From: davidv@yang.earlham.edu (Live from the Twilight Zone)
Newsgroups: talk.politics.misc,talk.politics.theory
Subject: Re: Pollution, profits and govt
Date: 7 Apr 92 07:20:46 GMT
Organization: ECMLVDC

In article <1992Apr1.191929.1940@clipper.ingr.com>, ald@clipper.ingr.com (Al 
Date) writes:
> In article <qlvkiINNapb@agate.berkeley.edu> faustus@ygdrasil.CS.Berkeley.EDU 
> (Wayne A. Christopher) writes:
>>In article <wa-j6apphil@netcom.com> phil@netcom.com (Phil Ronzone) writes:
>>> Good IS == to profitable.
>>>
>>> Profit is an unforgeable economic feedback mechanism that says
>>> society REALLY prefers what you are doing (selling goods, offering
>>> services) over other other things.
>>
>>I see, you are making the small simplifying assumption that people are
>>rational, well-informed agents that always do what they perceive to be
>>best for their long term interests and those of their children.  Do
>>you believe this, or does Ronzonian economics work in the absence of
>>this assumption?  If the latter, please explain in more detail.
> 
> I dont think Mr. Ronzone makes the assumption that people *always*
> act rationally, only that acting irrationally puts them at a disadvantage,
> when driving down the road, or engaging in job interviews, for example.  
> This puts natural and societal limits on irrational behavior.  
> You run out of money, or you run into a tree.
> 
> Capitalism provides what people *think* they want, regardless
> of whether they are rational or not.

	Even if people did always act rationally, this is not synonymous 
with maximization of utility/profits/whatever, no matter what the 
disciples of Adam Smith and Milton Friedman might say.  Game theory 
exercises such as "The Prisoner's Dilemma" demonstrate that individual 
actors, each acting in order to maximize their own well-being, can arrive 
at a final result that is injurious to all of them.
	True, awareness of the nature of the Prisoner's Dilemma and 
similar problems can allow individuals to make the correct decisions, and 
not take what seems to be the "rational" path.
	But, in addition to the problem of free and sufficient 
information, taking this solution also requires a willingness to trust 
every other participant in the exchange- for if one person sells out the 
rest, that one person can make an incredible profit at the expense of all 
the other participants.  Laissez-faire approaches encourage competition, 
not trust.

					If people want to have purple
> hair and rings in their noses, by golly, some entrepreneur will notice
> the demand and supply the dye, so to speak.  The drug trade is an
> excellent example.  Trying to ban items which people want simply doesnt
> work, unless society is willing to become a prison camp.  
> Besides, who can state categorically what is a rational desire,
> and which is an irrational desire in someone else?  
> 
	There are some common-sense limitations, but I agree that any 
effort to propose a standard of rationality is doomed.

> We must be tolerant, after all, if we are to be free ourselves.
> 
	There is enough substance of a debatable sort in this one line to 
spawn a whole slew of debates.  For now, I won't.

> Although people do not always act rationally, they ultimately are
> responsible for their own actions, as they will reap the rewards or 
> the suffer the consequences.  If they find themselves strung out on drugs 
> and they want to stop damaging themselves, there will be profits to be made by
> providing treatment programs, as now widely exist for alcoholics 
> and nicotine-addicts.
> 
	The problem of informed consent steps forward again.  Can it be 
ethical to allow individuals or firms to provide the means and social support 
(through advertising and the like) to endanger someone's life and 
well-being for profit?  And how ethical is it to require payment for 
someone's trying to put their life together after they made a 
self-destructive decision based largely on misleading information (look at 
a cigarette advertisement, one of those "cigarette smoke contains carbon 
monoxide" ones, that is dominated by healthy rich people enjoying 
themselves and tell me that the rank-and-file of society will appreciate 
the risks involved in smoking)
	On the other hand, I also believe that there is, or ought to be, 
the fundamental "right to be wrong".  At some level, these matters are 
also a matter of conscience and/or real informed decision.
	Individual freedom versus individual choice- oye vaye.
>>
>>> You can't fake profit and its message in a free society.
>>
> 
> This is also true in an un-free society. (8-)
> 
>>Sure you can.  Just one weak link in the chain mentioned above is
>>"well-informed".  Say an industry was doing something bad for the
>>environment.  How do people find out about this so that they can exert
>>some influence over the industry?  The free, unbiased media?  Ha ha
>>ha.  What if this industry has a monopoly over a product that
>>everybody needs?  Or are monopolies impossible in a Ronzonian economy?
>>
> 
> The freedom of speech and of the press is designed to allow ideas to
> spread.  By a process of successive approximations, people can 
> get pretty close to knowing what is really going on, in most cases.  
> The fact that all information is subjectively tainted by the
> perceptions of the sender and of the receiver is inescapable.
> You must choose between open communications and a Ministry of
> Information.  I myself have more faith in the truth getting out
> of thousands of muck-raking tabloids and back-stabbing corporations 
> than from the bowels of 1 political institution.
> 
	The press isn't free.  The press costs money.  On the other hand, 
a Ministry of Truth is an unappealing prospect too.  Better, I think, to 
give the press and corporate society a rival, in the form of some sort of 
governmental news source- not the same as a governmental monopoly.  This 
provides an economically-motivated and a politically-motivated source of 
information that can keep an eye on each other, and the citizenry can 
choose which to believe based upon prior performance; in other words, 
through a market force.

