Capitalism and government regulation

MiddleClassCentrist · October 8, 2012

The biggest problem we have is that the corporations that are supposed to be getting regulated... get their faithful employees placed on regulatory bodies. Monsanto employees a regulatory body? WTF?

This is why our regulations act as barriers to entry and do not actually solve issues. They don't want competition and they don't want to change their business model. It should be ILLEGAL for anyone with vested interest or prior attachment (unless deemed a whistle-blower to poor corporate compliance) to sit on a regulatory body.

Edited October 8, 2012 by MiddleClassCentrist

Moonlight Graham · October 8, 2012

Profit is moral because the aggregate consumer considers it moral. When the aggregate consumer has the means to buy that $10,000 computer manufactured locally with the best safety standards and most expensive green energies, then your morals will be reflected by the actions of business. Until then, all you can do is force people to accept your morals through taxation/regulation, just like Mao, Hitler, and Stalin forced people to accept their morals.

My morals? I said amoral, not immoral. Profit is amoral because it doesn't really care about consumers other than as a means of accumulating profit. Businesses treat customers the way they do because it will maximize profits. If one business treated consumers a unique way which gave it a profit advantage, other businesses in the same field would follow suit simply in order to survive.

Profit and capitalism is not moral, nor immoral, but amoral. It doesn't care. Consumers may care, and owners may care, but if that care doesn't turn a profit at a competitive rate then it will cease to exist in a competitive market.

Moonlight Graham · October 8, 2012

The "aggregate consumer" doesnt know jack shit about the products they buy though. They would gladly purchase a computer made from ground up human babies if the price was right, and they were educated about the production cycle.

Thats why expecting consumer ethics to replace regulation is such an utter fantasy. It doesnt work, never has worked, and never will work.

I agree totally, but I disagree that people would buy products made of ground up babies. Your first sentence was right, and consumers buy products today made from not far from the moral equivalent to ground up babies and yet they don't really know it. If western consumers truly did understand and confront the morality of the products they buy most would be compelled to radically alter their spending habits.

dre · October 8, 2012

I agree totally, but I disagree that people would buy products made of ground up babies. Your first sentence was right, and consumers buy products today made from not far from the moral equivalent to ground up babies and yet they don't really know it. If western consumers truly did understand and confront the morality of the products they buy most would be compelled to radically alter their spending habits.

Sorry I meant to say "werent" educated about the production cycle.

carepov · October 9, 2012

What really bothers me are people, generally on the right economically, who are ideologically dedicated to deregulation of business/corporations/markets. They say this will improve profits and economic prosperity. Well, yes it can. However, the following is what I have constructed as basically a law of capitalism:

Capitalism is amoral, as it is driven by ONE concern: profit. Unregulated, business concerns for maximum profit will often trump any concerns for public safety, the environment, workers safety/well-being, prudent function of the markets etc. That is why government regulations exist.

Like you, I am bothered by the ideologically minded people that call for carte-blanche deregulation.

However, I am also bothered by ideologically minded people that call for excessive, useless and counter-productive regulation and government involvement and blindly oppose de-regulation, free trade, foreign investment and privatization.

IMO, the language in your “basic law” is misleading/biased towards the latter.

“Capitalism is amoral,” sure but to add balance: The current system of capitalism is amongst the most moral (or least immoral) systems in human history.

I agree that regulations are needed to help protect safety and the environment, but I disagree that business concerns “often” trump other concerns.

Businesses should be driven more by long-term profit and less by short-term profit. With a longer time horizon business concern will almost always align themselves with other concerns. Think about it: damaging the environment or ignoring public/workers’ safety will reduce profits in the long-term.

Finally, some government regulations are useless or even counter-productive and exist for only political reasons. A small example or this is Canada’s ban of bisphenol-A in baby bottles.

Pliny · October 9, 2012

THe consumer regulates which products are successful in the market place but thats about it. There was plenty of demand for asbestos insulation for example. It worked just fine to keep you warm. Consumers were thrilled to buy leaded gasoline as well because it made their cars run better.

Since cost is where consumers have the biggest impact they actually encourage companies to behave worse. The whole idea of consumer regulation is a complete and total fantasy.

You said it regulates which products are successful in the market place. Then you said the whole idea of consumer regulation is a fantasy. Which is it?

I don't think consumers encourage companies to behave worse. They encourage them to behave at all.

Asbestos for insulation and leaded gas were sold to the consumer as beneficial and there were no objections. When the risks became evident did they demand alternate products or did they just want to continue buying asbestos and leaded gas? Were those products then banned or did consumer demand drop? Which came first?

dre · October 9, 2012

You said it regulates which products are successful in the market place. Then you said the whole idea of consumer regulation is a fantasy. Which is it?

