Your opinions aren’t necessarily related to conservativism. Lots of conservatives recognize that the government can correct market externalities. Conservatives and liberals may differ on their opinion of the breadth of the role government should pay, or whether, in a specific case, government intervention is worthwhile.
Read Milton Friedman or William Buckley if you’re interested what conservative intellectuals had to say about market externalities. If I remember correctly, Friedman (nobel prize in economics, noted conservative) wrote a textbook which explained market externalities and the role of the government in solving them.
For your first question, a short list off the top of my head…
A bit before 1787
A bit during 1787
A bit after 1787
Before 1787…Establishment of property rights and the rule of law. Fundamentals necessary for risk taking, investment and the creation of wealth. In other words, fundamentals required for the advancement of a modern society.
At 1787 (actually, 1789 if I remember correctly)…The genius here was the system of checks and balances in government, as well as a nice enumeration of citizens’ rights in the first 10. The 2nd Amendment theoretically provides a check on the government and military as a whole.
Also, the notion that a 51+% majority can’t eliminate certain protections that the minority hold for themselves and are inviolate. Although this latter point is continually challenged, as we debate often on this Board.
The genius in 1789 was also articulating how the burden needs to be put on government to prove a case that it can take from, and restrict freedoms of, its citizens. And not the other way around. This also is continually under challenge.
Post 1789…Ricardo’s theory of comparative advantage. My personal favorite. Not that this was codified in law anywhere, of course, but it reinforces that free exchange between individuals, even when they cross sovereign boundaries, creates benefits for all. Sort of a re-stating of Adam Smith in a special form. Exchange includes capital, goods and people (immigration).
Post Industrial Revolution, when most people moved away from subsistence living, strong evidence that a few, fundamental investments in the productivity of a nation can pay for themselves multiple-fold and they are to the benefit of all. They increase the competitiveness and wealth-creation ability of the nation which ultimately translates into staying power and a global strategic advantage.
When possible, people should take care of these by themselves if they have the resources to do so. They will do so, since it is in their best interest. But it is in the rest of the citizenry’s self interest to chip in for the small % of cases where this is not possible.
Primary and (probably) secondary education
Insurance against catastrophic failure events with high severity, e.g. cancer
Large infrastructure investments of national importance that have huge transaction costs on the front end, making it impossible for the private sector
Accounting for costs of public externalities (a catchall term for a lot of things described here)
I would also throw in a basic social safety net. But that is often a red herring in these discussions. The amount of $$ that directly goes into the pockets of the indigent is a trivial portion of the national budget. One could argue that charity could pick this up, if the government wasn’t taking so much of our money for other, worthless things. But let’s not go there right now.
Also, evidence in the form of multiple 10’s of millions dead, and a few wars, that communism and ‘heavy’ socialism do not work. By eliminating property rights, the rule of law, and the checks and balances inherent in the US system, they destroy incentives to take risks and invest. They foster corruption and inefficiency amongst the ruling class. When people are not making decisions on their own behalf, and trading off the benefits, costs and risks according to their own personal utility profiles, wealth is destroyed.
Which is why the investments I describe above in education, healthcare, etc. should be simple wealth transfers in the form of vouchers, or even straight cash without strings, and not via government as a delivery mechanism. The decision-making should be left in the hands of the individual.
A couple of other random, second-order subjects for debate, post 1789…
The creation of limited-liability companies that can pool capital for large ventures, with investor protections. I think this is a Good Thing. Any large modern private venture, beyond the scope of a family-owned proprietorship, owes a significant portion of its success to this innovation and the laws surrounding it.
The creation of fiat money and fractional-reserve banking, regulated by a central bank. The abandonment of a gold standard. The need for government to get involved in money or finance at all. Lots of good grist for discussion here. Arguments on both sides. Andrew Jackson and Murray Rothbard took one side. Lots of people took the other. We’re cleaning up after this mess right now, so it’s timely.
That’s a free form rambling. I’m sure I missed a few points here and there. Hope that’s what you were looking for.
If food labels were made voluntary, and some went away tomorrow, are you asserting that commerce would grind to a halt? That food manufacturers and consumers would stare at each other in a Mexican standoff indefinitely, with consumers starving and food manufacturers going bankrupt?
I drove by a used car lot this morning. It’s been in business for at least 10 years. I took a look at one of the cars in the lot. Then I went home, looked at the guy’s website, and read the description of one of the cars that I looked at.
