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December 22, 2011 / compassioninpolitics

The Disadvantages of Strict Libertarian Economic & Regulatory Policy

The Crash:
I’m not sure why Libertarians predicting the 2008 crash means their economic policy is any better. From what I can tell people from across the political spectrum predicted it. The problem, however, is the libertarians hands are tied from a policy perspective when a downturn happens (they have 50% fewer options in their policy tool belt, perhaps even less). Don’t get me wrong, a health care mandate in this environment wasn’t a wise economic or public policy option. [As an FYI who are the economists you are referring to?] So your argument is de-regulation of the stock market will make it less likely that risky decision making would have gone down in 2008? I’ll concede that the real estate issue was at partially due to government decision making–but I’d argue that it wasn’t sound government decision making. And its probably the case that if the issue had just be real estate, we could have just bailed out the consumer instead of the big banks.

De-Regulation & Hidden Costs:
I’m not denying the consumer protections have don’t have hidden costs….they also have hidden benefits. Moreover, its my contention that consumer protections, if written well, serve to decrease the overall disease in society, thus increasing the need for health care expenditure, increased worker productivity, and as well as increasing government revenue.

I’ll concede your example–I’m just saying on balance its helpful to have regulations intact which provide testing–encouraging corporate accountability and transparency. I’m not here to defend over-regulation, just smart regulation and pragmatic regulation which protects consumers. I can know that the company hasn’t been able to create the health care equivalent of the Sham Wow or those ionized bracelets that are supposed to make your balance.

Tragedy of the Commons & Environmental Protections:
Tragedy of the commons is a metaphor for a range of problems which are generally at their core a prisoners dilemma.

The Friedman speech relies primarily on metaphors rather than anything historically based. Moreover, his “argument” about bees ignores the pain that poverty causes…as well as the need to protect the environment in the first place in order to have sufficient bees….or a host of natural resources. Admitted, some environmentalists go over the top on this one. I’m not here to defend those missteps on behalf of non-pragmatic environmental regulations. Second, his defense of self-interest as a means to solve the prisoners dilemma–doesn’t solve the prisoners dilemma in the first instant. Moreover, Friedman isn’t dealing with the need to create shared goods which allow for efficiency–which otherwise wouldn’t be provided for. Every instance I’m talking about government intervention is a case in which the market has historic failure–or there is an net economic advantage to providing a shared resource to serve as a springboard for growth (public education, the GI Bill, and effectively run job training) . No metaphor can sweep that under the rug. Also remember that not having to breath CO2, NOx, and SO2 means fewer deaths and more productive workers.

Monopolies/Rich Get Richer
How exactly does the free market keep one capitalist from seizing all the resources (i.e. monopoly-like behavior)? I don’t understand how de-regulation automatically solves. If anything de-regulation allows things like ENRON turning off power in California on grandmothers and laughing about it….or toxic dumping poisoning our the water we drink, the air we breathe, and the soil our crops grow in.

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