How did USA become such a messed up country?

[JinXy]

I sort of agree with this, as long as the wealth stays with a company and they keep reinvesting it it isn't a problem, it drives the economy. The problem arises when they sit on the cash or make huge payouts to stock owners(especially when these payouts ends up with a select few individuals), or when they buy off policitians.

Yes, but the cash that is hoarded by companies or paid out to stock owners don't end up under the mattresses. They go into the banking system, and from there new loans are made. It might not be the company reinvesting the money themselves. But someone else will borrow the money from the banks and do it.

Now we hear that banks aren't lending much to businesses now. That's true, because they are lending tons of money to the government (by buying treasuries) and because the Fed is printing money to pay these banks interest so that the banks will keep the money with the Fed.

[Elldallan]

Yes, but the cash that is hoarded by companies or paid out to stock owners don't end up under the mattresses. They go into the banking system, and from there new loans are made. It might not be the company reinvesting the money themselves. But someone else will borrow the money from the banks and do it.

Now we hear that banks aren't lending much to businesses now. That's true, because they are lending tons of money to the government (by buying treasuries) and because the Fed is printing money to pay these banks interest so that the banks will keep the money with the Fed.

Well the problem I see is as per that video is that wealth is too heavily distributed with the top 10%, hell even the top 1%, if the wealth was a bit more evenly distributed it would still get spent but there would be less poverty and a definite improvement of living quality for pretty much everybody. Plus the money doesn't disappear just because it's taxed, it's just moved to the government which can invest it somewhere as well.

A problem is that once money reaches the Cayman Islands or wherever it essentially becomes invisible and the persons or corporations can swindle them off to do whatever.
So in my opinion the movement of money towards these places should be hampered and double taxation legislation should be lightened so that if country X has 5% tax and country Y has 50%(yes this figure is intentionally exaggerated) tax then even even if a corporation moves it cash from country Y to country X country Y can still take the differing 45% in tax, this would obviously be a problem for tax paradises as it'd destroy their "business model". At the moment where such double taxation laws exists it simply prevents double taxation and the tax where you register it is what goes.

But most blatantly we need to prevent corporations and the top 1% from buying politicians, regardless whether they do it legally or illegally.

[JinXy]

Well the problem I see is as per that video is that wealth is too heavily distributed with the top 10%, hell even the top 1%, if the wealth was a bit more evenly distributed it would still get spent but there would be less poverty and a definite improvement of living quality for pretty much everybody.

Wealth is too heavily distributed at the top 1% precisely because of the Fed. Bailouts and money printing.

Plus the money doesn't disappear just because it's taxed, it's just moved to the government which can invest it somewhere as well.

Sure, the money is still around physically, but that's not the point. I guess I could have made myself clearer: When the money is funnelled through the government, it increases the cost of capital (buildings, labour, rental, etc) because now, companies have to fight for this labour/buildings/equipments with the government. The costs to the entire economy rise as a result. Instead of hiring more government workers that produce no real goods, these workers are much better employed in the private sector. Also, governments are generally not such good investors because they face no market competition. They can spend money without short- or mid-term consequences without being checked by market forces that are present around normal businesses.

A problem is that once money reaches the Cayman Islands or wherever it essentially becomes invisible and the persons or corporations can swindle them off to do whatever.
So in my opinion the movement of money towards these places should be hampered and double taxation legislation should be lightened so that if country X has 5% tax and country Y has 50%(yes this figure is intentionally exaggerated) tax then even even if a corporation moves it cash from country Y to country X country Y can still take the differing 45% in tax, this would obviously be a problem for tax paradises as it'd destroy their "business model". At the moment where such double taxation laws exists it simply prevents double taxation and the tax where you register it is what goes.

I would contend that US does not have a problem of tax revenue at all. It has, instead, a huge overspending problem.

But most blatantly we need to prevent corporations and the top 1% from buying politicians, regardless whether they do it legally or illegally.

Well, I wish we can do that too. This is an age old, perennial problem that will never disappear in a democracy. That's why there are other forms of government which are arguably more stable than a democracy.

[Elldallan]

Wealth is too heavily distributed at the top 1% precisely because of the Fed. Bailouts and money printing.

Sure, the money is still around physically, but that's not the point. I guess I could have made myself clearer: When the money is funnelled through the government, it increases the cost of capital (buildings, labour, rental, etc) because now, companies have to fight for this labour/buildings/equipments with the government. The costs to the entire economy rise as a result. Instead of hiring more government workers that produce no real goods, these workers are much better employed in the private sector. Also, governments are generally not such good investors because they face no market competition. They can spend money without short- or mid-term consequences without being checked by market forces that are present around normal businesses.