I explained that very clearly already. Youre just going to have to read.

I don't think consumers encourage companies to behave worse. They encourage them to behave at all.
Asbestos for insulation and leaded gas were sold to the consumer as beneficial and there were no objections. When the risks became evident did they demand alternate products or did they just want to continue buying asbestos and leaded gas? Were those products then banned or did consumer demand drop? Which came first?

Consumers used those products for decades until the government did studies which determined they were dangerous, and then banned them. Consumers would still be using them today, and they probably still wouldnt know they were dangerous. Now, in libertarian utopia theoretically private watchdogs could emerge that could study the impact of all the various different products on the market, and it could educate the consumer. The problem is its proven hard for such entities to get a viable revenue stream, and this work is extremely expensive. Most consumers wont voluntarily pay them to do this kind of work, and the companies making the products sure as hell wont. Plus that arrangement would very subceptible to corruption.

Pliny · October 10, 2012

I explained that very clearly already. Youre just going to have to read.

It still reads the same. The contradiction is still there.

Consumers used those products for decades until the government did studies which determined they were dangerous, and then banned them. Consumers would still be using them today, and they probably still wouldnt know they were dangerous.

There are building standards and asbestos had to be approved for use by government in the first place.

Government isn't going to protect anyone from unknowns. Saying asbestos would probably still be used today is just conjecture and more than likely wrong.

Now, in libertarian utopia theoretically private watchdogs could emerge that could study the impact of all the various different products on the market, and it could educate the consumer. The problem is its proven hard for such entities to get a viable revenue stream, and this work is extremely expensive. Most consumers wont voluntarily pay them to do this kind of work, and the companies making the products sure as hell wont. Plus that arrangement would very subceptible to corruption.

What's libertarian utopia? Is everyone happy there?

You are making an argument that cannot be proven. Government has been granted the responsibility for product safety. It cannot be determined what would have occurred had it not been given that responsibility or if anyone would have taken it up but no company would wish to be linked with death or injury from their products. It becomes a criminal matter if they do not make corrections to their product and that is the proper role of government - determining criminal activity.

How safe would our products be if government had not been given responsibility for product safety? You can't really say. Business would have to ensure product safety themselves and the consumer wouldn't be buying cheap crap form China if that were the case. The first painted toy discovered with lead in the paint would have shut down imports immediately. There has to be certain guarantees from business that would be standards consumers expect. What we have set up is the consumer expects government to have already done that job and they don't look themselves. Business doesn't answer to the consumer it answers to government regulation. If business wants longevity it should answer entirely to the consumer.

Taking the cynical approach to capitalism and that it is some dog eat dog race to the bottom is easy because there is no safety net and when competition is tight businesses go under. But the system provides the best use of resources and the best results for the consumer.

Michael Hardner · October 10, 2012

What's libertarian utopia? Is everyone happy there?

Well, yes, mostly. Not those individuals who knowingly sold themselves into slavery at a young age, though.

MiddleClassCentrist · October 10, 2012

Well, yes, mostly. Not those individuals who knowingly sold themselves into slavery at a young age, though.

Technically, libertarian Utopia is Somalia.

Bonam · October 10, 2012

Technically, libertarian Utopia is Somalia.

No, that would be anarchist Utopia. Libertarians believe in the rule of law.

eyeball · October 11, 2012

No, that would be anarchist Utopia. Libertarians believe in the rule of law.

Rational anarchists believe in what is true. There's not much more you need to know that you couldn't have picked up in kindergarten.

bleeding heart · October 11, 2012

No, that would be anarchist Utopia. Libertarians believe in the rule of law.

To say that anarchists don't believe in law and order is only selectively true, and there are plenty of debates among anarchists. Certainly, the matter is, let's say, intellectually-underdeveloped, but the debates and discussions rage on, which is only proper.

At any rate, you migth be too easy on right-leaning libertarians; they are also highly remiss about articulating their favoured social order, too-often degnerating into a (by default) anarcho-libertarian stance....a more savage project outside of formal tyranny would be hard to imagine. Unlike left-libertarians (who doubtless too have all kinds of unanswered problems), right-wing libertarians are usually self-damaged either by social conservatism (which is almost always statist) or their anarcho-capitalist tendencies...which is almost deterministically predicated on unelected de facto rule by the wealthy.

Edited October 11, 2012 by bleeding heart

dre · October 12, 2012

It still reads the same. The contradiction is still there.

