5 ms·

You don’t just get to say “from first principles” and then put forward your obviously-American POV as some immovable basis from which everyone else should be ar

You don’t just get to say “from first principles” and then put forward your obviously-American POV as some immovable basis from which everyone else should be arguing from. Regulation routinely reduces cost. It’s all to do with the nature of the regulation. Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. It’s always disappointing when individuals get swept up in believing this tripe.

AnthonyMouse 3y ago
> Regulation routinely reduces cost. Can you provide an example of this actually happening in a competitive market? > Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. Businesses that want to challenge an incumbent who succeeded in making regulatory capture work for them would be an obvious counterexample, and for the same reason the customers who want to see the challenger succeed in making the market more competitive.
- patmcc 3y ago
  >>Can you provide an example of this actually happening in a competitive market? Tobacco companies probably made a bunch more money as aspects of their advertising became restricted/regulated/banned - because they were basically in an arms race with one another and spending more and more to maintain market share. But that is a pretty specific case, I'm not going to make any claim that's general or applies to airlines. https://www.nytimes.com/1989/01/02/business/the-media-business-ad-ban-might-help-cigarette-makers.html https://www.nytimes.com/1989/01/02/business/the-media-busine...
  - AnthonyMouse 3y ago
    Making more money doesn't imply that they lowered prices, and in general the relationship is the inverse. Also, they did not lower prices: https://fred.stlouisfed.org/series/CUUR0000SEGA https://fred.stlouisfed.org/series/CUUR0000SEGA
- Sai_ 3y ago
  Decriminalising and regulating marijuana reduced costs to consumers - such as the cost of going to jail in return for possessing marijuana.
  - bfung 3y ago
    But if it wasn’t “regulated”(ie: criminalized) in the first place, it wouldn’t need to be decriminalized and regulated.
- lmm 3y ago
  > Can you provide an example of this actually happening in a competitive market? No doubt you'll no-true-scotsman "competitive market", but buying a house in the UK got significantly smoother/cheaper when sellers were required to provide a certified survey to all interested parties, rather than each buyer having to commission their own survey. Lemon laws are widely recognised as making it cheaper to buy a reliable car. Food safety regulations made food a lot cheaper by rendering imported food trustworthy.
  - AnthonyMouse 3y ago
    What you're getting at here is regulations that... increase the competitiveness of a market. Which does imply something about the preexisting competitiveness of that market, and was the reason for that caveat. Competitive markets are what keep prices down, and you need a regulatory environment that facilitates them. The trouble is you can't even say things like "food safety regulations increase competition by rendering unknown sources trustworthy" because it depends on both details and context. You could easily have food safety regulations that impose high overhead and drive small providers out of business, or different market dynamics that provide an alternate way for customers to evaluate trustworthiness. And each attempt is an opportunity to make a mistake and do the opposite of what you intended -- or the exact thing the incumbents wanted and lobbied for. It has to be done with care, and rarely in only cases of great need, because it's so easy to screw up. And then competition can't fix it, because regulations are enforced by a monopoly. Which is where we are now, in all too many cases.
    - renewiltord 3y ago
      Well, I'm as pro-market as the next person, but surely fire brigades are the classic anti-example: the market was competitive with many fire brigades, prices were inelastic sure, and there was a lot of time-elasticity of demand, but the customer had the short-term ability to shop, etc. Government regulated fire brigades reduced competition and decreased cost. I default to "regulation increases cost" as well, and think that the default position should be to justify it, but I don't think the opposite is a zero-instance situation.
- ks2048 3y ago
  I’m not sure if it’s relevant to the issue here, but if you want an example of a regulation that reduces cost: “you cannot sell medicine X for more than $Y”. You could argue that in a pure market such a rule would never help (a competitor would naturally offer it cheaper, if possible). But if you look closely there few “pure” markets.
  - AnthonyMouse 3y ago
    Which is better given an uncompetitive market, an regulation that says "you cannot sell medicine X for more than $Y," or a regulatory change that restores competition to the market? The latter is better to such a degree that the former is just a toy example with no practical use outside of academic discussions and corrupt politicians who want to avoid solving the underlying problem on purpose.
    - ffgjgf1 3y ago
      Living in utopian abundance would be even better but sometimes not every option is feasible, especially in the short term. The objectively inferior option might still be better than doing nothing.
      - AnthonyMouse 3y ago
        Inefficient hacks are often worse than nothing because they remove the momentum behind fixing the underlying problem. You reduce the margin from 2500% to 1000% and think you're helping, but what you're really doing is condemning yourself to paying a 1000% margin forever because it's now below the threshold that people get outraged enough to do something about it.
  - devilbunny 3y ago
    > “you cannot sell medicine X for more than $Y” This leads to shortages. I am speaking from experience here. I'm an anesthesiologist, and with three exceptions I can think of, our drugs are all off-patent, so their prices are basically a function of production costs. But the federal government of the US, which buys a lot of drugs under the VA and Medicare, has a rule that you can't increase the price by more than X% per quarter (or year, not sure). Now, we all agree that this sounds like a good regulation. Right? Nobody can just raise the price of insulin by 40000%? Except that generic drugs really don't make much money, and when one company leaves the market for a given drug (there are usually only 2-3 manufacturers per drug), the remaining corp(s) can only make up the shortfall by moving to 24-hour operations (in the short term). Staffing that means hiring more people and paying overtime. So the cost of production... doubles, at least. The part that is missing: it's a drug that sells for twenty cents for a sterile ampule. Doubling it to forty cents is not going to break the bank. It's cheap, it will continue to be cheap, and yes - in the long run, someone will set up a line to make it for ten cents and sell it at twenty. But in the short run? You run out of drugs. I've seen it in almost every category of anesthesia drugs (induction, opioids, paralytics, paralytic reversal, etc.) in the last ~20 years. You'd think that "not being aware during surgery" would be one of those things that people would care about, but it isn't.
