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Occupy This!

by Michael Shermer, Nov 01 2011

On Sunday morning, October 16, 2011, I taxied down to the Occupy Wall Street shindig from the 92nd Street Y where the Singularity Summit was unraveling as organizers scrambled to figure out how to work the wireless Internet system in the room while speakers boasted about how close we are to computers achieving human level intelligence. Human ignorance maybe, but intelligence? More on that topic later. (See my Scientific American column for January—out mid December—for my skeptical thoughts on when I think computers will achieve human level intelligence. Hint: We’re five years away…and always will be. But since I don’t want to sound so pessimistic, I have taken a cue from the singer/songwriters Zager and Evans, that the exordium and terminus of the singularity will be 2525 and 9595.)

When I posted some pics I snapped with my iPhone on twitter and made a couple of snide remarks, many of my fellow skeptics chided me for my insensitivity or berated me for my libertarian blindness to real social injustices being protested at the various “Occupy X” events. I call them events (or “shindigs”) because my general impression is that although there are some real issues being mentioned here and there in a desultory manner, for the most part I think most people I saw were in one of two categories: (1) onlookers such as myself snapping pictures and taking in the scene; (2) participants wanting to be part of what might turn out to be this generation’s (a) Woodstock or (b) Montgomery bus boycott. In my opinion it is neither, but I have to admit that I haven’t inhaled that much second-hand pot smoke since I was in college (yes, even at the staunchly conservative Pepperdine University, there were bountiful plumes of pot smoke wafting down the dorm room hallways!).

I have appended various photographs at the end of this essay to let the moment speak for itself, grammatically challenged signs and all, but let me first make a few comments regarding what might be gleaned from the party atmosphere of a few salient points of political and economic significance.

  1. Why has no one from Wall Street gone to jail for the financial meltdown? Bill Maher has asked this question several times on his HBO show Real Time. I have asked many experts myself, including economists, lawyers, and Wall Street traders. Answer: no one went to jail because they didn’t break any laws. Conclusion: If you want someone punished for the meltdown you have to first change the law. Perhaps these protests are the first step in that direction, although I doubt it because I don’t think Wall Street by itself caused the meltdown. It was a combination of many factors, primary being the removal of risk aversion from both Wall Street traders (and bankers) and Main Street home buyers. Still, if you want to blame Wall Streeters…
  2. What, exactly, did these Wall Street people do that was so wrong? Well, for one, the protestors seem to think that they are too greedy. This is like standing outside the Staples Center in Los Angeles to protest that Kobe Bryant and the Lakers are too greedy because they are constantly trying to win a championship and make a ton of money in the process. That’s the whole point of playing professional sports—to win and make a boatload of money in the process! Analogously, the only reason to work on Wall Street is to make a boatload of money. That’s the whole point of “playing the market.”
  3. The Wall Streeters accepted bailout money that they shouldn’t have gotten. Yeah, well, whose fault is that? What did you think they would do? Turn the money down? Heck no! You offer someone a handout and they’ll take it, whether it is a main street worker or a Wall Street CEO. The problem is that they should never have been bailed out in the first place. That happened because of crony capitalism, which is nothing like the libertarian vision of real capitalism. So here I’m sympathetic with the Occupy X protestors: no “in profits we’re capitalists, in losses we’re socialists.” Sorry. If you want to play the game of Risk you have to accept the losses as well as the gains.
  4. Wall Street CEOs and their resident COOs, CFOs, traders, and the like, make too damn much money, hundreds of times more than the gap used to be between the highest paid and lowest paid members of corporations. Emotionally I am once again sympathetic to the Occupy Xers: the amount of money some of these guys makes is obscene, and the income gap between them and us is Grand Canyonesque in yawning abyss. But what’s the number? How much is too much income? $1 million? $10 million? $100 million $1 billion? $10 billion? Is it really the job of some government agency to set a ceiling on how much anyone is allowed to make? Would any of my readers care to pick a number and defend it? And what if it is a number well under Bill Gates’ income? He’s giving most of it away to what most of us would consider very worthwhile causes (disease eradication in Africa, education in America). Is it okay to make $X if you give most of it away, or is it only okay if it is taxed away from you and spent on some cause someone else thinks is better than the causes you want to support?
  5. The government should regulate Wall Street more. I agree that all competitions must be regulated by a well-defined set of rules that are consistently enforced with penalties assessed without prejudice or bias, from sporting contests to stock market trading. That is what the SEC is for, among other regulatory bodies. But from where I sit as an average Joe the Skeptic position of modest income who tries his hand at stock market trading in figures infinitesimally smaller than the Big Boys, it all looks like insider trading to me—from the Wall Street CEOs to the Beltway politicians appointed to look after them, who seemingly trade jobs and hold their positions no matter who is in power, Democrats or Republicans. Obama has drunk the Wall Street Kool Aid no less than Bush did. They all do. The entire system is corrupt, in that sense. Once you allow the players to dictate who enforces the rules of the game, the game is over. It would be like Barry Bonds being appointed Director of the Steroid Drug Testing Agency overseeing baseball to insure a fair contest, while he is still playing the game!

Will anything come of the Occupy This protests? Probably not. If the President of the United States can’t institute changes, who can? Congress? Yeah, right, there’s no corporate money tainting those jobs now is there? So here’s one man’s simplistic answer: no more government bail outs for anyone for anything, either on Main Street or Wall Street. Bail out money corrupts, and government bail out money corrupts absolutely.

Click a photo to enlarge it

279 Responses to “Occupy This!”

  1. Mark says:

    Let me see if I’ve got this. We knew all along that investment bankers are greedy swine, so we should have understood that they are only greedy swine, in the sense that greed is literally the only thing that matters to them.

    Yeah, they’re scamps, so what are ya gonna do? Rescind corporate personhood. Reinstate Glass-Steagall. Ban derivatives trading. That’s just for starters.

    face it, the invisible hand of the free market is as imaginary as any god, and the libertarian vision is a juiced-up version of what we’re dealing with right now.

    • MadScientist says:

      I just couldn’t believe that derivative trading wasn’t banned in the 80’s. The same old crap was simply repackaged and sold. It’s just like the present incarnation of the stock market I guess – legalized pyramid scams.

      • tmac57 says:

        It’s interesting to hear economists from the full spectrum try to rehabilitate the image of derivatives.They say things like “Derivatives have an important function in our economy,it’s just that we need to make them more transparent”,and then nothing is done to make them more transparent. Problem solved right?
        Stay tuned for round three of “The day the derivatives ate the economy” show.(Recession to follow)

    • Re Shermer, and posting in response to Mark so I can get at the top of the comments heap.

      1. This is a flat lie. Nobody’s gone to jail because governments have so far brought only civil cases. That in no way means that crimes weren’t committed. Fallacy of unexcluded middle, colloquially speaking, and other logical fails here. How selective were you of whom you asked these questions, Shermer?
      2. The crimes they committed? Fraud. I don’t care what Moody’s said on ratings, these folks knew the “products” weren’t that good; that’s why Sachs sold its own clients short and bet against those same subprime alphabet soup products. And, speaking of … that itself is break of fiduciary duty, which I believe can be criminally as well as civilly tried.
      3. There is no such thing as “real capitalism” except in the nonexistent nighttime wet dreams of libertarians. Reality is that greed will lead every time to economic systems being rigged. Reality No. 2 is that Adam Smith based his “invisible hand” on the “wind up the universe like clockwork” deity of Enlightenment Deism. Multiple world wars, the Holocaust and atomic bombs have shown in one way that such a deity doesn’t exist; the quantum theory behind those atomic bombs have shown that in another, even more complete way.
      4. We “pick numbers” all the time with progressive tax brackets. I’d be more than happy to add additional tax brackets with rates of 50 percent or so to our current tax structure, Shermer. Geez, what a nutbar statement this is. I’ll wait for Shermer to officially defend a flat tax next.
      5. You assume all non capital L Libertarians are part of a two-party system, I guess. Well, I and many other Greens and Socialists also know Obama drank the Kool-Aid. Fortunately, the Greens’ first announced presidential candidate, Dr. Jill Stein, looks very good. (Google her.)

      My answer on bailouts was the one true progressives proposed all along, Shermer — the Swedish answer of nationalizing the banks. If there had been no bailout at all, sadly, you and I wouldn’t be arguing your stupidity level right now. The correct answer was bailouts with many more conditions.

      Other than that, this post of yours isn’t even an exercise in empirical thinking — it’s just a sneer and a screed.

      • Oh, per the real political alternatives, let me save you the trouble of Googling for Green Party candidate Jill Stein:

      • Phea says:

        I followed your link, checked out your blogspot, and have to say, I like your overall style. I did, however, feel compelled to leave a comment about your, “no regrets”, spiel. Hope you’re not offended or anything, but I think I know just enough about you to safely say you wont be.

      • No, not a problem, Phea. And, on matters philosophical or psychological, I like discussing differences of thought. And, thanks for the kudo otherwise.

      • ThatSkepticGuy says:

        She looks and sounds the same as every other totalitarianism-driven Green partier.

      • ThatSkepticGuy says:

        Seriously, though, that’s rich. Going to a Skeptic blog to campaign for the party that opposes medical science, GE foods, animal testing research and wants taxpayers to foot the bill for gov. mandated healthcare revolving around pseudoscience like homeopathy.

      • Wrong says:

        Thankyou-I may not agree with your conclusions, but at least you set out your argument logically, rather than trashing the article out of hand as being Libertarian, and hence invalid.

      • +SocGadFly

        Once again you make an intelligent progressive argument. The notion that no crimes were committed is specious. Certain laws weren’t broken, to be sure, but that doesn’t mean that NO laws were broken.

        But people keep dancing around the elephant in the room: The bad faith efforts of ‘Wall St’ to sell toxic assets. I am surprised that the buyers of these ‘products’ don’t file a class-action suit against the banks that sold them.

        Imagine if a used care salesman did superficial work to conceal the fact that a car wasn’t road worthy, hired a mechanic to certify that it was and then sold it to you and you got into a horrible accident which killed your family. Would you accept the argument that doing ‘half-assed’ repairs isn’t illegal?

        All of these Capitalist-fan boys overlook the crucial bit: Capitalism only works if the parties involved are *honest and law abiding*. Once they are willing to lie, cheat and break laws the system collapses. Who can you trust? Obviously not S&P!

      • Right; just because nobody’s been charged doesn’t mean laws weren’t broken. Shermer himself correctly admits Obama also drank the Kool-Aid. (Reality? He drank it *back in 2003.*)

        Part of good skepticism is supposed to be open-mindedness to a new subject. It appears, instead, that Shermer went to OWS wanting to see what he wanted to see.

        And, although I didn’t like TARP, and follow-ups, because there weren’t enough conditions attached, contra Shermer, something had to be done in 2008. If we really had had “no bailouts” we probably would be in an actual depression.

      • Phea says:

        Interesting article… and website, thank you.
        I realized a long time ago that in reality, we only have a one party political system, the Property Party, (composed of folks who own for a living rather than work for one). It’s next to impossible to get elected to any major political office without their blessing and support. The bailout really drove this home, as it was supported by both parties, and the wishes of the people were ignored.

      • The “property party” … well put.

      • ThatSkepticGuy says:

        “All of these Capitalist-fan boys overlook the crucial bit: Capitalism only works if the parties involved are *honest and law abiding*. Once they are willing to lie, cheat and break laws the system collapses. ”

        And this same theory doesn’t apply to the centralized authoritarian government necessary for Socialism . . . HOW,exactly?

      • MadScientist says:

        Yup – once upon a time we’d call these people ‘swindlers’, but these days people have some weird notion that it’s legal and acceptable – even desirable.

      • I’m going to add one other thing about Shermer, that I’ve mentioned before, that also gets at “credibility.” I’m not accusing him of anything, but Frank Miele and Vincent Sarich, who are on the masthead of Skeptic magazine, have well-traveled repuatations as “racialists.”

        Frankly, you add this to his libertarian blather, and Shermer’s an embarrassment to real skepticism in a number of ways.

      • JJ says:

        “that’s why Sachs sold its own clients short and bet against those same subprime alphabet soup products.”

        Is there any evidence that Sachs favored short positions over long positions? Or any evidence that other banks also didn’t keep a mix of long and short positions? I’ve heard the rough sentiment from the OP a lot of times but would like to see some figures to back it up.

      • tmac57 says:

        Re Goldman Sachs,he might be referring to this:

      • Yep, that’s exactly what I’m talking about. That’s why, in addition to fraud, contra Shermer, I note that Sachs at least committed breaches of fiduciary duty; now, that is only a civil offense at the federal level, but I believe some states also have it as a criminal offense.

    • On the “invisible hand,” there’s good evidence that Adam Smith was influenced by the “wind up the universe and let it run like clockwork” deity of Enlightenment Deism.

      The existence of such a deity has been directly refuted by quantum theory, above all the uncertainty principle. It’s been indirectly refuted by things like two world wars, the Holocaust, and atomic bombs linked to that very same uncertainty principle.

      It’s “amazing” how people like Shermer never want to discuss this. (Other than trying to deny that Enlightenment Deism is what influenced Smith, and I find those arguments unconvincing.)

      • ThatSkepticGuy says:

        What a nonsensical argument. Should we disavow Newton and Kepler because their discoveries were propelled by a belief in the divine?

  2. Tim Oertel says:

    First, the disclaimer. I’m nowhere near an expert on the financial industry, or the recent disasters. I have an interest, and do some reading. Perhaps it’s insufficient…

    But there seems to be an issue with your first point. No one has gone to jail. There seems to be a LOT of evidence that there has been widespread fraud in the housing market, particularly with so-called ‘robosigning’. There seems to be some significant violations of SEC reporting requirements around CDOs. There seems to be some significant lack of enforcement around risks that banks have been taking, that the SEC and/or the Federal Reserve should be aware of, but either weren’t aware (suggesting incompetence) or were but didn’t do anything about (malfeasance).

    On at least the robosigning issue, the banks were pushing an act of congress to make it explicitly _legal_ for them to do what they were already doing, but which is ostensibly illegal, by allowing them to use notary rules of any state, rather than the one they were doing business in. I don’t recall the bill off hand, but can probably find it.

    At the very least, I’d expect some prosecutions, some trials. Perhaps they’d get off, but we haven’t seen ANY (as far as I’m aware)… and that seems strange to me.

    Now, “strange” isn’t evidence, nor is “seems”, but we are talking a HUGE amount of money, and that means power in congress… so I’m concerned.

    I agree with your general sentiment, that I sympathize with the Occupy movement on several topics, but I’m not sure what it will really accomplish. But I sure hope that there are some HUGE upsets come 2012 election, and I can still hope that some people are kicked out (like Bernanke, among others) and that maybe this will help the US start moving in different directions.

    • To show just how fallacious Shermer’s reasoning is:

      1. In 1888, five prostitutes were killed in grisly fashion in London slums. But, because nobody was ever arrested, no crimes were committed, right?

      • ThatSkepticGuy says:

        The only thing that demonstrates is the bizarre argumentative fallacies which you feel the need to fall bak on to supplement your inability to argue rationally.

  3. Wilson says:

    It’s basically back to the classic debate between Keynes vs Hayek on a true free market vs. one that is influenced by the government. Both major political parties believe in Keynes (corporate tax breaks, TARP, etc.) Shermer makes a good case for the Hayek point of view.

    • tmac57 says:

      Exactly how did he do that? By saying “this system is flawed” ergo “my system is better”? Libertarianism is a ‘black box’ from an economic theory point of view,because no one really knows how it would play out under real world conditions.

      • Caleb says:

        “Black Box”? Where did you get that idea? All the negative economic conditions can be traced to some form of useless government interference anyways. Libertarianism would play out a lot better than socialism. Just imagine how productive our society would become with less bureaucracy slowing down and holding things back.

      • Ronable says:

        Can’t let that one go… with no regulations, greed would TOTALLY take over, and we’d end up with a continuous series of unsubstantial booms with severe, society overturning busts in between. Dictionary definition of greed is “wanting more than your fair share”, meaning that reward is NOT related to value added. Capitalism will only work well, providing for a stable, relatively egalitarian society, if greed is reasonably well controlled. That won’t happen without enforcement of rules. You want ‘no government libertarianism’, go to Somalia. Lots of aggressive entrepreneurs there — we call ‘em pirates..

      • ThatSkepticGuy says:

        “no government libertarianism”

        . . . is “Anarchy”, not Libertarianism.

        Seriously, maybe you folks should actually take an Economic or Political Science class and then come back.

      • Beelzebud says:

        Without “useless government”, your markets would not exist…

      • ThatSkepticGuy says:

        “Without “useless government”, your markets would not exist…”

        REALLY, now. Please do elaborate on how it is government and government alone which creates need and demand.

      • tmac57 says:

        “Libertarianism would play out a lot better than socialism.” And and example in the real world would be what again?
        Interestingly,socialism could be used as a cautionary tale for an ideology that sounded good in principle,but had unintended consequences in attempting to implement it.Libertarians seem to believe that their belief system won’t suffer from the same source of weakness that all others have been plagued by,namely ‘human nature’.

      • ThatSkepticGuy says:

        “Interestingly,socialism could be used as a cautionary tale for an ideology that sounded good in principle,but had unintended consequences in attempting to implement it.”

        No it couldn’t. For one thing, the totalitarianism, oppression, slavery and mass murder socialists like to explain away is an inherent part of the dogma.

      • Markx says:

        Caleb, all the positive aspects to date of capitalism depend on the hindred of regulations and laws aministered by those same “useless gonvernments”.

        Like many ‘brilliant ideas’ the concept of libertarianism (at least the versions which advocate laissez-faire capitalism) ignores some obvious facts, and show little sign that anyone has even thought it through.

      • Syd Foster says:

        ThatSkepticGuy says: “…the totalitarianism, oppression, slavery and mass murder socialists like to explain away is an inherent part of the dogma.”

