Harry Binswanger’s 2011 praise of Goldman Sachs at Forbes.com ignores the context that the US does not have a free market economy. The US is a mixed economy, whose financial sector is monopolized by banking cartels. Counter to Binswanger’s argument that, “since profit is the market value of the product minus the market value of factors used, profit represents the value created,” the corporate profits of Goldman Sachs are the result of lobbying, government insider favors, the infamous 2008 bailout of AIG. and their membership in the central bank’s monetary monopoly. This misdirection is the primary characteristic of what Roderick Long called “right-conflationism.”
Nobody inherently owes anyone anything. Binswanger appears to be making a collectivistic argument where the value society gets should be recognized.
“It is “the community” that should give back to the wealth-creators.” This is how so. Wealth isn’t going to be absolute, but all I see is an implicit position of intrinsic market value.
“Since profit is the market value of the product minus the market value of factors used, profit represents the value created.” Yes, this is profit, and money paid for a product represents value someone has for a product. Then again, we mustn’t forget profit becomes distorted with regulation. Binswanger should know better.
“Imagine the effect on our culture, particularly on the young, if the kind of fame and adulation bathing Lady Gaga attached to the more notable achievements of say, Warren Buffett.” Yet another example of intrinsic market value. Binswanger is implying that Lady Gaga has to be less valuable than Buffet. Entertainment value is valid, and some people value Lady Gaga. The bottom line is that Binswanger looks to be making a “social value” utilitarian argument mixed with profit being the end-all of that value.
"Billionaire investor Warren Buffett on Wednesday defended credit rating agencies that gave overly positive grades to mortgage-related investments before the housing bust. He said the agencies were among many who missed warnings signs of the crisis.
“They made the wrong call,” Buffett acknowledged.
But he said he counted himself among those who failed to foresee the collapse of the housing bubble. Buffett called it the “greatest bubble” he had ever seen.
“The entire American public was caught up in a belief that housing prices could not fall dramatically,” Buffett told a congressionally chartered panel investigating the financial crisis. Had he known how bad it would get, Buffett said he would have sold his company’s stake in Moody’s.
Buffett is testifying before Financial Crisis Inquiry Commission alongside Moody’s Corp. CEO Raymond McDaniel. Buffett’s investment firm is Moody’s largest shareholder."
Thanks for the reference. I would not characterize that as Buffett giving sub-prime AAA ratings, but defending someone else’s mistake in doing so.
Buffett himself sounded the alarm on Freddie and Fannie way before anyone else thought there was an issue. He sold his Freddie/Fannie stock when they were still high and when there was no sign of a downturn on the horizon. As often happens, people thought he was being unduly risk-averse, because those firms had an implicit government guarantee, but that wasn’t reassurance for him. Similarly, a little before the downturn, he had bought a reinsurance company that had a lot of derivative risks, and he forced them to unwind their positions at significant losses. The one thing one cannot accuse Buffett of is taking one undue risk. he always plays things safe. Buffett has shown an obstinate independence when it comes to avoiding booms. If every American were to stick with Buffet’s level of risk-taking (relative to their own level of assets) we’d not see such booms and busts.
As for this topic, I have not read the linked article, but in my experience this particular libertarian argument usually fails to argue for any line at which a firm is justified in lobbying government or in using government-rules, subsidies, etc. to its advantage. By this logic, every bank is evil because they work under FDIC subsidy.
“I have not read the linked article,” – But thats not going to stop me from commenting on what I think it might say!
Ah, so your article does in fact point to ways in which businessmen collaborate with government, take subsidies, pay lobbyists, perhaps even bribe government officials, but still remain moral. Good for you. We need more articles like that.
Its kind of silly to begrudge someone for an article that they didn’t write. If I was interested in that theme at the time, I might have written it. Since you seem to have an interest in it, perhaps it would be a good topic for you to write about? Still, I think its kind of silly to say “He didnt write about x, in that article so, that somehow makes the article untrue.”
Its kind of silly to begrudge someone for an article that they didn’t write. If I was interested in that theme at the time, I might have written it. Since you seem to have an interest in it, perhaps it would be a good topic for you to write about? Still, I think its kind of silly to say “He didnt write about x, in that article so, that somehow makes the article untrue.”
When a particular argument requires a caveat in order to be correct, it’s not unreasonable to expect someone making that argument to include the caveat.
Its kind of silly to begrudge someone for an article that they didn’t write.
That’s your mistaken characterization. Having read your article, I see I was right after all: just another in the “anarcho-communist occupy-Wall St” genre. It’s been going on since at least 1920?
“just another in the “anarcho-communist occupy-Wall St” genre.”
This is way off base.
Where in my article do I make an appeal to anarchism? – I don’t.
How is my argument dependant on anarchism or communism for that matter? – It isn’t.
Anarchists and communists both see mixed economies as places where people who probably would not make it in a true free-market have instead “captured” the machinery of the state and are running it (e.g. via “banking cartels”). Obviously there are some, even many, businessmen like this. However, it does not follow that the majority of businessmen own their wealth to pull-peddling. The majority of folk who work at places like Goldman Sachs are extremely bright and very action-oriented. They have strengths that would help them thrive free-markets that are as cut-throat as they come. Most os these high-earners would still be high-earners in a free-marmet.
