You can't buy or sell stocks without another seller or buyer! How is it immoral if all transactions are voluntary?
Don't allow leftists to play games with definitions! Some of the libertarian-leaning leftists at this forum will try to redefine "left-wing" back to its original defition (Third Estate, limited government, free-markets, laissez-faire reforms, etc.). Fine! We non-leftists can't stop them from using their own personal definitions; they can use whatever labels they want to describe any concept they want.However, they have the audacity to then use their personal definition of "left-wing" (remember, the original definition, which is no longer valid) to prove that modern leftists are more libertarian than modern rightists! They will say that libertarianism is "inherently leftist" (again, using the original, no longer valid definition), and use that to insist that we should prefer and side with modern leftists over modern rightists.
Question their motives.
thecapitalist:You can't buy or sell stocks without another seller or buyer! How is it immoral if all transactions are voluntary?
Does it screw over the average Joe when big bad hedge funds buy stocks and they go higher? When it boils down to it, what's the difference?
edit: I had "Jow"...
thecapitalist: Does it screw over the average Jow when big bad hedge funds buy stocks and they go higher? When it boils down to it, what's the difference?
Does it screw over the average Jow when big bad hedge funds buy stocks and they go higher? When it boils down to it, what's the difference?
WAIT, YOU HAVE THE NAME "CAPITALIST"!? was sure it would be taken, so I didn't even try it!
Just remind him that shorting stocks isn't some mystical, magical thing. It's simply acting on a belief that a stock is over-valued.
Stocks could technically be manipulated in a large variety of ways and that includes "vanilla" buying and selling. Should buying and selling stocks be outlawed?
thecapitalist:WAIT, YOU HAVE THE NAME "CAPITALIST"!? was sure it would be taken, so I didn't even try it! Just remind him that shorting stocks isn't some mystical, magical thing. It's simply acting on a belief that a stock is over-valued.Stocks could technically be manipulated in a large variety of ways and that includes "vanilla" buying and selling. Should buying and selling stocks be outlawed?
capitalist:3. Buying gold is essentially shorting the dollar. It is immoral to buy stock in gold?
Buying gold using someone else's dollars, you mean? Selling stocks you don't own without withdrawing them from the possession of some current owner is essentially the same thing fractional reserve banks do with dollar deposits...
Paul: capitalist:3. Buying gold is essentially shorting the dollar. It is immoral to buy stock in gold?Buying gold using someone else's dollars, you mean? Selling stocks you don't own without withdrawing them from the possession of some current owner is essentially the same thing fractional reserve banks do with dollar deposits...
Well as far as fractional reserve banking goes, Austrian Economics doesn't say it's 'wrong' really, it just points out that the concept of fractional reserve banking is bankrupt and all banks are technically insolvent. We then apply that knowledge and say fractional reserve banking is wrong, especially since we don't have free banking so there's not really an alternative.
nje5019:Well as far as fractional reserve banking goes, Austrian Economics doesn't say it's 'wrong' really, it just points out that the concept of fractional reserve banking is bankrupt and all banks are technically insolvent. We then apply that knowledge and say fractional reserve banking is wrong, especially since we don't have free banking so there's not really an alternative.
Some would argue that it's essentially fraudulent, and have called for 100% reserve banking along with the gold standard. If all the participants are informed and consenting, then of course it isn't fraud, so that's a tough position to hold too absolutely.
--Len.
Right, technically they're informed and they just don't care to look into the details to understand how 'fraudulent' the banking system really is. So that's kinda tough to argue each way. I do know that my high school econ teacher tried to tell us money was still backed by gold so i could sort of argue that maybe there's a trend in public schools to keep people ignorant but that'd be just as hard to prove
nje5019:Right, technically they're informed and they just don't care to look into the details to understand how 'fraudulent' the banking system really is. So that's kinda tough to argue each way. I do know that my high school econ teacher tried to tell us money was still backed by gold so i could sort of argue that maybe there's a trend in public schools to keep people ignorant but that'd be just as hard to prove
We've lost too many threads this way already! This seems to be the single largest area of disagreement among Austrians (except maybe strategy.) Can't we have other discussions without all discussions coming down to 100% gold reserve vs. free banking?
On the OT, I'd agree with your friend that there are greedy corporations making a profit off the victimization of others. Halliburton, Bechtel, Blackwater... but I fail to see just what this has to do with short selling. How exactly do corporations use short selling to victimize others?
Now, here's something they do do to screw people over, which is not and should not be illegal - pump and dump. What is the best way for the average Joe to defend himself against a pump and dump strategy? Answers itself, doesn't it?
