Debate on bailouts and foreign policy

Economics Economics Questions
1

Here are my two questions:

  1. How do you rebut the claim that monetary and fiscal policy that worked 90 years ago won’t work now?

  2. Could a well placed bomb on a famous New York bridge bring the world to a stop?

  3. what do you think of my debate style that I have developed as of late?

Read on and I have expounded on these questions in more detail. The following should give important context for these questions.

I went over to the home of a new client of mine to watch the last debate between Romney and Biden. This client is a VIP, a very BIG name for me (probably the biggest yet, with loads of contacts to even more BIG name people I would love to work with). Contingent upon working with me, he (sort of jokingly, sort of seriously) put a huge emphasis on my politics. He made it a point to inform that he is a huge progressive Liberal and Obama supporter.

Needless to say, I was worried. I knew going in I would need to bite my tongue a lot. Every now and then he would make some inflammatory comment during the debate (like we all do), and he would ask me what I thought about the topic at hand. I tried to focus the majority of my comments on criticizing Romney; I figured I would start by establishing common ground.

After the debate, we headed out onto the balcony to discuss the topics over a few drinks and a few cigarettes.

He started going into all the shit that Romney said that pissed him off and how great Obama did on the points. He was very excited, and I couldn’t get a word in edge-wise, though admittedly I wasn’t trying that hard. His boyfriend was kind of the “female” of the conversation, trying to make things more civil, which I welcomed greatly.

Then…the dreaded moment came. I had to say something, so I sufficed it with, “I am always in a tough spot in these situations. Either people love me or hate me, and usually the latter, because I don’t identify with either side of the debate. I don’t think there is much of a difference between the two parties, so I don’t really care who wins. Either way, we are in for it, IMHO”

Things got tense for a bit, and they asked, “What do you mean? These guys are total opposites. If you don’t like one, you must like another, right? I guess we don’t really understand where you stand on this. Could you please explain more?”

I obliged by saying the following (which I have found to be very effective lately, especially when talking to people you can’t really afford to piss off over politics):

“Look, when you hold the opinions that I do, it is very easy to loose friends because the opinions I hold are not popular. Thus, I am usually alone in a debate. So, before I say anything, I need to set a few ground rules.”

“First, I believe that most people’s ends are the same: almost all of us want the most efficient, nurturing, and prosperous society possible, and this end is pretty universal. What most people disagree on is how to achieve that. I think it is helpful to acknowledge this general good nature within the person you are talking to, and I acknowledge that in you. I hope you will grant me the same respect, as well.”

“Second, whatever comes of this conversation, we agree to keep it separate from our friendship. I like you guys no matter what politics you hold, and it is likely that no matter what, you and I could find something we disagree on, just as we already know we have found some things we agree on already.”

“Finally, we agree to be open and listen to the other person, doing our best not to raise our voice and, again, not take things personally. We must both agree that the search for truth is our goal; not to win the argument.”

They accepted this, and actually appreciated it. We went back and fourth, and eventually my client made the comment that if we hadn’t bailed out the banks, we would be back in the great depression, he would be homeless, and we’d all be waiting in bread lines. It’s unfortunate that we had to do it, but we need to learn from our mistake of “de-regulating the banking industry” and that the Federal Government has a legitimate place in regulating Wall Street.

I tried to get a word in, but he kept cutting me off, and at these times I was quick to remind him again that I am listening and that we are really on the same side: we both want whats best, so let’s talk it through calmly. He apologized for interrupting and we moved on.

SO…I explained austrian business cycle theory (I think rather well), explained that the Wall Street could have never gotten away with what it did before, during, and after the bust had the Federal Reserve not been in place, and that had we let the banks fail, sure, it would have hurt, but by injecting liquidity into the market via fed res notes, we are only staving off the inevitable collapse, the difference being that it will be much worst the longer we wait, and that eventually, injecting money won’t stop it. I used the heroin addict going through detox as an example of our economy using a recession as a correctional method.

He still wasn’t getting it, claiming that we had no choice. “we wouldn’t have lasted the winter” he said. “We were able to get out of the Great depression because of FDR’s measures as well as our involvement in WWII. Thank God that happened, or else it would have lasted even longer than it did, which was too long!”, he claimed.

In true Woodsian fashion, I then asked him if he was aware of the depression of 1920, explained how things were worst at the onset of that depression than the “Great” one, and the Fed did nothing, exactly the opposite of its policies in the Great Depression. It lasted a year and we were good. The only reason it started was due to the Fed’s involvement prior to the depression of 1920. I also explained the broken window fallacy and how that applied to the argument that putting people back to work and sending our most able bodied men and resources to be destroyed in war helped our economy.

In short, they didn’t entirely understand the fallacy (I think due to a few drinks), but their main point was this: “That may have worked back then, but the world is a different place now. This is a global economy and just because a policy worked back over 90 years ago, doesn’t mean it would work today. Plus we were mostly an agricultural nation at that time. This is not the case any more.”

