Re: COPY: Re: Stasism/Dynamism

Robert J. Bradbury (bradbury@www.aeiveos.com)
Sun, 5 Dec 1999 09:02:09 -0800 (PST)

On Sun, 5 Dec 1999, Robert Owen wrote:

> But things HAVE changed, and not simply in the proliferation of market
> regulations. For example, not only do most consumers fail to save part
> of their income, but in fact decrease their income through the interest
> charged on their excessive purchasing. A decreasing number of Americans
> are genuine investors, and the failure rate of small businesses due to the
> devastating purchasing power of corporations is a grievous limitation of
> "free enterprise".

I think this analysis is somewhat limited. The proliferation of credit in our society allows younger people to have a lifestyle that would have formerly been limited to older (wealthier) individuals. As the baby boom generation moves from its younger years into its middle and even older years they shift from being consumers to savers. I will freely admit that the credit card companies charge outrageous rates that do not reflect current economic conditions (they may have made some sense back in the early '80s when interest rates were driven to astronomical levels). Though you now see some competition starting to push the rates down during "introductory" periods, they rapidly revert to a higher level. To some degree I believe the companies do this so that the "good" credit risks can cover the losses generated by the "bad" credit risks. If so, since this is a relatively free market, why hasn't a company been created that only grants cards to the good credit risks and does so at rates only several percent above the bank costs of borrowing money? Is there some hidden monopoly here?

As there are now more people (percentage wise) investing in the stock market than there ever have been, the statement "A decreasing number of Americans are genuine investors" is false, unless you have some interesting "spin" on the term "genuine".

The failure rate of small businesses is due to a lack of experience, a lack of planning or a lack of market knowledge. I fail to see how the purchasing power of corporations (which includes both large and small businesses) contributes to small business failures. [Since I've been involved in 3 or 4 small "failed" businesses in the last 10 years, I pretty qualified to comment on this.]

With regard to "market regulations", I don't think you can have this discussion without bringing into it the economic problem of common property. If you look at much government regulation it has taken the form of forcing corporations to pay attention to the costs of common property (e.g. air or water). Now you may not like how they implement the regulations (or taxes) to fix these problems but I don't think you can escape from the fact that these are problems that do require fixes. What is interesting to me is that while most people intially (back in the '60s & '70s) viewed these regulations as "bad", many, now that they seen the results have come to accept them as good. Can the "free market" people propose a solution for the problem that if India & China decide to burn their coal resources in the coming decades (their cheapest solution for power), *we* may pay the price for this in the form of increased pollution, shifts in weather patterns, crop losses, etc?

[Mind you, if you have read my Nanotech comments you know that I want them to burn the coal, but I'm trying to illustrate the problem.]

I think the problem is one of the "education" of the public. The car manufacturers generally resisted making cars "safer" until the public became educated enough (around the time that air bags became relatively affordable) that they started demanding safe cars (before that it was a niche market for companies like Volvo). Now they are scrambling to be innovative and outdo each other with passenger air bags, side air bags, back seat air bags, side door beams, etc. Now, if you are against such things as safety regulations, you are voting in favor of hidden costs. People get injured, they go to hospitals, that ends up costing you in terms of increased health care costs (whether paid for by your government or company or self, depending on your situation). The work days they lose may cost them personally, but it also costs you because it lowers the productivity of the society resulting in a lower return on any investments you might have.

Where things get "iffy" is when the cost-benefit analysis of the regulations is flawed. As Bruce Ames has often pointed out, this is the case with some of the "carcinogen" regulations. Here the increased fruit or vegetable costs associated with reduced pesticide usage result in a decline in vitamin intake among the poorest that drives up birth defects and probably cancer rates.

I wonder if a major effect of "regulating" something is to drive public discussion so that those who can see the long term beneficial results end up educating those who would prefer to keep their heads in the sand and watch a football game?

Robert