Wednesday, October 15, 2008

I'm from the government and I'm here to help

From here. And this is interesting:




"...in offices around the country, bankers simmered.

Peter Fitzgerald, chairman of Chain Bridge Bank in McLean, said he was "much chagrined that we will be punished for behaving prudently by now having to face reckless competitors who all of a sudden are subsidized by the federal government."

At Evergreen Federal Bank in Grants Pass, Ore., chief executive Brady Adams said he has more than 2,000 loans outstanding and only three borrowers behind on payments. "We don't need a bailout, and if other banks had run their banks like we ran our bank, they wouldn't have needed a bailout, either," Adams said.

The opposition suggested that the government may have to continue to press banks to participate in the plan. The first $125 billion will be divided among nine of the largest U.S. banks, which were forced to accept the investment to help destigmatize the program in the eyes of other institutions.

In rolling out the program, Treasury said it would make the rest of the money available to banks that requested it. Officials said they expected thousands of banks to participate.

But both the
American Bankers Association and the Independent Community Bankers of America said that they knew of few banks that planned to participate.

"I'm not sure we've heard from any that want to participate," said Karen Thomas, vice president for government relations at the community bankers group, which represents about 5,000 banks. "That said, if any community banks do enroll, we anticipate it will be just a small minority."

Federal regulators said they did expect some banks to volunteer, though none stepped forward yesterday. But they added that they would not rely on volunteers. Treasury will set standards for deciding which banks can be helped, and the regulatory agencies will triage the banks they oversee: The institutions faring best and worst will not receive investments. The institutions in the middle, whose fortunes could be improved by putting a little more money in the bank, will be pushed to accept the money from the government."


So. We can conclude one of two things from this. One is that...


....pesky politicians just shouldn't intervene when a badly-regulated part of the economy screws up and poses a systemic risk.

I suspect that someone, somewhere is arguing this, and the time we will spend reading and attempting to reason with such commenters is time that we will never get back.

Or, we could conclude that...


...the whole ideology of the absent state - including the OECD-sponsored abhorrence of state-aid - a maximal interpretation of 'protectionism' - is hollow and impractical, and that elected governments (and, sadly, unelected ones as well) are key players. That we are now (and actually, we have been for some time) in a social-democratic market economy. The time has come to ignore well-heeled pressure groups and apply the same cushion to the poorest sections of society that we are now applying to the richest.

This has huge implications for lots of sectors of the economy. I can't list them all, but for me, there is now surely a cast-iron case for the application of the cultural exception to broadcasting, film and content-production in general. State subsidy for public service broadcasters can no longer be seen as being a tax-funded competitor to commercial broadcasters such as BSkyB. A decline in regulated and accountable local media poses a systemic risk to the quality of democracy and local cultural expression.

OfCOM are currently reviewing the funding of public service broadcasting. They are doing so in the dim light of the Thatcher-Reagan doctrine. That doctrine is now dead.


Would it be a bad idea to organise a series of street-parties up and down the country to celebrate this? Halloween, perhaps? We could burn a witch in effigy?


Update: This gloating really must stop. But not yet, eh?

11 comments:

KB Player said...

I burned Thatcher in effigy one Guy Fawkes Night (Halloween! How Americanised can you be!). Date, 5 November, 1990. Less than 3 weeks later my boyfriend came home singing "Ding, dong, the witch is dead."

As a good liberal, I have to say using supernatural powers are an inappropriate way to dismiss prime ministers.

(Heh,heh)

John Meredith said...

Syurely the non sequitur of the decade so far: the banks have failed so we must keep the BBC!

Where do you get this idea that free markets are 'unregulated'? We can have a regulated broadcast media (and do) without having to jail people who own TV sets without a government licence. What kind of liberal can really stand that?

If the government wishes to run a broadcasting company, it can, just as it can participate in any other market. The argument is about how that is funded, and generally speaking left liberals are against non-progressive taxation. Except when the benefit accrues overwhelmingly to them and their class, it seems. That is why I would be happy to keep a BBC of, say two TV channels and two radio channels, funded from general taxation.

