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  1. #191
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    From Time:

    An Argument for More Self-Government

    Here's something the left and the right can agree on: we need a bigger role in solving our collective problems

    What do Newt Gingrich and the Obama White House have in common?

    Back when he was still a presidential candidate, Gingrich said to his fellow conservatives, “if we shrink government then we have to grow citizens.” Last week, at a forum hosted by the White House Office of Social Innovation, many in attendance said essentially the same thing: we citizens need to take on more responsibility for the common good.

    Does this mean Republicans and Democrats are suddenly in violent agreement? No. Gingrich wishes for shrunken government; most of those gathered at the White House last week don’t. But it does mean that the old political frames for defining the role of government are in flux — and that it’s time for all of us to rethink what it means to govern ourselves.

    (MORE: Real Neighborhoods Do More Than Watch)

    At last week’s forum (which I helped to organize), the unspoken reality was that, like it or not, citizens everywhere now have to do more of what the state used to do. This is partly the result of decimated public sector budgets, and the exit of government from entire lines of civic work such as local courts and road maintenance. But it’s also because technology is rapidly rewriting the relationship between state and citizen.

    Consider platforms like SeeClickFix, which allows anyone to post a photo and the location of local problems like potholes or graffiti, and prompts neighbors or town officials to address them. IndieGoGo crowdsources funding for community projects that once might have been publicly funded. Such platforms not only give people power but allow them to see themselves not only as clients or cranky customers but also as responsible co-owners.

    Is this trend of more empowered citizens conservative or liberal? Both and neither. It’ll please the right because it shows that given good tools, Americans can do more without the state. It should also please the left, because it reminds us that for change at scale, the state remains indispensable: universal health care, for instance, isn’t going to be crowdfunded voluntarily.

    (MORE: Why Community Service Should Not Be a Punishment)

    But this trend will also force each side to shed its shibboleths. The right has to recognize that there are collective endeavors that require, well, collective endeavor — which is to say, government. The left has to recognize that doing public work requires less bureaucratic bureaucracies.

    A new deal for citizenship is emerging, and it makes the debate about big versus small government seem irrelevant. We need government today that’s big on the what and small on the how — government that sets great goals for society and offers ample resources, but then fosters more bottom-up innovation in methods.

    This means we need more competitive challenges such as the X Prize or the Buckminster Fuller Challenge, which offer big monetary awards for teams that solve complex technical or social problems. The administration is already using grand challenges to spur education reform and clean energy development.

    It also means redefining public service so there are more ventures like Code for America, which deploys techies into City Hall for a stint. And finally, it means evolving past the usual politics of left and right. We thrive when we have both strong citizens and a smart state, personal and mutual responsibility.

    Are Americans prepared to participate in such self-government? Are we ready as citizens to fill the breach?

  2. #192
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    From the Economist:

    The golden rules of banking

    They make the rules, and get the gold



    THE crisis has taught people a lot about the banking industry and the thought processes of its leaders. These lessons can be distilled into four golden rules.

    1. The laws of supply and demand do not apply. When food producers compete to supply a supermarket, the retailer has the luxury of selecting the lowest bidder. But when it comes to investment banking, wages are very high even though the number of applicants is vastly greater than the number of posts. If the same was true of, say, hospital cleaning, wages would be slashed.

    An investment bank, like a supermarket, demands a certain quality standard: it will not hire just anybody. But whereas it may be easy to identify a rotten banana, it is harder to be sure which trainee will be the next Nick Leeson and which the potential George Soros. That gives executives an excuse when things go wrong.

    2. Success is down to my genius; failure is caused by someone else. When banks do well, and profits soar, the bosses are responsible for it all with their strategic cunning and inspiring leadership. Huge bonuses are therefore due.

    But, like Macavity the mystery cat, executives were never at the scene of the crime. They did not attend the crucial meeting, read the vital memo or open the incriminating e-mail. Together with this surprising inattentiveness, executives have a remarkably faulty memory which means that conversations are rarely recalled in any detail. It is a wonder, indeed, given their technical shortcomings and early-onset Alzheimer’s, that they make it to the top of their organisations at all.

    But executives do tend to remember one vital fact. When scandal breaks, the blame should lie with a few rogue employees who have ignored the corporate culture. Managers cannot possibly be expected to keep track of the actions of junior staff. And that leads to the next rule.

    3. What is lucky for an individual trader may be unlucky for the bank as a whole. There is a survivorship bias in both fund management and trading. If your career starts with some bad losses, it will quickly come to an end. So, by definition, veteran traders will have had initial success. But that could be down to luck, not skill.

    Successful fund managers attract more clients and thus manage more money. This will keep happening until they have a bad year, when clients will desert them. Their worst result will thus occur when they have the most money to look after. They may end up losing more client money in cash terms than they ever made.

    Similarly, successful traders will be given more responsibility, first heading their departments and then leading the bank itself. They will gain a reputation as the kind of person who can handle risk, and they will believe their own publicity. The likes of Dick Fuld of Lehman Brothers and Jon Corzine at MF Global seemed to regard caution as a quality for wimps.

