2014-08-20

Markets Will Take Care of Themselves Through Supply and Demand?

I think the fundamental difference in points of view we have comes down to the following:

wjw       -> distrust Big Business and Govt(in that order).
Ludvick -> distrust Govt. and (to a certain extent) Big Business(in that order).

The common problem we face is that the two have become co-dependent and otherwise tightly coupled, disabling the balance between the two individually unique roles they play.

Regarding 1. Markets will take care of themselves through supply and demand:

Natural Systems vs. Contrived Systems
When I refer to a natural system, I am talking about systems that would exist regardless of humanities existence(ex. weather).
In contrast, a contrived system is one that humans come up with in order to get along with each other(ex. constitution).

Markets are not a Natural Force
Treating markets as a natural system (like weather) is dangerously  irresponsible.  Markets are not a natural force; they are based on a contrived system.  Unlike the weather, they can and are manipulated on a regular basis, we see it every day, over and over again.  Supply is easily manipulated and demand (for other than basic needs; food, shelter, etc...) is a matter of manipulating perception(at least in developed countries).

Allowing 'the markets' to simply evolve is as great a threat to liberty as over-regulating.  The reason we regulate is because the system has holes in it which, when taken advantage of, minimizes individual liberty by tipping the playing field.  Maintaining the 'level playing field' is what regulation is supposed to do.  Politics aside, (which is almost impossible to do because of the tight-coupling between Govt. and Big Business, but lets pretend...) business represents a very narrow interest in individual liberty:  If a business can monopolize, it will. If a business can get around having to pay taxes, it will.  Business is driven by profit, not human or common interest(a good business will respond to human/common interest to survive, but that is not the driving force of the business).  There is nothing wrong with that motivation.... unless there is nothing in place to balance it in the interest of the individuals.  Govt. is the mechanism we use to provide that balance.  Unfortunately, Govt. ain't doing it's job.  If it was, this last recession would have been a dip in the road instead of the chasm it became.  The crossover between Govt. and business as exemplified by Fannie Mea and Freddie Mac is one example of how business will cripple itself and the markets it serves in the interest of short term profit.  It is just as good an example of  how incapable of doing good business the Govt. is.  This is a case in point of why 'self-regulation' is an oxymoron.

In reality, Big Business is no different than Big Govt.  Either one losing sight of their role and the interests they represent is bad news. When the two co-opt each other, the news is even worse.  Either system unchecked will minimize individual liberty and opportunity. Unchecked growth of either or both is lethally cancerous to the ideals we claim to value.

Treating markets as if they were a 'natural force' defies logic, flies in the face of the evidence we observe every day, and is no more than a cop-out by those who are (or think they are) benefiting in the short term.  Simply letting a system like that go unchecked is pretty close to saying "yeah, lets go back to a pre-magna-carta feudal system".


PS  I have no interest in the standard solutions to these problems.  An example of a standard solution is the 're-distribution' of wealth through taxation.  That is not a good solution because it is self-defeating.  On the other hand, cutting/eliminating Govt arbitrarily is about like chopping off ones own fingers because one wants to simplify their life by reducing complication.  It is simply ridiculous.  Improving ones dexterity might be a more productive method.