An economics lesson

[veronica_rich]

The next time somebody tells you that free market businesses will act in any way to protect their customers and the public's interest, without regulation, slap them. Slap them HARD. Kick 'em for good measure while you're at it.

Of course, I could've told you this years ago. The reason we don't have MORE pollution is because of federal regulations (trust me, the states aren't doing much to enforce their part - in a battle between a state's department of economic development and its department of environmental protection, the former will beat the latter every time). The reason we had 40 years of prosperity between the Great Depression and Ronald Reagan is because FDR's advisors and the Congress at the time KNEW that antitrust regulations were necessary to protect the Have-Nots from the grasping, greedy claws and control of the Haves.

Don't believe me about regulation? Alan Greenspan does. Finally. Let's face it: No system that allows CEOs and other top executives to hop from company to company and cherry-pick the low-hanging fruit - with BONUSES not based on merit - is going to lead to companies that try to protect their shareholders or customers. It's "me first!" all the way, baby!

This goes along with a saying I saw on a local church signboard today: Many want to harvest, but few want to plow.

Comments

[justawench.livejournal.com]

Lots of things work, in theory. The problem with free-market capitalism is that it requires perfect information and free entry for competition, which is absolutely not possible. It's said that a company has an incentive to not pollute, because if they pollute, potential customers will be angry and vote with their pocketbooks by buying a competitor's products.

This assumes that every customer will be aware of the impact of the pollution and that there is a non-polluting competitor for them to turn to. If there is no non-polluting competitor, the free market says one will pop up to fill the void because of the profit to be made. That would be great if there weren't barriers to entry like gov't regulation, economies of scale and intellectual property.

Imperfect information is what led to this current problem, in large part. People thought the subprime mortgages were a safe investment because they were rated highly and the increased demand for them generated more subprime mortgages (if I understood Greenspan correctly).

Can you imagine what things would be like if there weren't any limits placed on businesses? Hello, company store! Goodbye, truth in advertising!

[veronica-rich.livejournal.com]

From what I've always been able to tell, the whole purpose of government regulation is because the average person doesn't have TIME to do all the necessary research and gain every bit of education that would be necessary to arm themselves intellectually against whatever profitmaking scheme commercialism might try to perpetuate upon them. Hell, the media - whose entire existence is based in large part on being an advocate and interpreter for the average working joe - can't cover and understand all of it.

[justawench.livejournal.com]

It bothers me that huge companies own some (most?) of the media outlets. Hypothetical: If GE was involved in something unethical, is NBC going to investigate it? Concentration of media into one person's hands (like Rupert Murdoch) is disturbing to me, too. I think I've gotten off topic.

[veronica-rich.livejournal.com]

Actually, it is on-topic. Part of the decades-old antitrust regulations Reagan busted in the 1980s had exactly to do with what media who could own - or rather, how much and in what markets TV, radio, and print media could be owned. There used to be regulations about not owning more than one outlet in each market, or the types you were allowed to mix in your media portfolio (if you were a publisher/producer), and there were also federal guidelines about how much local programming was required to be produced in each market, in order to give local writers, tech people, actors, and support staff adequate jobs - and to give spotlight to local news and arts. It was considered silly and antiquated by Saint Reagan (but do keep in mind that this is the same guy who used to be president of the SAG and pissed off his fellow actors because he didn't work to adequately protect their royalties way back when, either).

[bellumed.livejournal.com]

Screw Alan Greenspan. Ask Upton Sinclair!

[lizzie-omalley.livejournal.com]

free market economy works without regulation ONLY in an economy that is both large enough to have competition And small enough that the consumer knows exactly where everything comes from, how it's made, who it's made by and can vote with their dollar about buying or not buying the thing and the company that produced it. The second that one company gets big enough to buy or beat the competition into submission it all out the window.

Not going to happen in a global economy with 6.5 billion people on it even presuming that we could trace the corporate shells.