- nerdbert 3y ago
  > Can you provide an example of this actually happening in a competitive market? How about EU regulations on the price of mobile phone roaming between member nations (the "roam like home" rule)?
  - AnthonyMouse 3y ago
    Either there isn't a lot of competition between carriers there and they were just sticking the roaming fees in their pockets before, or there is a lot of competition and the carriers had to make up for the increased usage and loss of roaming fees by raising the prices of phone plans. This isn't the same thing as whether you like the result of the rule. Maybe paying a little bit more in total in exchange for having a more predictable monthly bill is something people like. It would still be paying a little bit more, if the market there is competitive.
    - Agingcoder 3y ago
      Assuming markets default to be competitive is wrong I think . Natural cartels and monopolies do exist after all, or markets have high entry costs etc. Economic theory usually assumes pute and perfect competition, which doesn’t exist in many markets
      - AnthonyMouse 3y ago
        It's not assuming the market is competitive. Wireless markets are often not competitive, because entry is limited by scarce spectrum availability etc. which incumbents lock up to limit competition. The point is that if you had a competitive market, margins would be thin and the only place for lower prices to come from without a reduction in operating costs is higher prices somewhere else. It's easy for regulations to lower costs in an uncompetitive market because the lack of competitive pressure allows the incumbents to do all kinds of inefficient nonsense that would drive them out of business if it was actually practical for new competitors who don't do that to enter the market and undercut them on price. But what you want to do in those cases to the fullest extent possible is to restore competition to the market, not try to regulate the incumbents while keeping them as a monopoly/oligopoly. A set of regulations that gets you 8% of the benefit of actual competition can be a significant improvement from the status quo while still being by far the less effective solution.
Brusco_RF 3y ago
>Regulation routinely reduces cost What? No they don't. Not without considerable adverse effects at least. You're not referring to price ceilings, are you?
- ffgjgf1 3y ago
  If the market is uncompetitive the adverse effects for consumers should be minimal.
b59831 3y ago
> Regulation routinely reduces cost. This is just plain wrong. Outside of monopolies (very few cases) regulations increase cost. Now, there are things more important than cost but that is a different argument
- pineaux 3y ago
  There are so many cases in which a regulated market shows lower costs, that not seeing it is just not wanting to see because it touches your core belief system instead of using reasoning. Regulation is needed to ensure property rights, contracts law, ward of monopolies, ward of externalisation of costs by companies unto the general population or the environment, to stop lies from being told as much as possible, to destroy rent-seeking behaviors. These are all legitimate reasons for government regulations and make the market better. There is of course a time and place for regulations. There IS such a thing as too much regulations.
ericmay 3y ago
The a priori that regulation reduces cost is a good one, but neither of you are compelling because the question has to include a time horizon with respect to resource consumption and other factors otherwise regulation reduces cost would be true only so much as a meaningless technicality. Similar to what you said I find it’s disappointing when individuals get caught up in believing that regulation or “more government” must be good while they ignore the externalities that the government brings to bear - I’m still trying to figure out why the government is regulating my EV like it’s a super duty F-250, and why the government made it illegal in my state to bring my own bottle of wine to a restaurant. I’m also trying to figure out why the government is leasing my land in Alaska (I’m an American, therefore it’s mine as well - yes I’m aware of recent Biden admin actions +) for oil and gas companies but won’t approve new nuclear reactors. It’s also crazy to me that the government doesn’t regulate by making mandatory seatbelts a requirement for school busses, and why it fails to regulate (ban) additive sugars and vaping and all sorts of other harmful products. I’m not trying to both-sides it here, but the central theme is everyone has an opinion on this stuff and the truth is regulation is good and bad, and it can cost or save money. We shouldn’t get into X is good, Y is bad. It lacks nuance.
turquoisevar 3y ago
The Americocentric nonsense is always prevalent in discussions like this, to the point that often the conclusion ends up being that America is so “special” and “unique” in its issues that any of the solutions other nations have come up with would supposedly never work. In terms of regulation reducing costs, you only need to look at Europe. Regulations in education, housing, medication, cellular networks, utilities, etc. have all driven cost down to one degree or another depending on which specific regulation a country has implemented. “Ah”, says the American, “but now show me regulation in a competitive market” as they rub their lower back in an effort to quell their aches from carrier that goalpost. And then you point out that those examples are of a competitive market. Only for them to pull a “gotcha”, because surely it couldn’t be that competitive if it had a cost reducing effect. The further you entertain, the more they move the goalposts and introduce circular reasoning, because in their mind anything that challenges their worldview must simply not be true.

