Politicians are like farmers. They sow the seeds of panic, promise and hope. Then they cultivate these seeds, watching them grow into power. And then they reap their reward: power, the option to command others, to overule the plans of many with their own plans, to substitute the decision-making of others for the decision-making of themselves. With their crop collected, they set off for the nearest town to sell their produce. Buyers await, each representing different special interest groups who have been saving for the occasion, waiting patiently for the politician to give them what they demand: power, the option to command others.
Special interest groups invest in politicians, and then buy their output: power. The negative externalities of this transaction are felt far and wide, but this is one externality that politicians will not be so quick to regulate.
Greg Ransom
· 9 months ago
When Hayek was talking about the difference between a society governed by the rule of law and a society governed by political expediency, he was talking about the difference between the rule of law and this ...
>>House Majority Leader Steny Hoyer, D-Md., said he was unsure whether it would be possible for Congress to draft a law specifically targeted at the AIG executives.<<
Matt
· 9 months ago
Leoni once wrote:
The paradoxical situation of our times is that we are governed by men, not, as the classical Aristotelian theory would contend, because we are not governed by laws, but because we are. In this situation it would be of very little use to invoke the law against such men.
This use of "law" seems to fit right in.
Matt
· 9 months ago
Leoni once wrote:
The paradoxical situation of our times is that we are governed by men, not, as the classical Aristotelian theory would contend, because we are not governed by laws, but because we are. In this situation it would be of very little use to invoke the law against such men.
This use of "law" seems to fit right in.
T L Holaday
· 9 months ago
Since laws are drafted by men and women, and legislation is of Godelian necessity either incomplete or inconsistent, you need not fear that the pure rule of law shall ever occur.
Lee Kelly
· 9 months ago
T L Holaday,
Godellian "incompleteness" does not apply to law and legislation as you suggest. It is something that occurs with statements in particular languages, not actions in a legal environment.
vikingvista
· 9 months ago
The cost of the AIG bonuses is what some who swore to uphold the Constitution are willing to shred it for. In times like these, the Constitution becomes very cheap.
vikingvista
· 9 months ago
"Godelian necessity either incomplete or inconsistent"
Inconsistency seems to be the popular choice.
indianajim
· 9 months ago
At one of the "tea party" protests of the outrages being foisted upon the nation by Obama and Co., a protestor carried a sign saying:
"CHAINS YOU CAN BELIEVE IN"
God I love the spirit and sense of humor of fellow citizens like the one protesting with that sign.
Michael Smith
· 9 months ago
What level of tax will be applied to the $100,000+ campaign contribution that Obama received from AIG?
Chris O'Leary
· 9 months ago
One of the things that makes our system great and strong is the legal system.
Unlike in many countries, when a contract is made between two parties, it is legally enforceable. As a result, both parties are able to plan accordingly which drives down risk and costs and allows things to be done quite quickly as a result.
It's not like some third party can insert themselves into the process and rewrite contracts arbitrarily. That would be crazy because it would drive up uncertainty and costs and bog the whole system down.
Oh wait.
Nevermind.
vidyohs
· 9 months ago
The rule of law in this nation is very deeply imbedded in the enculturation of each individual.
But as with all peoples and all nations one must always remember the one paramount observable and undeniable fact about law, or the rule of law; and, the one amendment to that paramount fact.
That fact is: Those who create the laws do not have to live by the law.
The amendment is: Those that enforce the law on the behalf of the creators, rarely feel its sting.
Welcome to reality.
Vangel
· 9 months ago
I do not wish to divert from the discussion about the preference of governance based on the rule of law over the arbitrary rule of men but there is something that needs to be said about the AIG mess that is missed by most commentators.
AIG was a good company with many good and profitable divisions. Its trouble came from one subsidiary that wrote insurance that caused massive losses. Had this division been permitted to go bankrupt most of the other divisions would have been viable and their employees would have earned bonuses. The problem is that AIG was not permitted to go under because the government wanted to use taxpayer funds to protect AIGs counterparties.
As usual, this is largely a government created problem. Let AIG go under and allow the market to decide which divisions should carry on and which ones should be liquidated. Save the taxpayers grief by keeping Congress to what is Constitutional rather than what is popular.
Methinks
· 9 months ago
I'm not as eloquent as Lee and I'm fed up.
Don't pay them. They will walk. This is fixed income derivatives, folks. Unlike standardized equity options trading, you can't just step into the crowd and start trading. Fixed income derivatives are structured products. If that team walks (and they will without compensation that makes it worth their while), the new team stepping in will be less competent because they will not attract good traders with crappy pay and the new team will be completely lost and AIG is much more likely to sustain further losses. Of course, the traders weren't the ones who made the decision to guarantee CDS and they weren't the ones who decided how much capital the firm was going to carry to back the CDS insurance business. Their task was simply to enter the best trades given the parameters set for them by upper management and the AIG centralized risk management team. That's how how fixed income derivatives work.
Of course, the government doesn't care because congress critters are all too stupid to know to care. Plus, AIG is just a way for the government to funnel money to foreign banks anyway by way of stepping in for AIG as the guarantor of the CDS. They don't care because they aren't making any guarantees with their own money. The guarantees are made with your money. The loss of the derivatives traders will simply be another loss paid for by taxpayers and that loss will be greater than the piddly bonus pool everyone is having a cow over. The bonuses aren't even a rounding error in the sea of bailouts and stimulus.
This is getting really funny.
Crusader
· 9 months ago
AIG execs bailing out is an example of "going Galt". The already have fuck-you money, and don't need these bonuses. So they say FUCK YOU Muirduck and all your socialist scum.
