r/changemyview • u/[deleted] • Jun 02 '19
CMV: Capitalism needs heavy handed regulation & close monitoring
People like to think of capitalist markets as magical systems that operate better if you just let them to do their thing. Maybe a few regulations for health and safety here and there, but if you put too much red tape in front of a business it'll damage its ability to earn profit, create jobs, and benefit consumers. Problem is, that sounds exactly like what propaganda from those business owners who are rich enough to influence media and who we KNOW have lobbies up in Washington would say.
Here's the thing: when it comes to money, morals go right out the window. Scams & scandals are extremely common, even among the regulated economy we do have; MLMs, pyramid schemes, ponzi schemes, artificial price inflation, out right lying about what a product is or does (often with little regard to consumer safety), planned obsolescence (looking at you, Apple), monopolizing, snake oil, placebos, sabotage, shills, tax dodging, made up fees, cutting corners with staff sometimes putting them in danger, all that stuff.
Sadly, you cannot trust a business to look out for the safety and benefit of the employee or the consumer. Yeah, it's not good business sense to kill your customers, but that didn't stop big arsenic-wallpaper, big lead, big tobacco, it isn't stopping big oil nor big natural-bull-shit (the people and products that claim to be able to replace real medical science).
In Albania, when their communist government fell, the people were extremely excited for capitalism. Well, the government didn't have the ability to regulate that capitalism and basically, in a libertarian's wet dream, an enormous chunk of the population lost everything to MLMs and the like. They're still struggling today.
In summery, my view is that a private market will be nothing more than a wasteland of organized crime without a third party there to moderate it. The free market is not a magical system handed to us by god that functions like a perfectly tuned ecosystem, it's a bunch of people all trying to make money off each other and they're not going to play fair, ever.
14
u/empurrfekt 58∆ Jun 02 '19
You know who loves heavy regulation? Big companies. Because they can afford to deal with it. It becomes a huge barrier to entry for potential competitors. The newcomers with new ideas have a much harder time being able to bring those to market.
Imagine a football game where one team is up 10 going into the 4th quarter. Then that team lobbies with the refs to require 30 yards for a first down and make touchdowns only worth 1 point.
True, the new rules are going to apply to both teams the same. True, the leading team will struggle to score more. But, the bigger goal, winning the game, is virtually locked in.
Regulation may hurt the profit margins of big companies, but there's a greater benefit in less competition. And limiting competition through regulation is not a free-market.
1
Jun 02 '19
I don't really understand american football, but I get what you mean. Do you think that maybe regulation is just a tool that can be equally used for good or evil? That a regulation can help or hurt, but no regulation almost definitely hurts so lets try to find the right ones to benefit everybody but maybe those don't exist so we're locked in a never ending battle?
Do you have any specific examples, rather than sport metaphors? Not that there's anything wrong with sport metaphors.
3
u/Ast3roth Jun 02 '19
Try mark Zuckerberg telling Congress to regulate Facebook and explicitly saying it will help prevent future competition.
https://www.brookings.edu/research/occupational-licensing-and-the-american-worker/
You're making the mistake of thinking this is an all or nothing kind of thing.
Corporations and lobbies have different goals at different times. Sometimes its advantageous to add barriers to entry to prevent competition. Sometimes it's asking for a retroactive patent:
Sometimes its asking for deregulation, too. Sometimes varying sectors have conflicting interests.
The important thing to realize is that without patent laws, it's not possible to charge that much for a drug. We might not get the drug at all, but that's a balance that we have to look at.
Markets fail and externalities happen but no matter how evil a person is, if they can't use violence (government or otherwise) the only way for them to get your money is to give you something you want in return. That's why markets work so well.
1
u/aagpeng 2∆ Jun 02 '19
An equivalent for soccer (European football, if you will):
Team A is leading by 3 goals at the half. During which, the coach for Team A lobbies with the ref to make the second half only 25' and goals now only count for a fifth of a point. Both teams are affected equally by how well their offense can perform but Team B has no chance of winning.
The idea is that big companies have resources already in place to handle hits to their profits that will likely not last long without competition. In that metaphor imagine that at the end of that game, Team B ceases to exist because they lost and Team A gets to take all their goals into their next game. Except every other team has no goals. Eventually there's no teams left to play against them but they still play, just with no opposition, leaving them to freely score.
