RE: POLITICS - Value, planning, and profits (was: Supporting WAPF or Not)

[Guest guest]

> -----Original Message-----

> From: Idol [mailto:Idol@...]

>

> -

> >Besides, your argument hinges on the assumption that government will

> >for some reason be better at long-term planning than

> corporations. This

> >is almost certainly backwards. Politicians just have to fool the

> >typical voter to get away with sacrificing long-term good for

> >short-term personal gain, but corporations have to fool

> investors who

> >have billions of dollars on the line and accountants who

> make a living

> >looking for signs of bookkeeping fraud. Neither is perfect,

> but I know whom I'd rather trust.

>

> Perhaps a little remedial logic is in order. First, WHOSE

> INTERESTS are we debating? Your assertion is that

> corporations are better at long-term planning than

> governments, but in whose interests?

The shareholders'. But in the right environment (i.e., one in which property

rights are defended vigorously), a business's profits are a measure of the

extent to which it's produced value for the public.

Well, almost. As you rightly noted, consumers don't always perceive value

accurately. But this makes a very poor argument for government regulation,

because Utopia is not an option. Imperfect judgment is a fact of human

nature, and legislators and bureaucrats are no less prone to it than your

average Joe.

Unfortunately, they can be much more dangerous when they do make mistakes.

If a grocer decides that raw milk isn't safe, he won't drink it. Maybe he

won't sell it, either. Even if 90% of the public is deathly afraid of it,

that's no problem for the 10% that wants to drink it. But if 51% of the New

York state legislature thinks that raw milk is dangerous, then you're stuck

smuggling it in from Pennsylvania. That's what happens when you try to

substitute the judgment of the state for the judgment of the individual.

> Second, to the degree

> government is separated from the corporate sphere and

> beholden to the public (a degree which has, admittedly, been

> radically diminished in these days of revolving-door

> regulatory employment and vastly expensive campaigns, and

> which can never be raised to anything remotely resembling an

> ideal level) government is likely to be BETTER at long-term

> planning because it has to be. Our government cannot afford

> to go out of business (though that's basically the neocon

> agenda)...

Either that bit about neocons is another joke that went over my head, or one

of us has no idea what a neocon is. As I understand it, it refers to a

Republican who's made his peace with big government. Certainly it doesn't

refer to those of us who actually would like to see the government go out of

business. Or are you just talking about the deficits?

Anyway, it's true that the government can't go out of business, but to

suggest that this is because of good planning is...not terribly accurate.

The US government will never go out of business for one reason and one

reason alone: it has the power of confiscatory taxation. No matter how badly

it screws up, it can always fix things by taking more money from you and me.

You'll pay because you have strange ideas about economics, and I'll pay on

account of the guns. The bottom line is that the government doesn't *have*

to plan for the long term, because we have no choice but to bail it out.

> but businesses go bust all the time.

Yes! That's *exactly* why businesses are better at long-term planning. The

market exerts a powerful selective pressure in favor of those businesses

which are best at giving customers what they want over the long term. Over

the long run, those who are best at serving the desires of the public and

planning for the future tend to accumulate the most resources. This tends to

minimize the influence of bad long-term planners on the productive process

and maximize that of good long-term planners.

Unfortunately, market distortions interfere with this effect. Progressive

income taxes and wealth redistribution tend to take resources away from good

planners and give them to bad planners, who predictably use them unwisely.

Subsidies keep businesses afloat when they should go under. Ultimately this

allows businesses to profit richly without serving the desires of the

public. Neocons like to talk about how taxation reduces incentives to work,

and it does, but the real reason big government is so destructive is that it

takes resources out of the hands of those who would use them wisely and puts

them into the hands of proven failures.

> > > If you don't believe me, listen to the Enron tapes.

> >

> >There are over 2,000 corporations in the United States with a market

> >capitalization of $1 billion or greater. That opponents of

> free markets

> >have for the last few years been pointing constantly at Enron, which

> >wasn't even operating in a free market, tells us a lot about those

> >other 2,000 large corporations. Enron is an exception, and

> that it was

> >able to wreak such havoc was arguably a result of government

> regulations.

>

> No, Enron is the most visible and well-known example, that's

> all. Surely you're not suggesting that people harping on

> Enron proves that other large corporations are good?

My point is that Enron isn't even a good example, and they still can't find

a better one among all those companies. IMO, it's true liberals like me who

should be harping on Enron. It's a great example of the kind of business

that prospers (for a while) in a market distorted by heavy intervention.