Telegraph Writer Calls for Middle Class Revolution

[Warspite]

I think regulation of big business and regulation of financial markets are completely different things and completely different debates.

The argument for regulation of big business is based on the inequality of actors (big business on one hand vs. a consumer or an employee on the other), and the argument that the state should empower the latter to level the playing field. There are legitimate arguments for it and against it (e.g. that in fact there is no reason to empower the weaker actor, as he or she is still able to make sovereign decisions) - and also possibility to reach middle ground (e.g. by empowering the weaker actor only if the stronger actor passes a certain threshold of power, e.g. is dominant in the market and there is no alternative for the weaker actor).

This is however completely different from regulation of financial markets (banks, PE, hedge funds etc.), where you have independent professional actors (whose interests, even if not always aligned, are also not usually contradictory) entering with each other into transactions that have the capacity of benefiting them immensely while wreaking great havoc on the state of the market and the society as a whole (with the latter not having any say in such transactions). The argument for regulation here is much stronger because without it there is absolutely no countervailing force to curtail such behaviour.

This.

[Tamas]

I think regulation of big business and regulation of financial markets are completely different things and completely different debates.

The argument for regulation of big business is based on the inequality of actors (big business on one hand vs. a consumer or an employee on the other), and the argument that the state should empower the latter to level the playing field. There are legitimate arguments for it and against it (e.g. that in fact there is no reason to empower the weaker actor, as he or she is still able to make sovereign decisions) - and also possibility to reach middle ground (e.g. by empowering the weaker actor only if the stronger actor passes a certain threshold of power, e.g. is dominant in the market and there is no alternative for the weaker actor).

This is however completely different from regulation of financial markets (banks, PE, hedge funds etc.), where you have independent professional actors (whose interests, even if not always aligned, are also not usually contradictory) entering with each other into transactions that have the capacity of benefiting them immensely while wreaking great havoc on the state of the market and the society as a whole (with the latter not having any say in such transactions). The argument for regulation here is much stronger because without it there is absolutely no countervailing force to curtail such behaviour.

This.

A good point indeed. My issue is, that there is "financial regulation" as in stopping what is basically criminal behaviour (mostly the ones that work by offering products without disclosing all necessary informations, or finance people actually working against the interests of their clients), and there is "financial regulation" which in the name of stability keeps too big to fail around.

The main thing is, that state intervention and tweaking for the greater good is a false concept. Why? Because the state (or more precisely, the people wielding its power) is VERY far from being free of influences. And who can extort influence on the state (again, more precisely, the people wielding its power)? The ones with the means to do it.

No matter the intentions, it will be the financial and political aristocracy who will steer and benefit from the state's interventionist power (regardless of the exact field).  That is inevitable. The only remedy for this, is to keep that interventionist power to the bare possible minimum.

[Martinus]

A good point indeed. My issue is, that there is "financial regulation" as in stopping what is basically criminal behaviour

This is a bit of a circular argument, because in such cases criminal behaviour is what is prohibited by law under a pain of a criminal penalty. So, for example, in Poland, a company issuing stocks to its subsidiaries past a certain percentage threshold is a crime. Or certain forms of leverage buyouts constitute a crime. None of these behaviours are "swindle" or "fraud" but they potentially lead to such detrimental consequences that the legislator decides to criminalise them.

(mostly the ones that work by offering products without disclosing all necessary informations, or finance people actually working against the interests of their clients), and there is "financial regulation" which in the name of stability keeps too big to fail around.

I think you are still talking past my point, to be honest, as the examples you are giving would fall into the "big business" regulations, at least in the meaning used in my example (i.e. protecting a consumer against unfair trading practices). What I am talking about are techniques such as short-selling, or acquisition financial assistance where you are not dealing with a "swindle" but something that everyone involved (at least directly) is perfectly aware of. You could say these are the business equivalent of "victimless crimes" (and are criminalised for the same reason).

No matter the intentions, it will be the financial and political aristocracy who will steer and benefit from the state's interventionist power (regardless of the exact field).  That is inevitable. The only remedy for this, is to keep that interventionist power to the bare possible minimum.

This is a completely dogmatic argument. But why stop there? The prohibition against murder and theft is also protecting the interests of the "financial and political aristocracy" (as it lets the "haves" keep their lives and their assets, and protects them against the "have nots"). It does not mean that abolishing all such laws and descending into an anarchy of roving raider bands would be the preferable alternative.

[Tamas]

I think you are still talking past my point, to be honest, as the examples you are giving would fall into the "big business" regulations, at least in the meaning used in my example (i.e. protecting a consumer against unfair trading practices). What I am talking about are techniques such as short-selling, or acquisition financial assistance where you are not dealing with a "swindle" but something that everyone involved (at least directly) is perfectly aware of. You could say these are the business equivalent of "victimless crimes" (and are criminalised for the same reason).

Well yes, but those are the areas where it starts to be really hard to effectively regulate. And if you have inefficient regulation, it is probably worse than having none at all, as such regulations (and in fact, laws in other sectors) become mere tools in the powerplays of the people doing the questionable stuff.

[Martinus]

I think you are still talking past my point, to be honest, as the examples you are giving would fall into the "big business" regulations, at least in the meaning used in my example (i.e. protecting a consumer against unfair trading practices). What I am talking about are techniques such as short-selling, or acquisition financial assistance where you are not dealing with a "swindle" but something that everyone involved (at least directly) is perfectly aware of. You could say these are the business equivalent of "victimless crimes" (and are criminalised for the same reason).

