Our System Is Broken
Those of you who follow this know that my friend Jeff is a free market guy who thinks my faith in Government is pollyannish and sites legitimate examples of government stupidity and ineptitude to prove his point. I, on the other hand, think Jeff’s faith in people to act responsibly is naïve and site examples of corporate greed and malfeasance to prove my point.
I going to try and get him to agree that whichever system is better (free market vs. govt. regulation) our current system is the worst of both worlds and is fundamentally broken. I’m going to call it “crony capitalism” and use examples of recent disasters to highlight the problem.
The free market system fundamentally rests on the principle that the Market is self-governing because bad actors will be driven from the market. In short “the Market” is supposed to be like Samuel Jackson’s character in Pulp Fiction: a bad ass mother f^%^ker. However if we bail out the savings and loans (Reagan) and bail out the big banks (Bush), and whine that Obama is being “un-American” by bashing BP (Rand Paul) we have pretty much gutted that principle and given the bad actors a get out of jail free card. We have a Moral Hazard situation whereby we have insulated the bad actor from the risk of his/her bad behavior thus ensuring we get bad behavior. Any of us who are parents learned this when our first child hit two years old.
On the other hand we supposedly have government regulation, but if the government regulators don’t take their jobs seriously or can be chosen from the ranks of industry lobbyists or don’t philosophically believe in regulation, we got nothing. The disaster that was/is the Mineral Management Services and its well-documented graft/corruption (http://www.nytimes.com/2008/09/11/washington/11royalty.html) , and an energy policy written by industry lobbyists, all helped lead us to this BP oil spill disaster. If you rely on a principle of government regulation, but then not take it seriously, it’s like having a crooked cop – it’s worse than having no police at all. (Hell you might as well be letting terrorists and criminals buy guns at gun shows w/out background checks – thank you NRA!)
So Jeff, while I prefer responsible, competent, sensible government regulation because I’m cynical about the nature of my fellow man, I’d be willing to try a purely free market approach, but then it has to be the real deal. No “too big to fail”, no bailouts, and those responsible for this oil disaster (BP, TransOcean, Haliburton) get their asses kicked, and kicked hard.
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While I believe that the oil spill is the biggest mess ever and the parties involved should be totally responsible for the expense of the clean up and the support of the people and fishermen who have lost their livelihood because of BP and its associated companies. It seems that the media is making this an all out bashing of
1British Petroleum, one politican said it is putting a rift between the two countries, he must have his heaad up his ass, does he think the British people wanted this for the Gulf coast? England has many oil and gas rigs out at sea and have had their share of oil spills in the past, although not as large as the Gulf Coast.
British Petroleum own 49% USA owns 37% along with other
companies that own the rest and I think Dick Cheney and Haliburton are in there too but never a mention of this.
I think Tony Haywood has been made the front man for this situation. Haywood said some wrong things when he first assesed the situation and got bad publicity because of it but he did say that BP has taken full resonsibility and will not cut and run or hide behind lawers.They BP have paid out so far 1.5 billion dollars in clean up and claims and say they will continue until it is completed and so they should. So lets stop the bashing by the politicians and media who want to look good in the eyes of the public. The job needs to be completed and then find the real cause of the explosian that killed oil rig workers and created this disaster. It seems strange to me that when Obama announced that he would allow more offshore drilling for oil, a few days later this happened then he backs off his decision. I may be reading more into this than there is but who knows.
System is badly broken, beyond repair under normal conditions. It is refreshing to see and realize that my fellow business people out there do have the understanding to see there are answers if we get the “wrong answers” out of the way.
2There must be a high degree of integrity to make any “fix” method successful. More Power!!
Ah, Sam. The rub is in your last paragraph. You believe in government regulation because you are cynical about your fellow man. I do not believe in excessive government regulation because I am cynical about my fellow man. No system is perfect, and I am not against all regulation.
I think the S & L crisis is an example of a governement regulation and intervention that somewhat worked. There were some crooks in the S & L business, but largely, there were banks that loaned money to commerical real estate projects based on tax law in place at the time. Then comes the 1986 tax law changed that changed the tax benefits of owning commerical real estate negatively. Real estate values plunge. Many S & Ls that loaned based on one set of rules, and then the rules changed. They were upside down. There were crooks, yes, but in the minority. The government seized the assets of failing institutions, had an orderly auction, and did it fairly quickly. New capital was deployed (I participated in this), and the crisis was resolved.
