

The Big Zero - hack_edu
http://www.nytimes.com/2009/12/28/opinion/28krugman.html?pagewanted=print

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logicalmind
The elephant in the room here is campaign financing. As long as a person* with
great wealth can outweigh the desires of the majority of people we will get
the government that we deserve.

*By person I mean a legal person <http://en.wikipedia.org/wiki/Legal_person>

~~~
anamax
> The elephant in the room here is campaign financing. As long as a person*
> with great wealth can outweigh the desires of the majority of people we will
> get the government that we deserve.

The fix, making it impossible for ordinary people to contribute useful amounts
of money to political causes in which they believe, makes things worse.

Note that we didn't actually have rich people buying elections before the
various campaign finance restrictions. Out of fear of a then-imaginary
problem, we set up a system where the problem actually occurs.

Malice or incompetence - either way, it's not much of a recommendation.

~~~
logicalmind
I don't think that ordinary people are the problem. If by ordinary people you
mean natural persons* . In the US government, the elected officials should
represent the will of the people who elected them. The problem is that special
interests find that money is better spent through lobbying. This allows them
to buy votes and even write laws. A massive amount of money is spent lobbying:

<http://www.opensecrets.org/lobby/index.php>

This money obviously has an effect. Ordinary people aren't creating lobbying
groups.

*<http://en.wikipedia.org/wiki/Natural_person>

~~~
anamax
> I don't think that ordinary people are the problem.

I didn't say that they were. I said that they were the ones adversely affected
by campaign finance restrictions.

The rubes think that that's an accident and that it could be fixed. The cynics
think that that was the goal and know that it won't. The realists know that it
was inevitable.

> The problem is that special interests find that money is better spent
> through lobbying.

That's because "we" keep voting for folks who set up programs "to do good".
That always fails because regulatory capture always happens.

Either we're insane or we want to be fleeced.

The only way to stop being fleeced is to insist that govt stop doing things.

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kees
My life is improved so much due to technology. Remember only your computer and
the internet in 1999.....

The same counts for almost every other product you're using.

Maybe financially there wasn't much progress, but the silent and steady motor
of improving daily life is still running.

~~~
habitue
Yeah this is what I thought when reading this. He does, however, preface his
statement that "nothing good happened" with "economically speaking", and he
makes a good case from that perspective.

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michael_dorfman
Hard to argue with this:

 _So here’s what Mr. Summers — and, to be fair, just about everyone in a
policy-making position at the time — believed in 1999: America has honest
corporate accounting; this lets investors make good decisions, and also forces
management to behave responsibly; and the result is a stable, well-functioning
financial system.

What percentage of all this turned out to be true? Zero._

~~~
byrneseyeview
If SarBox applied to the government's own accounting, most Federal officials
would be doing hard time. Meanwhile, the vast majority of corporations don't
end up restating their earnings. It's one thing to say that people are flawed,
and are dishonest when they can get away with it; but it's another idea
entirely to imagine that government regulation does a better job. Madoff's
competitors called him a scam artist before the SEC got involved; Paulson made
a fortune by correctly betting that housing was overpriced; the Enron story
was pushed by short sellers and journalists, to the point that the government
didn't get involved until after the bankruptcy.

So why would we trust the government--which has failed miserably so far--to
suddenly do a better job than the private sector?

~~~
roc
Luckily it's not an either/or.

There's a nice balance in there where the free market weeds out most problems,
the government mops up mistakes that get by and regulation prevents those
mistakes from growing into systemic risks.

The only _real_ problem we just suffered, was that certain institutions were
allowed to become integral parts of our financial system _and_ were allowed to
play fast and loose with their own solvency.

If those banks weren't absurdly leveraged, the housing bubble would have just
been another recession.

Lesser problems were the risk ratings that were tantamount to fraud and the
short-sighted financial focus of your average corporate entity which lead to
the over-leveraging.

But I'm comfortable conceding that ground to caveat emptor and letting the SEC
sweep up the most egregious trouble-makers a day late, as usual. Because I
honestly have no idea how you could actually _fix_ those problems without
breaking something far more important.

~~~
lionhearted
> There's a nice balance in there where the free market weeds out most
> problems, the government mops up mistakes that get by and regulation
> prevents those mistakes from growing into systemic risks.

You missed the largest problem - the Federal Reserve set the price of
borrowing money artificially low, almost to the point of being free. Whenever
you set the price of borrowing money (interest and fees) lower than the rate
of inflation, you're going to get some sort of massive financial problem. It's
in everyone's rational interest under that scenario to borrow as much as they
can. Of course, that leads to catastrophe.

~~~
jbooth
That plus the large tax cuts aimed pretty much exclusively at the rich -- give
all of the asset holders a bunch of extra liquidity and remove ordinary
T-notes as an option by setting rates lower than inflation even while
borrowing a ton of money..

You're gonna get a bubble somewhere -- that money has to go somewhere.

~~~
roc
But bubbles in and of themselves don't lead to the systemic crisis we just
went through.

There were plenty of policies I disagreed with and plenty more that fueled the
bubble. But I was talking specifically about the problems that lead to the
credit crisis, paralyzed markets and generally gummed things up above and
beyond a popped bubble.

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mmphosis
The good news is that there is only one way to go once you hit rock bottom.
The bad news may be that I don't think that we've hit bottom. And, we don't
necessarily know what the bottom is. The Big Zero is a nice round number, but
I think we've been borrowing towards an unpayable debt for longer than ten
years, and we are only falling further. Planes, both figuratively and
literally, continue to keep dropping out of the sky. If it was left up to me,
I would get right to the bottom of it.

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Tichy
But it gave us the iPhone! Perhaps we could call it the "iCade" or something
like that?

~~~
WilliamLP
Basically the decade involved a ridiculous penetration of cheap phones,
cameras, and texting, along with vastly improved TV and monitor technology.
Along with this came an extreme social change towards being plugged into a
social and media network at all times, toward where this is now near its
logical conclusion of the devaluation and death of individual thought.

~~~
dandelany
[citation needed]

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olegk
This decade has been really really good for IT, especially salary-wise. There
were tons of successful startups.

~~~
WilliamLP
> This decade has been really really good for IT, especially salary-wise.

Yet somehow I'm making a lot less than I did in 1999, before inflation. Part
of that is my fault, but still!

