission Accomplished” 🙂

      • Priscilla permalink
        January 25, 2012 2:24 pm

        Yeah, that “Mission Accomplished” thing turned out to be a bad idea on an epic scale.

      • January 25, 2012 2:27 pm

        If you read the article in Atlantic I linked too, the US is the worlds 1st or second largest manufacturer – far larger than it ever was in the 50’s.

        There is even some shifting of manufacturing from China back to the US.
        We have excellent transportation, abundant, cheap and reliable, energy and other resources, and a highly skilled labor force.

        For those product where that is beneficial no nation can compete.
        At the same time there are and will remain few jobs for unskilled labor.
        So long as the minimum wage prices those on the low end out of the workforce, and out of the opportunity to get a job that might eventually lead to higher skills and pay, much low skill work will get outsourced.

        At the same time while Government job training programs have been an abysmal failure, myriads of US businesses are actively engaged in either on the job training or working with technical schools and community colleges to train people with the skills they need.

  30. January 25, 2012 2:35 pm

    I fully expect that electric cars, solar cells, and myriads of other more efficient ways of doing things are in our future.
    But we can not force them with regulations, and subsidies. They make things worse not better.

    Do you realize the federal government losses on Solyndra alone – without counting a raft of other energy boondoggles, exceed the entire Wisconsin budget cuts that have had us all watching, protests, recalls, ……

    And here we have New York preparing to demolish a convention center they have not even finished renovating at a cost of $350M, to provide space for a private developer, and build a new $4B convention center.

    Atleast it is NYC where there is some hope that a convention center will actually eventually pay itself off, as opposed to the myriads of cities accross this country that are spending a small fortune building a variety of public commercial facilities that will never pay themselves off.

  31. Kent permalink
    January 25, 2012 4:27 pm

    Rick, You replied to me this statement in the past Romney column:

    “Kent: I don’t think we have to worry about Gingrich advancing that far, unless Mitt steps in a big pile himself between now and summer.”

    Now me: I am a strategist. Like a Centrist/Moderate Karl Rove/James Carville.

    I was a former Fundamentalist, Independent Baptist kid….I can assure you that the fight will come between a Extremist side and a Moderate side of Republicanism.

    Once, and if Gingrich wins the nomination. It will be between a right extremist side and a Moderate Democrat who is influenced by the Extremist left.

    Either way, Gingrich is dooming the Moderates for Romney and causing those Moderates who want change to retreat back to Obama.

    The way I see playing out is the possibility that the Republicans hold both branches of Congress and Obama is still President for another four years.

    Regardless, I want change, but not for some moral, religious, holier than thou freaks. Give the new guy a chance, but not Gingrich. He is not a ‘balanced” man. I see corruption…Capitalist style, rather than pilfering and demonizing it.

    Grant it. A Republican win will bring a greater division to the wealth and poor and money will eventually flow again down to the bottom employee (if there is still enough bonus to go around). Employment will grow as will wealthy paychecks for those deemed worthy.

    As for Ron Paul, he is too old. He has no chance at this point. He needs to go back being a “messenger” like Herman Cain.

    Ron Paul needs to pass the reins to someone younger he can mentor. He has the young voters. He needs to find someone who can fill in and be respected by the younger generation. I am not talking about his son. I don’t want a Monarchy on this Libertarian Party. I suggest more work getting Libertarians at the bottom levels of Government and continue to get the message out. An aggressive campaign in smaller levels can make a great stride to being everywhere eventually.

    There are plenty of smart open-minded people in our country to run for office than the options we have now. Who in their right mind wants to put up with the crap of the media.

    Then I digress, there are probably a lot more stupid/naive people also who think they can do the job.

    • January 26, 2012 11:50 am

      There are two visions for our future that are competing at the moment.
      Obama’s actions represent one,
      The words of Gingrich, Romney, and even now Obama represent the other.
      Unfortunately regardless of the rhetoric, neither of these actually represents the smaller government fiscally responsible view.

      Paul represents and emerging power in the GOP, and is less about this election than the future. I suspect the next Republican Libertarian voice will be his son – who is more moderate and carries less baggage. But more importantly this is the rise to power of a new voice in the GOP at the expense of social conservatives and neo-cons.

      The Tea Party represents a slightly different emerging power. It is likely that Tea Party Fiscal Conservatives, as well as social conservatives will chose the GOP candidate.

      But they are not really happy with either choice – note the late efforts to Draft Daniels or find some other modern day Ronald Reagan.

      I have zero doubt that if the GOP had a real fiscal conservative candidate, with views on social issues strong enough not to offend the social conservatives, and weak enough not to offend the rest of us they would win in a landslide. But that candidate does not exist.

      I have no idea whether Gingrich or Romney will get the GOP nod. But both are insider politicians and fairly moderate as Republicans go. Gingrich has more baggage but has somewhat better fiscal conservative credibility.

      TNM posters may not wish to be so dismissive of the various Republican Candidates, absent economic improvement, any one of the Republican Seven Dwarves would beat Obama.

    • January 26, 2012 2:15 pm

      Kent: Looks as if I stepped in a pretty big pile with my prediction. Romney is having trouble in the South against good ole boy Gingrich, which I probably should have expected (but didn’t). I thought that after Newt’s poor showing in Iowa, he’d quickly become irrelevant. But he keeps coming back like a stubborn case of psoriasis.

      I don’t think either of the GOP front-runners can beat Obama, as vulnerable as he is — not because they can’t win moderate votes, but because they’ve both been exposed as men of devious character. Obama isn’t exactly a straight shooter himself, but at least he’s reasonably “clean” (to use Joe Biden’s term) and he doesn’t exclude anyone from his vision. I think he genuinely tries to be president of all the people — something that everyone except the Tea Partiers and libertarians seems to recognize.

      You’re right that a Gingrich nomination would throw most of the moderates into the Obama camp. If the GOP nominates Gingrich, it’ll be to make a statement of principle, much like Goldwater’s nomination in 1964 or McGovern’s in ’72. They knew they didn’t have a prayer, but they wanted to go down to defeat with someone they could believe in. I don’t even know if Gingrich would inspire that kind of passion among his base. Ron Paul would (but he has an even smaller base).

      Why don’t we get better candidates running for president? First, you have to have tons of PAC money backing you now, and good honest politicians tend not to be tight with big-money interests. Second, given the grueling campaigning, media scrutiny and mudslinging of presidential politics, who in their right mind would run for president these days? It takes a supreme egotist with a thick skin.

      • valdobiade permalink
        January 26, 2012 2:45 pm

        Oh noes!

        Nancy Pelosi prediction about Gingrich as president is nada, zip, zilch…

        “Pelosi’s spokesman Drew Hammill said Wednesday, “The ‘something’ leader Pelosi knows is that Newt Gingrich will not be president of the US. She made that clear last night”

  32. valdobiade permalink
    January 25, 2012 5:25 pm

    Well… I guess I’ll draw a “Kodak moment” conclusion here.
    I became just a ping-pong ball between asmith and Priscilla 🙂

    Everybody gets information as everybody can. We filter and ignore what we don’t like and inflate what we like. We cannot be totally impartial.

    Some people had stocks in Kodak and defended analog images even if they were not right. Maybe Kodak requested help from government because Kodak helped the Defense Department with Military Photo Equipment.

    Some had stocks in analog image tech, some have in digital image tech and I bet there were fights between its supporters. I may have stocks in solar energy, some may have stocks in oil, so there is expected fights between interests.

    You want to see Solyndra experience as being worse than two Bush wars or an ecological disaster? It’s OK, it’s your choice. Do you see the government being more dangerous than the rich keeping a middle class? It’s OK, it’s your choice. I am against wealth equal distribution, even if “equally” born, some deserve more than others even using mischievous ways… is a free market after all. Free of rules too, nobody likes regulation.

    Adam Smith predicted 200 years as the longest period of growth, followed by population stability. He was wrong of course, even if his ideas looks bright at times. They are just ideas like Marx ideas. Marx did not envision Communism, it was just that his ideas were wrong put in practice… as were Adam Smith ideas.

    But Adam Smith got an excuse, “if it doesn’t succeed, how can you expect help from an invisible hand 🙂

    • valdobiade permalink
      January 25, 2012 5:31 pm

      A small mistake here… I wrote “Do you see the government being more dangerous than the rich keeping a middle class?”

      I meant: ” Do you see the government being more dangerous that the rich getting rid of middle class?”

    • Priscilla permalink
      January 25, 2012 7:02 pm

      valdo, who said the Solyndra scandal is worse that two wars? It’s comparing apples and oranges……Let’s compare Solyndra to Kodak, or maybe to Enron or Chrysler, but not to Bush’s wars. Or Obama’s wars for that matter. Or to the killing of binLaden. Stop me here 😉

      • January 26, 2012 12:30 pm

        Why compare ? Big government fails. Both Republican Big Government, as well as that of Democrats.

      • valdobiade permalink
        January 26, 2012 1:54 pm

        well… weren’t the wars tax payer money (and lives) spent for oil (re)search?

        Sorry, I don’t buy this “spreading democracy” nonsense or let’s kill Osama bin Lade by waging two wars. There were a lot of terrorist even before Bush crusade.

    • January 26, 2012 12:21 pm

      I did not say Solyandra was worse than myriads of things that happened during the Bush Administration.

      I will be perfectly happy to attack Republican Statism and Government failure.
      If anything you are making my case – Big Government fails. It fails under Republicans. It fails under democrats. The differences in failure are not even of great consequence.

      I will be ecstatic to see a pissing contest over the failures of Republican big Government vs. Democratic big government.

      I am the advocate of small government remember.

      I also find it interesting. So many hold the markets to a standard of perfection they do not apply to government. Even accepting a (false) practically Micheal Moore view of the marketplace, government is worse by all the same measures, and government is more powerful and therefore more dangerous.

      I will credit Rick with atleast grasping there is a problem on the government side of the equation, Though he is still fixated on business, and pushing the wrong solutions.

      Obama was supposed to be the great progressive hope.He is just proof of the fallacy that big government works with the “right” leaders. Progressives are unlikely to ever get anyone better than Obama – and still failure.

      You and I are free to differ, on these and myriads of other issues.
      But neither of us are free to impose our view by force on the other.
      If somehow libertarians took over the nation, you would still be free to hold and practice your views exactly as they are today. The only thing you would lose was the right to force me or anyone else to pay for what you wanted.
      At the same time libertarian power would cost you nothing.
      Contrary to popular belief libertarians do not beleive corporations should be able to rape, pillage and burn as they please, we are all still free to use the market and the courts to punish bad behavior. What you lose it the right to spend other peoples money to accomplish your whims.

      • January 26, 2012 12:36 pm

        I did say that Solyandra was fiscally worse than the political warfare going on in Wisconsin, despite the vast disparity in media attention.

