Peter Schiff 'Schools' Princeton University Professor Cornel West
Libertarian financial tycoon Peter Schiff has done the free market yet another service by blasting socialist/communist Princeton Professor Cornel West virtually into the stratosphere with a brief debate moderated by CNN's Anderson Cooper on his "360" program.
Dr. West, a leading light of the progressive movement – someone who has worked for the most prestigious universities in the world – proved on-air that he didn't know the first thing about economic history and that his much-vaunted beliefs (endlessly quoted by the media) are based not on faulty analysis but simply on ignorance.
This cannot be denied. It is on video for anyone to see. One example is West's astoundingly ignorant claim that 1930's Depression in America was basically the result of the 1920s rampant capitalist speculation and greed.
Schiff immediately attempts to rectify Dr. West's misunderstanding by informing him that the 1929 stock market crash was caused by the newly formed Federal Reserve's expansion of the money supply in the 1920s. He doesn't bother to tell West that this expansion was in fact both stealthy and criminal and that FDR ended up shutting down the banks in the 1930s to ensure that people didn't try to exchange their phony, overprinted dollars for the Fed's non-existent gold.
West denies it, of course. He apparently musters the most cogent argument he can; it goes something like this: "No, no, no ... Brother Peter. No, no, no ...."
West's ignorance is breathtaking and further evidence that the Internet Reformation is beginning to penetrate the last bastion of the Anglosphere power elite's defenses – its brainwashed progressive allies who call for yet more government, more regulations, more taxes without knowing even the rudimentary elements of real economics, let alone economic history.
Schiff's rhetoric and arguments are a "beautiful thing" to watch and at the end of the interview Cooper allowed they were "interesting" and spoke of inviting West and Schiff back on his program for a further debate.
We will be a bit surprised if that happens.
(Video from Hollywood2NY YouTube user channel.)
Posted by RebelYell on 12/02/11 06:15 PM
In my opinion Peter Schiff did not win this debate. Instead he fell into the trap, as Ron Paul so frequently does, of preaching to the converted.
This is a huge problem for libertarians. I'm not sure whether libertarian ideas are really difficult to understand or whether they're just difficult to understand for people who have received a modern education, but that doesn't really matter - the point is that the vast majority of the population does not understand the concepts which underlie Schiff's conclusions.
Therefore, when Schiff merely elucidates his conclusions in a hectoring manner, he persuades only those who already understand the concepts and are aware of the facts that lead to his conclusions. Those who do not already share the concepts are not convinced, and those that might be open-minded are put off by his strident demeanor.
Unfortunately it seems to be extremely difficult to explain libertarian concepts in a simple manner (although I loved rossbcan's concise explanation of the consequences of de-risking behavior below), because the chain of consequences to show the link from cause to final effects is often long and broad.
In addition, I actually think that Schiff is wrong when he refuses to recognize that the banks bear any blame for the problems. West is correct when he alludes to the symbiotic relationship between Wall Street money and politicians. Wall Street does provide the money which bribes the politicians to shape the regulations which distort the markets and allow the banks to misbehave.
West's remedy - additional government power - is of course wrong. As Schiff does correctly point out the root of the problem is that government has (coercive) power.
He could have gone on to highlight more clearly the logical inconsistency in any statist argument. The statist must always argue that the state needs to exist to control the bahvior of "bad" people in the free market. However any such argument must completely collapse when you consider how much more damage those same "bad" people can do when allowed access to the coercive power of government. And any argument that bad people do not manage to get into the government is so patently false it is ridiculous.
Posted by RebelYell on 12/02/11 05:48 PM
Thank you for expressing this so clearly.
Posted by mcfrandy on 11/29/11 10:57 PM
The Daily Bell writes in response to someone's post:
"Well ... let's try to leave race out of it or the Bell generally will be categorized as anti-black as well as whatever categorizations people already have for it ... "
Yes, indeed. Right onto the racist list of the Southern Poverty Law Center. (In fact, it could get on that list without even mentioning race.)
Posted by EconomicsMonkey on 11/12/11 01:29 PM
Agreed. It's a game of who can ram their point across in an intelligible manner within a few seconds. TV is an entertainment medium and network news is just following the laws of TV physics.
