tdh@frog.UUCP (T. Dave Hudson) (12/03/85)
> The libertarian/socialist debate is really a debate about the nature, > viability, and justice of capitalism and its relation to democratic > political life. To most Americans, capitalism and democracy either > are identical or coexist harmoniously. I think both libertarians and > socialists are right to recognize a profound incompatibility between > them. Each proposes a radical cure for the ills of society which > they perceive as deriving from this incompatibility: (1) Smash the > state, abolish politics, and establish a "pure" form of capitalism. You are writing of anarcholibertarianism, not libertarianism. > (2) Smash capitalism by abolishing the particular > form of property relations which are its basis, and extend democratic > political life over a wider realm. Democracy is only a means of peacefully arriving at decisions. It does not specify what those decisions are to be. It is therefore by itself inadequate as a political philosophy. I suspect that most Libertarians share the position that democracy is necessary. But democracy in the U.S., even as constrained by a constitution, already has complete control. It is nonsense to speak of extending it over a wider realm. It is democracy that continues to support existing property relations (in part, rationally). It is not democracy that Carnes is asking for, but rather some other political philosophy that is not specified in the above quote. Carnes' alignment with democracy is disingenuous. Just injecting some wonted rigor. David Hudson
carnes@gargoyle.UUCP (Richard Carnes) (12/10/85)
>> Each proposes a radical cure for the ills of society which >> they perceive as deriving from this incompatibility: (1) Smash the >> state, abolish politics, and establish a "pure" form of capitalism. > >You are writing of anarcholibertarianism, not >libertarianism. I think all forms of libertarianism wish to replace politics by the market (perhaps not totally), but I am interested in hearing arguments to the contrary. "Politics" means the struggle for authority. Libertarians of all stripes seem to want to keep politics from "meddling" with the market. >Democracy is only a means of peacefully arriving at >decisions. It does not specify what those decisions are to >be. It is therefore by itself inadequate as a political >philosophy. "Democracy" could be described as a Greek translation of "power to the people." I don't think it entails a particular method of making social choices, but this is worth discussing. "Democracy" is an essentially vague word. >I suspect that most Libertarians share the position that >democracy is necessary. But democracy in the U.S., even as >constrained by a constitution, already has complete control. >It is nonsense to speak of extending it over a wider realm. I don't think so. Large private corporations, which are basically anti-democratic institutions, wield a lot of power in the US. There is a profound book that explores the questions we are raising here: *Politics and Markets: The World's Political-Economic Systems* by Charles E. Lindblom. Much of the nonsense in this newsgroup could be eliminated if everyone would read this book; but recommending it on the net is probably the best way of guaranteeing that no one will ever read it. One of its themes is what is wrong with both classical liberal and pluralist thought. Sample quote: The executive of the large corporation is, on many counts, the contemporary counterpart to the landed gentry of an earlier era, his voice amplified by the technology of mass communication.... More than class, the major specific institutional barrier to fuller democracy may therefore be the autonomy of the private corporation. It has been a curious feature of democratic thought that it has not faced up to the private corporation as a peculiar organization in an ostensible democracy. Enormously large, rich in resources, the big corporations, we have seen, command more resources than do most government units. They can also, over a broad range, insist that government meet their demands, even if these demands run counter to those of citizens expressed through their polyarchal [roughly, democratic] controls. Moreover, they do not disqualify themselves from playing the partisan role of a citizen -- for the corporation is legally a person. And they exercise unusual veto powers. They are on all these counts disproportionately powerful, we have seen. The large private corporation fits oddly into democratic theory and vision. Indeed, it does not fit. -- Richard Carnes, ihnp4!gargoyle!carnes
lkk@teddy.UUCP (12/10/85)
In article <267@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes: > >I don't think so. Large private corporations, which are basically >anti-democratic institutions, wield a lot of power in the US. To amplify what Richard said: It is instructive to note that even the 500th largest bank in the world (in Italy, I beleive) has more financial reserves than any countries except the Soviet Union and the United States. The gross sales of Exxon are larger than the GNP of most third world countries. With such economic significance, these corporations become quasi-nations unto themselves in the world of international finance. When <random third world leader> approaches the Chairman of Chase Manhattan Bank for a loan, it is the banker who has the upper hand. Thus, David Rockefeller has the ability to drastically affect the fortunes of millions of people the world over. Was he elected by them? No. -- Sport Death, (USENET) ...{decvax | ihnp4!mit-eddie}!genrad!panda!lkk Larry Kolodney (INTERNET) lkk@mit-mc.arpa -------- Life is either a daring adventure, or nothing. - Helen Keller
marks@cascade.ARPA (12/11/85)
In article <1793@teddy.UUCP> lkk@teddy.UUCP writes: > >... It is instructive to note that even the >500th largest bank in the world (in Italy, I beleive) has more >financial reserves than any countries except the Soviet Union and the >United States. > >The gross sales of Exxon are larger than the GNP >of most third world countries. > >With such economic significance, these corporations become >quasi-nations unto themselves in the world of international finance. I would like to point out some important distinctions between corporations and governments. Corporations cannot throw people in jail. Corporations cannot wage military war. Corporations cannot levy taxes and alter them at will. >When <random third world leader> approaches the Chairman of Chase >Manhattan Bank for a loan, it is the banker who has the upper hand. Oh? When <random third world leader> decides to default on his loan from Chase Manhattan, who has the upper hand? The <random third world leader>; why else would the Chairman of Chase Manhattan ask the U.S. Government to bail him out? >Thus, David Rockefeller has the ability to drastically affect the >fortunes of millions of people the world over. Was he elected by >them? No. No, he wasn't elected, but he was voluntarily chosen by them. His customers chose to do business with him, but they could just as easily have chosen someone else. We need a clear definition of what "power" is. Carnes and Kolodney insist that corporations have "power", but they have none of the powers that I mentioned above, i.e. enforcing laws, levying taxes, waging war. What kind of power do you mean? Also, what is your solution to this perceived problem? Should we nationalize all corporations larger than the smallest nation, or some other equally arbitrary limit? Should we remove David Rockefeller from his post and make his decisions by majority vote? Stuart -- Stuart Marks, Center for Integrated Systems, Stanford University {ucbvax,decvax}!decwrl!glacier!marks, marks@su-cascade.ARPA "Is not Napoleon. Is not Hitler. Is not Mussolini. Is Allegro con Brio!" -- Toscanini, on Beethoven's 3rd Symphony, "Eroica"
