(USSA) United Socialist States of America...

[R00k]

Lack of regulation - especially when it comes to social needs and commons - produces greed-induced tragedies like Enron. That's simply historical fact.

[seremtan]

look who saved fannie mae and freddie mac and therefore the entire US mortgage market. i bet gwb cries himself to sleep every night

[Mikko_Sandt]

Many natural resources are not so easily compartmentalized, and the consequences of actions taken by their respective owners not limited therein (and therefore not priced accordingly).

Of course you can't privatize air, but steps should be taken to privatize whatever we can. For example, when it comes to fishing permits, semi-privatization of fishing areas has led to a reduction is overfishing. In Africa, public ownership of biologically diverse areas has led to decay but when these areas have been put into private use the populations inhabiting the areas have recovered.

Nor is a tragedy of the commons scenario the necessary outcome of government control or regulation (read: restriction of economic activity).

Not a necessary but a likely outcome and not uncommonly much worse than the alternative.

Lack of regulation - especially when it comes to social needs and commons - produces greed-induced tragedies like Enron. That's simply historical fact.

Enron is hardly a good example of what lack of regulation can cause. Enron hurt several people whileas government regulation can hurt hundreds of millions. In fact, Alan Greenspan argues in his book that the regulatory network that was put into place after the scandal is causing more harm than good. Governments and the public should not over-react. Another good example of this is futures markets on oil: even presidential nominees (both) have demanded regulation in order to curb speculation (which didn't cause the spike in the price of oil in the first place) which would only make things much worse.

[GONNAFISTYA]

lol Alan Greenspan.

No wonder.

[Grudge]

Of course you can't privatize air, but steps should be taken to privatize whatever we can. For example, when it comes to fishing permits, semi-privatization of fishing areas has led to a reduction is overfishing. In Africa, public ownership of biologically diverse areas has led to decay but when these areas have been put into private use the populations inhabiting the areas have recovered.

source?

[scared?]

Mikko_Sandt ...EPIC FAILURE...

[seremtan]

...speculation...(which didn't cause the spike in the price of oil in the first place)

smarter people than you say it did

[R00k]

Of course you can't privatize air, but steps should be taken to privatize whatever we can. For example, when it comes to fishing permits, semi-privatization of fishing areas has led to a reduction is overfishing. In Africa, public ownership of biologically diverse areas has led to decay but when these areas have been put into private use the populations inhabiting the areas have recovered.

Kruger National Park is one of the most successful wildlife preserves - probably the most successful - in Africa. So successful that private reserves have popped up all around it to benefit from the huge diversity it has preserved - and they are benefiting very well.

Which brings up another area in which regulation is obviously helpful: hunting. If it weren't for government control of animal populations, many of the awesome species that exist over there would have already been hunted out of existence.

Enron is hardly a good example of what lack of regulation can cause. Enron hurt several people whileas government regulation can hurt hundreds of millions. In fact, Alan Greenspan argues in his book that the regulatory network that was put into place after the scandal is causing more harm than good. Governments and the public should not over-react. Another good example of this is futures markets on oil: even presidential nominees (both) have demanded regulation in order to curb speculation (which didn't cause the spike in the price of oil in the first place) which would only make things much worse.

Pure rhetoric. I won't deny that people are overreacting (and did overreact) to the Enron scandal. But there were regulations in place before it happened, that were dismantled. Those were working perfectly well before. So Enron is a perfect example of what lack of regulation can cause -- because it was a direct result of the elimination of regulations. The same way that consolidated control of all of our media is a direct result of deregulation. Has the public service that our media provides us markedly improved during the deregulation that has occurred over the last couple of decades?

[GONNAFISTYA]

The funny thing about "free open markets" is that - given time and no restraints - they ultimately end up as a monopoly. This has always made me chuckle because if you know what a monopoly is then you'll know that it's the same as a communist system...one all-powerful company that dominates a market with no alternatives for consumers....which is what regulation helps prevent.

For more examples of the necessity of regulation (rather than the cut throat approach) look into the history of Hawaii, Guatemala, Cuba, Argentina, Honduras, Iraq (duh)...and several other countries to see how unfettered markets lead to horrible outcomes for "the common good"...all in the name of deregulated control of a market.