        Oh, and Wisconsin has cut 800M from its state education budget – subsidies to local school districts, and despite that, local school districts, are not laying off significant numbers of teachers, cutting their salaries. In fact they are not even reducing their benefits dramatically. The primary cost saving change is that districts are no longer obligated to buy teachers benefits packages essentially from the teachers unions. Interestingly they are still mostly doing so, but now that the union affiliated benefits providers are facing competition, their rates have dropped – by hundreds of millions of dollars across the state.

    • January 26, 2012 12:28 pm

      No one claimed Adam Smith was perfect. Neither was Harvey, Newton, Freud, Einstein, Fleming, Salk, ….
      But he was the first to put everything together (even his ideas are not original), and he described and explained the marketplace and how it works, and with few exceptions he has proven correct.

      I am not familiar with predictions of population growth – itself a tremendously complex issue – though even today as countries attain higher standards of living population growth declines.

      • valdobiade permalink
        January 26, 2012 2:02 pm

        Asmith wrote: I am not familiar with predictions of population growth – itself a tremendously complex issue

        Some believe that if the population have a moderate income it will “moderately” multiply. If the population is poor, then they will multiply like fruit flies. That’s why developed countries should help poor countries… but poor countries do not understand… it is a tremendously complex issue.

        The rich are a few and their multiplying does not impact population growth. If you’re out of the rich will, then you’re going to multiply the poor.

  33. Ian CSE permalink
    January 25, 2012 9:22 pm

    For the record I have little belief in Solar energy at present, I’ve calculated that when I replaced my old style light bulbs with the new swirly one and cut my home electric bill in half for an investment of less than $50, that was about 3 orders of magnitude, literally 500-1000 times, more cost effective than a comparable solar system with a back up generator that would run close to $50,000 dollars to cut it my cord to the electric company. It will take a LONG time to bring solar energy costs down by 500 times. Meanwhile buy swirly light bulbs. I’ve tried to interest my local environmentalists in this comparison, so far no interest! Conservation of existing energy sources is by far the best bang for the buck on energy issues.

    Solyndra was not a working business model after the Chinese govt. put huge money into developing high-grade silicon raw material sources for their own manufacturers of conventional solar cells. The price of that silicon fell to one tenth of what it was 2 years earlier when Solyndra got its loans. Those loans were certainly not based on the idea that the Chinese would do that and drive Solyndra out of business. Is that fair competition or should we erect some trade barriers to Chinese solar cells and save American jobs? To me Clinton’s decision to give most favored nation trade status to China was worse than his judgement on how to relate to cute interns by a wide margin. I suppose that from the vantage point of 100 years or so history could judge it as wise, but as of now….

    Investing substantial government money in scientific research is an excellent idea according to me. For one thing it keeps a lot of pointy headed intellectuals off the streets, eh? ( A little joke) But, let an expensive project fail (as some projects always will) and immediately many little partison peckerheads (hows that for alliteration?) swoop down and behave like the flying monkeys in The Wizard of Oz over the corpse of a once noble idea. My sympathy is NOT with the flying partisan monkees,

    In comparison to the trillion dollar level of mistakes by Brilliant free market idiots like Larry Summers, who could not foresee what would happen to complex mortgage derivatives when the housing bubble burst, I would say the Solyndra 500 million “scandal” merits an enormous yawn. You’d have to multiply that figure by ten to reach the 5 BILLION that one of the big Investment banks paid its executives in bonuses for their excellent work using our tax money after they had blown up the world economy.

    • January 26, 2012 5:01 pm

      Presuming that the Chinese government is actually subsidising Chinese manufacturing.
      First how is that different from the US government subsidising Solyandra ?
      China’s whole economy is 1/6th the size of ours, do you really beleive that organised efforts on the part of the Chinese to subsidise their businesses aren’t roughly on parity with our ad hoc politically driven efforts ?
      Further even accepting that somehow there is a real disparity, the net effect is the Chinese are subsidising us. They are effectively transferring an enormous amount of wealth to the people of the United States.

      Again even presuming all this “unfair” trade practices, Wages in China are increasing and other factors currently have Manufacturing returning to the US.

      Most of the Trade Fallacies both parties parrot were refuted by ,,, Adam Smith 200 years ago, Any that remained were dispatched by Basiat and other early Classical liberals. Most of this is basic economics, not particularly libertarian.Merchantilism died over 200 years ago. Get over it. It did not work then, it does not work now.

      The nature of trade is such that a nation trying to game the system reaps more harm than benefit.

      Absolutely the Chinese can buy jobs – but it is unbelievably expensive, and only works for a very short time.

      We lived through all these idiotic fallacies in the 70’s and 80’s only the boggy man of that era was Japan – so how well did that work out for them ?

      I agree that Clinton should not have given MFN trade status to China. He should have given it to everyone. There is absolutely no sane reason for trade barriers they are luddite efforts. At best they slow the inevitable, regardless they do more harm than good.

      I will agree that Larry Summers is an idiot – but if you think he is a free marketer you are nuts.

      Well atleast you have grasped that the burst of the housing bubble is the root cause of this. Extremely complex derivitives were at the root of Enron’s failure (as well as Orange County several years ago). Mortgage Backed Securities are neither complex nor derivitives. Collaterized Debt Obligations are insurance – not derivatives. Neither are particularly complex. The only thing that banks and Wall Street could have done about this mess would have been raise the alarm earlier, or quit writing any mortgages. Lenders were legally obligated to write bad mortgages if they wrote any mortgages.

      Solyandra is not the only government financed Green Energy project that has failed. Most have failed – not just accross the US but accross the world. Nor is Solyandra the only recent one with all kinds of political entanglements. It is just the biggest, and the one the President invested so much political capitol in. Nor is Solyandra 500m it is probably closer to 1B alone by the time you are done, including all factors – including 150m in tax credits to Solyandra creditors.

      Wall Street Bonuses in 2009 were just under $20B – but that was on $55B of net income. The fact that everything entangled with mortgages lost money does nto mean everything on Wall Street failed.

      Regardless – one government failure does not justify another.
      The government should stay out of investing in anything – it is abysmally bad at it.
      And it should not be bailing people out either.

      Do you really beleive all the smart people will become unemployed if government does not fund all this crap ?

      Despite high unemployment, professions such as engineering have shortages.

  34. Priscilla permalink
    January 25, 2012 11:02 pm

    Not surprising that you would defend the stimulus millions that went to Solyndra, Ian. But, I wonder…how do you justify this as “scientific research”? Solyndra was a manufacturing corporation,not a research project, built on an unsustainable business plan that was pointed out as such to the Energy Dept. by at least two separate outside auditing agencies.

    Solyndra was a banruptcy waiting to happen, and everyone knew it, including the administration…not only was the price of silicon already crashing when the company got it’s loan, but it was well documented in many emails that Solyndra’s manufacturing process was far too expensive to be profitable.

    But, whatever, right? It’s only money……

    • Priscilla permalink
      January 25, 2012 11:03 pm

      its not it’s… of my pet peeves, and I did it myself. Ugh.

      • Priscilla permalink
        January 25, 2012 11:18 pm

        Oh, and lots of straw men going on in your comment. DId I say say that the investment bank executive bonuses were a good idea? You need to control that tendency of yours…….

    • Ian CSE permalink
      January 26, 2012 12:03 pm

      This is a segment of a Scientific American piece on Solyndra that quotes a Bloomberg article as well. I found it by following references yesterday from the Wiki Solyndra article. They refer to research grants to Solyndra. I do not have the interest in this to justify making a Ph.D level study of it, your point may have merit from a certain angle but others more informed than myself have discussed it in terms of research grants.

      “The Solyndra bankruptcy is being called “the first serious financial scandal of the Obama Administration” and it might bring into focus some fundamental problems in the nation’s energy investment structure. Today, the U.S. government underwrites about $2.5 billion each year in fundamental energy research – or about $1.1 billion less than it did in 1980. This type of funding is designed to support research on technologies that could become future breakthroughs, if the theory behind them pans out (and the execution is solid). Compare this to the $30 billion that the Department of Energy has committed in the form of low-interest loan guarantees to support the construction of alternative-energy projects – which is where Solyndra’s funding came from – and a potential problem in the federal funding structure appears. Specifically, do these funding levels reach the right balance?

      Under the Energy Policy Act of 2005, the Department of Energy administers a loan guarantee program to provide Federal support to “spur commercial investments in clean energy policies that use innovative technologies.” The American Recovery and Reinvestment Act of 2009 (ARRA) expanded this by including language to support loan guarantees for “renewable energy systems, electric transmission systems and leading edge biofuels projects.” It was under this act that Solyndra was awarded $535 million in federal loan guarantees on September 16, 2009 (of which about $520 million was issued) in addition to the $200,880 in federal grant money that the company had been awarded in June 2009.

      The Solyndra bankruptcy announcement, less than 2 years after it was awarded hundreds of millions of dollars through the federal loan guarantee program, has already led some Congressmen to argue for a reduction in funding for this U.S. Department of Energy program. But, perhaps there is a more fundamental issue at play here – specifically, the optimal role of the federal government in financially supporting the energy industry. According to the editors at Bloomberg News stated on Thursday:

      “The government’s rightful role in this competition is at the beginning — and the end. We favor government support for research labs that can put hundreds, even thousands, of interesting ideas in play. Trying to pick winners in the midst of the action is ill-advised. The government can accomplish more, with less risk, by simply becoming a big, reliable customer for solar, wind and geothermal power.

      A well-conceived alternative energy program could save the U.S. many hundreds of billions in the years ahead. If the Solyndra debacle gets U.S. policy pointed in the right direction, the loan-guarantee losses won’t have been totally in vain.”

      • Ian CSE permalink
        January 26, 2012 12:25 pm

        Hmmm, a more carefull reading says that I misread this, they were nat research grants. One point for you, Priscilla.

        Its still very easy to attack things in retrospect, by your account they would have understood it would fail and done it deliberately anyhow. I am a cynic, but it does not go that deep; they expected heroic success and American jobs, thats why they spent the money, not some kind of diablical plot to get a rather small campaign contribution if that is what your are getting at.

      • January 26, 2012 5:07 pm


        Even in the best light this is a pretty bad argument.
        Government is making tens of billions of dollars of investing in green energy either as loans or as research each year, year after year some of it for more than 3 decades – and still we have little to show for it.

        We that is except for the political friends of whichever party is in control at the time getting rich.

    • valdobiade permalink
      January 26, 2012 2:19 pm

      Why do I have this feeling that attacks on Obama’s Solyndra is the same as “birthers” attack on Obama’s birth certificate?

      • January 26, 2012 3:35 pm

        You have a point, Valdo. While the Solyndra controversy is at least based in reality (unlike Birthermania), it seems to be one of those minor mistakes that Obamaphobes will try to magnify for political gain.

      • Priscilla permalink
        January 26, 2012 3:52 pm

        Ok, so this goes back to my original question. How is Enron “evil”, but Solyndra “a minor mistake”? And, yes, this is an essay question, gentlemen.