If we would have done the same thing this time, I would have had no problems. Instead, we have been throwing money at problems and wondering why it isn’t working. As for the oil spill, if you were to ask me who has a better chance of fixing and cleaning the situation quickly..private enterprise with no fear of any regulation or oversight, or the beauracracy who needs an environmental impact study before they build sand berms to keep the oil from the coast…well neither is perfect, but I’ll go with private industry..because I am cynical about my fellow man.
3S&L crisis:
1) Stupid government eases rules on S&L’s and lets them take on more risks etc, but forgets that they have guaranteed the deposits.
2) S&L industry tanks and government has to bailout
3) Politically connected GOP insiders like Bill Simon become filthy rich buying up “auctioned” commercial real estate at 1x cash flow.
4) Taxpayers get stuck with the bill.
In Dave’s view either the regulations stay in place, or the regulations and guarantees would have both gone away. The problem is they had their cake and ate it too.
Oil spill: BP, Trans Ocean and Haliburton have done nothing yet to earn my trust.
4I love how libs trash Haliburton, but someone tell me. Were their contracts with the government terminated? Hmmmmm…I didnt think so.
5And I love all this right wing support of BP/Haliburton lately. Michelle Bachman is practically dry humping BP.
Free Market theory doesn’t suggest that BP gets a free pass, it suggests that they are held accountable through market forces and civil litigation.
Why in God’s name are the right wing rushing to defend BP?
I only mentioned Haliburton because they are the ones who were supposed to plug the f*^%$ well. It shouldn’t be a conservative vs. liberal issue.
If saying Haliburton should be held acountable for not plugging the well is considered “trashing” them, and that makes me a liberal, well I guess I’m a liberal – and a proud one at that.
6Sam I dont give a ratsass about Haliburton. My point was for years they have been considered evil by the libs, but now that the chance is there to get rid of them, its not taken. I guess the dems like their money as much as the republicans do.
7Unfortunately you are probably right.
8You will not get an argument from that both sides of the aisle are corrupt. Thats why someone in SC who never left their house can win their primary!
9Here’s the deal with all of this. Shit happens. Whether it be Katrina or the Gulf Oil spill or whatever else. Obama ridiculed Bush over Katrina, and now he and now all his apolgists are explaining why the his lack of success doesn’t put him at fault. All those that defended Bush are attacking Obama. Some want more regulation, others less. The bottom line is that whatever we do..shit will continue to happen. That is the purpose to life. We can not purify it, nor should we. Should we try to avoid bad things? Sure. However, when stuff happens, nobody hates anything more than a bunch of guys sitting in house hearings acusing people of incompetence. This coming from 535 people who have never been in the line of fire in their life. We all need to grow up.
10I was thinking something similar for the few seconds I watched the hearing regarding BP. Who the hell do those guys think they are! At least get some people on there asking questions that know something of the situation.
11TM..the questions are generally positioned to try to make the guy testifying look bad..not get to the bottom of anything. Frankly, I thought Tony Hayward made our congressmen look like twits. He reminded me of some Revolutionary War general looking down on the Colonists. Rather than grandstanding, why can’t we find out:
1.) Why we have not signed an Executive Order to bypass the Jones Act. If there is a downside to doing that, what is it?
2.) Why neither BP nor the Federal Government have availed themselves of all of these oil cleaning processes you see on TV every night. If they are not scalable..fine. Why doesn’t somebody say so.
3.) Why did someone think we needed an environmental study to build sand berms to protect the environment. What could have gone wrong that is worse than what happened?
Etc, Ect.
There are many more questions, and there may be good answers, but instead of pointing fingers, why doesn’t anybody try to figure out what we could do to make things better. If, as I say, shit happens, and we can’t figure out an answer,so be it. That’s the answer. My guess is we can’t solve this because everybody is too busy covering their own ass.
12Very good question. I truly wondered about the environmental studies for the sand berms. I mean how can they hurt worse than oil choking everything. Isn’t that sort of like worrying about getting a sunburn while standing outside in the sun observing a nuclear bomb detonating?
13Like I said, our system is broken
14Ok Sam, I hope you are still checking this one because you win. My 15 year old daughter just told me she has decided to become a Democrat. I asked her what drove her decision. She said “why work and give half of it to the government, when I do nothing and get benefits”. You win. Now if you’ll excuse me, I need to go back to researching real estate in Panama.
15I have given that one some thought myself. Wonder if I can get the government to buy me some property in Panama?
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