August 2, 2012

Questions For Tea Party

Updated 8/3/12: A charter member of the Tea Party movement addressed my questions below and I posted his responses immediately below my questions. The remarks in blue are my comments to his response. I tried to post my comments to his blog; however, he took them down. I guess he did not want his readers to see them.

1. Are many banks too big to fail and should we consider breaking them up??
2. Do free markets need an umpire as ascribed by Milton Friedman: "But we cannot rely on custom or conscious alone to interpret and enforce the rules; we need an umpire. These then are the basic role of government in a free society; to provide a means where we can modify rules, to mediate differences among us on the meaning of rules, and to enforce compliance with the rules on the part of those few who otherwise would not play the game."
3. Is the Supreme Court decision in Citizens United OK, or should it be repealed?
4. Should anti-trust legislation be implemented to break up monopolies and oligopolies?
5. Should we get out of Afghanistan?
6. Should the health care law be amended to bust up the oligopolies in the insurance industry?
7. What is more important to our long term survival; education or military?
8. Should there be no tax increases on the super wealthy?

Below is the response of a Tea Party Member with my response.

1) Many are too big to fail but only because of crony capitalism. Who would be in charge of breaking the banks up? The same regulators who failed us? The same political cronies that pushed the Community Reinvestment Act and destroyed our economy? Let bad banks fail; don't place the burden of "bailing them out" on the taxpayer; let the free market decide and everything else will work out.

I agree with your comment about crony capitalism, capitalism without free markets. We would need to rely on the the government; there is no one else to do it.

The key would be to keep their feet to the fire. The Community Investment Act was around since the late seventies and did not cause the sub-prime fiasco that came to a crash in the fall of 2008. Sub prime lending got a slow start in the mid to late nineties. It was a creation of Wall Street and they had many accomplices' including the banking industry, the credit rating agencies, mortgage brokers and Realtors. These are the villains that should be pursued and my guess is the only reason we are not is campaign contributions.

It is easy to say let the banks fail; however, if that was done the 1930's would have looked like a mild recession in comparison. Many banks are too big to fail and that is why they need to be broken up. If we broke them up, the next time we could afford to let them fail. The five largest banks in the country have more assets than this country's GDP.


2) Free markets may "need" an umpire, the problem, however is "who" the umpire is. Is the umpire a Dick Nixon-type character? A benevolent Philosopher King? A loony right-winger? A Bolshevik leftist? "Umpires" of the free market: Rule of law and indisputable contract law.

There is no such thing as "indisputable law". All laws can be disputed. Again, we have to agree on an umpire.

3) The decision is OK; free speech is free speech.

I believe the constitution should be amended to outlaw contributions from non-people; unions and corporations. They cannot vote, why should they be able to buy votes? This is a major reason for crony capitalism.

4) No. Allow consumers and the free market decide.

My take is many of our markets are not free. A free market is one in which there are many producers competing against one another to provide products of the highest quality at the low prices. They are fighting for your business. There are many industries where this is no longer the case. The mobile phone industry is an example. There are three major companies that control the market.

Adam Smith, the founder of capitalism said in 1776, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public or in some contrivance to raise prices."


5) Yes

Agreed

6) The health care law should be repealed in its entirety. There should be more competition in the insurance industry and we need to get there by market forces.

I am all for market forces whenever possible. In many states one or two companies control over 80% of the market. Is this a free market? Also, how does market forces protect the truly needy. We are a country founded on christian/Judeo principles. How do we reconcile this?

7) Education; but getting the government (especially federal) out of education is the only way to save our education system in America. Also, we need far more diversity of thought and opinion in the halls of academia. Our military stance going forward should be simple: if you attack us, we will wipe you off the face of the earth (and mean it); otherwise the affairs of nations are, for the most part, none of our business.

I agree with education; however, I am not sure how we do this without government. Yes, government is very inefficient. I just don't know how we provide education to the child in inner city Detroit who has a mom and no dad. Further, the mom may be working two jobs to keep food on the table and/or she has a drug problem. I don't think we say too bad it is not my problem.

I heard the other night that our military budget is larger than the next 17 countries military budgets combined.

8) No. This nation does not have a revenue or lack-of-taxing-anyone problem. Ever see how many days of current-day deficit spending Obama's soak-the-rich tax "plan" covers? What is it, two weeks or so? Thinking that we can fix this nation's fiscal ills by taxing the "rich" (even more than they are) is a dangerous pipe dream. Close the govt-spending credit card and start cutting. Start at the Military-Industrial complex and move your way down through every single department. Shutter the EPA; close the Department of Education. I can list dozens more agencies/departments that could be closed and shipped off to the states.

(Further noted: Since the author of both the site and poll seems fixated upon "breaking up" monopolies and oligopolies, perhaps he would agree with breaking up the biggest monopoly/oligopoly in the history of mankind - the United States Federal government and sending its "responsibilities," mandates, regulations, et al. to the 50 states that it monopolizes.

Now that's a "break up" I support.

LOL! Good comment. We do have a spending problem. The problem was here long before Obama. The governments approach to budgeting was to decide what they wanted to do and do not even think about how we are going to pay for it. I remember like it was yesterday George Bush after 911 telling everyone to keep on spending and consuming while we head off to war.

I am sure the budgeting process in your household starts off with how much money you have to spend and then prioritizing your expenditures and making sure they do not exceed your revenue. That would be a refreshing way for government to approach things.

If we break up the federal government we have 50 nations. We end up like Europe and they are having a tough time and there is only 27 nations.

By the way, I do read Krugman a lot. I assume you are a Milton Friedman capitalist! Am I right?

8 comments:

  1. I'm a charter member of the Tea Party and a blogger (www.leftcoastrebel.com) and will easily answer your questions here (found your site through a comment you left at a David Brooks NYT piece.