        (And point to you,Ian, for acknowledging your minor mistake)

  35. Ian CSE permalink
    January 26, 2012 11:53 am

    Not everything is Strawman, other logical errors and fualty arguments exist! I did not say anything about you and bank bonuses I just went on my usual stream of consiousness ramble about my feeling on the Solyndra scandal. Its not a strawman argument at all its just context and perspective.

    Nixon, Reagan, and Clinton all had scandal racked 8 years terms, and all of them will be judged mostly as successful presidents. W Bush, was actually a fairly ethical president, other than lying about the cost of the Iraq war and committing the US to torture of enemy combatants (no matter how strongly I may feel they deserved it and more) and of course he is judged as a failure. This is my attempt at putting the rather tiny Solyndra “scandal” into perspective.

    History may judge Obama as a failure, but I doubt because of scandal.

    • Priscilla permalink
      January 26, 2012 3:56 pm

      Ok, fair enough, but my original point was to ask why you and Rick (or maybe it’s just Rick) consider shady business investments to be “evil” when done by businessmen and investors, but “mistakes” when done by government agencies and presidential advisors?

      • valdobiade permalink
        January 26, 2012 6:43 pm


        I guess that all business investments, be it private or public (with tax payer money), have chances to fail. Some of them succeeds some of them not, but we always judge the investments from its “fruits”.

        Was Solyndra the only Obama’s investment in energy with tax payers money? I don’t know, all I know is that Solyndra is signaled out as a failure against Obama.

        Were the war in Iraq started by Bush W. the only investment in energy with tax payer money? I don’t know, all I know is that tax payers lost a lot more money in the Bush W venture to consolidate corporate oil profits from Iraq. I think that tax payers money are subsiding the war. This is puzzling me: why trillions invested and lost in wars are not considered failures against the Presidents who approved the wars? Since WWII I’ve never heard about US victories… only Obama kiling Osama bin Laden and the recent SEAL rescue in Somalia.

        In both cases of Solyndra and Iraq, everything could be blamed on wrong analysis given by advisers. What I think is evil about the investment in Iraq is that it was done under the “spread democracy” facade.

        Enron was evil because they knew that that their investment were made without producing anything useful. Solyndra at least created jobs and company assets can be sold and recuperate some loss.

      • Pat Riot permalink
        January 26, 2012 6:54 pm

        I used the word “evil” a ways back, and was hesitant to do so because of the religious/supernatural connotations of the word.

        I believe we are talking about “wrongdoing,” be it criminal or immoral or both, such as knowingly cheating people out of millions of dollars, and I think the magnitude or scale of the wrongdoing matters greatly, including how many people were adversely affected and how much damage was done.

        And it also matters how aware the perpetrators were as to what they were doing. As Asmith correctly pointed out, many business failures are errors, mistakes, and stupidity, but without reason for prosecution. Same for many ineffective and costly government programs—errors, mistakes, and stupidity. Failures by error and miscalculation and lack of foresight are a different animal than situations where devious people siphon of millions under false pretenses—that’s “evil,” business or government, depending on the situation.

        I think any rational Moderate knows there are evil deeds being done by some people in government and some people in business.
        Some people will say “how do you know what’s wrong” or “where do you draw the line,” etc, and sure there’s some gray areas, but then there’s also the blatant selfish cheating, small scale and large scale. If I give three or nine examples of blatant cheating/wrongdoing my post will be too long.

      • January 27, 2012 10:16 am

        Priscilla: OK, I did a little more reading on the Solyndra story, because I hadn’t followed it closely as it broke. Originally I thought it was just a case of good-faith investing with public money in what turned out to be a badly managed company. I didn’t realize that Solyndra had such a tight relationship (including donations) with Obama. Yes, this is typical crony capitalism on a sizable scale, and I won’t defend it.

        Would I rate the Solyndra affair as an example of “evil” ranking up there with Enron? Ehh, it’s still a second-rate scandal; I think the intentions were good (support a promising clean energy enterprise), even if the means were corrupt and the results speak for themselves. It’s Ursa Minor compared to Enron’s Ursa Major.

      • January 27, 2012 10:41 am

        Fine Solyandra alone is not on the scale of Enron – but Solyndra is not alone. There is Ener1 at $118M Beacon Power at 43M.
        That is just the results of a quick check. There are several more that are financially questionable – in fact I am not sure that any, certainly not many of the recipients of federal energy loan guarantees are financially solid.

        I am certain that if you work hard enough you can find a successful example of government funding or guaranteeing some type of business that is not clearly a political payoff, and has proven over the long run to be successful.
        But that is pretty much the point – you have to look really hard to find one.

        Losses from Solyndra may not be on the scale of enron – though they are at the bottom end of the same magnitude, But they are larger than the entire cost of Obama’s presidential campaign. You are fixated on the pitance of money involved in political campaigns. The entirety of US annual spending on political campaigns is less than the US spending on Potato Chips. Which falls squarely between Solyandra and Enron.

    • January 26, 2012 5:19 pm

      My point is not about scandal, it is about the stupidity of government investment.
      It is stupid whether done by Clinton, or Bush, or Nixon or Obama.

      Though there are Obama chronies that profited from this and Obama deserves more bad press than he is getting – particularly as this was supposed to be government 2.0 open, transparent, ….

      I have zero problem with any claim that nothing here is new – in fact that is my point.
      There was actually plenty of similar schemes in the Bush administration – the primary difference is not that Bush did not find ways to feed chronies from the government coffers, but that Obama actually managed to fail at it.

      I am sure that somewhere in the Nixon saga there is government money going to political chronies, but the nixon “scandal” was criminal abuse of power, Clinton’s “scandal” was irresponsible sexual behavior. I suspect history may prove kind to Clinton given the poor quality of his successors, and history will give Nixon credit for many things he did accomplish, but ignoring watergate on one hand and foreign affairs on the other, he was still an abysmal president.

  36. Priscilla permalink
    January 26, 2012 6:27 pm

    Ok, so my use of the word “scandal” has become a distraction. Fine. Solyndra is not a scandal, it is an example of the cronyism that I find far more “evil” than the robber baron stuff that seems to get the 99% so exercised. Because, ultimately, while all dishonesty and theft and corruption is evil, crony capitalists steal with impunity – the foxes are guarding the henhouse. So guys like George Kaiser, the billionaire who owns Solyndra, gets free-for-nothin’ loans from the taxpayers, with no due diligence beforehand, because he’s a major fundraiser for the president. Putting aside the whole issue of why a government guarantee should be given to a business that is almost sure to fail, how about the issue of job creation, which is supposedly the whole reason why the money was invested in the first place? I doubt that even the most ardent Keynesian believes that doomed businesses are the vehicles for economic recovery.

    Kenneth Lay may have been a corrupt businessman, but, if he hadn’t died, he would have gone to prison (yes, I’ve heard the conspiracy theories, but I’m gonna go with him being dead). With Enron, you’ve got government prosecuting bad businessmen. With Solyndra, you have government as bad businessmen.

  37. January 26, 2012 6:28 pm

    Why does government failure keep getting a pass here, while business failure is always the result of criminal greed ?

    Solyndra is not the poster child for government corruption – nor is it the most egregious example of government waste and ineptitude – just the most glaring at the moment.

    My argument is not that Government should not invest in green energy – but that it should not invest in anything. My argument is not that Obama is more wasteful that Bush or …
    I strongly suspect he is, but I am sure the next Republican will manage to top him.

    Costly mistakes are going to be made in investing. If something is actually a good investment private money will line up around the block. There is no project too large for private funding – and Solyndra certainly was not.
    Businesses like Kodak and Enron fail. Eventually every business will fail. that is just how it is.

    At the very least can we hold government and private enterprise to the same standards. If we are going to presume criminal culpability with every business failure – why shouldn’t we presume the same with respect to government.

    Truthfully the incentives are actually the opposite. Despite myriads of laws and regulations, there is little a business can do that is both illegal and good business, but there are myriads of opportunities for corruption in government, a low probabaility of being caught and prosecuted, and all too often government failure draws even more government money.

    We should be starting with the presumption that mistakes in business are just that – the incentives are just not there for anything else. But we should always be looking for malfeasance when something goes wrong with government – because the incentives as all over the place.

    That does not make every business failure innocent or every government failure a crime, but we should atleast start our assumptions based on real probabilities.

    Further, government corruption (or even just simple mistakes) are far more dangerous.
    What is the greatest harm a corrupt business is likely to do as compared to the harm corrupt government can cause easily ?

    If you invested in Enron, or Kodak, you have every reason to be upset, but every single one of us suffers from Solyndra’s failure. Kodak and Enron investors atleast had choices as to where they were investing their money.

    • Ian CSE permalink
      January 27, 2012 11:19 am

      I hope this goes in the correct place reply to ASmith of 6:28.

      Government failure is getting a “pass” from most of us because you have made such a bad case that government regulation is always useless. Dozens, perhaps hundreds of solid counterexamples have been given to you but you have lacked the intellectual *openness* (I removed a different word and tried to find a nicer-sounding replacement) to recognize any of those acts of government as being a net success. So, you have made the failures of government your own endless repetitive monopoly and failed pretty badly in proving your impossibly absolute case, as well as failing to notice how badly that case is being received. Your particular dog won’t hunt in the form you have cast it.

      Few, if any of us, have any more enthusiasm for considering your basic premise, the fundamental uselessness of government action on the economy or regulation. Its just a case of bad psychology and a faulty philosophy triumphing over excellent writing skills.

      • January 27, 2012 10:57 pm

        Government was getting a pass from all of you before I started on this blog.
        Not only do I not recall a good counter example. I recall very few counter examples being offered at all.

        I am sorry if when you offer vague and unsupported claims, that I do not roll over and agree. I can not and have no right to force you to agree with me, not even if I could prove something with certainty, but you have no right to my agreement or even a right to expect me to back down absent atleast a credible statement of your position.

        I think it is pretty clear exactly where I fall on most every issue here.
        You are certain I am wrong and you are right – but in truth you have not really taken much of a clear position.

        You are not obligated to, but don’t pretend I am being difficult when you so rarely are willing to stake a clear position.

        My supposedly bad psychology and philosophy may not be shared by a majority of people today, but it is closer to that of this nations founders, as well as myriads of other well respected thinkers.
        Again you do not have to accept it but pretending it can be dismissed off hand or has been refuted is pretty unimpressive.

        And frankly my writing here is pretty rough. I do not put nearly the effort I do for published efforts or work. The philosophy and ideology on the other hand is quite sound.

        I am looking for an argument from you. You too are obviously a smart person. Too smart for such great faith in government – despite overwhelming evidence to the contrary, and too smart for such little faith in people – despite overwhelming evidence to the contrary.

