From: Robert J. Bradbury (bradbury@www.aeiveos.com)
Date: Sun Dec 05 1999 - 10:02:09 MST
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
This archive was generated by hypermail 2.1.5 : Fri Nov 01 2002 - 15:05:58 MST