Jasper wrote:The argument for free market usually goes like this: If something is desired, people can make more profit, and so make more, since more people/more is available, when there is too much, they cannot ask as much, and the production/availability of a service goes down. And that way, the supply always meets demand as much as possible.
The argument for the efficacy of markets is a bit more sophisticated than this. It's not just about supply and demand but about the related problem of how to allocate resources. Markets have a mechanism for this that works pretty well, for some values of pretty well: the pricing mechanism. I've never heard anyone propose a mechanism that could plausibly solve "the knowledge problem" anywhere near as well in a planned economy. More importantly, no such working mechanism has ever been observed in the wild. In a planned economy you have a basic problem: given a limited number of tractors, how do you deploy them so as to produce the most food? Scale that problem up to the problem of allocating all of the resources in the economy and- it looks pretty intractable. Empirical observation bears that out, at least so far.
Given a perfect market, without externalities, it's pretty easy to see that it would work perfectly if the goal is to maximize production- that's actually pretty close to math
. Unfortunately, all markets in the real world are imperfect. But you're engaging in a bit of bait and switch here by pointing out that markets aren't perfect but ignoring the fact that regulatory regimes are also not perfect. You can't ju+stify regulatory interference just by pointing out a market failure. You also have to make a plausible argument that your regulatory regime will, _in actual practice_, not fail even more spectacularly than the market fails.
I tend to distrust utopian thinking, and there's a strong whiff of just that in your arguments. More generally I've noticed a certain syllogism at work in the arguments of a lot of people:
1. Regulation can solve any problem
2. There are problems
3. More regulation is needed
In fact, many of the problems that people want to address with more regulation are problems that occur in industries that are already very heavily regulated. In many cases the problems themselves are at least partially due to the regulatory regime itself. It's not at all honest to treat markets in a practical manner, recognizing their shortcomings in practice, but then treat regulation in an idealized fashion. If you want to compare markets to some perfect regulatory regime then you must compare perfect markets with that perfect regulatory regime, unless you have some reason to think that a perfect regulatory regime can be more easily achieved than a perfect market. I would argue that the evidence suggests that imperfect markets do a better job than imperfect regulatory regimes in most cases. I would also argue that the effect of excessive regulation is to make associated markets less perfect, and that that is a cost of regulation that must be accounted for in any cost/benefit calculation.
There are a number of observations and associated theory that are generally grouped under the heading of "public choice theory." The "tragedy of the commons" is one such observation, and it's one that computer scientists should recognize, as it's a sort of variation on the classic "prisoner's dilemma." But you should take your first cue from the word "commons." If I own a field, I will not overgraze it too badly. I might overgraze it a little, under the theory that today's returns are more valuable than tomorrow's, but that might actually be optimal, given a sensible discount rate on future returns. But I won't ruin it, as my expected future return on that piece of land is greater than the value of ruining the land, even given a reasonable discount rate on future returns. If I suck at doing that sort of calculation I will go out of business, absent intervention, and thus lose much of my ability to incompetently allocate resources and guesstimate good discount rates.
So far, I think you basically get the argument. Where I think you miss the point is in the next step- if we put this same piece of land under a regulatory regime we will likely wind up causing the tragedy you seek to avoid. The problem comes in because of another idea from public choice theory: regulatory capture.
The sad fact is that any regulatory apparatus meant to regulate a given industry will eventually be co-opted by certain players in that industry. That might sound dogmatic to your ears, but it's a phenomenon that has been observed over and over in the field. Let's posit regulatory agency A charged with regulating industry B. Let's assume that Industry B is quite complicated- you need years of experience to understand Industry B well enough to work in it. You also need years of experience to understand industry B well enough to regulate it. Well- where is Agency A going to get regulators from? Most likely from the biggest players in Industry B. Where are regulators from Agency A going to go when they leave the agency? They're going to go to the biggest players in Industry B. Eventually you are going to have a very hard time telling the big players in Industry B from the regulators in Agency A. Not only is this going to mean that any regulations Agency A enacts will be toothless as regards those big players, it also means that Agency A is likely to enact a lot of regulations that the big players in B are really happy about because they raise tremendous barriers to entry- so high that small innovators can't enter the industry and make things better.
