[ExI] stossel on optimism

[Kelly Anderson]

2012/1/6 Stefano Vaj <stefano.vaj at gmail.com>:
> On 5 January 2012 21:06, Adrian Tymes <atymes at gmail.com> wrote:
>>
>> Unless and except where corps effectively become governments.
>> The line is not so clear as it might seem.
>
>
> Yes. The "failure of planned economies" has become a platitude since at
> least the eighties. But while markets may have other arguments in their
> favour, I believe to have already remarked once that perhaps the failure had
> to do with the attempt to manage something as large and complicate as the
> USSR with pens, pencils, file cabinets, pocket calculators and punch-card
> machines.
>
> The real example of planned economies today are not the very few socialist
> economies still around in not-so-developed countries, but large
> conglomerates, whose internal workings are by no means based on market
> mechanisms (the few attempts for intracorporate emulation of them, see
> Aker's IBS, having been unqualified disasters).
>
> Now, even without their hypothetical "seasteading", it is perfectly
> imaginable even in the most libertarian scenario that one of them could well
> assume a role even more pervasive than, say, XIX century governments. Let us
> imagine that it ends up employing most or all of the members of a community,
> who might in turn be shareholders, and/or consumers of the product,
> thereof... From that to the assumption of government-like features, there is
> just one small step.

Even capitalist systems can fail when too much faith is placed in one
aspect of the system. Thinking that 'real estate never goes down', or
that AIG is big enough to ensure everyone at the same time for the
same basic eventuality. That just ends up with all the world
governments becoming the final insurance company... which makes AIG
type companies too profitable because they aren't really the backstop
everyone thinks they are. There's something unfair about that (and you
know I, Mr. libertarian, don't say that sort of thing lightly).

If there ever was a place for a regulation, it seems that the
government should make sure that one insurance company isn't ensuring
everyone in a way that they'll have to pay out to everybody at the
same time. Though it's hard to see how you would do that. Say, for
example, that the Yellowstone super volcano went off. Every insurance
company in the world would fail immediately, and no amount of
legislation could prevent it. But perhaps some headway could be made
in purely financial instruments that don't depend quite so heavily on
natural disasters, but rather highly complex bubbles, like the real
estate derivatives.

I wish I could think of a way to outlaw investments that smart people
can't understand, but that's getting in the way of liberty. The only
solution, therefore, would seem to be educating investors to the
stupidity of buying something they can't explain to their mother.

I had a friend who invested using a rather complex scheme of selling
both short and long at the same time and allowing other people to bet
against each other using stocks he actually owned. I never could
completely wrap my head around it, so I would never make that kind of
investment. I hope he isn't sorry some day that the hole in his scheme
isn't exposed, and it almost has to be there. Of course, he is pitting
two greedy investors against each other, so maybe he'll always win...
who knows? It sounded like he had made himself into the house.

-Kelly