        You really do live on another planet! “Socialism” is what we have in Britain, and while the state here has been a dogged supporter of your American mass murder in Iraq (not to mention all the murders perpetrated in Central and South America over many decades by the fascist dictators actively kept in place by the policies of your governments, with the support of so many of your people, but that’s another issue), my disgust with our state’s complicity in your state’s nastiness doesn’t prevent my being glad that I live where the worst effects of poverty and ill health are mitigated by our societal commitment to maintaining a recognition of the interdependence of us all, and extending our collective helping hand to the needy.

        You are referring to revolutionary Communism, dolt, not socialism. Your sloppy speech is the late stage fruit of decades of propaganda promulgated by your so-called free market masters. The Pentagon has bankrolled most of your technological development, and then handed it over to the rulers of your system to make vast profits, none of which have enriched your culture. Then when they screw up, suddenly they want the handouts for their corporations that they refuse to the mentally ill homeless, or the disenfranchised children of the inner city poor… or anyone or thing but their own greedy unimaginative one-track-minded selves.

        And you trot along beside like loyal servants hoping for some of the leftovers, badmouthing “socialism” without even knowing what it is.

        At least the Occupy people are saying they’ve had enough of the scam… and unlike the Tea Party, they aren’t a front for the monied interests!

  4. Somite says:

    1. The game was rigged in advance so that what was done was not illegal. It was unethical and inappropriate but not illegal. Should be illegal.

    2. What they did wrong was a. To create bogus ratings. b. to knowingly bet on those bogus ratings using inappropriate leverage. c. Award themselves bonuses for doing so.

    3. Bailouts is part of what they are protesting.

    4. Yes. They make too much money in comparison to other workers in the support structure. There is a reasonable figure but what they make is unreasonable and siphons money away from the economy.

    5. Glad to see you agree with them.

    The best treatise on what is wrong with libertarianism and excessive compensation was written by Sam Harris:

    • declined says:

      4. Do “they” really siphon money out of the economy? Not if they spend it: suppose they buy a private jet; factory workers were hired to build that jet, a pilot is needed to fly the jet, and mechanics to maintain it. I see alot of job creation here. You know what doesn’t create jobs? Taxing it all away instead.

      Do they make too much money? Is the gap appalling? YES and share-holders should be up in arms, but it’s a problem with company policy, not public policy.

      • Wesley Goodford says:

        *If* they spend it. A lot of it is just sitting in bank accounts, although one could argue that injecting that money back into the economy would just cause inflation. A bigger problem is the way they spend it. The disproportionate resources required to fuel rich men’s hobbies are real (as opposed to money, which is basically a bookkeeping device) and can only be used once. Build a limo, or save a hungry person’s life? (Note: comparison based on back-of-an-envelope computation based on average limo and average Western person, for illustrative purposes only.)
        Another problem is the disparity between work and reward. Although there are a few exceptions (some directors really do run 16 hour work weeks) most rich people are lazy underperformers. And when a director screws up and gets fired, he usually gets a golden handshake; with that and the money he already has he can live quite comfortably for a long time. An average worker will find himself in a rather different position.
        Yet another problem is that a lot of rich people (and wealthy organisations) spend money to buy politicians. While there is something to be said for the attitude that one shouldn’t care about someone else’s bank account as long as one has enough oneself, that argument quickly evaporates once you realise that money is routinely used to bypass the democratic process.

      • Canman says:

        “..that money is routinely used to bypass the democratic process.”

        Tell it to Arianna Huffington and Meg Whitman.

      • Caleb says:

        You need an education on the difference between Wealth and Money. Why can’t the rich man have his limo and the poor man have his food at the same time? Money doesn’t just dissapear, it is a form of exchange. The more exchange there is, the greater prosperity. Sitting in banks? Banks have the ability to loan out whatever money is in the account. So money just “sitting around” in bank accounts actually helps people start businesses and create wealth.

      • Mark says:

        Yep. They make money…. and all that money comes from somebody’s pocket.

        The pocket of every little trader who thinks he will try his hand in the market,

        From very investment fund that is churned through the ‘fleecing system’, usually making minimal or minor profits, and being charged management fees (should that be mis-management fees?) for the pleasure.

        It comes from the fees and interest banks charge which they churn into this shadowy mess (whilst still managing to make huge profits and paying their own huge bonuses).

        So, if they didn’t do this, banks could lend at lower rates, make decent profits and the whole system would still function right? Nooo, but not under the scenario where profit must grow at 10% per years, and everyone is incentivised (read bonused) to make it happen, or at least appear to happen.

        WE pay for it all. Many of us don’t react, as its “only” $10, $200, a few thousand here and there.

        But there are hundreds of millions of us being bled so quietly and consistently so we barely notice our slightly anaemic state.

      • Mark says:

        And I’m not sure “big business” ever does all its spending in the country it has sucked up all the cash, quite often it goes offshore.

        Tax, on the other hand, should largely go back to the community being taxed , albeit after a little too much has trickled through bureaucracies and political pay-packets (and of course, give or take a foreign war or two).

        Shermer sums it up nicely as he says right here: “….it all looks like insider trading to me—from the Wall Street CEOs to the Beltway politicians appointed to look after them,…. The entire system is corrupt, in that sense…”

      • Ted Fontenot says:

        Why is taxing so different? The exact same thinking you demonstrate as to the private jet example applies to taxation: you need workers to concoct and administer a tax system, and they will spend their money, as well those who benefit from the revamped tax system. And they’ll spend it in the USA (probably buying a lot of foreign-made goods, but that’s another issue).

      • Caleb says:

        Why is the government any better at spending your money than you are? If it doesn’t matter how the money is spent, why not remove lag from the system and just allow people to spend their own incomes? Should you really allow a few so called “Experts” from the government to decide how to best send half your income? Look at the thousands of examples of misused taxpayer money by the government. The bailouts for one. Voting with your wallet is the best form of regulation.

    • MadScientist says:

      In any small company, in general you must actually earn more than you’re paid to justify your job and some jobs are justified as being required to support the company (for example the secretaries and accountants). With large companies (and more recently with politicians), there is a misguided notion that they are magically immune to the requirement that they earn more than they’re paid and that their support positions somehow require obscene compensation. Unfortunately the delusion persists.

      • tmac57 says:

        The boards of directors who determine their compensation are often populated with their peers and cronies who themselves benefit from similar ‘you scratch my back,I’ll scratch yours’ type of behavior.The failure of the shareholders to police the actions of the boards,leads to these kinds of excesses,and I am just as guilty as the next shareholder,because in truth,I have no idea what the people who run the corporations that I invest in are doing.
        Most people don’t even know who their representatives and senators in government are,and if they do,they don’t know how they are voting,and if they know that,they don’t really know how those votes affects their lives.
        What’s needed is a board of ethics,to determine if the corporation is benefiting the overall interests of the shareholders,and not doing harm to the company’s reputation and future,and to society at large.I won’t hold my breath.

    • Ahh, a neocon warmonger refuting a libertarian greedmeister. No wonder Gnu Atheism and modern skepticism have such GREEEAAAAT PR images.

  5. Ken says:

    I’d really like to get your take on this skeptical response to the ‘by his bootstraps’ college image that was going around a couple of weeks ago; an image about which you tweeted that “this pretty much sums up what I think of the Wall Street protesters” –

  6. Jim Bullington says:

    Gates is not giving away too much Michael – top of Forbes list for many, many years (any down years are probably the result of down market years):

    2011 – $56B
    2010 – $54B
    2009 – $40B
    2008 – $57B
    2007 – $59B, etc, etc.

    Gates and Buffet are making a good start, but are they doing enough? I agree with the points Sam Harris made in his essay “How Rich is Too Rich?” on his blog –

    The wealthy are eventually going to have to contribute more back to society – finance their own infrastructure improvements, education programs, etc. Gates’ level of wealth alone is so astronomical, it is hard to comprehend – You could earn an income of a million dollars a day, every day, and still not even come close to Gates’ wealth for many, many years (just accumulating the income.)

    I can see where the wealthy don’t want to dump more tax money into a dysfunctional government – neither do I. And I agree with the free market economy, but at some point (it appears) the wealth inequity is going to reach a point of serious contention – and who knows what will happen then?

    • Wrong says:

      I like Harris’ suggestion, where the wealthy are encouraged to put money into funds set up for improvements to infrastructure etc that will help create jobs.
      I can see the issue with it, many people won’t contribute, but I can see the problem with taxation too, that the money goes to a government you don’t necessarily even like, to make decisions that you don’t necessarily agree with, which aren’t necessarily good, or even right.

      • If only there were a way to get government to stop serving evil and start representing the Will of the People. (I know, I might as well imagine a square circle – or respectful political discourse ;)

        Could you imagine what this country would be like if the government actually served the people? Sure, everyone would complain about their taxes (like we complain about dentists and spouses) but you can’t make everyone happy. But if somehow we could get our government to create and enforce rules which make the American Dream more than a theoretical possibility for the rest of us – then ich or poor, we’d know that at least he have a hoest chance at it.

        But this all hinges on an impossibility – making our government serve us… when we all know that it is evil and we should stay far away from it.

      • Caleb says:

        Its called communism, except no one has incentive to work any longer, kind of like how it is in this country.

    • Mark says:

      Ha ha! Re Bill Gates wealth: that is indeed an educational way to look at it.

      If I can pick up a good consultancy job at 1 million USD per day, it will take me 161.64 years to have earned the equivalent of Gates’ 59 billion.

    • Caleb says:

      So is it really that unfair that Bill Gates and Steve Jobs made a fortune while changing our society and world? How many people do you know own a computer made by apple, or running a windows os? The wealthy dont just steal money from people, people buy their goods for a reason.

  7. Jonathan So says:

    I find myself in the same line of thinking in regards to these occupy protests, I don’t see any clearly defined goal or really anything finite that they are protesting against (protesting “greed” makes no sense, maybe “irresponsibility” and government enabling would be more apt?)

    It looks that if anything, the protests’ most recognizable result will be in the light it has shed on civil rights relations. While police brutality and excessive force is nothing new, it certainly has been brought to the forefront again as a problem.

  8. JJ says:

    Instead of asking ‘what is too much to make’ I think it’s better to evaluate the disparity of wealth and income.

    Large disparities eventually lead to unrest, period. Be it disparity in income, disparity in wealth, disparity in marriage (referring specifically to institutionalized polygamy and the impact of bride shortages), disparity in human rights, whatever.

    I support Occupy X insofar as I realize the numbers are f**ked up. I hope that an individual’s politics don’t override the factual basis behind how f**ked up the numbers or the factual basis behind the problems created by such disparities.

    I don’t how Occupy X is a catch-all protest and I don’t support that is being used as a soapbox for anti-corporatism, conspiratorial accusations. I don’t support protests that hope to bypass legislative processes – it’s the vicious cycle of democratic apathy as people feel detached, don’t participate and then want to fix everything all at once. That kind of thinking has led to fascism in fairly recent times, something I hope our collective consciousness hasn’t forgotten.

    And I *REALLY* don’t agree with the parallels drawn to popular revolutions in the Middle East. Especially as we watch the kinds of government that are coming into power in Tunisia and Libya.

    • Agreed, especially with the Adbusters and Anonymous backing; both groups are about “protest as performance art” as much as anything. Meanwhile, from web polling on OWS’ own website, and my analysis and guesstimates, a significant percentage of OWS protestors, at least who responded to the polls (significant as in more than 20 percent have a *graduate* degree) are holders of either a JD or an MBA. I’m guessing that three years ago, many of these folks *wanted* to work for the Wall Street they now find so evil.

      That said, vote Green! Stop buying into the two-party duopoly!

      • Thank you!

        America would benefit from having honest-to-god Socialists and Libertarians in the congress and the Senate.

        One very reliable way to break the plutocracy’s back is to split the duopoly into multiple parties. Parties which are each focused on a handful of core ideologies (as opposed to the current system where Dems & Reps pick political ‘planks’ out of strategy or laziness).

        If no party has a majority our politicians would have to actually negotiate instead of stomping their feet, making demands and threatening to ‘kill the economy’. Also, if there were more than two choices politicians couldn’t run on the ol’ democratic standby “At least I’m not as bad the other guy.” – they would have to serve their constituents.

        And buying out a multi-party government would be very expensive and might break the plutocrat’s banks.

      • ThatSkepticGuy says:

        “That said, vote Green! Stop buying into the two-party duopoly!”

        Oh, that’s rich. Dismiss Libertarians as being crazy and unrealistic and prop up in their place instead the party of science-fearing, Constitution-hating closeted Communists.

  9. Kenn Space says:

    We are at war. Our corporate controlled government (through corporate lobbying and election funding ) is out of the peoples control. People want government control back. Makes sense to me… I feel US corporate capitalism (corporatism) is based on an economic fascism: To have a corporate being where the chain of command eventually muddles all responsibility to any human being. These corporate beings are running your life and controlling your government. (Enough to really make an individual mad and protest.) The corporate being does not exist, and when it comes to face it’s corporate responsibility, it is a piece of paper. That is plain and simply wrong. Restore capitalism to individual responsible chains of command, or this war will be lost.

    • ThatSkepticGuy says:

      “Our corporate controlled government”

      . . . is a Fairy Tale created and perpetuated by Big Government Leftists who don’t want people to blame the government for problems created by the government.

  10. Phea says:

    Paulson, (being politically in line with what Dr. Shermer believes), didn’t want to bail the big banks out. He honestly believed a little thing called moral hazard should prevail. Unfortunately, he realized systemic failure had to trump moral hazard, or the whole house of cards would come tumbling down. Even guru Greenspan, who was an Ayn Rand libertarian, had to admit his, “world view” was basically flawed. (He actually went on record stating he believed the free market would take care of fraud, and no regulations were necessary). Dr. Shermer needs to get current. His views are starting to sound about as antiquated as the old John Birch Society and their, “commie behind every bush”, rants.

    • Phea says:

      Just a side note. The Wall Street banks did not want to take the TARP funds, (as that pretty much temporarily nationalized the banks), but Paulson insisted on it, after Lehman Brothers went under. As far as the problem of the unregulated derivatives, it goes way back to Clinton. This link is a pretty good place to start for anyone interested in how the ’08 meltdown happened and why.

      • MadScientist says:

        Derivatives go way back to the Reagan era when we had the Junk Bonds and Derivatives Scandal. Nothing significant was done to change things, we just got empty promises of “they made mistakes, but it won’t happen again”. Make no mistake, trading strategies are optimized for grand short-term gains for the people involved in controlling the trading – there is virtually no consideration of the investors themselves.

    • Paulson was almost as incompetent as Geithner. Read Suskind’s “The Confidence Men.”

  11. Willy says:

    Sigh! I pretty much agree with Michael.

    The protesters are mostly just angry folks who want to blame anyone who has more than they do. In some cases they are right and in most cases they are wrong, only an individual and careful analysis of each so-called “fat cat” could tell – you sure can’t tell just by income or net worth. Many folks that these whiners call “fat-cats” earned their money by hard work. The fact that some did not is something these folks don’t seem to care about.

    The real concern with this sort of economic situation is what could happen if it gets bad enough and people get angry enough. Angry people make bad choices and disaster can follow. Read the history of
    Germany between wars if you need proof. We all know how that turned out.

    • Read about Depression era America!

      There were serious protests. Vets marched on DC.
      (Do you know why Gen. MacArthur was out of the country in 1941?)

      BTW: As much as neocons like to vilify Roosevelt for the ‘socialist’ New Deal it was probably a good compromise – a lot of Americans were advocating Communism in those days. The Great Depression was seen as a result of capitalism gone amok. Kinda how the Great Recession is seen by many as a result of capitalism gone amok.

      Not surprisingly people get angry when they suffer because someone else did something wrong or stupid… they get angrier when the wrong-doers and stupid-heads do not share their suffering. The amazing thing about Occupy-X is that the participants and ‘policing themselves’ largely. They are restraining the truly angry – considering how much anger they can rightfully claim, they are astonishingly civil.

      If the Plutocrats don’t wake up and fix things, they will look back wistfully on the well behaved Occupy-Xers as they try to put out burning cities with downsized fire departments. People will only suffer unjustly for so long before they start spreading the suffering to those who they perceive have caused it… especially if they ignore you when you’re being civil.

  12. Jaime says:

    So, why is this on Skepticblog? This appears to be more politics than skepticism.

  13. libertarian_adi says:

    Hilarious comments from typical leftists, who churn out PBS explanations of the crisis and blame the Wall Street bankers for responding to bad incentives put in place by the government. Remember, the recession didn’t initiate in the financial sector but only fell into it. The Housing bubble is what needs attention. What caused it? More generally how are bubbles formed?

    Here’s Nobel prize-winning economist and libertarian, Vernon Smith, who is an expert on bubbles, explaining how the housing bubble started.

    He attributes the bubble to the following:

    #1 Low interest rates set by the Federal Reserve. (Central Banking)
    #2 1997 tax breaks for profits up to $500,000 — specifically for the housing market. (Subsidies)
    #3 Eroded credit standards by government-sponsored enterprises, Fannie Mae and Freddie Mac. (Regulations & subsidized subprime lending)

    You had the federal government and the federal reserve distorting incentives in the economy, specifically the housing market. Under this system of bad incentives, pursuit of rational self-interest lead to a market failure. In laissez faire free markets none of this would have happened. Social democratic idiocy and the “housing is a right” crowd created the housing bubble, which burst and its effects fell into the financial sector. Now politicians want to go about fixing this problem by maintaining 2 of the 3 steps above and an expanded role of the state in the economy. Freethinking is embarrassingly absent among left-wing atheists when it comes to economics.

    • Mark says:


      I’d be interested to hear your definition of laissez faire free markets. Do you think there should be absolutely no laws or rules involved in the operation of this system?