But few people are willing to follow their principles to the point whre they lose benefit thmselves. You are more Reaganite than you are prpared to admit.

Paulie said...

John,

Not 'unregulated'. 'Badly regulated'.Do pay attention.

There has been a tendency towards 'unregulated' in that 'unregulated' = less regulated or regulated subject to regulations that were developed in negotiation with strong anti-regulation pressure groups.

As for the rest of it, you either haven't read or haven't understood this post.

John Meredith said...

I read and understood (I think) the post and it certainly implies that you see a distinction between 'unregultaed' media in the free media market and 'regulated' media in the state sector:

"A decline in regulated and accountable local media poses a systemic risk to the quality of democracy and local cultural expression."

You can see how a careful reader could construe from that that 'regulated and accountable' is being treated as synonymous with 'state funded', unless the 'local media' you are referring to is not state funded (in which case I don't understand the article, why not just say 'local media'?).

However, I am grateful for your clarification. But I still don't see how the current banking crisis leads you to the conclusion that public service broadcasting as currently constituted should be unassailable. If you are just saying that you see a role for public service broadcasting then we don't have a beef (although I still don't see how one idea follows from the other). The question, though, should be how much, how funded, and by whom. Why not have a subscription only BBC? I'd ay for it. I think most of us would.

Paulie said...

"Why not have a subscription only BBC? I'd pay for it. I think most of us would."

This is not a view that is shared by most people who are charged with PSB's ongoing survival.

The BBC isn't, technically, primarily state funded. I think that the flat-fee compulsory licence fee model ticks all of the boxes in terms of independence. And as far as practical accountablility goes, I'd be very surprised if you could find another institution anywhere in the country (world?) that so many people regard themselves as being included in the discussion about how it should be managed and according to what standards.

The 'progressive payment' model would only work if the BBC were fully integrated into the state and could see people's tax returns.

My conclusion from the banking crisis is that only an idiot or a charlatain can now argue that there should be no area of the market that can't be subject to the application of state-aid rules - and commercial broadcasters have sought to legally portray the BBC as state-funded and have the relevant OECD rules applied to it. Thus my link to the 'cultural exception'. If a state has an overarching 'systemic' reason to ignore market-liberals, they should do.

I'd agree that it would need to be a good reason and they should show their working, but PSB and cultural production in general is a fairly good case in my view.

John Meredith said...

"The BBC isn't, technically, primarily state funded. I think that the flat-fee compulsory licence fee model ticks all of the boxes in terms of independence."

Independence is the only thing to be said for it. But the fact that the BBC has other revenue streams is not exactly uncontroversial. Why should one academic publisher (say) be subsidised by the the government and all the others have to duke it out? And, really, there is nothing to prevent an award from general taxation being protected by some kind of grant agreement that gauarantee the BBC as much independennce as it currently has. That is just a technical issue.

"And as far as practical accountablility goes, I'd be very surprised if you could find another institution anywhere in the country (world?) that so many people regard themselves as being included in the discussion about how it should be managed and according to what standards."

You ight be right, but you might be wrong. It is the kind of thing we just can't ever know.

"The 'progressive payment' model would only work if the BBC were fully integrated into the state and could see people's tax returns."

No, you would just bnee to make a grant out of general taxation which is already progressive.

"My conclusion from the banking crisis is that only an idiot or a charlatain can now argue that there should be no area of the market that can't be subject to the application of state-aid rules"

I am not quite sure what 'state-aid' rules are, but rally, are ther many people who argue that markets should not be regulated in any way by the state? But omparing things so utterly disimilar as banking and briecasting is bound to lead you into tight corners. I can't see how the current crisis offers us an gerneralisable conclusions at all. Not least becaus we don't yet understand what caused it and what will make it better

"- and commercial broadcasters have sought to legally portray the BBC as state-funded"

It is state funded. If I don't pay for my licence I will go to jail. The state will see to it. The fact that it has other revenues is neither here nor there. Nearly all of them depend on the state funding to start with.


"Thus my link to the 'cultural exception'. If a state has an overarching 'systemic' reason to ignore market-liberals, they should do."

