Why is free market economics considered "right wing"?

Great Debates
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Yes, my left wing economic views on are well known around here:rolleyes:

I don’t believe that being “pro” or “anti” “regulations” in a general and absolutist way is a valid debate. One has to look at specific regulations, determine what they are trying to achieve and then debates those specific policies.

But in general, I do agree that excessive regulation is a drain on the economy. However history has also provided plenty of examples where companies or industries have failed to properly regulate themseves and have caused massive problems. Deregulation of the energy industry helped create Enron. Deregulation of the financial services industry helped create the 2008 financial crisis.

They are governing bodies enforced by the lawful power of the state. As I pointed out above, people are often terrible at assessing risk and companies are often terrible at self regulating when it comes to a choice between profits and safety, environment or ethical behavior.

Another reason we have regulatory agencies is that companies can affect people who don’t have a choice in the matter. If a Boeing 787 drops out of the sky and lands on my house or a BP oil rig explodes and destroys my fishing business, how did I make a choice in that?

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You are an intelligent man and good debater, msmith. Let me address your points in turn:

  1. I completely, wholeheartedly agree with this. Regulation needs to pass this bar. It is a very high bar. About the only bar that should exist is significant negative externalities. Just to jump ahead, you address that in point 5 above. I think you carry it a little too far, but I would agree that addressing negative externalities is a proper form of governmental regulation. Addressing things that do not have significant negative externalities is almost invariably due to rent-seeking, or a power-grab by governmental bureaucrats.

  2. Bullshit. Two quick points here

2a. Enron was regulated, dude! By the SEC! It took two enterprising Wall Street Journal reporters, who simply went through publicly available materials, to light the fuse under that bomb. Go back and read the history. This is a beautiful example that proves my point, and not yours. Especially since…

2b. Who was really ‘hurt’ by the Enron debacle? Players in the energy markets? No. They kept on functioning just fine after Enron’s collapse. It was the stockholders. And the stockholder are supposedly protected by…the SEC!

  1. If you think this point is settled, you are sadly mistaken. This is a large can of worms to open up, but I would offer

3a. Government subsidized mortgages to the tune of $5+ trillion through Fannie Mae and Freddie Mac…and by the way, same song second verse is playing out right now in the student loan market.

3b. The core tenets of any libertarian philosophy against fiat money and fractional reserve banking.

But let’s set that one aside for now. Pretty complicated stuff.

  1. “People are terrible at assessing risk.” Well, um. OK. That’s a pretty broad and sweeping statement. Not sure I agree with you. But I’ll play along for a bit.

So you are asserting that you, msmith, are terrible at assessing risk. Fine. But what makes you think a government employee is better than you? And someone who you don’t even know, have never met, and have no way of judging his or her competence?

Why don’t you trust yourself, but instead will trust a governmental official to make the decision for you? Why? This is the part that truly baffles me. Especially for those people who claim to want to keep the government out of their bedrooms, or their religious beliefs, or their drug-taking habits.

But when it comes to “assessing risk”, you are ready to run headlong into their arms. Why?
5. I will buy the BP rig argument. Don’t buy the 787 argument. In theory, one could stretch the negative externality argument to include almost anything, in a butterfly-flapping-its-wings-in-China sort of way. Politicians certainly try to do it all the time.

Good post, though. Keep it up.

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There were “negative externalities”.

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Such as?

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Refer to Dick Dastardly’s post, following mine. I get that most people who read business journals and track their investments closely really could not give a leaping shit about people and entire states screwed over by financial chicanery, all that matters is the yield of the portfolio. The rest of us have to live in the real world.

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I did read it. I read a bunch of ranting and raving about greedy, evil people who had connections with George Bush. I suppose I could also write something similar about Jon Corzine having connections with President Obama. Or the Kennedy’s having connections with just about everyone.

Was there a point to that, or to that ridiculous link? I thought we were talking about how Enron caused negative externalities.

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That’s good. Go and write about how a guy like Corzine with serious political connections can steal two bilion dollars in plain sight and then the SEC say he won’t face charges. You’ll be making our argument for us.

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The part about Bush amounted to about ten or fifteen words, there were a whole bunch of other words in there about how Enron managed to gain control of the California energy market and cause all manner of pointless havoc. Electricity rates became much higher than they needed to be, bolstered by artificial scarcity. Many, many more people were inconvenienced or harmed than some stock traders.

It is a problem that the SEC is not all that effective at preventing fraud while at the same time its existence makes people think that fraud is reasonably well under control. The only way to avoid issues like Enron or the Bain style BS is to enforce standardized accounting transparency rules so that companies are not able to hide their weaknesses through arcane manipulation of their ledgers. It should be noted that Enron was vetted by a privately run auditing firm, so the idea that regulation can be handled by the private sector is not supported in this case.

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Wait. What? Who’s side is who on again? Which point is being made by who, again?

No, the Corzine story proves my point. Not yours.

Sigh. Groan.

My point was that the SEC imposes costs, restricts choice and prevents voluntary transactions from occurring…like all regulation does. But it doesn’t “protect” anybody. Except the jobs at the SEC, of course. Corzine’s firm was supposedly regulated by the SEC and he basically committed a massive fraud, as you state above.

Who did the SEC protect again, in that case?

You seem like a nice fellow, Mr. Dastardly. But unfortunately, it’s time to put you on the ignore list.

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How did Enron “gain control” of the California energy market? Did they steal the assets at gunpoint? Forge documents? Form an armed militia and storm the gates?

Artificial scarcity is by definition, artificial. It cannot last for long if free market mechanisms are at play, to get back to the OP.