Posted by EconomicsMonkey on 11/12/11 01:27 PM
Peter Schiff 'schooled' Cornell West the way creation scientists 'school' Paleontologists in 'debates.' Sure he was quick to recite his lines but his facts were simply wrong. The bulk of the bad loans were funneled through the unregulated credit markets, not GSEs like Fannie and Freddy.
Click to view link
Posted by wjc on 11/05/11 03:10 PM
We need a debate as follows:
1. Provide a stated specufic resolution or position.
2. Define each term in that resolution or stated position
Most TV "Debates " are like "Game Shows" and shouting matches
Posted by wjc on 11/05/11 03:01 PM
Our strength is not in diversity; strength is in UNITY!
Posted by hedlykarok on 11/05/11 12:38 PM
Peter is full of Schiff on several points.
1- It was the banksters and their fleas (lobbyists) that wrote the laws eliminating Glass-Steagall, the rats (congress) just passed them as they were paid to do. In fact, it was Gramm and DeLay who mad sure CDS were specifically exempted from not only financial regs but also GAMBLING laws.
2- Fannie/Freddie had fewer toxic loans than the banksters, especially prior to 2004. A 2005 bill to prevent them from holding MBS failed, even then in 2007 they held only 17% (SeekingAlpha).
3- The crash of 29 WAS caused by speculation and unlimited margin lending. Why doesn't Peter know that's why the 1933 and 1934 Acts were implemented to begin with?
4- Labour Unions ended child workers and the 80 hour slave week, not the business owners.
They both are blinded by their respective myths though. Cornell has an imaginary man in the sky and Peter has delusions of grandeur.
He's not a 1%-er, he's only worth $70mil
Reply from The Daily Bell
We don't agree that the marketplace needs the firm collective hand of Barney Frank, Nancy Pelosi, Barack Obama, George Bush, etc. Sorry. We think the market itself and the Invisible Hand can do the job, as they did for thousands of years....
Posted by Reader on 11/01/11 10:34 AM
I think the US depression of the 193s began and was caused by the collapse of so many American Banks - that it was a case where these failures destroyed the principle feature of Capitalism i.e Capital Formation.
Today, It is the DEBT that is killing the banks and driving western civilization mad trying to figure out what to do.
Posted by Thomas Molitor on 10/31/11 11:10 PM
Dr. West is not an economist. Nor is Bernanke for that matter. The causality of the Austrian School of Economics is not understood by many. Period.
Posted by charlescmt on 10/31/11 06:32 PM
I don't think that Mr West did so badly. Firstly, Schiff is misstating facts. He declares that Glass-Steagal was made necessary by bank deposit insurance. This is a completely mistaken assertion. Glass Steagal PRECEDED the FDIC. Indeed, a main feature of the GS act was the creation of FDIC which did not get up and running till sometime later. Sounds like Schiff himself, rather than Dr West who needs to learn some facts!
Schiff further asserts that the government bears total responsibility for the current serial bubbles/manias and describes banks and others' actions as "error" enabled by irresponsible monetary policy. This is apologistic nonsense. Many of these actors clearly knew that not only were their actions illegal & unethical but unsustainable and systemically risky as well. "Liar loans" were an error?? The smartest guys in the room were unaware of the risks of speculating in exotic derivatives with 40 to one leverage??? The problem with both sides is that each paints its own side as knights in white armor while the other side is the embodiment of evil.
Ultimately, as is so often the case, both sides in this debate are partly right and partly wrong. In the wake of governments rising power,corporations have increasingly become joined at the hip with it. Misdeed and errors of one become those of the other. The bad monetary policies that preceded 1929 and 2008 were not created in a vacuum. The big guys in banking & industry pushed for inflationary policies and deregulation that allowed them to take the ball and run with it. Plenty of evil, error and blame to go around.
Perhaps ultimately it all stems from new generation hubris. As long cycle enthusiasts would point out, no one is left alive who remembers the brutal lessons of too much public money printing and the accompanying private casino style speculation so we go about making current history rhyme with the past. There is even room here for elites, suffering from the same forgetful hubris, to push a flawed agenda in ways too risky and destructive for their own or anybody else's good. Thats my take, anyway
Posted by Freeman on 10/31/11 03:02 PM
Peter the great.