  38. Pat Riot permalink
    January 26, 2012 7:48 pm

    Note: outline below includes 2 references to Kodak:

    Some businesses succeed because… Kodak, they bring something to market that people want to buy.
    2.of subterfuge, trickery, lying, cheating, government subsidies, cronyism, etc.
    3.some combination of 1 and 2.

    Some businesses fail because of…
    4.mistakes, honest mistakes, bone-headed mistakes, selfish mistakes, understandable mistakes. (Kodak?) or more people cheating, embezzling, committing fraud, or some other illegal or immoral behaviors. (Enron)
    6.some combination of 4 and 5 above.

    Some Government programs and ventures fail because of
    7.miscommunication, misunderstanding, nobody really being in charge of multiple partners, mistakes, lack of foresight, stupidity, misplaced ideology,
    8.individuals lying, cheating, stealing, misrepresenting, and/or being greedy to a criminal and or immoral degree.
    9.Some combination of above

    Some government programs and ventures succeed because problems are corrected thanks to…
    10. tax dollars
    11. public and private dollars/public-private partnerships
    12. dedicated people
    13. Good data and foresight
    14. Some combination of above

    • January 26, 2012 11:53 pm

      A fundamental difference between government and business is that businesses regardless of reason can fail. Government can not be allowed to fail – another reason the scope of government should not be overly broad.

      The only thing worse than a public-private partnership is government trying to perform a task that the private sector can handle on its own. Regardless public-private partnerships are an invitation to corruption mis-management, …

      Why aren’t 12, 13, and 14 reasons private ventures can succeed ?

      In theory there is no reason government can not succeed at most anything that it does.
      In practice the information, the incentives and the people are all wrong from the beginning.

      Business requires risk, governments are and should be risk averse.
      Business must respond to changes in circumstances and information.
      We actually do not want government to be exercising judgement and discretion.
      We want government to conform to uniform, unchanging rules in everything that it does.
      That is the only way of assuring that “fairness” that everyone here is so fond of. More importantly, When we say “equality before the law” we really mean equality with respect to government (again the scope of government should be narrow, the law and defence). Equality with respect to government means rigid unchanging rules. This is precisely what you do not want in business.
      Businesses respond as information changes – government does nto even bother to figure out that circumstances have changed.

      I can go on and on. But government and business are fundamentally different, they have different objectives, different powers, and different ways of operating.

      We do not want business to have the power of government – even by proxy, and we do not want government to function like business. Business corruption is a minor and often self correcting problem – except when it interferes with the business, and then it gets fixed. Corruption is possibly the most dangerous problem government can have. We do nto want government engaged in activities that needlessly increase the opportunities for corruption.

      As I have mentioned repeatedly the fundamental difference between government and every other voluntary organisation is the right to use force.

      Any problem that really and truly requires that force requires government. Any problem that does not should be outside the purview of government.

      When you are considering whether government should do something, the first question should be does this task require force ? If not then leave it to other organisations.

      The use of tax dollars is not an asset, but a liability. There is always private capital available for tasks where that make economic sense. If you doubt that drop a couple of your most cherished regulations and see how fast capital moves to take advantage.

      The fraud, lying, cheating and stealing in Enron did not actually begin until after Enron was already deep in trouble – this is fairly normal for most of the evil done by failing businesses. People are far more likely to lie, cheat and steal to avoid failing (or blame) than to succeed. Enron’s fundamental mistake was a poorly understood financial scheme that amplified both the upside and the downside – and they found themselves on the downside. Bad decision – with full hindsight certainly. But every allegation of malfeasance is for behaviour that occurred after that. Mostly for lying about being in trouble when they knew they were in trouble.

  39. Pat Riot permalink
    January 26, 2012 7:55 pm

    My point above is that there are devious people in business and government, as well as wonderful people in business and government. That’s not naive or soft.

    Is anyone out here really saying that all good is in one sector and all bad in another sector? If so I won’t debate here. I’ll either go to Wild Card sectioni or just let it go…

    • valdobiade permalink
      January 26, 2012 8:53 pm

      What you wrote sums up nicely everything about investments, be it private or governmental.
      What is missing is the business persuasion, like if you want to sell me a jacket and in the end I will sell you my dog 🙂

      • January 26, 2012 11:57 pm

        We are all being forced to buy a dog called APACA that some of us do not want.

        And you do not think government engages in persuasion ? And often when that fails, they just shift to force.

        I pay taxes, therefore I am buying whatever government decides I am buying whether I want to or not.

        Your analogy disproves your own point.

    • Priscilla permalink
      January 27, 2012 12:13 am

      Eh, Pat, I don’t agree with you. Government has a responsibility not to be involved in funneling tax dollars into business ventures.

      I will agree with Ian (a rare enough occurence) that government investment in certain types of research…military, medical, energy, is a good idea. The private sector is not likely to take the financial risks necessary to fund certain types of projects which could yield huge benefit to all of us.

      But criminality by those who have taken an oath to protect the public trust and who are largely immune from prosecution is different. You generally make a lot of sense, but I respectfully disagree with you on this. Kodak.

      • January 27, 2012 10:55 am

        We are getting close to some agreement.
        Oddly I have heard the argument that the investment in Solyndra was driven by DoD. For a variety of reasons technical and otherwise the Military has need of the specific type of Solar Cells that Solyndra produces.
        Though I still do not see that as a special justification for DOE financial guarantees. If DoD needs a particular type of Solar Cells it should contract for them, determine if they are worth the likely high price for their specialised needs and order them if necessary.

        The vast majority of government investment failures are not provably criminal. I have no problem beleiving that although each administration endeavors to use government investment to reward its supporters, these are not primarily or solely politicial payoffs. I think Obama and DOE absolutely wanted and beleived Solyndra would succeed. Does anyone doubt that Pres. Obama wanted to invest very heavily in Green Energy ?
        That he wanted positive outcomes to celebrate in 2012 ? Rewarding political contrinutors is just a plus.

        I have problems with the political chronyism. But the root problem is that if an investment can not attract private capitol on its own, the odds of success are already poor.

        I am hard pressed to think of any investment than really ought to be done, but that will not be done without government funding. Solyndra as a military contractor might actually be an example – but we do not have enough information on the actual military value of their product.

        Violation of public trust need not be criminal. Admittedly those are more egregious. But honestly wasting our money is a violation of public trust.

    • January 27, 2012 10:17 am

      While I would argue that different types of people are attracted to government service than are attracted to business – and that that is as it should be, I will not disagree with you that the overwhelming majority of people involved in either are good.
      Absent malfeasance they are also often wrong. When people in business are wrong, they either learn or fail. The structure, organization, and incentives in government are such that People in government almost never even recognise they are wrong.

  40. Pat Riot permalink
    January 27, 2012 8:26 am

    Priscilla, I’m not sure, Kodak, what you’re disagreeing with.

    Are you disagreeing with the possibility in which government succeeds in a public-private partnership because you believe government shoiuldn’t be entangled with business except in certain types of research (or a public bridge or roadway perhaps), or…

    disagreeing about people in government positions being immune from prosecution (like, say, with the Solyndra debacle) ? Or both?

    I certainly think “blatant wrongdoing” (criminality) should be punished whether it’s in government or business . Sometimes it’s difficult to prove, sometimes not so difficult to prove, but certainly can be a big difference between criminality and bad business choices or bad government choices.

    As far as public-private partnerships, I think they’re greatly misunderstood. There’s almost always private businesses involved and gaining directly or indirectly with all public/government endeavors, including research and public projects.

    • January 27, 2012 11:10 am


      Public-Private partnerships are frequently better ways to accomplish something than govenment doing the same task directly.

      Obama is painfully discovering that. Bush famously pushed public-private partnerships to essentially privatize large portions of the tasks of the US military to make Iraq and Afghanistan possible and more affordable.

      Democrats legitimatley criticised these as being incredibly chronyistic and corrupt, and wastefull – all true. One campaign promise that Pres. Obama made that he actually attempted to live up to was to bring these tasks back under the military. Despite all the problems the Bush military privatization had, the transfer of those tasks to the military is proving to be far more expensive and wasteful.

      And that is I think the best you can expect from a public-private partnership.

      We see these all arround – even locally. What small city does not have some public-private effort to build a convention center ? Despite the abysmal record of cost and failure.
      Locally the city of Harrisburg is essentially bankrupt from loan guarantees for a waste incinerator. Myriads of larger (and smaller) cities are funding increasingly expensive sports stadioums that rarely if ever pay themselves off.

      The infamous Kelo decision was driven by a Public-private partnership – as has virtually every bad supreme court takings case since the revolution – the houses have been bulldozed, the neighborhood destroyed – and pfizer is gone.

      Public-private always means, government takes all the risk, pays most of the money, and private makes all the money. The best of these projects prove economically viable assuming a 30+ year payback that any private investor would run from. Industry typically needs 2-3 year paybacks, and longer term investments are considered bad with anything greater than a 7 year payback.

  41. Pat Riot permalink
    January 27, 2012 8:30 am

    And my position, from experience on the inside with public-private and public-private-education projects and ventures, is that they can make great common sense and be tremendous, wise stewardship of money and resources, and succeed, and I can give examples, or they can be a mess and a waste of time and money, and both of those possibilities are on the side without criminality, i.e. stealing money or duping the participants or public, etc.

    • January 27, 2012 11:13 am

      Public-private is often the best available choice in education – BECAUSE it is so politically hard to do anything with education otherwise. Essentially the pure public education system in the US has failed. We are not politically prepared to return to a pure private system, so our best hope for anything in education is public-private.

      But I do not see not as bad as a pure public system as a great selling point.

  42. Pat Riot permalink
    January 27, 2012 8:36 am

    public-private is not black-and-white good or bad. It depends how it’s set-up, depends on the details. Sometimes it’s a win-win-win for everyone involved, and ethical with full transparency, and sometimes there is some cronyism involved, like with business–first come; first served, dog eat dog.

  43. Ian CSE permalink
    January 27, 2012 9:30 am

    God help me, I feel thousands, maybe tens of thousands of words coming on, and I don’t have time for it now, deadlines!

    Can I be concise? What is evil? We have to define that. Kodak certainly was not evil, lets settle that. Evil among social animals (who are the only being for whom the concept can exist I guess) is the idea that one person has no scruples about how much harm they do to other people to get something, generally money power, sex.

    I read another of those endless cases of Vermont embezzling last week, this one was sadder than most. Another mousy middle aged women embezzled money from her boss, the wrinkle was they were very good friends and went on joint vacations together with their spouses, saw each other socially many times per month, and the embezzling doubled it rates while her good friend was diagnosed with cancer and fighting for her life and therefore not looking at the books. Was she evil, or just sick, money sick? Money is a sickness, and its not just CEOs, bankers and politicians, its accountants, ministers, etc.

    Unfortunately money makes too many people behave like the people in Peter Sellers movie, the magic christian. Or, to pick a Russian example, Master and Margarita. Even if just say, 1% of the population is able to rationalize even the most vile actions to get more and more money, that is enough to flavor our society in a bad way.