Not bailing out banks wouldn't change anything except screwing over the small savers, they have no real power but in that scenario they take all the risk, that's because if a bankruptcy were allowed to happen there would most likely be enough money to pay off the largest savers in these banks which means that the ones who are promoting the risk taking behaviour are those who profits from taking risks while they're not the ones who are actually taking said risks, this is a very bad thing which usually leads to disasters. Unless the law was changed so that bankruptcy payments happened from the bottom up there would never be any change, so the bailouts is a good thing that saves the general public in my opinion. But in my opinion any bailout should involve the government seizing control and ownership of said business, that would create an incentive for said businesses to avoid bailouts, but the current system where large investors are the ones that are pushing for greater risks in return for greater interest rates while at the same time being unlikely to ever be the ones to suffer for said risk taking will perpetuate that sort of behavior infinitely. I agree though that the government is usually a bad player in certain markets, however I do think that the government should be solely responsible for such things as infrastructure and healthcare and education, you could also add research(which I see as distinctly separate from education in general) grants to this because corporations are uniformly bad at promoting the sort of science that doesn't bring any short term results but works to further our understanding of science in general, this is necessary for science to prosper and advance and something that is becoming evermore scarce these days.

Personally I think having to fight for labour and have to pay workers more is a good thing, movement of capital from the 1% to the lower and middle classes is a great thing in my opinion. But the government doesn't have to spend money where it competes with the private sector. It could invest money in things that benefit all such as construction and maintenance of roads, railroads, powergrids and in my opinion a fiber grid, In my opinion it'd be the best solution if the government built and maintained the fiber and phone backbone and then leased connections to ISP's for the last mile. Then you'd get around the de facto local monopolies that exists today because of the exorbitant entry fees.

Although there are some things I think are better off in the public sector rather than the private sector, such as schools, hospitals etc where profit should never be the primary motivation.

I would contend that US does not have a problem of tax revenue at all. It has, instead, a huge overspending problem.

Yes I agree, the US has a huge and enormously bloated "defense" budget. But what I was talking about was the movement of money to financial paradises, usually with banking laws that does not allow for transparency. The transfer of money to these institutions should be hampered regardless of wether the country has a taxation problem or not, and as a side bonus the government gets more money to spend.

Well, I wish we can do that too. This is an age old, perennial problem that will never disappear in a democracy. That's why there are other forms of government which are arguably more stable than a democracy.

Most sensible democracies has limits on party/personal campaign fundings, for once corporations should be forbidden from contributing to election campaigns at all and there should be a limit to how much a single person could contribute as well. Yes I know that there are ways around at least the latter but it'd slow down the process at least and it'd be easier to get rid of politicians who accepts bribes since they'd have to do it illegally rather than the current legal way.

[JinXy]

Not bailing out banks wouldn't change anything except screwing over the small savers, they have no real power but in that scenario they take all the risk, that's because if a bankruptcy were allowed to happen there would most likely be enough money to pay off the largest savers in these banks which means that the ones who are promoting the risk taking behaviour are those who profits from taking risks while they're not the ones who are actually taking said risks, this is a very bad thing which usually leads to disasters. Unless the law was changed so that bankruptcy payments happened from the bottom up there would never be any change, so the bailouts is a good thing that saves the general public in my opinion. But in my opinion any bailout should involve the government seizing control and ownership of said business, that would create an incentive for said businesses to avoid bailouts, but the current system where large investors are the ones that are pushing for greater risks in return for greater interest rates while at the same time being unlikely to ever be the ones to suffer for said risk taking will perpetuate that sort of behavior infinitely.

Well, I mentioned before that it was government and Fed policies which encouraged this risk taking by the banks, and when they fail, the government bailed them out. 2 wrongs really don't make a right.

If we continue bailing out people, the moral hazard is still there. People will not learn that they have to scrutinize the banks closely themselves instead of assuming that the government has got their back. Besides, if these banks were allowed to fail, other banks would have come in and bought up the deposit accounts/assets of the failed banks. Before the 2008 crisis, the US had about 8000 commercial banks. There are prudent banks who have been waiting for this opportunity to gain market shares. However, they are being punished. Savers in the majority of other banks are being unfairly punished too when they have to be made to bail out these failed banks. Having said all these, these bailed-out banks are even more leveraged now. They have tons of junk mortgages and government bonds on their balance sheet, which are not shown to the public (you can get the data from the SEC). This is why the Fed is cornered. If it raises rates, these institutions will fail again as they suffer massive losses on their bond and mortgage holdings.

