Economics: more or less government intervention?

[().-.]

Right, I'll take a stab at this discussion from a 'left' view.

 

Anyhow, if you don't agree with a particular set of principles, it's near impossible to reconcile the policy differences. As much as I hate bringing it up, it's very similar to the abortion debate. The views are incompatible, and if there is such a thing as absolute truth, one side is right and the other is wrong. Without an absolute scale it's impossible to be certain which is which, other than the fact that I know I'm always right.

 

This is a very good point to bear in mind. :wink:

 

i) Natural rights are, to quote Bentham, 'nonsense on stilts'. People have no innate rights to property and the like; they're simply social constructs which allow society to function relatively smoothly - talk of human rights is aspirational; respect for that which is necessary in a 'just' society. A monopoly is all well and good until someone hangs you from a lamp post.

 

Given this, any system which disenfrachises large amounts of the population who live under it is eventually destined for failure - above and beyond supplying public good, redistributive tax policy is necessary to alleviate wealth concentration which is inimical to a democratic or representative system.

 

ii) I take the view that markets tend to fail for a variety of reasons, notably information asymmetry - yes, in theory free markets are the most allocatively efficient, but unfortunately we live in the real world rather than an elegant model. Free exchange in the Nozickian sense in meaningless, as he and others fail to derive meaningful accounts of just acquisition and transfer (specifically in the 2nd case, imperfect information) - G A Cohen does a much better account than I could; see chapter (3?) of Self-Ownership, Freedom and Equality.

 

iii) Small government proponents are on the right track inasmuch as they are supportive of human aspirations and dignity; the ability of individuals to freely fulfill their potential without undue hinderance from others. This is well and good, but there exists massive structural discrimination against significant percentages of the population - meritocracy is only meaningful inasmuch as equality of opportunity exists: real, concrete support for things like 'self actualisation' comes from pragmatic social policies of freely available healthcare, eduction, regulation on air quality etc.

 

iv) In markets which tend towards monopoly, a public rather than private monopoly is preferable, especially with regards to strategically important resources such as Oil ownership, electricity generation and like. The difficultly in initial just acquisition of natural resources means that it's better for such to be collectively owned by the population of a country via their representative government than in the hands of wealthy (transnational?) elite.

 

That's all I can think of at the moment - I'm just spitballing from memory here, so I'll come back to edit/add in a few hours.

[Donnie]

I think we are on the same page now (or at least in the same book). I thought you were opposed to regulation, not just in favor of a different method.

 

Cartels are inherently unstable, but that doesn't meant can't work for significant amounts of time if the conditions are right. Leverage is probably the most sure way to keep them in line (blackmail), but logic will work as well. For as long as the long term loss of breaking the cartel is greater than the short term gain, the motivation is to abide the cartel. Most of them will last for several years (average is someplace north of 5), which is longer than anyone really wants to put up with them.

 

Also, once a cartel is broken and everyone uses the dominated strategy, there is motivation to reform the cartel as it will allow everyone to make more money, so it is not unheard of for a cartel to reform some time after breaking.

 

This sounds almost like predatory pricing. That is walmart and target and kmart can all lower their prices to non profitable levels to [bleep] every mom and pop store. Never happened even with people like Rockefeller. Specific to Rockefeller his price drops were due to cutting waste and lower prices to stay competitive.

 

Again either the cartel isn't that bad so it takes a long time for additional competition to respond to the higher prices, or they are totally price gouging and the competitors enter quickly to annihilate the cartel. Think about a real world cartel like the drug cartel. Insane prices right? Massive barriers to entry, you have to have enormous connections to bribe politicans, have regulation agencies turn a blind eye, have people to smuggle for you, people to sell to, wars between other cartels, etc. Therefore cartels exist, however the profit is so good that even then there is competition and plenty of it. If you got rid of all drug laws, a massive wave of competition would swoop in and make marijuana for example about as much as non hallucinogenic weeds.

 

Basically your theory never happens in the real world without some sort of government barrier to allow it to happen.

 

 

On regulations there are plenty of natural regulations, such as boycotting shitty businesses. I know plenty of gay people that will never have a chicken sandwhich from Chick-fil-a. I also believe in private lawsuits for market externalities and/or business agreements. That is a business paying a beekeeper to do business next to their orchards if they help. Or a hotel company suing a factory opening next door. Or a hotel paying a ski/surf rental shop to open next door.

