From: adesai@leland.Stanford.EDU (Atit Dinkarrai Desai)
Subject: Re: Open letter to the libertarian right
Organization: DSG, Stanford University, CA 94305, USA
Date: Thu, 8 Oct 92 23:30:39 GMT

In article <parvin1.718565086@husc11> parvin1@husc11.harvard.edu (Douglas Parvin) writes:
>craig@jido.b11.ingr.com (Craig Presson) writes:
>
>>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].
>
>1) See my previous posts for a mathematical explanation of how the situation 
>I described is a stable equilibrium that wouldn't be countered by market
>forces.

ad: Where does this exist in the real world?, I can't think of any industry
where this is the case. So maybe this argument is worthless. The only
place I can see this happening is some small towns where there is only
one supplier of some products( say a general store). I don't hear them
calling for government intervention. Certainly the prices are higher in those 
stores,due to increased distribution costs as well as "gouging". Its easy
to visualize that 2 stores coundn't make it. Yet it is voluntary, you can
choose to pay or not. If prices are too high, people always find a substitute
or invent one.(like oil and solar cells)

>2) The federal subsidizing is limited to offsetting start-up costs, after
>which it plays no part in the subsequent competition.  There is very little
>governemt involvement, so your "costs of reguation and inefficiency" are
>miniscule.

ad: again where is there no intervention? Whats to prevent the 2 companies
from colluding by keeping the same price and splitting the profits. In this 
case your and my taxpayer dollars have just gone into someone elses pockets.
Be careful, don't say anti-trust! I'm sure anyone or any government who 
makes such as investment is going to require that prices be lowered, which 
in turn is going to require watchdogs.

Ideally, you would want price to be at marginal cost to capture the most
surplus, but that also requires a lot of monitoring. You if you anything
about utility rate regulation then you know what a fiasco that is. The 
utilities run circles around the regulators with a myriad of tricks and
loopholes.
>
>>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. 
>
>As I showed earlier, assuming it's a global good, the only loser is the 
>monopoly corporation.
>Oh, I suppose I forgot to add in the stimulus to the economy generated by
>the majority of people having more money to spend, too.  What makes you
>think that this doesn't counter-balance what you're saying?  Empirical
>studies have shown that the marginal stimulus to the economy of a consumer's
>dollar gain in wealth far exceeds that for corporations.  Witness the soaring
>stock prices of the last three years.  How well has that stimulated the
>economy?

ad:Back to the complex system. Maybe there was a stimulus but other factors
overwhelmed it. I said a poweful mantra to fuck up the economy, and it did,
so now you now that I'm God. Empirical studies in macro-economics, what a joke!
Again,there are just too many factors, that react in all sorts of non-linear
fashions that make those "all else being equal" points worthless. However, I 
tend to agree with you, I just don't have too much faith in voodoo-economics
as most macro-economic studies tend to be.

>>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).
>
>Agreed.  If the good is not wide-spread, those not needing or wanting it
>lose out some.

This deal is too good! President Parvin, since we been such good friends
on the net, I am sure you will grant me this expensive equipment paid
for the taxpayers. I'm in the money,.I'm in the money ....

I know you are tired of the old libertarian lines, but the government
gets to decide who is wealthy and who is not! It usually the poor
who don't participate in most economic activities like buying homes,
flying, etc. yet they pay for the government regulation and interference in 
these activities, and the rich get subsided. Ok, some people
who do participate like building the plant or buying the product benefit,
but others lose money. Yet, the laws put people in jail for armed robbery
here they don't!  

Finally, in your complex set up. how do you know its not profitable
for another firm? you can't predict future profits! alright, say some
companies have failed in trying. Well, I might have a better idea and
we willing to give it try. To say its impossible and the government
should step ignores the uncertainty.

Also, there could be positive shock in the future that makes it viable
for 10 companies to share the market. If you built the government plant first,
it would be wasted because companies would have enetered anyway. Or, they
discover natural gas underneath. cheap fuel for everybody. The old
monopolist dies of a heart attack! The lone lone ranger rides into the
sunset, ....

The problem with government planning is they take the status quo and 
project it to infinity. The world just is not that way. 


O.k. last point: If this was a truly surplus producing endevor. Then,
all those people benefitting would in their own self interest put up their
own money to build the plant. They would realize all the benefits as you
said. Why does the government have to do it through the use of force?
If you want to get into the coordination costs or "free rider problem"
we can get into that too. But, think about this point carefully.
Newsgroups: alt.politics.libertarian