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I Pencil: A product of the mixed economy

April 16th, 2011

I’m thinking about doing another book, which would be a reply to Henry Hazlitt’s Economics in One Lesson a tract published in 1946, and available online, but still in the Amazon top 1000. It’s largely (as Hazlitt himself says) a rehash of Bastiat.

I’ll try to put up a prospectus soon, but I thought I’d start with something simpler, a response to Leonard Read’s 1958 I, Pencil. This essay is a description of the incredibly complex “family tree” of a simple pencil, making the point that the production of a pencil draws on the work of millions of people, not one of whom could actually make a pencil from scratch, and most of whom don’t know or care that their work contributes to the production of pencils. So far, so good. Read goes on to say that

There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work.

Hold on a moment!

Read’s first person pencil starts the story like this

My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon.

That would probably be in a forest managed by the US Forest Service or the Bureau of Land Management, or maybe a similar state agency.

It goes on to mention “all the persons and the numberless skills” that are involved in forestry and in the various subsequent stages of production. Most of those people would have acquired their basic skills in public schools, and learned more in colleges, trade schools and so on, mostly public or publicly funded.

Next up is the rail trip to San Leandro California. Read’s pencil doesn’t mention the line, but it’s presumably on the network of the Union Pacific Railroad, created by Act of Congress under Abraham Lincoln, with the plan of building a railway line across the US[1].

And, while we learn how the pencil is produced by sandwiching a graphite tube between two wooden slates, the pencil forgets to mention its invention and patenting by Nicolas Conte in the late 18th century. The patent system is a temporary government-created monopoly, and a classic example of the mixed economy[2].

Finally, let’s look at Eberhard Faber, the company that made the pencil. It’s now a subsidiary of Newell Rubbermaid, a multinational consumer goods conglomerate with over 20 000 employees and dozens of different brands. Obviously, someone sees a fair bit of benefit in “dictating and forcibly directing” the work of these thousands of employees, rather than relying exclusively on transactions in the marketplace. And the shareholders seem keen on organizing all this activity under the state-created protection of the limited-liability corporation, rather than acting as independent entrepreneurs.

What can we learn from all this? As Read argues, following Adam Smith, markets can indeed organize very complex production processes, to an extent that might well seem miraculous to anyone who tried to reason about it in the abstract. But that doesn’t mean that markets are the only, or invariably the best, way to organize production.

The majority of economic activity takes place without any direct connection to markets, undertaken in the household or government sector, or within large corporations that trade in the market sector, but use central planning to organize their own activities. The boundaries are constantly shifting as some activities shift between household, government and market sectors, and as households, governments and firms outsource some activities and integrate others.

The fact that a particular form of organization exists and functions does not prove that it is optimal. It is certainly possible to imagine forms of modern society in which markets and private property play no role, or forms in which there are “markets in everything”. And, within the broad class of mixed economies, there’s a wide range of possibilities – most goods and services have somewhere and sometime been provided by governments, and somewhere and sometime by private markets.

Nevertheless, the broad outlines of the mixed economy have remained broadly stable since the 1940s, surviving both the challenge from comprehensive central planning in the Soviet Union and the push for privatisation that began in the 1980s and ended (as a program with a credible theoretical foundation, if not as an ideological agenda) in the Global Financial Crisis. Any serious policy program has to take account of this fact.

fn1. Actually when Read was writing, it was probably the Southern Pacific, successor of the Central Pacific, which built the western half of the line, meeting the Union Pacific line halfway in a marvel of successful planning.

fn2. Libertarians and other free market advocates are divided in their views on patents and other forms of ‘intellectual property’. But their logic-chopping style of argument tends to push them to one or other of the extreme positions, either opposing any patent protection or treating intellectual property similarly to other property, with no time limits. Nozick (and Rothbard) finds an intermediate position, supporting protection against direct copying, but not against independent invention.

  1. Freelander
    April 16th, 2011 at 13:27 | #1

    Damn, I’d thought of doing that some time ago. Very good idea though. Given that “I Pencil” is such an amazing work of fiction and shows a total ignorance of how businesses handle their supply chains. Any fool ought to know that a business doesn’t, including pencil manufacturers, doesn’t just wave a hand ful of cash in the air with the market pray “Wave your money and they will come!” To make sure you get exactly the inputs you require to the specifications you require is not a simple matter of the magic of markets. There are all sorts of non unfettered market activities helping the whole pencil making magic on its way.

  2. Joe
    April 16th, 2011 at 13:50 | #2

    Henry Petroski’s book “The pencil” tells you more about the pencil than you would want to know. He’s followed it up with a book on the toothpick! And there’s a Pencil Museum in Keswick!

  3. Ikonoclast
    April 16th, 2011 at 14:01 | #3

    Hmmm, I seem to recall that Henry David Thoreau knew how to make a pencil. His father owned the business and Henry David improved the design of it and and the quality of input materials.

    Later, IIRC, he made his own pencils living solo in the cabin “On Walden Pond”.

    That does not disprove the “I, Pencil” thesis of course. What does disprove it is a consideration of the specialisation of labour and coordination of the same in enterprises as JQ says.

    People (in the aggregate) do know how discrete manufactured items are made be they pencils, houses or bridges. These are things markets can be involved in in trading. What we perhaps don’t know is how more complex social possessions are made and maintained, like language, institutions, broad culture and so so. Interestingly, these accreting social inventions are largely NOT “made” by markets or traded by markets. Markets are one sub-system among many in the overall system of humjan interaction, communication, cooperation and civilization. Whe do these ideologues try to make out that markets are somehow the be all and end all of everything? It’s humbug.

  4. Freelander
    April 16th, 2011 at 15:08 | #4

    Another one to attack is Paul T. Heyne’s The Economic Way of Thinking which is much beloved by the looney right and especially loved as a primer for economic education. I flicked through it once and seem to remember it had looney things in it like using the way drivers behave on the road system as an example of acheiving optimal outcomes without government interference, comparing it favorably as very similar to the marvel of the unfettered market.

    Only two problems, first, there is hardly an absence of government involvment when it comes to driving on the road, and second, even within this government constrained and regulated environment, individual behaviour is still often antagonistic to acheiving a global (or frequently local) optimum. Constraints begin with the white lines, and the direction concerning which side to drive on. Contrary to Heyne, even with this existing high level of regulating, there are plenty of arguments why a bit more government intervention would make things even better on the road.

  5. April 16th, 2011 at 16:03 | #5

    As Austerian and propertarian comment is becoming quite ubiquitous, I thought about reading what is it exactly that these people are talking about.

