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Questions on Laissez-Faire Capitalism

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NateTheGreat

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Schools

    If I understand laissez-faire capitalism correctly, under such a government there would not be public schools. By this, I don’t simply mean no public schools and simply vouchers, but that there would be no government funding of education period, federal, state, or local. My concern lies with the fact that under such a system, the poor would likely not have access to education, ruining the “American Dream” for these individuals. Can any of you address this concern?

Roads

    If roads were privatized, wouldn’t there be a lot of suing the road owner since it was “unsafe”, just as Friedman claims the government is doing today? If this is the case, it wouldn’t be a worthwhile investment and thus we would have no roads.

Also, I have a question on this quote: "In Austrian theory, the rapidly expanding money stock artificially lowers interest rates, signaling businesses to invest more in longer-term and more capital-intensive projects."I understand the first part, but why do lower interest rates cause businesses to invest in the longer term and more capital-intensive projects?“Definition Regulations”

    I feel that at times it is necessary for the government to intervene and establish what I like to call “definition regulations”. These are regulations that make suppliers of food meet certain requirements to call something by a certain name. The most prevalent example of this would be meats: without the government, how would a shopper discriminate between a porterhouse and another piece of meat? Shouldn’t a supplier of food have to have a certain amount ratio of beef-to-fat for something to be considered ground beef?

Business Information

    Would businesses have to release certain information under a laissez-faire society? For example, if Google is tracking what I’m searching to supply me with certain advertisements, don’t I have the right to know? Would businesses have to show records of how much, say, mercury they are putting in water that leads to other people’s housing?

Courts

    This leads me to my next point. Under a laissez-faire government, individuals claiming property damage or food poisoning would have to file a suit in the court of law. Why is this preferable to safety regulations?

Licenses

    Under a laissez-faire government, roads would be privatized and the road owners could require drivers to be approved by a private safety agency. 1: Would individuals be able to sue the road owner if he failed to require this? 2: Could the government require road owners do this proactively while still maintaining its "Laissez-faire government" tag? 3: How would this apply to the air? Would I have to be licensed to get in a plane, or are we privatizing the air too? Who would require that I get a license if I were flying?

Edited by NateTheGreat
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1) Objectivists are proposing a radically different political economy that may look very different than things do today. The idea is that in a society like this over time poverty would be redefined to the point where even someone who was considered extremely poor could receive a high-school education. This is not absurd at all considering that the advance of technology raises the quality of living, and that the poor, when you really look at it, are just a couple of decades behind.

More concretely, as long as the people living together could muster up enough cash to pay for the internet, they could easily find a cheap way to educate their children (online class rooms and such).

2) Roads: We should probably just have monorails everywhere instead. That would solve the problem. Our reliance on roads and cars is ridiculous. So maybe if our infrastructure was subjected to market forces it would change.

3) Pros and Cons of regulations.

Pros-

Time saver - Typically people don't worry about getting poisoned by food anymore.

Stops the worst of the worst from happening (supposedly) - Fire marshals and health inspectors can prevent dozens of people dying.

Cons-

Regulations make it harder for little guys to enter an industry, promoting big business over small. This can cause stagnation and lack of competition.

Regulations promote laziness and stupidity. Anyone who has ever bough anything that was illegal (unregulated) had to quickly learn how to not get ripped off and how to fact check. Maybe if people knew how to do this with their politician and their corporations we wouldn't be collectively burned so often.

Regulations can stop progress and get people killed, particularly in the area of medicine where a life saving drug may be caught in red-tape for years.

Regulations give politicians control over what can be sold and what can't be. Not a good thing.

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Schools...
Check out this thread for a discussion on whether K-12 schooling is affordable to the poor..

... but why do lower interest rates cause businesses to invest in the longer term and more capital-intensive projects?
Interest is the cost of capital. Lower interest rates means the cost of capital is lower. If one has a choice between spending on a more highly-automated machine, versus using more employees on a less automated machine, the two costs to compare are: interest rates and wages. The lower the interest rate, relative to wages, the more attractive is the capital-intensive choice.

“Definition Regulations”: I feel that at times it is necessary for the government to intervene and establish what I like to call “definition regulations”. These are regulations that make suppliers of food meet certain requirements to call something by a certain name. The most prevalent example of this would be meats: without the government, how would a shopper discriminate between a porterhouse and another piece of meat? Shouldn’t a supplier of food have to have a certain amount ratio of beef-to-fat for something to be considered ground beef?
The government does have a role to play. If someone is selling cat, and labeling it beef, it is fraud. However, most of the realistic day-to-day examples are best left to reputation/brand and a private certification. Civil suits are another way the government can be involved. Proactive government regulation usually becomes a bureaucratic mess. For all its faults, I think that rules that grow out of precedent from court-cases are better.

Courts: This leads me to my next point. Under a laissez-faire government, individuals claiming property damage or food poisoning would have to file a suit in the court of law. Why is this preferable to safety regulations?
I don't think one should altogether rule out the type of "regulations" you alluded to above. The typical issue with regulations is that they violate the right of two people to deal with each other. Now, you have the government setting some of the terms of the deal. The government is supposedly acting on behalf of one of the parties.
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  • 1 year later...