There are building standards and asbestos had to be approved for use by government in the first place.

Government isn't going to protect anyone from unknowns. Saying asbestos would probably still be used today is just conjecture and more than likely wrong.

What's libertarian utopia? Is everyone happy there?

You are making an argument that cannot be proven. Government has been granted the responsibility for product safety. It cannot be determined what would have occurred had it not been given that responsibility or if anyone would have taken it up but no company would wish to be linked with death or injury from their products. It becomes a criminal matter if they do not make corrections to their product and that is the proper role of government - determining criminal activity.

How safe would our products be if government had not been given responsibility for product safety? You can't really say. Business would have to ensure product safety themselves and the consumer wouldn't be buying cheap crap form China if that were the case. The first painted toy discovered with lead in the paint would have shut down imports immediately. There has to be certain guarantees from business that would be standards consumers expect. What we have set up is the consumer expects government to have already done that job and they don't look themselves. Business doesn't answer to the consumer it answers to government regulation. If business wants longevity it should answer entirely to the consumer.

Taking the cynical approach to capitalism and that it is some dog eat dog race to the bottom is easy because there is no safety net and when competition is tight businesses go under. But the system provides the best use of resources and the best results for the consumer.

You are making an argument that cannot be proven. Government has been granted the responsibility for product safety. It cannot be determined what would have occurred had it not been given that responsibility or if anyone would have taken it up

It can be determined, just look at what happened. Its not like one day the government just said it was going to up and regulate everything. Private industry had plenty of opportunity to regulate itself, and the public demanded rules when they failed.

but no company would wish to be linked with death or injury from their products.

Which is exactly why they sure as hell arent going to fund a study that might conclude their products are harmless. Tobacco, asbestos, leaded gas... The private sector has absolutely no problem selling cigarettes even though they know they kill hundreds of thousands of people a year, and for decades they simply denied they were even bad for you. The only reason we even know they cause about a hundred kinds of cancer is because the government commisioned a whole shitload of studies into it.

What incentive was there for tobacco companies to spend billions on studying the effects of tobacco use on health? How was a private watched dog going to get billions in funding to do all that stuff? From your uncle pete?

Pliny · October 16, 2012

It can be determined, just look at what happened. Its not like one day the government just said it was going to up and regulate everything. Private industry had plenty of opportunity to regulate itself, and the public demanded rules when they failed.

A simple explanation but untrue. Quite a few industries lobbied for regulation to limit their competition. Rockefeller has been noted for that as he felt "competition was a sin". Products evolve not because they are legislated to evolve, they become better because of competition and consumer demand. The fact is that it would be a lot easier to detect fraudsters and criminal activity with less regulation.

But in fact, the protection of freedom and liberty is what built the largest economy in the world with the highest standard of living not government regulation and the nanny state, which is more about building and preserving conservatism in society than progressive liberalism.

Which is exactly why they sure as hell arent going to fund a study that might conclude their products are harmless. Tobacco, asbestos, leaded gas... The private sector has absolutely no problem selling cigarettes even though they know they kill hundreds of thousands of people a year, and for decades they simply denied they were even bad for you. The only reason we even know they cause about a hundred kinds of cancer is because the government commisioned a whole shitload of studies into it.

What incentive was there for tobacco companies to spend billions on studying the effects of tobacco use on health? How was a private watched dog going to get billions in funding to do all that stuff? From your uncle pete?

Tobacco is, apparently, an addictive product. It's ill effects became well-known and the movement to destroy the industry began. What happens though is that people go immediately to the government to demand action since government is the agency imbued with the legitimate use of force.

Government, due to its revenues from the industry, it could be argued, has only succeeded in regulating the industry and cigarettes are still around.

They should perhaps be trying to understand addiction. Smokers live in a deluded world of addiction where they believe they enjoy smoking. I did for thirty odd years and it wasn't until I read a book on addiction that I understood it and was able to quit cold turkey.

I hear smoking among younger people is on the rise so what really has government done besides attempt to scare the bejeebers out of people who are already addicted? If you want to eliminate tobacco use probably a better means is to have a society that frowns on smoking, making smokers social pariahs. Certainly, there may be people who think it is about freedom and liberty to be able to use tobacco but they are probably those who are addicted or make their living in the industry or a government that has a huge interest in the revenues tobacco generates for them.

For some reason you have a predilection for buying the establishment propositions. Must be your scientific logic. Unfortunately, human behavior cannot be scientifically predicted with 100% accuracy because there are not any scientific axioms formulated that infallibly predict behavior. I know government would like it if there were. It would make regulation easier and more effective for them.