Beyond that, as I said, this is related to the tragedy of the commons. If I am Big Player C in Industry B and I get exclusive license to graze pasture D I have an incentive to take as much profit from it as I can, right now. Why? Because the only reason I have that exclusive license is that I'm the guy controlling Agency A right now. But I can't be sure that will be the case in the future- Big Player E might out-bribe me next year, and thus obtain the license. So I had better get what I can get right now. This is the tragedy of the commons in a guise more temporal than spatial, but just as invidious.
Jasper wrote:Pollution is actually quite analogous to the cattle holders, and indeed, stuff like carbon trading is much like licensing of cows. Pollution cannot be adressed by people suing over "property violations", because it is not always local, and even if it is, it often can be made global, for instance, increasing the length of a smoke stack. Its causes cannot always be easily pointed out. In fact, the most problematic pollution is global or international, and this means you would have to sue all industries in a nation. Not very practical.
I'll admit that in the real world the market is not equipped to deal with externalities optimally, mainly because it's very hard to agree on how they should be priced. But here's the thing- using a regulatory mechanism doesn't help with that- you still don't know how they should be priced. It's worth noting that the current cap-and-trade bill will not have any effect on climate change but will prove a very fertile ground for special interests seeking political favors. I suspect that in a few years we will hear a lot of legislators billing the entirely predictable and dire effects of this bill as market failure
Jasper wrote:Secondly almost none of the oceans/seas of the world have been divided into ownership, most of it doesn't even belong to any nation, most countries controlling fishing do so by licensing. This does not give much incentive for any individual fisher to fix pollution of their water, or to try improve the quality of their fishing area. Any attempt at division would be very difficult.
Actually, quite a number of nations do claim certain banks. There's still a problem of course, in that fish move around a bit, and some fish move around a lot. I happen to be very fond of certain types of tuna that are now both very expensive and quite endangered. So I have paid a lot of attention to this problem. I'm pretty convinced that the only real answer to this will come from better aquaculture, and that the only way we're going to get there is through market mechanisms. But it's worth noting that the answers to this problem that have worked best, so far, have involved assigning property rights to fish. I could write 5-10,000 words just about Iceland's answer, but instead I'll just suggest that you go do the research for yourself. I'd also suggest that you recognize that regulation isn't going to be a silver bullet here. As Brooks pointed out, in another context, there are no silver bullets.
Jasper wrote:Yet another problem trying to prevent pollution entirely by litigating is that lawyers constantly push and pull at logic, rethoric and laws. And they're expensive too.
As opposed to regulators who are- well I'm inclined to mock you here, but instead I'll just ask- what makes you think that regulators are made out of sterner stuff than lawyers? At least lawyers make money either way. Regulators only get paid if the decisions go the way of the people they are trying to regulate. And at least lawyers operate in an adversarial environment- regulators rarely hear anything they don't want to, unless their subordinates are making too much noise kissing their asses.
Jasper wrote:For instance, if the competition is mostly over quality, the customers must actually recognize it.
In other words, if other people have preferences that differ from yours they should be made to shape up and like what you like. I've been using Linux for around 15 years. Gotta say that it's just starting to get to the point Irix was at ~15 years ago, which is a bit sad, but I digress. Anyway, I'm a fricking programmer, y'know? Of course Linux is better for me, but... As late as 2002 I spent an entire weekend trying to get Debian to recognize two identical network cards as different interfaces so I could use my Linux machine as a router. I'm trying to figure out how I might explain that process to my Mom... The sad fact is that people tended to prefer MS Windows to Linux because it was better for them. That might be changing now- Ubuntu is pretty damned usable, and since I've already moved my Mom (I'm the help desk for my mom, so I've got some skin in the game- I'm pretty sure that if I had set her up with Linux in 2000 my phone would have been ringing 24 hours a day) to OpenOffice... maybe moving her to Ubuntu is the next step. But here's the thing- we don't need a regulatory agency to help us with that decision. The truth is that, as completely screwed up as it is (and that's not the word I want to use but I'm trying to be family-friendly here) MS Windows was the best OS for my Mom for years.