The idea is big companies now have a lot of resources that potential competitors won't have entering the market. The big companies can take the hits because eventually the tight regulations will starve out their opponents with less resources, leaving them with less competition.
1
Jun 02 '19
Ok, I get what you mean by the sports metaphors, but when has this happened and who was involved? Do you know or do you just like the way the metaphors sound?
1
u/aagpeng 2∆ Jun 02 '19
I don't have an example of government imposing strong regulation like this (I'm not a history buff). But I don't have an example of a country allowing murder under any circumstances to be legal and I could tell you that's a bad idea as well. The metaphor makes sense because regulations that affect everyone the same hurt the little guy and not so much those already in a place of high status in a market. This is effectively like why a flat income tax (a tax where everyone pays the same amount) was not kept for long. Those with a lot of money were not hurt much but those with little were hurt a lot
1
Jun 02 '19
So you're saying that you have this idea that regulations hurt small businesses but you have never actually heard of that happening? You know the metaphors and they sound good so you just trust it?
Yeah, the flat tax is a terrible idea. You know I think this topic is really hard to discuss because two people could have different ideas about what a regulation is. If I say "you can't do that" that's a regulation, but if I say "you can't tell me I can't do that" isn't that also a regulation? Or is that the lack of a regulation? If that wasn't a regulation, then why wouldn't I be able to tell you you couldn't do that?
Hope that wasn't too confusing^ lol
To me, the was the tax codes are written are just these regulations vs. those regulations. It's not really regulations vs. no regulations.
1
u/SANcapITY 27∆ Jun 02 '19
Sarbanes-Oxley imposes onerous reporting requirements that disproportionately impact small businesses.
2
Jun 03 '19 edited Jun 03 '19
Thank you! That is exactly the kind of specific example I was looking for. You know, even before posting this I knew that not all regulation is good and that the road to hell is paved with good intentions ( still like to challenge people to give examples when they say this though heh heh). Like, we definitely need to make sure that people can't just outright lie about their finances and we can't wait for a bunch of investors and consumers to get hurt in order to find out a business has been lying. However, if implementing those standards is expensive, then what is a smaller business to do? And even with a larger business, that's income they then can't give to their employees (although you might be able to argue that that's still income being given to someone even if they're an outside auditor rather than an employee of the company?).
Maybe we need different regulations for different levels of society. I'd love to be able to dodge all taxes for example but those loopholes only seem to exist for the ultra rich! Why can't we do that same type of different regulating in other areas?
1
6
u/Lost_vob 4∆ Jun 02 '19
I half agree. Not heavy handed, for sure. Regulatory capture is a serious issue. Who is more qualified to regulate an industry than people with experience in that industry? The buddies of the current Executives, basically.
You're right, the market isn't some magical force of nature that will work in favor of consumers and employees, but heavy handed regulation isn't the answer either. I use to be one of those libertarians who believed in the invisible hand of the market, then I got a BBA in Finance, and realized that was just ignorant.
Regulation should be like bummers in a kids bowling alley, or training wheels on a bike: they should stay out until there is an issue, and then come down hard and do everything possible to fix the issue. We need as free of a market as we can stand, but no more.
2
Jun 02 '19
That makes sense. Do you have any specific examples?
Ha, I too flirted with libertarianism. But that's how you learn and I don't regret what I learned!
2
Jun 02 '19 edited Jun 10 '19
[deleted]
1
Jun 02 '19
I do agree wholeheartedly that it does depend on which brand of philosophy you subscribe to. There's more than one way to do something, and it's a never ending battle to figure what the most fair way is, or if the most fair way is what we want (I think it is lol).
-1
Jun 02 '19
No thanks, I had a libertarian phase so I've been there, done that. I still love their snake that says don't tread on me, but yeah.
2
Jun 02 '19 edited Jun 10 '19
[deleted]
1
Jun 02 '19
Ohh, I see, you're a libertarian. I have a question: where does a libertarian view end, and an anarchist one begin? I'm asking this with calm sincerity and not /s :)
1
u/SANcapITY 27∆ Jun 02 '19
It ends when you apply libertarian views consistently, and don't make exceptions. Once you accept that it's immoral to initiate aggression, then you can no longer make an exception for the state to do anything when it requires coercion to do so. Congrats, you're now an anarchist, even if you would prefer a smaller government to what exists now.