      My own conclusion is, in a “no –rules” capitalist system, some big businesses get bigger and bigger, digesting and outcompeting all smaller operators, until inevitably one person (or one corporation) ends up owning everything.

      It seems to me that some are keen on that sort of outcome.

      • libertarian_adi says:

        “My own conclusion is, in a “no –rules” capitalist system, some big businesses get bigger and bigger…”

        No, it’s exactly the other way around. Had you taken a class in elementary price theory you would have know that classic patent law, occupational licensing, barriers to entry into a market created by regulatory agencies, are what cause monopolies. Here’s George Stigler, a Nobel prize winning economist who specialized in Industrial Organization, on this topic:

        My definition of laissez faire is the traditional definition. Governments should only provide courts of law to adjudicate differences among the citizenry. Regulations, legislated by economically illiterate politicians, have unintended consequences and more often than not exacerbate the problem (ex: The Civil Aeronautics Board, the Interstate Commerce Commission, the FDA’s drug lag, price gouging laws, minimum wage laws, child labor laws, rent control laws, laws against dynamic pricing.)

        It is important to know that economic reality is detached from your intuition.

      • Markx says:

        Hmmm. Thanks for the reply.

        I’ll do some more reading.

        I live in a place where occupational licensing and patent laws are rarely applied.

        There are a lot of poor exploited people in such countries, and you need to “renovate” your new house the day you buy it.

        I feel some economic theories may be detached from reality.

      • Markx says:


        It is my opinion that people who state theory as ‘fact’ rarely have a very clear view of the real state of affairs.

        Clear vision takes an open mind, and an acceptance of the limitations of our knowledge.

        You may do better to at least appear open minded by applying a few qualifying phrases “ theory…”, “…in my opinion…”, “…I believe”…

      • libertarian_adi says:

        “It is my opinion that people who state theory as ‘fact’ rarely have a very clear view of the real state of affairs.”

        It is my opinion that people who think that scientific “theory” and “fact” are different are no more well-informed than creationists, who resort to the same juvenile tactics.

        “I live in a place where occupational licensing and patent laws are rarely applied. There are a lot of poor exploited people in such countries, and you need to “renovate” your new house the day you buy it.”

        Not having state-mandated occupational licensing is not tantamount to having people being exploited. Methinks you don’t understand simple market dynamics. Labor economists, ya know *scientists* who study labor markets, have found no evidence for increased efficiency in markets with state-mandated licensing. They unanimously oppose occupational licensing. Open a treatise on labor economics and learn.

        Moreover, the country you happen to live in might be in a poor condition. However, not having occupational licensing or strict patent law didn’t cause it. The robustness of an economy has to do with myriad variables, not just two. You confuse correlation with causation — a classic fallacy.

      • libertarian_adi says:

        This might surprise you. I’m not suggesting complete causation. But economists mostly agree that economic freedom *causes* better growth.

      • Markx says:

        Adi said: “…people who think that scientific “theory” and “fact” are different are no more well-informed….”

        theory (from the word theoria, θεωρία, meant “a looking at, viewing, beholding”, and referring to contemplation or speculation, as opposed to action…. NOT as the term is understood in ‘ scientific theory’).

    • Somite says:

      No. The most important factor in this debacle was the inaccurate rating given by rating agencies to derivatives. There was pressure by the banks to have AAA derivatives to dump money into and they got them. Even then the system wouldn’t have collapsed if the amount of money invested wasn’t so large in the absence of leverage.

      Government policies did encourage housing ownership but financial institutions exploited this to siphon government capital.

      I also like how you consider the wsj editorial better than the scholarship of PBS.

      • libertarian_adi says:

        “I also like how you consider the wsj editorial better than the scholarship of PBS.”

        Vernon Smith won the Nobel prize for experimental work related to bubbles. PBS is a state-funded propaganda machine. No state-funded institution has the incentive to reveal the truth: especially when the truth involves exposing the topsy turvy policies of the government, which it relies on for funding. You left-wing atheists amuse me with your complete lack of critical thinking.

      • tmac57 says:

        PBS gets 15% of it’s aggregate budget from the federal government.The bulk is from individual donors and grants.
        As for the propaganda charge,that is completely baseless.PBS consistently produces some of the best science,and children’s programing,and their documentaries,arts and culture programing,dramas and comedies are also 1st class.
        Admit it,you are just parroting a conservative talking point,and you have no idea about the content on PBS.

      • Daniel says:

        PBS also has children’s programming that has earned millions and millions of dollars. Secondly the grants you speak of come from large corporate sponsorship. If it is one thing PBS as a conglomerate has learned is don’t bite the hand that feeds you.

      • libertarian_adi says:

        15% of its budget is enough to influence the political slant of the content.

        “PBS consistently produces some of the best science,and children’s programing,and their documentaries,arts and culture programing,dramas and comedies are also 1st class.”

        You are going off with your mouth without thinking. I have nothing against children’s programming and the great science documentaries. It might be good for such things, but definitely not for advanced macroeconomics.

      • tmac57 says:

        Give me a specific example of a PBS program that has this so called ‘political slant’,and what specific content of that program deserves the label of ‘state funded propaganda’.

      • libertarian_adi says:

        “Give me a specific example of a PBS program that has this so called ‘political slant’,and what specific content of that program deserves the label of ‘state funded propaganda’.”

        The PBS documentary about the recent recession which deliberately skipped to the financial parts without discussing the crucial causes of the Housing Bubble. Without the housing bubble, the financial crisis wouldn’t have happened. The bubble burst and only spread to the financial sector. It is important to trace a problem back to the starting point.

      • tmac57 says:

        What PBS documentary are you referring to? I asked for something specific. And in any case,just because some content that you thought should be in a documentary was allegedly not included,how exactly does that prove ‘state sponsored propaganda’?

    • Phea says:

      So… I guess Greenspan admitting he was wrong about free markets being able to regulate themselves was PBS taking things out of context, or lying? PBS Frontine documentaries are, for the most part, interviews with the people involved. Are you saying Paulson, (Bush’s Sec. of the Treasury), lied? Yes, I’ve watched several PBS Frontline programs to try to understand and make some sense of what happened and why. I’ve also watched, “Inside Job” and thought it was good. Have you? If you do, you’ll find that BOTH parties are blamed. It’s really not a “right” vs “left” issue at all. Both Bush and Obama were fully behind the bailout, in case you didn’t notice.

      • tmac57 says:

        Surely you just don’t understand that the only way to understand the ‘truth’ on everything,is to watch FOX all day,and read the WSJ.Oh,and also pay very close attention to all of those endlessly forwarded emails that keep you informed about Obama,guns,God,and all of the various conspiracies being committed by the Marxist,socialist,Nazis.

      • libertarian_adi says:

        “I’ve also watched, “Inside Job” and thought it was good. Have you? If you do, you’ll find that BOTH parties are blamed. It’s really not a “right” vs “left” issue at all.”

        This is purely an economic issue. Bubbles are features of the macroeconomy. There is no left-wing economics or right-wing economics. Your inability to lay down politics and actually look at what contributed to bubble is at best laughable. Getting your economics from documentaries is not a good strategy. “Inside Job” skips directly to the financial sector and doesn’t discuss how the housing bubble even formed.

      • Boy, are you delusional. Fact is, most economic “theories” today are actually nothing more than public policy prescriptions.

      • libertarian_adi says:

        And your economic “theories” are delusional prescriptions for disaster. It’s hilarious how you stress it’s only a “theory” — that’s what creationists do when they talk about biological theories. Self-absorbed fool, get lost!

      • Markx says:

        Adi, once more…

        theory (from the word theoria, θεωρία, meant “a looking at, viewing, beholding”, and referring to contemplation or speculation, as opposed to action…. NOT as the term is understood in ‘ scientific theory’).

      • Phea says:

        It’s NOT rocket science, fool! You want the “basic” bottom line reason for ’08? It’s quite simple… Real estate values had ALWAYS GONE UP, (for at least 70 years or so). and the idea that they could possibly go down was unthinkable, not even considered as a potential part of the equation. I’m, going to leave it there, and if you can’t grasp that one single, simple FACT, you’re way beyond reasoning with…

      • Phea says:

        And just because you’re such an annoying, uninformed, insolent prick, I’ll add that the only “bubble” you need to really give any serious thought to, is the one up your ass… your head…

      • libertarian_adi says:

        I feel sorry for you mom that she had to put up with an imbecile like you for years. She is probably thinking, “why didn’t I use a condom?” This is why I am strictly pro-choice and pro-planned parenthood. When your head is *occupying* your ass, it’s hard to get acquainted with reality.

  14. WeatherServo9 says:

    Michael, I love your magazine and everything you do for raising the discourse. But like many readers, I suspect I will always have a problem with your anarcho-capitalist ideology whenever it rears its head. And that’s fine. Disagreement is not a bad thing, and I don’t want us all to agree about everything because that would mean none of us would need our brains.

    The gist of what you’re saying seems to be that, were there no government around to be corrupted, all these bad things wouldn’t be happening. So eliminate the government (but not the SEC apparently) and everything gets better. Am I interpreting that correctly? I’d like to see you apply that argument to human beings. If human beings didn’t exist, after all, there’d be no financial crisis. And I’m puzzled by what a Libertarian thinks the SEC should do. I wish you’d expand on that some more so that I can understand the mechanisms of a Libertarian SEC – who would elect or appoint it, who would write the rules for it, who would enforce the rules for it, to whom would it be accountable and so on.

    No human system or human being is beyond corruptibility. The difference is that a democratically elected representative government or lawmaker is easier to keep in check (even though it may be at times quite difficult and require massive protests) than an anarcho-capitalist private sector. Neither is perfect, neither is evil, it’s just a matter of finding the right balance between the two. And this, of course, is an ongoing matter.

    • Wrong says:

      I’d disagree. When we vote, we choose from (For the most part) two parties. That means that we either choose one system or another, and neither of them appears perfect, or even optimal at this point. If it comes down to choosing the lesser of two evils, something has gone wrong.

      And if the government decides to bail out big business with money they taxed, I’d regard that as being a bad thing. I’ve always regarded it in the terms of that Jefferson Quote: “Government big enough to supply everything you need is big enough to take everything you have “.
      If we give the government our money, then they will spend it. We should only give them what they need, and they should budget so that they only need what the people want. Acting rashly to help the people doesn’t serve that.

      And, as Shermer said, “Capitalists in Gains, Socialists in Loss.”- If I want to risk my money, I’ll do so, I’ll gamble, or invest, or do whatever. But it shouldn’t be up to the government to tax me and then force me to invest, or to support someone elses loss made whilst taking their own risks.

      • We don’t get to choose between two parties – we get to choose between the same party under two different names.

        BTW: I love Jefferson but that quote about big government is so anachronistic; I would counter with this:
        “A government weak enough to be no threat to you is too weak to be of any use to you.”

        Capitalism is a wonderful idea – like ‘free love’ and ‘intellectual purity’ – but it is no longer a viable option. A capitalist nation cannot compete in a socialist world. America is socialist and needs to come to terms with that.

        Q: Why did the US government bail out GM?
        A: So the military could continue to buy equipment and spare parts.

        If you believe that a nation must put an honest effort to defend itself, then you need to accept that it must not only draft youngsters but it must regulate and sometimes socialize businesses and industries. [Check out the history of the Jeep!]

        Manufacturing *is national security*… it has been ever since the days of Napoleon and the Civil War (US Civil War, that is). The nation needs to protect & manage all strategic manufacturing just as much as it does military forces and strategic resources. Check out how broad the equipment requirements are for the military: textiles, electronics, plastics, medicines, hardware.

        Protecting strategic industries means bailing them out when they screw up – and helping them defend themselves against foreign economic threats. If we don’t keep the manufacturers alive here we will have to have our top secret military electronics made overseas.

        Considering that disease can be a weapon of mass destruction, National Healthcare is becoming *national security*. [Imagine if terrorists started infecting illegal immigrants - who typically handle America's food supply. It'd be a Crichton novel times a million]

        If we neglect parts of National Security then we’re wasting money on an Ameircan Maginot Line.

      • Exactly, on some of this. Having China build military-use computer chips and other stuff in the name of hypercapitalism is incredibly stupid.

      • Markx says:

        Bad Boy – wekk said.

        Exactly why “Free Trade” is another theory that is a “crock of ****”.

        A country NEEDS to protect its manufacturing industries, and its food production.

        (Luckily for you the USA does that, whilst blithely talking up free trade, it is clear it only applies to everyone else, primarily for the benefit of the USA… but, that is another story, and I think they ARE doing the right thing, others just need to wake up to it.)

        But bear in mind supporting that military machine has perhaps become an inextricable part of the USA economy. You probably can’t afford to stop fighting.

      • libertarian_adi says:

        “Exactly why “Free Trade” is another theory that is a “crock of ****”. A country NEEDS to protect its manufacturing industries, and its food production.”

        There you go again. A protectionist argument this time? You need to work on your free thinking skills. Let me help ya.

        The argument from “protecting domestic industries” has been touted by economic illiterates, going back to James Madison, as much as the argument from “intelligent design” has been by creationists. Countries which specialize in industries for which they have a *comparative advantage* and trade with other nations, with other comparative advantages, will both benefit by having more of the desired goods at a lower price — with not net loss in employment. Here’s Milton Friedman giving the mainstream argument for free trade:

        Oh wait, you don’t trust uncle Milty? Well how about…

        Paul Krugman, who won the Nobel prize for his work on International Trade theory and is one of the greatest defenders of free trade, wrote an article when he was at M.I.T, comparing protectionists like you to creationists. He demolishes all the economic fallacies put forward by protectionists. Read it.

        It’s funny that in your previous comments you were masquerading like some know-it-all (a common behavior among clueless leftists). You don’t even have a basic understanding of how the economy works.

      • Markx says:

        Ah Krugman – I usually like his stuff, he usually expresses himself quite clearly. However, not so in this case.

        He puts forward arguments in his 1996 essay championing Free Trade “RICARDO’S DIFFICULT IDEA”. He starts out by saying it is a concept that seems simple and compelling to those who understand it, but then writes many pages explaining why nobody seems to understand it, and why many oppose the idea. His argument:

        1. Free trade has a an iconic status, so some simply oppose it to appear “daring and unconventional”

        2. It is VERY difficult for those without knowledge of the art to understand. “As it is … part of a web of a dense web of linked ideas” He worries that “intellectuals, people who value ideas …somehow find this … idea impossible to grasp”. (Apparently therefore concluding they must be stupid, not for a moment that he may be wrong).

        3. He feels those who oppose the concepts of free trade have an aversion to mathematics and mathematical models. He then goes on to refute an argument by Sir James Goldsmith against the validity of free trade ideas by telling us Goldsmith simply did not understand the “pauper labour fallacy”, which Ricardo dealt with “refut(ing) the claim that competition from low-wage countries is necessarily a bad thing” .

        Krugeman does not bother to explain that further in the 1996 essay, but in a 2007 essay his own view towards that issue seemed to have changed: “But for American workers the story is much less positive. In fact, it’s hard to avoid the conclusion that growing U.S. trade with third world countries reduces the real wages of many and perhaps most workers in this country. And that reality makes the politics of trade very difficult.”
        He concludes “It’s often claimed that limits on trade benefit only a small number of Americans, while hurting the vast majority. That’s still true of things like the import quota on sugar. But when it comes to manufactured goods, it’s at least arguable that the reverse is true. The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.
        As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.”

        That only takes us ¼ of the way through the 1996 essay, but I might just leave it there for the moment.

        I do want to come back and comment on his appalling and feeble attempt throughout that essay to equate his “Theory of Free Trade” with Darwin’s “Theory of Evolution” , thereby implying anyone who disagrees with him is the equivalent of a creationist. (and somewhat revealing an inflated view of himself)

        By the way, libertarian_adi is not, by any chance, a nome de plume for Krugman, is it?

      • Markx says:

        BUT … one more revealing thing from Krugman’s 1996 essay

        (I wondered at your objections to “occupational licensing”).

        “The basic Ricardian model envisages a single factor, labor, which can move freely between industries…”

        Nice theory!

        Oh …. Theory (from the word theoria, θεωρία, meant “a looking at, viewing, beholding”, and referring to contemplation or speculation, as opposed to action…. NOT as the term is understood in ‘ scientific theory’).

      • Markx says:

        And … from the 1996 essay:

        Krugman: “The standard textbook version of the Ricardian model assumes full employment in both countries ….”

        He resolves unemployment issue concerns thus: “ … international trade is a long-run issue and has a natural self correcting tendency “

        (i.e. excuse us while we starve the workers to death!)

        AND thus “ countries have central banks which will try to stabilize employment around the NAIRU… so … Federal Reserve and its counterparts will sct in the background to hold employment constant.”

        Government or central control to make it work?

        NAIRU Non Accelerating Inflation Rate of Unemployment. As discussed by Ian Shepherdson, of High Frequency Economics :“You might as well ask what is the tooth fairy’s favorite color or what sound does a rainbow make,” … The NAIRU concept asserts the economy “is permanently highly unstable” and is always a step away from a highly unstable inflation environment, the economist said, adding “there has been no evidence to support this idea in the past 30 years.”

      • WeatherServo9 says:

        Wrong, you replied to me, yet you seem to be arguing against things I didn’t say. I talked about a balance between the interests of money and the interests of humanity, all you’ve done is reiterate Michael’s point that every bad thing that happens is entirely because of too much government. So, like Ted said below, you blame the prostitutes but not the pimps.

        I actually haven’t formed as clear an opinion on the bailouts as you imply that I have. Initially, on a purely emotional level, I am suspicious for the same reasons you are. These corporations claim that government regulation is burdensome, but they gladly take government bailouts. It’s appallingly hypocritical and unfair. However, I (and actual economists) can imagine the economy being much worse had no bailouts occurred. So, you could make a case for doing or not doing them. But since they *were* done, the best we can say is that they should have been executed differently – like the government shouldn’t have given the money to the banks without a clear timeline for how and when the money was to be used (there should have been strict, enforceable guidelines about giving out new loans, ending foreclosures, renegotiating mortgages and so forth). Instead a lot of it just went to personal bonuses, and the foreclosing and robosigning continued.