nrh@inmet.UUCP (12/11/85)
>/* Written 12:59 pm Dec 10, 1985 by lkk@teddy in inmet:net.politics.t */ >In article <267@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes: >> >>I don't think so. Large private corporations, which are basically >>anti-democratic institutions, wield a lot of power in the US. > > >... > >With such economic significance, these corporations become >quasi-nations unto themselves in the world of international finance. What does this mean? Does it mean that you believe only nations should be above a certain size? If so, on what basis do you make the case? >When <random third world leader> approaches the Chairman of Chase >Manhattan Bank for a loan, it is the banker who has the upper hand. Larry, I don't think you understand what's going on here. The statement is trivially true (whenever I offer you a deal, I have the "upper hand" because you may refuse it or not, but I can't (having already offered it)). >Thus, David Rockefeller has the ability to drastically affect the >fortunes of millions of people the world over. Was he elected by >them? No. Nope. The person who sought out David Rockefeller was not some random swine who was appointed by the gods to be able to assume a debt in the name of the country, but the head of some government or other. Such governments typically claim to be democracies, and if they act anti-democratically by selling their economic future to David Rockefeller (who is, by the way, not the only bidder) then it is the governments you should criticize, not the moneylenders. By the way, the US government has some impact on all this, by making it profitable to lend to third world nations through various incentives. David Rockefeller can ignore these, but others would take his place.
lkk@teddy.UUCP (12/12/85)
In article <27@cascade.ARPA> marks@cascade.ARPA writes: > >I would like to point out some important distinctions between >corporations and governments. Corporations cannot throw people in jail. >Corporations cannot wage military war. Corporations cannot levy taxes >and alter them at will. THey don't need the *de jure* ability to do these things, their economic clout gives them *de facto* power. The U.S. government has intervened on numerous occaisons for the purpose of protecting American Corporate interests (Chile, Iran, Dominican Republic). U.S. banks have great influence over the tax policy in countries such as Mexico. United Fruit more or less OWNED Honduras for much of this century. > >>When <random third world leader> approaches the Chairman of Chase >>Manhattan Bank for a loan, it is the banker who has the upper hand. > >Oh? When <random third world leader> decides to default on his loan >from Chase Manhattan, who has the upper hand? The <random third world >leader>; why else would the Chairman of Chase Manhattan ask the U.S. >Government to bail him out? No third world leader has defaulted. Instead, most of them have had to eat crow in their countries by instituting "auterity measures," causing great political dissatisfaction. It seems that the disincentives to defaulting are sufficiently great that no politician is willing to risk it. Look, it a simple question of power. David Rockefeller has the power to affect the lives of millions of third world citizens. Very few men in the world (elected or otherwise) have that sort of power. > >>Thus, David Rockefeller has the ability to drastically affect the >>fortunes of millions of people the world over. Was he elected by >>them? No. > >No, he wasn't elected, but he was voluntarily chosen by them. His >customers chose to do business with him, but they could just as easily >have chosen someone else. You mean some other Banker, and then be put in the same situation. The fact remains that most of the third world remains economically dependent on the West (or the Soviets, just as bad), and thus subject to the manipulation by western bankers. Now before you flame me with "Well, thats the price for being poor and undeveloped, we can't all be equal.", please remember that virtually all third world countries were exploited by European colonialists, and that THEIR resources were used to power OUR economic development. > >We need a clear definition of what "power" is. Carnes and Kolodney >insist that corporations have "power", but they have none of the powers >that I mentioned above, i.e. enforcing laws, levying taxes, waging war. >What kind of power do you mean? > I think I"ve answered this question. Economic power is sufficient to get other people to do what you want. Therefore, the fact that they don't have those other sorts of power is pretty irrelevant. >Also, what is your solution to this perceived problem? Should we >nationalize all corporations larger than the smallest nation, or some >other equally arbitrary limit? Should we remove David Rockefeller from >his post and make his decisions by majority vote? Nationalizing the Banks would certainly be a good step. A less exploitative foreign policy would also help (i.e. don't crush nationalistic rebellion, cooperate with foreign government attempting meaingful economic reform, rather than those "favorable towards U.S. investment). -- Sport Death, (USENET) ...{decvax | ihnp4!mit-eddie}!genrad!panda!lkk Larry Kolodney (INTERNET) lkk@mit-mc.arpa -------- Life is either a daring adventure, or nothing. - Helen Keller
janw@inmet.UUCP (12/12/85)
[Discussion, started by Richard Carnes, about whether large cor-
porations are undemocratic]
Large bureaucratic hierarchies, whether governmental or private,
function in similar ways, obeying laws discovered by Parkinson.
Civil service is subject, in principle, to remote democratic
control by elections.
Business executives are subject, in principle, to remote democratic
control by the market.
(In both democratic mechanisms, people with more money or
knowledge exercise more influence).
Being remote, the control is weak.
All types of managerial hierarchies cooperate and tend to induce
a similar structure wherever their influence extends (e.g., among
their contractors or subcontractors). Just obeying governmental
rules and regulations requires a large corporate staff - and a
staff composed of the kind of people who feel happy dealing with
rules and regulations.
These they pass on to subsidiaries and subcontractors, adding
standards, specifications, schedules, forms for reporting pro-
gress in implementing tools for monitoring progress in follow-
ing rules, regulations, standards, specifications, schedules...
They are all very busy.
