Linked by Dmitrij D. Czarkoff on Fri 31st Aug 2007 08:54 UTC
Editorial This article is an answer to "Competition Is Not Good" by Kroc and reading it wouldn't be comfortable without switching to and from the original article. I wrote it just because I do strongly disagree with Kroc and I believe I can prove that he is not as close to truth as it may seem from the first glance.
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RE[3]: I agree
by SReilly on Fri 31st Aug 2007 13:31 UTC in reply to "RE[2]: I agree"
SReilly
Member since:
2006-12-28

I'm afraid that, considering the fact that most world economies are capitalist, regulation is a must. You state that regulation creates instability but have not provided any proof to back up your statement. If fact, any economics will point out quite clearly that exactly the opposite of your statement is true.

Just look at the Wall Street crash of 1929. Because of unregulated trading, millions of people lost they're life saving not to mention that it worsened an already terrible situation, namely the Great Depression.

More recent examples are WorldCom and Enron. Both companies where working in recently deregulated industries and anybody can tell you what happened there in more detail than this post allows for.

The evidence to back up my claim is common knowledge. Just because you don't believe in regulation does not mean it's not vital in a capitalist society.

To think otherwise has proven to be extremely detrimental to economies the world over, not to mention stupid.

Reply Parent Score: 2

RE[4]: I agree
by alcibiades on Fri 31st Aug 2007 18:29 in reply to "RE[3]: I agree"
alcibiades Member since:
2005-10-12

We are getting a little off topic, but the crash of '29 was not caused by competition. It was caused by a previous government sponsored credit bubble starting in the early years of the century. If you want to understand it, research the effects of the founding of the Federal Reserve on bank reserve requirements and lending ability, in Murray Rothbard's book, available online. The depression which followed was also not caused by any lack of regulation. The standard account now is that it was largely caused by the actions the government took during the New Deal to decrease competition and keep prices up. The inevitable result was, output fell.

The US started to emerge from the depression with the arrival of the second phase of the New Deal in the late thirties - complete with trust-busting, enforcement of pro competition law, abolishing of price cartels and similar market rigging collusions. It was in fact competition which got the US out of it.

You mention Worldcom and Enron. You could also mention the subprime fiasco. This too, like the South Sea bubble in England, or the Mississippi Bubble in France, is the result of a government sponsored credit bubble. We seem to have them in the West roughly once ever 70-100 years. The reason they are so infrequent is they teach a lesson which stays in the memory for two generations at least.

The third generation, like those now blaming deregulation for Enron, has forgotten history, and so is condemned to repeat it. But not in exactly the same form. Derivatives replace Investment Trusts. Options replace bear and bull pools. Housing replaces stocks. The result is however very similar and equally dire.

Reply Parent Score: 2

RE[5]: I agree
by chemical_scum on Sat 1st Sep 2007 02:26 in reply to "RE[3]: I agree"
chemical_scum Member since:
2005-11-02

We are getting a little off topic, but the crash of '29 was not caused by competition. It was caused by a previous government sponsored credit bubble starting in the early years of the century. If you want to understand it, research the effects of the founding of the Federal Reserve on bank reserve requirements and lending ability, in Murray Rothbard's book, available online. The depression which followed was also not caused by any lack of regulation. The standard account now is that it was largely caused by the actions the government took during the New Deal to decrease competition and keep prices up. The inevitable result was, output fell.

You right wing US libertarian's are so funny or perhaps tragic. You just love to lie about history. The depression could not have been caused by the New Deal as it did not start until the depression was at is worst. The turn around in production occurred during the first New Deal and continued through the second New Deal. Industrial output had recovered by 1936. The mini-depression of 1937 was cured primarily by by increasing government expenditure though debt financing. There were only threats of ant-trust activity and little was actually done. However the increase in government expenditure then was small in comparison to that which occurred during WW11 which resulted in a massive increase in employment.

Personally I think the best solution is to eat the rich even though it might be not good for ones cholesterol levels.

Reply Parent Score: 2

RE[6]: I agree
by sbergman27 on Sat 1st Sep 2007 06:56 in reply to "RE[5]: I agree"
sbergman27 Member since:
2005-07-24

""
Personally I think the best solution is to eat the rich even though it might be not good for ones cholesterol levels.
"""

Most blood cholesterol is produced by the liver. Consumed cholesterol does not actually have that much effect. So you can probably eat as many wealthy people as you want, to no ill effect.

Except for the calories, of course. ;-)

Edited 2007-09-01 06:57

Reply Parent Score: 2

RE[4]: I agree
by n1xt3r on Sun 2nd Sep 2007 23:06 in reply to "RE[3]: I agree"
n1xt3r Member since:
2006-02-05

"More recent examples are WorldCom and Enron. Both companies where working in recently deregulated industries and anybody can tell you what happened there in more detail than this post allows for."

Interesting that you would choose to cite Enron as an example. One only needs to study a little of Enron's history to see how they completely gamed California's system of regulation. While remaining completely legal I might add.

The dark history of Enron is an argument *for* allowing the straight-forward approach of the market forces to decide who to punish and who to reward. In the case of California, it was the state's attempts to regulate energy prices that were an early enabler of Enron's behavior. Now, I'm not arguing against government regulation, but I am suggesting that there's a balance to strike between regulation and the market forces. Leaning toward the latter. I'm not an expert on the subject by any means. I'm simply pointing out that there's arguments for and against both.

Reply Parent Score: 1