Comments on: What Happened to Market Discipline? http://www.thefreemanonline.org/columns/give-me-a-break/what-happened-to-market-discipline/ Ideas on Liberty Wed, 15 Feb 2012 03:46:16 +0000 hourly 1 http://wordpress.org/?v=3.3 By: James Brook http://www.thefreemanonline.org/columns/give-me-a-break/what-happened-to-market-discipline/comment-page-1/#comment-1581 James Brook Mon, 02 Feb 2009 15:57:21 +0000 http://www.thefreemanonline.org/?p=8543#comment-1581 Actually, Clair, many people know exactly how free markets work. F.A. Hayek and John Stossel know. The point that they were making is that there are too many decision points for central planners to handle. "Basic Economics" by Thomas Sowell explains this very well. These decisions are concerning priority, and are reflected in the price someone is willing to pay for any given good. Supply and demand interact to determine price for a myriad of goods. Individuals decide what price they are willing to pay, and that influences how much of a given resource is devoted to making one product over another. There are too many possible decisions to make for central planners to make all of them. You are right - the market is self-regulating. This is the mechanism of that self-regulation. This applies also to mortgages. The price of a mortgage is the interest rate. The individual lender's confidence in the reliability of the individual borrower determines that price. The Community Reinvestment Act pressured lenders to lend to riskier borrowers, taking much of their decision making ability from them, skewing that mechanism. Actually, Clair, many people know exactly how free markets work. F.A. Hayek and John Stossel know. The point that they were making is that there are too many decision points for central planners to handle. “Basic Economics” by Thomas Sowell explains this very well. These decisions are concerning priority, and are reflected in the price someone is willing to pay for any given good. Supply and demand interact to determine price for a myriad of goods. Individuals decide what price they are willing to pay, and that influences how much of a given resource is devoted to making one product over another. There are too many possible decisions to make for central planners to make all of them. You are right – the market is self-regulating. This is the mechanism of that self-regulation. This applies also to mortgages. The price of a mortgage is the interest rate. The individual lender’s confidence in the reliability of the individual borrower determines that price. The Community Reinvestment Act pressured lenders to lend to riskier borrowers, taking much of their decision making ability from them, skewing that mechanism.

]]> By: Stephane Budge http://www.thefreemanonline.org/columns/give-me-a-break/what-happened-to-market-discipline/comment-page-1/#comment-1243 Stephane Budge Tue, 27 Jan 2009 17:57:46 +0000 http://www.thefreemanonline.org/?p=8543#comment-1243 To expand on this thought, the socialists in the "state" play on the emotions to get what they want. For example; the American auto industry. Foreign automakers came in and made a better car that appealed more to the consumer, which hurt the big three as less and less of their cars were purchased. The socialists appealed to the heart of the American consumer by saying basically, "How could you capitalists let all of those people employed by the big three be out of work? You heartless piece of human flesh." And we, the one's who can see through the lie of it, not wanting to seem heartless, let the socialists take our money and give it to an industry that is sucking the life out of us. Time to stand up for ourselves and fight back. The more we are the "bigger person", the more rights we will lose. React for the future and not for the moment. To expand on this thought, the socialists in the “state” play on the emotions to get what they want. For example; the American auto industry. Foreign automakers came in and made a better car that appealed more to the consumer, which hurt the big three as less and less of their cars were purchased. The socialists appealed to the heart of the American consumer by saying basically, “How could you capitalists let all of those people employed by the big three be out of work? You heartless piece of human flesh.” And we, the one’s who can see through the lie of it, not wanting to seem heartless, let the socialists take our money and give it to an industry that is sucking the life out of us.

Time to stand up for ourselves and fight back. The more we are the “bigger person”, the more rights we will lose. React for the future and not for the moment.

]]> By: Clair Schwan of Libertarian Logic http://www.thefreemanonline.org/columns/give-me-a-break/what-happened-to-market-discipline/comment-page-1/#comment-1202 Clair Schwan of Libertarian Logic Tue, 27 Jan 2009 03:44:40 +0000 http://www.thefreemanonline.org/?p=8543#comment-1202 Hayek was right. I always laugh at politicians and even the Federal Reserve when they pretend to know how the marketplace works, and therefore know how to manage it. No one knows exactly how it works, but it does. It is self-regulating, given some time and no meddling from do-gooders in public office. But time isn't what Americans like to invest. We like drive-up convenience. We like huge problems solved in 30 minutes and 3 commercial breaks. We like instant everything. The biggest problem we have is thinking that government solves problems. With rare exception, government is the source of just about every problem there is. People don't need management, they need to be left alone. It's an over-simplification, but the problem is two-fold. First, we have a public that expects the nanny state to solve the problem. Second, we have politicians that don't have the guts to say "leave it alone" and let the marketplace work out private enterprise issues. Sadly, it's the "I owe, I owe, so off to work I go" crowd that ends up paying for it. And, they'll continue to pay for it as long as they are afraid of standing in the soup line because of an economic collapse. Clair Hayek was right. I always laugh at politicians and even the Federal Reserve when they pretend to know how the marketplace works, and therefore know how to manage it. No one knows exactly how it works, but it does. It is self-regulating, given some time and no meddling from do-gooders in public office.

But time isn’t what Americans like to invest. We like drive-up convenience. We like huge problems solved in 30 minutes and 3 commercial breaks. We like instant everything.

The biggest problem we have is thinking that government solves problems. With rare exception, government is the source of just about every problem there is. People don’t need management, they need to be left alone.

It’s an over-simplification, but the problem is two-fold. First, we have a public that expects the nanny state to solve the problem. Second, we have politicians that don’t have the guts to say “leave it alone” and let the marketplace work out private enterprise issues.

Sadly, it’s the “I owe, I owe, so off to work I go” crowd that ends up paying for it. And, they’ll continue to pay for it as long as they are afraid of standing in the soup line because of an economic collapse.

Clair

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