Are you asserting that this ‘car label’ (the food equivalent) is mandated by law? Because it isn’t. But somehow, transactions still seem to take place on this guy’s lot. I’m confused. I thought government mandates were required to correct information asymmetry and ensure efficient commerce.
Despite Bright & Shiny’s assertions, there are no laws regulating what EBay’s sellers say about their products. I’m especially sure there wasn’t any law when Pierre Omidyar first set it up back in the 1990’s in the Bay Area.
But yet, despite that, commerce has exploded on EBay and many other online web sites. How is that possible? Information asymmetry is through the roof on Ebay transactions, with sellers being remote avatars and buyers being unable to touch or feel the products. How can commerce even happen? Doesn’t the government need to step in, to correct information asymmetry here?
What is it waiting for? There are efficiencies to be gained, dammit! Let’s tell Nancy Pelosi and Harry Reid to get going on that!
But you’re forgetting that one side is viciously, amorally, irretrievably Evil and the other is the embattled, mankind-loving fount of truth and justice. And that truly explains sociopolitical conflict.
Religion dominates this board far more than you’d realize at first glance.
Of course not. Just because my choice is not as well-informed as it could/should be does not make me incapable of action. I’m not Buridan’s ass.
Why must everything be so extreme with you? Just because there is information asymmetry doesn’t mean the government must intervene. No one in this thread has said so. Ever. On the example of used cars specifically I even admitted there was not much the government could do. (Some governments tried, but current data seems to show that it had little to no effect. This doesn’t surprise me.)
The mechanism for feedback made getting better information practically costless. This helps assure buyers in the face of information asymmetry. You’ll note there are mechanisms in place to help assure sellers about buyers, as well.
The slope is not so slippery. In fact, it isn’t even a slope. Each market should be examined on its own merits. Sometimes, corrective action might help.
P2. How is this extreme? It’s the classic example of information asymmetry. The used car problem. I deliberately chose it so that it wasn’t extreme.
But I do like extreme examples from time to time. They help to bound the problem and extract mutual agreement from both sides of the debate, by saying that ‘Yes, IMM, I agree. At that end of the spectrum the answer is X. But I am asserting that on my end of the spectrum the answer is Y.’
That’s progress amidst a debate, isn’t it? Because then you’ve narrowed the scope of the problem-solving to talk about where along the spectrum the pendulum swings from X to Y, and why it swings.
But I’m surprised you think the used-car example is an extreme.
P3. Exactly. That’s exactly my point. There are lots of mechanisms that EBay puts in place. They were put in place by their own volition, in a private market, to further everybody’s interest. Sellers and Buyers. Ebay itself. Everybody is acting in their own interest in a free market.
The government didn’t have to mandate that. Many posters above, including you, assert that in other markets the government must step in to mandate it.
Um, OK. I think. Not sure where you’re going with this.
So…
When there are lots of people demanding something in a free and competitive market, and
It’s economically possible for wealth to be created by satisfying that demand via voluntary transactions, and
There aren’t public externalities to deal with
You’re arguing that sometimes it just doesn’t happen, and government must step in? The government has some special insight that risk taking, profit-seeking businesses who could fill the void do not have?
Hmmmmm. I don’t buy that. Sorry. But I’m willing to be educated.
Look closely at the examples you may have in your head, at the moment. As well as the examples we have been debating in this thread. My hypothesis is that somewhere along the line, they don’t satisfy the 3 criteria above.
The usual path is for a small, special interest such as
A rent-seeking entity looking for regulatory capture (e.g. a licensing guild) or
An aggrieved party seeking monetary or intangible damages (Madoff’s victims, people who get sick buying tainted bread)
demand that government ‘do something’. They pool their resources and clout and tell their story to the world. An elected official is glad to step and say ‘Absolutely, I’ll do something. I’ll solve this problem for you. I’ll set up <Agency X>’ to provide oversight, backed by force of government.’ Then he gets elected.
Then there is a claim that somehow Agency X is addressing a public externality. That’s a big Rubicon to cross. I would argue in most cases that is a fallacy, as I have been arguing for the last two pages of posts. But it usually doesn’t take much to hop across that Rubicon with one, quick little step.
