http://www.nakedcapitalism.com/2009/12/is-kleptocracy-a-relevant-term-for-discussion-about-the-origins-of-the-crisis.html#comment-73288

But there ARE those who believe in NO regulation – Greenspan being a perfect example, believing fraud was self-regulating.

As for schemes, there are no conspiracy theories my friend, just self-interest and the inexorable pull in one direction or another that this self-interest creates.

I find your arguments about government facile. Government is not completely divorced from the populace. Those in government are self-interested as well but they do not work in a vacuum. They need votes and that means serving their self-interest necessarily means pandering to one group or another.

As for a kleptocracy, I sense a blinding agenda there, a predicate that assigns primacy to one form of self interest over others that are in fact more evident. Rich, successful people are good at adding to their wealth by definition, but there are not enough of them to take over democratically elected government and direct public wealth to themselves. There are, however, enough of the poor to vote in whomever they wish; the artifical distribution of wealth is going downstream these days, not up. The mere existence of increased wealth at the top in recent years is not evidence of a scheme to extract it from the poor; it is an artifact of the shift from manual (common) to intellectual (rare) economic inputs over the last 50 years. So the only societies where a kleptocracy can thrive are non-democracies like Soviet Russia or African dictator states, etc. On the other hand, government does like to increase its own wealth and power, as we can see across the West today. A politocracy is much more likely before we get to a kleptocracy; if we keep ceding more of our freedom/wealth to government eventually a kleptocracy may develop as the rich and powerful go to Washington rather than New York or London.

What do you think about my ideas on money, and I am aware that they will not come to pass unless we have severe dislocations in our current setup.

PS- I write other controversial stuff too, just saying.

My take: there is always a risk in having government ‘intervene’ in the economy. But, given the market failure last year, it was a risk worth taking. The alternative is collapse. And while collapse can lead to the relatively benign 1920-21 outcome most Libertarians point to in America, it can also lead to the much harsher experiences Germany and Italy suffered in the early 1920s.

So if we were faced with the same post-Lehman choices again, I would advocate a strong and muscular government response again. I will actually write on this theme of crisis response later, but I had advocated a more free-market solution at the time. This was not the direction we went.

As for stimulus, there again I would probably advocate the same, especially an increase in automatic stabilizers like unemployment insurance but I would of course have wanted the bankruptcy process to facilitate a liquidation of malinvestment in autos, in finance, in housing, etc.

…if you read my three December 08 posts referenced in the stimulus piece, you will see that I don’t think fiscal stimulus is a “panacea.” After all, the government can’t make up for all the lost output of the public sector and more government spending is likely to increase malinvestment. there is only so much the government can or should be allowed to do. On this score, implicitly, I have far less faith in government than Marshall or Krugman.

So, I would advocate stimulus if I had to do it again. But, you have to do so based on the facts as they stand and you are right in part when you say I “have become convinced that the “system” as presently constituted is simply incapable of producing worthy stimuli to meet the jobs crisis, say CCC or WPA type programs.”

Don’t get me wrong, there is a limited role for jobs programs – even a WPA type one, but you have to be realistic about the chances that this will help lead to sustainable recovery.