From: craig@jido.b11.ingr.com (Craig Presson)
Subject: Re: Open letter to the libertarian right
Reply-To: craig@jido.b11.ingr.com
Organization: Intergraph Corporation, Huntsville, Alabama
	<7054@transfer.stratus.com> <1ave8nINN1hi@armory.centerline.com>
Date: Thu, 8 Oct 1992 15:38:46 GMT

In article <1ave8nINN1hi@armory.centerline.com> mrh@centerline.com (Mike Huben) writes:
   In article <7054@transfer.stratus.com> cdt@sw.stratus.com (C. D. Tavares) writes:
   >In article <parvin1.718418434@husc11>, parvin1@husc11.harvard.edu (Douglas Parvin) writes:
   >> So, if the start-up costs are such that competition won't occur, and if
   >> the entrenched company is making relatively enormous profits, I don't
   >> see any moral problem with regulation or subsidized entrance for competition.
   >
   cdt>Let me see if I can paraphrase this.  If market conditions are such that
   >any person would be an idiot to voluntarily invest in a competing start-up, 
   >you would be in favor of the government forcing all of the citizens to make 
   >exactly this investment.  Forgive me if I admit that I don't understand this.
Right arm! Farm out!

   You don't understand it because you are not counting the value to society
   of being able to purchase product at a lower, competitive price.  Individual
   investors can only count the reduced profit after competition minus the
   startup costs.  Society as a whole can count as profit the reduction in price
   times the quantity purchased by society minus the startup costs. 

   These two different equations (doubtless simpler than they should be) show
   that economic decisions by society's benefit can sensibly contradict the
   "logic" of the market.

   Mike Huben

I see no equations here -- and that's the problem. The initial case is
ill-stated, and can be indefinitely shaded toward Parvin's and your
pro-regulation stance, because you fail to do two fundamental checks
at the beginning: 1. Give an existence proof; 2. Do the numbers; and
when you do 2, don't forget to count in the costs of regulation and
the inefficiency introduced by using the Fed. government, which are
enormous. Then estimate the ill effect of marginal addtional taxes on
the economy as a whole -- you have left out that every taxpayer's
discretionary income is reduced by your little scheme, and all the
others like it, all of which have fine-sounding justifications, and
"don't cost much" individually. 

Also, society as a whole is not benefitting, only the customers of
that new enterprise you forced us to start are, but "society as a
whole" gets to pay (either directly or by debt service).

You must give a realistic example of a situation where:
1. "start-up costs are such that competition won't occur", AND
2. "the entrenched company is making relatively enormous profits"
before you have any position at all to argue from.

I will even be a kindly old grandmother and point out the trap I just
set: most of the examples you might come up with are results of
government regulation in the first place, so the optimum is to remove
that barrier, rather than patch here and patch there.

-- Craig Presson
"Giving money and power to government is like
giving whiskey and car keys to teen-aged boys."
  -- P.J. O'Rourke

Newsgroups: alt.politics.libertarian