        I agree that the current party system is inherently flawed and beyond repair, which is why I am in favor of changing political parties into PACs and ending personal party affiliation. But then I also want publicly-funded election campaigns (with a much shorter campaign season to lower the cost) which people like you generally oppose as socialism. Whenever people like you talk about government, you speak of it with enormous disdain, and you stomp your feet and say “no no no no no!” like a two-year-old. But in the real world, the government is the only thing we have which legally explains and enforces the very specific kinds of freedoms guaranteed to us as citizens. There is no mechanism in capitalism to guarantee any freedom for anyone. To restate my original point, I think the best system, the fairest, is individual freedom (the market) balanced with the needs of the community (the government). Is the balance currently out of whack? Yes. Is a lot of government spending out of control? Yes. Most especially in the military-industrial sector. But I advocate taking doable steps in the real world, reforming the public and private institutions we have to function more effectively, fairly and democratically. You (and Michael, somewhat, and others in this thread) are advocating (“no no no no no!”) a utopian, anarcho-capitalist extreme, a fantasy of pure theory with no consequence.

    • Ted Fontenot says:

      “The gist of what you’re saying seems to be that, were there no government around to be corrupted, all these bad things wouldn’t be happening.”

      Very good point that needs to be emphasized. Some are always willing to believe is all about corrupt government. Remember Homer Simpson’s reply when Marge asked if he were lying to her (about some scheme with which he was engaged): “Marge, it takes two to lie: One to lie and one to listen.” Same thing with corruption. The conservative, and the conservative libertarian, are very loud about deriding the prostitute–they give the pimp carte blanche, though.

      The fact is, Mr. Shermer, we have always had government, and government exists to mediate between competing (and conflicting) interest for the good of the community. It’s not all about the individual. It never was or is. To believe it is, is just one more unexamined, unsupported faith-based religiosity.

      • Syd Foster says:

        Well said! Ted’s made my point: and if you libertarians got your way, we’d soon have government again anyway… otherwise known as warlords (also known as mafia godfathers)… you ran this experiment in Afghanistan, after the Russians left and you abandoned your various tools you had been supplying with arms for so many years, instead of rebuilding the infrastructure as you had promised. Most of the Afghans joining the Taliban did so out of desperation for peace and stability… the Taliban mentality is alien to the pragmatic and normally easy-going Afghans! I was there in peace time in 1976, and I can say without a doubt that they would have responded favourably to American assistance if you hadn’t dropped them (going expressly against a verbal promise you made, (which I saw on television in Europe), spoken directly to Afghans, who would have spread that word, so they all knew when you broke that promise) when you went to Iraq instead. A tragedy and a stupidity that has set us back for generations into the future.

  15. John B says:

    If they broke no laws then why do they need blanket immunity? Would be the first time history somebody who broke no laws needed this. Also you are hardly a legal expert, stick to science.

  16. Beelzebud says:

    Funny how Shermer will post about this, which painfully reveals his own biases for all to see. It has nothing to do with scientific skepticism, and is only his political and economic opinions.

    Yet last year when the Freedom Works funded Tea Party, and Fox News went around protesting, I don’t remember hearing a peep about it from Shermer. I guess it’s because at the end of the day that astro-turf movement was about protecting the top 1%.

    What I can’t get over is Shermer’s insane adherence to the libertarian way of thinking. Here is is basically saying “Yeah everyone knows Wall Street is greedy, if you didn’t want them to take TARP money, you shouldn’t have given it to them”

    This is the same guy that wrote “Regulation Schmegulation” after the market crash at the end of Bush’s term.

    You aren’t Joe the Skeptic, here at all Mr. Shermer. You’re mistaking your own personal political/economic opinions as The Truth.

    • Wrong says:

      I noticed that the name of the site is SkepticBlog, and not Scientific SkepticBlog.

      If you take issue with his post, point out the logical fallacies, or come up with an alternative arguement with equal evidence. Just saying that he’s biased and blaming it on Libertarianism, which the adherence to is “insane” is simply using ad-hominems and poisoning the well. Address the issue like a skeptic, rather than getting angry: If Shermer is acting in a way you find unskeptical, Prove It, put together a case which has equal or greater justification than his. I don’t personally agree with libertarian economics, but I’m getting sick of typing into the comments section here that skeptics should argue skeptically.

      I don’t see where he argues for protecting the 1%. He says that the corporations should bear their losses. That isn’t protecting the 1%.

      I didn’t see anywhere that he said that what he said was “The Truth”, and I don’t see why some parts of Libertarianism can’t be right.

      • I will take issue with the position “Corporations should (always) bear their losses.”

        When a corporation is necessary for national security, we cannot allow it to fail.
        Even Libertarians who believe in national security should agree with this.

      • libertarian_adi says:

        “I will take issue with the position “Corporations should (always) bear their losses.”
        When a corporation is necessary for national security, we cannot allow it to fail.”

        Are you a libertarian?

        Most bankrupt companies are bought by competitors and are restarted with a new team. Losses are even more important than profits in a capitalistic system. They are what that get rid of poorly managed firms. Unfortunately, in the corporate welfare state, the same lousy team which lost, gets back up and running again. The American automobile market should be dominated by the more able Japanese, not Bailout motors.

        Uncle Milty explains it eloquently.

      • Beelzebud says:

        Just curious, but which libertarian think tank pays your salary?

      • I already did that way up top, starting with the logical fallacy of his that just because no cases have been brought to trial means no crimes have been committed.

      • Caleb says:

        But what really is a crime? Should the governement be forced to regulate ethical decisions? Property rights yes, but what about personal rights.

      • Beelzebud says:

        You don’t have a personal right to rip people off.

      • tmac57 says:

        Personal rights can never be absolute.Laws are the social negotiation between what people feel they have a right to do,and what a civil society has determined are limits to those rights.
        For every law established,you can probably find some asshole who found a way to infringe on someone else’s life,liberty,or property.That is,left to their own devices,some of us will ruin it for the rest of us.

  17. Goldarn says:

    Wow, you really are blind to some things.

    Assumption: Nothing illegal was done because no illegalities were found. Could that have anything to do with a lack of investigation?

    Assumption: The government basically gave the businesses a handout, so why shouldn’t they take it? Did you not realize that the businesses lobbied the government for a handout, and threatened to kill the economy if they didn’t get it?

    Sorry to see you’re on the side of the hostage takers. You are a piss-poor version of a skeptic who refuses to face alternative arguments.

    • Wrong says:

      Assumption 1: If so, then surely the Occupy Wall Street protestors would have a crime to convict those they want taken down with? Something doesn’t have to be illegal to be immoral, and something definitely doesn’t have to be illegal to be wrong. As far as I can tell, OWS is about corporate corruption and the corporations being given public funding to use to their own ends. Those actions were sanctioned, or even commited, by the government.

      Assumption 2: That’s what the protestors are protesting. And I don’t think Shermer has a problem with that, as he said, “They’re Capitalist in profit, Socialist in Loss.”-I’d take that to mean he agrees that the losses of corporations should be born by the corporations.

      What I’d wonder of the OWS protestors, and Libertarians, is, are they willing to stand by their convictions and let the economy take the hit? Is it better to let the system collapse than to do harm in trying to fix it? I don’t have a definitive answer. I’d think Yes, but I’m no economist.

      Finally, accusing someone of being on the side of the “Hostage-Takers” is a bit extreme. Calling names doesn’t prove your argument, and your argument didn’t prove anything probative either, it just said that their may be some things you aren’t seeing. I could equally say “God” and have a similar case. Refusing to face alternative arguments is an odd thing to say, since he faces the opinions of some of the protestors here, and either criticises or expounds upon them. Simply because he does not agree with you does not make him unskeptical, and I would have to say that I think that the trend on these boards for calling someone unskeptical when you don’t agree, rather than because they’re acting unskeptically is troubling. It’s an ad-hominem, it doesn’t prove your point, and the people making the claim don’t seem to realise that if both views have no logical fallacies, are based on sound premises, and come to different conclusions, then there is not enough evidence, and you should “Agree to Disagree”. Such, in my mind, should be the way with politics and political philosophy, especially since not one has been demonstrated as universally superior.

      • Ted Fontenot says:

        “Those actions were sanctioned, or even commited, by the government.”

        Again, this overlooks who are the power brokers who forced the government to work this way.

        You seem to think that government exists independent of, and divorced from, those who create it for their best interests?

  18. Andrew says:

    Good Post.

    I like the irony that is so prevalent in those pictures.

    Actually this has everything to do with skepticism. People should be skeptical of regulations, government, corporations and even the people protesting. So what if Shermer is a libertarian, your entitled to your own political view, and he’s not saying he’s RIGHT and everyone else is WRONG. All he did in this post was ask a few questions, (which is what skeptics do) on wealth inequality. And even sided with the protesters on some of their arguments. But then you socialists (I’m speculating) go and attack him for his biased views! Argghhh.. lol…really? Oh and if you are going to cite Sam Harris as correct, and Shermer as wrong, than you fail to your own arguments against Shermer, that of biased interest.

    Also look at the standard of living, despite the disparity between the richest and poorest, everyone’s standard of living has risen dramatically since the late 19th century. And now that India, China and South America is getting their growth spur, we will unfortunately suffer a little bit, and there will be a lot more competition in the future for jobs. The same thing will happen again when African nations become developing economies.

    Also it is unsustainable to take money away from people who produce and give it to those who don’t produce, and it’s a fallacy to assume that without government assistance, there would be no assistance.

    • Wrong says:

      Agreed. I have no idea why so many keep saying that Libertarianism is itself fatally flawed, and some even comparing the Free Market to “God”, on a level of proof, especially since we have never had a truly capitalist system, or a truly Free Market.

      • Ted Fontenot says:

        At the most elemental level of society, all the way through to the most complexly organized societies and systems, there has never been, and can’t be, individual freedom to that absolute extent. That is, and always has been, and always will be, a total non-starter. In tribal communities 50K years ago, the elders told the family group, a member of the tribe, that in order to be a member of the tribe, those two bison they killed today, sorry, but we’re taking one of them for the good of everyone else and for the good of the continuing existence of this community. I mean, this is a no-brainer.

      • Markx says:

        Wrong – Ill say it with great certainty (and I usually qualify my remarks), but I’m sure of this one:

        Libertarianism is itself fatally flawed.

      • Markx says:

        Ha ha! (yeah, I clicked on it) :-)

    • amidit says:

      “everyone’s standard of living has risen dramatically since the late 19th century…”
      The prosperity of America is based on massive (relative) misery all over the world, and this has intensified in the last decades. The numbers living with poverty and hunger if not starvation has increased dramatically.

    • Ted Fontenot says:

      “Actually this has everything to do with skepticism. People should be skeptical of regulations, government, corporations and even the people protesting. ”

      Of course. And skeptical of those who really own the government and the country?

      • libertarian_adi says:

        “The prosperity of America is based on massive (relative) misery all over the world, and this has intensified in the last decades. The numbers living with poverty and hunger if not starvation has increased dramatically.”

        [Citation Needed]

    • “It is unsustainable to take money away from people who produce and give it to those who don’t produce.”

      So, you’re saying the parent-child relationship is due to die out at some time in the future?

      • libertarian_adi says:

        Transfer of money and property in parent-child relationships are *voluntary* and *personal*.

  19. OaklandSkeptic says:

    When I was sent this, I was pleased to see some official recognition within the Skeptical community about the past months events, and was looking forward to reading what the thoughts were on this movement (or collection of movements as it were).

    I am disappointed.

    As an Oakland resident and student journalist, I have been in daily attendance of the Occupy Oakland encampment since 6am Tuesday morning after I was awoken to the sound of police and television helicopters circling above my apartment.

    That afternoon I witnessed police officers shooting at non-threatening protesters marching down their cities street, while in the evening I was tear gassed and an army veteran was put in the hospital.

    I have attended several press conferences on this issue, including one attended by Oakland’s Mayor Jean Quan. I have interviewed citizens marching through their streets or holding signs in front of police barricades.

    I’ve spoken with single father who came down for an hour between the time he got off work and the time he needed to pick up his daughter at school. I’ve spoken with a Unitarian grandmother who was on her way to church early Tuesday morning to make breakfast for the campers when she heard of the police raid on the radio and was on the scene to see the last of the over 90 arrested taken away.

    I’ve spoken with AC Transit city bus drivers who came down to support the call for a strike and to get people motivated to attend a Board Meeting occurring just across the street where the decision to cut further funds from public transportation was being discussed.

    I’ve spoken with union organizers, grandparents, teachers, students, the unemployed, the underemployed, Buddhists, Muslims, Jews, Catholics, children, anarchists, Democrats, Republicans, police officers, community organizers, indigents, pot-heads and straight-edgers.

    The above comments by Dr. Shermer are shallow, surface-scratching first impressions which do not represent what the Occupy protests have evolved into, what their message is, what their complaints are or what solutions they are working toward in order to resolve them.

    It is my belief, after being witness to the organization structure of these groups, of their public outreach, of how they have been stereo-typed and how they have responded to those stereotypes that the tools and talent of skepticism and Skeptics is desperately needed to truly understand what is going on in hundreds – thousands – of cities across the country and the world.

    Who better than us can help navigate the dangers of media hyperbole, group-think, misinformation, or the frailties of eye-witness testimony?
    Who better than us can recognize the solitary individuals who show up preaching 9/11 Truth messages and otherwise attempting to attach anti-government conspiracy theories and ensure that such messages aren’t used to negatively stereotype the mass of regular folk who are simply tired of how things currently stand?
    Who better than us to joyfully sift through government papers and official statements looking for those nuggets of truth, such as the municipal codes violated by protesters or the Crowd Control policy of local police?
    Who better than a Skeptic and science enthusiast to convey a little chemistry lesson when teaching how to escape tear-gas or wash your eyes from pepper-spray?

    In encourage everyone who is Skeptical of this movement to take a day off work and just spend a day with the people at your nearest Occupy protest. Yes, some will be weird stoners. Yes, some will have ridiculous conspiracy theories. But these are stereotypes.

    They do not represent the whole.

    • Phea says:

      Great post. I might add, the simplicity of the cadet honor code, “I will not lie, cheat, steal, or tolerate those who do.” Very simple, very direct, and pretty much impossible to wrangle around.
      Who better than us, (as a society), to STOP doing business with the liars, cheats, and thieves who call themselves “businessmen” but are in reality, business criminals, (in many cases legal liars cheats and thieves).

      The primary goal of business should not be profit. The primary goal of any business should be to try to ensure everyone you do business with wins. Profits will follow, along with loyalty, reputation, honor, and all the other things profit cannot buy.

      Unfortunately, we seem to worship and reward profit and greed, and as long as we collectively do, we will get exactly the businesses and politicians we deserve.

      We do have the power to change this… but it wont happen with laws and regulations, which are easy to circumvent, or buy outright with enough money.

  20. Deen says:

    1. You forgot about the lobbying. If it was legal, it only was after paying millions in lobbying. Never mind that transactions took place that could still be argued were fraudulent – selling assets they knew to be toxic, and then betting against them – but who has the resources to take on the legal departments of the big banks? Especially with financial constructs that appear to be intentionally maximally obfuscating, to the point that many bankers themselves don’t understand how they work?
    2. The term “playing the market” alone suggests what these people are doing. They’re not producing anything, they’re gambling. And not with their own money either.
    3. You forgot the “too big to fail” bit. And you again left out the lobbying that allowed that to happen. Or the libertarian, free-market-absolutist arguments that supported it.
    4. It’s not about making “too much money”, it’s about making too much money relative to everyone else. Also, there might be an empirical way to assess how much is too much. For example, when the rich have so much money that they start to disrupt the balance od power. Or when large parts of the population can’t afford to buy the products of the businesses any more, and the economy collapses.
    5. But that’s exactly what OWS appears to be protesting against: Wall Street should no longer be allowed to buy political influence.

    So here’s one man’s simplistic answer: no more government bail outs for anyone for anything, either on Main Street or Wall Street.

    And how do you think to achieve that? At least OWS has gotten people talking about income inequality again. What are you doing against it? Other than defending it, that is?

  21. Martha Calderon says:

    Shermer, but wasn’t the bailout necessary? My understanding was that if the bailout hadn’t happened we will be in worst conditions we are right now. A lot of people lost a lot of money (and I am not talking about the big boys, I am talking about people’s savings, retirement funds) and wouldn’t it have been worse? I would really like to know your opinion on this.

  22. BillG says:

    What needs to be addressed and what is causing OWS indignation: “too big to fail”. On the brink of collapse, did we have any other viable option? Perhaps, though OWS is a picnic relative to a plausible anarchy.

    “Meet the new boss, same as the old boss”.

  23. Wrong says:

    Why all the hate on Libertarianism? There are certainly issues with the philosophy, but no more so than you could find with other systems such as Socailism etc.
    Sure Shermer’s writing mostly from his point of view: but he’s at least willing to support his views with logic and facts, and whether or not I agree with him, I always enjoy reading his political pieces.

    • Phea says:

      I sure don’t hate the basic concepts of Libertarianism. For one thing, I believe the force of the law should only be used to protect people and their property, and not used to enforce differences of opinion, (consensual crimes).

      I would also like to believe, (but don’t), in Ayn Rands world, where the free market will sort everything out if left unregulated. What I do believe is that the problem isn’t so much with greed, as it is with our, (societies), overall acceptance, admiration, and rewards for greed and profit at any cost.