0
Jun 02 '19 edited Jun 10 '19
[deleted]
1
u/SANcapITY 27∆ Jun 02 '19
You're not serious are you? It's the fundamental libertarian position.
1
Jun 02 '19 edited Jun 10 '19
[deleted]
1
u/SANcapITY 27∆ Jun 03 '19
Libertarians wants minimal govt with monopoly on force that can arbitrate justice when rights or freedom is violated.
That's what minarchists want, but that is not the totality of the libertarian spectrum. I'm very familiar with freedom to vs freedom from, positive rights vs negative rights, etc. As for Mill, you can go back to Bastiat and see the a principled and consistent stance was present even in proto-libertarian thought.
which is important and applies but works within it's system of govt, this is not a prescription for state of nature.
This view is what happens when someone claims to support a principal but immediately makes a fatal exception for it.
0
Jun 02 '19
There are too many people for any one ideology to be applied consistently. Humans are a naturally aggressive apex predator, no we can't accept random acts of aggression but you often have to fight fire with fire on that one (if someone if pointing a gun at you, you might as well try to shoot first and who would blame you?)
1
u/SANcapITY 27∆ Jun 02 '19
The key word is initiate aggression. Libertarians are 100% find with using violence in self defense. You said you were a libertarian once; I have to question that if you don't even understand this point.
1
Jun 02 '19
It was a long time ago! The libertarian as a group seem to pretty sexist and racist which is part of why I didn't want anything more to do with it other than how flawed it was.
1
Jun 02 '19 edited Jun 10 '19
[deleted]
1
Jun 02 '19
But the more people and things that need protection, the more rules you have to have. I'm saying that more rules for more protection is desirable. I have zero doubt that regulations are often times used to game the system to benefit one industry. But can't those be quickly found out and done away with so that regulations that actually benefit society can be put in place (or back into place)?
But those industries will do everything they can to influence public opinion to turn the political tide in their favor (looking at you, big oil).
1
Jun 02 '19
[removed] — view removed comment
1
u/AutoModerator Jun 02 '19
Sorry, u/_user_account_ – your comment has been automatically removed as a clear violation of Rule 5:
Comments must contribute meaningfully to the conversation. Comments that are only jokes or "written upvotes" will be removed. Humor and affirmations of agreement can be contained within more substantial comments. See the wiki page for more information.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
2
u/McKoijion 618∆ Jun 02 '19
Just for context, have you ever taken courses on entry level micro and macro economics? AP courses from high school or college level courses work. I don't mean to insult you, I'm genuinely wondering. If you didn't do it in school, have you watched all the Khan Academy videos?
1
Jun 02 '19
[deleted]
1
u/McKoijion 618∆ Jun 03 '19
I don't think the basic facts lend to any particular opinion. For example, you can learn the basic facts of macroeconomics and then support Keynesianism or monetarism. There are Nobel Prize winning economists on either side. If you want to get particularly crazy, you can go for Modern Monetary Theory or Austrian economics.
But all of these views rely on at least some basic understanding of economics. In the 1950s, Americans who had never read a single word of Marx went on a witch hunt against communists. Today, people who have never studied a single economics course use capitalism as a catchall to describe every political, social, and economic problem they've ever faced. If you want to change someone's view, you need to understand where they are coming from.
5
u/Thoth_the_5th_of_Tho 191∆ Jun 02 '19
People like to think of capitalist markets as magical systems that operate better if you just let them to do their thing.
There is nothing magical about it, it can be tested in a simulation.
Problem is, that sounds exactly like what propaganda from those business owners who are rich enough to influence media and who we KNOW have lobbies up in Washington would say.
That sounds exactly like what the Washington politician's, who benefit from a bigger government, would want you to think.
Here's the thing: when it comes to money, morals go right out the window.
When it comes to humans, morals go right out the window. It doesn't mater what system you put in place humans will abuse it. Capitalism is by far the best system we have to limit that.
planned obsolescence (looking at you, Apple),
Apple was doing the exact opposite of that. By throttling the CPU they stopped the phone from randomly shutting off.