I agree though that the government is usually a bad player in certain markets, however I do think that the government should be solely responsible for such things as infrastructure and healthcare and education, you could also add research(which I see as distinctly separate from education in general) grants to this because corporations are uniformly bad at promoting the sort of science that doesn't bring any short term results but works to further our understanding of science in general, this is necessary for science to prosper and advance and something that is becoming evermore scarce these days.

It is interesting to note that in the past, healthcare and education and research were carried out extensively by the private sector, before government got involved. People back then had so much purchasing power to indulge in and donate to such efforts. It was only later on that people's wealth are wiped out by inflation and taxation. So nowadays, people tend to assume that we need government for these services.

Personally I think having to fight for labour and have to pay workers more is a good thing, movement of capital from the 1% to the lower and middle classes is a great thing in my opinion. But the government doesn't have to spend money where it competes with the private sector. It could invest money in things that benefit all such as construction and maintenance of roads, railroads, powergrids and in my opinion a fiber grid, In my opinion it'd be the best solution if the government built and maintained the fiber and phone backbone and then leased connections to ISP's for the last mile. Then you'd get around the de facto local monopolies that exists today because of the exorbitant entry fees.

Agreed somewhat.. but the minute you hire a government worker and put him to work in an office or give him equipment, this action alone is already competing with the private sector for resources (that worker's labour, the equipment, the office space, etc)... and that's the point that i am trying to make. A society has limited resources. It's better not to waste them on too many government workers.

Although there are some things I think are better off in the public sector rather than the private sector, such as schools, hospitals etc where profit should never be the primary motivation.

Well, i will argue that profit motives is what encourage competition, and competition increases quality and reduces costs. If we look at areas where there is not much government involvement, quality rises and costs go down (especially consumer electronics, or even lasik surgery). In areas where there is a lot of government involvment, quality does not rise as fast/quality drops and costs rise (healthcare, education, housing).

Yes I agree, the US has a huge and enormously bloated "defense" budget. But what I was talking about was the movement of money to financial paradises, usually with banking laws that does not allow for transparency. The transfer of money to these institutions should be hampered regardless of wether the country has a taxation problem or not, and as a side bonus the government gets more money to spend.

Well, unfortunately, it is precisely because Uncle Sam wants a big cut of all these money that the rich have to move their money out to tax havens, where the governments don't take as much. The US do have a big "defense" budget like you said, but a larger ticking time bomb is the welfare costs. Last year, welfare costs made up about 45% of the government's expenses (not revenue). That's about $1.6 trillion. And the government only has about $2.5 trillion in revenue

Most sensible democracies has limits on party/personal campaign fundings, for once corporations should be forbidden from contributing to election campaigns at all and there should be a limit to how much a single person could contribute as well. Yes I know that there are ways around at least the latter but it'd slow down the process at least and it'd be easier to get rid of politicians who accepts bribes since they'd have to do it illegally rather than the current legal way.

It is a tough issue isn't it. Plato once said something like: A society evolves from chaos/dictatorship to aristocracy to oligarchy to democracy, and back to chaos/dictatorship again.
The US founding fathers knew full well about the dangers of democracy, which was why they created the US as a Constitutional Republic. Anyway, yeah, eventually every system breaks down. On top of your suggestion, i would also add that politicians be made to stay in their home states where the public can knock on their doors any time, rather than have them all congregate at the Capitol Hill, where lobbyists can all gather and have a field day buying up politicians.

[Elldallan]

Seems I ended up writing a bit, so I separate things into different posts.

It is interesting to note that in the past, healthcare and education and research were carried out extensively by the private sector, before government got involved. People back then had so much purchasing power to indulge in and donate to such efforts. It was only later on that people's wealth are wiped out by inflation and taxation. So nowadays, people tend to assume that we need government for these services.

Back then there also was nothing fair or equitable about healthcare, if you go even further back tho healthcare was socialized in the way that the professionals where fed by the community, by those they helped so that they could keep doing their work rather than have to work long hours in the field or hunting.

