Government Regulation of the Economy

Discussion in 'Economy' started by Mr.Conley, Jun 8, 2006.

  1. Mr.Conley
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    Mr.Conley Senior Member

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    One of the issues most commonly touched on at USMB is regulation. A lot of people support it a lot of people can't stand it. This seemingly trivial issue is in reality one of the most important and affects each of us everyday. I thought I'd bring up the issue, see if anyone wants to state their opinion, and try to reach a consensus.

    Here's what I think.

    I believe that too much regulation hurts the economy, but that regulation is always needed. As anyone whose has ever entered, among other things, the Chinese healthcare system will tell you, KNOWING that that is antibotics in that syringe and not say Windex is a definite plus about medicine here in the states. Indeed, one of the biggest healthcare problems in the 2nd and 3rd worlds is ensuring that a presciption drug companies are selling you the product as advertised. A surprising number of people have met less then happy endings because of this lack of regulation. This lack of standards and regulations is also the reason why many people don't support the idea of importing drugs from overseas.

    Indeed, it is because of situations like the one above that drive me to support regulation. We already have enough snake oil salesmen as it is. If we can't hold them accountable for their actions because of a lack of regulations, then it's only the little guy who gets screwed. Without regulations, ADM suddenly has very little incentive to make sure that thoses apples aren't poisonous. After all, without regulations, who is ever going to find out? Not the FDA for sure. And even if someone does figure it out, technically ADM didn't do anything wrong. They just sold you some apples, and no one said they were good apples. Sure, you can take your business elsewhere the next time you buy apples, but that becomes problematic if your dead.

    As for hiring and workplace regulations, these are also needed. What is it that allows sweatshops to exist? There are no regulations that forbide those conditions from existing in those countries, the employers have no incentive to improve conditions and thereby hurt profits, and for the workers, it's either this, similar work at another factory, unemployment, or back to the paddy fields and subsistence farming for the next few generations. Workplace regulations are essential, a minimum wage prevents a race to the bottom, workplace safety ensures that Bob can go to work everyday without fear of dying and knows that he'll have a least the minimum to feed the kids at night. Sure Bob could try to find work somewhere else, but that's problematic if Bob winds up 1. Dead because of a lack of workplace safety or 2. Can't feed the kids because every job pays the same $1.50 for the work he does. Bob could try to go to community college to develop new, higher paying jobs skills, but employers wouldn't accept his credentials because the lack of regulation in higher education prevented them from knowing if his degree was legit. The already well known institutions faced a similar problem, they couldn't trust the applications they recieved from the unregulated secondary school system, and have no idea the actual quality of the students they are accepting.

    Basically what I am saying is that sure, regulations can cause a lot of hassle and red tape, but we do need a set of agreed upon standards or else who knows what could happen. Regulations provide these standards and ensure a well run,and safe, economy and workplace.
     
  2. LOki
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    LOki The Yaweh of Mischief

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    So...full...of logical...fallacy...factual...distortion...socialist...fascist...propaganda:blowup:
     
  3. PsuedoGhost
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    PsuedoGhost Member

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    We'll just throw you back to 1890. We'll see how long you like it there.
     
  4. LOki
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    LOki The Yaweh of Mischief

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    H.G. Wells LOLs.

    Bullshit presumptuous implications galore LOLs.
     
  5. Hobbit
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    Hobbit Senior Member

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    I believe that a free market economy can eventually work out any problem in itself as long as competition is allowed to flourish. However, the government is capable of helping out the process as long as it uses its power sparingly.

    First off, monopolies should be flat-out illegal. Monopolies can and will occur in a free market, and will hurt everyone in the long run.

    As for other regulations, there's such a thing as too much. Now, in a free market, there's a demand for people such as consumer reporters to tell people how clean and safe the places they do business with are. Some companies even hire the inspectors themselves to make sure the places stay safe and clean and so they can publish the good reports with their ads. This isn't always enough, though, which is why there are federal and state standards that can get a place shut down. Not everybody reads consumer reports, and people will get sick or even die without the more forceful regulations. Sometimes, wierd or overly strict regulations pop up as a side affect of bureacracy, but it's a necessary evil.

    All in all, little regulation is needed, as a free market polices itself, but sparse use of regulations helps make the process a bit safer.
     
  6. Mr.Conley
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    Mr.Conley Senior Member

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    Ohh... the problems exist, and don't you think they don't, because they do. However, if I showed you it would so awesome that your head would explode. So you see, I'm not doing this because I can't, it's because I don't want to hurt you.
    I know there are problems, and that this is is really oversimplified, but I wanted to encourage debate. Hopefully this will piss you off enough to post a real rebuttel.
     