AnthonyMouse 3y ago

> Regulation routinely reduces cost. Can you provide an example of this actually happening in a competitive market? > Only one party is incentivised to say trot out this “regulation is bad” BS and its businesses that want to operate in an ancap utopia because they weren’t lucky enough to make regulatory capture work for them. Businesses that want to challenge an incumbent who succeeded in making regulatory capture work for them would be an obvious counterexample, and for the same reason the customers who want to see the challenger succeed in making the market more competitive.

patmcc 3y ago
>>Can you provide an example of this actually happening in a competitive market? Tobacco companies probably made a bunch more money as aspects of their advertising became restricted/regulated/banned - because they were basically in an arms race with one another and spending more and more to maintain market share. But that is a pretty specific case, I'm not going to make any claim that's general or applies to airlines. https://www.nytimes.com/1989/01/02/business/the-media-business-ad-ban-might-help-cigarette-makers.html https://www.nytimes.com/1989/01/02/business/the-media-busine...
- AnthonyMouse 3y ago
  Making more money doesn't imply that they lowered prices, and in general the relationship is the inverse. Also, they did not lower prices: https://fred.stlouisfed.org/series/CUUR0000SEGA https://fred.stlouisfed.org/series/CUUR0000SEGA
Sai_ 3y ago
Decriminalising and regulating marijuana reduced costs to consumers - such as the cost of going to jail in return for possessing marijuana.
- bfung 3y ago
  But if it wasn’t “regulated”(ie: criminalized) in the first place, it wouldn’t need to be decriminalized and regulated.
lmm 3y ago
> Can you provide an example of this actually happening in a competitive market? No doubt you'll no-true-scotsman "competitive market", but buying a house in the UK got significantly smoother/cheaper when sellers were required to provide a certified survey to all interested parties, rather than each buyer having to commission their own survey. Lemon laws are widely recognised as making it cheaper to buy a reliable car. Food safety regulations made food a lot cheaper by rendering imported food trustworthy.
- AnthonyMouse 3y ago
  What you're getting at here is regulations that... increase the competitiveness of a market. Which does imply something about the preexisting competitiveness of that market, and was the reason for that caveat. Competitive markets are what keep prices down, and you need a regulatory environment that facilitates them. The trouble is you can't even say things like "food safety regulations increase competition by rendering unknown sources trustworthy" because it depends on both details and context. You could easily have food safety regulations that impose high overhead and drive small providers out of business, or different market dynamics that provide an alternate way for customers to evaluate trustworthiness. And each attempt is an opportunity to make a mistake and do the opposite of what you intended -- or the exact thing the incumbents wanted and lobbied for. It has to be done with care, and rarely in only cases of great need, because it's so easy to screw up. And then competition can't fix it, because regulations are enforced by a monopoly. Which is where we are now, in all too many cases.
  - renewiltord 3y ago
    Well, I'm as pro-market as the next person, but surely fire brigades are the classic anti-example: the market was competitive with many fire brigades, prices were inelastic sure, and there was a lot of time-elasticity of demand, but the customer had the short-term ability to shop, etc. Government regulated fire brigades reduced competition and decreased cost. I default to "regulation increases cost" as well, and think that the default position should be to justify it, but I don't think the opposite is a zero-instance situation.
ks2048 3y ago
I’m not sure if it’s relevant to the issue here, but if you want an example of a regulation that reduces cost: “you cannot sell medicine X for more than $Y”. You could argue that in a pure market such a rule would never help (a competitor would naturally offer it cheaper, if possible). But if you look closely there few “pure” markets.
- AnthonyMouse 3y ago
  Which is better given an uncompetitive market, an regulation that says "you cannot sell medicine X for more than $Y," or a regulatory change that restores competition to the market? The latter is better to such a degree that the former is just a toy example with no practical use outside of academic discussions and corrupt politicians who want to avoid solving the underlying problem on purpose.
