I want to congratulate Jason for providing a great response in his comment. It was obviously well thought out and exquisitely written.
I will attempt to respond to some of Jason’s comments, but encourage the reader to read his full comment before continuing with this entry to make sure you are understanding what is being said in context of the discussion.
Jason noted that, “In making such evaluations, it is important for you to recognize that even an unregulated market will never truly be “unregulated.” As we spoke about, the self-interest of market participants generates what we will call “private” market regulation.”
This to me is an essential understanding of this broader question. What do we want to govern our markets. I would rather the self-interest of men govern themselves, instead of the self-interest of bureaucrats to govern men. Bureaucrats have their own interest, and among them is to be re-elected, which takes more donations from wealthy lobbyist and temporary appeal to emotional issues of their constituents. I would rather a simple man make decisions for himself based on his own self-interest, than a ‘elected’ official making a decision for millions of people who all have diverse interests that do not align with the interests of the politician or with each other.
Furthermore on this issue, I see society as three branches. The market, the moral, and the political. Often times people confuse what the roles of these three branches should be. The market should allocate resources efficiently and effectively, the moral should instill moral values in all of us, and the political should be there for only things that neither the moral nor the market sphere can provide.
This fits into Jason’s comment that, “if private market regulation is effective, then government regulation is at best unnecessary.”
I fully agree with him, if the market is regulating things properly then government regulation is unnecessary and to further the thought, it can decrease efficiency of the market and create broader social harm.
Jason also noted that, “Since the one-size-fits-all approach isn’t appropriate, maybe we could offer businesses a choice between seeking the benefits and accepting the burdens of government regulation, or forgoing those benefits and avoiding those burdens by transacting in financial markets that are only privately regulated.”
This I also agree with, however would replace government regulation with market regulation. If a group of businesses want to form a trade organization that will better ‘regulate’ their actions than all the better. The best example of this is Underwriters Laboratories. This is a non-governmental organization that ‘regulates’ any and most all electronic devices to make sure people do not get shocked or killed. It’s to the electronic industry like the FDA is to the food and drug industry, minus the US government. This is an example of how companies can create an organization to monitor the actions of each other, and make sure that electronic equipment comply with the standards set by the society. These companies are transacting in a market that is only ‘[privately regulated' but it is being regulated efficiently and to the benefit of both producers and consumers (consumers don't get shocked producers don't get sued).
Jason's last comment is best described is misguided trust in our government. "Either way, there has to be regulations and the only way to make sure everyone is playing fair and competing on the same level is for the government to step in and create a standard across the board."
This assumes as one of its premises that the government can 1) know what it means to play fair and competing, 2) has the incentive to act on this knowledge, 3) can act on this knowledge without undue consequences, and 4) that whatever standard they create is optimal. I can not support any of these premises. 1) The only people to know what is fair are the parties that are entering into a contract (e.g. I offer to pay you $4 an hour to work and you agree as opposed to the government forcing us to agree to other terms) 2) see discussion about incentive above and see Wikipedia on Public Choice Theory 3) regulation of illegal drugs has resulted in us spending in 2000 40 billion a year and creating an organized crime industry of 400 billion a year there are tons of secondary consequences often never mentioned in the political debates 4) what is optimal is not precise neither will it ever be truly known this is why I look at the reasons behind something or the reason to act, rather than the result of that action. I could give money to the poor and think that I have helped someone, or the real result could of been to help him afford a gun to kill his whole family. But who knows maybe we are better off because he took his genes out of the pool. See understanding and judging the ends are harder than having a moral theory that simply supports the underlying reason to act. I think acting in ones self-interest is best since it is at least making that person happy( as long as this action doesn’t take away someone else right to act in their self-interest). This is irregardless of the ‘consequences’ or of what is optimal.
And know I am getting too far off target. So Jason Newmanthanks for posting your comment, and keep them coming. If anything we have fulfilled our duty to our self-interest, since we acted on what makes us happy. And I’ll buy you two beers.
Technorati Tags: market regulation, Underwriters Laboratories, Public Choice Theory, illegal drugs, organized crime, Jason Newman
Again John, I am going to have to disagree with you. Many Americans continue to distrust the government, such as you, although I believe there are signs that hostility toward government has begun to diminish. I also think there is also considerable evidence that distrust of government is strongly connected to how people feel about the overall state of the nation. (And I would love to know what the governement has done to you personally to make you so extremely cynical and jaded.)
Today, personal satisfaction is soaring, the economy is thriving and confidence in state and local governments is growing, but neither satisfaction with the condition of the country nor confidence in the federal government has been transformed. Worry about the moral health of American society is suppressing satisfaction with the state of the nation, just as discontent with the honesty of elected officials is a leading cause of distrust of government. In the broadest sense, these ethical concerns are now weighing down American attitudes as Vietnam, Watergate, double digit inflation and unemployment once did. I think that disillusionment with political leaders is essentially as important a factor in distrust of government as is criticism of the way government performs its duties. Cynicism about leaders is especially critical to distrust among the generations of Americans who came of age during and after the Vietnam and Watergate eras, while performance failures are more important to older Americans. Distrust of government and discontent with the country notwithstanding, there is no indication that these attitudes are near a crisis stage. Public desire for government services and activism has remained nearly steady over the past 30 years. And distrust of government is not fostering a disregard for the nation’s laws, eroding patriotism or discouraging government service. About as many people would recommend a government job to a child today as would have in the early 1960s for example, when there was much less distrust of government. And furthermore John, most Americans describe themselves as frustrated with government, not angry at it like you. And that frustration is taking a toll on the quality and nature of the dialogue between the American public and its leaders in Washington.