First question: While I know this criticism isn’t really valid, I didn’t know how to offer a rebuttal to it in a way that would be persuasive to them; you know, one of those responses where it begs from the other person a “Well now that you put it that way, I guess that doesn’t make sense.”

After much more debate, they admitted I knew my stuff and at least gave me the credit for being able to back up my claims, unlike most people they had met, which made the debate more civil.

Finally, we got around to the topic of domestic protection. My client agreed with Obama and Romney on the topic of automatic weapon ownership. Both candidates made the claim that they cherished the second amendment and that gun ownership is part of our national heritage, however the average U.S. civilian should be prohibited from purchasing these weapons, and they should be reserved for those in the police and the military only. My client agreed, claiming, “Most civilians only use these to kill other people (in the anti-NAP meaning) and are dangerous for society. Most ordinary citizens neither want nor need these weapons. They only get used by gangs for violent reasons.”

I replied, “You said earlier that you agree with me that these wars in Iraq and Afghanistan are wrong, yet now you implicitly seem to be making the claim that the military deserves to use automatic weapons while at the same time civilians should not be able to. Are you willing, then, to make the claim that there are more wrongful deaths caused by civilian hands holding automatic weapons (in the 100’s per year) than the amount of wrongful deaths caused by military hands holding automatic weapons (in the thousands per year)? I mean, are you really saying that the military has shown to be more responsible with these weapons than the civilian public? Don’t even get me started on the hellfire and cruise missiles, the nukes, the warheads, etc. that we aren’t allowed to own, but the military can and regularly does use in an irresponsible manner.”

“Well, of course not, but the military needs it weapons because they fight an enemy that uses these weapons (He didn’t actually say this, but I know this is what he meant). The wars aren’t the problem per se, but rather how they were waged. Ever since Obama took office, the war on Terror has been waged in a much more responsible, efficient, and strategic manner. He ended the war in Iraq, and he took out Bin Laden swiftly. Compare this to Bush! Obama didn’t start these wars, so he has to wage them somehow! But regardless, despite all of it’s flaws, the military is a necessary evil because the only way to provide for common protection is through a Federal Government.”

This answer puzzled me a bit. He makes the claim that another area the Federal Government has a responsibility toward is protection from foreign attack, including preemptive strikes. While almost anyone that isn’t an anarchist believes in this so called “responsibility”, including liberals and progressives, usually the liberal opposes wars like those in Iraq and Afghanistan, as he did, and is all too willing to point out the inexcusable abuses of the military, especially today; but my client was not very willing to do this. This confirmed my suspicion that in my client’s mind, Obama is somehow above reproach and can do no wrong.

I didn’t want to tell him I was an anarchist because I knew that at this point it would remove all my credibility, at least to him, but I did say, “It is a bit of an assumption to say that security could not be provided for absent the government.” Then i said something about how the ends don’t justify the means.

With this, he got very excited. “YES THEY DO and I’ll tell you why. IT IS A FACT THAT WE NEED THE FEDERAL GOVERNMENT TO PROTECT US; THAT IS JUST STRAIGHT UP FACT! There are people out there who want to kill us, and we live in a day and age where all it would take to bring us down is a back pack bomb placed just in the right place in (name of some New York Bridge) and, if it went off, it would cause millions of deaths, bringing down the entire city of New York, halting the world to a stop. We must stop that from happening at any cost!”

While he didn’t really provide any proof of my point that protection could be provided other ways, I let it go. I tried to ask him, “Should we really pay ANY cost to avoid that from happening? We could potentially eliminate any possibility of that happening if we were willing to pay the cost of all our freedom. We could make everyone work from home and if you leave, you get shot on site. But, even then, it still might happen.” I didn’t get to say this but this brings me to another question: Would there be a better way to approach this topic? And, is his claim of the bridge bomb even true? I think his estimation of our importance is over-estimated to some degree, and how serious one bomb would be, but I am no architect so I don’t know if this is even possible.

All in all, it went great. We left hugging and laughing, and everyone was in good spirits, or good spirits were in us (if you know what I mean). They ended the debate thanking me for listening, answering their questions, and being honest and civil, and it all went off without a hitch. They still disagree with pretty much everything I said, but I think I did leave them with something they aren’t often left with after conversations like these: a god taste in their mouth and an open mind, knowing that there are people out there who totally disagree with you, yet have good reasons for believing it. I will be seeing them again, and these topics will inevitably come up. I hope I can change them like I did my Polish friend that I have told you all about.*

*He recently admitted that I changed him from a socialist to a “Skeptical Ancap”. My heart was warmed!

I appreciate your responses. Thanks.

2

Excellent job, sir! I like hearing these stories.