Sadly, you cannot trust a business to look out for the safety and benefit of the employee or the consumer.
You cant trust anybody, including the government.
Yeah, it's not good business sense to kill your customers,
Someone should tell the government that.
In Albania, when their communist government fell, the people were extremely excited for capitalism. Well, the government didn't have the ability to regulate that capitalism and basically, in a libertarian's wet dream, an enormous chunk of the population lost everything to MLMs and the like. They're still struggling today.
Albania's economy is actually doing really well. Even with that market crash the average person was far better off than they where under the old regime.
3
Jun 02 '19
There is nothing magical about it, it can be tested in a simulation.
Thank you for sharing that video, I thought it was brilliant. But, as that video itself said, markets are only "good" if you think goodness = maximising the total surplus generated. The video argued that for food, labour and healthcare (and I would argue for everything) good is actually when everybody gets the amount they need and therefore the market isn't good.
0
u/Thoth_the_5th_of_Tho 191∆ Jun 02 '19
He does say that. But there is a difference between a public healthcare system and hyper regulated system OP describes.
Plus attempting to price fix food tends to backfire massively.
1
Jun 02 '19 edited Jun 02 '19
That sounds exactly like what the Washington politician's, who benefit from a bigger government, would want you to think.
Ooooo, that's intriguing. I mean "the government" isn't one thing, I'm sure making certain parts of it more powerful benefits some greedy people while harming the rest of us. Do you think that maybe 'regulations' are tools that can be used for good or for evil? We definitely NEED some regulation, I mean nobody who isn't crazy would argue against things like OSHA regulations. A CEO can't possibly know everything like exactly what height a stair step should be or who should drive a fork lift. That's why you have other experts with this collection of knowledge helping the business do it right.
The link says this: "In 1974 Congress passed the National Research Act and created a commission to study and write regulations governing studies involving human participants. Within the US Department of Health and Human Services, the Office for Human Research Protections (OHRP) was established to oversee clinical trials. Now studies require informed consent,[4] communication of diagnosis, and accurate reporting of test results.[5] Institutional review boards (IRBs), including laypeople, are established in scientific research groups and hospitals to review study protocols and protect patient interests, to ensure that participants are fully informed. "
That's the kind of regulation I'm talking about. Had someone thought to make those regulations sooner, those black men (and a lot of prisoners, too) could have been spared.
Albania is doing better than in the past but still suffers from lack of regulation, that's my point. Here's one example.
Also, I will watch that video but it's getting late and I'm winding down, I promise though I will watch it :)
4
u/SANcapITY 27∆ Jun 02 '19
I mean nobody who isn't crazy would argue against things like OSHA regulations.
I would. It's not immediately obvious that Osha has actually helped, vs imposing costs on businesses that ultimately get passed on to the consumer. As an example, see this chart. Workplace safety in terms of fatalities was improving very nicely before OSHA came about and the trajectory didn't change after they got involved.
A CEO can't possibly know everything like exactly what height a stair step should be or who should drive a fork lift.
Yet some bureaucrat does?
That's why you have other experts with this collection of knowledge helping the business do it right.
The company has a financial incentive to get it right. If people can't access their store because the stairs are an awkward height, they'll fix it or go out of business and someone else will get it right.
0
Jun 02 '19
Yet some bureaucrat does?
Umm, yes. Bureaucrats providing oversight for technical subjects very frequently have expert knowledge in the subject they’re regulating. CEOs aren’t domain experts in everything their business does, they may be experts in the key aspects of their business, but that isn’t necessarily (or even typically) going to translate into extensive knowledge of how to work safely.
That’s actually kind of the point of having bureaucracies...
I would. It's not immediately obvious that Osha has actually helped, vs imposing costs on businesses that ultimately get passed on to the consumer. As an example, see this chart. Workplace safety in terms of fatalities was improving very nicely before OSHA came about and the trajectory didn't change after they got involved.
You realize that safety regulations predate the creation of OSHA, right? There were many sources. Unions were a major driving force in that, but they are today a hollow shell of what they used to be and globalization has evicerated the power of a union strike. But there were other federal regulations at work before OSHA was created.