Adam
· 9 months ago
"For though they are free men, they are not free in all respects; law is the master whom they fear, a great deal more than your subjects fear you."
All Comments
Politicians are like farmers. They sow the seeds of panic, promise and hope. Then they cultivate these seeds, watching them grow into power. And then they reap their reward: power, the option to command others, to overule the plans of many with their own plans, to substitute the decision-making of others for the decision-making of themselves. With their crop collected, they set off for the nearest town to sell their produce. Buyers await, each representing different special interest groups who have been saving for the occasion, waiting patiently for the politician to give them what they demand: power, the option to command others.
Special interest groups invest in politicians, and then buy their output: power. The negative externalities of this transaction are felt far and wide, but this is one externality that politicians will not be so quick to regulate.
When Hayek was talking about the difference between a society governed by the rule of law and a society governed by political expediency, he was talking about the difference between the rule of law and this ...
>>House Majority Leader Steny Hoyer, D-Md., said he was unsure whether it would be possible for Congress to draft a law specifically targeted at the AIG executives.<<
Leoni once wrote:
The paradoxical situation of our times is that we are governed by men, not, as the classical Aristotelian theory would contend, because we are not governed by laws, but because we are. In this situation it would be of very little use to invoke the law against such men.
This use of "law" seems to fit right in.
Leoni once wrote:
The paradoxical situation of our times is that we are governed by men, not, as the classical Aristotelian theory would contend, because we are not governed by laws, but because we are. In this situation it would be of very little use to invoke the law against such men.
This use of "law" seems to fit right in.
Since laws are drafted by men and women, and legislation is of Godelian necessity either incomplete or inconsistent, you need not fear that the pure rule of law shall ever occur.
T L Holaday,
Godellian "incompleteness" does not apply to law and legislation as you suggest. It is something that occurs with statements in particular languages, not actions in a legal environment.
The cost of the AIG bonuses is what some who swore to uphold the Constitution are willing to shred it for. In times like these, the Constitution becomes very cheap.
"Godelian necessity either incomplete or inconsistent"
Inconsistency seems to be the popular choice.
At one of the "tea party" protests of the outrages being foisted upon the nation by Obama and Co., a protestor carried a sign saying:
"CHAINS YOU CAN BELIEVE IN"
God I love the spirit and sense of humor of fellow citizens like the one protesting with that sign.
What level of tax will be applied to the $100,000+ campaign contribution that Obama received from AIG?
One of the things that makes our system great and strong is the legal system.
Unlike in many countries, when a contract is made between two parties, it is legally enforceable. As a result, both parties are able to plan accordingly which drives down risk and costs and allows things to be done quite quickly as a result.
It's not like some third party can insert themselves into the process and rewrite contracts arbitrarily. That would be crazy because it would drive up uncertainty and costs and bog the whole system down.
Oh wait.
Nevermind.
The rule of law in this nation is very deeply imbedded in the enculturation of each individual.
But as with all peoples and all nations one must always remember the one paramount observable and undeniable fact about law, or the rule of law; and, the one amendment to that paramount fact.
That fact is: Those who create the laws do not have to live by the law.
The amendment is: Those that enforce the law on the behalf of the creators, rarely feel its sting.
Welcome to reality.
I do not wish to divert from the discussion about the preference of governance based on the rule of law over the arbitrary rule of men but there is something that needs to be said about the AIG mess that is missed by most commentators.
AIG was a good company with many good and profitable divisions. Its trouble came from one subsidiary that wrote insurance that caused massive losses. Had this division been permitted to go bankrupt most of the other divisions would have been viable and their employees would have earned bonuses. The problem is that AIG was not permitted to go under because the government wanted to use taxpayer funds to protect AIGs counterparties.
As usual, this is largely a government created problem. Let AIG go under and allow the market to decide which divisions should carry on and which ones should be liquidated. Save the taxpayers grief by keeping Congress to what is Constitutional rather than what is popular.
I'm not as eloquent as Lee and I'm fed up.
Don't pay them. They will walk. This is fixed income derivatives, folks. Unlike standardized equity options trading, you can't just step into the crowd and start trading. Fixed income derivatives are structured products. If that team walks (and they will without compensation that makes it worth their while), the new team stepping in will be less competent because they will not attract good traders with crappy pay and the new team will be completely lost and AIG is much more likely to sustain further losses. Of course, the traders weren't the ones who made the decision to guarantee CDS and they weren't the ones who decided how much capital the firm was going to carry to back the CDS insurance business. Their task was simply to enter the best trades given the parameters set for them by upper management and the AIG centralized risk management team. That's how how fixed income derivatives work.
Of course, the government doesn't care because congress critters are all too stupid to know to care. Plus, AIG is just a way for the government to funnel money to foreign banks anyway by way of stepping in for AIG as the guarantor of the CDS. They don't care because they aren't making any guarantees with their own money. The guarantees are made with your money. The loss of the derivatives traders will simply be another loss paid for by taxpayers and that loss will be greater than the piddly bonus pool everyone is having a cow over. The bonuses aren't even a rounding error in the sea of bailouts and stimulus.
This is getting really funny.
AIG execs bailing out is an example of "going Galt". The already have fuck-you money, and don't need these bonuses. So they say FUCK YOU Muirduck and all your socialist scum.
"For though they are free men, they are not free in all respects; law is the master whom they fear, a great deal more than your subjects fear you."
-Demaratus to Xerxes, The Histories by Herodotus