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Comment by onethought | Hacker News Reader

But all the major market instabilities have been solved by government bailouts even in the current way of things. So they are provenly unstable and require government propping them up constantly with public money.

I think you are the one espousing fairyland. Without the private gain public loss “market” we have now, half the market would have died in 2008 and the other half would have died last year…

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This is implying that externalities of bad government policies (ie encouraging high home owner rates) weren't the main cause of the market needing a bail out.

That’s what made the money worthless in the first place yes. Badly regulated markets. The financial market then made the problem orders of magnitude worse. Again, not enough regulation.

It’s so weird how a story of greedy investors turned out to be the fault of the government in the end. “You set it in place, we simply had to bite!”

By saying half the market would die die you mean GDP would have been cut in half without a bailout in 2008?

Obviously that’s hyperbole but I did have a look and industrial activity in the USA declined by 46%. Global trade dropped by 70%. GDP itself dropped by about 30%, from what I could find.

By contrast, the Great Recession of 2008 saw a GDP drop of 4.3%.

So, yes, without government bailouts, markets can fail _catastrophically_

30% was a lot higher than I realized.

Yes. Or worse, at least. Over a trillion dollars was injected and there was still a recession.

To be clear, I am by no means a market-maximalist. I'm claiming that markets are an extremely effective way to govern the production of goods and the allocation of labor, compared to their alternatives. Further, I'm claiming that any sweeping claim that "markets" as a concept are bad is uninformed and patently wrong.

With that said, we have different tools for different scenarios. In 2020, we used the "national funding, mobilization, and redistribution" tool to combat COVID and I think that was probably smart. Doing so necessarily wasted a lot of money (through graft, incompetent capital allocation, ec.). But optimal capital allocation was not the most important thing last year. We wanted safety! State intervention wins here!

With respect to other market instabilities, well, it gets complex. 2008 was a mess of government, quasi-government, and private market behaviors all in a toxic dance.

In any case, most markets most of the time absolutely do not require the government to step in. The economy is breathtakingly large. I mean, just really, truly stupendously massive. I hear "capitalism is bad" and "markets are toxic" claims a lot, but I've never heard a viable proposal that could realistically function as effectively as a predominantly market system.

Also, I'm not claiming that our current markets are perfect. Certainly they are not. It's clear that there are huge issues in a significant number of industries (hospitals, housing, and education are all suffering from cost disease).

We can (should!) take a crack at fixing the issues we have. Most of those fixes will come bottoms-up through creative-disruption, and some will come tops-down through policy and regulation.

It's important to look at these things as tools in a toolbox, not totalitarian dogma in an ideology.

‘Bottom up creative disruption’ isn’t going to change the concentration of wealth … unless you count violence as creative disruption.

That just means markets need corrections, not that there is an alternative. Exchange of goods is going to take place regardless. You can have the government control all economic activity outside the black market, but that leads to for worse outcomes which only benefits the party elite.

What party? You're confusing dictatorships and planned economies.

The party that plans the economy.

Why would a political organization plan the economy, as opposed to a specialized government agency? You're confusing dictatorships and planned economies.

Perhaps read “party” as “entity” or “organization of people” as in the phrase “a party to the agreement” or whatever?

That being said, I see no way that a governmental organization which plans the economy could fail to be political, by which I mean, closely connected to highly contentious government policy decisions.

Of course it will be, that's just the nature of making decisions. But these decisions have to be made anyway. It's better if they depend on the policies of an elected government than the whims of rich people.

I'm not sure that the decision do have to be made in the same sense that they are made if there is an explicit policy.

But, regardless, a "specialized government agency" which "plans the economy", would I think invariably be a "political organization".

If I put my cynic hat on for a moment, normal government policies often depend on the whims of rich people as we are, unequal access to lobbying is a problem.

They do. But how do you get rich? By having other people work for you. That cannot happen to nearly the same extent in a planned economy.

I don't think we really need stupidly rich people. Is taxation a planned economy?

A million poor people are rich in aggregate.

What are you trying to say?

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