 

I dont know what the rules should be, but I do know that there is some level of balance that is fair to both the factory owner and the hotel owner.

[Randox]

I can see your point for some markets, but not others. Some markets have a high cost of entry that is not the governments fault (they don't control the price of mining equipment, oil rigs and passenger jets), and would leave a new entry vulnerable to predatory pricing, where the threat of such is enough to keep people from entering the market. You can also have established market situations where the profit sharing prevents the market from being profitable with more new entries, which is another barrier.

 

 

While I think the property laws are a neat idea, they just seem to be complicating things. Instead of making x illegal, you instead have to prove that what they are doing has a specific impact on you, and you have to sue them, which is really really expensive. I just think it's easier to have government enforcement. It also leaves a loophole for doing some terrible things if you go far enough away from people. In Canada, there is a lot of space no one is using (because no one wants to live there), and it'd be just swell if no one turned it into a wasteland on us.

[Donnie]

Patents aside (id rather not get on that topic) your right they dont. Still a high investment cost is not a real barrier. Given the cell phone monopoly in Mexico and the ridiculous profits that generates, if you got rid of market restrictions you would probably expect half a dozen companies that get get enough capital to pop up and compete overnight. Now what if all 7 of them then decided to cartelize? There is a huge cost in making your own cell phone company how would this cartel ever be broken? Easy, if the profits that can be made off breaking the cartel are high enough investors will flock to it. If they aren't is the cartel all that bad? Sure its not optimal but its not the end of the world. This is a natural regulation.

 

Lawsuits dont have to be expensive. Thats a problem with the current legal sytem, not the economical principles behind them. That doesn't really apply directly against this idea.

 

If you pollute only the land you own I see no problem with this, now if your pollution affected land outside your property there is a problem right there. Your right these can be convoluted, but government involvement leads to things like BP getting exept from environmental regulations because they donated lots of money to Obama's 08 campaign. So there is loopholes in any system. Just less in this one.

[Randox]

Hmm, that is a pretty big problem I'll admit. I believe the single largest flaw in the american political system are lobbyists. Canada doesn't allow that practice, and we have more restrictions on political funding.

 

A less convoluted legal system would certainly be an interesting avenue to go down. You could do some interesting things with that I expect.

 

 

My objection to polluting your own land is that it is very difficult to do. You have to deal with things like the water table, runoff, and people hiding things. Disclosure about what exactly people have buried on a property can become an issue. I guess I just have a bias to prefer that the landowner should be the one in charge of making sure they take care of their land rather than relying on other people to complain about it. I do however have a lot of problems with property laws becasue at least here, the government likes to make a neat little rule book that has no ability to react to different situations. There are a lot of issues here when you property has waterfront because people aren't allowed to think.

 

On the other hand, people can be capable of some staggeringly terrible ideas, and you end up with stupid laws to try and keep them say dumping their septic runoff in the lake everyone is drinking from.

 

 

Ideally my bias is for more government control, but realistically, the government is capable of incompetence that is seemingly rivaled only by oil companies. I don't trust the private sector because their goal is to make as much money as possible, often at the expense of the public. So I am forced to want a balance, where the private sector tries to balance out the incompetence and the government tries to reign in the greed.

[Donnie]

Markets are the best way to deal with the demands of society. Why are government laws so terrible? Because its a monopoly on law. Enforced not by a market where you can pay for legal protection from agencies with the best balance of laws (for institutions/indivuals) but instead you either got a facist state who arbitrarily makes laws or you got a democratic state who makes laws based on what the will of the majority is.

 

I recommend doing research on Medieval Iceland and Ireland. How their legal institutions were not government driven but market driven and how the quality of their laws were much fairer then other European states at that time.

 

For iceland look up information about the Althing. Prechristianity it worked by each individual in iceland can subscribe to a chieftaincy who would have a set of laws, you could subscribe to any law maker in this case and your market decision decided which chieftaincies were more successful. Each year they met for an Althing to make agreements between chieftaincies and its roughly treated as a parliament in contemporary times, the difference being is you didnt vote you bought whichever laws/enforcement you agreed with.

 

Brehon Law (Ireland). Brehon law worked similiar to iceland with some specific differences. Im kind of tired so im not going to list the specifics.

 

Now your distrust of markets is a distrust of crony capitalism. Since people do only whats in their self interest, and the current economic system incentives [bleep]ing over everyone and making as much money as possible at the public expense (BP in a nutshell) thats what you get.