The process of bureaucratization is not limited to governments
(of all levels) and private companies - there are unions, chari-
ties, parties, professional organizations etc. It is a univer-
sal process; it is equally prevalent in the 1st, 2nd and 3d
world.
The growth of this form of organization is not due to its effi-
ciency or necessity but to politics and to Parkinsonian mechan-
isms. Practical exigencies are what *limits* that growth.
They may yet *reverse* it.
These pyramids have a built-in informational bottleneck at the
top. For an individual bureaucrat, the bottleneck has the shape
of the boss's ear. And all levels of the hierarchy have a built-
in interest in exploiting the bottleneck by disinforming their
superiors. One level up, and reality looks quite different; three
levels up, and it is completely unrecognizable. In a bureaucracy,
understanding reality and power to influence it are inversely re-
lated.
Bureaucracies are dinosaurs, with a tiny head on a bloated body.
With informational flows gaining intensity, perhaps it is time
they went the way of the dinosaurs.
Jan Wasilewskyberman@psuvax1.UUCP (Piotr Berman) (12/13/85)
> > lkk@teddy > >... It is instructive to note that even the > >500th largest bank in the world (in Italy, I beleive) has more > >financial reserves than any countries except the Soviet Union and the > >United States. > > > >The gross sales of Exxon are larger than the GNP > >of most third world countries. > > > >With such economic significance, these corporations become > >quasi-nations unto themselves in the world of international finance. > Stuart > I would like to point out some important distinctions between > corporations and governments. Corporations cannot throw people in jail. > Corporations cannot wage military war. Corporations cannot levy taxes > and alter them at will. > > >When <random third world leader> approaches the Chairman of Chase > >Manhattan Bank for a loan, it is the banker who has the upper hand. > > Oh? When <random third world leader> decides to default on his loan > from Chase Manhattan, who has the upper hand? The <random third world > leader>; why else would the Chairman of Chase Manhattan ask the U.S. > Government to bail him out? > In practice, the mutual dependence is substancial. In particular, the banks helped the corrupt elites of Thirld World countries to launder tremendous amounts of money and waste even more. At this moment both foreign and American public is kept hostage by banks: banks resemble giant bicicles: they may stand only when they run, if someone would stop them, the fall will be painful for anyone around. This way the major banks could afford to invest rather recklessly and to wait now patiently for help. As you may notice, there is a continuing trickle of bail out for major banks: the government sponsored loans to debtors like Mexico or Argentina. > >Thus, David Rockefeller has the ability to drastically affect the > >fortunes of millions of people the world over. Was he elected by > >them? No. > > No, he wasn't elected, but he was voluntarily chosen by them. His > customers chose to do business with him, but they could just as easily > have chosen someone else. > > We need a clear definition of what "power" is. Carnes and Kolodney > insist that corporations have "power", but they have none of the powers > that I mentioned above, i.e. enforcing laws, levying taxes, waging war. > What kind of power do you mean? > > Also, what is your solution to this perceived problem? Should we > nationalize all corporations larger than the smallest nation, or some > other equally arbitrary limit? Should we remove David Rockefeller from > his post and make his decisions by majority vote? > > Stuart Power of banks: forcing people to do what they do not want to do. Example: you want to borrow from us, you must deposit here (my personal experience). Imagine that there is no regulations. Then you might have: you want to borrow, deposit here, insure here, use us as a brocker. Or worse: we do not like you, we will recommend everybody not to borrow you. Example two: you do not want a financial chaos, help us (and pay taxes to do it). Depriving you of an asset you use (like a house) may be quite a punishment. Unregulated power of banks could be very destructive. Piotr
nrh@inmet.UUCP (12/16/85)
>/* Written 12:45 pm Dec 13, 1985 by berman@psuvax1 in inmet:net.politics.t */ > >Power of banks: forcing people to do what they do not want to do. >Example: you want to borrow from us, you must deposit here (my >personal experience). Omigosh! What a huge amount of power: to trade with you only on terms they find agreeable! (Of course, YOU must also find the terms agreeable). Oh woe! It's quite true that the banks have a power to deny you a loan, but they can't "force" you to do things you don't want to do unless at some point you agree to this, or, of course, if the government backs them up. >Imagine that there is no regulations. Then you might have: you >want to borrow, deposit here, insure here, use us as a brocker. >Or worse: we do not like you, we will recommend everybody not >to borrow you. Such tactics work sometimes -- and sometimes not. Would you like to know where it's used a lot around here? Bless you Piotr! The GOVERNMENT operates in this way: if you're an ex-con, or have a dishonorable discharge from the military, you do indeed have a black mark against you. Know something else? There are programs specifically designed to give folks like that a chance.... >Example two: you do not want a financial chaos, help us (and pay >taxes to do it). Oho! A government goes to a bank and offers to pay more money back later in exchange for a quantity of money today. The bank agrees. The government, likely through incompetence or lack of nerve, FAILS to meet the deadlines. In the world of individuals, suppose you took out a loan and then went on a trip around the world, not using the money in any wise way. At the end of the year, you're in the same shape as this third world government. In EITHER case, the bank involved would be justified in exercising whatever non-payment clause there was in your loan when you refused to pay. In either case, if you could convince them that you were going to change your way of using money, but just needed some more to get back on your feet, you might be able to convince the bank to give you more. In either case, the bank might insist on a little more control of how you use the money, and in either case, the bank would be perfectly justified in so doing. >Depriving you of an asset you use (like a house) may be quite a >punishment. Unregulated power of banks could be very destructive. I suppose you'll find this tough to believe, but the ungrateful S.O.B.'s that run the movie theater nearby have just stopped showing a movie I liked. Further, even when they were running it, they insisted I *pay* them when I saw it! Oh the injustice! Oh the enormous power they wield! But wait! What about that "convenience" store right next door? They have the godawful nerve to charge MORE than the huge supermarket at the foot of the hill, thus FORCING me to pay more (unless, I suppose somebody might point out, I go to the supermarket). Piotr, get it straight: you can prevent any bank from gaining undue influence over you by making sure that a) You are willing and able to make the payments, and b) The other terms of the loan don't discommode you. and not taking the loan unless you are satisfied on counts a & b. I've no patience with Snidely Whiplash, but you rarely find Snidely Whiplash in the real world. It's a SHAME that folks sometimes can't make their interest payments, and it's also sad when nations can't. But let's hear no moaning about the power the banks wield: it's power given to them by their borrowers, and if that degree of power is unjust, let's have a closer look at the borrowers, shall we? It's not that the banks are complete nice-guys, or that any consequence of a credit shutoff is deserved (what about children born during a loan-induced boom who suffer during a collection- induced bust, for example?) but merely that the power stems not from the banks but from the borrowers.