    One question I have, which nobody has been able to answer, concerns the Natural Rate of Interest (as opposed to the market rate of interest).

    As I see it, the general idea is that the natural rate of interest measures how compelled to consume people are. If consumption goods are less scarce now, investment on capital goods is less profitable (because there’s already enough consumption goods). And if consumption goods are less scarce, then people will discount future consumption at a lesser natural interest rate (i.e. are more willing to save now).

    Notice that this “natural rate of interest” exists only in people’s heads, maybe even unconsciously, and is independent of the rates one sees advertised in banks.

    As you guys seem to have read about Austerian thought, I wonder can anyone here answer me: why on earth should the natural rate of interest converge to a single value?

    Notice that a mechanism of arbitrage could explain the convergence of market interest rate to a single value. Further, in a competitive market, where one considers interest rates as prices (which Austerians seem to deny, btw) a price elasticity of demand argument could also rule out multiple market interest rates.

    What argument, if any, can explain a convergence of individual’s different natural rates of interest into an aggregate one?

    Or maybe I just misunderstood the whole idea?

  6. April 16th, 2011 at 16:49 | #6

    Come on then John, get writing – looks like you already have the chapters mapped out! How about “It takes a village” for a title, or has that been used?

  7. Ernestine Gross
    April 16th, 2011 at 17:43 | #7

    Yes, get writing and I look forward to the book.

    An aside, was there really a ‘credible theoretical foundation’ for the program that started in the 1970s in the USA and locally in the 1980s? Surely Radner’s early 1970s work should have sent a warning about securities markets and the later work by several authors on incomplete markets was published just in time when AGW was emerging as a major market failure. There are also warnings in the theoretical papers on risky bond portfolios.

  8. Donald Oats
    April 16th, 2011 at 21:07 | #8

    The incredible specialisation in the manufacture of a pencil is in large part a choice rather than a necessity. This choice reflects different available organising principles for production of said item, nothing more.
    Cars were once built by a small team, working together for however many days it took (I think it was like two or three). Of course they sourced iron and steel, but the made many of the parts essential to the automobile. A team of eight designed on Toyota car. So more than one organising principle exists, and no doubt they are each optimal in their own niches.
    Perhaps I am missing the point…

  9. April 16th, 2011 at 21:39 | #9

    Brilliant Tu quoque. Especially liked the subtle reference to Coase’s proof of the need for a corporate command economy, albeit owned by capitalist proprietors rather than statist sovereigns.

    Ideologists of Left and Right need to lose their Platonic absolutes. The mixed economy, like the world itself, is an evolutionary work-in-progress with boundaries constantly shifting.

    Attempts to box everything into one conceptual schema invariably founder on reality, sometimes condescendingly referred to as “pragmatism”. As if “practice” was some kind of vice that theorists should never indulge in.

    I prefer Einstein’s dictum: the good scientist should be a “shameless opportunist”. Let the ideologists be scandalised, I prefer to see good deeds get done rather than rest on my pristine pure philosophical laurels.

  10. Louis Hissink
    April 16th, 2011 at 21:59 | #10

    John,

    You wrote:
    “The majority of economic activity takes place without any direct connection to markets, undertaken in the household or government sector, or within large corporations that trade in the market sector, but use central planning to organize their own activities. The boundaries are constantly shifting as some activities shift between household, government and market sectors, and as households, governments and firms outsource some activities and integrate others.”

    It’s the majority of activity takes place……., not economic activity. Economic activity is, sensus strictu, limited to the market.

    The rest of your arguments must therefore fall.

  11. haiku
    April 16th, 2011 at 22:10 | #11

    So if I mop the kitchen floor, that’s mere activity, but if I pay a cleaner to do it, that’s economic activity. I guess that’s true if the value of my time is zero, which might be true for certain blog commenters (and quite possibly negative, in particular cases of responding to certain blog commenters. SFFTT.)

  12. hc
    April 16th, 2011 at 22:25 | #12

    You are right pencils and most other things are a product of the mixed economy. Isn’t that what level-headed textbook writers – e.g. Paul Samuelson – have been saying for a generation? I think focusing on extremist ideologues on the right is not the way to go.

    Freelander, I think Paul Heynes had a more nuanced view than this. I think you didn’t get much past the introduction. He is trying to sell economic theory to introductory economics students. I don’t think Heynes is trying to suggest roads can operate on the basis of laissez faire but just that there is a surprising degree of overall consistency of action.

    Heynes is an important figure in the limited literature on teaching economics.

  13. Freelander
    April 16th, 2011 at 22:38 | #13

    An alternative view of Heyne is that his stuff is simple minded twaddle.

  14. Agog
    April 17th, 2011 at 00:30 | #14

    “Economic activity is, sensus strictu, limited to the market.” Really? See Boulding on ‘Grants Economics’ or anything about gift economies….

  15. Ernestine Gross
    April 17th, 2011 at 05:30 | #15

    Freelander :An alternative view of Heyne is that his stuff is simple minded twaddle.

    Difficult to disprove.

  16. April 17th, 2011 at 06:26 | #16

    Pr Q said:

    The majority of economic activity takes place without any direct connection to markets, undertaken in the household or government sector, or within large corporations that trade in the market sector, but use central planning to organize their own activities. The boundaries are constantly shifting as some activities shift between household, government and market sectors, and as households, governments and firms outsource some activities and integrate others.

    This is obviously true, but somewhat misses the point of the libertarian Right. They are not so much as enamoured with market transactions (although they are) as abhorrent towards government authority. Especially the power to tax, spend and regulate according to democratic mandate.

    They regard all private sector non-market transactions (such as household and corporate activity) as ultimately examples of the proprietor’s legitimate individual autonomy. They do not regard the sovereign as enjoying comparable legitimate institutional authority.

    So ultimately the libertarian ideological position is predicated on a view of the legitimacy, rather than efficiency, of state authority. Really it ultimately boils down to Alpha-males ruling their business and home roosts without interference from niggling bureaucrats (and nagging wives).

    Hence they are driven to the ideological solution of privatisation, which transfers the authority to make command economic decisions from the public to private sector. Of course this usually ends in economic disaster. But since the libertarian agenda is primarily driven by non-economic factors its not surprising that they stare like zombies at the bitter fruits of their endeavours. Economic rorts are a feature, not bug, of the privatisation program.

  17. April 17th, 2011 at 06:58 | #17

    More generally, the fundamental ideological problem these days is not insufficient government action, but inappropriate government action. We have a mixed economy alright, but it is badly mixed-up with public and private sectors mangled together in many unholy alliances.