      When we stop worshiping and rewarding greed and profit, and start rewarding honesty, integrity, and decency of people we do business with, things might change, but I’m not holding my breath. Personally, I try to make sure everyone I do business with wins… it’s not much, and sounds corny, but it’s a start.

      • Wrong says:

        Indeed. When it comes to social issues, I’d tend towards the Libertarian end of the spectrum: I’d suspect many would. I don’t personally agree with Ayn Rand, and I don’t believe that a free market is necessarily going to fix everything. But whether I agree or not, taking an argument and at least being open minded about it, letting it stand on it’s own merits, rather than my opinion, and criticising only the flaws, rather than the person, is the skeptical way to behave. I don’t believe there’s any one absolutely optimal philosophy, and I don’t see why saying that politics is not a matter that can be discussed skeptically.

    • I can tell you why I (kinda) hate Libertarianism (and Ayn Rand’s ‘Objectivism’)

      I used to be a True Believer in those ‘philosophies’ – they were so attractive and beguiling. They claim that they are founded on the most pure and noble thing: freedom. Freedom to create, freedom to succeed and freedom to fail. (As a researcher, I can tell you that failure is one of the most under-rated things. No failure is a Failure if you can learn from it).

      I read Atlas Shrugged, The Fountainhead, We the Living, and other of Rand’s works. It made so much sense to me … when I was a young man.

      Now, I’m an old(er) man and I feel like I was conned – I feel like the Libertarian movement and the Objectivists are no better than televangelists who flatter people into donating their time and money for their own selfish purposes (there’s something addictive about being at the head of a large group of people. It is very ego satisfying to stand in front of cheering crowds).

      Just as the most crooked Televangelist utters some kernels of truth (and as a broken clock is right twice a day), the Libertarians and Objectivists teach ‘truth’. But it comes bundled with too many things which are unacceptable. When you boil it down either these groups aren’t really advocating anything different (maybe sliding boundaries of acceptable behavior slightly t one side) or they are advocating abandoning our humanity.

      Total Moral Freedom = Law of the Jungle.
      Is the goal of humanity really to return to animalistic behavior? Giving in to appetites, desires and urges is what animals do. Whether those apetites are making money, building sky scrapers, having sex, or putting others under our control – one reason we have rules and laws is to balance conflicting freedoms. As the old saying goes “You right to swing your fist ends at the tip of my nose.” As humanity becomes increasingly urbanized fist-swinging room decreases – noses get too close. Sure, *if everyone could exercise self-control we wouldn’t need so many damn laws* but not everyone can and one jerk spoils it for everyone. Even if only one out of a million people want to start swinging fists on NYC subway cars, you’ve got a dozen of them doing that every day.
      Until the Libertarians figure out how to give freedom to those who can handle it while restricting the fist-swinging jerks we need to have laws. And every time a jerk gets creative, we need a new law. It is sad but I’d rather keep my nose from getting broken than swing my fists with careless abandon.

      The Double Standard of Physical Strength vs. Mental or Economic Strength.
      This is the one that always gets me. Libertarians and Objectivists look down on armed robbery and rape(as do most of us), but don’t seem to mind manipulating people into compromising situations through economic or intellectual superiority. If you write a confusing contract which conceals the fact that you are screwing the other party you are seen as a ‘tough’ businessman – but you punch-out one person and you are a thug. Why?
      It seems to me if taking advantage of a weakness is wrong it shouldn’t matter whether that weakness is physical, psychological, economic, or whatever.

      This double standard is even more clear when it comes to coitus: seducing, coercing or manipulating an unwilling sex partner is OK (or even admirable according to some men’s magazines and books) but obtaining sex through physical or chemical means is frowned upon. Note: if your sexual target is drunk enough to be unable to give a coherent and forceful ‘No’ – that is a chemical grey area.

      The thing is, Libertarian and Objectivist supports usually make the case that their views are completey rational. The fact is the Libertarian and Objectivist views are at least as naive as fundamentalist Christians. They are based in denying reality (and all of them are based in certain views of right, wrong and morality).

      I feel like I fell for a cult… I (kinda) hate them because I’m really mad at myself for being so naive.

      • Oops.

        I should have explicitly stated:

        If you say that the L & O movements aren’t advocating anything as extreme as ‘The Law of the Jungle’, then they are basically saying “We just want a bit more of this type of freedom than that other guy does.”

        Then it isn’t so much a separate philosophy as much as a matter of taste: I like these freedoms, which freedoms do you like?

      • Phea says:

        I’m not sure how you came to your conclusions, but I pretty much agree with you. I’m 60, and had a kid before I turned 18, which kept me out of the draft. Having a family to support, and not a lot of formal education, I found selling encyclopedias door to door was a pretty neat, (legal), way to make money. I was pretty good too, but found my real talent was hiring and training gullible youngsters to be, (unknowing, for they believed the “pitch”), con men/women.

        I became a skeptic at an age younger than most, as I fully realized people see what they want to see, hear what they want to hear, and for the most part, are very easy to manipulate, (and if it sounds too good to be true, it’s ALWAYS a lie).

        I loved Ayn Rand, and saw myself as a hammer, rather than a nail. It took me awhile to finally realize success, (for me), wasn’t about accumulating money. Today my personal success goal is to populate my personal world with people I can trust alone in my house. I’m happy to report, I’m well on the way to achieving it!

        Keep being skeptical Bad Boy… it will serve you well.

      • Markx says:

        Hey Phea. The best marketing guy I know started out as an encyclopaedia salesman. He often says, “If you think this is hard, try selling encyclopaedia door to door!”

        And ain’t marketing grand! Though I like to think the youngsters are not so much “gullible” as WANTING a marketing story they can tell as if it is 100% true. Give your marketing guys a plausible story to differentiate the product, and they take off like a brush fire!

      • Phea says:

        A great pitch has to have two elements carefully woven together, enthusiasm and sincerity. Having a kid believing the pitch, (at first, anyway), is the easiest, quickest way to get him out there producing. After a couple weeks, their “bubble” always popped, which then led them to have to make a decision. Do I keep up the legal con and rake in easy money, or do I have to quit because I don’t want to make a living lying to people. Funny thing is, almost without exception, the ones who chose the first option, were usually making a lot of sales. The ones who took the moral high road, not so much.

      • tmac57 says:

        “Do I keep up the legal con and rake in easy money, or do I have to quit because I don’t want to make a living lying to people. ”
        That is the reason that my wife gave up being a mortgage loan officer.She could not justify upsaling people into borrowing more than they could reasonably afford,and steered them away from loans that had higher commissions,but were worse deals for the customers.If only the whole industry had worked that way,we probably would not even have this topic to comment on.

      • Markx says:

        Bad Boy – that spiel above impresses me. (Probably because I agree with it 100%)

        But mainly because your strength analogy is perfect.

        That is what would happen in a “no rules capitalist system”. Some are smarter, harder working, sneakier, trickier, better at manipulating people. So they will succeed in business, and get bigger and bigger. As they get bigger and bigger, they have more marketing power, better access to cheap finance, and swallow up the little family start-ups. The libertarians will say “fair enough, that is how it is supposed to work”.

        Then in fifty years they will find a handful of people controlling everything, pretty much like today.

        Perhaps their fault is, they ALL picture themselves as being part of that handful.

      • Markx says:

        Correction for my post above – I should say “almost like today” ….because what we have had to date is not too bad, it just seems to keep drifting steadily in the wrong direction….

      • Miles says:

        I think your copy of Atlas Shrugged was broken. Nowhere in any writing of Ayn Rand or any Libertarian in history, has any Libertarian advocated no having any laws.

        You have basically just spent 11 paragraphs confusing Libertarians with Anarchists. No wonder you disagree!

  24. Somite says:

    The truth is that more regulation, not less would have prevented the collapse. Inspection of rating agencies for accountability and requiring sufficient leverage would have prevented anything. What is astounding is that no meaningful regulation has been enacted to prevent another collapse.

  25. d brown says:

    And reality has a well-known liberal bias.” – Stephen Colbert – 2006
    The game was rigged in advance. but much of it was still illegal OCCUPY is not looking as pro as the Teabaggers. Maybe its because the Teabagger movement was pre-fabbed over time by economic royalists and their PR people, complete with web pages. When Rick the Fox guy, called out for someone to do something, the web pages opened with the right kind of tall tales for all the right kinds of people. And then the Teabaggers gave money to the rich? Oh say, for lies you can buy voice stress analyzers. Larry Flinn had a PI run Nixon’s Watergate speech in one. Flinn printed the speech with the graft along said the words. It sure looked like it worked. After that Pols only talked about mom and the flag. The lies were from spokesmen.

  26. MikeB says:

    “The number of Americans receiving food stamps reached a record 45.8 million in August, the government said. The figure was 1.1 percent higher than the previous month and 8.1 percent more than a year earlier, the U.S. Department of Agriculture said today in a report on its website…”

    Shermer has written one good thing: Why People Believe Weird Things.

    Libertarianism is a Weird Thing.

  27. americanbychoice says:

    How come no one has tackled Shermer’s analogy yet? His statement,
    “This is like standing outside the Staples Center in Los Angeles to protest that Kobe Bryant and the Lakers are too greedy because they are constantly trying to win a championship and make a ton of money in the process.”
    NO, it is NOT like that! It is like Kobe not only has all the referees in his pocket and everytime there is a questionable call, it goes in his favor, but also that he has the NCAA in his pocket as well. If there is doubt about a call, the referees come to Kobe to ask if he is in favor of the outcome they plan to release. If not, they change the outcome. The opposing team, the 99%ers, can make no baskets because the rules of the game are set by Kobe and his Lakers; the 99%ers can never win. And the 99%ers are required to play the game. There is no way they can say, “I am not playing the game.” It is the only game in town. Stop playing the game and your “credit rating” is in the toilet, you get kicked out of your abode, you have no “health insurance” and no “retirement”. In short,IT IS NOT A LEVEL PLAYING FIELD!!!
    Libertarianism (big L or little l) requires NO such interference!
    Given this state of affairs, Mr. Shermer, what you are saying is BS and your snarkiness is unappreciated by this follower of Skepticblog.

    • +1
      Also, Kobe Bryant (and the NBA) don’t force everyone to play on that unlevel playing field.

      (If you want to choose ‘not to play’ the American game how can you do that? How can
      you live off the land when all land in America is part of that game … in fact, the land game
      was a huge contributor to our current woes)

    • Yeah, both his sports analogies were stupid.

    • Markx says:

      Yep, americanbychoice, your sports analogy is far more accurate. In fact it sums it up EXACTLY.

      But your conclusion, (if I correctly interpret your brand of libertarianism) is that the referee leaves the field, and the rule making body makes no rules.

      The game will not regulate itself. We will still need them, but they need to be 100% balanced.

      • libertarian_adi says:


        your retarded analogies expose your poor grasp of market dynamics so easily. If I were that stupid I would just keep all my views to myself. In the word of Lincoln: “Better to remain silent and be thought a fool than to speak out and remove all doubt.”

        There are many rules in the free market. They are set by the consumers, enforced by competition, and the excesses of the market are taken care of by tort law.

      • Beelzebud says:

        So in other words, if enough people die from buying your faulty product, eventually you’ll be shut down from a class action law suit.

      • Markx says:

        Rules “enforced by competition”

        Adi that is where it all comes unstuck:

        Great in theory,

        But some are smarter, faster, stronger, trickier, more manipulative, harder working etc etc . Then eventually, inevitably, size (business size) holds sway. Little guys can’t compete. Even if they do find a unique approach, the big guy moves in and copies it, or simply buys them out.

        Then, eventually, inevitably, one big company will run everything.

        Those who are the strongest proponents of laissez-faire capitalism are well aware of this, for it will be they who benefit.

  28. John says:

    Why “should” Bill Gates and other rich people like him give away their money? Where is that written? Since when do they owe us anything? They came up with ideas that made them money, why should they give it away to help “society?” Since when does “society’s needs” trump individual rights?

    What I find funny about people who quote that the wealthy have seen their income increase more than anyone else. Is income the only way to measure someone’s success or how well off they are? Do we not have other means of measurement?

    It’s completely ignorant to not take into account changes in an economy such as technology scientific advancements and improvement in healthcare.

    Is it not interesting that these protesters are rallying against capitalism yet all of them have a form of a smartphone? It wasn’t that long ago that a bad joint led to an amputation. Now you can get replacement joints to the point that most recipients wished they had gotten them sooner. All of these things have improved our lives and made them better.

    I am an immigrant and I am WAY better off than my parents were when we arrive in 1976. And that was the reason they came to the U.S. to give me and my sister a better life. It was a great decision because we are both better off.

    The poor are even better off than they were 20 years ago. If you think our poor are not better off then you need to live in a poor neighborhood for a week and then travel to Lima, Peru and live in a poor neighborhood there. If you’re observant you’ll come back with a different perspective.

    The one thing that irks me about all this talk is that everyone is failing to see that despite the income gap we all still have the ability to move up and down the wage scale. You can become rich in the U.S. or you can fail and become poor.

    The last time I checked the U.S. is not India where you are stuck in a class based on a government decision and no subsequent generation of your family will ever get out of it. I mean really, if you had a chance to invent something that will make you wealthy you’re not going to do it? Please.

    In the end all of this has happened because of government intervention in our economy. Government action creates special interests. That’s just nature. If the government weren’t open to taking bribes…I mean campaign donations than they wouldn’t pass any laws that favor one group over another. You can cry all you want about greedy and evil corporations all you want, but the last time I read the Constitution I couldn’t find anything that said that corporations can create laws.

    If you think I’m wrong, than please explain why the government passed tariffs on imported soaps and cleansers at the behest of the U.S. companies that make them. It sounds like a good thing, except you’ll have to ask all those companies who imported those products if it was a good idea. A lot of them ended up going out of business because the increased tariff increased the cost of their products, which artificially increasing their prices to the point that they weren’t competitive any more.

    Just food for thought.

    • tmac57 says:

      “…the last time I read the Constitution I couldn’t find anything that said that corporations can create laws. ”

      “…the government passed tariffs on imported soaps and cleansers at the behest of the U.S. companies that make them.”

      Think about the contradiction contained in these two sentences.

    • Ted Fontenot says:

      “Since when does “society’s needs” trump individual rights?”

      Since, like, always, man. Wow. Groovy.

    • Mark says:

      Hmmm South America, corporations, US government collusion with big US business…CIA, overthrowing legitimate governments, etc

      Can of “Free Market” worms right there!

      Never, in the history of this good earth, were big business and big government so inextricably entwined (until Halliburton decided to invade Iraq, that is).

      Wiki …

      For those who don’t wish to go there, a couple of extracts:

      “…In 1954, the democratically elected Guatemalan government of Colonel Jacobo Arbenz Guzmán was toppled by U.S.- backed forces led by Colonel Carlos Castillo Armas[9] who invaded from Honduras. Assigned by the Eisenhower administration, this military opposition was armed, trained and organized by the U.S. Central Intelligence Agency[1
      One of the company’s primary tactics for maintaining market dominance was to control the distribution of ….lands. …(claiming) that hurricanes, blight .. natural threats required them to hold extra land or reserve land. …(Thus) UFCO was able to prevent the government from distributing banana lands to peasants who wanted a share of the banana trade. …it allowed vast tracts of land under its ownership to remain uncultivated and… discouraged .. government(s) from building highways, which would lessen (its) transportation monopoly of (UFCO’s) railroads …… the Arbenz government’s land reform included the expropriation of 40% of UFCO land…” (to redistribute to peasant farmers …

      (communism!! – call the CIA!!)

    • Bill Gates once said that he would not have been able to have generated his wealth without all sorts of government supported infra-structure… which was built by the generations who came before. He said that each generation owes it to the nest generation to invest in the infrastructure so they will have opportunities to invent and create.

      Bill’s Dad strongly supported income tax in his home state (Washington) because he felt that the economically strong should shoulder more burden than the economically weak.

      So in answer to the (paraphrased) question “Who says Bill Gates should pay more taxes?”
      “Bill and his Dad do!”

  29. Supernova says:

    I’m with you, Michael, on everything… except point #4. It sounds like a case of special pleading.

    Yes, the gap between the rich and poor is too large. Plato said the rich should make no more than 6x what the poor make, and JP Morgan said the rich should make no more than 20x… I have no idea where they picked these figures from, or what logic led them to these conclusions.

    What you’re saying is that we shouldn’t draw a line because we don’t know where to draw it. Do you really believe that nobody has the expertise to draw such a line, like Plato and JP Morgan attempted to? I’m sure someone in this country understands economics enough to draw such a line, and just because you and I aren’t the ones doesn’t mean they don’t exist.

    It’s nice what the Bill and Melinda Gates foundation does for the needy, but I don’t see why that would make them an exception. It’s like making an exception for the thievery of Robin Hood because he gives to the poor.

    • libertarian_adi says:

      “Do you really believe that nobody has the expertise to draw such a line, like Plato and JP Morgan attempted to? I’m sure someone in this country understands economics enough to draw such a line, and just because you and I aren’t the ones doesn’t mean they don’t exist.”

      You are saying someone — presumably a central planner — should set *wage ceilings* such that the rich only get incomes which are collectively no more than a certain multiple of what the poor earn.

      Question: What if the market wage for rich people are higher than the wage ceiling?

      No one who has even received a C- in an elementary microeconomics can possibly support the idiotic policy you have put forward.

      • Supernova says:

        Calling an argument idiotic doesn’t make it idiotic. Suggesting that someone with a bad grade in economics has a better idea of economics is a presentation of evidence. These are arguments from ridicule, which can be made about literally any idea… which is why it’s a logical fallacy. Perhaps you shouldn’t insult an idea just because you disagree with it, especially if you don’t want your own ideas insulted.

        You assume that I’m suggesting a wage ceiling, when I could very well be discussing an increase in pay for the workers at a company that keeps the gap closed (after all, a gap can be closed from the top or bottom)… in other words, instead of a wage ceiling we could have a wage floor.