 

If there was for example enough demand people then people would only buy organic foods that are not GMO and used no pesticides in the growing process. However by peoples own subjective value they care more about saving a few bucks then their own health. I see nothing wrong with this. California wants to force companies to label GMO foods. I agree with the idea behind it, but a better approach is to have companies that self label themselves as GMO free and people boycotting everything else.

[Omar]

@Randox

Omar, I don't think political campaigns are expensive because of contributions. Political campaigns are all about prancing on a public stage advertising yourself is expensive. Would you prefer an environment where candidates can't raise money and the only people who get air time are those who already have powerful connections like owners of media outlets?

 

It is not true that lobbying violates anything. You are free to lobby your representative and everyone else must be free to do so as well. Lobbying is simply the way that constituents express their wishes to their representatives. How do you propose for your congressman to know your wishes so that he may adequately represent you if you can't lobby him? The problem with lobbying isn't that individuals and groups attempt to influence politicians (this is part of a representative republic), it's that politicians have the power to grant all sorts of wishes. Their power has few limits. As long as that's the case, those who wish to buy power will always find willing sellers among politicians eager to monetize their power - and here it's worth mentioning that money is not the only currency. Bribes can come in the form of favours of all flavours. So, "banning money from politics", as it were, will only serve to make the bribes much less visible to the public.

http://cafehayek.com...-the-goose.html

[Range_This11]

Randox,

 

Often you will find that the lobbyists are actually sought out by politicians. Politico ran a very interesting story this summer about it, but I can't seem to find it.

 

I oppose the "free" market (and capitalism in general) on one basic principle. That business entities--large or small--will always seek to make the most money in the most efficient way. I don't have a problem with people who are rich or business entities that make huge profits. However, the means by which entities or people accrue profits is often harmful to both people and the planet. For the most part, consumers are naive to the harm that business entities inflict upon them or the planet. I refuse to believe that if things like the EPA or other regulating government entities were eliminated, that any company would adhere to pollution regulations.

 

The financial system is just as bad. Those controlling the game from the top will almost always escape with tidy profits. All you have to do is look at the hedge fund guys from about five years ago. They made millions--if not billions--by trading and betting on bad loans. They let people take out loans they could not and would never pay back, and then called them in in order to profit. The lack of ethics in that is truly disgusting. That is what no regulation will get you.

[Donnie]

Yeah because the current laws remove all guilt from businesses. A free market on laws will and previously had to market extranalities correlate directly to the businesses profits themselves. Overfishing,polution, deforestation and other manners of pollution is a failure of the government, including agencies and laws that support the EPA. The only way you can have actual regulations against polluting businesses is if you open enforcement of laws to individuals.

 

A good example of this is nuclear powerplants. If a nuclear meltdown came directly out of the owners pockets/investors pockets, and could result in crippling fines and perhaps even the death penalty (for 1 count of murder for everyone that dies as a result of failure) would there be as many nuclear plants? Hell no. Given that there are more nuclear power plants on the market then would be sustained if the owner recieved 100% of the punishment for failure then you can point to government intervention hurting peoples safety. Even worse is these power plants often ignore their own safety rules and cannot withstand the 8.0 earthquake that they were built to withstand.

 

Once again subsidized safety makes less people safe. Like subsidized tuition makes colleges more expensive. Like the war on drugs makes drugs more accessible.

 

 

Also since you mentioned the great recession please watch why it happened. Regulations are the cause.

 

 

http://youtu.be/d-oLOSnITmM

[Range_This11]

The only way you can have actual regulations against polluting businesses is if you open enforcement of laws to individuals.

 

Essentially this is the justification for everything else in your post. I wholeheartedly disagree with this.

 

You're entering some tricky territory when you talk about the nature of law. Law placed in the hands of individuals (who are, by the way, accountable to no one but themselves) is a very dangerous thing. It is equally dangerous in the hands of any government of any kind. In America, however, there is at least some accountability for lawmakers and enforcers alike. It is the responsibility of the citizens (by staying engaged and voting) to keep an eye on government, politicians, and judges. You talk about individuals enforcing law. I'm very confused about this. Are you implying that there should be some sort of private vigilante enforcing ethically bad practices by businesses? Or do you mean that businesses are supposed to be self-regulatory? Furthermore, where will the CEOs or other business leaders go once accused of environmentally harmful business practices? I'm guessing that you don't want to set up a private Kangaroo Court, because that would be a return to barbarity and Old West style law. No, they would land in government courts just like any other case. Also, these sorts of laws cannot simply be made up on the spot by individuals. They have to be codified and universally applicable to ALL businesses, written down for all the country to see. Without a central authority (i.e. a government), this would undoubtedly lead to wrongful convictions.

 

So where does this leave us? If I'm following the semi-comprehensible intellectual thread of your post, you want private enforcement (and perhaps development) of law because the government is incompetent in catching all cases of ethically wrong business practices. Not only that, but businesses of all types should be self-regulatory and you believe that they have the incentive and accountability to do so. Again, I cannot in good faith agree with the idea that businesses will not cut corners to profit.

[Omar]

By opening enforcement I think he means suing. I don't know how individuals could possibly gather enough money to sue, say, BP, but that's what I got out of it.

[Donnie]

Im talking about more Underwriters laboratories and less FDA. Businesses will pay UL to have their sticker saying that this product was tested and is safe. If UL gives the sticker to unsafe products their business is jeopardized. If UL is honest with their testing businesses that make products will continue to make products that meet their safety requirements to the extent that that is what makes products sell.

 

I belive if you had an agency like UL for environmental regulation, that is only businesses that meet their environmental requirements can get the sticker saying their product is environmentally friendly. To the extent that consumers care about this is the extent that the regulations work.

 

Now whats wrong with agencies like the FDA? Because if they get bribed there is no competing firm to say that X is really unsafe. Kind of like there is multiple companies that rate car safety. Or multiple companies that rate how good a video game is.

 

 

 

Anyways on the whole law thing thats a thread in itself about how that would work. I listed some historic examples if your interested. If your just a critic and have no interest I dont really have time to explain atm.

 

By opening enforcement I think he means suing. I don't know how individuals could possibly gather enough money to sue, say, BP, but that's what I got out of it.

 

Class action lawsuits.

[Range_This11]

I agree that a "stamp of approval" is a legitimate incentive, but disagree that they are less likely to be corrupt than the government. Every person or entity is susceptible to corruption and bribery. I find the historic comparisons you provided to be at least somewhat irrelevant. Epochal comparisons are difficult to justify. The economic, political, and cultural conditions of twelfth-century Ireland are vastly different than those of twenty-first-century America. They're not even close to comparable. I'm not just a skeptic. A discussion on the nature of law and how it applies to twenty-first-century corporatism is highly relevant. Claiming you can't be bothered to justify the legal nuances of your argument means you are (a) too lazy, or (b) don't have a leg to stand on.

[Estonian dude]

I am gonna throw a glove in here and say that communism is the best way of ruling the earth, that I know of.

But it doesn't work. Because of human nature. And that, what was in Soviet Union, was not communism. That was a dictatorship.

As a real world example, I have to admit that the Swiss way of governance is the best. There the goverment intervents in business quite a bit. And you can't say that it is bad country to live in.

I can say the same for Norway and Sweden. For Norway, practically all bigger industries are state-controlled. Statoil is almost fully state-owned and state-controlled. Agriculture has huge government subsidies. And the economy is flourishing. Practically everyone is happy there.

[Omar]

Communism is extremely wasteful even if people cooperate. The government simply can't accurately estimate how much of each good will be demanded. The way it works in capitalism is that prices signal what supply and demand are like. But in a communist system the prices are not dependent on supply and demand. Central planners can't figure out what is needed, so they supply whatever they think is useful. Growth is production of what people demand. That's why entrepreneurship is so much more efficient.

[Randox]

To be clear, my objection to lobbying is based on representation to politicians. Say the Government is re-writing a regulation that impacts an industry, then the Government should be consulting with people in that industry to find out what their needs are, what is realistic, and how much time they are going to need to adjust to the new laws. This turns the regulation into a co-operative effort between regulation makers and industry. With lobbying, you have the firms interacting with the politicians instead of the people who actually write the industry regs (who would be civil servants), which leads to uninformed direction from above that the informed underlings have to follow.

[Donnie]

I agree that a "stamp of approval" is a legitimate incentive, but disagree that they are less likely to be corrupt than the government. Every person or entity is susceptible to corruption and bribery. I find the historic comparisons you provided to be at least somewhat irrelevant. Epochal comparisons are difficult to justify. The economic, political, and cultural conditions of twelfth-century Ireland are vastly different than those of twenty-first-century America. They're not even close to comparable. I'm not just a skeptic. A discussion on the nature of law and how it applies to twenty-first-century corporatism is highly relevant. Claiming you can't be bothered to justify the legal nuances of your argument means you are (a) too lazy, or (b) don't have a leg to stand on.