    Ultimately this is a problem that stems from the degeneration of the traditional seperation of private church from public state. The old Westminster system used to avoid the conflict of interests that crop up when private lobbyists live off the public teat.

    Government rules and money are everywhere, but usually beholden to private corporate purposes. Most notoriously with private-public partnerships but also with outsourcing and commercial-in-confidence contracting. No bid contracts and cosy sweet-heart contracts.

    The lowest common denominator here is the systemic attempt to do an end-run around standard public accountability. The blurred boundaries allow audit trails to be covered up or finish up in dead-ends.

    The poor results of the mixed-up economy speak for themselves. In the federal sphere we had pink batts, the BER, the hybrid bastard love children of Telstra & Optus, and now the unfolding mess of the NBN. In the state sphere we have MYKI, the Desal plant, cross-city tunnel and anything touched by Macquarie Bank’s infrastructure tentacles.

    I conclude that Pr Q’s attempts to develop a counter-narrative about the virtues of non-liberal (“corporal”?) mixed economy is worthy but will fall on deaf ears.

  18. Ikonoclast
    April 17th, 2011 at 08:25 | #18

    @Jack Strocchi

    “Really it (libertarianism) ultimately boils down to Alpha-males ruling their business and home roosts without interference from niggling bureaucrats (and nagging wives).” Jack S.

    I agree (even if you were being ironic). Libertarianism is about legitimising self-interest, aggrandising all wealth and power to specific advantaged individuals whilst allowing all others to be exploited without hindrance. Libertarianism might deny this but it is the inherent truth in the attempt to minimise the legitimacy of democratic government. In practice libertarianism equals oligarchy.

  19. Alice
    April 17th, 2011 at 09:58 | #19

    Love this story about I pencil…
    Every time the Prof says he is thinking about writing another book, you can bet the metaphorical pencil is already hard at work.

  20. BilB
    April 17th, 2011 at 12:36 | #20

    If you want a real challenge, then try doing a family tree for the iPod, a product with a far shorter history, but will probably require several supercomputers to calculate the cross links for this similarly sized product. Here though you will find a guiding plan which will include nearly every science and graphics based tertiary institution on the planet.

  21. BilB
    April 17th, 2011 at 12:38 | #21

    Nice definition there Ikonoclast

    “Libertarianism is about legitimising self-interest, aggrandising all wealth and power to specific advantaged individuals whilst allowing all others to be exploited without hindrance. Libertarianism might deny this but it is the inherent truth in the attempt to minimise the legitimacy of democratic government. In practice libertarianism equals oligarchy”

    I have added that to my library.

  22. BilB
    April 17th, 2011 at 12:47 | #22

    Louis Hissink.

    The government does not share your view. That is why they have a fringe benefits tax, which must annoy you endlessly.

  23. Chris Warren
    April 18th, 2011 at 11:57 | #23

    Hang on …..

    Nevertheless, the broad outlines of the mixed economy have remained broadly stable since the 1940s, surviving both the challenge from comprehensive central planning in the Soviet Union and the push for privatisation that began in the 1980s and ended (as a program with a credible theoretical foundation, if not as an ideological agenda) in the Global Financial Crisis. Any serious policy program has to take account of this fact.

    What precisely are these broad outlines that have “survived”?

    If the terms are mixed “public-planned” vs “private-market” then this is a dead end – pencil or no pencil.

    The real issue is whether society can continue with any sort of capitalism eating away at its roots.

    A mixture of “planned capitalism” [which is what competition policy delivers] with “market capitalism” or “public capitalism” with private capitalism” solves nothing.. Both forms of this “mixed economy” require increased per capita debt and population growth.

    The concept ‘mixed economy’ is better developed as a mixture of capitalist enterprise (planned or market) and socialist or cooperative enterprises(planned or market).

    Once you have escaped capitalism – do you need a mixed economy? Would a regulated market economy then suit all at least for most goods and services?

  24. Freelander
    April 18th, 2011 at 15:37 | #24

    @Ernestine Gross

    More so if you’ve read him.

  25. Greg Ransom
    April 18th, 2011 at 15:41 | #25

    Great strawman argument!!

    Great red herring argument!!

    Great “no one claimed otherwise” argument!!

    You are tilting at windmills. indeed write your book.

    Then we can engage in various arguments of second best institutional design, public choice theory, etc., etc.

  26. Greg Ransom
    April 18th, 2011 at 15:43 | #26

    The is plenty of private timberland in the West, and many non-government subsidized rail lines, etc.

    You’ll actually habe to work to tell a story that is true and is not myth.

  27. BilB
    April 18th, 2011 at 15:48 | #27

    I think, Chris, that you are arguing for a homegenous slab economic construction versus the mixed material random rubble economy that works best in most countries, Australia included. The homogenous one colour economy construction may be simpler to understand and operate for a time, but it does not cater for the wide variety of the people, energies, ideas, opportunities, and needs that make a vibrant society. An economic construction hewn over time of heavy industry capitalism blocks and government planning blocks infilled with a small business, private enterprise and public service mortar makes for a more appealing collage of human enterprise than the alternative of the centrally managed economy. It may not be as strong overall as the homogenous construction, but it is a far better serves the needs of a mixed variety of peoples.

  28. Chris Warren
    April 18th, 2011 at 21:32 | #28

    BilB

    I cannot see how our current ‘mixed economy’ rubble or not, works at all. When you look at it you cannot avoid noticing that:

    per capita debt has increased and this is necessary (due to capitalism)
    the importing of value from offshore oppressed labour has increased.

    Both of these threaten the entire structure irrespective of how it is constructed.

    Its not the collage that concerns me but the cancer eating away underneath.

  29. BilB
    April 19th, 2011 at 06:07 | #29

    Fair point, Chris, but there is nothing to stop a fully managed economy making the very same mistakes. The Cinese people, I think I heard on the news, have a 50% saving level, and this is despite their horrible individual personal circumstances. It is not about what the governement does, it is about the national work and saving ethic.

  30. Chris Warren
    April 19th, 2011 at 09:03 | #30

    Judging from appearances China appears to be running a capitalist economy and probably has 100 years of such boom and bust cycles to go until they arrive at the same debt-burdened endpoint as Europe and America.

    Here is the latest funeral rite for Keynesian America:

    More debt

    But the problem for the Chinese is that the current flush of growth they are experiencing is not based on any internal dynamic of capitalism but more on opportunistically feasting on the rest of the world.

  31. Freelander
    April 19th, 2011 at 14:43 | #31

    @Chris Warren

    America is hardly ‘Keynesian’. They do have a debt problem.