Now, here's a point that you might make to him. Corporations which successfully screw the commoner over tend to be, well, rich. This means that they can buy access to government, and that it's very unlikely that government policy would do anything to hurt them. On the other hand, if someone tries to outsmart them (like a certain junk bond trader prosecuted by Rudy Giuliani) it is likely that they would run to the government for help. So increased regulation will empower the greedy, evil corporation, not weaken it.
JAlanKatz: Now, here's a point that you might make to him. Corporations which successfully screw the commoner over tend to be, well, rich. This means that they can buy access to government, and that it's very unlikely that government policy would do anything to hurt them. On the other hand, if someone tries to outsmart them (like a certain junk bond trader prosecuted by Rudy Giuliani) it is likely that they would run to the government for help. So increased regulation will empower the greedy, evil corporation, not weaken it.
Right. This reminds me of a Mises quote (from Human Action I think):
"The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers."
In the absence of government economic protection and regulation, only companies that serve the customer prosper.
There is some other relevant quote that I cannot remember... something about how those who have the most capital are often the most opposed to the free market because it takes away their protection and allows for competitive entrepreneurs and startups to challenge them. Anyone know what I'm talking about? Bueller?
My cynical side says it's like the idiots who threaten the weatherman during a drought. The entire market is voodoo to them anyway. Short-selling is a prediction of decline, so the ignorant believe that it causes decline. Add in confusion between ABPT dropping in price, with generalized hard times, and voila! Short-selling QPRS starves babies and kills puppies.
On the other hand, maybe he meant that shorting stocks is immortal. You never know.
christians used to and muslims still do believe that usury of any kind was immoral. it can be argued that shorting is particularly immoral as it profits on the failings of other real endeavours. it produces nothing useful but acts as a leech on development in a way that buying stocks in a straightforward belief of a company's worth does not do as much.
i wonder if the money generated by this practice were available to society in a healthier way whether we would all prosper more. hedgers are only more reprehensible as they are bigger. a terrorist is a person with a bomb but no aeroplane.
sadly if it was outlawed it would probably take place under cover anyway
and blessed are the cheesemakers
This idea of shorting stocks is immoral dates back for centuries. If it were immoral, a case could also be made that buying stocks is immoral because only those with the ability to pay are those who will buy and then they make the price go up, make profits and widen the population's income inequality.
Shorting stocks is the human action required in order to restore the stock market to its equilibrium point where buyers and sellers will agree on a price, after a huge boom fuelled by an excess of psychological hope that was unconfirmed by economic reality.
Art transcends ideology.
http://mises.org/Community/blogs/ruben
IT IS NOT IMMORAL BUT WITHOUT ANY DOUBT IT IS JUST CASINO BUSINESS.
About your example on the dollar vs. gold ........... it is valid. But the dollar and gold have worldwide aggregated values not like corporations
Moreover, corporations tend to be over/under value and these cyclical value fluctuations are caused by CASINO (short selling/hedging the stocks and stuff like that). Short selling int he stock market has become "betting".
capitalist:Hey everyone. I have gotten into a discussion/argument with a colleague of mine. He believes that shorting stocks is immoral because it allows market manipulation at the expense of the "average joe." Clearly, this individual is not the sharpest tool in the shed (which makes debating them even more challenging). I have made the following points which I thought were decent, but nothing I say has really gotten through so far: 1. Shorting stocks is not reserved only for hedge fund managers -- the "average joe" can go online and short a stock just as easily as buying one 2. All shorting a stock means is selling it before you buy it. It's no more immoral than selling a stock after you buy it. 3. Buying gold is essentially shorting the dollar. It is immoral to buy stock in gold? (No.) Then why is it immoral to short the dollar? These points have been basically ineffective. Please help me out here. Thanks
I have made the following points which I thought were decent, but nothing I say has really gotten through so far:
1. Shorting stocks is not reserved only for hedge fund managers -- the "average joe" can go online and short a stock just as easily as buying one
2. All shorting a stock means is selling it before you buy it. It's no more immoral than selling a stock after you buy it.
3. Buying gold is essentially shorting the dollar. It is immoral to buy stock in gold? (No.) Then why is it immoral to short the dollar?
These points have been basically ineffective. Please help me out here. Thanks
Short sellers perform two important functions:
1. They quickly set the correct price of an asset when it is unclear what that price is or when the managers of the asset give misleading information about the asset. This provides important information to people wanting to buy the asset vs buying something else.
2. The short sellers steal the equity from a failing company before the executives are able to do so. Think how much more money the executives of Enron would have been able to steal if not for short sellers.