Personally I think government is needed to make healthcare equitable and availible to all, and to achieve that, preferably free. Private sector tends to effectivize a process/system as much as possible which is usually a good thing but in healthcare that means cutting down on doctors, nurses and staff in general, and cutting down on expensive patients or long term patients because they take up valuable bunk space.
We've recently seen this happen in nursing homes for the elderly over here where the market was recently opened up for the private sector, the result, fewer nurses, less personal dignity for the patients, worse care and worse mental health for the nurses who are overworked, underpaid and forced to make unethical decisions.
All in the sacred name of profit, this lashes back at those homes that are still owned by the government because there is rising distrust and they loose out in grants because the private homes entice people with fancy advertisement and lofty promises, which they never can nor intended to fulfill, and then the private homes reap large profits for a short time and then they go "bankrupt" and then a new replacement conveniently pops up promising to be better than the old one but typically failing just like the previous one, this has happened recently with schools ran by private businesses as well. So no, I don't see anything good ever coming from letting the private sector run healthcare, schools or critical infrastructure etc.

Another great example, this time from the US where the government awarded local monopolies to corporations in exchange for them building the infrastructure which led to that the big competitors all using different frequencies for mobile networks meaning you can't take a cellphone from one provider and expect it to work with another, contrast this with Europe where the government actually exercised control and mandated that a single technology be used, you can now basically take a cellphone from Sweden and it'll work in southern Italy as long as you just get a network provider.

Or the internet expansion in the US where in many areas you have the choice between 1 Fiber operator, 1 DSL operator, 1 cable operator or nothing. This leads to the market atrophying rather than promoting competition because the entrance fees into the market are astronomic. If the government had instead built the fiber backbone themselves and then rented it at cost to the providers there could have been real actual competition in every community, if you don't like the big ISP's offer, the community pools it resources, buys equipment and leases net access from the government and connects it and voila, access.

[Elldallan]

Agreed somewhat.. but the minute you hire a government worker and put him to work in an office or give him equipment, this action alone is already competing with the private sector for resources (that worker's labour, the equipment, the office space, etc)... and that's the point that i am trying to make. A society has limited resources. It's better not to waste them on too many government workers.

As I said, there are certain markets or market sectors where I don't think private competition is appropriate.
But in general I agree, it is good to not waste resoources on too many government workers, the question then becomes, how many are too many.

Well, i will argue that profit motives is what encourage competition, and competition increases quality and reduces costs. If we look at areas where there is not much government involvement, quality rises and costs go down (especially consumer electronics, or even lasik surgery). In areas where there is a lot of government involvment, quality does not rise as fast/quality drops and costs rise (healthcare, education, housing).

Except that some markets doesn't encourage neither competition or a rise in quality. When the entrance fees to a market is high enough the market naturally progresses towards a relatively small number of players with huge market shares that can essentially split the market between themselves and then gouge the customers with a worse service at a higher cost. US internet is an excellent example of this. In my opinion it is better if the government handled at the very least the general structure of these markets so that in essence they become much smaller and much more local markets where actual competition can take place.

Well, unfortunately, it is precisely because Uncle Sam wants a big cut of all these money that the rich have to move their money out to tax havens, where the governments don't take as much. The US do have a big "defense" budget like you said, but a larger ticking time bomb is the welfare costs. Last year, welfare costs made up about 45% of the government's expenses (not revenue). That's about $1.6 trillion. And the government only has about $2.5 trillion in revenue

The rich wants to keep their money yes, anyone would. The solution is if the US and other similarly inclined countries worked together and created a system where they share relevant information between the financial departments and punish money traveling outside of this zone where oversight/transparency essentially becomes nonexistant. Recently The EU/US managed to do this with switzerland, they threatened embargoes if they didn't get access to Swiss banks, and since Switzerland was surrounded by the EU on all sides...

It is a tough issue isn't it. Plato once said something like: A society evolves from chaos/dictatorship to aristocracy to oligarchy to democracy, and back to chaos/dictatorship again.
The US founding fathers knew full well about the dangers of democracy, which was why they created the US as a Constitutional Republic. Anyway, yeah, eventually every system breaks down. On top of your suggestion, i would also add that politicians be made to stay in their home states where the public can knock on their doors any time, rather than have them all congregate at the Capitol Hill, where lobbyists can all gather and have a field day buying up politicians.

Good suggestion, although I don't know how feasible since they actually have to communicate and debate to actually do their job, but you could certainly legislate that they'd have to spend X% of their days in their home state. The internet gives plenty of options for most of the communication neccessary but not all.