franka@mmintl.UUCP (Frank Adams) (12/16/85)
In article <1802@teddy.UUCP> lkk@teddy.UUCP (Larry K. Kolodney) writes: >Nationalizing the Banks would certainly be a good step. A less >exploitative foreign policy would also help (i.e. don't crush >nationalistic rebellion, cooperate with foreign government attempting >meaingful economic reform, rather than those "favorable towards U.S. >investment). Nationalizing the banks would be a disaster! Instead of being independent power sources, they would all be added to what is already the greatest accumulation of power in the world. Now if you need to borrow money, there is only one place to go -- and you had better have good political connections if you expect any success. I will agree that the accumulation of power in corporations is intrinsically a bad thing. BUT, that power must be accumulated. Building a new commercial airliner, for example, costs $1 billion or more. So someone has to have the power that control of that kind of money brings. There are essentially only two known solutions to this requirement. One is corporations, and the other is to have the government control it. The latter option has demonstrably worked less well in practice. Truely meaningful economic reform would be a very good thing. It did wonders for Japan, South Korea, Hong Kong, and Singapore. I suspect what you have in mind, however, is government control of the economy -- i.e., socialism. This policy has been adopted by most of the rest of the third world. It, too, has done wonders -- at preventing growth. Frank Adams ihpn4!philabs!pwa-b!mmintl!franka Multimate International 52 Oakland Ave North E. Hartford, CT 06108
franka@mmintl.UUCP (Frank Adams) (12/16/85)
In article <28200382@inmet.UUCP> nrh@inmet.UUCP writes: >>When <random third world leader> approaches the Chairman of Chase >>Manhattan Bank for a loan, it is the banker who has the upper hand. > >Larry, I don't think you understand what's going on here. The statement >is trivially true (whenever I offer you a deal, I have the "upper hand" >because you may refuse it or not, but I can't (having already offered it)). > >>Thus, David Rockefeller has the ability to drastically affect the >>fortunes of millions of people the world over. Was he elected by >>them? No. > >Nope. The person who sought out David Rockefeller was not some random >swine who was appointed by the gods to be able to assume a debt in the >name of the country, but the head of some government or other. > >Such governments typically claim to be democracies, and if they act >anti-democratically by selling their economic future to David >Rockefeller (who is, by the way, not the only bidder) then it is >the governments you should criticize, not the moneylenders. > >By the way, the US government has some impact on all this, by making it >profitable to lend to third world nations through various incentives. >David Rockefeller can ignore these, but others would take his place. Another point is that David Rockefeller does not have nearly as much power in this situation as you suggest. If he can't justify his decision to the Board of Directors on economic grounds, he is likely to get kicked out. (Making such decisions on economic grounds is so automatic for management that this generally doesn't become an issue. What does become an issue is the actual financial results.) This kind of constraint means that the actual power is much less than the apparent power. Frank Adams ihpn4!philabs!pwa-b!mmintl!franka Multimate International 52 Oakland Ave North E. Hartford, CT 06108
lkk@teddy.UUCP (12/16/85)
In article <28200382@inmet.UUCP> nrh@inmet.UUCP writes: > >>/* Written 12:59 pm Dec 10, 1985 by lkk@teddy in inmet:net.politics.t */ >>In article <267@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes: >>> >>>I don't think so. Large private corporations, which are basically >>>anti-democratic institutions, wield a lot of power in the US. >>... >> >>With such economic significance, these corporations become >>quasi-nations unto themselves in the world of international finance. > >What does this mean? Does it mean that you believe only nations >should be above a certain size? If so, on what basis do you make >the case? I was not making any prescription for change, simply pointing out the fact that there is little democracy (self-determination) in the world, in part due to the economic hegemony of the first-world over the third. > >>When <random third world leader> approaches the Chairman of Chase >>Manhattan Bank for a loan, it is the banker who has the upper hand. > >Larry, I don't think you understand what's going on here. The statement >is trivially true (whenever I offer you a deal, I have the "upper hand" >because you may refuse it or not, but I can't (having already offered it)). Except for the fact the the third world needs the money a lot more than the banks need to lend it to them. > >>Thus, David Rockefeller has the ability to drastically affect the >>fortunes of millions of people the world over. Was he elected by >>them? No. > >Nope. The person who sought out David Rockefeller was not some random >swine who was appointed by the gods to be able to assume a debt in the >name of the country, but the head of some government or other. > >Such governments typically claim to be democracies, and if they act >anti-democratically by selling their economic future to David >Rockefeller (who is, by the way, not the only bidder) then it is >the governments you should criticize, not the moneylenders. Just like, "well you're starving, and I own all the food in town, but you certainly have the right not to deal with me." Freedom entails (among other things) control over your own destiny. If you are constrained by lack of resources just to stay alive, any other "freedom" is irrelevant. -- Sport Death, (USENET) ...{decvax | ihnp4!mit-eddie}!genrad!panda!lkk Larry Kolodney (INTERNET) lkk@mit-mc.arpa -------- Life is either a daring adventure, or nothing. - Helen Keller
laura@l5.uucp (Laura Creighton) (12/17/85)
