Do US laws help or hinder our economy?

[Jagos]

No, no links today...

Just a small wonder and a small look at what's been going on in the world and a few small questions to ask.

Currently, I've looked into reading a lot into the law and seeing if it works to make our lives efficient in any manner. Feel free to agree or disagree, but I'm of the opinion that the law of the land so to speak, does need an overhaul.

We're supposed to follow all of the rules, but how is that really effective if they're constantly changing?

We can blame the economic meltdown of the US on bad laws and fake demand effectively making money disappear. Currently, I'm reading about the Sarbanes-Oxley Act that every business MUST conform to but effectively does nothing in the process.

Then we have Obama promising change on a lot of different fronts but he is scared to truly veto anything.

So here is the question before us:

Can economic laws truly affect change or is it best to leave it to those in business?

[Fifthfiend]

Well, we had laws in place to prevent the economic collapse, then we repealed them, then the economic collapse happened, so yeah, economic laws are a pretty good idea.

...I mean I am just throwing it out there but when a massive collapse of the economy results from (reprehensible and irresponsible conduct on the part of the wealthy that was not adequately protected against by) "bad laws", my personal view tends to be that the best solution to that is... good laws. As opposed to, like... no laws.

[Nique]

I think we have a system that is too complicated to accurately predict... or actually complicated enough that it castes doubt on even reliable predictions so people end up feeling justified in continuing to do whatever shitty thing they feel like doing even though it might mess things up for everybody.

I dunno. I'm just meandering here but what is the difference if there are no laws and the biggest meanest guy on the playground starts making up bullshit rules like 'no tagbacks', or if there are extremely complicated and letigious laws and the biggest meanest guy on the playground gets to say there are no tagbacks becuase the byline in section A part 34 creates an exception for big mean guys who hang out on playgrounds?

[Hanuman]

Check your wallet, ask how other countries are doing.

[Aerozord]

well economic laws are "long game" laws when it comes onto their effects. And I do think that congress is legitimately trying to do what they can. Yes I am jaded but the rich suffer too during a recession, not as much, but they are better off when the economy is going well.

for example Sarbanes-Oxley Act was intended to help investors, but really it just made it an accounting nightmare. Problem is we are dealing with politicians. They are not economists and are as knee-jerk as the rest of the population is about these things. They do not understand the complexities of a chaotic system, or heck even basic accounting. They just see a problem and focus on a short term fix to it. Sometimes that fix is good long run, sometimes it just makes things worse, hard to say.

This is the same goverment that instituted minimum wage and child labor laws. So you know, even a stopped watch is right twice

[Hatake Kakashi]

The problem, as I see it, is that nearly every politician out there, regardless of affiliation, is in someone's back pocket. Let's face it: each side has had a rather immense majority within recent years, and none have really done shit about the way the corporations are fucking with the general populace. The gap between the haves and have-nots within the US is as wide as it has ever been, and it only promises to widen further, regardless of whom we might vote in, or who will be nominated/appointed for some "job" (read: cushy fucking gravy-train) that our elected officials decide to make up that day.

The problem is rapidly becoming too severe to handle via civilized means. I believe it is only a matter of time before the public decides enough is enough and begins reclaiming what is truly theirs through more... persuasive means.

Ultimately, when the people in power are more concerned about the people they serve, rather than the bank accounts that serve them, the nation flourishes. When they're more concerned about what kinds of lifetime perks they'll be getting, when the next vote for a raise is, and which corp is going to pay the most to get a chance to fuck the public, we get the kinds of situations we're in now. The laws that come from them are directly reflective of their ultimate values.

[Odjn]

Laws aren't written by economists for good reason. There are a lot of economists who are perfectly ok with an even higher wealth divide than we have now because it's a stable economy, regardless of the ethical quandaries it would cause, such as a working class near indistinguishable from slavery.

Ostensibly politicians are the one who choose less efficient economics in favor of a better representation of wealth in the underclass. The problem with is, well, the people attempting to help the poor are politicians.

[Professor Smarmiarty]

Ostensibly politicians are the one who choose less efficient economics in favor of a better representation of wealth in the underclass.

Massively massively arguable. Cause all implentation sof capialism we know are tremendously and demonstrably massively inefficient.
Politicians choose laws that help whoever bankrolled their election.

[Geminex]

Okay, the "demonstrably" bit intrigues me. Do go on.

[Jagos]

Laws aren't written by economists for good reason. There are a lot of economists who are perfectly ok with an even higher wealth divide than we have now because it's a stable economy, regardless of the ethical quandaries it would cause, such as a working class near indistinguishable from slavery.