[Elldallan]

Well, I mentioned before that it was government and Fed policies which encouraged this risk taking by the banks, and when they fail, the government bailed them out. 2 wrongs really don't make a right.

If we continue bailing out people, the moral hazard is still there. People will not learn that they have to scrutinize the banks closely themselves instead of assuming that the government has got their back. Besides, if these banks were allowed to fail, other banks would have come in and bought up the deposit accounts/assets of the failed banks. Before the 2008 crisis, the US had about 8000 commercial banks. There are prudent banks who have been waiting for this opportunity to gain market shares. However, they are being punished. Savers in the majority of other banks are being unfairly punished too when they have to be made to bail out these failed banks. Having said all these, these bailed-out banks are even more leveraged now. They have tons of junk mortgages and government bonds on their balance sheet, which are not shown to the public (you can get the data from the SEC). This is why the Fed is cornered. If it raises rates, these institutions will fail again as they suffer massive losses on their bond and mortgage holdings.

The problem is that stopping the bailouts won't stop the problem. Because the driving force for these machanizms will still be there and just as strong as ever.
The big investors will keep demanding high interest rates on their investments and will go with whoever offers the highest, since these investors controls the majority of the invested money the banks will keep competing with each other over these investors and taking ever larger risks to raise those interest rates. Then when they fail the large investers will get back most if not all of their money from the person coordinating the bankruptcy because the laws dictate that those who the bank has the largest debts to will get their payouts first, in order of the size of their debts. So in the end those who demand that risks be taken doesn't share in taking these risks, the small savers who go with the big bank because they think that size equals safety will take the fall and all of the risk. So even if bailouts would stop the behaviour would continue because the system promotes and rewards that behaviour. If instead bankruptcy menat that the government seizes ownership and pays out as much of the debts as possible in reverse order of size and then scrap the business if there is nothing left after all detbs has been paid, or as much of the debts as possible this provides incitement for all the key players to take responsibility because once the government seizes control they can stop payouts of huge parachutes for the board of directors etc and they can bring criminal charges against key corporate officers who commited criminal negligence. plus the investors who demanded the risks will be the ones who ends up loosing money. Thus you promote responsibility and prudence with those who controlls the risk taking.

Besides, the small people will never have neither access to nor the actual knowledge to interpret the neccessary information should they have access to it. So the small people will never be able to scrutinize the banks the way you suggest they should. Banks are even explicitly allowed to lie in their quarterly statements if it stabilizes the market because customers don't understand market fluctiations and at the smallest sign they'd flee a bank in hordes just because the quarterly statement was ever so slightly bad and the bank would collapse even if it was a stable and well functioning bank who just had a bad quarter because they don't keep enough actual hard money around to give to people if there suddenly was a huge spike in transactions.

[JinXy]

Seems I ended up writing a bit, so I separate things into different posts.


Back then there also was nothing fair or equitable about healthcare, if you go even further back tho healthcare was socialized in the way that the professionals where fed by the community, by those they helped so that they could keep doing their work rather than have to work long hours in the field or hunting.

Personally I think government is needed to make healthcare equitable and availible to all, and to achieve that, preferably free. Private sector tends to effectivize a process/system as much as possible which is usually a good thing but in healthcare that means cutting down on doctors, nurses and staff in general, and cutting down on expensive patients or long term patients because they take up valuable bunk space.
We've recently seen this happen in nursing homes for the elderly over here where the market was recently opened up for the private sector, the result, fewer nurses, less personal dignity for the patients, worse care and worse mental health for the nurses who are overworked, underpaid and forced to make unethical decisions.
All in the sacred name of profit, this lashes back at those homes that are still owned by the government because there is rising distrust and they loose out in grants because the private homes entice people with fancy advertisement and lofty promises, which they never can nor intended to fulfill, and then the private homes reap large profits for a short time and then they go "bankrupt" and then a new replacement conveniently pops up promising to be better than the old one but typically failing just like the previous one, this has happened recently with schools ran by private businesses as well. So no, I don't see anything good ever coming from letting the private sector run healthcare, schools or critical infrastructure etc.

Another great example, this time from the US where the government awarded local monopolies to corporations in exchange for them building the infrastructure which led to that the big competitors all using different frequencies for mobile networks meaning you can't take a cellphone from one provider and expect it to work with another, contrast this with Europe where the government actually exercised control and mandated that a single technology be used, you can now basically take a cellphone from Sweden and it'll work in southern Italy as long as you just get a network provider.