Was that the case in the California energy market? For example, scarcity risks can often be offset by hedges. Or limited by long-term contracts for supply. It happens all of the time in other industries such as coal or oil. Was that the case in California? If not, why not?

I await your response. As well as some evidence that you have a basic understanding of what “negative externalities” truly mean.

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Then why is the Right so very much against the concept of estate taxes? The inheritor enjoys a loftier position in society and opportunity, merely by virtue of winning the womb lottery. This helps to insure that rich families become dynasties. See: Hilton, Paris.

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No, the inheritor benefits from the thrift, hard-work and self-sacrifice of their parents, who made conscious choices to provide for their young.

See: Hilton, Paris’s father and/or mother.

If I wish to deny myself a better car, house, clothing, entertainment options, food, etc. for many years to provide a better life for my children…AFTER I have already paid taxes on my earnings to the benevolent government, who are you or anybody else to say otherwise.

Estate taxes are by far the most offensive and egregious of all taxes, in my opinion. I’ve already paid taxes on that money. I saved it for my children.

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As I stated, however, this does NOT support the concept of “Equality of Opportunity”- because some are clearly more equal than others due to circumstances of birth. Paris Hilton did *nothing *to justify her wealth. She didn’t earn it. The fact that her parents *did *earn it is completely irrelevant.

You may want to save your money for your children, but you should at least admit that by doing so you’re giving your children greater opportunity than, say, the child of a single mother living in a slum.

My point is that high-minded concepts like Equality of Opportunity sound great on paper, but it turns out that, hey, maybe it falls apart in the real world. And that’s where the Left disagrees with the Right- the Left, at least, is willing to admit that extremes don’t work, that not everything is black and white.

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Yes, in fact, they did forge documents. Their entire cap was based on fraudulent accounting, meaning they were able to trade large blocks of issues that probably would not have been accessible to a company that practiced transparent accounting. In addition, their senator, Mr. Gramm, duly bought and paid for, gifted them with an exemption in the Commodity Futures Modernization Act of 2000 that protected he type of online trading they were doing at the time: a sort of deregulation.

Enron’s trading schemes allowed them to gain control of California’s utility energy market and extract unwarranted profits by manipulating supply to drive up prices. You see, utilities are a closed ecosystem that does not follow the same kind of patterns as an open market would. Customers simply do not have a choice, there is only one source for what a utility provides. Hence, if an unscrupulous private entity can control a utility, they control the supply-side of the equation.

Enron’s activities were a progressive fraud from the outset, California was just one more step along the path of expansion their scheme required in order to persist. And they certainly knew what they were doing, Ken Lay had a PhD in economics.

Yes, I was mocking your language. You stated that the stockholders were the ones who were hurt by the Enron debacle, implying hat they alone bore the brunt of it. Not only were others negatively impacted by Enron’s activities, but many of them were not even in any kind of position to avoid them, at least the investors might have been able to unload their stock before it tanked completely.

You see, the opportunity is still there for everyone, we all get an equal shot at it, it is just more accessible to some than to others. I can climb a mountain with an ice ax, but if someone puts a ladder up it for me, the mountain is still there, it just becomes more accessible to me. And one might also consider the fact that Paris Hilton is kind of peripheral to society, she wants for little so she competes with the rest of us for … news bandwidth, not much else.

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What I’m saying is that there’s no effective regulation, oversight or it appears potential legal sanctions against financial crooks. The SEC and other regulators along with the DOJ are signally failing to do their jobs. That’s how a guy like Corzine can do what he did with no sanction.

And if you’re threatening to post about somebody robbin billions and not being prosecuted for it then you’re making my argument for me.

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I want regulators who assess risk instead of me doing it because:

  1. I am not an expert in the 10,000 fields that I would have to be in order to make needed accurate judgements.
  2. Even if I had the knowledge, I don’t have the time. I would have to spend every waking moment of my life assessing.
  3. I shouldn’t have to get fucked over by a bad “vendor” in order to learn a lesson about that vendor’s poor/unsafe quality. Should I risk food poisoning at every restaurant I might dare venture into.

You act as if the people in the FDA, FAA etc are jamokes that were picked up off the street. These are trained people who have knowledge in their respective fields.
They may not be perfect but they’ll certainly be more accurate in the long run than any one of us.

Do you practice medicine on yourself because you don’t want to trust a government board who vouched for a medical students education. I thought not.

I have a fear that this country will be destroyed by all this back-woods, keep the the “revenooers” from my still, pull yourself up by your bootstraps mentality. That was a necessary mindset 200 years ago; we’re in a technological age now. You can’t be a jack of all trades.

And as far as I’m concerned the world needs to operate on “caveat vendor”, not caveat emptor.

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Feudalism is not a legal system; it is a socioeconomic system and feudal law grows out of it, rather than the other way around. The point of skeptics-of-Libertarianism is that Libertarian government would produce a feudal society de facto. De jure comes later, if ever.

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Shouldn’t it be the whole point of industrial civilization, anyway, to maximize the number of people who can live both idly and comfortably?

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One day we will have robots that can work better than any human, and think better than any human. And then we’ll live in idle comfort and splendor for some period until our robot slaves realize they don’t need us anymore, and at that point we won’t be able to do anything about it, since they’re smarter than us.

Until that happens, no. That is not the point of industrial society. No one should be entitled to receive more from society than they contribute in return, other than some minimum amount required for survival.

We are not wealthy enough to provide “comfort” to people who don’t earn it, and we never will be, because the lazy moochers who demand to be handed things will always measure their quality of living relative to what the wealthy, productive people have earned, and regardless of how much “comfort” they may have in an absolute sense, will never be satisfied.