      • tmac57 says:

        In an extremely tight labor market,business can coerce their workers to work for less than their labor is worth to them,because they have very little choice.But the people at the top who manage to lower those ‘costs’ get rewarded with bigger pay and bonuses,which then becomes an incentive to lower wages further,fueling a race to the bottom.
        As long as the top tier are still very comfortable,their market forces consist of extracting as much from their workforce as they can,while paying them as little as possible.Add on top of that,the push to dismantle the social safety net and labor unions(freeloaders to some) then labor ends up having no power,or choice but to accept the scraps that the ruling class deigns to toss them.This was the situation in the past that led to the changes in society that finally resulted in altering that power imbalance,and the growth of the middle class improved standards of living all around,including the rich.
        But now the rich want to consolidate their power,both financially and politically,so that they have unlimited control.I think that they may have overplayed their hand.People are starting to wake up and see the handwriting on the wall if we continue down this path.

  30. Markx says:

    John, these are interesting statements:

    ” Why “should” Bill Gates and other rich people like him give away their money? … Since when do they owe us anything? ….. Is income the only way to measure someone’s success or how well off they are? ”

    These thoughts/concepts have become almost ingrained beliefs in part of our society, beliefs foisted upon us by the very people who benefit the most from us supporting their right to pillage until our last breath..

    In that way it is a bit like the old Catholic Church structure, with the devout believers contributing what they could so the Popes could live in luxury, sin and debauchery in Rome.

    Now having said that, I don’t really want to place Mr Gates in such despicable company (as ancient popes, and modern purveyor of toxic assets), he has done mighty things within the bounds of this (rather wonderful) capitalist system.

    But, enough is enough, and I think we perhaps just need a few more rules, and consequences, to level the field a little.

    And we should not be swayed by those who seek to convince us that it is important for our freedom that the “top end” needs unlimited access to even more than they now have.

    Markx … because marks seem to be multiplying….

  31. John Le Marquand says:

    According to William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s where he put 1,000 people in jail says there is lots fraud that could be prosecuted. He says this crisis 70 times worst than the saving & loan crisis. Check out these video clips

  32. libertarian_adi says:

    There is an embarrassing lack of free thinking among left-wing atheists when it comes to economics. If you don’t understand the economic arguments against minimum wage laws, rent control laws, price gouging laws, and child labor laws, then you certainly won’t understand how bubbles are formed.

    • tmac57 says:

      Yeah,where do all those things lead to except high standards of living in a civilized society? Overrated…right?

    • Phea says:

      I read the article… and have a couple of issues with the perceived, “correct” answers.

      Question 1, about housing regulations. What kind of regulations? If you’re referring to inspections that are required as they’re being built, yes, they do make housing more expensive, but the alternative might be buying a home from a slipshod builder that had no insulation behind the sheet-rock, and burned down because of faulty wiring, (kind of expensive, if you ask me).

      Question 2. Again, yes, but I think, overall, it might get a bit more expensive for someone to engage the services of a doctor or lawyer who’s only qualification in a business card he printed.

      Question 3. Overall standard of living? That’s not a black and white question at all. One factor is how many single income families were there thirty years ago, that had the same standard of living as a two income family of today?

      Does the FDA cause food prices to be higher… yes, thankfully, (read The Jungle, if you don’t much like the idea of the government meddling with our food suppliers). Is it necessary to regulate our banks and financial institutions? Na… let’s stick to Greenspan’s philosophy, even though he admitted his world view was basically flawed, and that things didn’t quite work out the way he believed they would. Child labor laws? Please, let’s not even go there, or if we do, let’s also consider putting slavery back on the table. Just think about much cheaper things could be with slave labor!

      You really should study history a bit. Our systems are far from perfect, but we’ve come a long way in the few thousand years we’ve been building civilization. I for one, don’t yearn for the unregulated, “good old days”.

      • Markx says:

        Phea, Well said. 100% correct in every point.

        We NEED rules and regulations (many of them)-

        BUT not just not ones which favour the few, or a system (the one we increasingly have) which is self perpetuating in its generation of laws and structures to favour the few (because they are almost exclusively the ones making the laws and creating the structures).

    • d brown says:

      The great tragedy of Science – the slaying of a beautiful hypothesis by an ugly fact. T.H. Huxley (1825-1895)

    • Markx says:

      Geez Adi – I read your article – it says nothing…just a survey with some crackpot professor’s “answers”.

      News flash mate. Just because its written down, doesn’t necessarily make it the truth.

      Better stick to the Bible – at least you know THAT is true, (right?).

  33. Kelly Marie says:

    I thought the post was very thoughtful. But I don’t think the Occupy Wallstreeters are just about those who work on Wall Street. Sure they shouldn’t have been bailed out, but I get more of a feel that it is about general discontent. There is no one problem, this just happens to be where it boiled over. I, for one, am more concerned about my growing student loan debt, for the college degree I’m told I have to have, for the job that won’t be there.

  34. Bryan says:

    I agree for the most part with Dr. Shermer. My interest in economics has definitely been piqued in the last few years, so most of what I know is from consuming popular media on the subject. One of the biggest things to go wrong that allowed this to happen seems to be the misalignment of incentives. In other words, as Michael Lewis talks about in his book, investment banking went from traders trying to make money for themselves and their clients to a fee-for-service business. And if it’s a bad deal, no big deal, because you still made 10M$ from your 1% fee. A lot of wasn’t strictly illegal but it was unethical. Some of it probably was actual fraud, especially some of the mortgage back securities deals. Let’s hope some justice is carried out, the AGs of New York and Delaware are looking into it.

    As for the protests, just like the pot plume, they’re kind of like a college frat party with free beer for activists of all stripes. That’s not to say it hasn’t amounted to anything. I think the most demonstrable difference is changing the “national conversation” in cable news from about the debt to income inequality. And ultra-conservatives are even making vague statements about being concerned about the needs of the 99%. There are lots of other issues that are brought up but the income inequality seems to be the main theme. Who knows if they’ll be able to push for more change.

    Dylan Ratigan has done some good reporting on the problems in the financial world that got us here. Dr. Shermer has been on his show a few times I know. Although so has Deepak Chopra (grrrr!). His main stories have been basically Dr. Shermer’s point #5. Government regulation and lawmaking has been captured by industry interests and they are making short-term focused decisions that are probably hurting the country in the long run.

  35. The idea that regulation causes bubbles is even more moronic. Were this Facebook or Google Plus, I’d be blocking Adi by now.

    • Beelzebud says:

      I would have blocked Shermer a long time ago. At least he says there should be regulation now. That’s a small step up.

    • libertarian_adi says:

      If I were the moderator of this blog, I would have banned a moronic imbeciles like you already.

    • Canman says:

      While the housing bubble might not have been caused by regulation, it still looks to me like the government is at fault. There are two giant quazi govt entities (Freddy and Fannie) that back a huge chunk of all mortgages, instead of the creditworthiness of the buyers.

      • B says:

        Yeah, because banks selling mortgages to people who can’t afford them, then selling them off as securities ranked as “safe” by regulators, and then having it all go to shit – that would all be solved by the free market. Nevermind the fact that banks have no financial incentive to find buyers who can pay their loans since they’re just going to sell them off anyway, and the regulators have no financial incentive to have their numbers be accurate (nevermind the fact that the bank employees were sometimes using entirely fabricated numbers on the loan applications – effectively defrauding the regulators, anyway). Nevermind that some companies realized that there was going to be a crash, so they helped create loans which were designed to fail, then they took out big insurance premiums on those same loans so that when they collapsed, they actually *made money*.

        I’m always amazed by how libertarians think the free market is going to solve everything. Yet, they think there should be laws against fraud (but why should there be laws against fraud – the free market will sort that out, too, right? Suggesting that companies *might* get involved in fraud unless there are laws against it, is suggesting libertarian blasphemy: i.e. companies aren’t always going to do the right thing, and the free market is insufficiently powerful to keep them in line.)

      • Canman says:

        The way the free market is supposed to solve bad loaning, is by putting the bad loaners out of business. Whenever there is govt interferrence it means extra overhead and complexity. Too much govt means profitability depends more on exploiting govt policies than doing basic business like making profitable loans.

        I’m not a free market absolutist, but I think a free market with minimalist rules is a better ideal to shoot for than top down rule from fatally conceited, enlightened experts.

  36. On further thought, I have to admit that the invisible hand of the free market is a quite compelling argument – I mean enlightened self-interest is a great motivator to optimize an economy. It is so good, I propose we extend it to transportation.

    Let us remove – or at least drastically reduce – all traffic regulations. Enlightened self-preservation ought to keep everyone acting in a safe and rational manner! In fact, if a driver is not deterred from some unsafe action by the risk of death how much effect will the threat of a traffic ticket have?

    Besides, that studies show that drivers actually drive through uncontrolled intersections *safer* and more *aware* than through ones with signs or lights (which tell the driver who has the right of way). Also, pedestrians are less likely to be hit while insisting upon their (legal) right of way if they are in a cross-walk which is *not painted* than in a painted cross-walk. They refuse to give up the right of way when the paint tells them it is theirs – but they insist upon their personal safety when there’s no paint. (google these – I’m not making them up).

    If laissez-faire works for our economy, let’s try it on our roads! I’m sure we’ll all be happier and get there as fast as we can (safely) go!

    • libertarian_adi says:

      “Let us remove – or at least drastically reduce – all traffic regulations.”

      We SHOULD remove all government mandated monopolistic traffic rules. Having different traffic systems engineered by private firms, which also happen to own the roads, competing with each other is better than traffic systems engineered by a state monopoly. Also, self-regulating means achieving *equilibrium*. In economics, general equilibrium theory explains clearly how free markets achieve the most efficient outcomes.

      • Phea says:

        State monopolies = bad. How simplistic, how naive, how gullible. I worked for AT&T during the time their monopoly was being broken up. Why were they a regulated monopoly in the first place? Well, for one thing, phone service, (before the breakup), was entirely “strung wire” technology. Just exactly how many telephone poles and wires would be too many in your neighborhood? Once satellite and microwave eliminated the need for wires, the monopoly went bye bye, as it should have.

        There are NO simple solutions to complex problems! There are only simple solutions to simple problems, which, for the most part are already in place.

        I love the example of crossroads back when automobiles first started arriving on the scene. Problem: We got these damn horseless carriages crashing into each other where roads intersect… solution: hmmm, maybe a big sign that says “STOP” would work… Simple problem, simple solution.

        To naively believe there are simple solutions to complex problems, only proves you have no grasp of the complexity of the problem.

      • libertarian_adi says:

        “State monopolies = bad. How simplistic, how naive, how gullible.”

        Funny, you babble on about simple solutions to complex problems but have yourself failed to explain *why* you think state monopolies are better and *how* you arrived at that conclusion. By the way, AT&T is a private corporation. Your example fails to demonstrate anything other than your inability to focus on an argument.

        Failed state monopolies:

        – US Postal Service before UPS and FedEx.
        – AMTRAK, which runs at $32 loss per passenger to the average tax payer.
        – State-owned industries in Maoist China
        – State-owned industries in Russia prior to the collapse in 1991

        State monopolies rely on forced taxation and don’t have to worry about competition. Hence there is no incentive to innovate or even serve the tax payers.

        Private firms can’t pick your pocket without your consent and, in competitive free markets, will find it in their self-interest to serve their customers’ wants (or be out of business) and will innovate new technologies to achieve that purpose. All transactions in free markets are voluntary and wouldn’t take place unless both parties benefit from them.

        So this is why I think private firms and voluntary transactions in free markets are better than state monopolies which rely on forced taxation.

      • Phea says:

        So, your idea of an “ideal” society would have us all paying for private fire departments and police services, private schools, roads, bridges and everything else we collectively use, and sometimes need? I get it. I disagree, but I get it.

      • Beelzebud says:

        You live in a fantasy world. You’re are honestly arguing in favor of a private road system, all with their own set of rules?

        Fantasy world. What you preach isn’t much different from what the communists preached, you just take it in the opposite direction. Libertarian Eutopia.

        Good luck. It’s going to be a long life.

  37. Markx says:

    Here is what is going wrong – from today’s news:

    MF Global continued to pile on large amounts of debt. On the eve of its collapse, it had about $US35 of debt for each $US1 of capital it held. By contrast, Goldman Sachs’s leverage ratio is $US13.50 for every $US1.

    Leveraged like this, they are certain to make a fortune, or to collapse in a steaming heap.

    Why do us ordinary citizens have to operate on having more assets than borrowings, but these guys……..???!

  38. d brown says:

    Look up what Smith really said about “the invisible hand.” It’s nothing like the R/W fanboys say he was talking about. And not Enlightenment Deism. As I remember it was about import tariffs. People are thinking too much without facts. Free thinking, left-wing atheists can see what happens with the kind of economics you get minimum wage laws, rent control laws, price gouging laws, and child labor laws. We know they have nothing to do with bubbles. Most bubbles were in the good old days back to the past Pols what to go back to. The free market is as dead as a dodo. The same people, not just the same kind of people, sit on too many boards of Directors.

    • libertarian_adi says:

      “We know they have nothing to do with bubbles.”

      Good guess. And thanks for demonstrating you can’t read properly.

    • libertarian_adi says:

      You need to look at what Adam Smith REALLY said about free markets.

      “By directing that industry in such a manner as its produce may be of greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.”

      “It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own [self] interest”'s ideas rigor.

      As rational agents pursuing our own self-interests in a free market, we will promote the common good much more effectually than when we really intend to promote it. That’s what Smith said.

      In modern day neoclassical economics, general equilibrium theory gives Smithian ideas rigor.

      • tmac57 says:

        What does Smith say about irrational agents pursuing their own self interests? (See stock market crashes and runs on banks)

      • libertarian_adi says:

        They aren’t irrational. They are still rational. One of the problems economists face is that their field has many terms which seem self-evident for non-economists. Terms like “efficiency,” “rational” and “competition” have completely different meanings in economics.

        “Rational” in economics means people have goals and will act accordingly to accomplish them. In the context of a bank run, the goal is to retrieve your deposits before the bank fails. Each rational agent pursuing his own self-interest tries to retrieve his deposit and this leads to a fastening of the bank fail: a market failure.

        Sure, there are numerous instances in which individual rationality doesn’t lead to group rationality. And these market failures are the norm in the political market. Welcome to Public Choice theory.

      • tmac57 says:

        I think that you have proved my point.If an individual makes a self interested ‘rational’ decision that if repeated en masse leads to an irrational market outcome,then free markets are not inherently rational,as libertarians always like to insist.

  39. VD says:

    Mr. Shermer, while I enjoyed your book, “The Mind of the Market”, this post is astonishingly off-target.

    Many, many crimes were committed by many Wall Street corporations and individuals. You asked: “What, exactly, did these Wall Street people do that was so wrong?”

    The short and easily proven answer is fraud, theft, forgery, money laundering, and tax evasion, all performed on a scale that is measured in the billions of dollars, possibly even trillions. This is not a secret nor is it even remotely debatable.

    There is nothing libertarian or capitalist about corporatism. Wall Street now has far more in common with pre-capitalist royal mercantilism than it does with capitalism. Its institutions are quite literally beyond the law.

  40. Nyar says:

    I have mixed feelings about OWS.

    I know that the protesters are mostly just entitled, spoiled, hipsters who think that capitalism is like totes harshing their mellow bruh and they are like totes against it ya know, like that guy on the T-shirt (Che) and whatever.

    But on the other hand, we do need a revolution in order to effectively clean house in Washington D.C. and maybe, just maybe, these kids can get the ball rolling.

    • Somite says:

      How do you “know” what the protesters are?

      • Nyar says:

        Actually I don’t know what they are, I was just having a little fun making them out as hipsters, but it does appear that at least some of them are ACORN ringers.

      • Somite says:

        ACORN still! Man you have got to stop listening to Limbaugh.

      • Nyar says:

        Now they call themselves New York Communities for Change (NYCC). I stopped listening to Limbaugh in the…uh, early 90’s. Dang I’m getting old.

      • tmac57 says:

        Guess that shit takes a while to detox from your system eh ;)

      • ThatSkepticGuy says:

        “ACORN still! Man you have got to stop listening to Limbaugh.”

        Why don’t you engage him point-by-point, or try to demonstrate how NYCC/ACORN isn’t really propping up this movement all evidence ot the contrary instead of hiding beside the same tired old circumstantial ad hominem?

      • libertarian_adi says:

        “How do you “know” what the protesters are?”

        Here’s Douglas Schoen, a Clinton administration pollster, on the Occunut crowd. They are retarded left-wing douchebags, it turns out.

      • Beelzebud says:

        I find it amusing that you brand PBS a “state-propaganda machine”, but yet you hold up the opinion page of the Wall Street Journal as a factual source about who the people are that are protesting Wall Street.

      • ThatSkepticGuy says:

        First of all, debate the evidence, not the source. Stop hiding behind circumstantial ad hominem because you can’t argue back.

        Secondly, these are the findings of a Democrat party pollster who has also done work for the Obama administration, the WSJ is just reporting it.

  41. bubbles says:

    Mr. Shermer,

    Karl Denninger just proved you don’t know what you’re talking about regarding OWS:

    • Miles says:

      I read the link you provided. I was not impressed. Whoever Karl Denninger is, he provides nothing but straw-man arguments. Michael was specifically talking about breaking laws related to the economic meltdown, chiefly, over-lending and making bad bets. None of the points Denninger lists has anything to do with over-leveraging or making loans that have been made. He lists things like laundering money, taking bribes, etc. All of which have absolutely nothing to do with the economic meltdown.

      Many of you have been referencing Karl’s post here. I think I have a good idea of what is happening here. Let me take a stab.

      The majority of readers here are liberal. Most of you believe that large corporations are either inherently evil, too greedy (whatever that means), or simply incompetent, and that government needs to boss them around in order to keep large corporations from exploiting the poor helpless masses.