Or the internet expansion in the US where in many areas you have the choice between 1 Fiber operator, 1 DSL operator, 1 cable operator or nothing. This leads to the market atrophying rather than promoting competition because the entrance fees into the market are astronomic. If the government had instead built the fiber backbone themselves and then rented it at cost to the providers there could have been real actual competition in every community, if you don't like the big ISP's offer, the community pools it resources, buys equipment and leases net access from the government and connects it and voila, access.

Look at the healthcare mess that the US is in right now. It speaks for itself. There is no such thing as "equitable" healthcare. Someone else will always end up paying for it. When you talk about private homes, have you looked at the regulations that they have to comply with? As i've mentioned, whenever the government got involved in any sector, costs will be high. They put in place regulations and taxes. Of course these private homes need to make profits. Otherwise there is no incentive to do it. But profits is not a bad thing. When there is profits, there will be competition, and prices will drop and quality improve.

You may make all the arguments against private businesses running schools and healthcare. But again, I will point out to the period of time when US became great without government involvement in all these areas. Private people can solve their own problems!

As for internet, there will always be competitors. Just because the costs are big (did you check how government regulations contributed to it?) do not mean that there will be less competitors. In fact, if there is tons of profits to be made, there will be competition coming in.

Having said that, I am impartial on the internet issue you brought up. But for healthcare and education, I am convinced that private people can do it on their own. I'm a private tutor myself and I have found many solutions to teach better compared to public schools. I can set up a school to rival the sloppy incumbents. The problem is that the cost of entry is very high, because of government regulations.

[JinXy]

The problem is that stopping the bailouts won't stop the problem. Because the driving force for these machanizms will still be there and just as strong as ever.
The big investors will keep demanding high interest rates on their investments and will go with whoever offers the highest, since these investors controls the majority of the invested money the banks will keep competing with each other over these investors and taking ever larger risks to raise those interest rates. Then when they fail the large investers will get back most if not all of their money from the person coordinating the bankruptcy because the laws dictate that those who the bank has the largest debts to will get their payouts first, in order of the size of their debts. So in the end those who demand that risks be taken doesn't share in taking these risks, the small savers who go with the big bank because they think that size equals safety will take the fall and all of the risk. So even if bailouts would stop the behaviour would continue because the system promotes and rewards that behaviour. If instead bankruptcy menat that the government seizes ownership and pays out as much of the debts as possible in reverse order of size and then scrap the business if there is nothing left after all detbs has been paid, or as much of the debts as possible this provides incitement for all the key players to take responsibility because once the government seizes control they can stop payouts of huge parachutes for the board of directors etc and they can bring criminal charges against key corporate officers who commited criminal negligence. plus the investors who demanded the risks will be the ones who ends up loosing money. Thus you promote responsibility and prudence with those who controlls the risk taking.

With more oversight from the market (instead of having the market assume that the government is regulating everything), those problems you mention will not be as bad as you presented them. Sure, investors want high interest rates. But banks will also be careful in taking risks when depositors and private consumer watchdogs are watching their actions. Without the government moral hazards, the banks will compete with each other based on the safety of their deposits. Right now, because government insured everything, banks compete with each other based on how much risk they take and how much yield they can give.

Again, these are not just theories. When people are allowed to fail, the industry consolidates and stronger and prudent players take over, and the industry grow with a better foundation and with renewed rigour. Just check out Scandinavia, South Korea, Russia, Mexico, to cite a few in recent history. They let people fail. Sure, it looks horrible for a year or 2, but they boomed after that.

Nobody talked about the great depression of 1920 in the US. They let people fail. They took the pain for a year or two. And boomed afterwards. For more info, check out my blogpost http://silvernjin.blogspot.sg/2013/0...ked-about.html

Letting people fail is not the problem. The problem was the artificial boom that came before it. This rapid growth was caused in large part by government policies and the central bank policies. The artificial boom is the disease. The bust is the cure.

Besides, the small people will never have neither access to nor the actual knowledge to interpret the neccessary information should they have access to it. So the small people will never be able to scrutinize the banks the way you suggest they should.

That's why you have competing consumer reports by knowledgeable people. We all small peons don't know much about the technology that goes inside apple or samsung phones too.

Banks are even explicitly allowed to lie in their quarterly statements if it stabilizes the market because customers don't understand market fluctiations and at the smallest sign they'd flee a bank in hordes just because the quarterly statement was ever so slightly bad and the bank would collapse even if it was a stable and well functioning bank who just had a bad quarter because they don't keep enough actual hard money around to give to people if there suddenly was a huge spike in transactions.

