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In a followup to an article discussed previously here on SoylentNews:
Bloomberg has a three-part series on the use of an obscure legal document that unscrupulous lenders are using against small businesses.
- In Part 1 - I Hereby Confess Judgement, (the part discussed earlier on SoylentNews,) they go into detail on what the predatory lenders are doing to small businesses using a document known as a "Confession of Judgement" to extract court wins from small businesses without a trial.
- In Part 2 - The $1.7 Million Man, they go into how a debt collector became NYC's top earning official.
- In Part 3 - Rubber Stamp Justice, the article describes how the courts are involved, and what some of them are doing to prevent this abuse.
After the story was released on Bloomberg, the New York State Attorney General's office opened a formal investigation last month.
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Predatory Lending is Crushing Small Businesses (continued)
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I'm mentally OVERDRAWN! What's that SIGNPOST up ahead? Where's ROD
STERLING when you really need him?
(Score: 3, Interesting) by Arik on Tuesday December 04 2018, @01:24PM (17 children)
No, that's a straw man and a distortion. Libertarianism is actually the only political ideology which deals with rent-seeking explicitly. It posits not an environment where rent-seeking magically goes away for no reason, but one where it is *minimized* by the simple expedient of *minimizing* the ability of the state itself to hand out favors first and foremost. If officeholders no longer have so much power to hand out rents, then it makes sense that fewer would spend time and money seeking favors, no?
"oligopoly and monopoly don't exist"
Again, a deception and a distortion. Again, unlike other political ideologies, libertarianism actually addresses these issues instead of sweeping them under the rug, ignoring them, or embracing them. Monopolies often, if not always, stem from the original monopoly - the government itself. They use that government ability to hand out favors, first to gain their monopoly, then to maintain it. Reducing the ability of the government to hand out such favors is a simple and obvious step to reduce the negative impact of monopolies and would-be monopolies, and only Libertarians advocate taking it.
"and government action never has a legitimate purpose"
That's not even a distortion, it's full-fledged nonsense. Libertarians hold to the legitimate purposes of the government as described in (among other places) the US Declaration of Independence, while others by expanding the list towards infinity dilute and distract from those purposes.
Your post reeks of projection.
If laughter is the best medicine, who are the best doctors?
(Score: 2, Insightful) by Anonymous Coward on Tuesday December 04 2018, @02:33PM (5 children)
Yes, because only the government can engage in rent-seeking and trading it. No, the Pickertons were angels.
(Score: 2, Informative) by khallow on Tuesday December 04 2018, @10:50PM (4 children)
Exactly. Welcome to the coal police [wikipedia.org], Buttercup. In that link, it describes how the state of Pennsylvania legalized the very sort of rent-seeking you claim to care about with the Pinkertons.
(Score: 2) by Mykl on Wednesday December 05 2018, @01:33AM (3 children)
Nice single data point. Let's get back to TFA and the legal loopholes being exploited at the moment.
This is clearly not government-sponsored rent-seeking. It's a loophole in the law, one which was not intended for the purpose to which it is being used and which the government is hopefully working to close off in order to protect people.
A libertarian utopia would make no attempt to address the problems outlined - after all, it's technically legal and "the market will sort it out"!
(Score: 1) by khallow on Wednesday December 05 2018, @02:57AM (2 children)
Not my single data point, let us note! I merely illuminated how in the example given the Pinkertons acquired so much power back then.
To the contrary, there are four ways the government (here the New York state government and its local governments) sponsors this. First, through the loopholes in the law that you already mentioned. It doesn't matter if this is an unintended consequence or not. Second, through the New York City Marshall who is sending these debt collection orders through like a factory and collecting 5%. Finally, there's the court case filers who are automatically processing these claims. They claim it's a money loser for them, but maybe it's not. One mentioned doing eight a day with same day service for $225 a pop. That's $1800 a day.
Finally, New York state uniquely has the muscle to coerce nationwide banks into giving up their clients. The largest banks all have a strong presence in New York City, the financial capitol of the US, and hence, are vulnerable to New York state government abuse. That's really how one can inflict so much harm on people on the other side of the US. Alabama, for example, couldn't pull that off.
(Score: 2) by Mykl on Wednesday December 05 2018, @03:27AM (1 child)
But would a confession of judgement clause be made illegal in a Libertarian utopia? I suspect the attitude would be "if you don't like the terms then don't sign the contract" with no allowance for deception, legalese etc.
My position is that Libertarians are no better equipped to deal with dodgy contracts (and likely less equipped) than other societies.
(Score: 1) by khallow on Wednesday December 05 2018, @04:06AM
Depends. A fair number would disagree that one can sign away rights in a contract. And even of those who do have that opinion, a contract made in bad faith would void that confession of judgment.
