6 ms·

You'll do massive economic damage that harms the poor if you price control or subsidise any commodity, including water. The economy is the way it is because of

by aminok 10y ago

You'll do massive economic damage that harms the poor if you price control or subsidise any commodity, including water. The economy is the way it is because of millions of individual decisions that factored in volumes of information that you could not fathom. Creating a law that with a stroke of a pen overrides the decisions of millions of people on resource usage, based on a simplistic formula created by a couple hundred people in a legislature, is incredibly reckless.

freyr 10y ago
> You'll do massive economic damage that harms the poor if you price control or subsidise any commodity Source? Is it possible the unfathomably complex economic machine will simply adapt to the subsidy? If the subsidy was limited to a couple liters per person per day (e.g., sufficient to ensure survival), could this be less reckless than letting people die of dehydration?
- aminok 10y ago
  >Source? This is logical extrapolation, and it's more or less validated by empirical evidence. It's not scientifically proven because we're dealing with incredibly complex phenomena where there are always potential confounding factors, but a reasonable case can still be made based on real world events. See Venezuela for an extreme example of the consequences of interventionism. The theory that intervention does harm is based on the fact that this complex system we know as an economy exists the way it does because of carefully weighted decisions of millions of people, each trying to meet their own needs in the most efficient manner available to them that does not cause harm to others (since harmful action is generally illegal in a market economy [there are edge cases of courses, like misleading advertising]). That carefully wrought symphony of welfare-maximizing human interaction is crudely disrupted by authoritarianism any time a legislature signs a law in effect that forces millions to act a certain way, that they otherwise would not have, or refrain from engaging in some voluntary interaction that they otherwise would have engaged in. An authoritarian intervention to force several million to do some action to benefit several other million is going to have innumerable unintended consequences, that could not possibly be a net positive for the world.
  - pron 10y ago
    Whoa, authoritarianism? Who said anything about authoritarianism? All prosperous economies are quite heavily regulated. You sound like that messianic group in the 40s and 50s of Milton Friedman, Mises, Hayek and friends who believed that the market solves everything. No one is proposing communism; no need to dig up the politics of the Mont Pelerin Society.
    - aminok 10y ago
      All regulations on voluntary market activity are a form of prohibition, where engaging in some voluntary activity is punished by prison sentences or expropriation of wealth. That is textbook authoritarian intervention. Just because it is popular and the most powerful countries do it does not mean it is not authoritarian. I don't believe that markets will solve everything but I do believe that the best chance we have to solve problems is through voluntary market action as opposed to authoritarian action.
      - dpark 10y ago
        > That is textbook authoritarian intervention. It's really not. It's not authoritarian when a democratically elected government creates regulations that it's citizens want. That's just governance. Otherwise every law a government passes is authoritarian, in which case the word is meaningless.
        aminok 10y ago
        Any law that punishes a voluntary action is authoritarian, whether it has a democratic mandate or not. Not all laws punish voluntary action. For instance, a law against theft is not authoritarian.
        dpark 10y ago
        Theft is a voluntary action. The thief is taking an action of their own volition. Your definition is flawed and meaningless.
- fpoling 10y ago
  My childhood was during the last years of Soviet Union. I saw first hand how incredible was damage from price control and government distributing food and basic necessities. Everything disappeared. Often in shops there was only empty shelves and when thing came one has to spend hours in a queue. It is so sad watching Venezuela going the same path with the same disastrous results.
  - pron 10y ago
    There's a vast continuum between the Soviet Union and modern Western economies, all heavily regulated. It's not a binary choice. Food, in particular, is subsidized in most prosperous countries. Today we know that both Soviet-style communism and Hayek-style free-marketism have the annoying tendency to result in people starving, which is why both approaches have been rejected by Western countries, that, in general, try to aim at some middle ground.
    - aminok 10y ago
