Alan Stanford: A perfect argument against Libertarianism

[Ken Korda]

I was just watching a BBC documentary on the case of this man (which actually emerged a couple of months ago) and it seems to completely justify the regulation of industry in general. A Texas banker, worth billions of dollars turns out to have defrauded customers of almost $6.7 billion dollars. Do I really need to say more than that? How can anyone advocate 'laissez-faire' capitalism when we now know that the wealthiest people are out for everything they can get at any cost. Forget your John Galt's and Howard Roark's, this is how people get rich and this is what our government needs to protect us from.

http://news.bbc.co.uk/1/hi/uk/7898535.stm Here's the story form the BBC news website

 

[Kpt._Rob]

Yeah, I've never bought all the "let business regulate itself" crap. The situation you pointed out definately isn't the only one, hell, the whole recession is pretty much the aftermath of a bunch of greedy bankers and businessmen who weren't regulated. We've got that prick Phil Grahm (master of deregulation) to thank for the current crisis, the last thing we need is more deregulation.

 

[munkyforce]

I was just watching a BBC documentary on the case of this man (which actually emerged a couple of months ago) and it seems to completely justify the regulation of industry in general. A Texas banker, worth billions of dollars turns out to have defrauded customers of almost $6.7 billion dollars. Do I really need to say more than that? How can anyone advocate 'laissez-faire' capitalism when we now know that the wealthiest people are out for everything they can get at any cost. Forget your John Galt's and Howard Roark's, this is how people get rich and this is what our government needs to protect us from.

http://news.bbc.co.uk/1/hi/uk/7898535.stm Here's the story form the BBC news website

I think you need to clarify the link between criminaltiy and free market economic theory here. Otherwise this isn't really an perfect argument is it?

 

[Kpt._Rob]

I was just watching a BBC documentary on the case of this man (which actually emerged a couple of months ago) and it seems to completely justify the regulation of industry in general. A Texas banker, worth billions of dollars turns out to have defrauded customers of almost $6.7 billion dollars. Do I really need to say more than that? How can anyone advocate 'laissez-faire' capitalism when we now know that the wealthiest people are out for everything they can get at any cost. Forget your John Galt's and Howard Roark's, this is how people get rich and this is what our government needs to protect us from.

http://news.bbc.co.uk/1/hi/uk/7898535.stm Here's the story form the BBC news website

I think you need to clarify the link between criminaltiy and free market economic theory here. Otherwise this isn't really an perfect argument is it?

We've seen the inevitable results of businessmen who aren't getting watched closely enough again and again. From the current economic crisis, to Enron faking power outages (as a result of which multiple people died) in order to be able to charge more, it is all too clear that when we're not watching people in positions of power are prone to take advantage of it. There is your link.

 

[munkyforce]

We've seen the inevitable results of businessmen who aren't getting watched closely enough again and again. From the current economic crisis, to Enron faking power outages (as a result of which multiple people died) in order to be able to charge more, it is all too clear that when we're not watching people in positions of power are prone to take advantage of it. There is your link.

Ok aren't both Enron and allen Stanford cases of criminal fraud? Criminal fraud that occurs under any type of economic system?

 

[Sewblon]

The banking industry is already regulated here in the US. The government controls the money supply, the interest rates and the central bank. The problem is people can't seem to agree if the depression-recession-apocalypse happened in spite of these measures, because of these measures, or if it is an inevitable cycle of the economy. Crashes have to happen in market economies, they bring financial expectations back in line with reality. The root problem with economic regulation is if the government is monitoring and controlling the economy, what stops them from accepting graft, extorting businesses and otherwise abusing their power? No matter how you structure society their will always be people who have leverage and extort it. It is even harder to fix if the government are the ones lying, cheating and stealing, everyone who has the authority to do something about it legitimately ultimately serves the government, and they have the nukes and stuff so threatening them with violence is not an option either.

 

[Kpt._Rob]

We've seen the inevitable results of businessmen who aren't getting watched closely enough again and again. From the current economic crisis, to Enron faking power outages (as a result of which multiple people died) in order to be able to charge more, it is all too clear that when we're not watching people in positions of power are prone to take advantage of it. There is your link.

Ok aren't both Enron and allen Stanford cases of criminal fraud? Criminal fraud that occurs under any type of economic system?