   [observation on monopolies deleted]

>>Go ahead, say "market forces can protect the environment" with a
>>straight face.  Or, since protecting the environment isn't profitable
>>in the short-term sense that the Invisible Hand operates, does this
>>mean that it's not good?
>>
> 
> I dont speak for Mr. Ronzone, but I agree that some action by the govt
> is required to protect the environment, which is a classic case of
> a public good.  OTOH, the most effective means to this end seems to
> be taxing pollution rather than banning it, and creating "markets" 
> to ration pollution to acceptable levels from a public health
> point of view.  The dosage makes the poison.
> 
	As long as industry does not decide to make the pollution market a 
high-demand one, and pass the associated high costs entirely onto 
consumers (so that consumers pay the money that industry uses to buy the 
right to pollute), this is a good idea.

> The purpose of such intervention should be to make the markets
> take account of the "hidden costs" which pollution creates.
> I see this as a market-oriented solution, albeit not a laissez-
> faire solution.  The industries involved will be encouraged to
> make profits by cleaning up their act.  When the pollution goes
> away, so does the govt program.
> 
> Or would you prefer that the govt just shut down all industry, plug
> up our butts, make us hold our breath and declare that we solved the
> longterm problem of global warming? 
> 
	I don't think that was the point Mr. Christopher wanted to make.  
On the other hand, regulation can lead to over-regulation, and create the 
situation you describe.  But, if the "rational decision" model is correct, 
either the trend would reverse itself before then, or it would turn out 
that people actually did prefer the situation you describe.
	What do you do with people who take advantage of the freedom 
inherent in a freedom-oriented philosophy to argue against that philosophy?

>>> A profit tells you that your combination of resources at your
>>> selling price is desired by people more than others.
>>
>>What people desire in the short term isn't what they desire in the
>>long term, and individuals are, for the most part, incapable of
>>reconciling these two types of desires without erecting an artificial
>>edifice (the government) to do it for them.  Anarchists, including
>>both communists and libertarians, seem not to understand this simple
>>psychological fact.
>>
>>	Wayne
> 
> 
> I strongly disagree on many levels.  There are *many* people who are 
> clear about their long term desires, even some corporations (!) 
> If this were not true, no one would save for their children's
> college education, nor for their own retirement.  No companies would spend
> money on R&D, nor would anyone give a hoot about global warming.
> Clearly there are SOME people who are longterm thinkers.
> 
> The problem is that TOO MANY people do NOT have a longterm perspective,
> and they slash and burn the environment and other
> people (and even themselves) for short term profits or just for kicks.

	Quite true.
  
> This is a complex problem, but the govt removes
> a great deal of economic incentive for longer-term thinking, by
> encouraging people to be 
> hopelessly dependent (welfare) or being suboptimal producers (agriculture
> programs) or being competitive failures (industrial subsidies), not
> to mention the way the govt runs ITSELF.
>
	The government can also support long-term thinking, by sponsoring 
investment tax credits, indexing capital gains to inflation, linking the 
tax rate on capital gains to the maturation period/life of the asset, and 
so on.  The government represents a pool of capital and labor that can be 
directed to influence the economy in a certain way.
	And before you condemn economic planning out of hand, remember 
that the Japanese economy is highly planned.  Remember that the largest 
free-market companies determine the allocation of resources among their 
branches by planning and not market forces.

> Isnt the motivation behind almost ALL of the self-perpetuating 
> ongoing govt economic intervention an attempt to solve a short term
> problem which is now long gone?  We still have the Rural Electrification 
> Agency, and Federal Crop Marketing Orders that cause tons of good fruit to 
> be destroyed, and antitrust laws which are used to penalize successful 
> businesses, and on and on and on.
> 
	I'd disagree with you about anti-trust laws, but you have hit the 
problem.  Much of American fiscal policy amounts to nothing more than 
politically-motivated transfer payments.  This is not a function of the
governmental role in the economy per se, but the constitution of the 
government and the problem of rational decisions by pressure groups 
leading to a less-efficient allocation of resources.

> Isnt democratic populist govt, by its very nature, one of the all-time 
> champions of short term thinking?   
> 
	No, a populist could equally well whip up a society with 
exhortations of "a better life for our children, and our children's 
children...".  And they have.

> OTOH, isnt the establishment of a limited govt with specific rights 
> (and hence responsibilities) retained by the people an excellent 
> example of good long term thinking?  
> 
	Possibly, although not necessarily.  Limited and specific 
governments can be slow to react to changing environments, and are often 
too weak to rectify errors in their constitution.  The story of the 
Articles of Confederation is informative here.

> --Al Date
> 
> "The kindest thing you can do for your fellow human beings is to establish
> and maintain a limited govt, so that you both may prosper."  

		-David Vacca

"Imitating the worst aspects of the oppressor does not prove equality. 
Imitating the worst aspects of the oppressor proves the oppressor right."
		-Matthew Legare
Xref: sparky talk.politics.misc:17271 ca.politics:3361 ba.politics:2602