  - ffgjgf1 3y ago
    Living in utopian abundance would be even better but sometimes not every option is feasible, especially in the short term. The objectively inferior option might still be better than doing nothing.
    - AnthonyMouse 3y ago
      Inefficient hacks are often worse than nothing because they remove the momentum behind fixing the underlying problem. You reduce the margin from 2500% to 1000% and think you're helping, but what you're really doing is condemning yourself to paying a 1000% margin forever because it's now below the threshold that people get outraged enough to do something about it.
- devilbunny 3y ago
  > “you cannot sell medicine X for more than $Y” This leads to shortages. I am speaking from experience here. I'm an anesthesiologist, and with three exceptions I can think of, our drugs are all off-patent, so their prices are basically a function of production costs. But the federal government of the US, which buys a lot of drugs under the VA and Medicare, has a rule that you can't increase the price by more than X% per quarter (or year, not sure). Now, we all agree that this sounds like a good regulation. Right? Nobody can just raise the price of insulin by 40000%? Except that generic drugs really don't make much money, and when one company leaves the market for a given drug (there are usually only 2-3 manufacturers per drug), the remaining corp(s) can only make up the shortfall by moving to 24-hour operations (in the short term). Staffing that means hiring more people and paying overtime. So the cost of production... doubles, at least. The part that is missing: it's a drug that sells for twenty cents for a sterile ampule. Doubling it to forty cents is not going to break the bank. It's cheap, it will continue to be cheap, and yes - in the long run, someone will set up a line to make it for ten cents and sell it at twenty. But in the short run? You run out of drugs. I've seen it in almost every category of anesthesia drugs (induction, opioids, paralytics, paralytic reversal, etc.) in the last ~20 years. You'd think that "not being aware during surgery" would be one of those things that people would care about, but it isn't.
nerdbert 3y ago
> Can you provide an example of this actually happening in a competitive market? How about EU regulations on the price of mobile phone roaming between member nations (the "roam like home" rule)?
- AnthonyMouse 3y ago
  Either there isn't a lot of competition between carriers there and they were just sticking the roaming fees in their pockets before, or there is a lot of competition and the carriers had to make up for the increased usage and loss of roaming fees by raising the prices of phone plans. This isn't the same thing as whether you like the result of the rule. Maybe paying a little bit more in total in exchange for having a more predictable monthly bill is something people like. It would still be paying a little bit more, if the market there is competitive.
  - Agingcoder 3y ago
    Assuming markets default to be competitive is wrong I think . Natural cartels and monopolies do exist after all, or markets have high entry costs etc. Economic theory usually assumes pute and perfect competition, which doesn’t exist in many markets
    - AnthonyMouse 3y ago
      It's not assuming the market is competitive. Wireless markets are often not competitive, because entry is limited by scarce spectrum availability etc. which incumbents lock up to limit competition. The point is that if you had a competitive market, margins would be thin and the only place for lower prices to come from without a reduction in operating costs is higher prices somewhere else. It's easy for regulations to lower costs in an uncompetitive market because the lack of competitive pressure allows the incumbents to do all kinds of inefficient nonsense that would drive them out of business if it was actually practical for new competitors who don't do that to enter the market and undercut them on price. But what you want to do in those cases to the fullest extent possible is to restore competition to the market, not try to regulate the incumbents while keeping them as a monopoly/oligopoly. A set of regulations that gets you 8% of the benefit of actual competition can be a significant improvement from the status quo while still being by far the less effective solution.