Does anyone here believe that there would still be competition (choice) in the OS market if Microsoft (or Apple) were left to do as they pleased?

Market fundamentals are great in theory but the minute you factor in the human condition all bets are off. Even Alan Greenspan knows this.

[YourGrandpa]

What if every restaurant was Taco Bell?

[GONNAFISTYA]

Then you and the rest of us would shit more blood.

[YourGrandpa]

Goofism: "Soon Sam Walton will be worshiped like Scientology's LRon, only on a global level and every store will be Walmart."

[Massive Quasars]

Many natural resources are not so easily compartmentalized, and the consequences of actions taken by their respective owners not limited therein (and therefore not priced accordingly).

Of course you can't privatize air, but steps should be taken to privatize whatever we can. For example, when it comes to fishing permits, semi-privatization of fishing areas has led to a reduction is overfishing. In Africa, public ownership of biologically diverse areas has led to decay but when these areas have been put into private use the populations inhabiting the areas have recovered.

That's quite conceivable. Given the diverse constitution of nature though, it's more a case-by-case matter as to what model (public, private, both) is optimal.

Nor is a tragedy of the commons scenario the necessary outcome of government control or regulation (read: restriction of economic activity).

Not a necessary but a likely outcome and not uncommonly much worse than the alternative.

If the resource becomes something of a public good, sure. However, the state could just as well restrict or regulate private activity within this unnamed natural resource sector. Probabilities are hard to ascribe given such vagueness, we've not pinned down policies as of yet.

I can't discern a great deal of disagreement among our positions here. My critique is broadly neoclassical.

[Mikko_Sandt]

Which brings up another area in which regulation is obviously helpful: hunting. If it weren't for government control of animal populations, many of the awesome species that exist over there would have already been hunted out of existence.

That is not a good example. Hunting can be turned into profit because people will pay for hunting. Privatize potential hunting territories and you'll have capitalists doing all they can to preserve the species there in order to save them for those thirsty for animal blood. As it is now hunters enter public lands unauthorized.

Think of the Bison. During America's expansion no one (well, no white people at least) owned these animals or the lands they inhabited so they were hunted almost to extinction. But now you can make a profit because people want to buy their meat so the Bison has been allowed to make a comeback.

Hunting also has economic benefits to locals which is something western hypocrits fail to understand. As if man had ever made it out of the caves had he been forced to conserve for the sake of conservation.

So Enron is a perfect example of what lack of regulation can cause -- because it was a direct result of the elimination of regulations.

If Enron is pretty much the only significant example you can come up with then I say this "lack" of regulation you're talking about is working pretty damn well.

The same way that consolidated control of all of our media is a direct result of deregulation.

That is about freedom of speech. Governments should stay out of broadcasting completely. If they don't, it only hurts the supply side and turns people into zombies. At least Americans have a choice. If they don't want to pay for FoxNews they simply don't watch it. In Finland if you own a tv you must pay a fee to the government. During the Cold War this was used to spit out pro-Soviet propaganda. Hell, private airwaves weren't even allowed until the 80s. And now because of the fee and because of its effect on competition most Finns are stuck with a few channels whileas Americans have dozens or even hundreds of channels, radio stations and so on. But the so called American "liberals" cannot stop whining about some evil Fox network or conservative talk radios...

Has the public service that our media provides us markedly improved during the deregulation that has occurred over the last couple of decades?

Ask the consumer. The consumer holds the remote and therefore has all the power in the world.

source?

Environmental and Natural Resource Economics, The Economist etc. There are several textbooks and studies available on the subject.

smarter people than you say it did

Okay then. How can speculation cause a spike in the price of oil?

Populist politicians feed nonsense to the people because they know people are too stupid to understand things like supply and demand. It was disgraceful that even McCain succumbed to this type of populist rhetoric which had been a trademark of Obama.

[R00k]

deep end.

[GONNAFISTYA]

Oh boy.

