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Chris
05-13-2012, 06:06 AM
Maybe this is stretching "economics" but this sort of thing comes up constatly discussing economic policy, the need to regulate, and the need to have government do it.

Government Regulates and So Does the Market (http://www.economicfreedom.org/2012/05/10/government-regulates-and-so-does-the-market/)
...Market incentives include a strong tendency to self-regulation. Businesses seek to make profit, but in a competitive marketplace they can only do so by making their product one which consumers want to purchase. One important aspect of this is reputation....

But it often isnít easy for consumers to determine the quality of a product by themselves, and some items are purchased infrequently or from a company that is unfamiliar to a customer. Do market forces provide any remedy to the problem of infrequent interactions with producers? You may be surprised to find that the answer isnít theoretical, even with the amount of government regulations currently in place. A company named Underwriters Laboratories has been providing this exact service for over a century....

Underwriters Laboratories isnít the only group offering this type of service. The U.S. Green Building Council (USGBC) is a non-profit organization which runs the well known Leadership in Energy and Environmental Design (LEED) program....

The market naturally tends to self-regulate, and even apart from this fact there are groups such as Underwriters Laboratories, Consumer Reports, or LEED who provide that service intentionally (and very successfully). Since government regulations can result in unintended consequences that harm the economy and restrict our economic freedom, we must be sure that government does not intervene in the economy when the market is better able to handle the problem itself.

MMC
05-13-2012, 07:55 AM
Well there has to be some form of government regulation. The New Frontier.....Space. Where all these private buisnesses are looking to making huge profits with the mining of Asteroids and or other planets. Even just traveling in Space to some stations and or So called Space Hotels. Regulation by the government will have to take place.

Do you think the market does a bang up job of policing itself?

Peter1469
05-13-2012, 08:20 AM
Yes, we aren't getting rid of government anytime soon so we should focus on limiting government regulation to things that make sense. In the 1980s and 90s the bank regulators did great work. They identified thousands of bankers that were breaking the law and the built cases against them and referred them to the DoJ. Over 1000 were convicted and jailed with felonies over the S&L crisis and another 3000 got lesser misdemeanor sentences.

Today the regulators and DoJ are silent while bankers rape us. I guess that is what no regulation gets you.

Chris
05-13-2012, 09:05 AM
Well there has to be some form of government regulation.

Why? Not disagreeing, just asking why, what justifies it?



Today the regulators and DoJ are silent while bankers rape us. I guess that is what no regulation gets you.

Simply not the case. According to The Political Implications of Ignoring Our Own Ignorance (http://www.american.com/archive/2011/december/the-political-implications-of-ignoring-our-own-ignorance), regulators failed us.
A common post-crisis narrative is that banking was de-regulated in the Reagan-Greenspan era. Some pundits make it sound as if regulators behaved like parents who hand their teenagers the keys to the liquor cabinet, leave for the weekend, and say ďHave a good time.Ē In fact, regulators believed that they had stronger regulations in place in 2005 than they did in the pre-Reagan era.

óBefore 1980, mortgage loans held by banks were illiquid assets subject to considerable interest-rate risk. These problems were alleviated by the shift toward securitization.

óBefore 1980, insolvent institutions were opaque because of book-value accounting. This problem was addressed with market-value accounting, enabling regulators to take more timely corrective action to address troubled institutions.

óBefore 1980, banks had no formal capital requirements and there were no mechanisms in place to steer banks away from risky assets. This problem was addressed with the Basel capital accords (formally adopted in 1988), which incorporated a risk-weighted measure of assets to determine required minimum capital. In the 2000s, these risk weightings were altered to penalize banks that did not invest in highly rated, asset-backed securities.

Thus, it was not the intent of regulators to loosen the reins on banks. On the contrary, from the regulators' point of view, it was the environment prior to 1980 that amounted to leaving the teenagers with the keys to the liquor cabinet. The post-1980 regulatory changes were believed to be in the direction of tighter supervision and more rational controls.

MMC
05-13-2012, 09:18 AM
Why? Not disagreeing, just asking why, what justifies it?




Simply not the case. According to The Political Implications of Ignoring Our Own Ignorance (http://www.american.com/archive/2011/december/the-political-implications-of-ignoring-our-own-ignorance), regulators failed us.


The post-1980 regulatory changes were believed to be in the direction of tighter supervision and more rational controls.....snip~

Does the data show that they were and not just believed or speculated upon?

Chris
05-13-2012, 09:46 AM
I think that's what Arnold Kling, the economist who wrote the piece, shows.

From one perspective he might be seen as arguing for better, more knowledgeable regulations. But knowing him as the Hayekian he is, from that perspective, he's arguing government central planners can really do no better, and we shouldn't rely on them blindly.

Peter1469
05-13-2012, 09:54 AM
Why? Not disagreeing, just asking why, what justifies it?




Simply not the case. According to The Political Implications of Ignoring Our Own Ignorance (http://www.american.com/archive/2011/december/the-political-implications-of-ignoring-our-own-ignorance), regulators failed us.