    As for the Chinese, due to the GFC they have swapped to greater reliance on internal demand, unfortunately. Unfortunately, not for them but for us. I like getting cheap goods subsidised by cheap Chinese labour. If the GFC hadn’t happened the Chinese government would most likely have continued with their depressed wages and depressed internal demand approach and their reliance on maintaining export demand. That they have not means our honeymoon of cheap Chinese goods will end sooner than it would have.

    The Chinese may have problems. What economy doesn’t? However, most of the anticipated problems spouted by many so-called analysts are often based more on wishful thinking than sound reasoning.

  32. Chris Warren
    April 19th, 2011 at 16:08 | #32

    Freelander

    The recourse to debt to to counter cyclical deviations and to stimulate the economy is Keynesian.

    Once upon a time the Europeans liked getting cheap goods sunsidised by cheap Negro, ‘Coolie’ and ‘Hindoo’ labour. If WW1 hadn’t happened the Colonial governments would most likely have continued with their depresed wages and depressed internal demand approach and their reliance on maintaining export demand. That they did not means the honeymoon of cheap Colonial goods ended sooner than it would have.

    So it is an old, old tale.

    Sound reasoning depends on whose shoulders you stand on.

    What sound reasoning suggests that capitalist profits can be made without either exploitation or increasing percapita debt to multi-trillion dollar levels (and rising)?

    Is it reasonable to have continuous ratchetting debt without the Keynesian muddle?

  33. Alice
    April 19th, 2011 at 20:12 | #33

    Dont you just love this debt link on the US posted by Chris above

    I mean Congress just has to vote to raise the debt levels (already in the insane trillions numbers) so as to keep the “creditworthiness of the US intact”.

    “Congress is going to have to raise the debt limit,” Mr. Geithner said on the NBC program “Meet the Press.” “They understand that. That’s absolutely essential to preserve the creditworthiness of the United States of America.”

    Its (US credit worthiness) has been robbed blind by US banks. But oh dear they must keep their rating agenciy reports looking sweet.

    Right. This is worthy of a Monty Python comment.

    “Always look on the bright side of life.”

  34. April 19th, 2011 at 22:52 | #34
  35. Freelander
    April 20th, 2011 at 01:23 | #35

    @Alice

    I can’t understand how S&P and Moody’s have ignored things until now. (Well to be honest I can, and its not so unusual given their track record.)

    Also, unlike the consternation over Greece, Ireland, Portugal, and Spain, which after all are only really equivalent to state governments given that they don’t have their own currency, little notice, so far, has been taken of the state of the US states.

    Whereas, Germany and others don’t really need to do anything to help the GIPS (and could just let them suffer), because state citizens have votes in the US Federal elections, that luxury is not available there. Moreover, in the US it is not just the peripheral states which are shaky, the rot in state finances is pretty well all the way through.

    It was very amusing and another example of the stupidity of those still in control of international money markets and other people’s money, that the S&P’s warning on the US caused a Pavlovian ‘flight to safety’, that is, to the ‘safety’ of the US dollar!

    Another reason for “Always look on…”

  36. TerjeP
    April 20th, 2011 at 04:06 | #36

    This is obviously true, but somewhat misses the point of the libertarian Right. They are not so much as enamoured with market transactions (although they are) as abhorrent towards government authority. Especially the power to tax, spend and regulate according to democratic mandate.

    More often without mandate. Rudd promised tax cuts and an end to reckless spending. Delivered the tax cuts but then proposed a raft of new taxes, never got around to taking a “meat axe” to the public service (his words not mine), and created endless new spending initiatives. He was succeeded by Gillard who found it necessary to deny her carbon tax agenda in the eve of an election. There are problems with democracy but the problem is not principly with voters who seem to do a reasonable job dealing with a pretty second rate menu that offers mostly fraudulent products.

  37. TerjeP
    April 20th, 2011 at 04:08 | #37

    Oops. First paragraph above should be in quotes.

  38. Chris Warren
    April 20th, 2011 at 11:30 | #38

    There are problems with democracy but the problem is not principly with voters who seem to do a reasonable job dealing with a pretty second rate menu that offers mostly fraudulent products.

    Unfortunately in NSW, voters appear to have rejected one set of liars and fraudsters in favour of a worse set of liars and fraudsters.

    This was pretty much a media con.

    Such is life.

  39. TerjeP
    April 20th, 2011 at 12:12 | #39

    What informed options did they have? Not many I’d say. Given a bad menu you eat bad food.

  40. W
    April 20th, 2011 at 14:17 | #40

    @TerjeP
    I do remember the “meat axe” line disappearing.

    I also recall all financial markets freezing during the GFC. Perhaps the message got lost somewhere in that mess.

  41. TerjeP
    April 20th, 2011 at 17:25 | #41

    It should not have.

  42. Alice
    April 20th, 2011 at 19:50 | #42

    @TerjeP
    Terje… I dont suppose you even notice that people want public services do you and the reason they voted NSW Labor out was because they werent getting them?

    I dont know how libertarians manage to take solace from the fact that most normal people want a mixed ecobnomy and a reasonable government presence when it comes to getting the infrastructure planned and built.

    It would be strange to actually sign up to be part of such a minority.

  43. Freelander
    April 20th, 2011 at 21:07 | #43

    The politics on offer has become much like the ‘choice’ we have in supermarkets. We get to choose the name of the party in power but have no choice over policies and government decisions, which, whichever brand or differences in packaging, stay much the same.

  44. Alice
    April 20th, 2011 at 21:42 | #44

    @Freelander
    Ive never seen it so bad. Liberal (at federal level just mad), Labor (at state level just bad), labor (at Federal level just sad).

  45. W
    April 21st, 2011 at 11:03 | #45

    @TerjeP

    I think the Government made the right decision to guarantee deposits, given the state of panic at the time.

    Additionally, many more Australian banks would have folded or have been taken over by the Big Four if the government did not provide liquidity. The short term market for funds was gone!

    Back to your point about Rudd not having the mandate to act. I find this intriguing because I believe the ability of the financial industry to create “independent” SIVs and shift all their risk off balance sheet is evidence that the market will not necessarily produce good systems. The failure of the market to account for systemic risk which was significantly intensified through the use of CDS to “manage risk” is undeniable. If governments did not act, the international economy was staring at a big, black hole.

    I suppose this is where we differ, I was happy with the decision for Australian government (and other governments) to take action whereas perhaps you would have preferred to let the market do its thing.

  46. TerjeP
    April 21st, 2011 at 11:44 | #46

    Alice – you assume too much.