I don't wish to get into it with you since you obviously believe in the power of the wallet that consumers have in terms of "keeping us safe" from evil, but I will make a few points:

Okay then. How can speculation cause a spike in the price of oil?

Uhm...speculation is what helps drive the market either up or down. Anyone who has been paying attention realizes that the supply of oil hasn't changed or decreased since the prices shot up. The reason the prices shot up were because of POTENTIAL problems with supply routes, such as Iran threatening to mine the gulf or the hurricane currently threatening the Texas oil producers. Ever notice every time Bush mentions Iran in a speech the price of oil goes up a notch? Nobody waits for something to happen, they speculate the supply of oil is threatened (as if it was actually happening) and act accordingly.

Yes...eventually the market will balance itself out (at least it has a good chance) but that won't happen overnight as nervous traders and "market gurus" are still predicting doomsday scenarios with future markets. The very fact that they're making predictions is speculation in of itself.

Another example (very recent) was a mistake in an on-screen graphic during a television program which said that an American company (I forget which one, it was an airline I believe and I'll try to find it later) was selling off it's assets to protect itself from bankruptcy. The story was not true. It was a mistake by a technician who produced the graphic. The stock dropped a ton in value on the first day from this false news and - while the stock eventually recovered to some degree - the company is still 11% less valuable than it was before an innocent "mistake". This all happened before the company was able to make a public statement to clarify the issue. The market reacted from news that did not originate from the company in question = speculation run wild. There's a reason why official press releases are so important to a company's value on the market....even if they're lies.

There's also reason for insider trading laws since "speculation" that is shared that discusses "forecasts from possible future endeavors" can affect the stock price and ultimately the market.

Watch what happens next time a company says it didn't meet predicted profits. It doesn't matter that the company could eventually rebound (or even still made millions in profit)...people are speculating (without seeing the companies books) that the company is doomed or suffering from mismanagement BECAUSE they didn't get what was announced to them last quarter. So the value on that company drops because of speculation of what's to come rather than hard fact. It could have been a temporary problem with supply, materials, shipping problems...whatever. The fact is that it affected that quarter's profit, made them lower than predicted so suddenly they're pariahs.

Hunting can be turned into profit because people will pay for hunting. Privatize potential hunting territories and you'll have capitalists doing all they can to preserve the species there in order to save them for those thirsty for animal blood. As it is now hunters enter public lands unauthorized.

Think of the Bison. During America's expansion no one (well, no white people at least) owned these animals or the lands they inhabited so they were hunted almost to extinction. But now you can make a profit because people want to buy their meat so the Bison has been allowed to make a comeback.

Hunting also has economic benefits to locals which is something western hypocrits fail to understand. As if man had ever made it out of the caves had he been forced to conserve for the sake of conservation.

Your examples are practical and good indicators of conservation due to market necessity. But I can find a shitload of examples that show many irresponsible companies "blowing their load" in the first year or two to maximize market penetration only to run out of stock the next year. It's quite obvious that a smart businessman wouldn't do this since it threatens their supply lines...but the business world isn't always full of smart people. And animals will continue being hunted to extinction.

----

Regarding your comment on media conglomeration: you completely ignored the fact that deregulation has lowered the overall quality of the news programming...where ultimately the consumer has choice but only a choice between a douche and a turd sandwich. Quality of news reporting does not equal number of channels available to the consumer. If one corporation is controlling all of those channels then the consumer has no choice at all.

All I'm saying is this: no matter what you say, markets need controlling or they'll eat themselves alive. It's like a hurricane...you only clean up after the storm hits.

[Fender]

I'm probably one of the more vocal proponents of laissez-faire, unregulated free market economy and open democracy, but I realize that it is a (very) long term goal. We are not ready for it as a species, let alone as Americans. It is naive to think otherwise. It is a noble goal that one day everyone will act in moderated self-interest with the interest of the common good in mind as altruistic, informed, educated, rational people? Yes. It is realistic? No, not in the short term. There will always be pricks that take advantage of the system, whether they are collecting welfare checks or golden parachute checks. We should attempt to educate people on why our proposed system is better and hope that one day society will be ready for it. In the meantime, some level of regulation is necessary to prevent the assholes of the world from stealing from the rest of us. The devil is in the details, of course. How much regulation is appropriate? What allows the benefits of a free market to flourish while keeping the greedy few in check? That's a really difficult question, and in some cases we've over regulated, squashing innovation and/or competition and in others, we've under regulated.

