Friday, January 29, 2010

On Socialism

An article in the Times of London on Tony Blair's appearance before the committee investigating the Iraq war.
Last night declassified documents released by Downing Street revealed that Mr Blair had already indicated Britain’s support for regime change in Iraq six months before the 9/11 attacks.
Earlier the former Prime Minister said that many of the arguments used to justify overthrowing Saddam’s regime now applied to Iran. He said that Iran was now a greater risk to Britain than Iraq was at the time that he ordered the invasion in March 2003
A blog post by Chris Dillow on arguments against government intervention in financial markets.
In its early days, one feature of the research into cognitive biases was the emphasis it placed upon the fact that “experts” were as prone to error as laymen. In Kahneman and Tversky’s classic Judgment Under Uncertainty, for example, David M. Eddy showed that doctors commonly misinterpreted diagnostic probabilities, whilst Stuart Oskamp wrote that “professional psychologists are no better interpersonal judges, and sometimes are worse ones, than are untrained individuals"
Governments are large bureaucracies, just like any large corporation. Individuals within Governments face exactly the same pressures to conform and comply which people in companies face. Government ministers are as prone to be delusional as CEOs. However, when governments get things wrong, they do so on a scale which no individual firm can manage. The Iraq war was just one such error of judgement. Another was the US government's role in feeding the housing bubble in the US.
Starting in 1993, Fannie and Freddie have affordable housing goals—30% of Fannie and Freddie’s purchases of loans have to be loans made to borrowers whose income was below the median income in their area. These are interim goals. In 1996, the interim goal becomes firm at 40%. In 1997, the number rose to 42%. In 2001 it rose to 50%. The Bush Administration increased this number to 52% in 2005, 53% in 2006, and 55% in 2007.
The "right" argument against government ownership of the means of production is not that private property is a natural right, but that government ownership results in an unacceptable concentration of power. The market is a means to displine and punish poor management. Markets (especially financial markets) will fail regularly, and will experience cycles of boom and bust, and there is a role for government in mitigating this, but markets are still the least bad means of organizing our economy.

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