Edited October 16, 2012 by Pliny

Sleipnir · October 24, 2012

What really bothers me are people, generally on the right economically, who are ideologically dedicated to deregulation of business/corporations/markets. They say this will improve profits and economic prosperity. Well, yes it can. However, the following is what I have constructed as basically a law of capitalism:

Capitalism is amoral, as it is driven by ONE concern: profit. Unregulated, business concerns for maximum profit will often trump any concerns for public safety, the environment, workers safety/well-being, prudent function of the markets etc. That is why government regulations exist.

Interesting statement you made. Little different from my version in describing a capitalistic economy

Unrestrained exploitation of limited resources as being unlimited, leading to an economic Malthusian catastrophe.

I look at economies and mode of economies by how they utilize their resources. I believe that since resources are limited, that should be the deciding factor on judging economies.

Wild Bill · October 24, 2012

Consumers used those products for decades until the government did studies which determined they were dangerous, and then banned them. Consumers would still be using them today, and they probably still wouldnt know they were dangerous. Now, in libertarian utopia theoretically private watchdogs could emerge that could study the impact of all the various different products on the market, and it could educate the consumer. The problem is its proven hard for such entities to get a viable revenue stream, and this work is extremely expensive. Most consumers wont voluntarily pay them to do this kind of work, and the companies making the products sure as hell wont. Plus that arrangement would very subceptible to corruption.

One thing about getting older is that often you were around to witness the history of issues that have suddenly become of interest. I was there when asbestos got banned.

Those were the days before I started selling electronic parts, when I worked in a construction materials lab. My boss filled me in on what was happening with asbestos. He had very little respect for the way governments handled the problem.

You see, asbestos comes in more than one form! What had finally been discovered was lung damage from FIBROUS asbestos! Those tiny fibres, if inhaled, could and did damage internal lung tissue. If sustained, healing becomes next to impossible. Asbestos mine workers were dying of this condition.

However, governments did not handle the problem scientifically. They handled it POLITICALLY! They banned asbestos of ALL kinds, everywhere! (Except in Quebec, where there was a very large asbestos mining industry. That was mostly ignored for decades now, for political reasons.)

It's really not a big deal to handle fibrous asbestos. It's not radioactive and it's not acidic to your skin. You just need good masks! If you are working in a concentrated environment like a mine or when demolishing an old building you should also wear overalls and take a good shower, to remove any fibres you may have picked up. It is like the difference between a fog of cement dust and cement cast in a wall or sidewalk.

Non-fibrous asbestos, such as in fire-prevention panels and such, is perfectly safe. Nothing to inhale, but by banning this along with the fibrous kind caused another problem, namely finding a substitute that worked as well and was the same price or less.

Banning the harmless forms increased costs and difficulties. When you ban something before there is a good substitute you are assuming the "tech" boys will just wave their magic wands and come up with something immediately. In the real world, that's not how it works. Not only can good substitutes take a long time and cost much more, they may not exist at all. Anybody who has had a 20 year guaranteed roofing shingle job on their house fail after less than 10 years learns that lesson.

Why did the government do it this way? Why do they ALWAYS do it this way! Because they don't care about true protection or a working solution. They care about politics, which is governed by public perception.

The average voter is not a technician or an engineer. He or she likely dropped science when the beans in that jar full of wet toilet tissue died, back in the 6th grade. Give them a true but scientific explanation of why something is ok and they will NOT believe you! Once they have heard that asbestos can kill or they see a television report on asbestos miners dying, they are terrified of coming into contact with ANY asbestos! Or worse yet, discovering asbestos materials in their own home, where they raise their kids.

So a politician does what is actually a smart thing, politically speaking. He over-reacts with his solution and bans asbestos TOTALLY, in any shape or form! Voters will never know or care that any fire-proofing materials in his or her home or office cost more and don't work as well. However, they WILL feel safer because a politician instituted a total ban! They might very well give him or her their vote as a reward!

When you talk about independent watch dogs you are talking about rational approaches, my good Dr. Dre. The problem is that most voters, when it comes to technical or scientific problems, are not rational. They simply don't know enough to have a valid opinion. We end up with politicians hijacking issues to garner electoral support, preying on the fears of the ignorant, including in most cases the politicians themselves.

If an issue is sufficiently important in the public eye we will see "white coat wars". This is where both side of an issue try to come up with a bigger pile of white lab coats than their opponents. The average citizen cannot understand technical arguments so he relies on which side has the more impressively large pile of lab coats.

