[ExI] Don't be evil

[Dan]

The point is, in a free society, you don't have to deal with psychopathic businessmen. If you know you're not going to be bailed out at taxpayers' expense (or via some other government program, such as credit expansion), then you'll likely take much more care in selecting who to hand your money to.

Also, the number of people who have such fortunes that they can merely flee the country AND still life the high life is very small. In the long run, for such people, this is a losing proposition. Surely, some will still get lucky and escape, but that's true under any social system: a lucky few will get lucky. The point is, though, if will lived in a free society, the problem would be far more limited and self-limiting since there'd be no alternative avenue for these people to get away with it.

In a free society, too, fleeing the country isn't likely to solve all your problems. If you have a bad reputation and everyone else knows about it, then it's going to be fairly hard for you to turn up somewhere else and expect them to be duped too. In my view, it's because of moral hazards created by bailouts and such plus the attitude that regulation works (it doesn't; it merely creates burdens for some and deludes most into believing the world is safer because there's some regulation in place) that people generally don't do the proper due dilegence on investments and the like. It's the unintended consequences of all these policies that have led to the bad outcomes.

Of course, some of the policies probably don't intend to some public good -- whatever that is -- but merely toward some private benefit at public expense and then the policies are sold as supporting the public good. The recent wave of bank and auto bailouts were all of this sort. The public was not really helped in any way. Just some big executives and investors got to redistribute their losses to everyone else. Some have even pointed out, since this happens time and again, that the nature of all such regulations and policies is merely to insure the elites always win out, regardless of the fact that this causes periodic financial crises.

I expect after everything calms down, in a few years, and all the new regulations are in place, we'll have another crisis and this will again be blamed on free markets, more regulations will be proposed, and the cycle will repeat. This does seem to be the nature of things in this area and it's rare in history where the alternative course is taken -- that of actually not bailing big investors, big banks, and big firms out and that of allowing them just to fail... It's rare, but not unheard of. In fact, the Panic of 1819 seems to have been a case of just that: the central bank inflated, some people got really wealthy, then the whole thing collapsed and the government did almost nothing to help them -- no bailouts, no new regulations, though there was some delay of debt payment. The world didn't end, but quite a few fat cats lost their fortunes.

Regards,

Dan


----- Original Message ----
From: BillK <pharos at gmail.com>
To: ExI chat list <extropy-chat at lists.extropy.org>
Sent: Wed, March 24, 2010 12:48:57 PM
Subject: Re: [ExI] Don't be evil

On Wed, Mar 24, 2010 at 2:40 PM, Dan wrote:
> Had we had a free society of the kind I propose, the kind of crises we see
> would be very unlikely as big banks (Citi), other firms (e.g., GM), and
> investors who made mistakes would lose money and, at the extreme,
> close shop. There would also be no credit expansion to fund the sort of
> unsustainable booms like the dot-com one and the current one.

Naww. You're still too idealistic.
I don't think you've had much dealings with psychopath businessmen.  ;)

If there was nobody available to bail them out, or their reputation
became so bad that they were running out of suckers, they would just
call it quits and move to their Caribbean island. (Or, sometimes, it
is enough to start up a new 'improved' company and carry on as usual).
The next generation of wolves is always waiting to take over and start
the scams all over again.

Once the wolves see that the free society is so slow to react that
they have time to take their winnings and run, there will be a
never-ending supply of wolves.

BillK
______________________________________________
extropy-chat mailing list
extropy-chat at lists.extropy.org
http://lists.extropy.org/mailman/listinfo.cgi/extropy-chat