That's why in a free market, there will be a natural reserve ratio that banks will hit. Competition on safety will bring them to this natural ratio. Sure, there will be problems from time to time. There is nothing perfect. But as a business entity, you are supposed to account for such risk as a bank run. Over time the system will become very robust. Having a central bank to print money whenever there is trouble weakens the system tremendously.

[JinXy]

Actually we don't need to debate so much on these.

Just get the government to reduce regulations and allow for competition. They can still keep their own hospitals and schools and whatnot, but allow private enterprises to compete with them without imposing regulations.

Start with these areas:
-Education business
-Healthcare business
-Currency-issuance business (virtual money has come and gone for thousands of years because of government intervention, which was why I wasn't so excited about bitcoin even though I support such private efforts)

Very simple! Let people compete. There is no harm to it. If government services are so great, the people will choose government services.
The problem is, no, government cannot compete equally. And so they have to come up with all these regulations in the name of protecting consumers. But really, these regulations only serve to protect themselves.

[Elldallan]

Actually we don't need to debate so much on these.

Just get the government to reduce regulations and allow for competition. They can still keep their own hospitals and schools and whatnot, but allow private enterprises to compete with them without imposing regulations.

Start with these areas:
-Education business
-Healthcare business
-Currency-issuance business (virtual money has come and gone for thousands of years because of government intervention, which was why I wasn't so excited about bitcoin even though I support such private efforts)

Very simple! Let people compete. There is no harm to it. If government services are so great, the people will choose government services.
The problem is, no, government cannot compete equally. And so they have to come up with all these regulations in the name of protecting consumers. But really, these regulations only serve to protect themselves.

I say no to letting enterprise compete in education in anything below university level because it creates segregation and it creates grade inflation. If schools are allowed to charge tuition fees then they'll take the students whose parents can pay said fees and they'll take the best teachers because they can pay better. Plus those teachers will be encouraged to set higher grades than the students actual knowledge because average grade is a competing point that will determine what schools attract the most students. So enterprises in general education is a bad idea in my opinion.
The best teachers are needed not with the best students, they're needed where there's the greatest need which typically is anywhere but with students from middle class or above because those students generally have support from home and they learn to read books at an early age, so they have an easier time in school and generally perform better.

The exact same thing will happen with healthcare because those who can and will pay will drain the system of money which will mean longer queues for the remaining hospitals, worse doctors because they can't pay top notch salaries, worse equipment because they can't afford it.

The simple thing is that allowing enterprises into healthcare/education is better for the individuals that can afford it and hence they will always be able to compete, but it will be worse for society as a whole and that's where the problem lies. So I think that government should keep enterprises out because in the long term that will benefit society more as a whole.

On the issue of currencies I don't have any opinion because I don't know much about virtual money or money issued by any NGO, but yes bitcoin is interesting and it'll be interesting to see where it leads, though I think the anonymity is a problem because it prevents the IRS equivalent from doing their jobs proper?y same as financial paradises already do today.

So no I don't think the issue is all that simple because individuals will always have their own best in mind and not that of society, which is why government should keep enterprises out of these areas in my opinion

[JinXy]

I say no to letting enterprise compete in education in anything below university level because it creates segregation and it creates grade inflation. If schools are allowed to charge tuition fees then they'll take the students whose parents can pay said fees and they'll take the best teachers because they can pay better. Plus those teachers will be encouraged to set higher grades than the students actual knowledge because average grade is a competing point that will determine what schools attract the most students. So enterprises in general education is a bad idea in my opinion.
The best teachers are needed not with the best students, they're needed where there's the greatest need which typically is anywhere but with students from middle class or above because those students generally have support from home and they learn to read books at an early age, so they have an easier time in school and generally perform better.

The exact same thing will happen with healthcare because those who can and will pay will drain the system of money which will mean longer queues for the remaining hospitals, worse doctors because they can't pay top notch salaries, worse equipment because they can't afford it.

The simple thing is that allowing enterprises into healthcare/education is better for the individuals that can afford it and hence they will always be able to compete, but it will be worse for society as a whole and that's where the problem lies. So I think that government should keep enterprises out because in the long term that will benefit society more as a whole.

