15 comments to The Big Lie at the Heart of “Inside Job”
Hmm, wait a minute. You mean it’s a “lie” because a left-leaning group is using somewhat sketchy means to influence market outcomes as opposed to right-wing grounds doing the same?
Or just someone non-Hayekian? What exactly is your stance on the rampant information problems in markets, particularly insurance and lending markets? Well, I guess what I mean is: What’s the Hayekian stance? My understanding is there basically isn’t one – the market will provide the information if it is needed?
Somewhat sketchy? They flat out lied! The left regularly accuses the right of lying but doesn’t mind doing it themselves because it serves the cause.
Rampant information problems in the market are due to state intervention. Prices are the most important information in the market, but accurate prices can happen only in a free market. Prices don’t happen by accident; entrepreneurs generate them.
Hayek argues for laws estabishlisahin transparency in financial markets in his _The Cconstitution of Liberty.
If you want to know what Hayek advocated, read Hayek.
Don’t mae it up or pull it out of our hat.
Mr. Reade, your understanding is mistaken.
There are lies on both sides, of that I’m sure and wouldn’t want to deny. Is this particular lobby group necessarily lying? Or just “encouraging” (aggressively) that banks become less lazy in their policies on lending in the presence of huge informational difficulties?
Essentially there IS a problem and both adverse selection and moral hazard come into it, and the question is what to do about it. I think you guys would say: Nothing. But the FACT is that both adverse selection and moral hazard are NOT created by the government, Mr McKinney. The fact that I have information about my health I want to deny the company offering me a health insurance product is completely independent of the existence or otherwise of a government.
Greg, I’m tired of libertarians telling me in response to a relatively precise point to read an entire book. Why can’t you actually argue it yourself? Are you that lacking in confidence in your ability to repeat what should be a very simple point?
My understanding (again, please do correct me – ps your understanding of my title is wrong ) is that in his Constitution on Liberty Chapter 9, Hayek dismisses the provision of public benefits (hence unemployment and health insurance) without any mention of information issues.
But do correct me. How exactly will the market provide insurance for those deemed to have uninsurable risks by the market? Particularly when that has come about because adverse selection has led to premiums being much higher than they would be in the presence of the relevant information?
No, moral hazard and adverse selection can only be created by the state. In a free market arbitrage would eliminate it.
In your example, no insurance company would sell you insurance if you withheld vital information. You can only do so now because the state forces insurance companies to sell it to you at a cost much lower than the risk.
PS, in a free market there is no reason for an insurance company to insure someone who is uninsurable. That would be stupid of the insurance company. Insurance is not charity. People with severe illnesses don’t need insurance; they need charity. Trying to buy insurance when you have a major illness is like trying to buy house insurance after your house burns down.
By “adverse selection” I assume you mean the same thing that the insurance industry means: healthy people don’t buy medical insurance. That does make premiums slightly higher than they would be if all healthy people bought insurance, but not by much because the number of healthy individuals who don’t have insurance is very small.
The main reasons premiums have risen is to pay for fast rising medical bills. Medical costs rise at twice the rate of cpi increases due to state control of the healthcare industry.
James, you are the one interested in raising your game. I’m not here to be your personal tutor, unless you’d like to hire me to do it.
This isn’t simple minded stuff. A great many on the left pretend that it is. I’d recommend they all actually ramp themselves up the learning curve to disabuse themselves of the illusion — and reading a book or two would make a good start.
“Greg, I’m tired of libertarians telling me in response to a relatively precise point to read an entire book. Why can’t you actually argue it yourself? Are you that lacking in confidence in your ability to repeat what should be a very simple point?”
James, you stand corrected. Time to crack a book .. and stop “guessing” about things you don’t know. A bad habit far too many possess.
“My understanding (again, please do correct me – ps your understanding of my title is wrong ) is that in his Constitution on Liberty Chapter 9, Hayek dismisses the provision of public benefits (hence unemployment and health insurance) without any mention of information issues.”
Looks like we have a free-rider problem here. The first moral duty is not to be ignorant. The burden is on you to teach yourself this stuff, if you sincerely do what to be serious and credible on the topic — an open question, of course.
“But do correct me. How exactly will the market provide insurance for those deemed to have uninsurable risks by the market? Particularly when that has come about because adverse selection has led to premiums being much higher than they would be in the presence of the relevant information?”
Yes, again time to give up trying dialogue with you guys. Just pointless, and I really do often wonder why I bother. Arrogant in the extreme (somehow you are just so superior that you need to be my tutor – haha!) and pretentious to boot, it’s not wonder you guys are all so marginalised. To think this is how you treat those interested in understanding more about your marginalised beliefs regarding the world around you…
The summarise – No Greg (and your friend), you don’t correct me by denying something exists in the face of overwhelming evidence that it does. You probably deny externalities exist too I guess? But don’t bother replying, I’m not interested in listening to people that state the world is flat and leave it at that.
” You probably deny externalities exist too I guess?”
You know nothing of Hayek’s work, your assumptions about me are completely unfounded, your assumptions about Hayek have nothing to do with Hayek, and you assume I have endless hours to teach you stuff you can easily read in a book.
That’s pathological, James.
James, I look at what people do, not what they say.
You won’t bother to open a book. Meanwhile you’d love to chew up my time becasue you can’t be bothered to use your own time even with basics one would expect from a high school student, time I don’t have. That tells me all I need to know about the sincerity and depth of your interest, and your respect for others.
Sorry James, my life doesn’t give me endless time to “dialogue” with people who refuse to read, and are happy to base a conversation on endless false “guesses” about a subject they haven’t seen fit to devote 10 seconds of their own time.
This sort of behavior, James, has a name — “troll” behavior.
The most important player on Ronald Reagan’s economic team is Ronald Reagan. The person most responsible for creating the economic program that came to be known as Reaganomics is Reagan himself. For over twenty years he observed the American economy, read and studied the writings of some of the best economists in the world, including the giants of the free market economy — Ludwig von Mises, Friedrich Hayek and Milton Friedman. — Martin Anderson