>Imagine that there is no regulations. Then you might have: you >want to borrow, deposit here, insure here, use us as a brocker. >Or worse: we do not like you, we will recommend everybody not >to borrow you. >Example two: you do not want a financial chaos, help us (and pay >taxes to do it). >Depriving you of an asset you use (like a house) may be quite a >punishment. Unregulated power of banks could be very destructive. > >Piotr If this happens it is very good news for me. Because I will make a hell of a lot of money just by opening up the Toad Terrific Savings and Loan company which does not have such terrible restrictions and is open on weekends. If I am the only bank doing this, then I should get a great flood of customers through my doors. Problem solved. Are there *still* people out there who don't realise that it is possible to make a great deal of money by treating people fairly and well? -- Laura Creighton sun!l5!laura (that is ell-five, not fifteen) l5!laura@lll-crg.arpa
nrh@inmet.UUCP (12/18/85)
>/* Written 12:19 pm Dec 16, 1985 by lkk@teddy in inmet:net.politics.t */ >In article <28200382@inmet.UUCP> nrh@inmet.UUCP writes: >> >>>/* Written 12:59 pm Dec 10, 1985 by lkk@teddy in inmet:net.politics.t */ >>>In article <267@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes: >>>> >>>>I don't think so. Large private corporations, which are basically >>>>anti-democratic institutions, wield a lot of power in the US. >>>... >>> >>>With such economic significance, these corporations become >>>quasi-nations unto themselves in the world of international finance. >> >>What does this mean? Does it mean that you believe only nations >>should be above a certain size? If so, on what basis do you make >>the case? > >I was not making any prescription for change, simply pointing out the fact >that there is little democracy (self-determination) in the world, in part due >to the economic hegemony of the first-world over the third. I hope you aren't equating democracy with self-determination: consensus, yes, but democracy no. >>>When <random third world leader> approaches the Chairman of Chase >>>Manhattan Bank for a loan, it is the banker who has the upper hand. >> >>Larry, I don't think you understand what's going on here. The statement >>is trivially true (whenever I offer you a deal, I have the "upper hand" >>because you may refuse it or not, but I can't (having already offered it)). > >Except for the fact the the third world needs the money a lot more than >the banks need to lend it to them. Then ask yourself, why should a bank lend to third world countries? (Actually, I'll bet a lot of bankers are asking themselves this question). They do it because they stand to gain something, and they're not so moral that they'll charge lower interest rates than they can get. Whether those rates are regulated or not, I don't know (I suspect they are, if only indirectly, by the danger of banking regulation in the US, and the degree of IMF/World Bank support of usurious rates), but given that all US banks share the market under the same regulations, there has been competition for sovereign debt. Given this situation, if the banks wanted to make the loan less than the Third World types wanted to take it, the banks would raise the interest rates, or (if high rates were forbidden) they'd refuse to make the loan UNLESS they saw that as the most profitable way to invest that money. Or do you think that they loan money to rather than to Argentina for the fun and glamor of it? >>>Thus, David Rockefeller has the ability to drastically affect the >>>fortunes of millions of people the world over. Was he elected by >>>them? No. >> >>Nope. The person who sought out David Rockefeller was not some random >>swine who was appointed by the gods to be able to assume a debt in the >>name of the country, but the head of some government or other. >> >>Such governments typically claim to be democracies, and if they act >>anti-democratically by selling their economic future to David >>Rockefeller (who is, by the way, not the only bidder) then it is >>the governments you should criticize, not the moneylenders. > >Just like, "well you're starving, and I own all the food in town, but >you certainly have the right not to deal with me." No, Larry. David Rockefeller doesn't own all the "food", or money. Not even the US banking community owns all the money (remember, there's always the Soviet Union (dangerous as that it) the Swiss and Cayman Island banks, and so forth. The situation YOU describe is much more like a statist society (they generally find they have to partially decontrol agriculture in fairly short order, but don't do it enough) where the government controls all the food (and water, and air). Let's be clear what we're talking about though -- we're talking about money for industrial development, not food. Industrial development is nice, but it's not as if it MUST be powered from outside, or by positive government action. Indeed, I'll bet all the government of, say, Ethiopia, would have to do is get out of the way. This is difficult NOW because the banks have done some pretty stupid things -- they've overextended themselves, and begun to make loans just so the bad debts don't appear on their balance sheets. Folks, can you say "impending bubble-burst"? >Freedom entails >(among other things) control over your own destiny. If you are >constrained by lack of resources just to stay alive, any other >"freedom" is irrelevant. A familiar, if almost inapplicable (in this case) argument. The degree to which those loans are squandered on useless, cosmetic, and counter-productive projects is appalling. This is not to say that loans should never be made (they should be, when all parties freely agree), but merely that corrupting a bunch more officials in Nigeria, or building the world's longest power line in Zaire (to a region that has a fair amount of hydroelectric potential) doesn't keep anyone from dying. Indeed, wasteful but politically popular use of those funds no doubt accounts for a fair amount of misery in the Third world.