(Score: 5, Insightful) by Immerman on Tuesday December 04 2018, @03:22PM (8 children)
What makes you think rent-seekers need government help? There's vanishingly few markets where the upstart little guy can compete on equal footing with large established players, which means most markets are naturally dominated by a few large businesses ripe for forming an oligopoly - at which point it's nigh-impossible for any new competition to emerge, since the established players can simply coordinate to deflate profits, even operate at a loss until the new competitor is driven out of business. It happens all the time today, without any help from governments.
If you want anything resembling a free market, then you need some authority to keep businesses from becoming so large that they can dominate that market - in fact I would venture the opinion that limiting the accumulation of excessive economic power by private individuals is one of the most legitimate justifications for a Government. Without that, your choice is only between whether the large businesses corrupt the government, or operate the military/police directly without any illusions of liberty or justice. Our species has a long history with that already, and I for one have no interest in moving back in that direction.
(Score: 2) by Arik on Tuesday December 04 2018, @11:38PM (7 children)
The observable fact that successful ones always turn out to have it would be a good pointer in that direction.
"There's vanishingly few markets where the upstart little guy can compete on equal footing with large established players,"
True.
"which means most markets are naturally dominated by a few large businesses ripe for forming an oligopoly"
Nonsense.
Alternative explanation - it means that established markets have been (and appear to almost inevitably be) over regulated, creating the conditions for oligopoly to rise and be nurtured.
It's a simple equation. The more power the government exercises over the market, the more the incentive for all the various players in the market to lobby the government for rent.
The incentive may rise in a roughly equal fashion, but of course the ability does not. Inevitably, when the government power being exercised over a market is expanded or increased, this leads to increased lobbying efforts, and the lobbying efforts of the largest, best financed players are notably more effective than those of smaller, less established players with less means. And this is a clear and certain route to, if not monopoly, at least something very oligarchical.
Am I saying this is the only source of monopolies? No, of course not. But it's the elephant in the room. Trolls laugh at libertarianism, but it's the only ism on the table that actually makes reference to that elephant and talks about him openly. How many monopolies would we have left if we got the government out of the business of picking winners and losers in the market? We'll never know if we never go, but there's good reason to believe it would be a lot less of an issue if we did go. Point to me a single historical monopoly that clearly doesn't have its roots in state 'regulation' of the market. The very earliest trading monopolies in the middle east were creations of the very first hydraulic states, and I can't think of a single documented example from any of the historically documented societies that lacked a central authority with broad power over the market. There doesn't seem to have been any real problem with monopolies in northern Europe, for instance, prior to the Christian era which brought with it the concept of kings having such powers 'by divine right. (An aside, but this is why so many Kings specifically were converted when their subjects wanted nothing to do with it. The old north-european Kings before Christianity were elected officials with relatively limited powers.)
All the way back in the bronze age, there were a few *natural* monopolies btw - no one in the near east had a great source of tin, it had to be traded a very long ways, and whoever had physical control over the source or the trade routes would exact a percentage in tax whenever it passed their way. Most of the gold was produced by Egypt - taken by the Pharoah and then traded for tin, among other things. But natural monopolies are really a different subject, most of the monopolies we see have no connection to that anyway. And notice the connection to government, even there - so what if the gold comes from Egypt? Big deal. What made that geographical concentration into a formidable monopoly was the authoritarian government, the notion that Pharaoh himself owned all the gold in the ground, along with his soldiers and his slaves, gave him a monopoly - not geographical concentration alone.
Anyway there are a handful of early 19th century US cases that are alleged to have occurred in an unregulated environment - but they all seem to have arisen out of the conditions of the railroad industry, and *it* was certainly the creation of government privilege and regulation - nearly every mile of track of was built on public land simply *given* to the chosen companies and even the construction was often subsidized either directly or indirectly - and they certainly did a lot of lobbying over the years when this network was being built. So the railroad industry was heavily regulated virtually from day 1. And while rail is not all that important today, with most of our shipping going over freeways with semis for many decades now, back when Standard Oil and US Steel were forming these railroads were the only game in town.
"If you want anything resembling a free market, then you need some authority to keep businesses from becoming so large that they can dominate that market"
Well, perhaps. But you're putting the cart before the horse. What makes you think that authority can be trusted to use the power it's given to the end you desire? When it will have every possible incentive to do the opposite...
Perhaps before we start trusting the government with power to go out and prevent monopolies from forming, we first get to see it stop using it's power to go out and *help* monopolies form, or to *maintain* them in their position? If they do that, and we still have problems left, *then* we can think of giving them positive power to rectify it. But if they can't even quit aggravating/potentially causing the problem themselves for a few years, how will we even know if they need it? And if they can't quit doing harm, doesn't it seem irresponsible to give them even more power in response?