    W – I don’t think the guarantees were a good idea. The banks in Australia did not need them and if there were problems with the banks Ireland shows where bank guarantees can lead you.

  47. Jim Birch
    April 21st, 2011 at 17:28 | #47

    @TerjeP
    Aren’t you conflating two different situations. Australian banks were in a quite different state to Irish banks. In Australia it was more-or-less an issue of confidence, or even just a potential issue of confidence. IIRC it was generally agreed at the time that the real risk was small. That analysis has proved correct. The process worked well and was pretty painless apart from the minor questions like when to sever the guarantee. This makes the action right in Australia. (That is, unless you are generically against government guarantees for other reasons.)

    Ireland’s problems were significant, as demonstrated by their post GFC trajectory so it’s not a guide to action in Australia in this case. Allowing banks to fail there might have been a good idea if you could clean up the bodies quickly, but that’s a different question.

  48. Alice
    April 21st, 2011 at 20:33 | #48

    @TerjeP
    Terje says “Alice – you assume too much.

    How so? Are you suggesting, by any chance, OFarrell got in because people are moving towards libertarianism Terje?

    Even OFarrell knows its about the trains and the roads.

  49. Alice
    April 21st, 2011 at 20:36 | #49

    @TerjeP
    Its Goldman I wanted to see collapse as they should have, spectaucularly, but we have Geitner to thank for that.The thieves and inequality merchants still prosper in the the US.,,but not for long..until the next crash and there is no bailout.

  50. TerjeP
    April 22nd, 2011 at 00:24 | #50

    Ireland’s problems were significant, as demonstrated by their post GFC trajectory so it’s not a guide to action in Australia in this case.

    At the time the ALP used Ireland as a role model for why we should have a guarantee.

  51. TerjeP
    April 22nd, 2011 at 00:31 | #51

    Alice – three points.

    1. I don’t oppose a mixed economy. I just have a different view about the mix.

    2. The public wants good public services. It is less concerned about whether they are delivered via the private sector or public sector. They want what works. If the private sector does airlines better than the public sector then they’ll choose the private sector option.

    3.

  52. TerjeP
    April 22nd, 2011 at 00:33 | #52

    3. Goldman should not have been bailed out.

  53. Chris Warren
    April 22nd, 2011 at 09:02 | #53

    @TerjeP

    It seems you are merely citing “mixed economy” as a figleaf.

    What is your so-called mix?

    I don’t think anyone is objecting to mixing public, private, regulated, or deregulated. This can all be adjusted flexibly.

    The real problem with some versions of “mixed” is they mix capitalism into everything.

    If you have capitalism – then you HAVE to bailout bankrupts. In a democracy, there is no choice. Whether they are families, small businesses, banks or countries makes no theoretical difference.

    People who include capitalism in their so-called “mix”, often engage in great expositions for and against all the other elements – but all this is a distraction. Once they are scratched – you find a capitalist.

  54. BilB
    April 22nd, 2011 at 09:12 | #54

    TerjeP,

    So what you are saying in your point 3, Terje, is that criminal fraudulent companies should be protected by some kind of commercial Nannny State?

    I pay higher rates and have to do without services that I pay for because of those Goldman Sachs ratbags. But you think that their behaviour should be rewarded?

  55. Ernestine Gross
    April 22nd, 2011 at 09:48 | #55

    No, @3 Terje was saying that he does not agree with bailing out banks of the type of Goldman Sachs.

    Terje, IMO many would agree on moral grounds that banks of the type in question should have gone bankrupt. The trouble is that unless we get a better information system on financial transactions the consequences for people world wide of having all Wall Street Bankers (some located in other countries but into the same game) go bankrupt cannot be assessed. So, there are two moral problems, not one.

    On the face of it, what happened in the USA is nothing but a monumental waste of resources and misery for huge numbers of people in the USA and elsewhere. It is for all to see. People in the USA lost their houses and live in tents while tax payers are being committed to convert the private bank generated ‘money’ – debt – into public money – debt -and the merry-go-around continues including rewarding the operators with bonuses and taking note of the S&P’s ranking (as if they would have any credibility). Would it not have been better to give the public debt to those who could not pay their mortage? Alternatively, take public possession of all houses of bankrupt owners, pay the said banks a fraction of the debt and rent out the houses at rents consistent with the income of these people. These are rhetorical questions because the data to make an assessment is not available and, more importantly, the lack of data is not confined to the USA. We all know there is an international network of debt channels but we don’t know enough about what goes on to deal with the second moral issue I mentioned.

  56. Alice
    April 22nd, 2011 at 19:53 | #56

    @TerjeP
    On this we are in complete agreement. Goldman Sachs were at the forefront of the gambling spree before the 1929 crash. It really is time GS crashed.

    In the 1890s they would have just failed. Ever since powerful banks have been saved. But they are just too powerful now and saving them is a huge mistake. I can see Ernestine’s argument. Innocent people will lose money but I dont know too many who bank with GS and I bet there are innocent super savers who dont even know they bank with GS but people around the world are paying to prop them up anyway. Innocents will pay but GS should fail is my opinion. Lehamn failed. Did it impose hardships of the like we are seeing now through global budgets which devoted themselves to propping up sick banks?

  57. Alice
    April 22nd, 2011 at 19:57 | #57

    @TerjeP

    3. (unfinished point by Terje) ..if the public sector delivers public services better than the private sector (and we are seeing some monumental private sector bunglings of public services) then people have a right to public sector delivery.

    Yes Terje?

    Apart from that I agree with you,

  58. SJ
    April 22nd, 2011 at 21:56 | #58

    Ernestine, it was the particular way that Goldman was bailed out that was so offensive.

    If a small bank in the US fails, it gets taken over by the FDIC, accounts are set right, then its assets and liabilities are auctioned off to some other bank. In the process, the shareholders (note to others: not the depositors) lose everything and the management gets fired.

    This didn’t happen with Goldman. The shareholders and management made out like bandits.

  59. BilB
    April 22nd, 2011 at 22:08 | #59

    Oops sorry Terje. I read that on too small a screen. Actually I read that in the negative because I thought that Goldman Sachs didn’t get a bailout. The whole GFC orgey of greed gets worse the more that I learn about it.

    But that would have been a brilliant plan, Ernestine, which is why it could not have never happened.