This is why society tends to grow in the slowest, most costly and inefficient manner. When I was a lad I thought I might grow up to live and work on the moon. It could have happened, if not for the social limitations I just described. Now, I sincerely doubt if the opportunity will come in time for my grandchildren to take advantage of it.

Edited October 24, 2012 by Wild Bill

Pliny · October 25, 2012

Good post Wild Bill.

Government did the same thing with DDT and millions in Africa needlessly lost their lives to malaria.

http://www.malaria.org/tren.html

"The dichotomy of WHO's Malaria Expert Committee's consistent support for use of DDT versus WHO strategies that worked against use of house spray programmes suggest that global strategies have been political formulations unrelated to the opinions of malariologists or to health interests of people living in malaria endemic countries. In the international arena, defence of DDT for public health use is a WHO/PAHO responsibility. Overall, it is disappointing to examine how these organisations fulfil their responsibilities."

Edited October 25, 2012 by Pliny

bleeding heart · October 28, 2012

Someone better tell Kevin O'Leary that capitalism is a moral enterprise. Because he is offended by the very notion. (In fact, he called the mixing of morality and capitalism "evil"...which, of course, means he hasn't really thought his own opinions through....)

Michael Hardner · October 28, 2012

Depends. Is morality the thought or the deed? If it is the deed then psychopath who follows the generally accepted moral code for selfish reasons is a "moral person".

Ok - I looked back on this. Morality can be considered in either a thought or deed. The question "Is capitalism moral ?" is clearly about thoughts, the philosophy. There is a morality there, in the act of trading, and you have pointed that out. But I don't think that capitalism itself can be said to be moral since it involves pursuing self-interest inside a moral code.

Pliny · October 28, 2012

Someone better tell Kevin O'Leary that capitalism is a moral enterprise. Because he is offended by the very notion. (In fact, he called the mixing of morality and capitalism "evil"...which, of course, means he hasn't really thought his own opinions through....)

I don't mind saying Kevin O'Leary is an ass. He is about money not about anything else. These types of "capitalists" make really good Dictators. They aren't free market entrepreneurs filling a societal need or demand. What do I find out about him when I read up on him? His Dad worked at the very socialist oriented United Nations. Unfortunately, It's O'Leary's type that tends to come out of business college these days - Self-centred and aggressive and unwilling to trust because they were instilled with the concept that Capitalism is a dog eat dog race to the bottom and you have to really look out for yourself. The truth is, to succeed in business you have to look after your customer and understand what society needs and wants.

Competition exists and can devastate another business so it helps to know what the competition is doing but you better be willing to get out of buggy whips when the horse and carriage is going the way of the Dodo, either that or make the best buggy whips on the market and cater to a new market, like in the third world. But you better realize your days are numbered. Does that sound amoral?

Because some idiots believe the world revolves around them happen to claim they are "capitalists" sullies the whole free market system.

Bonam · October 28, 2012

Ok - I looked back on this. Morality can be considered in either a thought or deed. The question "Is capitalism moral ?" is clearly about thoughts, the philosophy. There is a morality there, in the act of trading, and you have pointed that out. But I don't think that capitalism itself can be said to be moral since it involves pursuing self-interest inside a moral code.

Of course it can be considered to be moral, it all depends on how one defines morality. For example, if you look at Ayn Rand's definition, then pursuing one's self-interest is the most moral action one can take.

TimG · October 28, 2012

Ok - I looked back on this. Morality can be considered in either a thought or deed. The question "Is capitalism moral ?" is clearly about thoughts, the philosophy. There is a morality there, in the act of trading, and you have pointed that out. But I don't think that capitalism itself can be said to be moral since it involves pursuing self-interest inside a moral code.

So a mob of religious zealots who burn a woman at the stake is moral because they are acting on a moral code?

Michael Hardner · October 28, 2012

So a mob of religious zealots who burn a woman at the stake is moral because they are acting on a moral code?

Hmmm.... we're getting pretty philosophical here so I'm on thin ice... I guess I would say yes, assuming they're acting according to a code of conduct. Of course, that's not my code or the code we have here. (In Canada)

Michael Hardner · October 28, 2012

Of course it can be considered to be moral, it all depends on how one defines morality. For example, if you look at Ayn Rand's definition, then pursuing one's self-interest is the most moral action one can take.

Thinking about this... It can be considered to be moral, as can any act. So saying "it can be considered to be moral" - well, that's not saying much.

Again, we're in the territory of philosophy here and I'm less than a novice - I'm only giving my opinion based on my understanding of these things. But we're having a discussion, so I'm comfortable with answering questions and you can just tell me if I misstep. I haven't considered some of these things before.