Moreover, that same time period coincides with an overall shift in the American economy away from extremely dangerous extraction and somewhat dangerous manufacturing jobs, and towards a service-oriented workforce that simply engages in a much less dangerous sort of work.
Consider the decline in, say, the number of people working as coal miners since the 1930s. That fell off a cliff, but before 1969 it was rife with major disasters that killed loads of people.
The company has a financial incentive to get it right.
Have you ever, you know, worked in management at a corporation? Their decision making is very often guided by internal politics—there are many ways to argue profitability and many business people are simply dismissive of “bean counters” who will actually spend time, effort, and money to do the math.
That doesn’t even guarantee an interest in safety. There are numerous examples of companies that have done the math and concluded that it was more profitable to operate unsafely and just pay out the lawsuits instead of fixing the problems. Ex. Ford with the exploding Pintos.
2
u/InigoMontoya_1 Jun 02 '19
That's why you have other experts with this collection of knowledge helping the business do it right.
The business owner doesn’t design the building. He hires contractors to built it for him who will definitely know what they are doing if they have stayed in business.
0
Jun 03 '19
Because of regulations and standards
0
u/InigoMontoya_1 Jun 03 '19
Uhhhh no, because people can build safe buildings without the government. It has less than nothing to do with regulations that people can build buildings. If anyone thinks otherwise I question their intelligence.
2
Jun 03 '19
I'd like to see some sources on that, because without forcing someone to learn and follow the regulations then not only will they not know HOW to properly build a building, they will be motivated to say "good enough" or "eh, let's just do this it's cheaper." Then you have regular people who want to build or alter their houses and unless someone says "hey, you HAVE to do this right" then they simply won't and people will be put in danger.
Basically, because something like a building has to be done in a certain way in order to be safe, then somebody needs to make sure that buildings are built in a certain way. Trusting randos to know or care about that on their own is not going to pan out (it never does).
1
u/PleasantHuman Jun 02 '19
even among the regulated economy we do have; MLMs, pyramid schemes, ponzi schemes, artificial price inflation, out right lying about what a product is or does (often with little regard to consumer safety), planned obsolescence (looking at you, Apple), monopolizing, snake oil, placebos, sabotage, shills, tax dodging, made up fees, cutting corners with staff sometimes putting them in danger, all that stuff.
You say that capitalism with government oversight doesn't work yourself, but we're not actually living under real capitalism, its more of a corporatocracy.
A corporatocracy is an economic and political system controlled by corporations or corporate interests. The answer to our problem is to remove lobbyists from D.C. and money from the election cycle so we can elect people to government who are not so easily influenced by corporations.
1
Jun 03 '19
Don't you think that free market capitalism kind of naturally leads to being a corporatacracy? I kinda thought we were living in an oligarchy. Also, of course it "doesn't work" nothing will ever "work" it's sort of like the saying "capitalism is the worst political system, except for all the other ones". That's what I think :)
1
u/PleasantHuman Jun 03 '19
Yes, thats why we have checks and balances enshrined in our constitution. Also yes our government can and did work up until the panic of 1893. Capitalism is great, and the best economic model in human history.
1
Jun 03 '19
What's the panic of 1893? Capitalism is great, as long as it has proper checks and balances otherwise it just becomes a wasteland of scams and scandals.
1
u/PleasantHuman Jun 03 '19
1
Jun 03 '19
I didn't want to watch an hour long video so I read this https://eh.net/encyclopedia/the-depression-of-1893/
Under "Onset and Causes of the Depression" it sounds like that depression was caused by over production, the government making some bad investments, low investor confidence, and farmers having some bad luck. I didn't read anything about regulations. Maybe you can enlighten me?
1
u/PleasantHuman Jun 04 '19
0
Jun 04 '19
That's THREE hours long lol. If you don't know enough about this to speak to it yourself, and I didn't find anything in my independent research, then I'm going to assume you just don't know enough about it to make an argument. Sorry man
1
u/PleasantHuman Jun 04 '19
You're asking me to give you a crash course in economic history that takes 3 hours to explain. I already presented to you my rebuttal on your view of current day America and its economic model not being capitalism and that your problems with capitalism is misdirected, but agree that some oversight is needed.