  60. Alice
    April 24th, 2011 at 14:16 | #60

    I think I have found a personification of Profs I pencil story..I Joe.

    http://lostinthe21stcentury.com/2011/04/20/a-day-in-the-life-of-joe-middle-class-republican/

  61. Donald Oats
    April 24th, 2011 at 15:11 | #61

    The public want public services, true enough. The public don’t care about the nature of the provision of those services (ie private or public), they just want the end result…to paraphrase Terje. Where Terje and I part company on this would be the fact that private companies go bust or rip off the goods and run away, all too often. While it is arguable that there is some risk of inefficiency in provision of services by a public sector, the flipside is that with the private sector the public a submitted to additional risks concerning the service provision in itself, ie continuity of the service provision. Examples abound, of private company collapse taking down what was once largely a publically provided service (ABC Learning, anyone?)…In the case of ABC Learning, the government had to step in and fix it, at substantial cost to us taxpayers.

    In other words, the public care about both the service itself, and the nature of its provision (continuous, reliable, etc) – only some of which may be covered by contract since business viability risks are inherently external to a contract to deliver. After all, penalties and the like are hardly of use when exacted against a bankrupt company. If the public get a good public service, and if the quality factors relating to the provisioning of the service itself, are covered, then I don’t think the public necessarily have a problem with privately supplied public service (an oxymoron of an expression if I ever saw one, though). Unfortunately, continuity of service in today’s world means that the government must be ready to step in when essential services are at threat. For non-essential but nevertheless vitally important services, perhaps the government could rely on other private companies stepping up to fill a void (in the situation of a private provider collapsing catastrophically, for instance), but the political risks in that strategy are severe.

    Have a good Easter everyone (although I don’t believe in it, but hey – chocolate!).

  62. john
    April 25th, 2011 at 20:38 | #62

    Shorter Leonard Read: ‘Industrial economies are complicated and interdependent’.

    Yes, but so what? I do not see how this has anything to do with the ideological point he is trying to make.

    The entire non-trivial content of this article (in relation to the point he is trying to make) is in the last paragraph: ‘Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society’s legal apparatus remove all obstacles *the best it can*.’ (emphasis added)

    Sure – but how? How much? What are the countervailing forces whose existence is admitted by ‘as best it can’? What unintended consequences might there be? How should they be dealt with? Where some people’s obstacles are other people’s goals (living wage, secure job, safe workplace…) how should the conflicting interests be resolved? The author signs off just at the point where things start to get interesting.

  63. BilB
    April 26th, 2011 at 08:25 | #63

    Alice 10,

    Counting ones blessings in the country where everyone needs to be “blessed”, is a rare event these days.

    I was having a look at the historical value of the US dollar a while ago and it very much appears to nose dive when there is a Republican president, and partially recover when there is a Democrat. One would think that after the disasterous George W Bush who took the country, and a lot of other countries, into a pointless war over oil costing the country at least 3 trillion dollars of extra debt while trashing the US’s international “good will” reputation, all in the disguise of needing to be tough on terrorism, that the Republicans would slink into the background for a decade or two. But no, they now are certain that they alone can fix the disaster that has been created, and have demonstrated their skills by immediately blaming everone else for the mess, while drawing on the intellectual power of John Shimkus to clean up the environment.

  64. Alice
    April 26th, 2011 at 11:10 | #64

    @BilB
    BilB (probably need a sandpit as a bit off topic) The US has two circular flows – one that creates jobs and is useful. The other that is sort of a black hole circular flow ie the inverse of the useful flow to the US or other economies. Policymakers traditionally had a role in ensuring the health of the first but something tells me the will of the political system has been hijacked so that policy makers / regulators of all types (and at all levels) are now engaged in expanding the black circular flow.

    This ugly second flow is a leakage that withdraws the taxes of ordinary every day citizens applies it to “ostensibly worthy causes” such as “bailing out banks” “aid relief to Haiti”, a “war on terrorism”, “increased military self protection” and then misuses the ostensibly worthy fund allocation..

    Talib refers to the problem of US corruption as the “regulator franchise” . The very people that make it into government are already grossly in debt to the funders who put them there. Corruption does not seep up in through the ranks of an increasingly tainted bureaucracy the US. Corruption trickles down.

    Two examples

    http://www.huffingtonpost.com/nassim-nicholas-taleb/the-regulator-franchise-o_b_667967.html

    http://rwer.wordpress.com/2011/04/25/only-in-america-former-u-s-official-sued-haiti-contractors-for-kickbacks/

  65. TerjeP
    April 26th, 2011 at 12:32 | #65

    If you have capitalism – then you HAVE to bailout bankrupts. In a democracy, there is no choice. Whether they are families, small businesses, banks or countries makes no theoretical difference.

    Chris – what you said above is rubbish in my view. I’d challenge you to justify and defend what you have said.

  66. TerjeP
    April 26th, 2011 at 12:41 | #66

    the fact that private companies go bust or rip off the goods and run away, all too often.

    Private companies occasionally go bust but not that often. And rarely do they “run off”. Weighed against this is the inefficiency of the public sphere and it’s unresponsive tendencies in the face of shifting demand. More public initiatives should go broke and run off.

  67. Freelander
    April 26th, 2011 at 13:45 | #67

    TerjeP :

    … rarely do they “run off”. …

    One thing is almost universal about private companies of any reasonable size and how they cease business.

    Almost inevitably they don’t just shut up shop, pay all their creditors and walk away with what is left when it becomes obvious that that is the best course for them and their creditors (and shareholders). No. Those running the companies, with other peoples money, typically (that is, using other people’s equity, debt, goods on credit, workers pay and entitlements for capital) keep drawing huge management fees (and bonuses), try to borrow more, try to get more goods on credit, delay payments, to the tax man, to super, entitlements they ought to be paying on behalf of their workers, and so on. When finally they can’t continue this any longer, either they or their creditors call in an administrator and the massive debts are uncovered. If the managers time it right, they appoint the administrators, that is, they go into voluntary administration, which is the most advantageous departure for those executives.

    We have recent examples.

    Here is a question. Is it reasonable for a company to be selling gift vouchers before Christmas when their business is obviously bust and they should know that when it officially goes bust those vouchers are unlikely to be fully honored?

    By the way, I neither brought or received any of those types of vouchers. It was obvious where that group was headed at least a year ago. Obvious, simply from walking into their shops and taking note of the evidence. Wasn’t difficult to see the credit problems on the floor.

    You don’t need to run off when all the money, other peoples money, is long gone and it doesn’t even seem that what you have done violates any law that anyone might want to enforce.

    The commercial practice of looting for profit is big business. If you can loot so that what you have been up to is not found out until you have long moved on to your next job, so much better. Looting for profit is why companies don’ t properly provision for long-term liabilities (except when it comes to senior executive remuneration). Look at the history of company pension schemes. And is why they don’t close when they ought to.