1. Why regulate? http://www.chinesedrywall.com/; http://www.msnbc.msn.com/id/18400433/ns/health-pet_health/t/animal-feed-china-often-contains-mild-toxin/

2. Today the regulators and DoJ are silent while bankers rape us. I guess that is what no regulation gets you.
That the case.

Chris
05-13-2012, 10:16 AM
1. Why regulate? http://www.chinesedrywall.com/; http://www.msnbc.msn.com/id/18400433/ns/health-pet_health/t/animal-feed-china-often-contains-mild-toxin/

2. Today the regulators and DoJ are silent while bankers rape us. I guess that is what no regulation gets you.
That the case.


My question to MMC was not why regulate but why depend on government for it.

If you're referring to lack of prosecutions for fraud and other wrong doings, then I agree, criminals should be behind bars and paying for their crimes. This introduces the subtopic of who regulates the government.

Peter1469
05-13-2012, 10:29 AM
My question to MMC was not why regulate but why depend on government for it.

If you're referring to lack of prosecutions for fraud and other wrong doings, then I agree, criminals should be behind bars and paying for their crimes. This introduces the subtopic of who regulates the government.

The voters- theoretically.

MMC
05-13-2012, 10:54 AM
Can we expect private corporations to regulate themsleves? Banks?

What about my example with Space. How could Governments rely on private industry to regulate everything concenring the conducting of buisness in that environment? Bases on Moons and or other planets. Travel to Space Stations and the bases. Jobs etc etc.

Chris
05-13-2012, 11:25 AM
Can we expect private corporations to regulate themsleves? Banks?

What about my example with Space. How could Governments rely on private industry to regulate everything concenring the conducting of buisness in that environment? Bases on Moons and or other planets. Travel to Space Stations and the bases. Jobs etc etc.

Probably can't, so you need an external agent to oversee.

But why government?

MMC
05-13-2012, 12:24 PM
Probably can't, so you need an external agent to oversee.

But why government?


Who else would oversee.....and or police, regulate, or have the authority to act?

Chris
05-13-2012, 12:28 PM
Who else would oversee.....and or police, regulate, or have the authority to act?

The market, as the OP shows.

Private police, but that's another topic.

Peter1469
05-13-2012, 12:57 PM
How would a private police be any different from a government regulator?

And how close are we to shutting down government?

MMC
05-13-2012, 12:59 PM
The market, as the OP shows.

Private police, but that's another topic.

You don't think thats related? So were suppose to believe the market will regulate itself? No need to check into anything. It will be automatic.....right?

Chris
05-13-2012, 01:06 PM
I suppose private police could be used to enforce private regulation, but I would think those would be covered by contract law.

"No need to check into anything."

No one's argued that, least of all me.


So why, when the question of regulation comes up, do you turn immediately to government?

MMC
05-13-2012, 01:30 PM
I suppose private police could be used to enforce private regulation, but I would think those would be covered by contract law.

"No need to check into anything."

No one's argued that, least of all me.


So why, when the question of regulation comes up, do you turn immediately to government?

Well my answer would be because a government would have the Authority by Law to make sure there was no immediate threat to cause harm to society. Whereas I don't see how that would apply to private industry to police themselves. Or for Private industry each field having their own private police to counter other private corporations.

Chris
05-13-2012, 01:55 PM
Well my answer would be because a government would have the Authority by Law to make sure there was no immediate threat to cause harm to society. Whereas I don't see how that would apply to private industry to police themselves. Or for Private industry each field having their own private police to counter other private corporations.

But you will agree that government power extends only to protecting rights, not promoting other causes believed by some to be in our interest, like say Solindra. And that's where I have trouble with government, it's corrupt crony capitalistic practices.

The point of the OP was independent private entities could be used to regulate and monitor private companies, not just leave them to themselves.

RollingWave
05-21-2012, 04:23 AM
That's great in theory, but if say.. a few thousand kids died from lead poison from crappy toys that a foreign company (that has since went under) and millions more have health related issue due to the same reason... a non-government market regulation can regulate this.... how? the problem here is that many of the problems regulations are trying to prevent is not instant, and it's potential effect is too devastating for any private company to be able to repay.

many things have the same problem, such as that the guy that made DDT economically viable was given the Noble Prize... only to be discovered a few decades later that the thing was basically killing humans fish / birds almost as effectively as insects, would it really be ok if that thing continue to be used out of economic viability? (it IS still more economically viable than a lot of the stuff we use today.) or smoking, would it really be ok if big tobbaco company flood the media with dubious "science" report supporting that smoking is not bad for your health? is that illegal? not really, are you going to find out that they're lieing until your dieing from lung cancer at age 48? not really.


at the end of the day economy is only part of human society, it does not and can not truely detach itself from politics and society. hence why economist tend to define public goods and all that.


More over, laws mandating check on company process are already hard enough (due to industrial secret concerns), the likilhood of most companies opening up the same process check to private regulator seems eons more unlikely. espeically over a large scale, even more especially across borders.

MMC
05-21-2012, 06:52 AM
Good post RW. :smiley: