Free-Market Regulation

[Diuretic]

The invisible hand is all very well but regulation will produce a better outcome for society in general.

"Better outcome" as defined how and by whom?

Given an economy exists to provide for the society it's embedded in it follows that if it increases wellbeing generally and reduces misery generally then it's a better outcome than if it increases wellbeing for only a few and reduces misery for only a few.

 

[Diuretic]

"Better outcome" as defined how and by whom?

Depends on the regulation.

Regulation that requires disclosure of information gives people more information to make better choices, which leads to a more optimal outcome.

Regulation that makes it difficult to fire employees beyond some point raises the cost of hiring employees, which leads to less hiring and more unemployment, which is a bad outcome for society.

Yeah, well that's your story.

Point being that when you use inexact semantics, like "better for society", any given person can pull any given reason out of thin air to make that statement true.

Not at all, apart from the fact that I met your objection, sometimes you just have to make general statements so that the particular can be examined.

 

[Diuretic]

The invisible hand is all very well but regulation will produce a better outcome for society in general.

I certainly agree that we can't expect the visible hand of private management to always entertain optimality. Once we refer to the limitations of the invisible hand, we have to consider the possibility of coercion. The negative effects of economic planning isn't restricted to government concerns.

In that respect, this alternative view of the free market (where the visible hand is determined by the economic agent's attempt to minimise transaction costs) also becomes utopian. It becomes about ignoring the reality of imperfect contracting. Its not simply about how certain organisational structures develop (such as the firm); its about but how those structures are used to enable force

The very existence of corporations, indeed even the potential for their existence, means that regulation must exist as well. The collective power of a corporation isn't the butcher, the baker and the candlestick maker pursuing individual enlightened self-interest.

 

[JW Frogen]

this example isn't all that afar from Coasian lighthouses.

Interesting account of the Coasian analysis here

I see the example as more mundane. Coase wrote ”We may conclude that economists should not use the lighthouse as an example of a service which could only be provided by the government”. .

A much better example would be the military. A nation can privatize its military, hire out, and this has often been done in history (in particular in Renaissance Italy), such militaries can even defeat state armies but the assumption of this is that a society or state is only an economy, not a culture or political polity.

State funded armies have by nature some form of idealism, commitment to that nation or political polity which transcends simply fighting for economic gain. This is why state armies are more reliable, a mercenary army can turn on a dime, move to the highest bidder, or quite when they feel the cost to their life and limb exceeds the economic reward.

State armies tend to fight for more complex, emotive reasons, and will usually stick it out even if it is not in their economic interest.

Human beings are motivated by more than just desire for economic gain.

An economy is only one aspect of a civilization.

Many economists forget this, which is why they are dismal scientists.

 

[JW Frogen]

The very existence of corporations, indeed even the potential for their existence, means that regulation must exist as well. The collective power of a corporation isn't the butcher, the baker and the candlestick maker pursuing individual enlightened self-interest.

Indeed, economic power is power in the literal sense that political power is power.

Just as with political power, economic power when left without any Madisonian checks and balances, tends to concentraite and be abused, indeed such economic power unchecked will actually damamge or destroy the very free, unregulated market that created it. (Such as the trusts in 19th century America.)

The human emotions that can lead men to ruin in the political sphere will do the same in the economic sphere.

 

[Limey]

A much better example would be the military. A nation can privatize its military, hire out, and this has often been done in history (in particular in Renaissance Italy), such militaries can even defeat state armies but the assumption of this is that a society or state is only an economy, not a culture or political polity.

I couldn't agree. The public good is a hypothetical national security. In reality we have a good that is regularly inconsistent with the basic required characteristics, particularly non-excludability

Many economists forget this, which is why they are dismal scientists.

There's no reason to abuse the Malthusian history of the term 'dismal scientist'

 

[JW Frogen]

A much better example would be the military. A nation can privatize its military, hire out, and this has often been done in history (in particular in Renaissance Italy), such militaries can even defeat state armies but the assumption of this is that a society or state is only an economy, not a culture or political polity.

I couldn't agree. The public good is a hypothetical national security. In reality we have a good that is regularly inconsistent with the basic required characteristics, particularly non-excludability

Many economists forget this, which is why they are dismal scientists.

There's no reason to abuse the Malthusian history of the term 'dismal scientist'

I am not concerned with theoretical doublespeak, I am concerned with human and historical reality, and how we really behave.

As ex military I can tell you theoretical thought not tethered to empirical reality can get you killed quick time.

 

[Limey]

I am not concerned with theoretical doublespeak, I am concerned with human and historical reality, and how we really behave.

As ex military I can tell you theoretical thought not tethered to empirical reality can get you killed quick time.

You're replying to a conversation about public goods. Your example, whilst appearing to be closer to a "pure public good" (given the notion of national security), is actually quite inconsistent with the notion. Its the practicalities, rather than the theory, that ensured that your example was irrelevant

 

[Toro]

"Better outcome" as defined how and by whom?

Depends on the regulation.

Regulation that requires disclosure of information gives people more information to make better choices, which leads to a more optimal outcome.

Regulation that makes it difficult to fire employees beyond some point raises the cost of hiring employees, which leads to less hiring and more unemployment, which is a bad outcome for society.

Yeah, well that's your story.

Point being that when you use inexact semantics, like "better for society", any given person can pull any given reason out of thin air to make that statement true.

From an economic standpoint, giving more people more information to make their decisions means people should make better decisions. This is a more efficient and more optimum outcome, about as controversial as saying that demand goes up and supply goes down when price goes down.

Politically, "better for society" is a subjective statement.

 

[JW Frogen]

You're replying to a conversation about public goods. Your example, whilst appearing to be closer to a "pure public good" (given the notion of national security), is actually quite inconsistent with the notion. Its the practicalities, rather than the theory, that ensured that your example was irrelevant

The ability of a nation and it's people to survive (and therefore also it's economy) is the ultimate public good.

It is the one public good all other public goods are contingent upon.

 

[Limey]

The ability of a nation and it's people to survive (and therefore also it's economy) is the ultimate public good.

It is the one public good all other public goods are contingent upon.

You're getting your vocab mixed up. You could quite rightly say "its jolly important". However, public goods have specific characteristics. Non-excludability is the crunch with this one. Given the military can be used essentially as a private good, we can't use the traditional vocab

 

[JW Frogen]

The ability of a nation and it's people to survive (and therefore also it's economy) is the ultimate public good.

It is the one public good all other public goods are contingent upon.

You're getting your vocab mixed up. You could quite rightly say "its jolly important". However, public goods have specific characteristics. Non-excludability is the crunch with this one. Given the military can be used essentially as a private good, we can't use the traditional vocab

There can be no public goods if no public can survive, how we survive as a polity is the ultimate public good question.

The military is the primary public good, for there can be not public without it.

Still, as I revealed in my first post the military can be privatised to the detriment of the public good.

So, what is an exclusively public good that can not be used as a private good?

 

[Limey]

There can be no public goods if no public can survive, how we survive as a polity is the ultimate public good question.

There are numerous necessities critical for our survival. Being a necessity isn't a sufficient condition for a public good.

The military is the primary public good, for there can be not public without it.

You're again misusing the term. There is no reason, for example, that we couldn't go all Chicago school and have all military services privatised. This reflects its non-public good status. Given excludability, its reduced to a standard private good where the utility maximisation goal (feeding off coercion where available) ensures its production

 

[JW Frogen]

Shall I repeat for the theoretically impaired? (You people, both left and right have done more damage in human history that the plague.)

Give me an example of a "public good" that can not be privatized.

 

[Limey]

Give me an example of a "public good" that can not be privatized.

Privatisation will naturally destroy public good characteristics. See, for example, the privatisation of the roads. Tolling would generate a private good

With the military we'd have privatisation of a good that already fails to make the minimum characteristics of a public good. Its privatisation would not destroy public good characteristics. It would merely lead to changes in power and the available coercive relationships

 

[JW Frogen]

Give me an example of a "public good" that can not be privatized.

Privatisation will naturally destroy public good characteristics. See, for example, the privatisation of the roads. Tolling would generate a private good

With the military we'd have privatisation of a good that already fails to make the minimum characteristics of a public good. Its privatisation would not destroy public good characteristics. It would merely lead to changes in power and the available coercive relationships

Naarp. Thank you for playing.

Once again give me an example of a "public good" that can not be privatized.

As to the privatization of the military, if a privatised military turns to the highest bidder or quits (as I demonstrated in my original post) it certainly has damaged the good of the public whose coin it was taking.

Surely even a theoreticaloligist such as you can learn that?

 

[Limey]

Once again give me an example of a "public good" that can not be privatized.

Just did!

As to the privatization of the military, if a privatised military turns to the highest bidder or quits (as I demonstrated in my original post) it certainly has damaged the good of the public whose coin it was taking.

You certainly can make political complaint. However, given excludability already exists, the economic analysis cannot be successfully applied

Surely even a theoreticaloligist such as you can learn that?

The reality of this exchange is more mundane: you've abused definitions. It doesn't necessarily negate the validity of your arguments, but it certainly ensures that you'll struggle for economic sense within it

 

[JW Frogen]

Anything can generate a private good, because the private is by definition one person to all.

What you claimed was that the military can not be used as an example of a good better placed in the public sphere rather than the private.

Once again, I asked you for an example of a public good that can not be privatized.

Third time now.

 

[Limey]

Anything can generate a private good, because the private is by definition one person to all.

A private good will not have excludability and will have rivalry in consumption.

What you claimed was that the military can not be used as an example of a good better placed in the public sphere rather than the private.

I've used the definition of the good correctly. The military does not exhibit non-excludability. An example would be the use of troops to break a strike. Given excludability, it is not a public good.

Once again, I asked you for an example of a public good that can not be privatized.

Third time now.

I've already given you an example: roads. Through privatisation we'd allow road pricing. By definition, this is the destruction of a public good and replacement with a private good

 

[JW Frogen]

Now you are claiming privatization of roads is the destruction of a public good in service of a private good but you have also argued privitatsation of the military is not such a case, yet any road building requires a state to exist, and the same intellectual, emotional, economic imperatives that would see private road building damage the public good would be by definition amplified by the privatization of a military necessary to keep the polity that those roads are built in alive.

I think you have a problem here theoretical boy.