I'm going to talk specifically about Enron here, because it is a case where, if there had been more involved regulation, a lot of the damage done by them could have been reduced, and if you want a source for what I'm saying, there's a documentary you can watch called Enron: The Smartest Guys in the Room. Getting to my point however, a lot of the fraud that Enron got away with, it managed to get away with because it wasn't regulated. The situation with the power outages specifically. Enron did a lot of lobying in California to get the power market deregulated, meaning that they could charge whatever they wanted for power. People would have been mad, however, if Enron had simply decided to up the price. As a result, Enron faked a number of power outages during some of the hottest months of the year (this, by the way, did result in multiple deaths), and because of the faked power outages they were able to charge higher prices for power because it seemed legitimate. This is case 1 of where deregulation goes horribly bad. Dealing specifically with fraud, however, a lot of companies are regulated by people who the companies themselves pay, this is because companies have lobied for this, and it means that for all intents and purposes no regulators are watching them. This is why it was so easy for Enron to commit the massive fraudulant acts they did, is because no regulators were watching the numbers, so it was easy for them to lie. If a regulator had caught Enron earlier in the game the damage that was done in their fall could have been greatly reduced.

 

[Shadowlolz]

Yes fraud can take place but if kept a closer eye on alot of it could have been either detected sooner or prevented...I am for freedom since I am American but capitalism can bite us in the ass and this recession/depression or whatever it's called is a good example of "where did all the moneys" go?

 

[munkyforce]

I'm going to talk specifically about Enron here, because it is a case where, if there had been more involved regulation, a lot of the damage done by them could have been reduced, and if you want a source for what I'm saying, there's a documentary you can watch called Enron: The Smartest Guys in the Room. Getting to my point however, a lot of the fraud that Enron got away with, it managed to get away with because it wasn't regulated. The situation with the power outages specifically. Enron did a lot of lobying in California to get the power market deregulated, meaning that they could charge whatever they wanted for power. People would have been mad, however, if Enron had simply decided to up the price. As a result, Enron faked a number of power outages during some of the hottest months of the year (this, by the way, did result in multiple deaths), and because of the faked power outages they were able to charge higher prices for power because it seemed legitimate. This is case 1 of where deregulation goes horribly bad. Dealing specifically with fraud, however, a lot of companies are regulated by people who the companies themselves pay, this is because companies have lobied for this, and it means that for all intents and purposes no regulators are watching them. This is why it was so easy for Enron to commit the massive fraudulant acts they did, is because no regulators were watching the numbers, so it was easy for them to lie. If a regulator had caught Enron earlier in the game the damage that was done in their fall could have been greatly reduced.

What I'm trying to get at here is that these actions are criminal (fraud). Catching criminals is the job of the police. When people talk about deregulation they are talking about the state not determining output, prices or the level of competition in a given industry. A regulator simply makes sure that output, prices or competition fall within the framework which regulation has set.

 

[bjj hero]

You sir are textbook example of an ignorant, who has no fucking idea about what he's talking about. The only reason why banks are able to pull off scams like that (and the reason for why we have crisis) is the artificial value of money caused by abandoning the gold parity standard, which is one of the pilars of libertariansim.

Im in agreement, but the Americans will burn you alive talking about gold standard.

 

[Ken Korda]

I was just watching a BBC documentary on the case of this man (which actually emerged a couple of months ago) and it seems to completely justify the regulation of industry in general. A Texas banker, worth billions of dollars turns out to have defrauded customers of almost $6.7 billion dollars. Do I really need to say more than that? How can anyone advocate 'laissez-faire' capitalism when we now know that the wealthiest people are out for everything they can get at any cost. Forget your John Galt's and Howard Roark's, this is how people get rich and this is what our government needs to protect us from.

http://news.bbc.co.uk/1/hi/uk/7898535.stm Here's the story form the BBC news website

You sir are textbook example of an ignorant, who has no fucking idea about what he's talking about. The only reason why banks are able to pull off scams like that (and the reason for why we have crisis) is the artificial value of money caused by abandoning the gold parity standard, which is one of the pilars of libertariansim.

But surely a return to gold parity would severley inhibit economic growth? If state's can only spend money up to the value of the gold they possess and no more what happens when industry requires more money for growth? As we have recently seen a halt in investment can lead to a drastic fall in share prices thus leading to the failure of business. The current system allows a deficit between imports and exports allowing banks to accumulate wealth (which can then be loaned to industry) and the ability for governments to borrow money using future earnings as collateral. Consequently, funds are accessible to industry and the economy can grow. The reason the golad standard was removed in the 1970's was becasue of its extremem rigidity; it did not allow states to adjust their economies rapidly enough to deal with the OPEC oil embargo.

The point I was trying to make with this thread was that if we know people are going to attempt fraud in any form of economic system we must enforce strict regulation in order to monitor them.

It is true that I am not intimatley familiar with the LIbertarian ideology. I myself am British and no such movement exists here. But the same argument can be made of the economic policies of New Labour and the Conservatives. If you want deregulation how will you protect us from those who seek to exploit the system?

 

[Lord Monocle Von Banworthy]

Um...yeah, I believe what we have here is a Hasty Generalization http://www.nizkor.org/features/fallacies/hasty-generalization.html

OP is essentially arguing that since some (one) rich people are criminals, all rich people are criminals, and we need some nebulous solution based upon that premise.