Their primary fault is that they mostly take the politics and philosophy of their times as a given and figure out how to work within that framework. It is not primarily a framework of their making… they find it, and work with it as if it is a metaphysical fact. The fictional archetype is closer to Gail Wynand, without his sleaze.
And, without his understanding of the immorality of the system.
I just want to add that I don’t intend my post as a defence of Binswanger’s article, which I haven’t read.
I fact, I’m quite open to the idea that Goldman Sachs stepped over the line, but your article, listing number of lobbyists, levels of political contributions, and salaries paid to executives is just a wrap-up of unconvincing bromides. If you want to make a convincing case, figure out the razor and judge Goldman against it.
Buffet was the largest shareholder in Moody’s. Moody’s gave AAA ratings. I just think they knew they general public wouldn’t be aware what was going on, and used it to their advantage. The amount of private equity redistributed in 2008 was 18 times that of 2003. Moody’s and Buffet had huge respect and credibility, much more than the few economists of 2004 who say it coming, and were hoping for alarm, but largely ignored.
I’m not try to cast blame, but I lost a lot of respect for him then. He was well poised to acquire the companies he did and avoid the most toxic of derivatives.
Anarchists and communists both see mixed economies as places where people who probably would not make it in a true free-market have instead “captured” the machinery of the state and are running it (e.g. via “banking cartels”). Obviously there are some, even many, businessmen like this. However, it does not follow that the majority of businessmen own their wealth to pull-peddling. The majority of folk who work at places like Goldman Sachs are extremely bright and very action-oriented. They have strengths that would help them thrive free-markets that are as cut-throat as they come. Most os these high-earners would still be high-earners in a free-marmet.
Their primary fault is that they mostly take the politics and philosophy of their times as a given and figure out how to work within that framework. It is not primarily a framework of their making… they find it, and work with it as if it is a metaphysical fact. The fictional archetype is closer to Gail Wynand, without his sleaze.
I would agree with this if you followed up with some explaination of how the points I made didnt apply in the case of Goldmans Sachs, or if Binswanger didnt personally nam_e Lloyd Blankfein as deserving as the same praise as that which Mother Teresa currently recieves._
I would agree with this if you followed up with some explaination of how the points I made didnt apply in the case of Goldmans Sachs, or if Binswanger didnt personally nam_e Lloyd Blankfein as deserving as the same praise as that which Mother Teresa currently recieves._
I would agree with this if you followed up with some explaination of how the points I made didnt apply in the case of Goldmans Sachs, or if Binswanger didnt personally nam_e Lloyd Blankfein as deserving as the same praise as that which Mother Teresa currently recieves._
So, you think that Mother Teresa’s morality rates higher than Blankfein?
I just want to add that I don’t intend my post as a defence of Binswanger’s article, which I haven’t read.
You should read Binswanger’s article - he really makes a poor quality argument that seems to contradict basic principles of what value is. That is, I don’t get why he seems to misrepresent so much of Objectivism by speaking about what we “owe” to the 1%. It’s just sad to see.
Anarchists and communists both see mixed economies as places where people who probably would not make it in a true free-market have instead “captured” the machinery of the state and are running it (e.g. via “banking cartels”). Obviously there are some, even many, businessmen like this. However, it does not follow that the majority of businessmen own their wealth to pull-peddling. The majority of folk who work at places like Goldman Sachs are extremely bright and very action-oriented. They have strengths that would help them thrive free-markets that are as cut-throat as they come. Most os these high-earners would still be high-earners in a free-marmet.
Their primary fault is that they mostly take the politics and philosophy of their times as a given and figure out how to work within that framework. It is not primarily a framework of their making… they find it, and work with it as if it is a metaphysical fact. The fictional archetype is closer to Gail Wynand, without his sleaze.
A statement like this makes one wonder why the person who made it thinks there needs to be any unmixing of the the mixed economy. Evidently it is already just as adequate a judge of merit as a laizzes-faire market would be.
If they would have been high earners anyway, and that is to be their defense for earning so highly, then some politician is going to come along, take all of their money, and say “the people I’m giving it to would have earned this anyway” (and they will deserve it when it happens to them). The moment all of these (allegedly) wonderful people at places like Sachs start taking whatever (sizable) portion of their income their same efforts would have amounted to if not for government favoritism, and donating it to The Ayn Rand Institute, or purchasing weapons for some kind of underground revolutionary movement, or giving it to Tea Party politicians, or even just to some half-baked Libertarian whom they think has his heart in the right place - instead of spending it on BMWs, exotic vacations, donations to Republicrat and Demublican politicians, church tithings, various “look at me” altruist causes, and the latest smartphone for their 10 year old daughters - then they will deserve moral adulation. Until then, they deserve to have their characters regarded with the same suspicion that any whining, alcoholic welfare recipient does when he claims that “the rich” have taken away all of his opportunities to make a better life for himself.