At this point, I would personally agree with him and actually develop his own point further, taking it right though all the way to praxeology. If 1920 is irrelevant, then 1929 is just as irrelevant, and so is any other historical episode, because there will always be the fall back position of “things are different now”. So you explain the difference between economic laws and empirical/historical observations, by saying that we can only make sense of history if we already have an underlying theory of how things work. Then you can focus the debate on pure theory, because both people know that bringing up historical examples is irrelevant, except as illustration of the theory. It’s the longer path, and it requires the person you’re speaking to to do some thinking/reading on their own, but in this case it’s probably a good way to go.

3

I honestly think a sizable chunk of people harbor libertarian sentiments and don’t even know it because they have been conditioned so loyally to the two party system. Being taught from day one in public schools that the state is our protector from killers and those who would poison our food (they still make kids read The Jungle in highschool!), it’s really tough for most people to come to the realization that everything we “need” the state for is based on lies.

It’s like people view libertarians as somehow anti-social because we don’t submit to the stiff dogma of the state–as if it’s a social club that everyone has a duty to uphold and participate in. Goes back to the myth of the social contract (or, as I see it, nationalism). That’s where all the factionalism comes from. The people who say, “If you’re not voting for Romney, you’re voting for Obama!” “Give Romney a chance!” “America can’t take another 4 years of Obama, we’re at a tipping point!”

If someone is open minded and fundamentally believes in the individual–which is why I believe there are more converts to libertarianism from the right wing than the left wing (like myself)–then I’m confident that a well-articulated and, as you said, a friendly and collaborative (most of us strive for the same things) conversation can easily change their minds.

That being said, I find it troubling that I have not yet been able to fully convert my father. For whatever reason he clings to his jingoism despite me having made him read Rothbard and Mises. It doesn’t make sense, and I’ve argued with him for hours about it—if you hate the state and believe in the free market, private property, freedom of contract and association, and ultimately the responsibility of the individual, why should it stop at economics and social issues? Other than that, he’s a minarchist like me. Except he still is going to vote for Romney. Doesn’t make sense.

4

Before trying to rebut it, I’d first ask the other person to provide his reasoning and/or evidence that (he thinks) supports that claim.

I’d say it depends on what’s meant by “bring the world to a stop”. Literally speaking, it absolutely would not do that.

You said you had two questions, not three. Unfortunately I don’t really have anything to say about your debate style, because I haven’t read many of your posts. Sorry.

Okay, after reading over your exposition, I think it’s nice that you tried to establish some common ground beforehand. That can definitely help put people (more) at ease.

The thing about what they claimed is that it’s just an empty assertion. “The world’s a different place now” - well, how so? Are the differences between then and now actually meaningful with respect to the context at hand? Basically my response to that claim would be about how the burden of proof still rests with the them.

What I personally try to do with people who disagree with me is find out the fundamental point of disagreement. It’s usually tucked away underneath a whole lot of other things.

For example, had I been in your shoes, I would’ve started out explaining something even more fundamental than Austrian business-cycle theory. It probably would’ve been the nature of money, but I may have moved to one or more even more fundamental economic concepts, like scarcity. You might be surprised how such fundamental concepts get “lost in the noise” for so many people, even when they’re talking about economics.

Had I been in your shoes, I might’ve pointed out to him that what he just said was a complete non sequitur. (I say “might’ve” because I understand he’s a business client of yours and you might’ve lost his business had you pressed the issue “too hard”.) Quite simply, I would’ve asked him how it follows that, because there are people out there who allegedly want to kill “us”, that we need a particular organization called the United States Federal Government to “protect” us. I might’ve gone even further than that, actually. For example, just who are these people “out there” who allegedly want to kill “us”? Who exactly does he mean by “us”? Does he mean all Americans? Really? How does he know that? Or does he simply believe it as a matter of faith? What does he mean by “protect” when he claims that “we” (who’s “we” again?) need this particular organization called the United States Federal Government for “protection”? How exactly would a backpack-sized nuclear weapon (I’m assuming this is what he means because he said “it would cause millions of deaths”) “bring us down” and/or “[halt] the world to a stop”?

Of course, I’d imagine that he’d be thorougly pissed off if I actually did call him out on all of those things, because he’d realize that his assertions are far emptier than he believed. Rather than admit to this vacuity, even though it’s basically been laid bare for all of us to see, I’d expect him to shift gears entirely and simply try to shut me up and make me go away so he wouldn’t “have to” think about it anymore. Suffice it to say, had you gone down that route, I think you probably would’ve lost his business. Since it sounds to me like you care more about that than trying to get through to him on how things really are (and that’s fine), I think it’s good that you didn’t do what I might’ve done in the heat of the moment.

There is the chance, of course, that he would’ve taken it differently, that he would’ve been grateful to you for helping him realize just how much he didn’t understand. I think there would’ve been more of a chance of this outcome if you kept your tone of voice very civil and respectful. Even then, however, I think the other outcome would’ve been much more likely, but that’s just been my own experience. Your mileage may vary.