    • January 27, 2012 11:24 am


      Kodak was a major polluter, if we were back in the film era, most here would not be waxing nostalgic.

      You example of criminality – whether evil or not, is only an example of business criminality in the sense that a Business owned by a person was ripped off.

      If you wish to try to make this somehow about “evil” then you need real examples of private corporate evil absent government entanglements. These do actually exist, but they are incredibly rare. Enron and MCI/Worldcom are the typical examples of incometence and coverup. They are not examples of theft, maligancy, or evil. The “evil” is that alot of people lost money – just as they did with Kodak.

      • Ian CSE permalink
        January 27, 2012 11:45 am

        The heads of corporations are just as tempted to commit deliberate acts of theft as mousy middle aged lady accountants who embezzle usually a good fraction of a million dollars. The head of the corporation that expanded Vermont’s larges hospital went to jail for 2-3 years for a grandiose set of deliberate bookkeeping frauds, as did Milo Pike, the President (I think owner as well) of Pike industries also went to prison for a year or so for fixing bids. He got out, he is back in business and bidding and receiving state paving contracts Then there is Bernie Madoff! What you call covering up incompetence most people would recognize as cheating, lying and swindling. You have a bleeding heart not the liberal type for the poor and powerless, but for some weird reason, for the rich and powerful. Its quite perverse!

        I have no idea of what you mean by “absent government entanglements.” I think that is all but impossible, everything in business is regulated and thank god for it.

        I’ll grant you that the CEOs of really large public companies have a much higher level of oversight than smaller fry, but you will not convince me that such highly driven and egotistical people are immune to the same tendencies that drive accountants-embezzlers or that they have the power to make things work out especially well for them at the expense of others, whether legally or illegally.

  44. Ian CSE permalink
    January 27, 2012 10:57 am

    Then there is the evil that results not from hunger for Sex, Power, or Money but from hate. Racism, class hatred (not tension or dislike, but burning class hatred and absolute contempt), ideological hatred, ultranationalism, and religious fanaticism are the largest examples. These are the forms of evil practiced not by bankers and accountants but by dictators, ideologues, and theocratic maniacs.

    Finally, evil can be mental Illness Jared Laugher (sic), the guy in Milwaukee with all the disembodied children in his fridge, etc.

    The last kind is random, will never be eliminated, and is impossible to protect yourself from and therefore we can dismiss it from our dissection of evil in society, which should be somehow things we can prevent if only we are smart enough. As well, it seems that no one could really prevent the Kodak tragedy.

    The evil of hatred we’d like to believe can be fought by education and by laws against hate crimes and could diminish in the world, or at least in our own society, over time.

    That leaves the evil that comes from uncontrolled appetites as the big puzzle. We need people to be hungry and strive, but there should be a boundary to what one will do to get Power, Sex or Money. We would (yeah, I know, Libertarians aside in many cases) like to legislate where the grey area of too much hunger and not enough ethics or concern for destruction of others lives ends and criminality begins to keep our politicians, industrialists, bankers, religious figures, and accountants, not to mention celebrities, jocks and musicians and from overstepping other people’s rights due to the different types of power they have accumulated.

    I think its clear that I am NOT prejudiced between the evils of business and industry and the evils of politics and government. They have different and yet similar flavors and the same psychological roots: ego to the point of megalomania, insatiable greed for something, lack of concern for other people, obliviousness to normal boundaries. This describes Jim Bakker, Arnall, O.J. Simpson, and Blagoyovich, Bill Clinton, and Richard Nixon. These were all intelligent, hardworking, super-achieving people, but they all crossed the line and became sociopaths of varying types and degrees.

    I’m NOT a libertarian, we need more laws and stiffer penalties. A person who commits a financial crime that nets hundreds of thousands or millions, or billions of dollars should be punished in proportion to the size of the sum of money they acquired. Someone who holds up a bank with a toy pistol and gets $1000 should not get a larger sentence than someone who embezzles half a million from their dying friend or the local power company. Someone whose financial misbehavior was so extreme that it was worth fines of $350,000,000 should be sharing a cell for the rest of their life with Bernie Madoff (and the cell should be no nicer than the one the toy pistol bank robbers occupy), not living the life of a connected political buddy and ambassador to the Netherlands. This is just common sense, otherwise these crimes seem to offer a very high potential profit/penalty ratio.

    • January 27, 2012 11:42 am

      Now you are dancing on my buttons.

      Hate is certainly evil. But it is also the perfect example of what should not be a crime. We can not control peoples thoughts and we should not control their speech.

      We should not try to legislate our perception of morality. There is someone else that thinks your morality is evil. There are no objective measures of morality. But there are evils we do have objective measures of. We can objective address harm to others. When you deliberately harm someone else absent self defense or defense of others – that is evil, it is also something we can address with government. In fact it is the undisputed purpose of government.

      Hate is a motive, not a crime. We sometimes punish people more severely because of the heinous nature of their motives. But motive is an element in a crime, not a crime in and of itself.

      Much of the rest of your remarks appear to me to have no theme. Essentially claiming a grey area and no ability to plumb it.

      It is occasionally difficult in complex circumstances – such as pollution, to measure the exact extent of real harm to others. If poor ability to measure represents a grey area so be it. Occasionally we have harms that happen without intent, and without recklessness. Many behaviours that were acceptable and not known harmful a century ago are recognised as such today. We tend not to criminalise harm absent intent or recklessness.

      But the standard for role for government is or is supposed to be protection from harm.

      When you try to turn that on its end and impose your standards, your moral judgement of what is evil and what is not. When you make it about appetite, predilection, thought, or words, rather than acts – then you are no different from religious fundamentalists – Christian, Muslim, whatever seeking a theocracy. There is no pass for progressive fundimentalists whose god is the state, and whose religion the tyranny of the majority.

      • Ian CSE permalink
        January 27, 2012 11:53 am

        You are an interesting fellow. But you have an argument that you will never win with the most basic foundations of both human civilization and morality. Of course! people define and legislate right and wrong, from the most primitive societies to the most complex. You think you can stop that?

        Of course I step on your buttons; the existence of civilization steps on them by its very existence.

        To go back to pithy Monty Python phrases, this is “symbolic of your struggle with reality!”

        Now, I have got to get onto my work. I pass the torch on to the next sufferer.

      • Ian CSE permalink
        January 27, 2012 11:58 am

        But I will add as my parting shot that you have completely misinterpreted nearly every point I made! I di dnot say almost anything you think I did.

        Its an interesting but really strange brain you have Dhlii!

      • January 27, 2012 1:27 pm


        I do not think I have mis-interpretting anything you have written. Even your responses make that clear.

        You beleive that all human society even from the earliest is essentially democracy. That regardless of form, people serve government not the other way around. That right, wrong, good, evil, law, whatever are whatever government decides they are – though you would clearly prefer that were democratic government.

        It is those views that make you liberal, not libertarian, not conservative, and not moderate.

        You are absolutely correct that men have formed societies, even governments even from primitive times.

        At the same time, though the governments were not mostly democratic – until recently, there have been principles – mostly my principles underlying all that law – since primitive times. Look up what a tort is.

        Human history serves my arguments weakly – though yours not at all.
        For most of human history, the law was whatever the ruler said it was.

        Your entire diatribe on evil is completely meaningless if there are no principles beyond whatever government decides.

        You do not even bother with a utilitarian argument. In the scheme you offer we are free to legislate murder moral and charity evil on our own whim.

        I do not actually beleive that you really beleive the things you argue.
        Actually I think it is pretty obvious you don’t.
        You see the role of government as rooting out evil, but you have presumed a definition, and not one based on societal convention.

        You do not have to share my principles, but I do not really beleive you have none.

      • Ian CSE permalink
        January 27, 2012 1:34 pm

        Each of your three statements of my beliefs is quite incorrect. Please reread my comments and try to figure out which of your own assumptions about people who you disagree with you have overlain on top of what I actually said, thus obliterating it.

        I’m working and don’t want to spend 1000 words explaining your misconstructions and this could be a good exercise for you.

      • January 27, 2012 5:31 pm

        I have read and reread your post, and responses.
        And I am not making assumptions.
        You are either saying something you do not actually mean, or mean something different than you said.
        Honestly I think it is a combination.

        You want a totally relativistic definition of values with some vague government/democratic foundation – so long as that works out as you wish.
        At the same time you use a personal set of values as if they there is some intrinsic non-relative quality to them.

        You have fallen into the logic trap of liberalism.
        If government – however you define it defines values and rights – by whatever mechanism it does – such as the will of the majority.
        Then you are stuck with the possibility even probability that those value may be determined contrary to your own.
        This is particularly problematic as the left only has faith in people as a concept. In application “the people” are something needing protection and certainly unable to grasp their own needs.
        To avoid running afoul of Goodwin’s law, I will use Mussolini’s italy, but myriads of other nasty states with popular support work fine.
        If all values are relative, then Musolini was not evil – atleast not confined to the context of Fascist Italy.
        Alternately if Musolini actually is evil – then by what standard ?

        Musolini only matters as a clearly extreme example.

        The real point is you are constantly ranting about greed, and evil.
        but evil is of the Potter Stewart variety

        “I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it.”

        Absent shared values we are monkey’s shouting gibberish at each other.
        I have been happy to define and defend my values.

        You are certain I am wrong, but unwiling to commit yourself to anything.

        I do not know the specifics on most of the cases you refer to – and the details matter. most instances of “cooking the books” are as with Enron and MCI efforts to forestall the consequences of honest though often stupid mistakes. The “crime” is not greed or losing money, but the coverup.

        Maddoff is a clear case of deceit and fraud – with government entanglements. There were many who found him straining credulity. But the SE repeatedly investigated and gave him their impramatur – this is purportedly the most important task the SEC has and yet it failed
        How many people invested with Maddoff BECAUSE the SEC approved him ? How is the SEC not itself culpable ?

        I do not happen to beleive that either Maddoff or the SEC are “evil”. But I do beleive they both were engaged in harm to others.

        Ultimately, no matter what standards you chose, once you chose one it will not be particularly difficult to demonstrate that by your own standards whatever they are government is more of a failure, more evil, more incompetent, than individuals as a whole or businesses.

    • January 27, 2012 11:57 am

      Separately, we punish those who use real violence more harshly for very good reasons.
      I am guessing you have never been the victim of a violent crime, or have any friends or relatives that have. Otherwise I have no idea how you could equate a financial ofense to a violent crime.

      The teller held up by the toy gun – was likely afraid for her life. She thought she might die. The use of even a toy gun to rob a bank is a death threat – give me what I want or I will seriously injure or kill you.

      Just yesterday in my city an elderly man shot two burglars. One is dead. This was their third robbery of the day. As justified as the man was, he was in fear for his life from a credible threat, and he will have to live with the fact than a teenage boy is dead because of him, for the rest of his life.

      Micheal Miliken killed no one. In fact most of his so-called victims did not even lose money. They just did nto make as much as he promised.