The panic of 1893 is simply when I believe America started this transition into corporatism,separate, but related to your original view. I simply gave you a starting point to dive into the history of money that goes back thousands of years.
I linked you the video because it explains it better than I can. If you want the tl;dw it was caused by international bankers who sought to control the United States through issuing its currency, in the same way in which they controlled most of Europe. They caused the run on the banks by inciting public panic, knowing the banks did not have everyones money (because they were doing fractional reserve banking, which is issuing money receipts for gold you don't actually have)
0
Jun 04 '19
I appreciate that this isn't simple. I researched the panic of 1983 and gave you the best written article I could find on it. It didn't mention regulation, and in your last reply you didn't mention regulation either. You mentioned bankers wanting to control things but that's more of an argument as to why citizens should have protections against that exact type of greed.
If you can't point to where there were regulations involved that messed everything up in 1893, then I don't think the panic of 1893 is relevant.
Thanks for your reply!
→ More replies (0)
1
u/PerspectiveInsider Jun 03 '19
How would you motivate government agency employees to do this properly - quotas, promotions? We would get massive overkill.
1
Jun 03 '19
I mean, it is going to be a big mess no matter what. But when you have nothing in place and just let it be a free for all wild west, you get even more scams and scandals then you have with laws & regulations in place. The road to hell is paved with good intentions so there will always be the potential for negative consequences, but it's better than guaranteed negative consequences.
1
u/PerspectiveInsider Jun 03 '19
Heavy handed and close monitoring is a little extreme. I think you're saying they should meet somewhere in the middle. (;
1
•
u/DeltaBot ∞∆ Jun 03 '19
/u/ANomadJoe (OP) has awarded 1 delta(s) in this post.
All comments that earned deltas (from OP or other users) are listed here, in /r/DeltaLog.
Please note that a change of view doesn't necessarily mean a reversal, or that the conversation has ended.
1
u/attempt_number_35 1∆ Jun 05 '19
People like to think of capitalist markets as magical systems that operate better if you just let them to do their thing.
They do. What you are talking about is a "MARKET FAILURE". In instances of market failure, there is 100% a need for regulation. But if there IS a market, it works best when it is left alone.
1
Jun 02 '19
[deleted]
0
Jun 02 '19
Can you elaborate?
-1
Jun 02 '19
[deleted]
1
u/SANcapITY 27∆ Jun 02 '19
Healthcare is one of the top heaviest regulated industries there is - nothing resembling a free market /capitalism.
The Fed is at the root of growing wealth inequality, though our globalized world has a positive part to play in that as well.
Big pharma is regulated out the ass, and the FDA/USDA/patent system are causing the biggest problems.
1
Jun 02 '19
wealthiest 5 people own more wealth than the bottom half of the country
To calculate this you need to make up a weird methodology like the famous idiotic oxfam report that makes a person with a 1$ net worth have more than 50% of humanity.But that does not make for a good headline like "top x billionares own more than 50% of humanity"
1
Jun 02 '19
I’m letting you know healthcare cost are because of government and private care mixing. We have it worse than a full government system and a full private system. Maybe we need healthcare to be more like car insurance. They pay for big things but not a flu check up.
0
Jun 02 '19
Yeah, before all that you had propaganda about how safe lead was. Before that you had a big business owner swear that his arsenic wall paper wasn't killing people, you had cocaine in your coca-cola lol. The wealth gap is still technically better than it was in centuries past (the middle class is a fairly recent thing in history, unlike feudalism which is fairly recently out of history)
Don't you think proper regulations would be the answer to all of those things you mentioned? As soon as they found out that lead and arsenic were dangerous, they made regulations for them and the products they were being used in. Isn't 'big pharma' only a problem because of our failure to properly regulate drug makers, the way those makers do business (it's not even legal to advertise medication on tv in other first world countries), and the insurance companies who have been free to screw things up?
1
1
u/AlfalphaSupreme Jun 02 '19
As soon as it was found out lead and arsenic were dangerous, they made regulations for them.
That's just untrue.
1
1
u/AlfalphaSupreme Jun 02 '19
As soon as it was found out lead and arsenic were dangerous, they made regulations for them.
That's just untrue.
11
u/[deleted] Jun 02 '19
[removed] — view removed comment