      When you start reading a post that disagrees with this world view, it already makes you uncomfortable. I don’t think it is unfair to say that it is common for many liberals to have a passionate dislike for the “super-rich” or for large corporations. An article that says large corporations might not be the root of the problem, activates something in your brain, and you are already upset from the beginning, as can be seen in so many hate-filled responses to this post.

      By the time you get to a phrase that says “they have broken no laws”, you are already so upset with Michael for defending evil, greedy corporations, that it comes naturally for you to take that phrase completely out of context and interpret it to mean “they have never broken any laws period”, instead of interpreting it within the context of the financial meltdown: over-lending and taking on too much risk.

      Hence, many of you respond by pointing out laws that large financial institutions have broken, but which have nothing to do with over-lending or taking on too much risk. You end up listing really weird things like “money laundering”, as if that was the cause of the financial crisis.

      I would be willing to bet that a number of your were so upset to be reading something that doesn’t agree with your worldview that you didn’t even finish reading the post. It’s obvious that many of you at didn’t read it closely enough to understand it.

      If you were Michael, would you bother responding to all this nonsense?

  42. jerry says:

    Shermer, you is ignorant.

    “They haven’t broken any laws?” Lol! They’ve admitted that they broke laws! Under oath, even!

    You are a dope, Shermer. Your stupidity wouldn’t be dangerous except lots of people think you’re smart so lots of people believe your dopey bullcrap.

    “They haven’t broken any laws”.

    “They haven’t broken any laws”.

    “They haven’t broken any laws”.

    “They haven’t broken any laws”.

    Oh my freaking god but you are a stupid, stupid, stupid man

  43. Phea says:

    As much as I respect and admire Dr. Shermer’s contribution to skepticism as a whole, it sure would be nice if he could find the time to get down here with the “ignorant masses”, get his hands dirty, and actually defend his political/economic opinions…

    • libertarian_adi says:

      Here’s Milton Friedman on libertarianism. Michael Shermer would agree with him. I wonder if you can defend your views after watching it.

      • tmac57 says:

        UH…adi,did you happen to notice what TV network ran that show? How about PBS, that bastion of ‘state sponsored propaganda’.
        From Wikipedia:

        “Uncommon Knowledge was a weekly 30-minute current affairs show hosted by Peter Robinson and co-produced and presented by San Jose, California, PBS member station KTEH from 1997 to 2005. It was distributed first by American Public Television and later by PBS to public television stations throughout the United States and internationally by NPR Worldwide.”

      • libertarian_adi says:

        If it was done by state-propaganda machine, PBS, then the interview was even more successful. The point of an interview was include tough questions. I would rather have a statist asking tough questions to a libertarian than a libertarian himself.

      • tmac57 says:

        Oh,and PBS also ran Firing Line with conservative William F. Buckley Jr. for 28 (1971-1999)out of it’s 33 year run. I just bet that drove the ‘statist propaganda machine’ wild.Right?

      • Max says:

        The host, Peter Robinson, is a former speechwriter for Reagan, and, like Milton Friedman, a research fellow at the Hoover Institution.

        Milton Friedman was also interviewed by Charlie Rose in 2005. Watch Friedman argue how well the U.S. economy is going, and how the record trade deficit is not a problem.

      • tmac57 says:

        Well,then Robinson must be part of the ‘statist’ wing of the Hoover Institute ( a little known branch).

  44. tmac57 says:

    Regarding why prosecutors don’t go after Wall Street,listen to this podcast from NPR’s Fresh Air:

    Too big to prosecute?
    Too complicate to prosecute?
    Too connected to prosecute?
    Too understaffed to prosecute?
    Too underfunded to prosecute?
    Innocent of wrong doing?…You be the judge.

    • ThatSkepticGuy says:

      “Too big to prosecute?
      Too complicate to prosecute?
      Too connected to prosecute?
      Too understaffed to prosecute?
      Too underfunded to prosecute?
      Innocent of wrong doing?…”

      This from someone who want an unquestionable centralized government to dole out for everybody what is and isn’t best.

  45. Lurker says:

    Michael, at least one right wing blogger strongly disagrees with you about Wall Street not breaking the law:

  46. Rollory says:

    Complete f***ing moron post.

    Karl Denninger (among others) has extensively covered the violations of black letter law that occurred. The violators have not been prosecuted because they have political influence because of their money. Nothing more or less than that. Wachovia laundered millions in Mexican drug cartel money, ADMITTED in court that they had done so, and were made to pay a fine amounting to a fraction of their profits. JP Morgan solicited and received bribes from officials in Jefferson County AL, this bribery is an established legal fact as the county officials are in jail for it, but bribery is a two-person crime and the bankers who received the money are walking around free. The housing bubble was created and collapsed because people at every level – from the investment banks offering securities to the people filling out home loan applications – provided knowningly false information: the applicants lied about their income, the bankers sold the securities as triple-A while discussing in internal emails (submitted in court proceedings) how they were “dogshit”. This is fraud, and normally people go to jail for it. Then there’s the insider trading on the markets that has been going on for years, and is easily documented – every single case where a stock suddenly changes suddenly on no news, and then 12 or 24 hours later news comes out that makes the move justifiable; Denninger again has been quite careful in noting such cases. Examples of prosecutable offenses abound, and only a fool, a liar, or a complete f***ing moron would pretend otherwise.

    There is nothing skeptical or rational about whoever wrote that post.

    • Miles says:

      Does it not ring any alarm bells that you are emotionally lashing out in the same way a religious fundamentalist often does when you suggest that the Bible may not be true? I’m curious, do you expect to be taken seriously by others when you write like this? Do other liberals on this blog take you seriously when you lash out like a hysterical teenager?

      To address your point, I don’t know anything about “Karl Denninger” or most of the claims that you make, but I do know that even if true, they have nothing to do with Michael’s post. As far as the legality is concerned, Michael was talking specifically about the bailouts. I have no idea where all of this other stuff came from, but it sure sounds like a conspiracy theory the way you present it.

      It seems to me like you would benefit from a little work on your reading comprehension skills, as well as going through a few breathing exercises when you come across someone else who has a different world view than you.

      • Lurker says:

        “Does it not ring any alarm bells that you are emotionally lashing out in the same way a religious fundamentalist often does when you suggest that the Bible may not be true?”

        I would expect better than an ad hominem from someone on a skeptic blog.

        “Do other liberals on this blog take you seriously when you lash out like a hysterical teenager?”

        Why do you assume that he is a liberal when he mentioned a right wing blogger:

        “To address your point, I don’t know anything about “Karl Denninger” or most of the claims that you make”

        Then why not spend a few minutes on a google search to educate yourself? Then even if you disagree with his cited source (Denninger) you will at least know that his source is not a leftist solely blaming wall street for the meltdown but a conservative blaming not only wall street but also Washington DC (both Democrats and republicans, up to and including Ronald Reagan).

        “I do know that even if true, they have nothing to do with Michael’s post. As far as the legality is concerned, Michael was talking specifically about the bailouts.”

        Michael Shermer said: “Why has no one from Wall Street gone to jail for the financial meltdown? ”

        What part of “financial meltdown” entails restricting oneself to the bailout?

        “I have no idea where all of this other stuff came from, but it sure sounds like a conspiracy theory the way you present it.”

        So you started with ad hominem and now you continue with tone trolling?

        “It seems to me like you would benefit from a little work on your reading comprehension skills”

        It looks like it is you who need to learn how to read as Michael talked about the financial meltdown in general, not the bailouts in particular.

        “as well as going through a few breathing exercises when you come across someone else who has a different world view than you.”

        The irony is that given that he cited a very right wing blogger and you said in another post that you are a libertarian it is quite likely that your political worldviews are much closer than you think.

        PS: even if you disagree with Karl in the end I would encourage you to try to read his blog for a while jsut as much as I would encourage creationists to read evolution blogs/websites as even if you end up disagreeing at least you know why you disagree.

      • Miles says:

        “I would expect better than an ad hominem from someone on a skeptic blog.

        I wasn’t suggesting that his argument is incorrect because he is being insulting and emotional. It is not an ad-hominem to point out to someone that they sound hysterical. An ad-hominem attack means “to negate the truth of a claim by pointing out a negative characteristic or belief of the person “. I was simply pointing out a negative characteristic of the person, not making a truth-claim based on that observation.

        “Why do you assume that he is a liberal when he mentioned a right wing blogger”

        I assume he is liberal because of his explanation of the causes of crisis, which only lists private interests, and does not mention any of the numerous examples of government causes. Most liberals see the financial crises as a failure of private markets, while most conservatives see it as a failure of government. His explanation was consistent with the liberal world-view.

        “Then why not spend a few minutes on a google search to educate yourself? “
        Because it was not necessary for the point I was making. He was claiming Michael to be a liar, because of laws that have been broken by financial institutions such as “money laundering”. But that has nothing to do with the laws that Michael is talking about. Michael was saying that when financial institutions took on too much bad risk, they were not breaking any laws. He wasn’t saying that financial institutions have never broken any laws period.

        “What part of “financial meltdown” entails restricting oneself to the bailout?”

        I could have worded “bailout” better, I agree. But my point still stands. Michael was talking about financial institutions taking on too much risk, and the response has been about breaking laws such as “taking bribes”, “laundering money”, etc. None of which have anything to do with taking on too much risk.

        So sure, I concede that I should have been more explicit instead of simplifying it to “bailouts”.

        Now can I ask you a question? Was your response intended to defend Rollory? Do you approve of his comment? I have read the referenced article by Karl Denninger. Do you believe that his list of laws that financial institutions have broken have anything to do with what Michael was talking about?

      • Lurker says:

        I keep hitting the spam filter so I will try to cut my response in two posts:

        “I wasn’t suggesting that his argument is incorrect because he is being insulting and emotional.”

        It looked like you were trying to do so implicitely. If it was not your intention then my mistake and apology for reading more between the lines than you intended.

        “I assume he is liberal because of his explanation of the causes of crisis, which only lists private interests”

        Because he was responding to a blog post that was talking about said private interests.

        If he was responding to a liberal post that only berated Wall Street but said the US government did nothing wrong you might have gotten the exact opposite impression.

        Now I don’t know him so he might indeed be a liberal but I don’t have enough information to deduce that yet.

        “He was claiming Michael to be a liar”

        He said:
        “Examples of prosecutable offenses abound, and only a fool, a liar, or a complete f***ing moron would pretend otherwise.”

        None palatable choices to be sure (and as they say you do not catch flies with vinegar) but he did not outright call Michael a liar.

        “But that has nothing to do with the laws that Michael is talking about.”

        You are missing the forest for the trees. The problem is in part specific laws that were either repealed (Glass-Steagall) or ignored (FDIC not enforcing the Prompt Corrective Action act*) but it was also that banks were given a pass or a slap on the wrist (fines) which creates a culture where they thought (rightly) that they would not get punished fo breaking the law.

        * search for a ticker named “The FDIC Cannot Ignore The Law, Then Abuse It” from 2010-09-04 if interested as my post has too many links (too spammy, can’t blame them).

        Karl traces (whether correctly or incorrectly, I’ll let you judge for yourself) the root of that culture to Continental Illinois**:

        “Our nation’s refusal to allow the market to work and clear bad debts dates to the 1980s bailout of Continental Illinois. And yes, it was a bailout – they got broken up and taken over, but their bondholders were protected.

        It is that singular event that marked the sea change. The belief was instilled in the institutional and individual investor that if you loaned capital to a bank and they did something stupid — or even criminal — with the money, you would not lose anything.”

        ** For the source of the quote, search for the ticker named “More Validation for Tickerguy: Consumer Debt” from 2011-10-03

        “Michael was talking about financial institutions taking on too much risk, and the response has been about breaking laws such as “taking bribes”, “laundering money”, etc. None of which have anything to do with taking on too much risk.”

        Isn’t lying about the quality of a product (like a loan) in order to sell it fraud?

        And would the banks have felt immune to prosecution if they had been prosecuted for other frauds that are not directly related to the financial crisis?

        Would the banks have taken so much risk if they had reason to fear being prosecuted for fraudulently selling crap loans packages that they thought were “a sack of shit”***?

        *** from ticker named “Our Biggest Financial Firms Don’t Scam” dated 2011-02-26

      • Lurker says:

        Still hitting the spam filter so I will cut it in more pieces (can’t blame them seeing the length of my first post):

        “Michael was saying that when financial institutions took on too much bad risk, they were not breaking any laws.”

        To take on so much risk they had to sell the crap loans they originated and to sell the crap loans they had to lie about their quality, which is fraud. So they could not have taken on more risk if they had not committed fraud.

        “Now can I ask you a question? Was your response intended to defend Rollory?”

        Not really, I don’t know the guy. I was more interested in trying to make you not dismiss Karl out of hand because you thought Rollory was a liberal who only blamed the banks in his post (note that I am not making any money from his website, I just agree with plenty of what he writes about the economy).

        I also am more interested in convincing you (and others) that the banks were not as reproachless wrt the law and the financial crisis as you and Michael seem to think because I don’t think it can be solved by only blaming the government or only blaming the banks.

        If you had been a lefty blaming the banks but giving a free pass to the government I would have argued that the government also has a large part of the blame.

        “Do you approve of his comment?”

        Parts of it I wouldn’t have made as while likely they are hard to prove (probably the parts that made you see it as a conspiracy theory).

        Some of it, while part of the bigger picture of the crisis, he did not show the relevance enough in his post (and neither did Karl in that post IMO; I tried to do better in mine, you tell me if I succeeded).

        More in what should be the last post.

      • Lurker says:

        “I have read the referenced article by Karl Denninger. Do you believe that his list of laws that financial institutions have broken have anything to do with what Michael was talking about?”

        From the rest of my comment I think it is obvious that yes, I do, though not all of it is directly connected to it but rather part of a larger culture of letting them get away with stuff that should have send some of them in prison, which incites more illegal acts.

        Some of it definitely was connected to taking more risk, like fraudulently selling securities as being worth the money when they knew they were not going to perform (in some instances going as far as shorting the securities they were recommending their customers to buy).

        If they had not lied to sell these loans and thus get them off their books they could not have originated more loans and thus would have been limited in the amount of risk they could take.

        May I ask you a question too?

        Even if you are not convinced yet of the illegality of what Wall Street did that led to the financial crisis, are you still as confident of their obeying the law as you were before reading this post?

        Thanks for your time.

      • ThatSkepticGuy says:

        “I would expect better than an ad hominem from someone on a skeptic blog.”

        You wouldn’t be able to guess, considering that temper tantrum of a post you made was rife with more ad hominem and childish insults than his post.

      • Lurker says:

        Given that I was quite calm when I composed both responses I made I wonder what made you think I had a temper tantrum?

        As for the ad hominems and childish insults I supposedly made, could you please point them out to me as I cannot seem to see them upon rereading my posts but would welcome knowing what they are so I can try my best to avoid them in the future.

  47. Kenn says:

    True, 1% controls the 99%

    in Cuba and N Korea.

  48. d brown says:

    The Wall Street Journal was the factual source on what it covered. But the opinion pages were nuts and were always saying the news pages were not just wrong but evil. I remember one day it had three stories on diffrent parts of the S&L mess and the opinion pages saying it was all a phony liberal conspiracy. That was then. Now it’s its just Fox.

  49. Nathan says:

    “no one went to jail because they didn’t break any laws”
    I seriously doubt that, and in any case, some of the things they did do certainly should be illegal. Say betting against home loans they deliberately made to fail. Glass-Steagall anyone?

    “What, exactly, did these Wall Street people do that was so wrong?”
    Along with betting against deliberately badly crafted home loans, they also hid greeces debt, which subsequently tanked the eurozone. Among other things.

    “But what’s the number? How much is too much income?”
    While Japan has done well in narrowing the initial income gaps, I think the various Scandinavian countries that balance things out afterwards through taxation have the right idea. Paying a disproportionately low amount of taxes is patently unfair, and that’s where the solution lies.
    Also get rid of peer benchmarking for starters. It’s always, no matter what’s going on, going to drive up incomes among the richest, often while they cut wages to the people at the bottom and drive companies into bankruptcy for profit. It’s plainly and simply an unethical income policy.

    “The entire system is corrupt, in that sense.”
    Then take corporate money out of politics. In fact, why not remove money from elections all together? Why is a principle component of campaigning to raise money anyway? How is that a first step for political office where we hope to employ someone who isn’t in it for the money, and isn’t just a charismatic con man?

  50. oldebabe says:

    Well, Michael, you surely do know how to get the pro-and-con opinion juices flowing…

  51. Max says:

    New York magazine did an unscientific poll of 100 OWS protesters.

    Rank yourself on the following Scale of Liberalism:.
    Not liberal at all: 6
    Liberal but fairly mainstream (i.e., Barack Obama): 3
    Strongly liberal (i.e., Paul Krugman): 12
    Fed up with Democrats, believe country needs overhaul (i.e., Ralph Nader): 41
    Convinced the U.S. government is no better than, say, Al Qaeda (i.e., Noam Chomsky): 34

    • Max says:

      Here’s some early Workers World Party (WWP) coverage of it.

      Code Pink had a banner reading, “Make jobs, not war.” Workers World Party’s banner read, “A Job is a right — Capitalism doesn’t work.” WWP also had signed placards that raised the Troy Davis case and declaring that racism is a tool to divide the working class. Demonstrators picked up and carried these signs.
      After a yoga class and a seminar on economics, there was an interesting speakout in front of the American Indian Museum. Larry Holmes of WWP spoke on the need to stop the execution of Troy Davis. Another speaker, drawing some cheers, called for the nationalization of the banks and the dismantling of the structure of the imperialist economy. A third speaker, carrying a Troy Davis placard, pointed out that Wall Street profits approximately equal the national debt.

