Laissez faire capitalism - statism and regulation
Posted by sanjay_ankur 8 years, 10 months ago to Economics
I'm a firm believer in laissez faire capitalism - that the market should be free of statism. Recently, I discussed this with one of my friends who put forward his opinion - that sometimes, the state is needed to regulate the market because corporations/producers behave immorally. While I understood what he said, it didn't quite hit home since I hadn't a fresh example.
I just watched the John Oliver show where he shows how the bigger corporations lie to chicken farmers and trick them into farming chickens that are poorly bred. If we stick to "no statism" and the free market, how is this to be handled?
I guess what I'm really asking is - laissez faire capitalism, to me, appears to have a very important foundation - that both the consumer and producer are moral entities that do not attempt to cheat each other - when one of the parties does cheat, how does laissez faire capitalism handle it?
As I've learnt from Atlas Shrugged - contradictions cannot exist, if you run into one, check your premises. The premise to laissez faire capitalism seems to be that all parties behave morally/fairly - what happens when this premise is false?
I just watched the John Oliver show where he shows how the bigger corporations lie to chicken farmers and trick them into farming chickens that are poorly bred. If we stick to "no statism" and the free market, how is this to be handled?
I guess what I'm really asking is - laissez faire capitalism, to me, appears to have a very important foundation - that both the consumer and producer are moral entities that do not attempt to cheat each other - when one of the parties does cheat, how does laissez faire capitalism handle it?
As I've learnt from Atlas Shrugged - contradictions cannot exist, if you run into one, check your premises. The premise to laissez faire capitalism seems to be that all parties behave morally/fairly - what happens when this premise is false?
SOURCE URL: https://youtu.be/X9wHzt6gBgI
That is not the premise to laissez-faire (originally laissez nous faire meaning leave us alone). The premise is each individual must evaluate and judge for ones self whether a product or service is worth the trade of one's work ($$$). The idea that individuals cannot or will not do this opens the door for looters/moochers to advocate government action (more than sufficient evidence of how well that has worked). As for immoral, disreputable, deceiving businesses, they will not flourish if a majority of individuals are "on guard" using their independent judgment as to quality and honesty of a business.
The main point is government regulations is just another method to take control from the individual (which is all that exists) and put it in the hands of looters........the premise being (so they can loot) "no one should have to think for themselves"...............only fools and irrational philosophies brainwashed people fall for this.
See the first post by kevinw.........................and companies would be formed ("pop up") to monitor and disseminate information..........good $$$ there!
P.S. Competence and morality cannot be legislated.................but they can be suppressed, repressed and mutilated with disastrous consequences......................for which a plethora of evidence exists today.
As for these rules regarding the treatment of chickens, it seems unlikely that the genesis of them is other than public opinion...turning into PETA protest, Dept of Agr rules and/or legislation. The companies would only be acting to preserve profits.
I've said before, that government rules belong only, when the simple, monotonic optimization from capitalism will not provide a global minima (or maxima, depending on how you want to pose the problem).
Animal rights might be such a case, but simple public education (e.g. 60 minutes) could provide the same result. The problem in these cases is the same as union workers shopping at Walmart, where everything comes from China. In private people make more selfish decisions than they'd objectively admit to, or vote for.
Seems to me all that is needed is widespread opinion that mistreatment is bad, and social behavior will control consumer choice, which will control the behavior of corporations.
The problem with chicken farmers is the value they add is very small, and thus their market position is weak. This is also not a problem.
A few years ago I vacationed in Cancun. I watched them wrestle a swordfish out of the sea, clean it, fillet it, and prepare it. I realized in America we no longer have freedom. We have the choice of 3 or 4 items of any category the government allows us to choose from, and they tell us that is freedom.
the need for some government is what happens after standards are established and ensuring the standards are included in the education system.
Rights AND responsibilities of citizenship are always the first step.
Many that have a preference for the ideas of freedom fail to understand the concept of 'self defense' and the responsibility that falls on the individual to exercise that right. And along with that responsibility is the requirement to recognize what is an attack on the person. If someone is defrauding another, he is endangering the other's life.
I agree that the big chicken companies are not behaving in a scrupulous manner, but think it through: Would you pay for a tough chicken in the market? (Apparently sunshine and running around makes chickens tough - and I can verify that anecdotally.) Would you pay more for the same chicken? How do you feel about chicken with a side of salmonella?
The solution to the chicken farm question has to include all of these elements. kevinw and Mammaemma are right in asking why we believe that a politician will be an 'angel', but we also have to deal with the fact that businessmen are not 'angels' either.
Probably the best solution is the "UL" (Underwriters Laboratory) plan: let anyone farm chickens in any way they want with no Federal oversight, but have one or more independent accreditation companies grade the product before it gets to market. Markets can refuse to accept chicken that does not have a 'passing grade' (eg has salmonella). This keeps the gov out of it (or minimizes the federal role - I am open to the idea of the gov monitoring the accreditation companies - qui custudio etc)
Jan
With all the government interference we have right now, the cheats still get on with it. The latest news about the 5 big banks being fined $5 Billion for the frauds they perpetrated is an example. (http://money.cnn.com/2015/05/20/investin...) Does anyone really think they only stole $5B?
There will always be liars and cheats. NO government is ever going to stop that. In fact the government institutionalizes some of it. The Pure Food and Drug Act is one of my favorite examples of keeping the truth hidden. The FDA has set standards for how much rat excrement can be in your sausage, not that it must be pure meat. Where exactly does the “Pure” part come in? So I know I can not rely on the government to protect me from harm, beyond what it does to punish those convicted of doing harm to others.
After all, A is A. People are what they are and that includes the many defective ones that vote (check the link to the Hillary voters and Zombies to see what I am referring to.) Start by realizing that, by definition,1/2 of people are below average. There are many people to whom the concept of "moral" is unintelligible. Government can't fix that!
Having a laissez faire government would mean I'd have to look out for myself when it comes to dealing with others. How is that different then the current situation? I'm being delusional if I expect anyone else to responsible for choices I make.
So what's wrong with big-farm chicken farming? It's slavery. The chicken companies finance the buildings for you, but just about when you think they're paid off, new government regulations come along, and they are obsolete. You're still "owned" by Tyson. You don't get any choice of how to run things, either. THEY tell you when the next load is coming in. You dare not plan any time off.
We looked into it, and determined that chickens, at least large-scale operations, are a matter of religion. Unless you sincerely believe that the chickens are the most important animal on the planet, and the Lord God Himself personally appointed you to look after His chickens, you have NO BUSINESS with trying to raise 50,000 chickens at once. The correct number of chickens is actually two or three dozen, and that's only if you LIKE chickens. We had some for a while. Now it's ponies, sheep and goats. Don't get me going about the USDA on those matters, either.
And I favor some economic regulation if its lack can be shown to have serious bad consequences. For example, regulations that require insurance underwriters to have enough cash to pay claims even in any reasonably possible disaster scenario are quite necessary.
Where possible, though, I prefer the law to simply place the blame for bad results where it belongs and let the business people choose for themselves what precautions to take. Thus for example, rather than insure bank deposits I would simply ban corporations from the field of banking. All banks would be required to be owned by partnerships or sole proprietors, who stand to lose their personal life savings if they lose yours. (This is how it was in Scotland in Adam Smith's time, and he wrote about it.)
But reputation is certainly not enough. The world has simply become so large that it's simply not possible to prevent someone who cheats or steals from finding new clients. Those libertarians who insist there should be no remedy for fraud except reputation should be kicked to the curb with the anarchists.