 

[Booze Zombie]

There's never a all-perfect argument for anything, but I will say this... We'd have a lot less problems in the world if socialism was the norm.

 

[Kpt._Rob]

I'm going to talk specifically about Enron here, because it is a case where, if there had been more involved regulation, a lot of the damage done by them could have been reduced, and if you want a source for what I'm saying, there's a documentary you can watch called Enron: The Smartest Guys in the Room. Getting to my point however, a lot of the fraud that Enron got away with, it managed to get away with because it wasn't regulated. The situation with the power outages specifically. Enron did a lot of lobying in California to get the power market deregulated, meaning that they could charge whatever they wanted for power. People would have been mad, however, if Enron had simply decided to up the price. As a result, Enron faked a number of power outages during some of the hottest months of the year (this, by the way, did result in multiple deaths), and because of the faked power outages they were able to charge higher prices for power because it seemed legitimate. This is case 1 of where deregulation goes horribly bad. Dealing specifically with fraud, however, a lot of companies are regulated by people who the companies themselves pay, this is because companies have lobied for this, and it means that for all intents and purposes no regulators are watching them. This is why it was so easy for Enron to commit the massive fraudulant acts they did, is because no regulators were watching the numbers, so it was easy for them to lie. If a regulator had caught Enron earlier in the game the damage that was done in their fall could have been greatly reduced.

What I'm trying to get at here is that these actions are criminal (fraud). Catching criminals is the job of the police. When people talk about deregulation they are talking about the state not determining output, prices or the level of competition in a given industry. A regulator simply makes sure that output, prices or competition fall within the framework which regulation has set.

If you'll read again, the first example involving Enron, with the power deregulation was exactly the type of deregulation you're talking about (which is why I felt it was a good example, since it addresses both forms of deregulation). When Enron was given the monopoly they had in California, and was told they could charge whatever price people were willing to pay (since the market became deregulated shortly after Schwartzeneger came into office there) they faked power outages to manipulate public opinion so that they could charge higher prices and people would willingly pay them. If you tell companies that they can charge whatever they want as long as people are willing to pay, they will abuse that privilage.

 

[Ken Korda]

But surely a return to gold parity would severley inhibit economic growth? If state's can only spend money up to the value of the gold they possess and no more what happens when industry requires more money for growth?

Jesus Christ, you have absolutely no clue what money is and how economy works.

The point I was trying to make with this thread was that if we know people are going to attempt fraud in any form of economic system we must enforce strict regulation in order to monitor them.

FUCK ME! And you think the guys in power to enforce strict regulations won't defraud 10X as much money? Don't you think strict regulations will slow down the economy more than "lack of money" [sic!]
I'm sorry but your gullibility makes my blood boil.

Well if it upsets you so much rather than insulting me why don't you educate me? I'd be much more willing to consider your point of view if you put it across as a reasonable argument rather than just throwing names around. Calling me names does not convince me that I am wrong.

 

[Koko56]

But surely a return to gold parity would severley inhibit economic growth? If state's can only spend money up to the value of the gold they possess and no more what happens when industry requires more money for growth?

Jesus Christ, you have absolutely no clue what money is and how economy works.

The point I was trying to make with this thread was that if we know people are going to attempt fraud in any form of economic system we must enforce strict regulation in order to monitor them.

FUCK ME! And you think the guys in power to enforce strict regulations won't defraud 10X as much money? Don't you think strict regulations will slow down the economy more than "lack of money" [sic!]
I'm sorry but your gullibility makes my blood boil.

Well if it upsets you so much rather than insulting me why don't you educate me? I'd be much more willing to consider your point of view if you put it across as a reasonable argument rather than just throwing names around. Calling me names does not convince me that I am wrong.

IIRC, that guy is an asshole.

There's never a all-perfect argument for anything, but I will say this... We'd have a lot less problems in the world if socialism was the norm.

ORLY?

 

[munkyforce]

If you'll read again, the first example involving Enron, with the power deregulation was exactly the type of deregulation you're talking about (which is why I felt it was a good example, since it addresses both forms of deregulation). When Enron was given the monopoly they had in California, and was told they could charge whatever price people were willing to pay (since the market became deregulated shortly after Schwartzeneger came into office there) they faked power outages to manipulate public opinion so that they could charge higher prices and people would willingly pay them. If you tell companies that they can charge whatever they want as long as people are willing to pay, they will abuse that privilage.

Ok I will concede that in the instances where there is no competition in an industry deregulation is a poor choice. I'm not a free market fundamentalist, however the point I was originally trying to make is that criminal behaviour is not a reason to say that free markets don't work.