Do not make the mistake of thinking that because my conclusion is the same as another person's that my reasoning is the same
Dean calls for reversal of deregulation
Economic platform would underscore `new social contract'
By Jim VandeHei, Washington Post, 11/19/2003
HOUSTON -- After years of government deregulation of energy markets, telecommunications, the airlines, and other major industries, Democratic presidential candidate Howard Dean is proposing a significant reversal: a comprehensive "reregulation" of US businesses.
The former Vermont governor said he would reverse the trend toward deregulation pursued by recent presidents -- including, in some respects, Bill Clinton -- to help restore faith in scandal-plagued US corporations and better protect US workers.
In an interview around midnight Monday on his campaign plane with a small group of reporters, Dean listed likely targets for what he dubbed as his "reregulation" campaign: utilities, large media companies and any business that offers stock options. Dean did not rule out "reregulating" the telecommunications industry, too.
He also said a Dean administration would mandate new workers' standards, a much broader right to unionize and new "transparency" requirements for corporations that go beyond the recently enacted Oxley-Sarbanes law.
"In order to make capitalism work for ordinary human beings, you have to have regulation," Dean said.
Look, people, free trade and all that, fine. And I really have no issue with capitalism as an economic system. But seriously, what's wrong with establishing a floor no one can fall beneath and letting all the competition take place above it? I'm not talking about guaranteed luxury, I'm talking guaranteed subsistance.
And now, without further interruption, we bring you the conclusion of the article.
In a speech here last night, one mile from the Enron headquarters, Dean sought to place this idea into a new and broader campaign context: a "new social contract for the 21st century" to restore public trust in corporations, national leaders, and US military might. Dean blamed President Bush for eroding the public's faith in these institutions with his policies over the past three years.
"At Enron, those at the top enriched themselves by deceiving everyone else and robbing ordinary people of the future they'd earned," Dean said. "The Bush administration is following their lead."
Dean has excited core Democratic voters with a relentless assault on corporations and the rich, and he is moving quickly to stake a position as the candidate with the boldest plans for tempering the influence and power of US businesses. If the economy continues to rebound, Democratic strategists say, Dean's proposal may offer a way for the party to frame the debate over jobs, income, and fairness.
Dean said that "reregulation" is a key tool for restoring trust. In doing so, he drew a sharp distinction with Bush, an outspoken advocate of free markets.
Dean also continued his clear break from Clinton's "New Democrat" philosophy of trying to appease both business and workers with centrist policies. Earlier in the campaign, Dean reversed his prior support for Clinton's free-trade agreements with Mexico, Canada, and China.
Virtually all Democratic candidates are making the fight against corporate influence a centerpiece of their campaigns. Every Democratic presidential candidate save Senator Joseph I. Lieberman of Connecticut has come out strongly in opposition to the GOP deals on energy and Medicare, and criticized them as gifts to big Republican corporate campaign contributors. Yet Dean appears to getting the most traction on this front.
Posted by P6 at November 19, 2003 08:43 AM | Trackback URL: http://www.prometheus6.org/mt/mt-tb.cgi/2333But seriously, what's wrong with establishing a floor no one can fall beneath and letting all the competition take place above it? I'm not talking about guaranteed luxury, I'm talking guaranteed subsistance.
Setting aside the moral issues, there is a practical one in the manner that we do this in America. First, taxes are immune to demand, so the normal self-regulation is harder there. (This is income taxes -- a consumption tax is self-regulating to some degree, as long as the demand for the product being taxed isn't inelastic.) That means that the politicos can set whatever tax they want, short of some type of revolution.
The other part of this is shifting that tax burden away from a voting majority and then endowing that voting majority with the largesse. Already in America, 50% of the population pays 95%+ of the income tax (and we are very close to 50% of the population paying 0.) When that happens, you get a self-reinforcing feedback loop where it is in the best interest of that 50% to vote in politicos who want to raise taxes and give the largesse to them.
That is a very dangerous situation, because there aren't many peaceful solutions left to the tax-paying 50%. About all they can do is the Atlas Shrugged thing, to some degree. (It is that or armed insurrection.)
If you are talking about corporate sustenance, then the situation is even simpler. When you set minimum prices, you remove an ability of smaller businesses to compete. The rate will be set to the liking of the big-guys in the industry, and the little guy will have to compete at the exact same price as the big-guys, but he won't have the massive infrastructure that they have. On top of that, there will be costs associated with compliance that the big-guys can absorb into the budget easier than the little-guy. Regulation is a barrier to entry rather than a facilitator.
From the article:
If the economy continues to rebound, Democratic strategists say, Dean's proposal may offer a way for the party to frame the debate over jobs, income, and fairness.
Here's the rub on that one. That situation can't come about. Dean's proposal will kill any rebound. The economic movers and shakers will see the writing on the wall, remove their investment in any soon-to-be regulated industry, and one by one the economy will shut down.
I will not set aside the moral argument.
Setting aside the moral (or if you prefer, ethical) argument is one of the biggest obstacles to creating the optimum society I can think of.