...

Ok, I know there's a lot of economists... But I'd need an example of at least two that are so conservative as to look at the information provided in front of them and absolutely ignore data for personal gain.

Well, we had laws in place to prevent the economic collapse, then we repealed them, then the economic collapse happened, so yeah, economic laws are a pretty good idea.

Yeah, but we have a group of politicians that are allowed a lot of money in lobbying to support a system that is tailored towards the haves. The ones that pass laws aren't economists and I doubt highly that politicians look at the effects of the laws they put in place.

[Professor Smarmiarty]

Okay, the "demonstrably" bit intrigues me. Do go on.

B ydemonstrably I mean mathmatical analysis of waste and inefficiency compared to theoretical values, not like - "We build two model societies living in bubbles, let's compare them". Values very a lot but with our current technology we're easily less than half efficiency, generally people say somewhere between 10-30% which is absurd.

[Darth SS]

Can economic laws truly affect change or is it best to leave it to those in business?

No, you don't leave it to business.

Okay, the most efficient allocation of resources occurs in a "vaccuum," that is to say where there are no externalities that cause change in an economy. Whether or not the resulting efficient equilibrium is morally acceptable is an entirely different matter.

The trend I'm noting is that regardless of political affiliation everyone says "No," that equilibrium is not morally acceptable. Where everyone differs is in how you manipulate the model such that the resulting equilibrium is morally acceptable. I.E. Do we provide incentive for people to behave in a more satisfactory fashion? Or do we use redistributive measures to make things more satisfactory? The result is never starkly on either side, and from within that discussion is the birth of politics.

Here's why you don't leave it to business: Ever notice how businesses keep finding new and creative ways to get around various laws often of the consumer protection variety? Yeah.

Laws aren't written by economists for good reason. There are a lot of economists who are perfectly ok with an even higher wealth divide than we have now because it's a stable economy, regardless of the ethical quandaries it would cause, such as a working class near indistinguishable from slavery.

No, laws aren't written by economists because we just don't give a fuck. More often than not debate concerning legal/economic policy is just arguing over which method to use, when in reality they're the exact same. For example, an import tariff, an import quote, negotiating export quotas, and negotiating export tariffs all due the exact same thing. They limit imports of a specific variety. Another example; everyone argues "I want to keep jobs in America! Let's increase imports and decrease exports!" Well how do you obtain the foreign dollars neccesary to pay for imports? By exporting. You can't increase imports and decrease exports, it just doesn't work that way.

Also, this comic is for you. (http://www.smbc-comics.com/index.php?db=comics&id=2060#comic)

Yeah, but we have a group of politicians that are allowed a lot of money in lobbying to support a system that is tailored towards the haves. The ones that pass laws aren't economists and I doubt highly that politicians look at the effects of the laws they put in place.

Bingo bango. Economics is an imprecise science at best, it's a horrible hybrid of probability theory, statistics, calculus and the scientific method. Sometimes we're just wrong. Sometimes we don't tell our boss what he wants to hear, so we get fired until he hires someone that does say what he wants the hear. That second one defines economists that get hired by politicians.

Check your wallet, ask how other countries are doing.

I'm sorry, was there a point in there? Or were you just trying to be snarky? What seems to be the defining characteristic of economically well off states and poor states seems to be that the well off states didn't have dictators that drove their states into impossible levels of debt because they wanted a porsche.



But...yeah. I'm an economics major, inside of a year of graduating. My focus has been primarily on international trade theory and money theory, but I'm sure I can be of some help here. So...ask me anything? I guess?

[Mr.Bookworm]

...

Ok, I know there's a lot of economists... But I'd need an example of at least two that are so conservative as to look at the information provided in front of them and absolutely ignore data for personal gain.

Alan Greenspan and Ben Bernanke.

They would also be, respectively, the last and current Chairmen of the Federal Reserve.

I can name more, if you want.

[Jagos]

Alan Greenspan and Ben Bernanke.

They would also be, respectively, the last and current Chairmen of the Federal Reserve.

I can name more, if you want.

... Gah?

Bernanke, I'll agree, but Greenspan seems to have done a decent job. Although with Ron Paul currently overseeing the Feds, that might be interesting in the next few years.

[Professor Smarmiarty]

What? Greenspan is more culpable for the financial crisis than prey much anyone else alive. And it's becuase of his absolute political belief in the fact hat markets will regulate themselves in defiance of all evidence to he contrary.

[Jagos]

How so?

The fake demand was created by a QSE, which he had nothing to do with. The market did work to correct the imbalance but it's government's fault in the first place.