    The touted efficiency of private business is largely a myth. Sadly both the private and public sector are shamefully inefficient, and for much the same reasons. And where business has scope to corrupt government (The brown paper bag economy) you get the worst of all worlds in a mixed economy. The Russian brown paper bag economy seems to be less efficient now than it was prior to the totalitarian collapse, and certainly less equitable (and possibly not even less totalitarian). Maybe that is why so many there are nostalgic about the ‘good old days’, and so many are drinking themselves into oblivion.

  68. TerjeP
    April 26th, 2011 at 14:47 | #68

    Sadly both the private and public sector are shamefully inefficient, and for much the same reasons.

    Yes they are no doubt on par. The difference is that whilst the private sector inefficiently produces stuff that people want the public sector all to often engages in inefficiently producing stuff people don’t want.

  69. Alice
    April 26th, 2011 at 15:04 | #69

    @Freelander
    Freelander – strange how many comapnies cannibalise future profits, employee benefits and everything else when they are going bust…thats often when private firms get really ugly.

    Terje – says “Private companies occasionally go bust but not that often.”

    Cant believe you said that Terje. Bankrupcty hardly an endangered species.

  70. TerjeP
    April 26th, 2011 at 15:55 | #70

    Alice – I suspect you have never looked at the data.

  71. Chris Warren
    April 26th, 2011 at 20:31 | #71

    Terje does not realise that if you do not bailout bankraupts, creditors take all, and the victims must resort to crime and beggery in order to survive. This is the first impact. The second effect is that wealth becomes concentrated even as the productive units in an economy diminish.

    Finally capitalism becomes choked-up with its own capital, and often enough in the past this leads to empire0-building wars and invasions.

    So it seems Terge is the so-called ‘rubbish’ he so fears.

  72. TerjeP
    April 26th, 2011 at 20:55 | #72

    Terje does not realise that if you do not bailout bankraupts, creditors take all, and the victims must resort to crime and beggery in order to survive.

    Creditors are the primary victims of bankruptcy. So your analysis seems quite flawed.

  73. Freelander
    April 26th, 2011 at 21:13 | #73

    @TerjeP

    They both produce stuff people want and stuff people don’t want. Interestingly, the public sector is frequently there to save the private sector’s bacon.

    When Iceland had its volcanic eruption it was the public sector that shut the airlines down. They clearly wouldn’t have done it themselves and made it clear they would fly if they weren’t stopped. A recent PNAS piece of research indicates what would have been the result.

    Once again, government and its regulators have saved an industry from destroying itself. In the process of destroying itself, the airline industry would have produced plenty more of a product the public doesn’t want – non-arrival at your flight destination due to your flight terminating short and somewhat abruptly.

  74. Alice
    April 26th, 2011 at 22:10 | #74

    @TerjeP
    Terje hasnt yet put two and two together to realise that sole traders and partners who go bankrupt are still part of businesses. They are in the stats as bankrupt individuals Terje and you might like to check the increase in bankruptcies on this site…..
    However it is kind of out of date (last year percentage changes reported was the year ended 09 and its still not pretty) but you will have to deal with that.

    http://www.itsa.gov.au/dir228/itsaweb.nsf/docindex/statistics-%3Eannual+statistics+archive-%3Eannual+statistics+archive?opendocument

  75. TerjeP
    April 26th, 2011 at 22:20 | #75

    Freelander – I don’t know enough to comment on the Iceland case but airlines do have strong financial incentives to avoid airplane crashes. And not just because airplanes are expensive.

  76. TerjeP
    April 26th, 2011 at 22:22 | #76

    JQ – if you are reading these comments I’d like to say that I regard Chris calling me “rubbish” to be a case of personal abuse.

  77. Chris Warren
    April 26th, 2011 at 22:36 | #77

    @TerjeP

    Creditors are the primary victims of bankruptcy. So your analysis seems quite flawed.

    So where is there any “flaw”?

    No bankruptcy, creditors run riot, debtors loose.

    With bankruptcy, creditors loose some and debtors get protection (ie bailout).

    Under capitalism in a democracy you have to bailout bankrupts.

    So what if capitalist creditors loose … this is not a flaw, it is a virtue.

  78. Freelander
    April 26th, 2011 at 22:49 | #78

    @TerjeP

    Of course they have financial incentives to avoid airplane crashes. But so do problem gamblers have financial incentives not to lose all their money by feeding pokie machines. Both problem gamblers and the people who run airlines are punks who feel they are lucky (with tribute to Harry Callahan). Unfortunately, the result is unlikely to make the travel-going public’s day.

  79. LD
  80. BilB
    April 27th, 2011 at 09:05 | #80

    If the government bails out bankrupts to a survivable position then the bailed out entities should loose an approporiate amount of equity to the bailing out body (government). The government then has the option to trade or reasign that equity in a meaningful manner, perhaps to the employees with the cost of the bailout recovered over time from profits.

  81. Freelander
    April 27th, 2011 at 10:00 | #81

    @LD

    Thanks for that. “Openmarket” providing as insightful a contribution as an Amoeba’s response to strong light.

    http://uncyclopedia.wikia.com/wiki/Amoeba

  82. Chris Warren
    April 27th, 2011 at 10:57 | #82

    And here we see American capitalism trying to work-up enough courage to give themselves the mother of all bailouts…

    http://economix.blogs.nytimes.com/2011/04/26/what-happens-if-the-debt-ceiling-isnt-raised/

    At this stage this is all they can do, as solutions to previous structural crises (such as war and empire building) are no longer available.

    Of course, piling on more debt this only delays the day of reckoning.

    Tough luck capitalism.

  83. Alice
    April 27th, 2011 at 20:20 | #83

    @Chris Warren
    Tough luck America. Thanks for 30 years of BS economic policies. Enjoy!!

  84. Freelander
    April 28th, 2011 at 01:44 | #84

    @Alice

    Very good. Could even be titled “I, Republican” or “I, FoxNews Fan” or “I, Pencil Head”.

    http://lostinthe21stcentury.com/2011/04/20/a-day-in-the-life-of-joe-middle-class-republican/

  85. Alice
    April 28th, 2011 at 08:57 | #85

    Oops – Prof can you delete above comment?. Its in violation of policy but there is a real excess of spin about the US recovery in the media and a dearth of well informed critical summing up about the real state of the US in the msm, its long running policy failures and its current potential for recovery. It might be fair to suggest that the US is now no better off than Japan in the 1990s and beyond and no, they have not reformed their banks so the structural problems in their financial system are still there. The risks are still there. This is a pretty good summing up

    http://rwer.wordpress.com/2011/04/27/where-are-we/

  86. Alice
    April 28th, 2011 at 11:48 | #86

    @Freelander
    I Pencil Head? ROFL.. Freejokes!