Perfect econ is a pipe dream. Work towards it, but accept its limitations.

[GONNAFISTYA]

One thing that could lead to free market utopia would be open, honest business where the inferior don't piss in the pool before bowing out. But that's also a pipe dream.

I'm a populist and believe in true personal freedom (besides murder and rape) but for reasons to understand why we need regulation or oversight just ask yourself,"What would a Ferengi do?"

There are those that don't care if they destroy a market. Some of them are there to make as much profit as possible as quickly as possible and when they're done everyone else cleans up the mess while the prick counts his money. I don't think those people will ever go away, because there are too many people who would be impressed or envious with the profits gained in such ways while happily ignoring the shitstorm it caused. They would possibly say,"He saw an opportunity and took it."

You are what you is.

[iambowelfish]

I find this pretty interesting, but it's not something I know a huge amount about. My view is that free market capitalism is pretty much ideological voodoo, but I'm semi open to someone convincing me otherwise, and I realise I may have some prejudices here myself, since clearly there are some people who think it's a good thing but aren't complete idiots.

From the point of view of a Brit like myself, America being described as socialist seems pretty laughable. I'm fully supportive of institutions like the NHS and the BBC.

That is about freedom of speech. Governments should stay out of broadcasting completely. If they don't, it only hurts the supply side and turns people into zombies. At least Americans have a choice. If they don't want to pay for FoxNews they simply don't watch it. In Finland if you own a tv you must pay a fee to the government. During the Cold War this was used to spit out pro-Soviet propaganda. Hell, private airwaves weren't even allowed until the 80s. And now because of the fee and because of its effect on competition most Finns are stuck with a few channels whileas Americans have dozens or even hundreds of channels, radio stations and so on. But the so called American "liberals" cannot stop whining about some evil Fox network or conservative talk radios...

You should try living here. Our TV is of relatively high quality, and the BBC channels set a good example which the private broadcasters rise to meet, particularly as far as keeping advertising unobtrusive goes. Is freedom of speech affected? I imagine you would say that the individuals' right to broadcast is affected, but under a purely capitalist system an average person like me wouldn't own a TV station, but I do own a stake in the BBC as a licence payer (not that I support that system, I think it should be tax funded) to an institution which continually has to justify its status.

I don't know about Freddie and Fanny but we've had banks bailed out over here and well, I'm curious as to what the alternative is. I mean would people lose their life savings if they had it in an account there? Can't we punish only those who were in charge of the risky decisions, or are ordinary savers culpable too for their "bad investments"?

But externalities, which by definition are outside the market mechanism, are usually caused by imperfect property rights. If the river in my example is privately owned the firm that wishes to pollute must negotiate a price for their right to pollute that reflects the opportunity cost of not polluting. Rivers of course lead to oceans and so on but the source of the problem persists: public ownership of land or water, a tragedy of the common.

Are you aware that the tragedy of the commons was originally an argument for regulation? How would you refute this interpretation? Needless to say it makes a lot more sense to me that way.

Laws should, of course, be respected. A company has no right to violate the liberty of others. A company should not pollute a river unless it has made a deal with the river's owner.

What's the difference between laws and regulation? Why can't it just be illegal to pollute a publicly owned resource? Do you think the government's role should be to protect property rights and only property rights? If so, how have you arrived at this view?

[seremtan]

I'm probably one of the more vocal proponents of laissez-faire, unregulated free market economy and open democracy, but I realize that it is a (very) long term goal. We are not ready for it as a species, let alone as Americans. It is naive to think otherwise. It is a noble goal that one day everyone will act in moderated self-interest with the interest of the common good in mind as altruistic, informed, educated, rational people? Yes. It is realistic? No, not in the short term. There will always be pricks that take advantage of the system, whether they are collecting welfare checks or golden parachute checks. We should attempt to educate people on why our proposed system is better and hope that one day society will be ready for it. In the meantime, some level of regulation is necessary to prevent the assholes of the world from stealing from the rest of us. The devil is in the details, of course. How much regulation is appropriate? What allows the benefits of a free market to flourish while keeping the greedy few in check? That's a really difficult question, and in some cases we've over regulated, squashing innovation and/or competition and in others, we've under regulated.