Then, the 99% of the public who isn’t really affected by this growth of government is too busy to care that Agency X just got initiated, or shrugs at the notion that an extra $2.50 of their taxes each year will go to fund it. Which is an unfortunate sin of omission, and where the bar of slippery soap starts to squirt away. Because of course, there are thousands of those little bars of soap that squirt away each year, and they add up to economic deadweight. To mix metaphors. And once those agencies get set up, it takes a meteor strike from outer space to dislodge them.
But like I said, I’m happy to be educated. Throw out a few examples if you will and we can kick them around.
Given that you’ve made economics arguments straight out of the Soviet central planning handbook, I suppose I shouldn’t be surprised that you obviously have no idea what you are talking about. There’s no magical exemption for Ebay sellers. They’re subject to the same exact laws that everyone else is. For example:
Here’s the FDA requiring ebay to pull the plug on sales of perscription suncreen. As you can see, the FDA, like every other government agency has full authority to regulate Ebay transactions.
Here is a Michigan case (warning pdf), involving the sale of original paintings. The defendants were hauled into court for their misrepresentations about the paintings, fraud, and breach of contract. Your assertion that there are no laws regulating what sellers can say on Ebay about their products is flat-out nonsense.
But don’t take my word for it. Let’s go ask Ebay what law governs the transactions that take place on it:
And here’s a link to the California Commercial Code which contains all sorts of laws and regulations governing how you can sell, advertise and receive payments for goods.
An Ebay transaction is just like any other transaction in the US, and it is regulated in the exact same way (with the exception of certain tax and jurisdictional issues). The moment you pointed to Ebay as your ideal market is the moment you lost this argument, since you have pointed to a regulated market as your ideal.
Yeah. There’s absolutely no information assymetry correction on Ebay. Let’s take a look, shall we. Here’s Ebay’s own rules and regulations regarding listings.
All of these rules are designed to correct the information assymetry problems inherent in an online marketplace. Your precious Ebay folks obviously have taken their pages from the Pelosi/Reed handbook!
If I were to actually post all of Ebays rules, I’d have to take up several posts to do it. What’s annoying about all of this is that I actually had to waste my time to dispute your nonsense. Can you not even do some basic research before you show up in threads spouting this junk?
Kimstu, somehow I was thinking of newspapers that you get out of a newsstand, rather than a magazine like the New Yorker. In the magazine case, I agree, the cost of verification is pretty low, so that might be an area where not as much regulation is necessary.
What? I thought Ebay was some magical land where the laws that apply to the rest of us don’t apply to Ebay sellers. Someone should tell Ebay, because they are actually telling their sellers to go familiarize themselves with the government’s laws. Crazy!
But that’s food, you say. Surely, for something such as clothing, it’s a libertarian free for all:
What? I can’t buy used underwear! Or unwashed clothing! What’s going on here? If I want to buy used underwear, why won’t Ebay let me?
Ok, but surely I can sell a copy of my latest manifesto on Ebay, right?
Wow! I had no idea libertarians think an ideal marketplace is one which restricts their speech. Amazing the things you learn here.
I would modify that slightly to say that “conservatives believe in individualism while liberals believe in collectivism.”
As it applies to major points of contention: Economics:
Conservative - The sum of individual choices made by consumers and producers, free of outside interference, will produce the maximimum benefit to society.
Liberal - Many of the benefits to society can be maximized through government assistance, regulation or mandate. Gun Control:
Conservative - Individuals have the right to provide for their own defense
Liberal - The government will ensure your safety Foreign Policy
Conservative - A strong US is better positioned to dictate the terms of our national interests
Liberal - Our national interests are best served through cooperation
This ideology manifests itself in a particular way as it applies to our civilizations social dynamic. Conservatives tend to be either your basic white affluent businessmen types or your rural/suburban, white Middle America types. Basically people for who being an “individualist” more or less has been a benefit since they are just like everyone else. So they ascribe a lot of their success to their “individualism” and hard work because society tends to reward them for it.
Liberals tend to be your minorities or your highly educated idealistic types. The first group tends to be people who are often oastracized or disenfranchised and and their individual labors are often either not appreciated or provide no real economic reward. Your educated, idealistic types often come from well off backgrounds where they have benefited from the system and tend to idealize and overemphasize it’s ability to protect and provide for it’s people.