  7. LOki
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    LOki The Yaweh of Mischief

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    Truth. Particularly by limiting their "help" to protecting the market from force and/or fraud.

    Nope. Bad idea. Monopolies are good.

    Coercive monopolies cannot occur in a free market--they only can occur by government sanction. Non-coercive monopolies are good for everyone in the long run. They establish infrastructural standards that are indispensible.

    There certainly is.

    Why must there be special regulatory standards for the marketplace when fraud is already illegal?

    Why can't the participants in the market, market the validity of their claims regarding their product; why should they not market their reputation as well? If they market under false assertions, it's fraud and you put them in jail.

    Morons are not an endagered species, we should stop treating them like one.

    No it's not.

    Nope. The less regulated the process, the safer it becomes. Being as safe as possible is a marketable asset that is destroyed by governemt imposed minimums--these minimums become industry maximums because there is no market incentive to improve beyond the lowest common denominator already set by fiat. In fact, the incentive becomes to lower that lowest common denominator, either explicitly through the lobbying (bribing) of legislators, or implicitly by manipulating (bribing)enforcement. Illustrating precisely why legislators, enforcement, and those who can buy them, are all so enthusiastic about regulation.
     
  8. BaronVonBigmeat
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    BaronVonBigmeat Senior Member

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    Health care: As a general rule, companies do not get richer by killing customers

    Food: ditto. OMG that guy is selling fruit out of the back of his truck! We're all going to die!

    Sweatshop conditions: It's better than the alternative, which is often child prostitution or picking through garbage dumps or something else awful. The real question we ought to be asking is "Why aren't better jobs available?" And the reason is almost always "government". Specifically, governments which present enormous barriers to new businesses and/or ill-defined property rights. See [ame=http://www.amazon.com/gp/product/0465016154/sr=8-1/qid=1149815277/ref=pd_bbs_1/102-3767693-1855314?%5Fencoding=UTF8]The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else[/ame] for details.

    Minimum wages are a form of price floor. Price floors cause artificial surpluses. A surplus in labor is called unemployment. Most places in the US are paying above minimum wage to begin with, not because they're generous, but because they have to or they won't be able to fill a certain position.

    Monopolies: In the absence of government intervention (key word here), monopolies follow one of two paths. Either they are serving customers and using resources efficiently; or they are constantly being undermined by innovative new companies who are looking to get a piece of the action. Standard Oil worked feverishly to discourage new competitors, and cut the cost of oil dramatically. But even that wasn't enough. They had 90% of the market at time antitrust investigations started, but by the time they were split up, they were down to something like 50~60 percent.

    Now if you're talking about official, government-enforced monopoly priviledge--yes, that's a big problem, a problem with government, not the market. The meaning of the word "monopoly" has changed over the years. It used to strictly mean "a priviledge,granted by government, to be the exclusive seller of a certain good". Also, it's important to remember that most regulations have a disproportionate effect on smaller firms rather than big ones. A great deal of legislation in the progressive era was either licensing type regulations designed to limit new competition (in the name of promoting quality or safety), or underhanded tactics by one tycoon to punish another's empire. In particular, a lot of the regulations during this era were little more than battles between the Morgan and Rockefeller empires.

    And finally, the free market can provide standards. For example, UL certifies electrical products, API certifies petroleum pipeline products, ISO certifies and standardizes all sorts of crap, etc. My company for example is audited every few months. If we lost our API and ISO certificates, no one would buy our products. If the regulations are good and valid, people seek out products with that particular seal of approval. If they go overboard, people can ignore them.
     
  9. Mr.Conley
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    Mr.Conley Senior Member

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    I've got to go, so I can only post a partial rebuttal.
    Here is an interesting article from The Asia Times. The first part is about the lack of protection (ie. regulation) of drug patents and its effects on Western drug manufacturers. The second part deals with fake drugs.
    As you can see, although there are laws that ban counterfeiting, there are no day to day regulations that have prevented counterfeiters from controlling 10-35 percent of India's drug market. While technically these companies have no incentive to let patients die, they have less incentive to make sure their drugs are clean.

    I'll respond to you four other point (food, sweatshops, minimum wage, and monopolies) either really late tonight or tomorrow.
     
  10. Mr.Conley
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    Mr.Conley Senior Member

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