Deregulated Capitalism is Superior to Alternatives

=== Pro Case === I've hit back Con's specific issues below, but I think his entire case can be reduced to the following: "What if markets have bad outcomes? Government should create good outcomes" 1) Trivial Formulation His thesis does not depend on the definition of "markets" or "governments". You could switch it around to say "What if states have bad outcomes? Markets should create good outcomes". You could replace either word with random nouns. This is simply an exercise in grammar. His approach is tautological. 2) Violation of Ceteris Parabis Assumptions A) Double Standard Con is trying to force me to apologise for bad businesses. Even if you buy that, why doesn't have to apologise for bad states? Why is he allowed to cherry pick European states and ignore Communist genocides? Why can't I single out the most politically correct corporations to defend capitalism? B) Turn Against States I can't because capitalism is just a system of negative rights. People can be jerks to each other. Similarly, states are law-monopolists who can violate negative rights. They can also be jerks and they have guns. Giving humans the right to attack each other solves nothing. 3) Assumption of Control Part of Con's strategy is to say "business will do X, and government should fix it". Notice the underlined words. Why does he apply incentives to businesses? Why does he only have to point out what the government should do? After all, businesses should restrain themselves. The existential freedom of these institutions is inconsequential. Just because he's advocating states doesn't mean he gets to control their behavior. This is the "magic wand" theory of statism. If he's going to point out that market incentives can have bad outcomes, he also has to deal with state incentives and show they lead to better outcomes. His analysis is totally incomplete. 4) Aggressive Monopolies are Bad A state is an aggressive monopoly on final arbitration. There is nothing about this organizational structure that lends itself to the public good. Con concedes a limited invisible hand works under capitalism. Until Con demonstrates a superior invisible hand under statism, we default to capitalism. === Con Case === Con's argument is that markets work except when _____, so if I hit back his issues I win. 1) Deregulation Inadvertently Makes the Free Market Less Free A) Theory of Collusion Con thinks firms can collude and become uncompetitive. But this would create excess profit opportunities, allowing old firms to expand and new firms to enter the market. So as long as are no legal barriers to entry, we don't have to worry about collusion. B) Capitalism and the Profit Motive Con says Capitalism seeks maximum profit. This is trivially true. Individuals have a subjective set of values which drive them. Sometimes they seek monetary profit, but only as a means to subjective-profit. This is why people spend money on stuff that isn't money. Subjective profit permeates all economic systems and creates no special disadvantage under capitalism. Milton Friedman is famous for pointing out that even socialist economies run on greed. The question is simply what system harnesses greed the best. Even if Con thinks capitalism allows people to screw each other over, states can do it with guns. Malicious intent without guns (capitalism) is superior to malicious intent with guns (states). C) High Profits Con briefly complains about high oil prices. First, a high oil price incentivizes companies to invest more money producing oil. As these companies get more money, they expand their output and prices decrease compared to if there were no extra production. Con's argument reduces to the complaint that we do not live in the garden of eden. Oil is also not a good example because OPEC is made up of governments, and they play a major role in world oil prices [1]. Governments are capable of the same harmful profit seeking behavior Con is so worried about under capitalism. D) Standard Oil Con has presented no evidence that Standard Oil is a good example of high prices/bad service. A cursory glance of the wiki article shows they cut Kerosene prices in half over 5 years [2]. What government has ever lowered the cost of its services so dramatically? E) International Harvester Research proved difficult. I'll just wait for a source or argument... F) American Tobacco The wikipedia article just says they were broken up by the Sherman act. It does not give any reasoning or statistics behind this decision. Again, I'll wait. G) US Steel No sources or proofs. For now, I will point to consistent anti-competitive steel tariffs in place since 1824 [3]. F) Anti Monopoly Laws Presumably Con wants to break up companies before they get too large. This deprives consumers of economies of scale because he's capping the size of firms. For example, Google currently has about 2/3rds market share [4] and still provides excellent free services. G) Natural Monopolies are Good Con doesn't realize that monopoly prices can also be a good thing. High expected monopoly profits incentivize innovation. For example, a cure for cancer might never be invented if firms can't get monopoly prices out of it. F) Monopolies are Fundamental to Markets If a firm beats its competitors, it is because that firm has something unique and useful about it. I.e. it has a monopoly on some beneficial trait. This monopoly is positive because it enhances the industry's production strategies. The monopoly will persist until other firms can copy or improve on the strategy, lowering prices to their neoclassically competitive level. 2) Firms Won't Serve Consumers A) Consumer Health Con is afraid that firms will sell consumers harmful products. This can be ameliorated via a contract that says firms will not sell you poison. Alternatively, intermediaries represent consumers and shoulder the burden of wise product selection. For example, electronics retailers almost universally require their electronics to have the UL seal of approval on it. UL is a private safety/quality certification company that tests and approves products for very low cost [5]. B) Firm Self Interest Con thinks firms will screw over consumers because they are profit-maximizing. But consumers are also profit-maximizing, so there is a give and take. Firms can't offer bad products for fear of losing market share to superior products. C) Safety Regulations Improvements in working conditions cost money. They show up as higher wages for employers. So you can think of firms paying people in a combination of money, working conditions, skillbuilding, etc. Firms offer certain a combination of these for a reason - to match worker preference. For example, sweatshop workers do not have central air conditioning because they prefer working at higher wage in heat. To provide air conditioning, wages would have to fall against the preferences of workers. 3) Worker Oppression This is basically the same Safety Regulations argument. Cross apply my response. I'll add that Competitive firms cannot systematically exploit workers because it creates a profit opportunity for other firms. For example, if Con is exploiting workers by paying them 10 cents an hour, I can expand and make more money by paying then $1 an hour. If this is still too low then I either have to raise my wages or another firm will offer even higher wages. This process continues until employees are paid their marginal contribution to firm revenue. Con also mentions hours worked per week. Currently there is no hard cap on how long Americans can work, and yet most people do not work 80 hrs/week. The overall trend in the American economy has been consistently downward [6]. [1] http://en.wikipedia.org... [2] http://en.wikipedia.org... [3] http://en.wikipedia.org... [4] http://tinyurl.com... [5] http://en.wikipedia.org...