So for example, a very driven and successful entrepreneur would tend to be conservative. He would rely on his ability to build businesses and would tend to not want the government taxing him to provide services for less industrious people.
A smart successful lawyer from a reasonably well off family might tend to be liberal. He may entered the law out of a desire to help people and may have recieved some government loans for law school. From his point of view, the government is a tool for bettering the lives of it’s citizens.
You are clearly delusional. This can’t possibly have happened. Things like this NEVER happen. Remember “There is centuries of evidence that they have NEVER happened.”
BrightNShiny:
All your arguments are entirely correct. They are also entirely irrelevant. Like Evil Economist, you seem hell-bent on refuting arguments nobody has made.
Nobody said there was no government regulation affecting what Ebay users are allowed to sell.
Nobody said there was no government regulation affecting what Ebay users are allowed to say.
Nobody said Ebay is exempt from any kind of laws or regulations.
Nobody had said anything about Ebay being an ideal market.
Nobody has claimed that Ebay does not have rules about what claims users make on Ebay or about what they can buy and sell on Ebay.
All that has been claimed is that in order for E-commerce to function well, new problems of information asymmetry had to be overcome which were not solved by government regulation. Ebay, in it’s own interests, created their own system to solve these problems. Thus proving that a market can solve problems of information asymmetry for itself.
IMM is clearly making the claim that Ebay is less regulated than the normal transactional market. All of my posts about Ebay are to refute that notion.
Nobody, except IMM:
How else am I supposed to read that?
I’ll give you the word “ideal,” since that has a specific meaning in economics. I should have said IMM’s “exemplary” market. My point here is that IMM pointed to a regulated market and claimed that “according to my theory” it should be illiquid and inefficient. However, Ebay supports my theory, not contradicts it, since it is a regulated market. Additionally, I’ve never claimed (despite IMM’s rather dishonest assertions) that a lack of information would make a market illiquid. I’ve responded to IMM’s posts directly, and you are the one making incorrect claims about what has been said in this thread.
While Ebay’s user rating tools and the like are valuable in helping to provide additional information assymetry correction, that is not the only way the information assymetry problem is reduced on Ebay. So, no, that doesn’t prove that the “market can solve problems of information assymetry for itself.” At most, it shows, that a combined regulatory approach with additional private sector regulation and information tools work together to reduce problems of information assymetry.
For generalizations, it seems ok, but I find it a little strange that you’ve picked the contrast that you did. It reminds me more of the old joke about how conservatives are liberals who had their wallet stolen and liberals are conservatives that have been to jail.
I believe the paper linked earlier has been the most enlightening thing I’ve read on this topic in a long, long time. I intend to get back to it in another thread at some point.
I think it’s clear that’s how he sees it, but the quote you provided doesn’t actually make that claim. You’ve made a big fuss about him supposedly misrepresenting your arguments. Perhaps he was just making the mistake of assuming your arguments were meant to be relevant to his claims rather than just a refutation (and a poor one at that) of what you percieve his attitude to be.
I’ll tell you how… most quotes have a little arrow symbol next to the name (which you seem to selectively avoid when it comes to quoting IMM) when you click it, something magical happens, it takes you to the actual post where you can see a statement in the context it was originally written. IMM was responding to erislover’s implication that providing of information must be mandated by the government in order to happen.
He pointed to a market which had a serious problem of information asymmetry which was NOT sufficiently addressed by government regulation. You are once again arguing against your perception of his attitude rather than the actual claims he made.
I’ve read through the entire thread several times now, I appologize if I’ve missed it but where exactly did he,assert that you claimed a lack of information would make a market illiquid?
Actually, you seem to be, like Evil Economist, meerly shadow-boxing.
Once again… nobody has claimed otherwise.
It doesn’t prove that a market can solve ALL problems of information asymmetry without any government regulation, but then, nobody’s made that claim.
And I made the mistake of assuming you had actually read the thread.
He responded by making an erroneous factual assertion, which I corrected. If you choose to arbitrarily assign different meanings to his plain words, that’s not my problem.
Yet, somehow, after reading the thread several times now, you missed this:
He claimed that I said that no transactions would take place in a market suffering from information assymetry problems.
Hysterical, coming from you.
Sure. In your alternate bizzarro thread.
Here’s you (do I need to link, it’s only a few posts up).
Maybe you should write more clearly so that we can understand what you’re actually trying to say, rather than having to divine it.