    This is a variant of the Peter principle, which holds that managers get promoted to their level of incompetence. The trader-cum-executive will make the biggest mistake when he is in charge of the whole bank. By this stage, he will be personally rich and will remain so even if the entire bank fails, not least because:

    4. Resigning can be a retirement plan. When ordinary folk resign, they are lucky to get paid to the end of the month. But when bankers leave in awkward circumstances, they make out like a lottery winner (Bob Diamond, formerly of Barclays, has done worse on this score than others). The bank may want to avoid a lawsuit, with all its unfavourable publicity. The more trouble the bank is in, the less publicity it will want and the better the negotiating position of the executive. This may not be the ideal incentive structure.

    Moreover, if the bank is big enough, the government will not be willing to let it fail. Take the Royal Bank of Scotland. Had it gone bankrupt, then the pension scheme might have fallen into the hands of the Pension Protection Fund (PPF), a collective-insurance plan. That would have been bad news for Fred Goodwin, the then chief executive, since individual pension payouts are capped under PPF rules. The limit at the time was £24,000 ($44,500) rather than the £703,000 he originally claimed.

    Bankers get such generous payoffs because it is in their contracts and airtight contracts are needed to attract the best people. But is this right? The BBC just appointed a director-general on a salary that is one-third less than that of the previous incumbent. Even so, there was no shortage of qualified applicants for the post. Back to the first rule: in banking, the laws of supply and demand do not apply.

  3. #193
    Member Musicallogic's Avatar
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    My views on the equality issue are succinctly stated by Friedrich Hayek. "There is all the difference in the world between treating people equally and attempting to make them equal."

  4. #194
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    Here is a fantastic defense of capitalism in the Economist:

    Rehabilitating capitalism
    For those who have lost faith


    THE financial crisis has led some people to question the viability of America’s economic system. Socialism’s appeal has faded in Russia and China, and to a degree in other countries that once were its champions, such as India and Cuba. But American-style capitalism has not had an easy time of it either. Crashing financial markets, bank bail-outs and high unemployment have all added to a growing sense of unease about a system that is based on private ownership of resources.

    “Why Capitalism?” by Allan Meltzer, a professor of economics at Carnegie Mellon University in Pittsburgh, is an extended response to some of the calls he has received in recent years. The most thought-provoking came from a woman in Germany who, after reading the New York Times, wondered if, only two decades after the fall of the Berlin Wall, she was actually witnessing the implosion of the system that brought it down.

    Capitalism’s core defence, Mr Meltzer argues, is that it is the only system that leads to freedom and economic growth. It is less good at ensuring virtue or stability; failure is an inherent part. Indeed the author’s observation that “capitalism without failure is like religion without sin. It doesn’t work well,” has already been widely circulated. However, the sins attributed to capitalism—corruption, fraud and greed, to name but three—are not only pervasive in systems where the state controls production, but far more damaging and far less likely to be rectified.

    The main problem, he argues, is that even nominally capitalist systems have, for better and worse, elements of state control. These often begin with defence and the police, and go on to national transport systems, which leads, in America’s case, to an ever-expanding network of bureaus and agencies. Much of bureaucracy is adopted under the rationale of enhancing “fairness”. But, as Mr Meltzer notes, fairness often means providing present benefits using debt that must be repaid by taxpayers in the future (which is hardly fair) or through regulations and subsidies created by people in government who then go on to exploit them in private-sector jobs (which is also unfair).

    It is this last issue that forms the heart of “A Capitalism for the People” by Luigi Zingales, a professor at the University of Chicago’s Booth School of Business. Mr Zingales has written an elegy to the America he found when he moved there 24 years ago from an Italy that was rife with nepotism. Italian businesses preferred to stay small and discreet. Growing bigger made them vulnerable to scrutiny and would require them to hire people on the basis of talent rather than loyalty; and loyalty was important because it, once again, helped protect the firm from scrutiny.

    Arriving in America, Mr Zingales found an enthusiasm for capitalism. Americans believed that it was possible to become rich and that increasing wealth benefited the poor as well as the not so poor. They regarded their capitalist system as fair—or at least fair enough. All of those sentiments, says Mr Zingales, have been eroded.

    Much of the change is a direct result of the vast expansion of the state through complex subsidies and anti-competitive regulations that invite the sort of cronyism that Mr Meltzer cites as well. When government favours the private sector, Mr Zingales argues, it is all too often by being “pro-business” rather than “pro-market”, meaning that favourable conditions are provided to particular institutions rather than to institutions broadly. This distorts the system, resulting in precisely the problem of select companies making profits while imposing costs on society that Mr Meltzer argues is at the core of what regulation should be designed to prevent.

    Mr Zingales makes three proposals. Protected sectors, notably education and health care, should be opened up to competition. Tax policy should be changed in two ways. First, it should be used to make subsidies and their costs more transparent. The deduction on mortgages, for example, should be termed a tax on renting; the lavish benefits provided for ethanol production should be regarded as a tax on petrol. Secondly it should be used as a substitute for complicated regulation and applied against areas that cost society, such as pollution and (because it creates instability) the use of short-term debt by banks.