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Pav on Thursday December 06 2018, @01:40AM (6 children)
The East India Company is an example of what you want... ie. a company that grew into a monopoly player that naturally arose from an unregulated market (as they INEVITABLY DO where there's no regulation). Even mathematics shows that unregulated capitalism leads to monopoly ie. game theory, specifically "competition between economic entities of unequal power". An analysis reality as we understand it, of all financial data that could be accessed... four centuries worth, shows that unregulated capitalism leads to monopolies and low growth - Pikettys analysis even showed that only when accumulated capital was weakened (by disaster, war etc...), or was heavily regulated by government, did economies go from low to healthy growth. BTW, the East India Company formed its own fleets and armies, and conquered the Indian subcontinent - no governments required (other than those that were conquered). "The Company" treated people just as harshly as one would expect from an oligarchy, until 1/3 of Bengal starved to death causing a British public outcry forcing the British government to slowly bring the company under some control through GOVERNMENT REGULATION. The Company had sparked the American Civil War also - it lobbied for the tea tax, which was levied against all importers of tea except the East India Company itself. It's also interesting that the Indian Rebellion of 1857 was against the East India Company because it was literally THE governing body of India.
(Score: 2) by Arik on Thursday December 06 2018, @06:20AM (5 children)
ROFL
You have to be kidding me.
The royal monopoly chartered by Queen Elizabeth (I) to invade India is your example of a monopoly arising without state support?
I'm not sure what you're smoking but lay off for a bit, you're out there.
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Pav on Thursday December 06 2018, @09:13AM (4 children)
That's just BS. Of course they needed Elizabeth I's permission to sail to the Indian Ocean using WAR TROPHYS from the Spanish Armada. Britain was a middle power in Europa and certainly no naval power, which is why they needed help from the weather to defeat the Spanish Armada, and the apprentice traders of the East India Company needed Spanish and Portugese ships to kick off their venture. Their aim was to break the Spanish and Portugese monopoly on trade, but once the new East India Company got out from under their sovereign it was unregulated capitalism at its finest. After some luck and good management they gradually became the new monopoly, built up their fleets and then their armies and crushed populations in half the world (including North America) as the gods of capitalism intented.
(Score: 2) by Arik on Thursday December 06 2018, @11:25AM (3 children)
A freaking royal monopoly.
Again, get off the drugs. You're making less than zero sense.
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Pav on Thursday December 06 2018, @12:45PM (2 children)
Who's the one smoking the finest crack? You do realise that the East India Company wasn't the only British trading company eg. the Royal Africa Company, the Hudson Bay Company, the Company of Scotland etc... etc... etc... etc... The American War of Independance was basically a war of survival for some of these smaller trading companies against the East India Company, and convincing the public it was all about democracy. Britain gained much of its empire unintentionally, by reabsorbing the East India Company! Learn some history.
(Score: 2) by Arik on Thursday December 06 2018, @11:08PM (1 child)
"Learn some history."
Says the man arguing from utter ignorance and scoring an own-goal as a result.
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Pav on Friday December 07 2018, @12:41AM
I'm certainly not defending the 16th century British monarchy... they were wanting to give themselves the best chance of company profits for the aristocracy after all. But other than giving the company its modest start, and some dubiously beneficial tax breaks this royal charter you recoil in such horror from was of little benefit. Britain became powerful because of the monopoly the East India Company ruthlessly achieved, NOT the other way around. At the time England was a rural backwater whos biggest industries were wool, tin, lead and coal... with the only manufactured goods being handmade cloth due to poverty providing cheap labour (the technical finishing/dying work was actually done by the Dutch!). Yes, England was once a poor country and profits hard to come by. The royal charter was basically a privatisation of recently acquired crown property too expensive to otherwise keep (ie. Spanish and Portugese ships captured from the Spanish Armada), and tax breaks on trade in certain products from certain regions to English ports (as previously mentioned, a small/poor market)... the "monopoly" was only on these tax breaks to marginal ports with small markets. The East India Company faced competition in the early days, but with growing power a REAL monopoly was attained by company mercenary armies driving out the Portugese, Spanish, Dutch and also dominating and/or overthrowing governments in India, Asia, the Carrabean (ie. "The Indies") and Africa. Britain attained its empire in large part by resorbing this runaway capitalist enterprise.
(Score: 1) by nitehawk214 on Tuesday December 04 2018, @05:46PM
Lol, no. They would simply bribe the politicians to give themselves the power to hand out rent.
"Don't you ever miss the days when you used to be nostalgic?" -Loiosh
(Score: 1, Insightful) by Anonymous Coward on Tuesday December 04 2018, @09:47PM
Pretty sure this is all religious thinking I didn't bother finishing after reading the first paragraph of wizardry.
I hope when you die god sends you to hell for worshiping a giant hand.