Perfect econ is a pipe dream. Work towards it, but accept its limitations.

this is one of the more leftfield pro-laissez-faire arguments i've ever heard: "laissez-faire hasn't failed, it's just the concept is so noble that we fallible humans don't measure up (yet)". you could probably make the exact same argument in favour of communism, any religion you care to name, etc

characterising all the demerits of laissez-faire as products of human shortcomings rather than as what they are - products of the shortcomings of the laissez-faire idea itself - is a little self-serving too. a market theorist can't posit a theory that depends on human greed for its efficacy, then blame human greed when things go wrong in an attempt to save the theory

[R00k]

It seems, historically, to be a part of the human condition to take a good idea to one of its extremes -- attempting to find the "final solution," or "unifying theory" in a neat, tidy package -- until we have just another universally discredited theory. It's maybe the most tangible form of a straw man there is. It seems like a perfectly reasonable endeavor (IMHO) to search for the grand unifying physical theory of the universe, but trying to develop such a blanket theory specifically for human behavior doesn't just seem misguided - it seems psychotic, in the historical sense of continually practicing the same behavior, but expecting different results.

The Chicago School ideas about economies were always very promising, philosophically. The problem seems to have arisen when students of it began to try to force entire societies of people into the textbook norms that are considered the optimal conditions for it to exist.

The worst part of the laissez-faire ideology, is that it can never be disproven in the real world (not to its ideological proponents, at least), due to the fact that its supposed conditions for success are so stringent. When it has failed in practice, its proponents have always claimed that it only failed because it was not a true, or pure, implementation. Any sort of government or public action that affects the economy -- directly or indirectly -- is perceived as impeding the free movement of the invisible hand and can't be allowed. Since there is no real world implementation of this, short of absolute anarchy, there will always be an excuse for why this "final solution" wasn't successful.

There will also always be people who either don't completely understand the science, or people who just want to use it for their own ends. Heck, the theory was used as part of the justification for creating the IMF and World Bank, even though those two institutions go against the very core of its principles. Unfortunately, the quote-unquote ideal implementation of laissez-faire only gives these people more freedom to do things like this. The system essentially calls for a complete lack of regulation and oversight. This succeeds in eliminating public manipulation of the markets, which allows the economy to flourish and correct itself. Unfortunately, it doesn't provide any way to protect against private interests manipulating the market; it only gives them the ultimate sentence of going out of business at the mercy of the market. The first problem with this is that it is only punishment after the fact -- in the real world, there's no deterrent big enough to stop humans from taking this risk when the reward is big enough. The second problem is that it doesn't account for all the other people who may suffer when this happens, even though those people were not the ones who made the decisions and took the risks in the first place.

[seremtan]

ironically, the medicine that IMF serve up to "developing" countries to bring them closer to our own exalted state of economic nirvana is the same medicine we avoided taking ourselves when we were developing. we didn't "open our markets" to other countries' "investment" - we simply used a combination of military force and protectionism to make sure we had the upper hand. britain did it, the US does it now. even more ironically, military force and protectionism are the methods almost exclusively available to government, and not the private sector. lol

[Grudge]

When it has failed in practice, its proponents have always claimed that it only failed because it was not a true, or pure, implementation.

Incidentally, that is exactly the same argument used by many socialists to explain the failure of communism.

[seremtan]

i think i said that already

this is one of the more leftfield pro-laissez-faire arguments i've ever heard: "laissez-faire hasn't failed, it's just the concept is so noble that we fallible humans don't measure up (yet)". you could probably make the exact same argument in favour of communism, any religion you care to name, etc

[Grudge]

I seem to have missed that

TLDR etc.