  87. Donald Oats
    April 28th, 2011 at 15:00 | #87

    @TerjeP

    I guess it depends upon what “occasional” is taken to mean: Running Off Statistics for Registered Companies, courtesy of ASIC. Rough as guts, for 2009 and 2010, we have the following info:
    Date | Registered Companies | New Registrations | Insolvency Appts | External Admin |
    2010 | 1.79 million | 11,249 (Dec) | 14,000 (2010) | 8500 (2010) |
    2009 | 1.73 million | 11,351 (Dec) | 15,600 (2009) | 8365 (2009) |

    Now, “Insolvency Appts” may have one company counted multiple times, eg goes insolvent then back on feet then insolvent again all in one year. The “External Administration” reports gives a single count, so is probably the better figure to use. There are good data at the ASIC site, if you want to knock yourself out.

    To me the notable feature is that being registered with ASIC is not essential for sole traders etc. I might be a fledgling writer, for instance, and have an ABN but not have a registered company. Nevertherless, the ASIC figures indicate that companies go insolvent at a lower rate than new companies are registering, but it is a comparable rate, say 70% of new registrations gives a rough guide to the number of external administration reports for the same period, more or less. On the other hand, if you compare 8,500 say, against 1.79 million registered companies, it doesn’t looks so bad, so maybe Terje’s use of the word “occasional” is a fair call.
    On the third hand, when a single company like Ansett goes down the gurgler, the fallout reverberates widely (why, that lousy company took my frequent – #?$$%@!! – flyer points, doh!), affecting 16,000 people directly, and their families and friends indirectly. I’ll concede the point though.

    Irregular family upheaval is the cost of an “efficient” capitalist system, I suppose. I’m making no allusions to alternatives though.

  88. BilB
    April 28th, 2011 at 15:43 | #88

    Alice,

    I don’t share Radfords lack of concern on debt being a problem, one years GDP of government debt has got to be a problem, but his point 7 is on the money.

  89. Jarrah
    April 28th, 2011 at 17:19 | #89

    A comprehensive rebuttal, LD (Lee Doren?). Good work. Note the ad hom from Freelander – that means you won the argument.

  90. Freelander
    April 28th, 2011 at 18:47 | #90

    @Jarrah

    Does not. Just means that there was no argument to rebut. I, Pencil-head was a far better read.

  91. Alice
    April 28th, 2011 at 18:52 | #91

    @BilB
    @Jarrah
    Nice work Jarrah – but can you ffind a rebuttal to I – Joe – my link above. I dont think the Profs comments on I pencil so wrong that I would automatically assume your bloke was right…there is a scarcity of references and sources in your blokes rebuttal but we come to expect this from the right dont we?

    Just because your source says it aint so doesnt mean it aint so. The commanding voice of pseudo authority is nothing but a meaningless source of real authority.

    The use of ‘ad hom’ also means you lost the argument here Jarrah. Its a mark of a certain class of persons. ?Those who take no real evidence on board in arriving at their own personal opinions and who also happen to be ideologically slanted to a particular (read unquestioning right wing) view, despite all of its now apparent failings??

    I – Joe.

    Bil B

    Radfords point 7 is on the money….I dont think Radford is unconcerned about US debt levels. I think Radford is very concerned about it, but not to the extent he wants to further enrich the rich in the united states at the expense of budget cuts to the services for the poor. I thought he made that pretty clear and its a good point.

  92. Jarrah
    April 28th, 2011 at 18:57 | #92

    So reasonable and rational criticisms of Quiggin’s central thesis and empirical examples is “no argument”, Freelander? Wait, that’s just more ad hom from you. Please try again.

  93. Alice
    April 28th, 2011 at 19:01 | #93

    @Freelander
    Agree Freelander. I – pencil nailed it to the wall. The prof was being pretty polite but the same idea is in both arguments. Those that want to diminish government and government intervention are doing untold damage to all whilst cleaning their teeth with clean regulated water and convincing themselves and trying to convince the rest of us they did it all on their own and they dont need government intervention, because they had the get up and go to get a job and look after themselves.

    Yeah right. Nice from the comfort of your clean regulation protected world to say you now never needed government protection because you had the “guts and smarts to make it on your own without government protection and government regulation”" (some of which was pretty hard to get passed in history)” in a government protected world.

    Dare I say it? Complete idiots.

  94. Freelander
    April 28th, 2011 at 19:10 | #94

    @Jarrah

    There wasn’t any ad hom in my response. I simply noted the lack of insight.
    Anyway, a sound argument is incomplete without an element of ad homonym.

  95. Freelander
    April 28th, 2011 at 19:14 | #95

    By the way… now that Obama has gotten the Hawaiian State Government to make an exception and release the long version of his birth certificate, isn’t it about time that Donald Trump had that thing on his head authenticated?

  96. Jarrah
    April 28th, 2011 at 19:28 | #96

    “There wasn’t any ad hom in my response.”

    Your response lacked anything but ad hominem. It did not engage with the arguments, but merely “played the man, not the ball”. That’s the definition of ad hom.

  97. Alice
    April 28th, 2011 at 19:45 | #97

    @Jarrah
    ad hom is a tired old right “staller” of discussion by right Jarrah…time to ditch it and play the argument yourself…

    ad humanym needed?

  98. Freelander
    April 28th, 2011 at 20:09 | #98

    @Jarrah

    Played the man? Noting the article lacked insight? Doh? I didn’t say anything about the man. Mind you, accusing someone of ad hom is playing the man.

  99. Alice
    April 28th, 2011 at 20:13 | #99

    @Freelander
    If the only true escape is death, that thing on Trumps head never got away in time. You have to admit Freelander – no one owns life, but anyone who can afford a long deceased racoon hairpiece owns death.

  100. Jarrah
    April 28th, 2011 at 20:41 | #100

    “ad hom is a tired old right “staller” of discussion by right Jarrah”

    Ironically, more ad hom.

    “Mind you, accusing someone of ad hom is playing the man.”

    Not true. To believe that, you must be ignorant, or a bit dim. (By the way, that’s an insult, not ad hom.) ‘Noting’ a supposed lack of insight is not what you did. You responded to an argument by comparing the site to an amoeba. That’s not grappling with the issue. That’s saying the argument is wrong/trivial/whatever because of who is making the argument. That is a textbook definition of ad hominem.

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