      >Today we know that both Soviet-style communism and Hayek-style free-marketism have the annoying tendency to result in people starving It's very annoying when people make bold statements like this without any evidence or factual support. Please provide some examples of free market economics leading to people starving. >which is why both approaches have been rejected by Western countries, that, in general, try to aim at some middle ground. I don't know if you know this but Sweden was the most free market economy in the world from 1870 to 1950. After it adopted social welfarism in the 1970s, its growth stagnated. It fell from being the third richest country in the world to the 17th. Imagine how much higher its standard of living would be today if it had maintained the rate of economic development it had in the early 20th century. You assume that since Western electorates have chosen a particular path, it is the optimal path. I see that as hubristic.
      - dpark 10y ago
        > Please provide some examples of free market economics leading to people starving. In a completely free market, how does someone without money not starve? > I don't know if you know this but Sweden was the most free market economy in the world from 1870 to 1950. After it adopted social welfare is in the 1970s, its growth stagnated. I have no idea if this is even remotely true, but I'll assume for a moment that it is. Does the fact that Sweden adopted welfare not tell you something about the consequences of their free markets? The free market was just so awesome that they passed welfare for all the rich Swedes who didn't need it?
- rglovejoy 10y ago
  >Source? Any recent news from Venezuela.
- rpgmaker 10y ago
  > Is it possible the unfathomably complex economic machine will simply adapt to the subsidy? Not only possible: it happens all the time. There are very few industries in the US that aren't subsidized by the govt one way or another. Agriculture and oil being one of the best examples.
  - aminok 10y ago
    We can safely assume, based on some sensible and self-evident axioms, that the adaptation is less economically optimal than the actions that would have been taken absent the authoritarian intervention.
jlg23 10y ago
> You'll do massive economic damage that harms the poor if you price control or subsidise any commodity, including water. That depends on how it is done, Venezuela showed how not to do it. I think a good option is to also provide commodities by non-profit companies run by the state and then use their costs plus a profit margin as a cap for commercial competition. If water, electricity and basic foods become too expensive people suffer and one finally will face revolts - which pure commercial entities are not necessarily incentivized to prevent (just pulling out of a market when the suffering becomes too great might be more cost efficient for them).
- aminok 10y ago
  Venezuela did enough damage where it becomes obvious that intervention fails. Just because the damage done by intervention is not apparent, doesn't mean it's not there. It's the hidden damage, that is caused by milder forms of authoritarian intervention, like that seen in mixed economies, that is the most dangerous, because it is not diagnosed and cured so it continues sapping the economic growth of the country for decades on end. >one finally will face revolts - One should not be cowed into instituting authoritarian measures. If there is a law-and-order issue, that should be dealt with directly by punishing violent protest.
  - dpark 10y ago
    So the "most dangerous" interventions are the ones that are so subtle we can't see the damage they cause? I would have thought the most dangerous interventions were ones that tanked the economy and caused widespread poverty and desperation. But yeah, slightly reduced economic output sounds worse. I do love the untestable nature of this assertion, too. The underlying claim here is that all interventions cause economic damage, even if we can't detect it. This is analogous to claiming that microwave ovens increase the risk of cancer, even though we can't detect it.
    - aminok 10y ago
      Yes exactly. They are allowed to continue hurting the economy for decades. >I would have thought the most dangerous interventions were ones that tanked the economy and caused widespread poverty and desperation. But yeah, slightly reduced economic output sounds worse. The compounding effect of slightly reduced economic growth adds up to a lot over the long term. Much more than a big one or two year drop in GDP. You can do the math and see what I mean. >The underlying claim here is that all interventions cause economic damage, even if we can't detect it. To clarify, you probably can detect it but like all economic phenomena, we don't have absolute proof that so-and-so economic policy was the cause of the damage. We only have a reasonable cause to believe it is the cause. The problem is that the majority of the electorate are not well-versed in economics so unless the damage is extremely obvious they're not going to react properly and correct the harmful policy..