lkk@teddy.UUCP (12/18/85)
In article <894@mmintl.UUCP> franka@mmintl.UUCP (Frank Adams) writes: >Nationalizing the banks would be a disaster! Instead of being independent >power sources, they would all be added to what is already the greatest >accumulation of power in the world. Now if you need to borrow money, >there is only one place to go -- and you had better have good political >connections if you expect any success. Until the recent advent of the Fair Credit Act (or whatever its called), the same was true of commercial banks. Especially if you were poor, or black, or <random object of bigotry or hatred>. I'd much rather that the banks be in the control of the government, which I have *SOME* chance of affecting, rather than private individuals. Government ownership of the banks could be like that in France, where they are run as semi-autonomous "for profit" institutions. Government ownership insures, however, that capital is available for societally important sectors, such as farmers and the poor. Right now, the banks are in the midst of a massive series of farm foreclosures across the country. These foreclosures do nothing postive, help to futher destroy the small farmer and rural culture, and could/should be prevented, given a government bank with the foresight to realize this. Private banks can't see past this years bottom line. > >Truely meaningful economic reform would be a very good thing. It did wonders >for Japan, South Korea, Hong Kong, and Singapore. I suspect what you have in >mind, however, is government control of the economy -- i.e., socialism. This >policy has been adopted by most of the rest of the third world. It, too, >has done wonders -- at preventing growth. It has also been implemented in almost every country in Europe, some of which have higher growth rates than the United States, and are much nicer places to live that Hong Kong. -- Sport Death, (USENET) ...{decvax | ihnp4!mit-eddie}!genrad!panda!lkk Larry Kolodney (INTERNET) lkk@mit-mc.arpa -------- Life is either a daring adventure, or nothing. - Helen Keller
berman@psuvax1.UUCP (Piotr Berman) (12/18/85)
> > >/* Written 12:45 pm Dec 13, 1985 by berman@psuvax1 in inmet:net.politics.t */ > > > >Power of banks: forcing people to do what they do not want to do. > >Example: you want to borrow from us, you must deposit here (my > >personal experience). > > Omigosh! What a huge amount of power: to trade with you only > on terms they find agreeable! (Of course, YOU must also > find the terms agreeable). Oh woe! > Using your movie theater example: it is like if you were told that you can watch "Rainbow bright" only if you also buy tickets for "Rocky XXX". Of course, I was not forced to make a deal: one can walk or learn how to repair old cars. Still, I view many package deals as infringement of my freedom, if there is no pure deal around. > It's quite true that the banks have a power to deny you a loan, but > they can't "force" you to do things you don't want to do unless at > some point you agree to this, or, of course, if the government backs > them up. > > >Imagine that there is no regulations. Then you might have: you > >want to borrow, deposit here, insure here, use us as a brocker. > >Or worse: we do not like you, we will recommend everybody not > >to borrow you. > > Such tactics work sometimes -- and sometimes not. Would you like > to know where it's used a lot around here? Bless you Piotr! The > GOVERNMENT operates in this way: .............................. > Which just supports my claim that not only the GOVERNMENT has the power. > >Example two: you do not want a financial chaos, help us (and pay > >taxes to do it). > > Oho! A government goes to a bank and offers to pay more money back > later in exchange for a quantity of money today. The bank agrees. > The government, likely through incompetence or lack of nerve, FAILS to > meet the deadlines. > > In the world of individuals, (...) > > In EITHER case, the bank involved would be justified in exercising > whatever non-payment clause there was in your loan when you refused to > pay. > You missed the point by a mile. Bank can invoke a non-payment clause against a country, but only to a point. In 19 century the bank would ask its government (US, France etc.) to size the customs of the debtor country. Nowadays, this is not practicable, so there exists an intricate system in which the rich governments subsidize the poor governments so that the latter can pay increased spreads to banks. > >Depriving you of an asset you use (like a house) may be quite a > >punishment. Unregulated power of banks could be very destructive. > > I suppose you'll find this tough to believe, but the ungrateful S.O.B.'s > that run the movie theater nearby have just stopped showing a movie I > liked. Further, even when they were running it, they insisted I *pay* > them when I saw it! Oh the injustice! ..................... > Remember the double feature example which I gave before. Imagine also that one company buys from the leading studios the franchise to show their movies in, say, Cleveland. Afterwards, whoeverer in Cleveland wants to see a movie must either a. agree to their terms, b. travel 30 miles. This is exactly what I mean by concentration of power. Of all the bissnesses, banks can potentially wield the greatest power. You as individual may do not feel it this way, but every kind of bussiness needs credit. Once there is a leverage, a dependance may appear. > Piotr, get it straight: you can prevent any bank from gaining undue > influence over you by making sure that a) You are willing and able to > make the payments, and b) The other terms of the loan don't discommode you. > and not taking the loan unless you are satisfied on counts a & b. > > I've no patience with Snidely Whiplash, but you rarely find Snidely Whiplash > in the real world. > > It's a SHAME that folks sometimes can't make their interest payments, and > it's also sad when nations can't. But let's hear no moaning about the > power the banks wield: it's power given to them by their borrowers, > and if that degree of power is unjust, let's have a closer look at the > borrowers, shall we? It's not that the banks are complete nice-guys, > or that any consequence of a credit shutoff is deserved (what about > children born during a loan-induced boom who suffer during a collection- > induced bust, for example?) but merely that the power stems not > from the banks but from the borrowers. The life is more complex than your down to earth example. Consider: John V. Decent deposits money in HugeBancorp. The president of HB is fed lavishly by president for life of Whereitis, gen. Bozo. Wheritis receves a loan, 1 billion dollars (plus another 10 billion from AnotherBankIntown, ZillionYenIncorp etc.). 7 years later (now we have seven lean years, following 7 fat ones). Gen. Bozo is retired in St. Tropez, the former president of HB similarly enjoys Boca Raton, the citizens of Whereitis learn that they need an austerity program after years of depositing billions in Swiss accounts of the most distinguished citizens, John V. Decent learns that unless his government will help, his bank account will go down the drain, the financial panic will drive interest rates to the sky and his employer will bancrupt. Now, is there a little of a reap-off here? In the unregulated past the above scenario differed: John. V. Decent actually was loosing his account and job. And the reap-off was bigger. Piotr Berman
berman@psuvax1.UUCP (Piotr Berman) (12/18/85)
> >Imagine that there is no regulations. Then you might have: you > >want to borrow, deposit here, insure here, use us as a brocker. > >Or worse: we do not like you, we will recommend everybody not > >to borrow you. > >Example two: you do not want a financial chaos, help us (and pay > >taxes to do it). > >Depriving you of an asset you use (like a house) may be quite a > >punishment. Unregulated power of banks could be very destructive. > > > >Piotr > > If this happens it is very good news for me. Because I will make a > hell of a lot of money just by opening up the Toad Terrific Savings > and Loan company which does not have such terrible restrictions and > is open on weekends. If I am the only bank doing this, then I > should get a great flood of customers through my doors. > > Problem solved. Are there *still* people out there who don't realise > that it is possible to make a great deal of money by treating people > fairly and well? > > Laura Creighton As a rotten relativist, I open Even Better Bank & Trust open day and night, only to vanish after accepting first 1 million dollars in deposits (no, I am rather honest, I wold rather return from the futures exchange and say: sorry, I lately realized that currency futures are not conservative investments after all). Not only I will deprive my depositors of the product of their toil, I will also scare to death your depositors.