I think Americans are also drawing sharper distinctions between federal, state and local governments than they once did. Today, more people trust their state and local governments than trust the government in Washington. But, it was not always that way. I think that about twenty-five years ago people were more confident in the federal government than in those closer to home. Since then confidence in Washington has eroded, while faith in state and local government has actually grown. The broader problem John is the American public’s connection to its political leadership. While trust in government does not directly correlate with that bond, feelings about political leaders(the bosses of government)clearly do. Boredom with Washington, not voting and seeing Washington issues as irrelevant are much more common attitudes and behaviors among Americans who are highly critical of political leaders than among those with more positive views of politicians. I believe that a close correspondence is seen between how Americans view the state of the nation and how much trust they have in government. People who generally distrust government also have a poor opinion of the condition of the country, and to be honest John, your view somewhat bothers me. Conversely, people who trust the government(Like me) tend to feel good about the country in general. Discontent with political leaders and lack of faith in the political system are principal factors that stand behind public distrust of government. Much of that criticism involves the honesty and ethics of government leaders. Concern about moral decline is also a major component of discontent with the nation at a time when its economic and international standing is ascendant.
I did a little research and according to my findings, most Americans(Like you John) give the government dismal performance ratings. An overwhelming majority of the public says that the government does a fair or poor job managing its programs and providing services (74%). Almost as many agree that when a program is run by government it is usually inefficient and wasteful (64%). These low marks do not come up significantly when people are asked about federal handling of specific tasks. For instance, 52% of Americans say the government is doing only a fair job providing for the elderly; 20% describe the effort as poor. Americans express mixed views on why the federal government’s performance is so lackluster. When asked what the government’s biggest problem is, priorities or inefficiency, 61% choose inefficiency. But when people look more closely at specific issues the government takes on, many acknowledge the complexity of the issues. Among those who give the government low marks on health care, for example, 48% blame the complexity of the issue, compared to 45% who blame the government. Whatever the reason John, the government’s perceived performance failures significantly undermine trust. Fully 70% of those who give the government a fair or poor rating say they basically distrust government. The inverse is also true: 76% of those who are satisfied with government performance basically trust the government. I think one reason performance factors so prominently in trust is that Americans have high expectations, like me, for the role government should play in public life. Fully 72% of Americans believe the government should see to it that no one is without food, clothing or shelter in this country.. Many Americans also say it is the federal government’s responsibility to manage the economy (68%), conserve natural resources (52%) and provide for the elderly (46%). At the same time, Americans do not believe the federal government gives these domestic issues the attention they deserve. On eight different issues,which range from ensuring safe food and medicine to setting academic standards for students and providing for the elderly, the public believes the federal government should give the issues higher priority than they think it now does. The priority gap is highest on ensuring access to affordable health care: 75% of the public say it should be a high priority; just 15% say it is. The gap is lowest on ensuring everyone can afford college: 50% want it to be a high priority: 11% say it is. Despite this enthusiasm for an activist government, Americans, like you, are uneasy with federal power and control. Nearly two-thirds (64%) of the public believes the government controls too much of our daily lives and more than half say Washington interferes too much in state and local matters. While these numbers are substantial, I think the intensity is lessening. Today, 29% completely agree with the statement government controls too much of our daily lives, down from 37%. The public divides into three equal sized groups when asked if the government has too much power (33%), too little (33%) or about the right amount (32%). Remarkably, this division has not changed markedly in 30 years.
The info I found shows that distrust of the federal government is not only about the workings of government. A significant part of this distrust reflects how people feel about the nation more generally. Discontent with the state of the nation is both a cause and an effect of distrust of government. Both sentiments are expressions of a broader disillusionment with the country as a whole, which is not apparent in people’s lives, nor is it as evident at the state and local levels of government. The consequences of distrust of the federal government are equally complex. The growth of this opinion since the 1960s, for example, has not been accompanied by a commensurate loss of appetite for government programs or solutions. Opinions about using the government to solve important problems have changed remarkably little over the past 30 years. It is difficult to pinpoint the specific negative behavioral or attitudinal consequences of distrust. It has not diminished Americans sense of patriotism, nor has it created a climate of opinion that is conducive to acceptance of illegal anti-government activities. Even public interest in government employment has varied little since the early 1960s, despite the decline in trust. Instead, distrust of the national government and low opinions of the state of the nation seem to weaken people’s connections to civic life. Interest in public affairs, news from Washington and voting are victims of low public esteem for politicians, which is an integral component of distrust. There are signs, however, that public criticism of government in almost all ways has diminished somewhat in recent years. I think that fewer Americans today fault government performance, worry about abuse of government power and feel government is unresponsive, than lets say in the 80′s, when we were born. However, on balance the vast majority of the public continues to be troubled by these things. Americans are now probably as distrustful of their national government as are the European publics, but remarkably remain less distrustful than Europeans of their political leaders. Over the past decade Europeans have caught up with American concerns about the power of government, but are somewhat less critical of government performance than those on this side of the Atlantic. While acknowledging the difficulty of many of the problems with which government deals, perceptions about poor performance are still seen as a primary reason for government failures. Despite some concern about misguided government objectives, I think most people would say it’s performance that determines their opinions. In conlusion, I think Americans should remain open-minded about government, and I hope you will too. I know it can(and eventually will) be better. But just remember John, we can’t all be as flawless as you.