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"Do we really need regulations?" Yes. You need to read on industrial history if this is not obvious to you. The nature of business and industry is such that t
by fsloth 9y ago
"Do we really need regulations?"
Yes. You need to read on industrial history if this is not obvious to you.
The nature of business and industry is such that they prefer local short term optimizations. In this context an environmental hazard is not considered a concern for various reasons, including, it incurs no immediate negative impact on the factory, the impact of one factory would be insignificant because everyone else is doing it and cutting chemical X would give competitors a financial edge, etc.
The only way to curb culture which creates negative externalities is to pipe those externalities back to it's source. Regulations and fines are a one way to make sure there is a feedback from negative externalities back to their source.
Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
The good news is that regulations work, and damage can heal.
See for example how CFC:s destroyed ozone layer before banning them.
- nlperguiy 9y ago> You need to read on industrial history if this is not obvious to you. I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why. > Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system. To me, this sounds as if the power of the government needs to be huge and centralized? Because obviously local agents cannot come up with globally optimal solution (if the problem is not structured in a way they can). For example, the huge use of insecticides and pesticides enables the industry of cheap meat and dairy. Regularizing insecticides and pesticides will most definitely increase the costs for the producers and the price of the product will increase. On the other hand, there are enormous subsidies in farming and will these subsidies now increase to keep the prices low? These regulations, at least that's how it looks to me, are directly impacting the tax payer, not the industry players. EDIT: I'm out of discussion. Getting to many downvotes for no particular reason.
- pjc50 9y ago> Regularizing insecticides and pesticides will most definitely increase the costs It will decrease costs but also decrease yield. If only one farm does this, they lose money. If it's imposed across an economy and imports of non-compliant produce are taxed, then the reduced yield drives up prices. This is effectively the EU approach.
- jpttsn 9y ago> I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why. Trying to recall what they taught us in business school. Regulations of the kind I think you mean (i.e. ban pollution) are one way to combat externalities, but there are others, in theory. Econ. researchers stipulate property rights as one way: If I own the river, and the right to fish in the future, my incentives will shift toward not polluting today. If the river is public and I have no guarantee of future yields, then the game theoretically smart thing to do is pollute as much as I can get away with. As always, the devil is in the implementation details. Pre-emtping useless word thinking: I am aware that "property rights" can fall under regulation, depending on definitions. If that bothers you, feel free to s/regulation/bans in the paragraphs preceding this.
- wav-part 9y agoWhy does this apply to one group of people (private industry) but not the other (govt) ? Both are money-seeking.
- pjc50 9y agoGovernment doesn't exactly have shareholders. Although campaign funding is tending that way.
- wav-part 9y agoCitizens may be thought as the shareholders. Anycase what does it prove ?
- lucozade 9y agoIt applies to both. It's just the mechanisms for regulation and feedback are different. When you don't have a mechanism for regulation in government, such as democracy, you tend to get very bad government. That's not to suggest that fines or elections are particularly effective but they serve similar purposes.