On the issue of currencies I don't have any opinion because I don't know much about virtual money or money issued by any NGO, but yes bitcoin is interesting and it'll be interesting to see where it leads, though I think the anonymity is a problem because it prevents the IRS equivalent from doing their jobs proper?y same as financial paradises already do today.

So no I don't think the issue is all that simple because individuals will always have their own best in mind and not that of society, which is why government should keep enterprises out of these areas in my opinion

I think you are not getting what I'm trying to say lol. What I am trying to say is: get rid of regulations. Regulations increases costs for private enterprises and prevent them from competing with the government. Let private companies compete with government companies. Since you said private companies are bad in these sectors, we should see them fail. If private companies really are bad in these sectors, consumers will vote with their money and choose government companies over private companies. It's an easy problem to solve isn't it.

Just get rid of regulations. I'm not saying get rid of government education or healthcare programs. Get rid of regulations and allow private companies/programs to compete with the government companies/programs. Nothing harmful about this. Imo, it is bad for government monopolies because I will bet that consumers will vote for private companies instead.

Regarding currencies, yeah they would like to regulate bitcoin for a variety of reasons. I posted my thoughts on it a while ago: http://silvernjin.blogspot.sg/2013/1...n-bitcoin.html

[Elldallan]

I think you are not getting what I'm trying to say lol. What I am trying to say is: get rid of regulations. Regulations increases costs for private enterprises and prevent them from competing with the government. Let private companies compete with government companies. Since you said private companies are bad in these sectors, we should see them fail. If private companies really are bad in these sectors, consumers will vote with their money and choose government companies over private companies. It's an easy problem to solve isn't it.

Just get rid of regulations. I'm not saying get rid of government education or healthcare programs. Get rid of regulations and allow private companies/programs to compete with the government companies/programs. Nothing harmful about this. Imo, it is bad for government monopolies because I will bet that consumers will vote for private companies instead.

Regarding currencies, yeah they would like to regulate bitcoin for a variety of reasons. I posted my thoughts on it a while ago: http://silvernjin.blogspot.sg/2013/1...n-bitcoin.html

I think you're missing my point too :) The problem that they wouldn't fail, in fact they'd probably be quite successful in doing what they do, making profits, and probably very good for however could bpay their fees. My objection is that I think they're bad for society as a whole because they concentrate quality treatment/education solely with those who can afford to pay for it. This is bad because it harms society as a whole, in a democracy the ideal is that every individual should be wise and insightful enough to be able to analyze the political climate in its entirety, same thing goes for a laissez-fair free market, the customer has to be able to view the entire market and deduct how to get the best bargain for his money. All this requires knowledge, which is primarily provided through schooling in modern society. For all this to be reasonable education has to be equally available to everybody which basically means it should be free(which in the end means paid by taxes because there is no such thing as a free dinner).

As for healthcare the entrance fees are so high that current actors can gouge for price to push new competitors out of the market and then inflate prices while not improving service, it is a market which by itself encourages monopolies, or at the very least a market with very few competitors. An in my opinion the only good monopoly is one run by the government because at least in theory the government has other aims than to maximize profits. When an enterprise is present as a monopoly you will typically see a decline in service quality and an increase in price, because that's the best way to maximize profits, it doesn't matter if your customers hates you if you can ensure that there is no other alternative, hence you can ask any price no matter how crappy the service as long as you don't cross the line where people will think it's better to do without. And as doing without healthcare generally means death or suffering I don't think thats an alternative that should be acceptable to any society.

The minimum value of bitcoin will at least in theory be tied to the cost of producing them(which is done by "mining" algorithms using your CPU & GPU) which means that the cost of bitcoin is tied to the cost of electricity,
this will be true at least until there is a stable supply of bitcoin and we're already at a point where it's uneconomical to "mine" bitcoin with a regular computer, only machines specifically designed for breaking ciphers can do so at a net win these days. That is unless you have access to at cost electricity or something like that, so in essence the NSA can probably make a killing off of bitcoin if they wanted since they already have the dedicated machines for the job and as a part of the government they can probably make the electricity cost redundant.
The limiting factor is that they probably want the use of these machines for breaking actual ciphers :P
Bitcoin is in essence already a real currency, but as it is an imaginary one even more so than money printed on paper it will probably be limited to online transactions for the foreseeable future.
The value of bitcoin is also closely tied to the percieved safety of the mining algorithm, if somone were to figure out how to break that cipher it'd essentially make bitcoing worthless overnight, which is the real weakness of bitcoin.

[Elldallan]

oops wrong button.