"always seeking to avoid the zero profit outcome through unfair market advantages and the stifling of competition."

Jesse's Cafe Americain has a post that I've been thinking about that Cate liked as well:

"There is a ideology that would like to believe that all people are naturally good and rational, and that markets are therefore naturally efficient and free if just left alone to themselves and allowed to function without regulation or management."

From my perspective, such views are what I call Kantian. They have uses for Political Theory and Economics, but are simply of limited value in Politics and Political Economy. One book that I really enjoy is David Friedman's "The Machinery Of Freedom" 2nd Ed. It is valuable as Economics and Political Theory, but I don't agree that it would be feasible.

"This line of argument is often pursued by certain faux conservatives when arguing that the police should be dismissed and the locks removed from the doors, in advance of a period of sustained looting of the common folk by the wealthy elite."

These are people that I'm not familiar with.

"One thing almost all idealists have in common is that their work exists largely on paper, and is rarely to be found in practical implementations over any sustained period."

I would say that idealists are people who don't accept the distinction that I drew above.

"That is why there are so few farmers and women in this camp of free market idealists because their daily struggle with disorder and decay teaches them that nothing goes the way of order and productive results without plenty of hard work, repeated effort and at least occasional observation."

Free Market Idealists tend to be few and far between. There are people who use various free market ideas that, upon closer examination of their actions, are clearly not free market idealists.

"It is the man in his easy chair reading his books that believes that the dishes clean themselves, the clothes are self-folding and storing, and the children organize their rooms and personal hygiene willingly without 'interference.'"

Wait a second. That sounds like me.

"This romantic belief in natural goodness is a great fallacy underlying the Greenspan-Reagan doctrine of trickle down easy money and the prima facie good of boundless deregulation."

These people tend to be a little too intent on imprisoning people who commit crimes to believe that people are naturally good. They do believe in law and order.

"It is similar to the belief in the natural goodness of all men and the self-ordering of large societies towards justice and equality without effort. It sounds nice, but in practice it is just ridiculous and almost utterly without support except in the minds of its philosophical adherents. No one who has ever driven in a major metropolitan area can possible believe it."

Self-Ordering has limits.

"What people forget is that it takes rules and referees and a great deal of hard work and repeated efforts to create and maintain a fair game and a level playing field for the many who may wish to play."

This is true.

"So too with the notion of a natural tendency to free markets. Its just not true. Markets tend to gravitate to oligopoly, insider dealing, fraud and utter inefficiency. Free market capitalists quickly come to hate competition with their success, and are always seeking to avoid the zero profit outcome through unfair market advantages and the stifling of competition."

This is true. That's why they tend not to be free market adherents in practice.

"Markets can be over-regulated by central planners, and it is always the road to ruin. But they can also be under-regulated and allowed to degenerate into the same awful excesses that governments and peoples fall into at various times in their history, periods of seemingly collective madness, disregard for the individual, and the rise of the will to power."

This is also true.

"Government is best that governs least indeed, but with the appropriate level of government to uphold the principles under which people come together to interact in a society and avoid despotism and anarchy. There is a range of good and evil in people, and they join in society for their mutual protection, and the accomplishment of efforts requiring a broad participation."

It's finding the appropriate level that's hard because it takes compromise.

"It is no accident that Jefferson was one of the framers of the Constitution, which although remarkable in its simplicity is ingeniously complex in its design, and fine balances of powers that endure with the commitment and sacrifice for the greater good of each succeeding generation."

I think that what I disagree with is that the people who are the most egregious perpetrators in this crisis don't believe in free markets in the same way as the people at Cato and Reason. They believe in a system that responds to interests as well as to other factors. That's why, in my little reference system, interest groups are a major part of political parties. I don't find such people idealists, but, on the contrary, realists, whose views about being bailed out if things went sideways on them are being borne out as we speak. They are the ultimate realists, because they're the ones actually in power. Not us.

"Seamus Milne says it’s time to fully nationalize the banks. Leaving ideology aside, it’s not obvious that this is a stinkingly bad idea."

This is a great day for finding posts I agree with. From Stumbling And Mumbling:

"Seamus Milne says it’s time to fully nationalize the banks. Leaving ideology aside, it’s not obvious that this is a stinkingly bad idea. "

Why, it's, it's, mine as well. I find ideology to equate to my political theory and economics.

"For one thing, Seamus is right that the measures taken so far have not worked. As the Bank of England says today:
Despite the actions taken to raise bank capital, ease funding and improve liquidity, conditions in money and credit markets remain extremely difficult. The Committee noted that it was unlikely that a normal volume of lending would be restored without further measures."

Why it's...You get it. I agree.

"The simple case for nationalizing banks is that they would be able to raise cash much more cheaply and easily than they can now; before today’s Bank Rate cut, 3 month Libor was 3.8% whilst the 3 month T-bill rate was just 1.7%. This would almost automatically allow them to increase cheap lending."

Why it's...it's...My argument again. From about two months ago, at least.

"And a lot of conventional arguments against nationalization are just plain wrong.
“Government has no expertise in managing banks.”
Nor do existing bank bosses. That’s why we are in the mess we are."

Why it's...I've argued this many times before.

“Nationalization reduces competition.”
The private sector solution to our crisis also entails a loss of competition; the Lloyds TSB-HBOS merger would never have been tolerated in normal times. And even in the best of times, competition between the banks wasn’t great."

In fact, over here, the original TARP had Tax Subsidies to encourage consolidation. These are the very same provisions that many people just stumbled upon a couple of weeks ago.

“Nationalization reduces innovation.”
It’s innovation - all those CDOs - that got us into this mess. By contrast, the innovation that would be useful - Shiller-type insurance against macroeconomic disasters - has not occurred in part because private sector financial firms cannot appropriate the large social benefits that they would bring. Maybe public ownership would help solve this public goods problem."

This point is a little shakier, but it has to do with implicit and explicit government guarantees in the US. In Britain, I'm not sure.

“Nationalization leads to bad deals for customers.”
Few customers, however, are happy with banks today. And my personal experience - from looking for somewhere to deposit the money raised from selling my flat a few months ago - suggests that National Savings are at least as efficient as any private sector bank."

This is less a bad deal than a bad joke.

“Nationalization would cause lending to become politicized.”
It would be nice to have any lending, politically motivated or not. But any reasonable arms-length structure would address this problem. After all, the BBC is in effect nationalized but operationally independent."

Much less so than a Hybrid Plan, and it would end sooner.

"So, full-scale nationalization is not a stupid idea. Better still, it might not be an expensive one. As stock markets and the economy recover, it might be possible to privatize the banks at a profit sometime in the next few years. How else is government borrowing to come down?"

Exactly. That was my original argument for a Swedish Type Plan.