I keep getting this argument that resolves to : "If we do X and keep all the assumptions that made us not want to do X in the beginning, these problems will arise that we don't know how to solve. Therefore we shouldn't do X."
I say, we have problems equal to or greater than all those you name. I say, we should do X, and therefore must learn to deal with the problems that arise. If it requires giving up the assumptions that make you not want to do X, so be it.
Dean's also writing off the neoliberal DLC types like Larry Summers, Rubin, Panetta, Rivlin, Bentsen etc. who understand that markets work and generate the wealth that progressives want to redistribute.
The economy is a dynamic feedback loop, not a static one - you eliminate or change incentives and you will get a change in behavior, not a continuation of the old behaviors you liked with a new statist improvement. Sometimes this amounts to a simple normative choice of which benefits society values more; at other times the unanticipated effects of regulation create distortions that grandly screw resource allocation up in a way no one thought possible because the regulation is interacting with unrelated variables.
I tend to think of the DLC as basically in the Libertarian camp. Yeah, he's writing them off too.
SOmething you forget though, Mark. A corporation is a creation of regulators. Ownership is defended by regulation. So your comment:
at other times the unanticipated effects of regulation create distortions that grandly screw resource allocation up in a way no one thought possible because the regulation is interacting with unrelated variables
is correct, but it's corollary is more important:
at other times the unanticipated effects of deregulation create distortions that grandly screw resource allocation up in a way no one thought possible because the regulation is interacting with unrelated variables
Think of it in ecological terms. Deregulation is like thinning out the preditors.
And mind you, that's without considering the ethical issues that guide all decisions. Or should, anyway.
Deregulation does indeed provoke changes as the market will seek it's natural equillibrium point but that is not a disallocation unless the deregulation is partial to remove only the controls but not the subsidies ( which is what corporations, especially big utilities attempt to wrangle as they did with telecommunications). If that happens the market will simply be distorted in a different direction.
Earl, unless human beings have become markedly smarter in the last two decades I'm dubious that we'll be able to cherry-pick the results we want and simply get them by governmental fiat. There are no free lunches - if you set prices you will get only as many units of that good as it is rational to produce. One memorable example would be the gas lines and " energy crisis " of the 1970's which had as much to do with Washington as OPEC.
I will not set aside the moral argument.
I'm sorry. We don't seem to be talking about the same moral issue. I'll lay it out for you. Forcing someone at gunpoint to work for the benefit of someone else is slavery and is immoral. If you tell someone that they can't benefit from thier labor without having to pay a fee to another person, then the person getting the royalty is the true owner of that person, and that is slavery. Just because you get to help elect your master doesn't make you any less a slave.
I'm not taking your arguments seriously, Phelps.
The question isn't whether there will be a government and taxation. The question is, what is the optimum—not minimum, but optimum—level of each.
There's no obvious solution to the optimum level question.
Let's say we have a society of two persons, P and Q. What distribution of income is preferable?
a) (2,10)
b) (3,4)
The answer, at first glance, SEEMS obvious: a) is preferable if you are Q, and b is prefable if you are P. And you would be right, only because the model is imperfect. Surplus wealth can be used to build production machinery that can create even more wealth. A more reasonable question would be:
What distributions of income are preferable?
a) (2,10) this year, (4,14) the next year
b) (3,4) this year, (3,5) the next year.
I'm not taking your arguments seriously, Phelps.The question isn't whether there will be a government and taxation. The question is, what is the optimum�not minimum, but optimum�level of each.
Not taking logic seriously is your failing, not mine. My opposition isn't to the idea of taxation -- it is the idea of taxing labor (income tax). I think that a sensible level of taxation (much lower than what we have now) can be achieved through consumption taxes (sales tax) and tariffs and duties (some intranational, some international.)
My other opposition is to rewarding negative behavior. Failing to provide services to society that society is willing to pay a reasonable price for is a just that -- a failure. It is not something that should be rewarded. The market should be allowed to punish and discourage this. If there is no way to fail, there is no reason to protect against failing. This is true of both individuals and corporations.
Logic is fine and useful in its place. It's your arguments I don't take seriously...don't confuse the two.
Logic is fine and useful in its place.
Wow. Wow. What exactly isn't logic's place?
Logic will indicate if, given a set of statements (assumptions, facts, whatever), a statement is true (can be deduced or inferred from the given premises).
Logic can't determine if the set of statements is an accurate representation of the state of affairs under discussion. Logic cannot gather the assumptions that will be processed by logic. We have an inherant ability to recognize patterns that provides actual facts and assumptions.
For instance, we see the repetition in a Tartan plaid. We recognize we have five fingers. We hear the recursion in Bach's Brandenburg Concertos. This is pattern recognition with no logic involved.
Logic is a pattern perceived and consciously mimicked to positive effect, but is only one pattern…a subset of all the patterns we see and mimic to our benefit.
Logic can say what is true, but that which is true is a subset of that which is actual.
Or to put it another way, a set of statements can be logically consistent and bear absolutely no resemblance to reality. Logic is a tool of analysis, not the be-all, end-all.