Friday, January 28, 2011

Deregulation

I recently argued that government regulatory agencies will almost. Inevitably become yet another tool that the regulated industry will use. To its advantage, it would seem like deregulation would be a good thing.

Right?

Actually, it depends on what you mean by 'deregulation'. There are two possible meanings - and some very strong incentives on the part of some individuals and companies to confuse the two. Confusing them effectively means gaining the right to maim and kill people or to destroy their property with impunity.

when you get right down to it, a system of private property is a system of rules and regulations.

In the purist of capitalist system, I'm not permitted to acquire your money by pulling a gun on you and offering you a market trade - if you give me your money, then I will not shoot you.

That is to say, there would be "regulations" in place that state that the legitimate methods I may employ to gain ownership of the money in your pockets does not include this option. My legitimate transactions must fall within the boundaries prescribed by a set of rules.

To see that "free markets" embody a set of regulations, ask yourself if we going to remove regulations on armed robbery. Are we going to deregulate the child sex industry? Are we going to use the market to regulate the hit-man industry? Are we going to permit government interference in the buying and selling of slaves?

Because "free markets" represent a set of regulations, if there is something that the free market requires that I would like to get rid of, I can easily form my argument against it as a call for "deregulation". In fact, in our current culture there is a whole set of mindless parrots - and at least one cable news network - likely to take up my call and to spread this demand for "deregulation" far and wide.

If you take a serious look at many (though certainly not all and perhaps not most) calls for deregulation, they are calls to remove prohibitions that are very much like prohibitions against slavery and the use of hit-men. For example, they include prohibitions against poisoning people and against activities that tend to cause injury to people or damage to private property. In effect, certain businesses arguing for de-regulation are very much arguing for legal permission to engage in actions that are harmful to others.

C'mon, do you know how much it will cost us NOT to kill people? This is bad for business. We will no longer be competitive. You have to let us kill people when it is profitable or we're going to have to start laying off employees - or moving our business overseas where the governments are more than happy to let us kill people for a share of the profits.

Another cry I commonly hears among supporters of "deregulation" is that we should let the market take the place of regulations. Rather than allow the government to make these decisions, we should let the people vote with their pocket book. "If you don't like what a company is doing, then, instead of turning to the government to regulate them and thus force your preferences on everybody else, you should simply refuse to buy their products."

Let's see how this type of argument works out.

We should not outlaw the use of paid assassins by private businesses. We should let the market decide these things. If you don't like the fact that a company is using paid assassins, then you are free to boycott the company. If enough people do this, then the market will favor companies that do not use paid assassins over those that continue to use them. If there isn't enough protest to force companies to give up the use of paid assassins, then it must not be all that important to people. Instead, what you have is a group of liberal cry-babies who think that the corporate use of paid assassins is just bad and they are running to the government to solve the problem. But the government does not solve these types of problems. It only makes them worse. Besides, it's un-American.

We can make the same argument with respect to slavery.

If you are opposed to the use of slaves in the production of cotton, you should not go to the government and seek to impose your interests on others. You should go to the market and simply buy products made from 'slave-free cotton.' Market forces will then push businesses to either switch to slave-free cotton production or go out of business.

Yep, that works.

Advocates of deregulation often complain about the simple scope of regulations. The set of books holding these regulations goes on for volume after volume. No one person can know them all.

I would like to see somebody who uses this argument present me with the codified rules of just a portion of the "free market" alternative to these regulations. I would like to see them write out the rules governing "consent", for example, or of "fraud", or the justification and limits for judicial adjudication of disputes, that does not take up volumes of text without using the trick of using vague and ill-defined generalities.

If there attempt contained any specifics at all, I would further challenge that he could not find even one person who would agree to all of them. Somebody will be saying, "No, that's not fraud. That's perfectly acceptable." Meaning that there are going to be disputes over exactly what this code says - and what it should say.

Once this code gets out into the public and starts to get used, we will have organizations, companies, and individuals motivated by self-interest to prefer certain interpretations over others - and to prefer interpretations that others have reason to oppose. They will no-doubt immediately get to work muddying the waters arguing for their special interpretations.

We are constantly taught that we live in a world where we face a choice either to have "regulation" or "no regulation". In fact, this is not true. The real choice is between "regulation of type A" versus "regulation of type B".

Deregulation - the removal of regulation - isn't actually one of the options.

4 comments:

Daniel said...

Mr. Fyfe, I'm not someone who prides himself in being politically savvy. When I see news reports detailing a red or blue viewpoint, my eyes will often see only shades gray, so I have little passion or interest in such subjects. As such I do not know much about some of the issues you present. There are, however, a few problems I have with the way you present them.

You are trying to view these situations algebraically. You say "Company is lobbying for deregulation of x action." Then, quite conveniently, you seem to forget that x has a value. Instead of evaluating the function (or exploring the argument) at the true value of x, you proceed to strawman the opposition's arguments by replacing x with a practice that is easier for you to condemn. Forgive my condescension, but it's rather disappointing a practice for someone who claims, and I once held, to be an objective eye.

Alonzo Fyfe said...

Daniel

I am afraid that I have no idea what your argument is. You're going to have to be bit more explicit about where you see a problem.

L Anthony said...

This comes across as quite confused.

You say: "when you get right down to it, a system of private property is a system of rules and regulations. "

Right, but that says nothing about government .. you're simply making a remark about an "is" to squeeze in the government.

Next, you say: "In the purist of capitalist system, I'm not permitted to acquire your money by pulling a gun on you and offering you a market trade - if you give me your money, then I will not shoot you. "

Of course not, and why? Because the free-market is a system of voluntary transactions between consenting individuals. The use of violence and coercion is not part of the free-market. That is called government, which makes it lawful for itself.

"To see that "free markets" embody a set of regulations, ask yourself if we going to remove regulations on armed robbery. Are we going to deregulate the child sex industry? Are we going to use the market to regulate the hit-man industry? Are we going to permit government interference in the buying and selling of slaves? "

Theft & slavery are contra the free-market and children do not consent.

Without wishing to sound harsh, I am only half-way through and this is so confused.

Alonzo Fyfe said...

I am trying to determine the source of your confusion.

The use of violence and coercion is not part of the free-market.

Actually, they are. Violence - or the threat of violence (coercion) - is how you enforce property rights.

Theft & slavery are contra the free-market and children do not consent,

What is "theft"? What is "slavery"? What is "consent"?

Who gets to answer these questions? What options do you have if you disagree with those answers? What options do others have if they disagree with your disagreement?

Getting a set of answers to these questions written into a set of books would end up making a system as complex, confusing, and potentially corruptable as any set of government regulations.