berman@psuvax1.UUCP (Piotr Berman) (12/21/85)
[ Discussion about undemocratic power of banks ] > >>>>I don't think so. Large private corporations, which are basically > >>>>anti-democratic institutions, wield a lot of power in the US. > >>> > >>>With such economic significance, these corporations become > >>>quasi-nations unto themselves in the world of international finance. > >> > >>What does this mean? Does it mean that you believe only nations > >>should be above a certain size? If so, on what basis do you make > >>the case? > > > >I was not making any prescription for change, simply pointing out the fact > >that there is little democracy (self-determination) in the world, in part due > >to the economic hegemony of the first-world over the third. > > >>>When <random third world leader> approaches the Chairman of Chase > >>>Manhattan Bank for a loan, it is the banker who has the upper hand. > >> > >>Larry, I don't think you understand what's going on here. The statement > >>is trivially true (whenever I offer you a deal, I have the "upper hand" > >>because you may refuse it or not, but I can't (having already offered it)). > > > >Except for the fact the the third world needs the money a lot more than > >the banks need to lend it to them. > > Then ask yourself, why should a bank lend to third world countries? > (Actually, I'll bet a lot of bankers are asking themselves this question). > They do it because they stand to gain something, and they're not so > moral that they'll charge lower interest rates than they can get. > > >>>Thus, David Rockefeller has the ability to drastically affect the > >>>fortunes of millions of people the world over. Was he elected by > >>>them? No. > >> > >>Nope. The person who sought out David Rockefeller was not some random > >>swine who was appointed by the gods to be able to assume a debt in the > >>name of the country, but the head of some government or other. > >> > >>Such governments typically claim to be democracies, and if they act > >>anti-democratically by selling their economic future to David > >>Rockefeller (who is, by the way, not the only bidder) then it is > >>the governments you should criticize, not the moneylenders. > > > >Just like, "well you're starving, and I own all the food in town, but > >you certainly have the right not to deal with me." > > No, Larry. David Rockefeller doesn't own all the "food", or money. > Not even the US banking community owns all the money (remember, > there's always the Soviet Union (dangerous as that it) the Swiss and > Cayman Island banks, and so forth. The situation YOU describe is much > more like a statist society (they generally find they have to > partially decontrol agriculture in fairly short order, but don't do it > enough) where the government controls all the food (and water, and > air). > > Let's be clear what we're talking about though -- we're talking about > money for industrial development, not food. Industrial development is > nice, but it's not as if it MUST be powered from outside, or by > positive government action. Indeed, I'll bet all the government of, > say, Ethiopia, would have to do is get out of the way. > > This is difficult NOW because the banks have done some pretty stupid > things -- they've overextended themselves, and begun to make loans > just so the bad debts don't appear on their balance sheets. > Folks, can you say "impending bubble-burst"? > > >Freedom entails > >(among other things) control over your own destiny. If you are > >constrained by lack of resources just to stay alive, any other > >"freedom" is irrelevant. > > A familiar, if almost inapplicable (in this case) argument. The > degree to which those loans are squandered on useless, cosmetic, and > counter-productive projects is appalling. This is not to say that > loans should never be made (they should be, when all parties freely > agree), but merely that corrupting a bunch more officials in Nigeria, > or building the world's longest power line in Zaire (to a region that > has a fair amount of hydroelectric potential) doesn't keep anyone from > dying. Indeed, wasteful but politically popular use of those funds no > doubt accounts for a fair amount of misery in the Third world. I think that the subject "power of the banks" is far from clear. The decision are made in a secretive way, and one can make inferences about the issue only with quite a bit of a guesswork. I would make several points: 1. Banks are run by wealthy people, which have quite large conservative bias. Example: if you have two equaly efficient/ /inefficient leaderships of a country (say, Jamaica), one with pro-western posturing, another with socialist posturing, guess who gets trouble getting loans? The problem here is that both government are almost equally credit worthy/unworthy. Alliende in Chile experienced a credit cruch, while truckers union, striking to paralize economy, could easily secure loans. Subsequently, Pinochet doubled (at least) the national debt. It is quite clear that we have a group of people exercising quite substancial political clout, who helped to topple more than one government with motivation being not profit alone, but political as well. 2. Frequently, loans are made in a way which assures future dependency of the debtor, rather than development. Of course, corrupt elites of debtor countries are to be blamed, but the lenders who cooperate with them do not have clear hands either, and sometemes take most of the profit from the corruption. It is fishy that country like Zair has positive trade balance for years and years, only to be heavily in debt (Argentina, Venezuela are also examples of that). Banks routinly neglect to perform economical analysis of their own, which could help tremendously the unsophisticated lenders. Instead, they operate as inefficient bureaucracies, blindly helping to finance inefficient projects and outright scams. 3. High interest rates charged to debtor countries are justified by higher risk. Still, banks want to have everything: the risk diminished by governmental support and the risk premium. 4. My general impression is that banks behave often irresposibly, because with their size and clout they can afford to. 5. Having to deal with several banks as a consumer, I got impression that the larger the bank is, the more arrogant it is. It charges larger fees, is less responsive to the situation of the client, tends to communicate with ypu exclusively via computer printouts (pretty dumb at that, like counting the same charge twice) etc. Of course, competition helps. If you can change money at CitiBank and DeakPereira, never go to CityBank (possibly, you should avoid CitiBank under any circumstances, but the same can go with Chemical, First of Boston etc.). One of the problems of underdeveloped countries is that they cannot go to a nice bank like First National of Centre Hall, but they must deal with CityBank and alike. 6. Banks are not in the bissness of being Santa Claus. Still, they do not behave responsibly. Current credit crisis of US farms originated partially because banks behaved like pushers of loans. The situation in third world is similar. The problem is that very large number of people is affected by the decisions of relatively few. The reasons of Great Depression are debatable, but the stock exchange panic for sure was facilitated by banks, which with they lending policies helped to overheat the market up to a point of great instability. Money supply may be blamed, but who had the clout to influence it? Piotr Berman