Brusco_RF 3y ago

>Regulation routinely reduces cost What? No they don't. Not without considerable adverse effects at least. You're not referring to price ceilings, are you?

ffgjgf1 3y ago
If the market is uncompetitive the adverse effects for consumers should be minimal.

b59831 3y ago

> Regulation routinely reduces cost. This is just plain wrong. Outside of monopolies (very few cases) regulations increase cost. Now, there are things more important than cost but that is a different argument

pineaux 3y ago
There are so many cases in which a regulated market shows lower costs, that not seeing it is just not wanting to see because it touches your core belief system instead of using reasoning. Regulation is needed to ensure property rights, contracts law, ward of monopolies, ward of externalisation of costs by companies unto the general population or the environment, to stop lies from being told as much as possible, to destroy rent-seeking behaviors. These are all legitimate reasons for government regulations and make the market better. There is of course a time and place for regulations. There IS such a thing as too much regulations.

ericmay 3y ago

The a priori that regulation reduces cost is a good one, but neither of you are compelling because the question has to include a time horizon with respect to resource consumption and other factors otherwise regulation reduces cost would be true only so much as a meaningless technicality. Similar to what you said I find it’s disappointing when individuals get caught up in believing that regulation or “more government” must be good while they ignore the externalities that the government brings to bear - I’m still trying to figure out why the government is regulating my EV like it’s a super duty F-250, and why the government made it illegal in my state to bring my own bottle of wine to a restaurant. I’m also trying to figure out why the government is leasing my land in Alaska (I’m an American, therefore it’s mine as well - yes I’m aware of recent Biden admin actions +) for oil and gas companies but won’t approve new nuclear reactors. It’s also crazy to me that the government doesn’t regulate by making mandatory seatbelts a requirement for school busses, and why it fails to regulate (ban) additive sugars and vaping and all sorts of other harmful products. I’m not trying to both-sides it here, but the central theme is everyone has an opinion on this stuff and the truth is regulation is good and bad, and it can cost or save money. We shouldn’t get into X is good, Y is bad. It lacks nuance.

turquoisevar 3y ago

The Americocentric nonsense is always prevalent in discussions like this, to the point that often the conclusion ends up being that America is so “special” and “unique” in its issues that any of the solutions other nations have come up with would supposedly never work. In terms of regulation reducing costs, you only need to look at Europe. Regulations in education, housing, medication, cellular networks, utilities, etc. have all driven cost down to one degree or another depending on which specific regulation a country has implemented. “Ah”, says the American, “but now show me regulation in a competitive market” as they rub their lower back in an effort to quell their aches from carrier that goalpost. And then you point out that those examples are of a competitive market. Only for them to pull a “gotcha”, because surely it couldn’t be that competitive if it had a cost reducing effect. The further you entertain, the more they move the goalposts and introduce circular reasoning, because in their mind anything that challenges their worldview must simply not be true.