If it does, but it is not clear even in the case of banking. It is much less clear in the cae of briodcasting. I think the system would survive without Strictly Come Dancing or even Life on Earth (although the cricket world might stumble) and it would be more plausible to say that Two Pints of Lager and a Packet of Crisps is a social hazard than anything else. It is wort noting that the lack of state lienced newspapers has not led to systemic risk from that sector

John Meredith said...

I typed that last post with my nose. Could you do better ith your nose? No, I didn't think so. So top sneering.

Paulie said...

"Why should one academic publisher (say) be subsidised by the the government and all the others have to duke it out?"

There you go again. Fetishising the notion of state-aid. Doing stuff in partnerships with commercial publishers is in the public interest. The flatness of the publishing playing field is a secondary consideration.

"You might be right, but you might be wrong. It is the kind of thing we just can't ever know."

The claim I made that you said 'might be right' is an absolutely stupendous one. If it 'might be right' I'd say that it wipes out other considerations about level playing fields, don't you? Surely the logic of market liberalism is that businesses are *the* most accountable organisations (ho ho!)

"are there many people who argue that markets should not be regulated in any way by the state?"

On your 'strictly come dancing' comment, there are two things that sneaky opponents of PSB do. They say that they are *actually* big fans of PSB, but they think that ...

a) It should be a voluntary subscription
b) It should stick to high-minded content and ignore light entertainment (just like the *really* successful PBS model in the USA - the one you MAKE your kids watch if they get really bad marks at school)

John Meredith said...

"On your 'strictly come dancing' comment, there are two things that sneaky opponents of PSB do. They say that they are *actually* big fans of PSB"

I don't make this claim, I can't imagine why you would be a fan of PSB per se, it would depend a lot on what the content was. Personally, I am irritated at having to fun SCD but would put up with it to get Life On Earth. But why should someone who can't stand Horizon or Life on Earth have to fund them when they could get SCD on any number of channels that they currently pay for? This is why the arrangement i iniquitous. It is a way of forcio ng peple to subsuiidise the leisure interests of the middle classes. It is as liberal as a newspaper licence would be.

As to 'fetishising the notion of state aid' I just don't know what you mean. And I don't see why it is a public good to have subsidised educational publishing rather than another subsidized industry. Personally I would like to see more subsidy in my line of work. Why should the government favour one and not the other? We all provide public goods.

As to the stupendousness of your claim that I agreed 'might be right', I also pointed out that 'it might be wrong'. If it is impossible to know one way or the other, it doesn't really have any argumentative force, you can't rest anything on it.

cian said...

Paulie,
Well I can sympathise with Peter Gitzgerald. It must be pretty galling to have been sensible during the "boom", received lots of criticism for being old fashion, inefficient, etc. And then finally when the f**&ers go bust, the government bail them out. Not that I agree with him mind.

I have a criticism of your proposal to fund a citizen's income from bank's dividends. I think we need to stop thinking of bank's as commercial operators. They're not, anymore than gas, water and electrical utilities should be. They're part of the infrastructure, and are needed if you're going to have a vibrant commercial sector. Just as power, transport, civil law, etc are needed. And that's how we need to treat the argument.

So the criteria for thinking about the sector should not be about its profitability, but about the public good. What's the best way to promote investment, to maintain cashflow, to prevent speculative bubbles. Maybe it is through heavily regulated banks, maybe a mix of private and public banks. Personally I'd favour some variant on the German system, with banks strongly encouraged to invest in small to medium companies, rather than simply lend to them.

Paulie said...

Cian

"...your proposal to fund a citizen's income from bank's dividends."

'Proposal' is a bit stong - idea is more like it.

And I'd agree with everything you say here. I'm quite a fan of credit-unions in principle for two reasons: If the 'common bond' is properly worked out, it can actually be a better way of assessing risk than the box-ticking way that banks do. And secondly, it can be socially useful at a local level. It's downside, I'd guess, could be that it promotes communalism (in Northern Ireland there are definately proddy / popish credit unions - but they are a lot stronger than elsewhere on these islands.

All of this is in the 'ideas' fold rather than 'proposals' though....