franka@mmintl.UUCP (Frank Adams) (12/22/85)
In article <1838@teddy.UUCP> lkk@teddy.UUCP (Larry K. Kolodney) writes: >>Nationalizing the banks would be a disaster! Instead of being independent >>power sources, they would all be added to what is already the greatest >>accumulation of power in the world. Now if you need to borrow money, >>there is only one place to go -- and you had better have good political >>connections if you expect any success. [Me] > >Until the recent advent of the Fair Credit Act (or whatever its called), >the same was true of commercial banks. Especially if you were poor, or black, >or <random object of bigotry or hatred>. I'd much rather that the banks be in >the control of the government, which I have *SOME* chance of affecting, rather >than private individuals. There are a lot of ways to affect private individuals. One is to get a law passed, like the Fair Credit Act (or whatever it's called). But the main point is that there are lots of different banks, and you only have to convince one of them. >Government ownership of the banks could be like that in France, where they >are run as semi-autonomous "for profit" institutions. Government ownership >insures, however, that capital is available for societally important >sectors, such as farmers and the poor. Right now, the banks are in >the midst of a massive series of farm foreclosures across the >country. These foreclosures do nothing postive, help to futher destroy >the small farmer and rural culture, and could/should be prevented, >given a government bank with the foresight to realize this. Private >banks can't see past this years bottom line. The French nationalization is rather recent; I would avoid drawing any conclusions about it for a few years yet. Government ownership insure that capital is *not* available for areas the government *doesn't* like. The government can and does make capital available where it wants it by giving preferential tax treatment. The banks are *not* in the midst of a massive series of farm foreclosures. There are a lot of farmers who borrowed a lot more money in the 70's than they should have. Those who are in really bad shape are being foreclosed. On the whole, the banks involved are being very accomodating -- these people are valued customers. >>Truely meaningful economic reform would be a very good thing. It did wonders >>for Japan, South Korea, Hong Kong, and Singapore. I suspect what you have in >>mind, however, is government control of the economy -- i.e., socialism. This >>policy has been adopted by most of the rest of the third world. It, too, >>has done wonders -- at preventing growth. > >It has also been implemented in almost every country in Europe, some >of which have higher growth rates than the United States, and are much >nicer places to live that Hong Kong. There are two (main) aspects of socialism -- nationalization and the welfare state. I was referring to nationalization here. The nations of western Europe all have more private industry than public industry. Furthermore, the public industries were mostly nationalized after they became large as private companies; and they are mostly not very productive today. Also, to my knowledge only France has much in the way of price controls; the typical third world country has lots of price controls. Twenty years ago, they were much, much nicer places to live in than Hong Kong. One expects (relatively) economically backward countries to catch up to (relatively) advanced ones. Western Europe has caught up with the U.S.; the Asian countries I listed, starting much farther back, have almost caught up with both. What needs explanation is why the rest of the world hasn't participated. I don't claim that socialist policies are the whole reason, but I think they are a large part of it. Frank Adams ihpn4!philabs!pwa-b!mmintl!franka Multimate International 52 Oakland Ave North E. Hartford, CT 06108
laura@l5.uucp (Laura Creighton) (12/30/85)
In article <1931@psuvax1.UUCP> berman@psuvax1.UUCP (Piotr Berman) writes: > >As a rotten relativist, I open Even Better Bank & Trust open day and >night, only to vanish after accepting first 1 million dollars in >deposits (no, I am rather honest, I wold rather return from the >futures exchange and say: sorry, I lately realized that currency >futures are not conservative investments after all). Not only I will >deprive my depositors of the product of their toil, I will also >scare to death your depositors. I don't think so. What will happen is that I will advertise that I am trustworthy and you are not. It is difficult to build a reputation for trustworthiness (in that it doesn't happen in a hurry) but it is difficult to lose one in a hurry as well. Maybe I should run the banking division of Pinkertons or Brinks... -- Laura Creighton sun!l5!laura (that is ell-five, not fifteen) l5!laura@lll-crg.arpa
berman@psuvax1.UUCP (Piotr Berman) (01/06/86)
> In article <1931@psuvax1.UUCP> berman@psuvax1.UUCP (Piotr Berman) writes: > > > >As a rotten relativist, I open Even Better Bank & Trust open day and > >night, only to vanish after accepting first 1 million dollars in > >deposits (no, I am rather honest, I wold rather return from the > >futures exchange and say: sorry, I lately realized that currency > >futures are not conservative investments after all). Not only I will > >deprive my depositors of the product of their toil, I will also > >scare to death your depositors. > > I don't think so. What will happen is that I will advertise that I am > trustworthy and you are not. It is difficult to build a reputation for > trustworthiness (in that it doesn't happen in a hurry) but it is difficult > to lose one in a hurry as well. Maybe I should run the banking division of > Pinkertons or Brinks... > > Laura Creighton The futures exchange example is real: a guy in San Diego managed to loose upward $100,000,000 in such a scheme, and money belonged to so-called "sophisticated investors". The claim that trustworthiness cannot be lost in a flash is false: witness the run on state chartered banks in Ohio after one of them got bancrupt: the others could be very prudent, but it did not help much. Piotr Berman
sykora@csd2.UUCP (Michael Sykora) (01/11/86)
>/* berman@psuvax1.UUCP (Piotr Berman) / 12:20 am Jan 6, 1986 */ >The futures exchange example is real: a guy in San Diego managed to loose >upward $100,000,000 in such a scheme, and money belonged to so-called >"sophisticated investors". It happens, but not often as a percentage of the number of deals that are made. Otherwise, deals would not be made.