Has the banking crisis killed libertarianism?

So argues Jacob Weisberg in this article:

Even noted libertarian Alan Greenspan seems chastened:

So how about it? Does the collapse expose the flaws of libertarian philosophy? Or is some libertarian out there prepared to argue that it’s really all the government’s fault? Or perhaps there’s even a hard-shell libertarian who thinks we should have just let the banks collapse and the credit markets freeze?

Nothing has killed libertarianism, because it was never alive.

See also this thread.

Neither of your views makes the slightest logical sense. You can laugh all you like, but the finanical system is heavily regulated, it was just regulated badly. To which the answer is never “more regulation,” because the people who create the regulations are, frankly, dimwits. If you want to regulate something you have to actually consider the overall impact of your decisions, and too many politicians are neither smart nor honest enough for that.

I have a question. What would we see as the difference between a situation where the financial system was regulated heavily but badly, and a situation where it was not regulated enough? Not whether both exist, but as in a person sitting down to figure out whether the current crisis stemmed from one or the other should look at what to be able to tell?

Libertarianism is sophistical It sounds logican until you examine it and it falls apart. We have a huge and complex economic system. If we let it alone we will be robbed over and over. Regulation is our only hope . Greed and theft must be fought with a lot of intervention .

Are they any more, or less, dimwitted than the people who run investments houses, rate the risks of various investments, or approve mortgages? If you don’t trust lawmakers to competently enact regulations for the financial industry, do you trust bankers to run that industry in the absence of regulation?

There was a big article in The Economist a week or so ago that basically argued that short-sighted regulation and the methods that those in the financial sector used to get around that regulation are what got us into this mess in the first place.

There are definitely plenty of people arguing that the problem was bad regulation and/or too much of it to begin with, and that deregulation is the key to making sure it doesn’t happen again or at least that further regulation is a bad idea.

How could it? If the system were run completely without regulation and THEN collapsed then perhaps one could make a case that this collapsed exposed flaws in libertarian philosophy’. But…it wasn’t regulation free. It wasn’t run to any libertarian/Libertarian ideal I know of. So I don’t see how it has killed libertarianism…quite the opposite in fact I should think.

As far as letting the banks collapse, my guess is that libertarians would in fact mostly say either A) Well, they need to be bailed out to correct problems that the government itself, along with industry (regulated and distorted by those regulations and by the environment created by government intervention) created, or B) Yeah…we should take this as a long overdue correction, take our medicine (as painful as it will be) and learn from this mistake. The burned hand learns best and all that jazz.


In the book Obamanomics, I read an Obama quote that could be relevant to this discussion.

That guy is so thoughtful and intelligent I wish he’d run for president someday.

Yeah, I wish we had him up here in Canada to ourselves. :slight_smile:

But apparently, that was a quote taken from his book “The Audacity of Hope: Thoughts on Reclaiming the American Dream” it continues to say…

Quite soberly rational, no?

I’m prepared to argue. I’m not saying that it’s entirely the governments fault, nor the democratic party’s, nor the general population’s. I’m saying that the failure of government sponsored Fannie Mae and Freddie Mac contribute to the bad economic times. I’m saying that without the government, those organizations wouldn’t have had the chance to fail and bring down large portions of the market. I’m saying that stricter lending requirements were made necessary, partly because of the government.

I’m fairly libertarian-ish. Where me and my counterparts differ is on regulation. I feel that regulation, even strict regulation, is appropriate. I’m prepared to say that it’s beneficial for the government to set the rules that businesses must play by. It’s not okay when the government actually takes a stake in the game. Don’t create, regulate! The government should govern, not participate. It doesn’t directly cost the taxpayer money, when the government makes a rule. It does cost the taxpayer money, when the government does business itself. Sure, the government could make money with this bailout, but I sincerely doubt that profits will be returned to the taxpayers who funded it. The profits will likely go to more Fannies and Freddies. So, in my own libertarian little world, I’m made even more confidant in my beliefs.

Sounds a lot like FDR talking about the New Deal, actually.

First off, you’l see numerous laws with very “flexible” interpretations, which gives bureaucrats a lot of uncertain ground to cover. Second, you’ll see laws which hinder the routine conduct of business while providing little-to-no protections, or laws which discriminate against perfectly valid business practices (such as, say, mid-size corporations) for no particular social reason. Third, you will see laws which don’t consider their effects under a variety of scenarios, especially the “doomsday” scenario where we do get a huge market crash. Finally, you will see nothing more than patchwork laws being tossed into place, after which the matter is forgotten by politicians who act before thinking and then forget the problem since voters don’t know much about the financial markets and can’t easily judge the efefct of their votes on it).

And… pretty much all of the above apply to the U.S. financial system. I’d say britain is a little better. Most are probably a bit worse, but saying that you’re slightly less stinky when you’re lyin’ in a heap of manure ain’t saying much.

I the shrt run or long run? In the short run, they can be equally stupid. In the long run, the free market will kill out the idiots much more easily. That said, I am hardly a libertarian myself, and do favor regulation.

Really? To me he seemed to be describing the Conservative Ideal. Not the way most conservatives think but how they like to imagine themselves thinking.

I can see why thoughtful conservatives could vote for Obama not merely grudgingly but with a degree of pleasure.

Loved the Weisberg article, in fact I posted it in one of the 34 threads on direction of the Republican party.

Apologies; I thought you might answer that question which I why I tried to make it clear that wasn’t what I was asking; poorly, it appears.

What I mean is not what I would see in terms of regulations, what the system would look like, and so forth, but what I can look at to know that it is these things which have lead to the crisis. To try and analogise, you might say a problem with a kite is that it’s too heavy. But I am asking not what the problems are, but what to look at to know whether it is those problems which are causing the kite not to fly - how can we know whether it’s the heaviness which has caused it, or whether the wind isn’t strong enough, for example. Not whether the problems exist, but how we can tell whether the current crisis stems from one set of problems or another (or a mix of more than one).

Perhaps, but I’ve seen no evidence that the dead idiots won’t be replaced with more of the same. Is there anything like evolution in free-market theory? Despite years of theory and practice of economics, the Masters of the Universe fucked up. Does anybody think this was the last bubble and the last crash? That argues in favor of regulation to me.

We don’t trust one branch of government to operate without the other two keeping an eye on it. Why should we trust one industry to put public interest ahead of their own?

It is illusionary to think the free market weeds out. It actually inbreeds. The get together and divide the pie. They created incredibly complex swaps to loot the system and to obfuscate the margins and amount being invested. What they did not do is compete. Competition has to be forced by busting them up and making them compete. They do not do it if they are left alone.

This strikes me as exactly the sort of “no true Scotsman” argument being ridiculed by the article in the OP. It sounds like the campus Communists who argued that the fall of the Soviet Union didn’t prove anything because the Russians weren’t practicing true Communism.

Yeah, it’s true we don’t have a libertarian system in place, but it’s also true that the watchword in Washington ever since Reagan’s election has been deregulation (or in the case of the mortgage derivatives at the heart of the current problem, non-regulation).

Well, if a little libertarianism looks like this, what would a lot of libertarianism look like?