      Your victims of Arnal, or Mozillo, or … put negligable downpayments on homes they otherwise could not have possibly afforded. Some – many (actually a majority) have actually succeeded and have a home when they would have been condemned to remain renters in the past. those who failed lost a small down payment, and have pretty much the credit record they started with – bad. They lost there home, and are now living with families or renting or .. They are doing precisely what they would have done had they never received a mortgage.
      To the extent Arnal defraided anyone he defraided Fannie and Freddie. As they were literally begging to be defrauded – demanding more no-doc, alternate loans, it is hard to say he defrauded them.

      The harm to others standard requires the cause of the harm to be your deceit, not their incompetence. While most market exchanges are win-win. Not all are.

      Again one of the fallacies of the left – every exchange that results in a loss is not a crime.
      The only way to keep everyone from ever making a bad choice is to take all choice away from everyone. Is that what you really want ? It is why I am opposed to your theft of freedom.

  45. valdobiade permalink
    January 27, 2012 4:21 pm

    What if Publicans and Mocrats quarreling is just to create a total crony capitalism?

    • January 27, 2012 6:16 pm

      They are not quarreling to create a total crony capitalist system, they are quarreling over who will control and profit by it.

      Though most of Ian’s examples of the evils of greedy business people demonstrate entirely different problems to me, I will not argue that there are no instances in which business fails due solely to humans with bad intent.

      We can not fight every evil in the world concurrently.

      I see crony capitlism as a problem on a far larger scale than everything most here worry about.

      The loss of public money from Solyndra alone would pay for Obama’s 2012 campaign.
      Total green energy losses would probably pay for all federal elections in 2012.
      So why is corporate contributions to political campaigns such a priority ?
      About half of the total dollars contributed come from individuals. A significant portion of the corporate donations are not large. I will be happy to jail any politician caught in a quid pro quo – and you are not going to end political corruption until you are prepared to focus on the politicians.

      The problems I mentioned above were solely with Green Energy subsidies, that is only a small portion of government corporatist waste. i will be happy to end ethanol subsidies, oil subsidies, farm subsidies, protective tarifs, – corporate welfare in every form.

      Even that is not the limits of corporatism. When Clinton first endeavored to take over healthcare, I had expected a tremendous backlash from the very businesses that he was regulating. That did not happen. They were either silent or actually supportive. Though a public outcry eventually killed the Clinton plan, it was far more grass roots than corporate opposition. I subsequently grasped that big business opposes very little of government efforts at regulation. Government regulation imposes barriers to entry, it provides protection for large enterprises. The primary effect of Sarb-Ox has been to thwart small businesses from growing into medium and large businesses. It has also chocked off alot of investment capitol to growing small businesses. It has created a giant new hurdle for small businesses to overcome to prevent them from growing beyond certain limits – and the results fewer small businesses are crossing that threshold.
      Is that really what our objectives were ? I am sure that the fortune 500 is quite happy to see less threats emerging from below. The average fortune 500 company has a life of only 40-50 years. Half of the big names when you were a child will not exist as you retire.

      There are no natural monopolies. There are no free market cartels. Despite the certainty of the left real monopolies and successful collusion are nearly impossible to pull off. Certainly plenty of businesses wish to be a monopoly.
      The only monopolies and cartels that exist in the real world, the only “successful” efforts at price fixing all involve government. If that impossible creature – a free market monopoly is an evil beast, why is a regulated public monopoly a good thing ?

      We may not be able to agree on how evil Arnal is, it still should not be hard to recognise that the entire housing mess is just a giant instance of crony capitolism.
      While I see the failure of government as the root cause, even if you can not accept that it should not be hard to grasp that crony capitalism is written all over this mess. From Barney Frank prepared to “roll the Dice” on Fannie and Freddie, to the The Federal Reserves revised lending guidelines, to Fannie and Freedie themselves begging brokers to sell more and more sub-prime, no doc loans, to the Fed fueling the market with artificially low interest rates, to the bailouts and even bonuses in bailed out institutions, …

      You do not have to be libertarian to grasp that the incestuous relationship between government and business intersects most every failure we have, and that this is a far larger problem than political donations, or greedy businesses in a truly free market.

      • valdobiade permalink
        January 27, 2012 6:45 pm

        Asmith wrote: From Barney Frank prepared to “roll the Dice” on Fannie and Freddie, to the The Federal Reserves revised lending guidelines, to Fannie and Freedie themselves begging brokers to sell more and more sub-prime, no doc loans, to the Fed fueling the market with artificially low interest rates, to the bailouts and even bonuses in bailed out institutions, …

        The latest (not the oldest Barney Frank):

        – The two Florida front-runners hit each other over investments and relationships to the mortgage giants taken over by the government at the height of the financial crisis in 2008.

        “We should have had a whistle blower not a horn tooter,” Romney said about the former House speaker, who worked as an adviser to Freddie Mac, the smaller of the two organizations.

        Gingrich accused Romney of “cheerfully” making attacks “inaccurately,” noting that he was not a registered lobbyist for the firm.

        Gingrich turned the table back on the former Massachusetts governor for his investment portfolio.

        “We discovered to our shock, Governor Romney owns shares of both Fannie Mae and Freddie Mac. Governor Romney made a million dollars off of selling some of that,” Gingrich said.

        The two firms have taken close to $150 billion in taxpayer funds since they were seized.

        Gingrich also said Romney “has an investment in Goldman Sachs” which is behind many of the foreclosures taking place in Florida.

        “Maybe Governor Romney in the spirit of openness should tell us how much money he’s made off of how many households that have been foreclosed by his investments,” Gingrich said.

      • January 27, 2012 10:40 pm

        Thank you for helping make my point.

  46. January 27, 2012 6:34 pm

    I do not know how things are in Vermont, but in Lancaster, PA if you embezzle $60,000 from a local business you will spend a decade in jail. If you get caught shoplifting 3 times you will spend atleast 2 years in state prison.

    I will take issue with Ian’s demands for stiffer penalities and more crimes, because in the real world, it is not going to be the Maddoff’s that bear the brunt of stiffer penalties.

    Throughout my life the number of things we call crimes has relentlessly increased.
    The standard of proof has continually decreased
    The penalties are more and more draconian. Cole Younger killed several people robbing banks, spent about 20 years in prison and spent almost another twenty years running a “Wild West” show and lecturing until his death. If you are a poor fourteen year old, and kill someone in the commission of a Robbery, you will be lucky today not to get executed. You will spend the entire rest of your life in jail.

    Criminal behaviour requires punishment, but increasingly we are increasing we are trying too man even Jay Walking a capitol offence.

    At the same time even with the economic downturn and with significantly better reporting than ever before Crime is still on a continuous downward trajectory at the lowest levels by far it ever has been in human history.

  47. Ian CSE permalink
    January 27, 2012 7:15 pm

    OK Dhlii, we will be methodical about this. One misconception you on my beliefs have at a time.

    You said “You beleive that all human society even from the earliest is essentially democracy.”

    Show me were I said that please, then we will deal with your other mistaken ideas.

    • January 27, 2012 11:12 pm

      Ian:”Of course! people define and legislate right and wrong, from the most primitive societies to the most complex. You think you can stop that?”

      Technically that is inaccurate – unless by people, you mean leaders, and if you do mean people, it essentially means primitive democracy.

      I will be happy to agree that is not so, but that is the only interpretation that supports a claim that majoritarian government is free to define values as it pleases based on long historical precedent.

      • Ian CSE permalink
        January 28, 2012 12:48 pm

        Dave, its quite ironic, do you realize what a tyrant you are? You try to force people to say what you want them to say. The ideas you are trying to force into my mouth are all absurd. You have completely distorted my ideas until they are unrecognizable. Who would believe that all governments in history are and were democratic? I doubt you can find anyone who believes that certainly not me.

        I said that people and governments have always determined what morality is. This is an objective fact and it has nothing to do with being democratic or not democratic.

        I determined what morality was when I raised my kids, i gave them my moral rules, which I myself got from millions of influences in my life.

        Criminal laws are government determining morality, murder, theft, rape are crimes because they are considered immoral. The roots of human government are hardly distinguishable from the roots of human religious belief. Morality and government and religion have always been intertwined. Morality may change over time and government can be forcing that change, think Russian comminists, or following behind and trying to adapt to such change, think of the change in our take on dominant Christianity over the last 300 years in America and consider how our law has tried to adapt to the new reality of many religions here.

        What fool would believe that government has been democratic? For 99.9999% of our history its been undemocratic, its undeniable.

        I’m going to try to respond to all your comments in one place here, because I am buried under work.

        You distort and misunderstand nearly every single word I write. Its extremely obnoxious, but I don’t think its deliberate, its not a tactic, its how you are wired.
        You seem to be genetically hard wired to believe you are correct about everything and you have built, out of terrible fear, an impregnable castle out of your political philosophy. You come here and try to shove your philosophy down our throats and nothing I or Pat or AMAC, or Jess or Rick ever say is considered by you to have any substance. You are the ultimate know it all who cannot admit you are incorrect about everything.

        No intelligent person can fail to recognize your talents or that you make many insightful comments. But as highly capable as you are in one side of philosophic debate, that of collecting data on the world and making interesting observations, you have a complete deficit on the other side of having such a philosophical conversation: you are utterly unable to process ideas that threaten your impregnable philosophical castle, your mind simply distorts and mangles every piece of information that provides a valid counter argument. In your mind, there is not one valid counter argument. Its enough to drive anyone trying to talk with you mad, but I accept that you don’t do it maliciously, you are simply constructed that way and cannot do otherwise. I honestly feel bad for you, you can’t stop yourself and it has to be a very difficult psychological cross to bear.

        Dave, I accept the fact in advance that you will completely misunderstand and mangle everything I just took the time to write, and that you will force my thoughts into a form in which I am utterly wrong and you utterly right. But I write anyhow, for my own sake and as well for the interest of other posters, just in case they are interesting to them.

        Your wife must be a saint!

      • January 29, 2012 8:00 pm

        When one bandies the term “people” about in the context of making decisions and government they usually mean democracy, or at the very lest they are precluding authoritarian rather than consensus based decisions.

        You chose to make your claim on a historical basis going back to primitives.

        I do not know how to make sense of your remarks except to take people deciding as some form of consensus making – which precludes most of human history, and includes primarily democracy.

      • January 29, 2012 8:22 pm

        My wife is a saint, and she is a lawyer, and she expects my arguments to be clear and sharp, and does not allow me to get away with vague and ambiguous arguments.

        And I do the same for her, and we are both better for it.

  48. January 27, 2012 11:23 pm

    The US has an incarceration rate of 743:100000 that is just under 1%. Accepting that every criminal is not incarcerated that suggests and even higher rate of criminality.

    Do you beleive that 1:100 CEOs are criminals ? I doubt more than 1/10th that number have ever even been accused of crimes.

