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Thread: Why shouldn't capitalism be better regulated?

  1. #151
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    Re: Why shouldn't capitalism be better regulated?

    Quote Originally Posted by DifferentDrummr View Post
    I'm puzzled at how you can conclude that the third party has no stake in making accurate assessments. Its own business depends completely on the extent to which clients and the public trust and rely on its information.
    What such businesses do is gather data on transactions that actually took place. The prevailing rate that is deemed correct corresponds to a group average or a group median value. In other words, the final arbiters are the many employers and employees who agreed to trade together, not a remote agency who tallies statistics on those transactions.

    Moreover, their services will never include either providing or using as complete and detailed a dataset as possible. The things I listed regarding attitudes, cultural background and the like are known to be hard to measure and are not as readily available as data drawn from existing public surveys, though they're important ways to evaluate how useful someone can be in a specific context. And, with regards to analysis, I might find clients who wish to pin down in fine details mean or median values for specific groups of people or specific regions. However, this is quite a different task than to claim Joe, specifically, is worth more than Jane. Manifestly, I might very track various statistics of the labor market and sell this information, but it's also obvious that I'll make mistakes, sometimes even very ample mistakes, in pinning down the value of a specific worker doing a very specific set of tasks. However, if my business is not about being right in advance of all transactions about every person I will never lose a single client over it -- and their business definitely is not about pinning down the value of every last person.

    On the other hand, you really have an incentive for employees to look for the best opportunity for selling their services. Their considerations will include wage, benefits, working conditions, distance from his home, security, and even perhaps the personality of the manager. No one but that worker can make a call as to how much any of these items should be weighed against the others and he has every bit of motivation for getting a good deal by his own account of what this means. Granted, the implied search is not free and it is likely he will stop short of the absolute best deal. But again, he's in a better position than anyone else to judge when searching becomes too costly, too risky, etc. Likewise, an employer has every incentive to be able to identify workers that will give them the kind of service they want at a price which is congruent with their objective of turning a profit. There is a limit to how rapacious they can be and that limit is set by poaching: you're never alone in the labor market looking for the best, the brightest, the most enjoyable or the most responsible people.

    If you ever participated in the evaluation of prospective employees, their training or in partook the hiring process yourself as an employer, you would know that not everyone who calls themselves electrician, cook, welder, carpenter, computer scientist, etc. are the same, even though their nominal titles and nominal skill sets are the same. An employee who shows up on time, who learns well, and who do not require constant supervision to operate as you would like them to operate are employees you want to keep. For one thing, the guy or girl you see working every day is known to be as good as you what you see whereas pulling people out of unemployment is always subject to some uncertainty.

  2. #152
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    Re: Why shouldn't capitalism be better regulated?

    Quote Originally Posted by Fenton View Post
    It's not the 1890's where a hand full of industrialists reign over vast monopolies and hoard vast amounts of wealth, and I noticed you didn't offer up any examples of these proper regulations.
    In the 1970s, someone could have pointed to whatever measure of the share of sales accruing to General Motors and Ford in the US to make a sweeping claim about their respective market power. However, this only makes sense insofar as we are disposed to equate results that are observed ex post facto with conditions that prevailed ex ante, therefore eliminating by an assumption other possible explanations of the outcome, such as superior technology, decision making, marketing, more responsiveness to the needs of customers, etc. For one thing, Toyota would have certainly disputed this claim of market supremacy and even put ample resources to disputing this claim. History vindicated this dispute, although much later as General Motors was on the brink of bankruptcy not so long ago.

    A more thoughtful way to put the problem of market power is to ask a very simple question: who are the players? The seeming obviousness of the answer that we're talking about a few car manufacturers is only surpassed by the obviousness of its falsity. Some very relevant players in markets are not only competitors but also prospective competitors. The extent to which a firm really has that big a window to move prices favorably depends on how easy it is for someone to enter the market and capture segments of it following the higher profit opportunities excessively high prices would create. The only way to make sure this is not a problem is when the government legislates away the potential competition.

    It's not obvious at all that, therefore, when exactly the government should counteract large corporations. The most recent plea for breaking large corporations exist only because of the obvious moral hazard that is created by politicians who can finance failing businesses with public funds without any consequences for owners or management. If the government can't do bailouts in the first place, there is no need to "break up" big banks and their behavior might have been very different without the retrospectively very rational anticipation that some of them would see their a** saved.

    Quote Originally Posted by Fenton View Post
    Thankfully, States like Texas challenged the EPA and the Obama administration in court which led to the Supreme Court issuing a stay which blocked Obama's Clean power plan.
    The environment is a very problematic issue because property rights can seldom be suitably defined or practically enforced for vasts amounts of things such as rivers, air, animals, etc. Many people make stupid decisions as a consequence of the obvious fact that this organization problem means they do not take into account the full costs of their choices on others, something markets usually compel you to do in one way or another. It is very obvious to any economist there is a need for regulation here because of externalities.

    With that being said, it's not an argument that any plan will do. Moreover, since we have to impose regulations, we get the trouble of figuring out a good, though a definitely imperfect way of getting regulators to do their job correctly. The EPA is a good idea, but it has obvious problems that plague all government agencies. One of them is that the president can unilaterally expand or contract its mandate, so short term political considerations can influence choices in ways that impose trade-offs that are far from reflecting the interests of everyone involved. Obama could win votes for Democrats from youngsters coming of age by pushing for environmental responsibility. Trump could get support for Republicans by insisting the costs these changes would impose on many business owners and some states that rely heavily on coal. They're both irrelevant concerns, from a social standpoint, on what exactly the EPA should do.

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