      The camps that offer free food, shelter, and medical care naturally attract the homeless, whom Karl Marx might call the lumpenproletariat, the unemployed and unemployable.

      • ThatSkepticGuy says:

        “pointed out that Wall Street profits approximately equal the national debt.”

        And if fanatical adherents to the most oppressive and murderous dogma of the past 300 years say it, it MUST be true!

    • Markx says:

      The world has economic problems.

      Unfortunately the OWS movement does not seem to have any sensible answers.

  52. Thomas Gargaro says:

    1. a Why has no one from Wall Street gone to jail for the financial meltdown? Answer: no one went to jail because they didn’t break any laws.

    I disagree. Clearly many did do wrong in the eye of the law, some like Citigroup paid fines vs. anyone going to jail.

    1. b [The Wall Street meltdown of 2008 was caused by] combination of many factors, primary being the removal of risk aversion from both Wall Street traders (and bankers) and Main Street home buyers.

    I disagree here too.
    I am an investor in 2008. I consider a CDO offering. I pay Moody’s rating agency to rate the risk of the CDO. They rate it at AAA+. Moody’s rubber stamps the investments. Many agency insiders laugh at all the money they are making based on the quantity of investments rated rather than actually looking at the CDOs at all. I pay an investment banker to manage my investments and risk. He tells me the CDO is practically risk free, but he is privy to the knowledge of the poor value of the packaged mortgages, such as containing “no document” mortgage loans.
    I buy the investment, not because I have lost all risk aversion. In fact I thought I was managing risk. In stead I invested based on fraud.

    You can say in hindsight that the investor was dumb. However that does not take away from the fact that fraud was perpetrated on a massive scale. Moody’s and the investment bankers did far worse than simply fail their due diligence for which they are paid, but directly lied to make more money.

    It was simply done at such a large scale and by so many that an underfunded SEC just had to shrug its shoulders.

    2. Analogously, the only reason to work on Wall Street is to make a boatload of money. That’s the whole point of “playing the market.”
    Yes, but through an efficient market where their is a free flow of information – not via fraud. Not via lies. Perfect example:

    “Citigroup had to pay a $285 million fine to settle a case in which, with one hand, Citibank sold a package of toxic mortgage-backed securities to unsuspecting customers — securities that it knew were likely to go bust — and, with the other hand, shorted the same securities — that is, bet millions of dollars that they would go bust.

    It doesn’t get any more immoral than this. As the Securities and Exchange Commission civil complaint noted, in 2007, Citigroup exercised “significant influence” over choosing $500 million of the $1 billion worth of assets in the deal, and the global bank deliberately chose collateralized debt obligations, or C.D.O.’s, built from mortgage loans almost sure to fail. According to The Wall Street Journal, the S.E.C. complaint quoted one unnamed C.D.O. trader outside Citigroup as describing the portfolio as resembling something your dog leaves on your neighbor’s lawn. “The deal became largely worthless within months of its creation,”…

    3. The Wall Streeters accepted bailout money that they shouldn’t have gotten. Yeah, well, whose fault is that? What did you think they would do? Turn the money down? Heck no!
    They didn’t “accept” the money out of thin air. They have the lobbyists and the connections that made that money available to them. That’s part of what the protest is about. Whereas any normal investor or company would have to pay for their mistakes. Wall Street doesn’t. Even at catastrophic levels of fraud and incompetence.

    4. Wall Street CEOs and their resident COOs, CFOs, traders, and the like, make too damn much money, hundreds of times more than the gap used to be between the highest paid and lowest paid members of corporations.
    Anytime transaction costs are too high it is due to inefficiencies – monopolistic, special interests, lobbyists, etc. The Wall Street movement is bringing light to these inefficiencies.

    5. I guess it is hard to regulate. I think if instead of more regulation we could eliminate some of Wall Streets lobbying power and their Executives hold on regulatory agency positions and enforce existing laws on fraud we would have a better system.

  53. Max says:

    The Pareto Principle says that in many cases 80% of the effects come from 20% of the causes.
    By extension, 80% of 80% of 80% = 51.2% of the effects should come from 20% of 20% of 20% = 0.8% of the causes.

    The top 20% of Americans own 84% of the nation’s wealth, so we might expect the top 1% to own more than 51% of the total. But in 2004, the top 1% owned only 34.3% of the total. Don’t know if it’s higher or lower now.

  54. Markx says:

    Lassez Faire capitalism – a fable:

    In a small and isolated town there exist some businesses; three supermarkets, two butchers, two bakers (the candlestick makers having long gone out of business due to the advances of modern technology).

    The citizens are happy, as competition keeps the prices down. Luckily there is no collusion between the various merchants, and when Blue Butcher tried to put his prices up, everyone flocked to Green Butcher.

    But, the owner of Growing Supermarket is a very popular man, he belongs to all the clubs, is a very good golfer, has a wonderful sense of design, and understands how to set up his supermarket to extract the most purchases from his customers. (Truly a renaissance man!). He has excellent connections in the bank, and is able to present very convincing business plans. His business booms, at the expense of both Mom and Pop Supermarket, and Almost Supermarket.

    Now, no-one can deny Mr Growing deserves his success, as he is smart, likeable, and hardworking.

    Almost Supermarket struggles on, Mom and Pop’s lower their prices a bit, and claw back some customers, and the butchers and bakers blithely soldier on.

    But, Mr Growing is man of ambition and drive, and has a brilliant idea. He incorporates a beautiful full service butcher shop in his supermarket. He has surplus cash now, so also embarks on a clever advertising campaign. Soon people are saving time, by buying both their groceries and their meat at one stop. Suddenly Mom and Pops supermarket, and both butchers are losing business.

    Mom and Pops tries to copy Growings by incorporating a bakery in the operation, but they are not cash rich and are unable to borrow on as favourable terms as Mr Growing. Meanwhile Growings sets up a bakery AND a coffee shop. And buys out one of the butchers and one of the bakers and shuts them down. He buys Almost, and replicates his supermarket there. Now people really have a choice, right?

    Eventually, Mom and Pops, and the remaining butcher and baker shut their doors. Luckily, Growings is hiring due to unprecedented growth, and they all get good jobs there. The mayor tries to enact some laws to stimulate some competition, but Growing explains to him that is against the known economic theories (sorry, ‘the absolute facts’, is how he presents them) and helps fund the mayor’s next election campaign. There are rumours the Mayor holds some shares in the company via a Cayman Islands company, but this is probably idle gossip.

    Occasionally, some poor soul sees the obvious opportunity and starts up a shop to compete. Growing simply cuts his prices, ups the advertising, and watches closely for any innovations he may copy. The competitors don’t last very long. One well funded competitor once forced Growing to trade at a loss for 11 months, but with his connections, financial clout accumulated reserves, this was not too dire a problem, and inevitably Growing prevailed, buying them out and setting up a third branch.

    The populace marvel at their good luck in being able to shop on one stop, and barely notice the gradual rise in prices.

    1. Does Mr Growing deserve his success? (I’ll answer that. Yes, undoubtedly)
    2. Is this result good for the general community?
    3. Is it a good thing that everyone ends up working for one employer?
    4. Is there any way in which such a system will regulate itself and provide competition?

  55. d brown says:

    Different police investigations have all shown that ACORN was framed by a R/W fanboy and his TV crew. The cops all say ACORN did nothing and the films on TV were made of cut up snips, the real films showed nothing was wrong. Look at all the liberal media that told everyone that they had been hosed by the R/W, again. That Fanboy says he is going after OWS now. One Fanboy said on his webpage he was the one who pushed the guards at the Smithsonian into pepper spraying the demos at the museum. Now who do you thing is acting out for the Network TV cameras.

    • ThatSkepticGuy says:

      “Different police investigations have all shown that ACORN was framed by a R/W fanboy and his TV crew. ”

      Not even close. The only ACORN sting that was discredited of disproven was the incident involving the yacht. Everything else is Left Wing wishful thinking.

  56. d brown says:

    “Tax what’s hidden. It’s estimated that America’s super-rich already sock away more than $100 billion a year in offshore tax havens.
    The super-rich use offshore tax havens to avoid paying what they owe in taxes. And we pay instead. They’re reneging on their duties as citizens. If it’s more important to someone to avoid paying what they owe in taxes than to continue being an American, then let them keep their money. And move out and not come back. Some are already trying to give up their American citizenship so they can come here safely and not be arrested. That’s not the way it works. They can become a citizen of the Cayman Islands, but they will always be Americans and owe taxes here.”

  57. Miles says:

    Hi Michael! I rarely visit the blog anymore because we libertarians are so despised here, it is too difficult to have a civilized conversation to make it worth posting anymore (I won’t be surprised if this comment elicits flaming responses). I’m not sure if you read the comments to your posts, but I just wanted to let you know that there are folks like me out here who support and appreciate what you are trying to do! Keep up the great work! I’ve been trying to get you on as a guest on EconTalk for ages now. I’d love to hear you discuss your new book with Russ Roberts, a GMU economist who has been doing a lot of thinking lately on the role that ideology plays in science. You can read his stuff on, or check out his weekly EconTalk podcast on iTunes or Really good stuff!

  58. d brown says:

    On many polls Americans go with much of the old time libertarians. old time, that’s like KARL HESS who say nobody should mess with anybody. Today’s libertarians say the ones with power should have the freedom to mess with people. Today’s libertarians are a holding cell for people who no longer can stand the GOP. They don’t like the GOP so they vote libertarian not Democrat. I must have missed the flames at libertarians. Some people who said they were libertarian used strong words and got strong words back. I like Karl Hess a lot. I know today’s libertarians call his kind pink libertarians and acts like the far right acts. I just think think people will never act that libertarian way. They would rather have a strong leader tell them what to do.

    • ThatSkepticGuy says:

      ” Today’s libertarians say the ones with power should have the freedom to mess with people.”

      It sounds like your biggest beef with libertarians stems from the fantasies you need to construct in your head to discredit them for not thinking the way you do.

  59. Russell says:

    Mr. Shermer,
    I’m a big fan and have defended you and your magazine and referenced you and your magazine in the past. I don’t like this article and I go into specifics here-
    Straw man! Micheal Shermer, you are capable of so much more insight than you displayed in this article!

  60. Kevin Gain says:

    I think your Libertarian confirmation bias is showing.

  61. Markx says:

    The 1% rules at work: (todays news)

    If senators and representatives are using non-public information to win in the market, it’s all legal says Peter Schweizer, who works for the Hoover Institute, a conservative think tank. He has been examining these issues for some time and has written about them in a book, “Throw them All Out.”

    “Insider trading laws apply to corporate executives, to Americans…If you are a member of Congress, those laws are deemed not to apply,” he tells Kroft. “It’s really the way the rules have been defined… lawmakers have conveniently written them in such a way as they don’t apply to themselves,” says Schweizer.

    Efforts to make such insider trading off limits to Washington’s lawmakers have never been able to get traction

  62. Pablo says:

    I don’t see how seemingly intelligent people can still hold on to the libertarian ideology. It sounds good on paper (hell, even Marx sounds reasonable on paper if read in context) but it just doesn’t work in the real world. Name one country that has ever reached true prosperity for a majority of its citizens based on pure capitalism and libertarianism. That’s right: zero. How much more evidence do you need?

    In the meantime, those social democrats in Scandinavia have been enjoying the best living standards known to men for decades, and we’re still arguing about Hayek vs. Keynes?! Get a grip on reality already.

    First rule of a skeptic: stick with the stuff that actually works!!! How about evidence-based economics for a change?

    • ThatSkepticGuy says:

      “(hell, even Marx sounds reasonable on paper if read in context)”

      Sure, if slavery, mass murder and totalitarianism are your thing. Which it kinda sounds like it is.

      “Name one country that has ever reached true prosperity for a majority of its citizens based on pure capitalism and libertarianism.”

      Name one that’s actually made the concentrated effort.

      “In the meantime, those social democrats in Scandinavia have been enjoying the best living standards known to men for decades,”

      For somebody soapboxing about reality and skepticism, you sure have a lot of silly, unsupported beliefs.

      • Pablo says:

        It’s clear to me that you’ve never read Marx in context, since you fail to make a single cogent point outside Cold War American right wing rhetoric.

        The fact that true libertarianism has never been tried shows that it’s part of a utopian belief system, impracticable in modern human societies. Just as utopian as communism, which evidently was appealing enough to some societies (usually oppressed under abusive oligarchies) to give it a shot. I’m not saying that the motivations of libertarians are wrong or that they’re morally corrupt. Most well-intentioned dogmas collide with reality and can’t be fully implemented. That’s just a fact.

        As for the situation in other countries, I don’t hold “beliefs”. I’ve lived in 4 different countries in Europe and Scandinavia. Have you ever been to Denmark? Have you ever lived in Norway? I doubt it, otherwise you would show a better understanding of reality outside the American or whatever other bubble you seem to be stationed in.

        I used to call myself a libertarian. Now I go with the evidence. No more silly dogmas for me.

      • ThatSkepticGuy says:

        “It’s clear to me that you’ve never read Marx in context, since you fail to make a single cogent point outside Cold War American right wing rhetoric. ”

        In other words, I’m judging Marx based on what he actually wrote, and not the shinyhappypeople sollipsistic utopian fantasy you need to insist it is.

        Either you tourself have never actually read Marx and are simply lashing out against people not abiding by your True Scotsmen (a frequent tactic in collectivist circles) or you don’t know what the word “totalitarianism” means.

        Because if you did, maybe you’d be able to recognize the government centralization of everything from free speech to food production as outlines in Marx’s “Ten Pillars” are precisely that.

        “The fact that true libertarianism has never been tried shows that it’s part of a utopian belief system, impracticable in modern human societies.”

        Your logic is absolutely asinine. We don’t really have the secular state in the US that we’re supposed to, because it’s never been tried. Does that mean the Constitution is a Utopian fantasy, too?

        “Just as utopian as communism, which evidently was appealing enough to some societies (usually oppressed under abusive oligarchies) to give it a shot. ”

        Except for the pesky fact that every single Communist state of the past 150 years was implemented, not through the autonomy of it’s people, but by wealthy individuals (Bolsheviks, Mao, Castro, Pol Pot, Hoxha, ad infinitum) who took over through the use of force and then began immediately consolidating power for themselves and their allies.
        You attempt to edify discussionm through the ad hominem that I’m stuck in some Right Wing Cold War mentality because I’m better informed on the subject than you, yet you yourself conform rather comfortably to the attitudes and platitudes expressed by the Useful Idiots of the 40’s, 50’s and 60’s.

        But don’t let any of that dissuade you from retreating to the safe confines of your sollipsistic cave.

    • Markx says:

      Pablo, agreed on all points, and Marx reads better on paper than libertarianism does.

      With Marxism, you can see why people (of those times) thought “Hell, this could just work!”.

      But, it didn’t, because men used it as a lever to consolidate and expand their own power.

      With libertarianism, it takes about one second of thinking to see that all the power is rapidly going to end up in a few hands. (Ironically, as happened with communism). The funny part is, it is the proletariat and middle classes who are battling for the rights of the rich to rule them.

      • tmac57 says:

        “The funny part is, it is the proletariat and middle classes who are battling for the rights of the rich to rule them.”

        The term ‘useful idiots’ comes to mind.

      • ThatSkepticGuy says:

        “and Marx reads better on paper than libertarianism does.”

        HA! Please elaborate, this should be good for a laugh.
        How does the absolutist insistence that everyone is de facto owned by the government and must surrender all property and rights to it or else face crimes against humanity (again, all of this is outlined in marx’s Ten Pillars) “reqad better” than the belief that people are entitled to self-determinism?

        “With libertarianism, it takes about one second of thinking to see that all the power is rapidly going to end up in a few hands. (Ironically, as happened with communism). ”

        Do you ALWAYS drive with the cart ahead of the mule?

        Maybe YOU can’t see how totalitarianism and feudalism would immediately and unequivocably lead to inequality and subjugation (not to mention mass murder, gulags, forced starvation, rigged elections and so forth) with a seconds’ worth of though, but people like Hayek sure were.

  63. Jon says:

    It’s very funny when you libertarians who like to think of yourselves as radical nonconformists, turn into the average dumb hippy punching republicans when you are threatened by a movement that may actually have potential to raise the standard of the average person’s life.

    Thanks for the laughs.

    • ThatSkepticGuy says:

      Why are you thanking us for the laughs when you’re clearly the one in clownface?:

      “when you are threatened by a movement that may actually have potential to raise the standard of the average person’s life.”


  64. Solidarity US. Org says:

    A Two Million Unity Rally Aimed at Gathering Together America’s Disenfranchised Middle Class, including labor unions, the unemployed, and progressive groups; to address various urgent issues afflicting them including: unemployment, anti-labor laws, women’s rights, gay rights, separation of church and state and fraudulent bank foreclosures, is currently in the planning stages by various power movements. If successful, this would be the largest rally in the history of the United States of America. The rally is being planned for October, before the 2012 elections.

  65. Shane says:


    We need to talk, but several months have intervened. Perhaps you’ve gained some insights, as you frequently have over the past thirty-five-plus years (or, I would surmise, much longer). I’d love to know.

    I could write a book on the depth of our disagreement (complete with endnotes), though you at least “get” part of it. Nor is it about “our” disagreement; empirical examination of history doesn’t bode well for Big L Libertarianism. So I’ll get back to you.

    The Believing Brain, indeed. Why DO people believe weird things?

    I am a fan of your work, or I wouldn’t even bother.

    Stay tuned.

  66. Shane says:

    Well, silly me: I didn’t realize that there are people who have defined “Big-L” and “little-l” simply in terms of the political party.

    They are welcome to that.

    To clarify: I am a civil libertarian. I am NOT what is called, these days, an economic libertarian.

    (If that seems a contradiction to some folks, put on your thinking caps, and google “Robert Bork” “classical liberalism.” )