    On the other hand I have no trouble believing !:100 politicians are criminals.

    And I am talking about real criminality here – actual theft.
    Mismanaging a company until it is nearly bankrupt and then dicking with the books to hide that, is not actually the same as stealing. It is immoral, but the actual harm occurred before the crime, and the harm was not criminal.
    Assuming a 40 year average life for fortune 500 companies, that means that means more than 2% fail each year. Failure is not criminal, but failing businesses do tend to try to hide that.

  49. Priscilla permalink
    January 28, 2012 9:58 am

    ” Failure is not criminal, but failing businesses do tend to try to hide that.”

    A good point, Dave. I was once involved with the board of a small country club (trust me, we are not talking 1%ers here) that was failing due to rising operating costs, crushing property taxes and static membership revenue. The members of this board were, for the most part, well-educated, moral people of high ethical standards. Nevertheless, as it became more and more apparent that the club was going to fail, a significant majority of the board insisted that this situation be kept secret, for fear that the members would abandon a failing club and go elsewhere, eliminating the possiblity of saving the club. The rest insisted that it was wrong to mislead the members, who were stakeholders in the club, and that transparency was the only ethical policy. Problem was, there were several stakeholders that were interested in buying out the club and selling to a developer….the supporters of secrecy used that fact to win the argument. The club failed anyway, and there was a huge outcry against that faction of the board that supported secrecy…they were, in fact, called criminals. (I was on the other side, btw, but I was appalled at the way these people were treated.)

    My point here is that good people can make bad decisions for reasons that are not nefarious. That doesn’t mean that they should not be punished if they break the law, but it doesn’t mean that they are evil.

    • January 28, 2012 10:23 am

      Fascinating story, Priscilla… it adds shades of gray to what would otherwise appear to be a black-and-white story about deception. So I’ll agree with you that the urge to shield a failing enterprise from scrutiny isn’t necessarily criminal.

    • Ian CSE permalink
      January 28, 2012 12:15 pm

      I agree with you on this one Priscilla and its a good story. I also thought that it was one of Dave’s little kernals of a truth in his sea of madness.

    • January 29, 2012 6:34 pm

      I do not beleive we are in disagreement.

      What was the ethical course of action with respect to this country club might be debatable.
      Though by law most public entities are required to accurately disclose their financial condition, and it has been a crime long before there was an SEC to to provide shareholders or potential stock buyers with misleading information.

      Every time a CEO of a public corporation speaks about their company, they are at risk of committing a crime. Again this is not new, and it is as it should be.

      But your scenario does not appear to be claiming that the failure of the club was criminal, but that misrepresenting the fact that it was failing to others was criminal.

      We are swimming in a sea of failure at the moment.

      Fannie and Freddie are failing, mortgages are failing, government is failing, banks are failing. GM and Chrysler were failing, The financial system did fail.

      Figuring out why is important so that we do not repeat our mistakes.
      But except in those instances where one party deceived another and the second party failed because of that deceit failure itself is not a crime – not even reckless failure.

      Arnal did not commit a crime against home buyers when he persuaded them to lie about their income – because the buyers are presumed to know their own income.
      The disclosure terms on loans an mortgages are such that borrowers knew or could and should have known the terms of their own mortgages. And the unsophisticated buyer meme is ludicrous. First we are talking a significant percentage of mortgages – many made by people who were not poor. Further, between payday loans, rent-to-own, bad credit car loans, and the myriads of other means that the poor can get credit – under difficult terms claiming that poor buyers do not understand loan terms is incredible.

  50. Pat Riot permalink
    January 28, 2012 10:50 am

    “…good people can make bad decisions for reasons that are not nefarious.”

    I think everyone can agree with that.

    “Failure is not criminal…” should be changed to “Failure is not necessarily criminal…”

    If we fail to hit our brakes while we are driving (say because we were not concentrating or we were thinking of something else or we made and error in judgement to look in the glove box for something stupid), and we smash into the car in front of us and paralyze (think of those people losing their pensions) or kill the person in the car, we are liable and can be prosecuted for manslaughter. Of course that’s different that premeditated maliciousness, but both are punishable.

    Words like “failure” and “evil” have different meanings in different situations to different viewpoints. Life ain’t easy!

    • January 29, 2012 6:13 pm

      For most of history, intent was a critical element of all crimes.
      So if you made an error in judgement even a bad one, so long as you did not actually intend harm, you could not be prosecuted criminally. Personally I think that was an excellent standard.
      In the modern era we have introduced an alternative to intent – though usually we create a new lessor crime when there is no intent, requiring a a high degree of recklessness. The harm that resulted has to be more than a possible outcome of ones actions, but a highly likely result of ones actions. Or atleast that was how it was initially intended. Unfortunately as with any squishy concept, measuring recklessnes is difficult – in you example above reaching into the glove box is reckless, but not sufficiently reckless to support a criminal conviction – atleast not as the laws regarding criminal recklessness were originally written.
      The law still has a high standard for criminal recklessness, but most juries have a low tolerance for recklessness, and courts are extremely reluctant to overturn jury verdicts based on facts.
      The last area we depart from the requirement for intent is “statutory” crimes – most people would think of statutory rape. A statutory offense is a crime, whether you know you have committed it or not – normally you do not have to know something is a crime, but you have to knowingly commit the act that is a crime. Statutory crimes require no intent and no recklessness.

      Beyond that juries constantly get the fine points of the distinctions between what is and is not a crime wrong, as well as between a crime and its lessor siblings. And the courts do not interfere. Prosecutors count on that. They routinely and tactically knowingly overcharge.

      Regardless, failure alone is still not a crime. Nor is failure a particularly difficult construct.
      Even if that is a spectrum of degrees of failure, egregious and extreme failure are still not a crime.

      Enron as an example was unbelievably reckless, and they failed. But I have not heard of any Enron criminal prosecution based on Enron or Enron executives failure or even their recklessness. The prosecutions have been about lying about that failure – usually in false accounting statements, SEC filings, or corporate statements.
      In the overwhelming majority of business related criminal prosecutions the actual crime is some form of lying or deceit often after a failure.

      This matters – alot. We do not grow if people are unwilling to take calculated risks. If we were to execute every business person that failed – no one would try, and society would rapidly degrade to medevil standards and most of us would starve.

      “evil” as well as morality (and “fairness”) has different meanings in different circumstances and to different people, which is precisely why it is an abysmal standard for law, regulation, government.

  51. Pat Riot permalink
    January 28, 2012 10:52 am

    Please forgive my typos. My connection kept going away, so I was posted without proofing…

    • Ian CSE permalink
      January 28, 2012 12:10 pm

      Oh no, typos are criminal, you could have injured someone!

      But we will try to forgive.

  52. Pat Riot permalink
    January 29, 2012 11:21 am

    Thankfully, theirs Know law agenst tipos!

  53. Ian CSE permalink
    January 29, 2012 1:40 pm

    Speaking of typos I made a doozie yesterday in my little diatribe in my hurry.

    replace “You cannot admit you are wrong about everything” to

    “you cannot admit you are wrong about ANYthing.”

    Makes me seem a bit unreasonable. heh.

  54. January 29, 2012 6:39 pm

    I have my own versions of Pat’s poor Internet connection.

    I have admitted that I rarely proof what I write here, and most of the time I write it extremely fast.

    Volume is not a substitute for quality – and I apologise, but it is easier to write alot fast than a little well. And I do nto have time for the latter.

    I can not ask for capital punishment for other’s typo’s without hanging myself.

  55. Anonymous permalink
    January 29, 2012 7:08 pm

    Haha I think Rick will be relieved with our civility and humility lately.

    Recently above Asmith said “squishy concept.” I like the phrase!

    Back in my late twenties I was elected jury foreman in a double manslaughter case. A man driving a heavy-duty tri-axle truck loaded with stone was unable to stop when traffic stopped in a bottlenecked high-accident area. We the jury went out to the scene to see the skid marks and where he went onto the shoulder and up the grass embankment to try to stop before landing on top of a broken-down car on the shoulder in which two young children were crushed to death by his truck.

    We the jury were sequestered for two weeks. Intent was a big part of the deliberations, and I agree with Dave that INTENT is important despite often being difficult to prove or disprove. Anyway, there were many factors, including the mechanic who had recorded that the brakes were checked even though he never pulled the wheels (the brake pad measurements recorded actually showed that the brake pads were THICKER than on the previous inspection. He admitted he just made up the numbers.)

    It was a sorrowful tragedy, and there were consequences/punishments both crimnal and civil, but I think we rightly acquitted the driver of double manslaughter. I was impressed with the legal system during the experience.

    Sometimes we have to draw the best lines we can in this squishy, imperfect world.

    • January 29, 2012 7:26 pm

      How was intent a factor in this case ? Unless there are facts you have not provided, it seems unlikely that the trucker intended to kill the two children.

      The question is whether there was recklessness sufficient to be criminal.
      The standard is supposed to be recklesseness sufficient that the harm was very likely.
      Shooting into a crown does not mean you intend to kill or injure someone. But it is reckless and the likelyhood is high.

      Speeding, drinking and driving, driving while on your cell phone, ….. are all atleast negligent. But the probability of something bad happening as a result of that single act of negligence is low.

      This is also why we have civil and criminal law. Absent some facts you have not provided it seems unlikely the Trucker commited a crime. At the same time it is also highly likely that he was responsible for the deaths of those children.

      Finding him innocent of any crime and holding him accountable for civil damages is the means we have spent the better part of a millenia developing to resolve issues like these.

    • Anonymous permalink
      January 29, 2012 8:33 pm

      Well yes it was partly the driver’s lack of intent to harm anyone, climbing into his truck in the morning after decades of clean driving, along with other facts, that helped us acquit him of such severe charges as double manslaughter. But originally it was only me and one other juror that were on the driver’s side. The other ten jurors wanted a guilty verdict. A few wanted him to “hang” for the deaths of those children. It was one of the proudest chapters of my life arguing for two weeks that there was lack of intent or carelessness on the part of the driver, despite the horrible tragedy. Court personnel pulled me aside afterward and said, “you got this one right, what took so long?”

      Judges and lawyers have to deal with a lot.

      • Anonymous permalink
        January 30, 2012 10:44 am

        There is a natural human tendency to want to hold someone responsible when something bad happens. The AGW crowd is now trying to blame earthquakes and volcanoes on global warming – regardless of the fact that both have occurred throughout the history of the planet, and despite the fact that there are actually excellent natural explanations, but we must find a human responsible for every bad thing in the world.

        One of the legitimate attacks of the left on economists – the perfect hypothesis, is copied by them in nature – but for humans lions would lay down with lambs.

        We have a similar case to yours locally.
        A trucker unable to stop before rear ending a line of inexplicably stopped cars elected to recover by making a left into a side road. That resulted in a head-on collision with a pickup truck headed the opposite direction.
        The driver and passenger of the truck were personal friends on their way home from delivering relief supplies to the menonite central commitee.