Also, your EU ban is actually not a very effective contrast, as the US has essentially banned incandescent bulbs. It won't take effect for another couple of years, but it is law in the US. Most people in the US have no idea that that's the case. But here's the thing- Al Gore still gets to fly around in a private jet, but I can't have a single stinking incandescent bulb. (I actually have a smaller carbon footprint than anyone I've ever heard of in my income bracket. I have embraced voluntary simplicity not because it is environmentally friendly but because I hate vacuuming, and having a maid would be an intolerable invasion of my personal space. Anyway, given that I live so simply, I would think that I should be allowed my one incandescent bulb, 'cause I hate flourescents. This is why trying to price externalities, even if you price them inaccurately, is a bit better than outright bans on things like incandescent light bulbs.)
Jasper wrote:There is the problem of labor also being a part of supply and demand, and the disparity of the ones doing the work and the ones in control and getting the profit.
Sure- but in many industries the regulatory regime does a great job of making the barriers to entry really high. The classic American success story is the immigrant who starts off with a pushcart and winds up with a department store. In the old days you only needed some scrap lumber and a few apples to start selling apples from a pushcart. How many permits would you need now?
What you miss, again, is that regulatory regimes tend to make it harder to act as a truly free agent within a market based economy. This is a natural consequence of regulatory capture. But I have to say that I have always felt like a free agent in my dealings with corporations. I choose who to buy from and who not to buy from, a side of things that you almost completely ignore (consumers matter too.) Beyond that, I have a choice of corporations to work for, if I choose to work for a corporation, and I can negotiate my terms if my services are valuable enough- think of it like you think of the incentives to make more efficient incandescent bulbs, but much more practical- if I don't like the terms I get when negotiating I can choose to make myself more valuable, so that I negotiate from a stronger position.
But, to be honest, I decided a while back that I didn't like the whole big corporate thing, even if they were willing to shower me with money, so I've worked almost exclusively for startups for the last 7 years or so, even though I've made less than I could have because of that decision. And I eventually decided that leisure time was important to me, so I've taken a total of about 4 years off in a professional career spanning only about 10 years. I feel like a wage-slave only insofar as I do have to occasionally work for people in order to get them to pay me money... that's unjust, I'll grant you, but it's not so unjust that I'm out in the street with a sign demanding a living wage just for being my own sweet self.
Jasper wrote:Note the tone though, "individuals expressing themselves by freely trading" vs most of reality; people working for corporations they have no control and possibly no bargaining power over,mostly following it's orders.
Well, I already addressed parts of this, but- look, let's cut to the chase. People don't make airplanes or computer chips in backyard shops. They can't even smelt iron very well back there- go research "The Great Leap Forward," probably the most ambitious attempt at putting your ideas into practice the world has yet seen. So if we want things like airplanes and computer chips we are going to have to have some concentrations of capital. Would it weren't so (if you could start an airplane company from a pushcart I'd be all for it), but it is. So we have basically two choices- either we have some sort of corporate structure (but note that the nature of that structure is actually an artifact of regulation in the modern world) or we have the government building airplanes and microchips. Or there's a third option- we have a few individuals so rich that they can risk the capital necessary to build a fab plant out of their own pocket- but I'm pretty sure that's not what you want.
If corporations are too monolithic.. do you really think that replacing them with more government is a good solution? Is there any corporation in the US as large and powerful as the US government? I think not. If I piss off a corporation I go work for a different one, or I go to work for a startup, or I start a startup. If I piss off the government I go to jail.
Jasper wrote:My conclusion is
very familiar to me. OTOH I don't think you understand the arguments against your position very well. I could write tens of thousands of words bringing you up to speed in this regard, but it would be inappropriate even in the off-topic section of a technical forum. But I'll say this- you should seek out the strongest arguments against your position you can find. I don't think you've even begun to understand those arguments.