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.]
[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.]
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