    More broadly, Mr Zingales wants a closer, explicit, tie between capitalism and morality. He wants to extend the public shaming of corporate crooks to people who take actions that are legal, but damaging to society, such as borrowers who walk away from mortgages merely because their value exceeds the value of the underlying property. Business schools, Mr Zingales says, are ideally positioned to point out when an action that provides a benefit for an individual comes at a cost to society, but in reality they rarely bother. This, he believes, is part of the same malaise that has befallen the political debate on capitalism, which has been taken over by special interests and people who have no faith in a real market-based system. For all America’s success, he warns, Washington is on a trajectory that leads to Rome.

  5. #195
    Junior Member nharkey's Avatar
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    Default Certainly inequality is a problem--but so are all the solutions.

    [QUOTE=PeaceBaby;1855722]But which is true then? Is inequality a problem or not? If you are saying the article admits to that, why is that admission prefaced by:

    I am responding just to the central question here, as a general question. Is inequality a problem or not? Of course it is a problem, but not in the simple way that people generally mean it. We have great inequality of wealth and assets and tend to assume that this is the fault of the "system" or some system or attitude or whatever other force. In truth the inequality begins with human capital. We have enormous inequality everywhere, of intelligence, motivation, character, strength, and just about any human asset you might mention--even physical attractiveness. Specific systems may relieve this somewhat or exacerbate it, but they will not begin to remove it. I tend to think that this is the central core of all political problems, and it is tragic, but also absolutely true. In order to have even the beginning of economic equality you need Orwell's boot in the face of every bright, energetic individual in the world. And if you somehow succeed in doing that, with whatever amount of governmental tyranny, you would wipe out the force that makes it possible for groups, cities, states and nations to grow and prosper as a whole. Perhaps many of you would feel better, but the food, shelter, health and general decency of the world would not be better. That great saying that "the best is the enemy of the good" was never more true than here.
    Last edited by nharkey; 07-19-2012 at 02:13 PM.

  6. #196
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    Quote Originally Posted by Musicallogic View Post
    My views on the equality issue are succinctly stated by Friedrich Hayek. "There is all the difference in the world between treating people equally and attempting to make them equal."


    Who owns the country?

    How much of the country 300 000 richest people own? 30 000 richest people? 3000?

    How much the people who own more than half the country pay taxes?

    Do they pay taxes?

    If they do not pay taxes, they own the politicians. Who pays their taxes?

    You do.

    But how can you be so stupid?

    You need your own money.

  7. #197
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    Is This the End of Norquist's Pledge?



    Writing in the Fiscal Times Bruce Bartlett notes that Republicans have to seriously contemplate raising taxes in order to avoid automatic cuts to defense spending. It seems that there are fears that the scheduled cuts could cost Republicans the election:

    An important factor putting the defense sequester on the table now is an obscure law called the Worker Adjustment and Retraining Notification Act, which requires companies anticipating mass layoffs to give workers at least 60 days advance notice. That means the layoff notices for defense contractors affected by the sequester on January 1 will be sent out no later than November 2, just 5 days before the election.

    There is also evidence that the stocks of defense contractors are suffering as investors expect a big hit to earnings from layoffs related to the sequester.

    Belatedly, some conservatives have now noticed that cuts in federal spending cost jobs. They are trumpeting a study by the Aerospace Industries Association predicting the loss of 2 million jobs if the defense sequester takes effect as scheduled. This includes not only jobs directly lost in the defense industry, but those indirectly lost as laid off workers cut back their spending for goods and services.

    ...

    It stands to reason that if cuts in defense spending cost jobs, then cuts in nondefense spending also cost jobs. And if spending cuts cost jobs, then spending increases must be able to create them.

    The obvious way out of this dilemma is simple: raise taxes instead. Achieve the same amount of deficit reduction but by through higher revenues rather than defense spending cuts. Given that federal revenues are now just 15.8 percent of the gross domestic product, compared with a postwar average of about 18.5 percent, it’s obvious that revenues could rise a lot without jeopardizing economic growth.

  8. #198
    ^He pronks, too! Magic Poriferan's Avatar
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    The USA is in terrible need of more tax revenue. The defense budget is hardly the thing that needs it, though.
    Go to sleep, iguana.


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  9. #199
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Musicallogic View Post
    My views on the equality issue are succinctly stated by Friedrich Hayek. "There is all the difference in the world between treating people equally and attempting to make them equal."
    Your views are stated by Hayek?

    My views are generally my own, arrived at myself, I wonder if that makes me more individualistic than you despite despising Hayek and all he stands for?

  10. #200
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    Quote Originally Posted by Lark View Post
    Your views are stated by Hayek?

    My views are generally my own, arrived at myself, I wonder if that makes me more individualistic than you despite despising Hayek and all he stands for?
    Just because @Musicallogic's views are echoed by Hayek does not mean that she/he has no views of her own.

    I for one agree with the quote from Hayek. There is all the difference between treating people in an equal manner, and attempting to make them equal.

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