 

again you have regulators regulating regulators regulating regulators. Again if a magazine is known for rating shitty games higher then they are and everyone else says its shit that magazine wont be taken seriously. If it happens often no one will trust that magazines opinion. Now the exact same applies for product safety regulators.

 

With the FDA you get a monopoly agency that can be bribed and is enforced through force on the margins.

 

With the legal system I am too lazy to spend hours and hours writing about why it would work and proving every nuance of why its better and worth changing as well as it would actually work. I am too lazy to do that right now, more importantly there are people who have all the information. If you are legitimately interested I can send you a load of information on the subject. Its just not worth posting on the thread because people will be joining the convo later and will be arguing with stuff that I had a response to 10 pages earlier.

[Range_This11]

You're comparing an opinion-based magazine review of a form of popular entertainment (video game) to issues of environmental protection and business ethics.

 

I think I'm just going to leave my response at that.

[sees_all1]

You're comparing an opinion-based magazine review of a form of popular entertainment (video game) to issues of environmental protection and business ethics.

 

I think I'm just going to leave my response at that.

 

Industries regulate themselves because public perception is worth it.

Tylenol is a good case study.

http://en.wikipedia.org/wiki/Chicago_Tylenol_murders

[Quyneax]

I think the completely free market, when implemented, isn't stable. Any company can improve their position by, for example, not providing correct information or forming cartels. Hence, some ouside influence is required to keep the markets in check. It'd help if that influence wasn't corruptible. Transparency helps there. In the end, everybody's a stakeholder in the welfare of the economy, so it's not quite possible to have 100%-outside influence.

 

Free market as ideal as well as for example the "Industries regulate themselves because public perception is worth it." heavily depend on the rational, economically sensible person. Those people are very very rare indeed and it's not realistic to build your economy around 'rational' deciders. People still take detours to go to cheaper gas stations.

 

On the other hand, having all industry publicly-owned hasn't worked out much so far in the USSR etc..

 

So in the end, I trust my democratic goverment more than I trust a company whose primary or even only interest is making money.

[Donnie]

if the consumer doesn't care about a safe product then isn't regulation a waste anyways? If people do care then people will choose only to buy safe products. Yes irrational businesses my lie and cheat as much as possible to get a short term gain. But they wont be able to compete against businesses with safe products, to the extent that that is what people actually value.

[Omar]

McDonalds have been advertising their chicken nuggets as 100% chicken forever, even though they contain something like 38 ingredients. The FDA doesn't do anything about this. I don't know if it's corrupt, but the more food safety rating businesses McD try to bribe, the more there is to gain for a single business to tell the truth (ridicules the competition and gets them business). If no corruption occurs, then businesses will pounce to make a profit. There may be flaws in this, but I don't see how they can compare to the fallibility of a government-sponsored inspector.

 

What does everyone think about minimum wage? Neoclassical economics argue that real wages equilibrate so that labour supply and demand are equal, and that labours pushing for higher wages are hogging wealth for some workers and causing unemployment for others. Progressives (I guess that's what you call the heterodox view) disagree:

http://www.progressive-economics.ca/2011/02/22/the-non-simple-economics-of-the-minimum-wage/

[sees_all1]

I'm guessing they're advertising the chicken part of the McNugget, not the batter/breading. The chicken portion contains 4 ingredients - chicken, water, salt, and sodium phosphates.

 

http://en.wikipedia.org/wiki/Chicken_McNuggets

 

I think this is similar to the Taco Bell controversy.

http://www.wwltv.com/news/health/LSU-professor-sheds-light-on-Taco-Bell-meat-controversy-115961599.html

[Donnie]

Minimum wage isn't livable like it was intended to be. It does however make it harder for teenagers to get their first job. Of course the bigger part of that is the difficulty making a business limiting the total numbers of jobs overall is more damaging then minimum wage is. So minimum wage isn't great but its far from my first target.

 

On why you shouldnt trust the FDA Monsanto is a better example then McDonalds

[Omar]

Nope, the batter is listed separately. Included in those 38 ingredients, but still only about half. Wheat starch doesn't count as chicken. Neither does autolyzed yeast extract