Posted by SicSemperTyrannis on 10/31/11 02:10 PM
I don't think this is harsh at all. I'm given to understand from the man's credentials that it's... you know... kind of his JOB to understand economic causalities.
Posted by Thomas Molitor on 10/31/11 12:50 PM
I think you are being a little harsh on Dr. West. After all, not many people (let alone academics) understand the causality of government intervention and federal reserve policies on markets.
Human action vs. government action. Take investment, for example. In a free market, investment responds to price signals based on supply and demand. In a free market, with no government guarantees or federal bank policies of monetary policy distortions, investors would make sound (or at least "sounder") investments.
On the other hand, malinvestments (like buying a house in Vallejo California in 2006 and watching its value drop by 66 percent by 2010) are created by distortive price signals caused by government intervention in the housing market (loan guarantees) and federal bank monetary policy (keeping interest rates artificially low).
Travis, I'm sure you know all of this so please don't take my post as an act of pedantry. But it takes a lot of unwinding of the mind for a lot of people to understand that the causation of economic events is government intervention not greed.
Posted by Danny B on 10/31/11 11:22 AM
I see a lot of argument and discussion. Reduced to it's most basic question, there is only ONE question.
LEVEL OF SUPPORT
Many decades ago one farmer fed 6 other people. Now, he feeds a few hundred. People are pulled from the agrarian society into a society with specialization and mechanization. As the mechanized society becomes more efficient, it needs fewer and fewer workers.
GOV has historically provided support to those who are not needed by private enterprise.
GOV dreams up endless programs [make work] to keep redundant people supported.
With fewer and fewer people actually needed to keep the mechanized society operating, GOV has had to absorb more and more people who are surplus to the private sector.
Since these redundant people BELIEVE that they are necessary, they demand a high level of remuneration. Even those people who have never done anything productive for their entire lives want to be well supported.
The built-in destructiveness of democracy has reached a point to where GOV workers "earn" about 50 % more than the private sector.
Since every $ 1 tax increase results in a $ 3 decrease in GDP, GOV has to be very careful to keep the parasitism under control.
The level of support for the non-productive has reached a point to where the economy can't support it any longer. How much is professor West paid to spread ignorance?
Obviously, there are NUMEROUS other factors.
In wide reading of financial sites, there is a huge resentment of "zombies" , both large and individual. This is resentment for the parasitism that is used to support the non-producers.
The West with it's uber-mechanization and automation has reached a level of forced redundancy that will soon force it to come to terms with the legions of "extra" people.
Artificial intelligence and medical advances will cause growth in the numbers of redundant people.
These extra people will need to be killed off or supported. The LEVEL OF SUPPORT will be worked out over the next several years. The "extra" people can't do much more than watch.
World socialism is pulling one way. World financial powers are pulling another.
Whether it results in Neo-Feudalism or World-Socialism, there will still be lots of extra people. Their level of support is the open question.
Posted by travis690 on 10/30/11 10:29 PM
Does Dr. West come up with these ideas on his own, or does he buy them from the village idiot for $1 each?
Posted by travis690 on 10/30/11 10:24 PM
Does anyone trust Anderson Blooper anymore?
Posted by rossbcan on 10/30/11 01:58 PM
The "debate" can be summarized thusly:
those who can't do, teach
those who can't produce, decree
those who can't think, rationalize
I'm sure the good professor has some explanation such as "greedy" to explain Peter's success.
@DB, why not moderate the joint debate the Prof so foolishly offered, take it out of the realm of shouting match, talking past each other?
Posted by davidnrobyn on 10/30/11 12:33 PM
Yeah, let's have a debate, as the Prof suggested--with a moderator and strict time guidelines so that the entire time is not taken up with both persons talking at once!! Very frustrating to listen to. The progressives think we've got to legislate against greed. Perhaps we can legislate against fear, too... and envy, jealousy, hate(oh, I forgot, they've already legislated against that one)... Perhaps the good Professor's seat ought to be called the "progressive chair of economics" since just plain "economics" is a little misleading.
Posted by David_Robertson on 10/30/11 11:38 AM
I have addressed that aspect of their behaviour in another recent post.