[Professor Smarmiarty]

Interests rates at record lows created the bubble. Strongly promoting ARMs which spiked in interest rates righ before the crisis caused lots of defaults.
It's as simple as tha.
And it wouldn't have been anywhere near as devestating if he hadn't used his time on the social securiy reform to compleely gut the poor which caused a lot of the housing trouble in the first place.

And how the shit did the market correct itself? If by correct itself you mean spectacularly explode and rely on massive corporate handouts while continually to imbalance in favour of a few very wealthy companies then yeah it totally corrected itself.
The entire crisis was due to rampant speculation by the financial institutions with no regulation- it is exactly proof that self-regulation is bollocks. Like I don't know how any lesson can be drawn excep tthat regulaion is needed or our financial institutions will play monopoly with our money. And not even regular monopoly. Houseruled cheating monopoly where you can buy anything yo uwant for no money as long as you promise to pay it back in 100 turns.

[The Kneumatic Pnight]

Bernanke, I'll agree, but Greenspan seems to have done a decent job.

What? No, like, the recent economic crisis is entirely Greenspan's fault. Look into the "Greenspan Put".

Or, better yet:

In a move that would become the hallmark of his tenure, Greenspan lowered the federal funds rate by 50 basis points, restoring order to the markets and giving investors confidence that the Federal Reserve would take decisive action when financial crises came to a head.

It was not until approximately ten years later that the term "Greenspan put" would enter the investment lexicon formally. Greenspan's willingness to lower the federal funds rate during challenging economic periods, such as the 1987 stock market crash, the 1990-1991 recession, LTCM, The Asian Contagion, the unwinding of the Nasdaq bubble and the period following the September 11 attacks created the perception that, so long as Greenspan remained chairman of the Fed, monetary policy would come to the rescue - hence, the "Greenspan put."

[Professor Smarmiarty]

Just in case it's not clear from the quote what the greenspan put did- it basically meant everybody had risk-free speculation- keep the profits, pu losses on society as a whole. Even if they didn' fail it lead to the massive risk-takingm high valuations and speculaion which did all fall apart in the end, this risk-taking only came about because it was seen as there being no way they could fail.

[The Kneumatic Pnight]

This is in addition to what he would do when a bank actually did look like it was going to fail, wherein he would occasionally do things like cover their holding requirement. Which is, for all intents and purposes, saying, "Speculation got you into this mess, it'll get you back out!"

Which is yet more hilarious in the face of things like:

The solutions for the financial-market failures . . . are higher capital requirements and a wider prosecution of fraud [.]

Yes, let's make it more expensive to be a bank and you'll just remove the benefits on a case-by-case basis. Let us also prosecute fraud with our non-existent oversight agencies.

So far, the list of things Alan Greenspan hates

Consistency of argument
Businesses failing
Regulatory agencies (that aren't him)
Kitty snuggles (probably)

[Mr.Bookworm]

Though it is pretty much Greenspan's fault, insomuch as it can said to be one man's fault, he did ask for economists motivated by money, so I guess I should give another example.

Here's a whopper.

Frederic Mishkin. Professor of economics at Columbia Business School. Served on the Board of Governors for the Federal Reserve System for two years.

Payed 124,000 dollars in 2006 by the Icelandic Chamber of Commerce to say everything with Iceland's economy was great.

[Hanuman]

I'm sorry, was there a point in there? Or were you just trying to be snarky? What seems to be the defining characteristic of economically well off states and poor states seems to be that the well off states didn't have dictators that drove their states into impossible levels of debt because they wanted a porsche.

Yeah, everything is judged by requirement, want, comparison or educated opinion.
Everything else is bullshit?

[Professor Smarmiarty]

Though it is pretty much Greenspan's fault, insomuch as it can said to be one man's fault, he did ask for economists motivated by money, so I guess I should give another example.

Here's a whopper.

Frederic Mishkin. Professor of economics at Columbia Business School. Served on the Board of Governors for the Federal Reserve System for two years.

Payed 124,000 dollars in 2006 by the Icelandic Chamber of Commerce to say everything with Iceland's economy was great.

This is he fantastic thing about current economics- even if you know the market is about to collapse you're not sure whether you should say anyhing because it will just make things worse as everyone panics and gets out. Really you'll just tell all your friends/employers and give htem advance warning/.

[Jagos]

Ok...

What concerns me is that the blame is in the wrong place. Alan Greenspan is more a result of the financial crisis, not necessarily the cause.

I'd say that the government (ineffectively) regulates, thinking it can do far better with the proposed safety nets it has in place that cost us a lot in tax payer money.