        Subsequently, the driver tested positive for past cocaine use – but was not impaired at the time of the accident. The driver was also not wearing his glasses.

        There is little doubt here that the Truck Driver is responsible for this accident and these deaths. But is he CRIMINALLY responsible ?

  56. January 29, 2012 7:15 pm

    I am going to try something again from a different direction.

    I receive serious criticism here for much of what I write. My “libertarian” views are too extreme, and out of the main stream. I am too inflexible, too tied to old dead economists, …..

    Much of what I write, and much of what generates significant disagreement is only nominally libertarian. Human history has been the evolution of the rules by which we live together in society. We have spent thousands of years starting before Hamurabi devising these rules. That is an ongoing continuous process.

    At the same time the western english speaking world, represents a specific evolutionary branch of that process. That specific tradition – the one we live in today, though not strictly speaking libertarian, is and remains founded on the classical liberal political, moral, and economic principles of Smith, Locke, Mills, and our founding fathers who were their peers.
    Our law, and government – even from this nations founding, went beyond the narrow principles of libertarians, but it has not rejected those principles. The declaration of independence sets the purpose of government as the protection of the rights of the individual, and the legitimacy of government as derived from the individual. These were all extremely radical notions for their time – and for much of the world still are.
    You can go to any law school in this country, and take torts, constitutional law, and criminal law – and the underlying principles to each of these will be the same obsolete, extreme radical, principles of old dead guys from another era.

    From the inception of this country until today. successful political forces have added to those principles, or expanded the role of government beyond those core principles I keep beating on – but it has not rejected or abandoned those core principles.
    Within the past century, there has been some small success “balancing” vaguely defined public interests, and benefits against those core principles – as if they were equal. But even in those instance we have not rejected just weakened those principles.

    Modern society is so dependent on most of those principles, that it would collapse if they failed.

    I can decry the extent to which we have weakened those principles – though the biggest problem is the older one of hiding them in a second growth forest of derivative rights and principles.

    But pretending those principles no longer exist or have no meaning, that our natural rights have ceased to exist and that only those rights we decide as a majority we have remain is in conflict with what is.

    What distinguishes libertarians from most others is not our reliance on natural rights, nor our principles. There is nothing unique about the rights, values and principles of libertarians. What differentiates us from conservatives, liberals, even real moderates and independents, is that in the context of government, and society, we rely ONLY on those values, principles, morals etc.

  57. January 29, 2012 7:16 pm

    Why aren’t things getting better ?
    What is unique about this recession ?

  58. January 29, 2012 7:54 pm


    I quoted your words. I think my interpretation is reasonable. But if you do not like my interpretation, your values ultimately belong to you not me. I could not take them if I wanted to.

    But I am trying to understand them, and I will disagree when I think they are wrong.

    No one not even 99% of us can decide your values for you.

    But the rest of us are stuck with the the logical meaning of your words as the means of discerning them.

    It is my suspicion because that is what I beleive of most progressives and liberals, that they honestly have not thought their values through to their logical conclusions.

    i am happy to take my values where they go. And I do not have all the answers. I can not tell you exactly how small government should be – only that it should be much smaller than it is.

    People and government are not the same thing.
    Each of us does decide what morality is for ourselves – with many outside influences.

    On occasion throughout history, government has used morality as the basis for what it does. But that is not some absolute or consistent objective fact.
    For much of human history, the rules were whatever the monarch said they were – maybe based on morality, maybe whim, maybe good motives, maybe bad, regardless not based on morality as an objective fact.

    That said history has been a continuous effort to divine what the appropriate rules for human interaction in society need to be. And the theme of that history is based far more on lockean natural rights than morality.

    We no longer sacrifice virgins for a good harvest, or stone adulterers. We do not pillory people for blaspheming. We do not castrate people for sodomy.

    At the same time 92% of us still beleive that adultery is immoral – yet we no longer have laws against it.

    I will be happy to agree with you that morality has off and on been a major factor in law throughout human history. But the theme has been trying to separate purely moral norms from those norms that society will not work without.

    I think it is crystal clear what I beleive those core norms are, and what the underlying principles for those norms are.

    I honestly have no clue what core values you would base society on.
    But if you really want to claim it is based on some shared concept of morality, and that this is an object fact – I will be happy to argue against that.

  59. January 29, 2012 8:19 pm


    From atleast the time of Hamurabi, despite the undeniable and continuing influence of morality, the drive in law has been to determine those norms that are essential to the functioning of society.

    Why is murder wrong ? Morality is not sufficient an answer. We still have myriads of different moralities and I strongly suspect you do not want law to become the moral consensus.

    I will be happy to agree that Hamurabi did not yet have Locks concept of natural rights.
    But he did understand that of the many things his culture found immoral, some offended some deeper principles, that society could not function without.

    For the most part the subsequent trend has been to remove from our Law those things that are just moral prohibitions, to refine things down to what is essential to a functioning society.

    What is wrong with Social Conservatives such as Santorum is that they are intent on imposing moral values that are independent of those core to the functioning of society.

    I do not do, for moral reasons, many things that I would not think of demanding of others through force of law.

    If you would, then once again you are indistinguishable from the religious right. At the very best you wish to force a less offensive set of morals on everyone.

    Maybe our disagreement is because of a different meaning morality ?

    But that just brings me back to another argument.
    I am trying to push you into defining what you mean.

    I can not persuade you of anything. But I can try to get you to examining your own values and find that when you get accurate about meaning you find serious conflict.
    That is what has changed my values.

    Liberalism sounds really good on the surface, but it never holds up more than surface deep. It is inherently in irresolvable conflict with itself.

  60. January 30, 2012 10:46 am

    Distinguished Harvard Economics Professor James Q. Wilson in the Washington Post on “income inequality”

  61. January 30, 2012 10:49 am

    The future of economics – Schiller, Stiglitz, and Diamond, most definitely not the paragons of libertarianism.

  62. January 30, 2012 11:45 am

    Click to access summers-12-15-08-memo.pdf

    December 2008, Larry Summers memo outlining Obama’s economic policy options prior to taking office.

    Basically what choices this administration considered prior to acting. Why they made specific choices and what they expected the results to be.

    Of note is that though the administration consulted numerous economists in preparing this, the widest they spread their ideological net was Greg Mankiw – A Harvard “New Keynesian” and former Bush economist, who was the only economist skeptical of the stimulus. Several top IDEA ranked economists had publicly come out challenging the Stimulus at the time it was proposed.

    If you only consult those you expect to agree with you, you can expect to get agreement.

    There is far more in here. While it is clear that the administration economic team had carefully thought out their actions and options as well as modeled the expected results.
    We now know the actual results.
    Before we choose to follow these types of policies again, it is essential that we make an effort to understand what went wrong – including deep enough examination to question whether the flaw was in the policies themselves rather than their implementation.

    I am sure that Mr. Perez was certain that his plan would save Kodak. Rick has legitimately claimed we consider whether Mr. Perez’s decisions may instead of caused or exacerbated Kodak’s problems. We can afford to see a fortune 500 company fail on occasion.
    We can not afford to see our government fail. It is essential that we do the same type of analysis of the decisions our government makes and the reasons for those decisions.

    I am not sure how this became public. Though I am glad it did. I am more concerned with why we can not get the same kind of information on all the decisions our government makes for us.

    Rick wants to harp on the effect of political contributions on politics.
    One of the campaign promises this president made that I fully supported was for far more open government. Little or nothing has been done, if anything this administration has been less transparent than any before.

  63. January 30, 2012 12:19 pm

    I would particularly note:

    One of the successful purposes of economic regulation is to create barriers to entry – to eliminate the opportunities for the poor and middle class to become rich.

    Whether we are restricting the ability of the poor to become Taxi Drivers, Barbers, Operate Hair Salons food trucks, or whatever.

    There are possibly circumstances where I might actually agree that government regulation has improved the quality of the services that we receive – but it has done so at the expense of opportunities for the poor and middle class.

    The highest proportion of deceit, fraud and outright theft are among new businesses, not established ones, and particularly among those started by the poor. By people still mastering the skills necessary to succeed in the marketplace are far more tempted to take shortcuts.

    The bottom of the market is messy and nasty. It is also the only opportunity for any of the poor to move quickly from bottom to the top.

    Each new wave of immigrants to this country has come with its own generation of criminal entrepreneurs. Joseph Kennedy’s start was not particularly up and up. Myriads of prominent US families started in less than clean forms of entrepreneurship with subsequent generations practicing a more acceptable variety.

    Again the seen and the unseen. The positive seen effect of speeding up the inevitable process where neophyte entrepeneurs learn that integrity is essential to business.
    The negative and unseen effect of reducing the opportunities for the poor and middle class to climb the ladder of success. The harm of this is not only to those who would have otherwise started businesses, but to all of us, as the absence of those businesses makes us all poorer than we would have been otherwise.

  64. January 30, 2012 12:35 pm

    Government Spending and Private Activity – from NBER

    “I find that in most cases private spending falls significantly in response to an increase in government spending. These results imply that the average GDP multiplier lies below unity.


    I find that increases in government spending lower unemployment. Most specifications and samples imply, however, that virtually all of the effect is through an increase in government employment, not private employment. I thus conclude that on balance government spending does not appear to stimulate private activity.”

  65. January 30, 2012 12:37 pm

    Aiding Conflict: The Impact of U.S. Food Aid on Civil War – NBER

    “Our estimates show that an increase in U.S. food aid increases the incidence, onset and duration of civil conflicts in recipient countries. Our results suggest that the effects are larger for smaller scale civil conflicts.”

  66. Anonymous permalink
    January 30, 2012 3:48 pm

    I think a Libertarian is kind of whore. It can sleep with Republicans-Conservative-Right as well with Democrat-Liberal-Progressives-Left. In the end it can take money from both and then criticize them for their small dicks.
    It needs a rich and convoluted vocabulary as well a lot of space to explain this position.

    • January 31, 2012 12:16 pm

      I think a better argument is that Conservatives and progressives are willing to prostrate themselves and adopt some libertarian positions, when they need logically sound defenses for their policies.

      The roots – core values, of libertarian-ism, predate both parties by more than a century.

      When Republicans need a principled defense of free markets, they start reading libertarians. But they fail to grasp that free individuals are intrinsic to free markets.

      The left whores around with libertarians less. Progressives have no need for a strong logical defense of individual liberty – they do not really believe in it anyway.
      Despite frequent agreement on ends, the conflict over core principles leaves libertarians with poor relations to progressives.

  67. July 18, 2012 11:48 am

    Remarkable issues here. I am very glad to see your article. Thanks so much and I am looking forward to touch you. Will you please drop me a mail?

    • July 18, 2012 11:27 pm

      BD: Yes, I do cover some remarkable issues here. You’re welcome, though I hesitate to give you permission to touch me without having met you or ascertained your gender. But thanks anyway.

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