    1) Many are too big to fail but only because crony capitalism. And yes, we should consider breaking them up.

    2) Free markets may "need" an umpire, the problem, however is "who" the umpire is. Is the umpire a Dick Nixon-type character? A benevolent Philosopher King? A loony right-winger? A Bolshevik leftist?

    3) The decision is OK.

    4) No

    5) Yes

    6) The health care law should be repealed in its entirety. There should be more competition in the insurance industry and we need to get there by market forces.

    7) Education; but getting the government (esepcially federal)out of education. Also, we need far more diversity of thought and opinion in the halls of academia.

    8) No. This nation does not have a revenue problem. Close the govt-spending credit card and start cutting. Start at the Military-Industrial complex and move your way down....

    ReplyDelete
  2. Thanks for the update. I can't respond tonight but I linked and am going to send some like-minded friends over.

    ReplyDelete
  3. As for question one;Let them fail. Other better run banks will quickly fill the void. The large banks rapidly expanded off of the open rules and programs encouraged by the federal government. The rules of prudent underwriting went out the door when fannie and freddie started buying every mortgage that was out there regardless of risk. It didn't help when Greenspan blessed these new mortgage bonds. It short circuited usual bond underwriting by calming the usual skepticism toward this new product fannie and freddie was bundling to Lehman and goldman.
    2. The umpire is the customer. Arbitrarily appointed umpires only encourage crony capitalism and are only as good as the skill of the umpire.
    3.Citizens United is fine. If they can be taxed, then they should be able to be represented.
    4.NO! Monopolies and oligopolies are an aberration of the free market. Without government help to keep them in place, they will always collapse from largesse and inefficiency. When a business has too large a difference between revenue in and cost to produce and deliver that product, competition will rise up to take some of the excess profits.
    5. When we win. The problem with Afghanistan is that no one has ever defined what victory in that conflict will be. How can one reach an ultimate goal when no one knows where the finish line is. How can one define a victory in a war on "terror"? What does victory look like? Define what victory is; accomplish it; bring the boys home in victory.
    6. No. The reason there are so few companies in the health insurance market is because there are very low profit margins in the health insurance business in which competitors can exploit. Apparently, it can't be done much more cheaply or efficiently than it is done now or the other small companies would cut prices to grab market share and grab increased profits through increased volume. If you are healthy and want cheap insurance, get the government out so companies can pool the healthy like good drivers are pooled and offered discounts. Give surcharges to the less healthy in their age group. Obesity, smoking, and general lack of concern for ones health compared to others in your age group will be surcharged to bring their rates in line with the potential risk of their lifestyle. No more hiding among the healthy and letting them pick up the cost of your lifestyle choices.
    7.Education is more important than defense to each person. In fact, it is so important that no one should entrust it to others. My neighbor is not responsible for my education. I am. The problem with public education is the fact that people refer to it as free. Nobody appreciates what they can get for free. There is no sense of urgency or importance to it. Make the schools a tuition/scholarship model and make people realize the benefit that education that it is. Only obligate the public to pay for those that want to be there. As grades go down, the amount of public assistance to pay that tuition also decreases. Full ride for A and B students: graduated tuition as it drops below that. Start it in middle school and throw out the ones that bring the others down. Defense is in the federal constitution. Education is not. Therefore it is a state responsibility only. Oh yeah, look up the definition of state. We are 50 separate countries that agreed to submit themselves to the tightly defined power intrusion of the federal constitution.
    8.NO! I have no right to his personal property. Why should a man pay many times what his neighbor pays for the same product? With great power comes great responsibility. The government has a fiduciary responsibility to use its powers efficiently and very prudently. The open disdain of the government and its tentacled agencies comes directly with the lack of consideration the government takes of its citizens. We have become an ATM for the machinations of politicians and bureaucrats to perpetuate themselves. We are divided into voting groups and bought and sold like cattle.

    ReplyDelete
  4. Re:letting market forces decide -that is how we got in the too big too fail position in the first place and the financial crisis has only further concentrated the banks. AIG sold insurance to banks with no way to ever pay off a loss. GS bet against its own customers. Yet, when it all hit the fan, no one was prosecuted, no one held responsible.
    Meanwhile, the Citizens United decision means any election result can be bought. So those with the most money can advance their political agendas while hiding their identity. When did we vote to become a government by the corporations, for the corporations?
    I agree that we need to seriously cut federal spending. I've yet to see a plan from either party that gets us to a balanced budget. To me,all spending bills should be in terms of percentage of revenue, not dollars. So DOD should get say 24% of revenues collected. We also need to get rid of career politicians. No one should be allowed to serve in the same elected position more than twice and the pay/perks should be on the same scale as new recruit in the military.

    ReplyDelete
  5. "Allot" is spelled "a lot", unless you're talking about distribution.

    Anonymous 3: (#1) Sure, other better-run banks will fill the void. Everyone knows that except the people who thought about what the consequences would be of multi-trillion dollar bank failures. The rest of your answers are equally well thought out. For instance, (#3) can you tell the difference between citizens and non-citizens? If you can, do you believe corporations are citizens?

    ReplyDelete
  6. Thanks for the spelling correction. I do that a lot.

    ReplyDelete
  7. Citizens United doesn't bother me at all. The correlation between money spent and victory in election is spurious at best. The Red Baron said "The key to victory is not the crate, but the man who flies it." All you need is enough money, not more money. If the Tea Party has proven anything, it is the point that a person can win when he is outspent 4 and 5 to 1. If he can get his message out and it is good, the word will spread like mad. What would more likely make you eat out at a restaurant the first time? A slick TV commercial or a positive reference from a good friend? More later.

    ReplyDelete
  8. ecstatic adoration to constructive criticism Break Up Messages

    ReplyDelete