by aminok 10y ago

freyr 10y ago

> You'll do massive economic damage that harms the poor if you price control or subsidise any commodity Source? Is it possible the unfathomably complex economic machine will simply adapt to the subsidy? If the subsidy was limited to a couple liters per person per day (e.g., sufficient to ensure survival), could this be less reckless than letting people die of dehydration?

aminok 10y ago
>Source? This is logical extrapolation, and it's more or less validated by empirical evidence. It's not scientifically proven because we're dealing with incredibly complex phenomena where there are always potential confounding factors, but a reasonable case can still be made based on real world events. See Venezuela for an extreme example of the consequences of interventionism. The theory that intervention does harm is based on the fact that this complex system we know as an economy exists the way it does because of carefully weighted decisions of millions of people, each trying to meet their own needs in the most efficient manner available to them that does not cause harm to others (since harmful action is generally illegal in a market economy [there are edge cases of courses, like misleading advertising]). That carefully wrought symphony of welfare-maximizing human interaction is crudely disrupted by authoritarianism any time a legislature signs a law in effect that forces millions to act a certain way, that they otherwise would not have, or refrain from engaging in some voluntary interaction that they otherwise would have engaged in. An authoritarian intervention to force several million to do some action to benefit several other million is going to have innumerable unintended consequences, that could not possibly be a net positive for the world.
- pron 10y ago
  Whoa, authoritarianism? Who said anything about authoritarianism? All prosperous economies are quite heavily regulated. You sound like that messianic group in the 40s and 50s of Milton Friedman, Mises, Hayek and friends who believed that the market solves everything. No one is proposing communism; no need to dig up the politics of the Mont Pelerin Society.
  - aminok 10y ago
    All regulations on voluntary market activity are a form of prohibition, where engaging in some voluntary activity is punished by prison sentences or expropriation of wealth. That is textbook authoritarian intervention. Just because it is popular and the most powerful countries do it does not mean it is not authoritarian. I don't believe that markets will solve everything but I do believe that the best chance we have to solve problems is through voluntary market action as opposed to authoritarian action.
    - dpark 10y ago
      > That is textbook authoritarian intervention. It's really not. It's not authoritarian when a democratically elected government creates regulations that it's citizens want. That's just governance. Otherwise every law a government passes is authoritarian, in which case the word is meaningless.
      - aminok 10y ago
        Any law that punishes a voluntary action is authoritarian, whether it has a democratic mandate or not. Not all laws punish voluntary action. For instance, a law against theft is not authoritarian.
        dpark 10y ago
        Theft is a voluntary action. The thief is taking an action of their own volition. Your definition is flawed and meaningless.
fpoling 10y ago
My childhood was during the last years of Soviet Union. I saw first hand how incredible was damage from price control and government distributing food and basic necessities. Everything disappeared. Often in shops there was only empty shelves and when thing came one has to spend hours in a queue. It is so sad watching Venezuela going the same path with the same disastrous results.
- pron 10y ago
  There's a vast continuum between the Soviet Union and modern Western economies, all heavily regulated. It's not a binary choice. Food, in particular, is subsidized in most prosperous countries. Today we know that both Soviet-style communism and Hayek-style free-marketism have the annoying tendency to result in people starving, which is why both approaches have been rejected by Western countries, that, in general, try to aim at some middle ground.
  - aminok 10y ago
    >Today we know that both Soviet-style communism and Hayek-style free-marketism have the annoying tendency to result in people starving It's very annoying when people make bold statements like this without any evidence or factual support. Please provide some examples of free market economics leading to people starving. >which is why both approaches have been rejected by Western countries, that, in general, try to aim at some middle ground. I don't know if you know this but Sweden was the most free market economy in the world from 1870 to 1950. After it adopted social welfarism in the 1970s, its growth stagnated. It fell from being the third richest country in the world to the 17th. Imagine how much higher its standard of living would be today if it had maintained the rate of economic development it had in the early 20th century. You assume that since Western electorates have chosen a particular path, it is the optimal path. I see that as hubristic.
    - dpark 10y ago
      > Please provide some examples of free market economics leading to people starving. In a completely free market, how does someone without money not starve? > I don't know if you know this but Sweden was the most free market economy in the world from 1870 to 1950. After it adopted social welfare is in the 1970s, its growth stagnated. I have no idea if this is even remotely true, but I'll assume for a moment that it is. Does the fact that Sweden adopted welfare not tell you something about the consequences of their free markets? The free market was just so awesome that they passed welfare for all the rich Swedes who didn't need it?
rglovejoy 10y ago
>Source? Any recent news from Venezuela.
rpgmaker 10y ago
> Is it possible the unfathomably complex economic machine will simply adapt to the subsidy? Not only possible: it happens all the time. There are very few industries in the US that aren't subsidized by the govt one way or another. Agriculture and oil being one of the best examples.
- aminok 10y ago
  We can safely assume, based on some sensible and self-evident axioms, that the adaptation is less economically optimal than the actions that would have been taken absent the authoritarian intervention.

jlg23 10y ago

> You'll do massive economic damage that harms the poor if you price control or subsidise any commodity, including water. That depends on how it is done, Venezuela showed how not to do it. I think a good option is to also provide commodities by non-profit companies run by the state and then use their costs plus a profit margin as a cap for commercial competition. If water, electricity and basic foods become too expensive people suffer and one finally will face revolts - which pure commercial entities are not necessarily incentivized to prevent (just pulling out of a market when the suffering becomes too great might be more cost efficient for them).

aminok 10y ago
Venezuela did enough damage where it becomes obvious that intervention fails. Just because the damage done by intervention is not apparent, doesn't mean it's not there. It's the hidden damage, that is caused by milder forms of authoritarian intervention, like that seen in mixed economies, that is the most dangerous, because it is not diagnosed and cured so it continues sapping the economic growth of the country for decades on end. >one finally will face revolts - One should not be cowed into instituting authoritarian measures. If there is a law-and-order issue, that should be dealt with directly by punishing violent protest.
- dpark 10y ago
  So the "most dangerous" interventions are the ones that are so subtle we can't see the damage they cause? I would have thought the most dangerous interventions were ones that tanked the economy and caused widespread poverty and desperation. But yeah, slightly reduced economic output sounds worse. I do love the untestable nature of this assertion, too. The underlying claim here is that all interventions cause economic damage, even if we can't detect it. This is analogous to claiming that microwave ovens increase the risk of cancer, even though we can't detect it.
  - aminok 10y ago
    Yes exactly. They are allowed to continue hurting the economy for decades. >I would have thought the most dangerous interventions were ones that tanked the economy and caused widespread poverty and desperation. But yeah, slightly reduced economic output sounds worse. The compounding effect of slightly reduced economic growth adds up to a lot over the long term. Much more than a big one or two year drop in GDP. You can do the math and see what I mean. >The underlying claim here is that all interventions cause economic damage, even if we can't detect it. To clarify, you probably can detect it but like all economic phenomena, we don't have absolute proof that so-and-so economic policy was the cause of the damage. We only have a reasonable cause to believe it is the cause. The problem is that the majority of the electorate are not well-versed in economics so unless the damage is extremely obvious they're not going to react properly and correct the harmful policy..