SWNerd:

 

I don't think one should altogether rule out the type of "regulations" you alluded to above. The typical issue with regulations is that they violate the right of two people to deal with each other. Now, you have the government setting some of the terms of the deal. The government is supposedly acting on behalf of one of the parties.

 

Sorry to revive an old thread, but which regulations would you keep (or not rule out), and why do you put regulations in quotations?

Edited by thenelli01
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  • 1 month later...

... ... which regulations would you keep (or not rule out), and why do you put regulations in quotations?

The OP used the term "definition regulations", by which he meant legally-accepted definitions of the names of some goods. Suppose a menu has "beef steak" on it and the restaurant gives the diner a pork steak. Is that legal? Though the courts cannot decide if the diner broke his covenant with god by taking a bite of that steak, what if a court has to decide if a contract was broken? Let's assume that the restaurant does not deny the steak came off a pig, but insists that this is what it chooses to call "beef steak"? Once can imagine real-life case that ask the courts to make this type of decision. (Let's assume there was no other intimation: no notice saying "our beef steaks come from pigs and are neither halal nor kosher".)

 

If a court decides that the steak is not "beef", it has decided one specific case, but -- via precedence -- it also begins to create a legal definition of "beef". By "definition regulations", the OP meant having some such definitions specified by statute or "regulation", rather than coming from precedence. There are pros and cons to having precedent act as a form of law. There are problems with regulatory bodies making law under a blanket permission from congress. There are also problems in the way legislatures use legal definitions to fit an agenda: like saying that if you add corn to bread it cannot be sold as bread, or saying that Champagne from California is not Champagne. Nevertheless, if a judge has to decide these things, then there must be some principles involved. However, with all that said, I would not rule out the notion that some statute should specify some such definitions. I don't know enough about the pros and cons to advocate it, but I don't think it should be ruled out.

 

The issue is a more general one of how statute and precedence  (civil law and common law) should work. My understanding is cursory, but I think both types have their benefits, and that what is needed is a formal way to make precedent into statute, while retaining the freedom of individuals to engage in informed consent (e.g. using any terminology they like, as long as the context makes the definition clear to all "reasonable men".)

 

 

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Isn't that simply defining what constitutes, or falls under the category, of fraud? It would be a regulation if there was a regulatory body overseeing the operations of the business to ensure he is complying with the law. (i.e. requiring he send in reports to prove that it is pork and not beef or having inspectors come to the site to test the product)

Edited by thenelli01
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Isn't that simply defining what constitutes, or falls under the category, of fraud? It would be a regulation if there was a regulatory body overseeing the operations of the business to ensure he is complying with the law. (i.e. requiring he send in reports to prove that it is pork and not beef or having inspectors come to the site to test the product)

Yes, it is not regulation as we know it. I don't see any reason why a government body would monitor a business in an ongoing way.
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It can be done by the free market, as I'm sure you know. For example, a private company affirming the quality, ratio, and safety of the foods. And if there is proof that a business is committing fraud as defined by the law, they can be sued. Now, how could you prove that filet mignon is really filet mignon and not some lower grade steak at a restaurant? Is the answer to only eat at restaurants that have a private company with a good reputation affirming it is filet mignon or a well-respected restaurant?

Edited by thenelli01
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  • 1 month later...

For NateTheGreat;

 

You opened, "If I understand laissez-faire capitalism correctly,".

 

You don't. It does not now, nor has it ever, actually existed. Almost no one understands it. It simply means the function of government is limited to protecting the citizens from force, fraud, and other abuse from all sources, both foreign and domestic. Everything else is a market opportunity. Bottom up capitalism works.

 

Schools: All due respect to Horace Mann, his efforts did benefit our great nation for a time, but now it should be clear government managed education is inadequate for the modern era. The poor you seem to have such concern for, are dropping out and taking life paths that seriously limit their potential RIGHT NOW, in record numbers. And more government money has consistently failed to fix the problem.

 

Roads: Your argument boils down to; tort law is broken so leave the road funding alone.

Americas roads were user funded for years before various governments got involved. If businesses were not allowed to use the government to tilt the playing field to their advantage, then money would have a chance to flow to the most efficient producers of the highest demand goods. That includes roads.

 

Business information; Secrecy is the handmaiden of FRAUD. One of the areas government has a valid role to play. Fraud is intellectual force, faking reality to someones detriment. It should be illegal across the board. Businesses should not have to ever disclose future plans, but past events should be openly accessible. ALL past financials should be open records, if you think you need to hide them you are considering fraud.

 

Courts;  Avoid confusing the function of the courts (interpreting the LAW) with the function of regulatory agencies (making up rules to attempt some social engineering goal and attempting to enforce them if you have adequate funding). When you suffer property damage you want a proper court to adjudicate your problem. Similarly if you are harmed, such as real food poisoning, the courts have a role to play. If you just ate somewhere and got the runs I suggest you take your business elsewhere.

 

Licenses: Fraud prevention, one does not allow people to perform services or exercise privileges for which they do not have the requisite skill and knowledge. Protect the citizens from fraud and force. 

 

Reality is the court of final appeal.

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