Well yes, but those are the areas where it starts to be really hard to effectively regulate. And if you have inefficient regulation, it is probably worse than having none at all, as such regulations (and in fact, laws in other sectors) become mere tools in the powerplays of the people doing the questionable stuff.

Sorry, but this argument can be made against virtually any law in the world.

[Tamas]

I think you are still talking past my point, to be honest, as the examples you are giving would fall into the "big business" regulations, at least in the meaning used in my example (i.e. protecting a consumer against unfair trading practices). What I am talking about are techniques such as short-selling, or acquisition financial assistance where you are not dealing with a "swindle" but something that everyone involved (at least directly) is perfectly aware of. You could say these are the business equivalent of "victimless crimes" (and are criminalised for the same reason).

Well yes, but those are the areas where it starts to be really hard to effectively regulate. And if you have inefficient regulation, it is probably worse than having none at all, as such regulations (and in fact, laws in other sectors) become mere tools in the powerplays of the people doing the questionable stuff.

Sorry, but this argument can be made against virtually any law in the world.

Not really, but the more complex thing a law tries to regulate/stop, the more valid this argument is, indeed. But just because the argument is bad in some (or most) cases, it doesn't make it irrelevant by default.

And it is very complicated for financial stuff.  You mentioned short selling, for example. Putting aside the fact that any regulation on it could be circumvented in some way, basically giving more manipulative power to the hands of those who can do that than they ever had while it wasn't regulated, the idea that short selling on its own being a bad thing is debatable at best. Massive short selling of an equity is not the cause of problems for that particular stock, it is the symptom. If somebody starts massive short selling of a product that is worth owing at the prices short selling is pushing it down to. If something can be collapsed by short selling, then it was ready to collapse period.

[Savonarola]

An article I never thought I'd get to share

I once heard a series of European History lectures in which the professor talked (briefly) about the Congrès International De La Petite Bourgeoisie which met in 1899 in (where else?) Brussels.  So our revolution has a long and glorious history.

[DGuller]

Haha. The common misinformation. Classical liberals are NOT on the side of reckless big business. YOU are, and everyone else calling for strong state regulations on businesses, since those help keeping the status quo, and giving the tools to save these assholes from the consequences of their actions.

What you fail to realize is that this is the story being sold to useful idiots, so that the plutocrat 1% will have more than 1% of the people voting for the policies that only favor the 1%. 

While is is true that the effect of regulation can go both ways, either in the direction of egalitarianism or away from it, lack of regulation consistently goes in one direction only (guess which one).  One of the reasons is that big money makes even bigger money quicker than little money makes less littler money.  Another reason is that no single country has yet devised a political system that eliminates both graft and regulation, so guess what a portion of that bigger money is going to be used for.

[DGuller]

I want to know who was stupid enough to lend money to a company leveraging it more than 100% for the purpose of paying dividends? How did these lenders expect to get their money back?

To be fair, paying excessive dividends out of the creditors' pockets is essentially embezzlement, though the legal system may not be advanced enough to recognize that for what it is.  It shouldn't be the job of investors to watch out against fraud.

[DGuller]

I think regulation of big business and regulation of financial markets are completely different things and completely different debates.

The argument for regulation of big business is based on the inequality of actors (big business on one hand vs. a consumer or an employee on the other), and the argument that the state should empower the latter to level the playing field. There are legitimate arguments for it and against it (e.g. that in fact there is no reason to empower the weaker actor, as he or she is still able to make sovereign decisions) - and also possibility to reach middle ground (e.g. by empowering the weaker actor only if the stronger actor passes a certain threshold of power, e.g. is dominant in the market and there is no alternative for the weaker actor).

This is however completely different from regulation of financial markets (banks, PE, hedge funds etc.), where you have independent professional actors (whose interests, even if not always aligned, are also not usually contradictory) entering with each other into transactions that have the capacity of benefiting them immensely while wreaking great havoc on the state of the market and the society as a whole (with the latter not having any say in such transactions). The argument for regulation here is much stronger because without it there is absolutely no countervailing force to curtail such behaviour.

That is also a good point.  I can see arguments against wealth redistribution, though ultimately I disagree with them.  But to argue against things like investor protections takes some serious lack of critical thinking or some Putin-level ideological brainwashing.

[garbon]

so that the plutocrat 1% will have more than 1% of the people voting for the policies that only favor the 1%. 

How often do "the people" get to vote on these policies?

[DGuller]

so that the plutocrat 1% will have more than 1% of the people voting for the policies that only favor the 1%. 

How often do "the people" get to vote on these policies?

Not often do they get to vote directly, but they vote by proxy by electing their politicians.

[garbon]

so that the plutocrat 1% will have more than 1% of the people voting for the policies that only favor the 1%. 

How often do "the people" get to vote on these policies?

Not often do they get to vote directly, but they vote by proxy by electing their politicians.

I'm not so certain that we have any clear visibility on which politicians will do what with regards to said policies. I mean I guess we have Elizabeth Warren though I'm not sure we've real assurance she'll do anything other than make angry speeches.

[Grey Fox]

I am ready to revolt.

[Admiral Yi]

I am ready to revolt.

So revolt.